The 20-30s: the beginning of the way. Creation of "Sovfracht" and the first successes.
Decree of the Council of Labor and Defense of the USSR on March 8, 1929 as part of the People's Commissariat of Internal and External Trade created JSC “Sovfracht”, which united all disparate freight cells throughout the Union and began its activities from March 16, 1929. JSC “Sovfracht” transferred the exclusive monopoly right to charter foreign and domestic tonnage for the needs of Soviet export-import organizations, conduction of all freight operations in the country, and also ship agency in the ports of the USSR and abroad.
Moreover, before the October Revolution, the freight business in the country was not developed, and the chartering of tonnage was entirely in the hands of foreign companies. Despite the fact that in 1921, V.I. Lenin defined the role of Soviet transport as "one of the most important bases of our economy," the "material instrument of our state's relations with foreign countries," until the creation of JSC “Sovfracht”, it was not any necessary attention to the chartering, that could turn it into a powerful tool for the foreign trade policy of the USSR.
Until 1929, most of the bulk of foreign trade was carried out on foreign tonnage, the cost of its chartering was significant and ranked second place among the country's imports. Various organizations ("Dobroflot", "Gostorgflot", "Tsentrsoyuz", "Neftesindikat" etc.), engaged in chartering, do not have unity in work and clear coordination of actions. The creation of such an organization as “Sovfracht” allowed several objectives to be realized, among them:
• monopolization of chartering, coordination and management of all freight operations from the one center in Moscow;
• carrying out an active freight policy: strengthening of Soviet influence in the global freight market, maximum reduction of freight rates, planning of chartering.
All previously established organizations were subordinated to “Sovfracht”, which conducted market research work and distributed the total amount of chartering for individual flags. “Sovfracht” also organized local offices in new markets, involved new flags and conducted successful negotiations with a number of developed capitalist states.
In 1930 the government decided to centralize the management of all water transport in the country. The People’s Commissariat for Water Transport was established for this aim. In the period of grandiose construction projects and active industrial development in the country, the marine was the most important resources of delivering foreign industrial equipment to the USSR. Only during the first five-year plan period (1929-1932) the freight turnover of the Soviet ports increased by 92%. The Northern sea route (Arkhangelsk-Vladivostok) has become regular. In the second five-year period (1933-1937), the share of industrial cargoes in the structure of the country's exports increases; modern machines and other equipment for heavy industry, non-ferrous metals began to predominate in imports. The provision of transportation of cargoes was the main goal of “Sovfracht”.
In June 1930 JSC “Sovfracht” was transformed into the Union, named “Sovfrachttransport” including freight, warehousing, stevedoring and insurance operations. However, o January 4 1932, these functions are transferred to the again created company “Vneshtrans”, and “Sovfracht” is recreated as a single freight organigation.
In the end of 1933 the structure of “Sovfracht” included:
• Freight offices in the USSR (Odessa, Leningrad, Vladivostok);
• Freight offices abroad (London, Hamburg, Oslo, Genoa, Piraeus)
• Representative offices of “Sovfracht” abroad (Stockholm, New York, Copenhagen, Tokyo, Shanghai).
In the 1930s JSC “Sovfracht” managed to effectively use its monopoly on chartering in order to reduce freight rates and currency charges for sea freight. For example, the efforts of “Sovfracht” reduced rates for transportation of cargoes via foreign regular lines from Soviet ports to North America by 10%. In the period 1932-1933, the decline in rates gave a saving of 18 million rubles (compared to 1931-1932). All limits of the People’s Commissariat were met for all cargo and directions.
In relations with export-import associations, the commission principle was replaced by cost accounting. According to this, the enterprise should be self-supporting, and its activity - profitable. Thus, along with economic independence, the organization also had a great responsibility for the results of its work. For JSC “Sovfracht”, the appearance of cost accounting has stimulated the improvement of the quality of freight operations. Staff of JSC “Sovfracht” was presented to high demands, determined by staff policy.
The Moscow Operational Freight center was founded in the aim of ensure the unity of the USSR’s speeches on the world freight market, management and coordination of freight operations. The tasks of the Center included:
• analysis of the freight market;
• regulation of the release of freight orders to the market in accordance with its condition;
• determining the order of freight for individual cargoes;
• operational regulation of freight rates in the work of “Sovracht” branches.
Marine transport intensively developed: the government systematically increased the tonnage of the USSR transport fleet, new shipbuilding plants were built and restored. In 1935 JSC “Sovfrakht” began to charter Soviet ships for the carriage of cargoes of foreign charterers. However, in the same year, because of the government decree on the transposition of operational work in the USSR, some representative offices of “Sovfracht” were closed, and in a number of others the staffs were significantly reduced.
Despite the growth of Soviet tonnage during the period of the Stalin five-year plans, it was not enough to meet the transport needs of external and internal cargo turnover. It was led to large foreign exchange costs associated with chartering foreign ships (while 90% of foreign trade cargo was transported by sea). The leading place among the chartered foreign tonnage belonged to the English flag (650,7 thousand tons). The largest part was also made up of Norwegian and Greektonnage.