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    [DETAIL_TEXT] => 
The Old System Is Out Of Time
 The present-day tariff system started to form in the 1990s. At that time, and up to the beginning of the 2000s, almost 100% of cargo was transported by the RF Ministry of Railways (in October 2003 it was transferred to Russian Railways JSC). Under these conditions, ‘tariff’ meant the rate for which the Ministry of Railways transported goods. All the rates could be found in a document named Tariff Regulation 10-01.
Its structure was rather complicated. The price of transportation depended on distance as well as class and the section of the Tariff Regulation to which the cargo was referred.
There were three classes and the criterion for them was the yield of this or that good. Taking into consideration Russian economic and geographic reality, the profitability of each sector was different. 
Considering social motives and the need to support some sectors of the economy, the tariff on transportation of 1st class cargoes (for example, coal and ballast) was lower than the cost price of their transportation, that of 2nd class cargoes (iron ore) was similar to the cost price of transportation, and that of 3rd class cargoes (oil, ferrous metals) exceeded it. Thus, the owners of 3rd class cargoes, the most expensive one, subsidised owners of 1st class cargoes.
The sections were arranged according to the direction of transportation. Section №2 contained rates on transportation inside Russia and to Russian ports, section №3 had rates on transportation to border crossings, i.e. to foreign consignees. The rates in section №3 were higher than those in section №2. Until 2001, transportation to Russian ports was considered export transportation and tariffs on it were higher. 
However, in 2001, it was decided to support national stevedoring companies, and since then tariffs on transportation to them have been calculated according to section №2 and become half those on transportation destined for foreign ports. 
The so-called ‘wagon constituent’ was implemented in Tariff Regulation 10-01 in 2003. Since that time, tariffs have consisted of two parts – wagon and infrastructure. The share of the wagon constituent was 15% on average and that of infrastructure 85%. This was done to stimulate private businesses to purchase railcars and to compensate for the shortage of rolling stock on RZD’s network. 
A cargo owner or transport company which had its own wagons paid just 85% of the tariff set by the state. The remaining 15% was the stimulus to make the business invest in non-core assets. Due to the implementation of the wagon constituent, there appeared a lot of operators in Russia.
Since then, the rail transportation industry looked like this: RZD as a public transporter was obliged to carry any volume of cargo in any direction according to the rates envisaged by Tariff Regulation 10-01. An operator could choose cargo, clients, and directions and it was to pay 85% of the rate set in Tariff Regulation 10-01 to the owner of the infrastructure (RZD). 
The sum paid by a client to the operator depended on the arrangement between the wagon owner and the consignor. In 2008, before the crisis, when there was a deficit of rolling stock, the tariffs of operators were 20-50% higher than those in Tariff Regulation 10-01, in accordance with which RZD worked. When there was a surplus of railcars, operators transported cargo at prices 5-10% lower than the rates set in the Tariff Regulation. 
Nowadays, the situation is radically different from the one mentioned above. The entire wagon park of RZD, which used to operate in accordance with tariffs set by the state, has been given over to two daughter companies – Freight One and Freight Two. These two companies are operators and can pursue a flexible price policy via the wagon constituent. Naturally, RZD, as before, receives 85% of the tariff set in Tariff Regulation 10-01. Freight One and Freight Two, as well as other operators, pay the infrastructure constituent to Russian Railways.
How do operators form their prices? The most popular way now is daily rental of a railcar. A cargo owner orders transportation from a transport company, an operator calculates the infrastructure constituent of the tariff, to which he adds the price for his services. This price is easily calculated – the number of days necessary to fulfill the order multiplied by the daily rental rate. The latter consists of the cost of the wagon, leasing payments, and maintenance costs, including repair.
So, we can say that there is a real market in the Russian railway transportation sector. A cargo owner can choose any of the offers made by several operators, and they can compete with each other on price or quality of service.

Constantly Improving 
However, the present-day situation is a sort of an interim condition of the tariff system. In the near future it will be transformed. The measures aimed at stimulating the loading of Russian ports, due to which transportation destined for domestic stevedoring companies was half that of foreign harbours, were scrapped stage-by-stage. 
In 2005, the state started to hold a different policy – transportation to Russian ports has become more expensive, while that to foreign ones has remained the same. Nowadays, there is no difference in 90% of cargo turnover.
Also, the Government and RZD are working together to remove cross-subsidisation between 1st and 3rd class cargoes. There are different tariffs for running both loaded and empty railcars, and operators make use of it to optimise payments. For example, an operator transports cargo of the 3rd (expensive) class, and earns a good profit. For the transportation of an empty wagon in the opposite direction he is to pay as if it were a 3rd class cargo. 
But the operator can avoid this situation by transporting any 1st class cargo a small distance and then transporting the empty rolling stock a long distance at the lowest rate. Such a situation causes failures in control of wagon flows on RZD’s network and makes a logistical mess. 
It is rather difficult to unify rates on the empty run, because if they are considered as the 2nd or the 3rd class, it will mean a higher financial loading on the cargo owners from the poor sectors of economy. If they are unified as 1st class, RZD will suffer losses, which is also unreasonable. All in all, it is a difficult problem, and one that has not been solved yet. 
In any case, the removal of cross-subsidising will make the railway transportation market more competitive and more attractive to investors. 

There Will Be Enough Money 
Another important event concerning railway tariffs on freight transportation was the adoption of the Methods to calculate the rates of Tariff Regulation 10-01 – the infrastructure constituent – in 2010. Every year, the government approves a tariff increase, and every time there is a heated discussion among authorities, cargo owners and RZD. 
Until now, there has been no document containing the parameters and formulae to calculate the indexation level. There were heated debates about the approaches and absolute figures. Now, the sector has a document which contains the formulae to calculate the tariff increase.
The approaches on which the Methods are based were developed so that RZD as an infrastructure company had enough revenue to fulfill all necessary works to maintain tracks, facilities, and the locomotive park. If the state is not ready to increase tariffs so that RZD could carry out its obligations, the Government must pay the difference in compensation. 1% of ‘missing’ revenue (according to the figures calculated by the Government) will cost the state budget RUR 8 billion.
On the whole, the system of tariffs on freight transportation adapts more and more to the present realities of the market. It is becoming increasingly simple and transparent, and shows the real expenditures suffered by the transporter and operators. At the same time, it allows transport companies to create profit by making use of the market situation and the arrangements with clients, which improves the financial structure of operators and makes them more attractive from an investment standpoint. 
By Ivan Stupachenko
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The Old System Is Out Of Time
 The present-day tariff system started to form in the 1990s. At that time, and up to the beginning of the 2000s, almost 100% of cargo was transported by the RF Ministry of Railways (in October 2003 it was transferred to Russian Railways JSC). Under these conditions, ‘tariff’ meant the rate for which the Ministry of Railways transported goods. All the rates could be found in a document named Tariff Regulation 10-01.
Its structure was rather complicated. The price of transportation depended on distance as well as class and the section of the Tariff Regulation to which the cargo was referred.
There were three classes and the criterion for them was the yield of this or that good. Taking into consideration Russian economic and geographic reality, the profitability of each sector was different. 
Considering social motives and the need to support some sectors of the economy, the tariff on transportation of 1st class cargoes (for example, coal and ballast) was lower than the cost price of their transportation, that of 2nd class cargoes (iron ore) was similar to the cost price of transportation, and that of 3rd class cargoes (oil, ferrous metals) exceeded it. Thus, the owners of 3rd class cargoes, the most expensive one, subsidised owners of 1st class cargoes.
The sections were arranged according to the direction of transportation. Section №2 contained rates on transportation inside Russia and to Russian ports, section №3 had rates on transportation to border crossings, i.e. to foreign consignees. The rates in section №3 were higher than those in section №2. Until 2001, transportation to Russian ports was considered export transportation and tariffs on it were higher. 
However, in 2001, it was decided to support national stevedoring companies, and since then tariffs on transportation to them have been calculated according to section №2 and become half those on transportation destined for foreign ports. 
The so-called ‘wagon constituent’ was implemented in Tariff Regulation 10-01 in 2003. Since that time, tariffs have consisted of two parts – wagon and infrastructure. The share of the wagon constituent was 15% on average and that of infrastructure 85%. This was done to stimulate private businesses to purchase railcars and to compensate for the shortage of rolling stock on RZD’s network. 
A cargo owner or transport company which had its own wagons paid just 85% of the tariff set by the state. The remaining 15% was the stimulus to make the business invest in non-core assets. Due to the implementation of the wagon constituent, there appeared a lot of operators in Russia.
Since then, the rail transportation industry looked like this: RZD as a public transporter was obliged to carry any volume of cargo in any direction according to the rates envisaged by Tariff Regulation 10-01. An operator could choose cargo, clients, and directions and it was to pay 85% of the rate set in Tariff Regulation 10-01 to the owner of the infrastructure (RZD). 
The sum paid by a client to the operator depended on the arrangement between the wagon owner and the consignor. In 2008, before the crisis, when there was a deficit of rolling stock, the tariffs of operators were 20-50% higher than those in Tariff Regulation 10-01, in accordance with which RZD worked. When there was a surplus of railcars, operators transported cargo at prices 5-10% lower than the rates set in the Tariff Regulation. 
Nowadays, the situation is radically different from the one mentioned above. The entire wagon park of RZD, which used to operate in accordance with tariffs set by the state, has been given over to two daughter companies – Freight One and Freight Two. These two companies are operators and can pursue a flexible price policy via the wagon constituent. Naturally, RZD, as before, receives 85% of the tariff set in Tariff Regulation 10-01. Freight One and Freight Two, as well as other operators, pay the infrastructure constituent to Russian Railways.
How do operators form their prices? The most popular way now is daily rental of a railcar. A cargo owner orders transportation from a transport company, an operator calculates the infrastructure constituent of the tariff, to which he adds the price for his services. This price is easily calculated – the number of days necessary to fulfill the order multiplied by the daily rental rate. The latter consists of the cost of the wagon, leasing payments, and maintenance costs, including repair.
So, we can say that there is a real market in the Russian railway transportation sector. A cargo owner can choose any of the offers made by several operators, and they can compete with each other on price or quality of service.

Constantly Improving 
However, the present-day situation is a sort of an interim condition of the tariff system. In the near future it will be transformed. The measures aimed at stimulating the loading of Russian ports, due to which transportation destined for domestic stevedoring companies was half that of foreign harbours, were scrapped stage-by-stage. 
In 2005, the state started to hold a different policy – transportation to Russian ports has become more expensive, while that to foreign ones has remained the same. Nowadays, there is no difference in 90% of cargo turnover.
Also, the Government and RZD are working together to remove cross-subsidisation between 1st and 3rd class cargoes. There are different tariffs for running both loaded and empty railcars, and operators make use of it to optimise payments. For example, an operator transports cargo of the 3rd (expensive) class, and earns a good profit. For the transportation of an empty wagon in the opposite direction he is to pay as if it were a 3rd class cargo. 
But the operator can avoid this situation by transporting any 1st class cargo a small distance and then transporting the empty rolling stock a long distance at the lowest rate. Such a situation causes failures in control of wagon flows on RZD’s network and makes a logistical mess. 
It is rather difficult to unify rates on the empty run, because if they are considered as the 2nd or the 3rd class, it will mean a higher financial loading on the cargo owners from the poor sectors of economy. If they are unified as 1st class, RZD will suffer losses, which is also unreasonable. All in all, it is a difficult problem, and one that has not been solved yet. 
In any case, the removal of cross-subsidising will make the railway transportation market more competitive and more attractive to investors. 

There Will Be Enough Money 
Another important event concerning railway tariffs on freight transportation was the adoption of the Methods to calculate the rates of Tariff Regulation 10-01 – the infrastructure constituent – in 2010. Every year, the government approves a tariff increase, and every time there is a heated discussion among authorities, cargo owners and RZD. 
Until now, there has been no document containing the parameters and formulae to calculate the indexation level. There were heated debates about the approaches and absolute figures. Now, the sector has a document which contains the formulae to calculate the tariff increase.
The approaches on which the Methods are based were developed so that RZD as an infrastructure company had enough revenue to fulfill all necessary works to maintain tracks, facilities, and the locomotive park. If the state is not ready to increase tariffs so that RZD could carry out its obligations, the Government must pay the difference in compensation. 1% of ‘missing’ revenue (according to the figures calculated by the Government) will cost the state budget RUR 8 billion.
On the whole, the system of tariffs on freight transportation adapts more and more to the present realities of the market. It is becoming increasingly simple and transparent, and shows the real expenditures suffered by the transporter and operators. At the same time, it allows transport companies to create profit by making use of the market situation and the arrangements with clients, which improves the financial structure of operators and makes them more attractive from an investment standpoint. 
By Ivan Stupachenko
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The Old System Is Out Of Time
 The present-day tariff system started to form in the 1990s. At that time, and up to the beginning of the 2000s, almost 100% of cargo was transported by the RF Ministry of Railways (in October 2003 it was transferred to Russian Railways JSC). Under these conditions, ‘tariff’ meant the rate for which the Ministry of Railways transported goods. All the rates could be found in a document named Tariff Regulation 10-01.
Its structure was rather complicated. The price of transportation depended on distance as well as class and the section of the Tariff Regulation to which the cargo was referred.
There were three classes and the criterion for them was the yield of this or that good. Taking into consideration Russian economic and geographic reality, the profitability of each sector was different. 
Considering social motives and the need to support some sectors of the economy, the tariff on transportation of 1st class cargoes (for example, coal and ballast) was lower than the cost price of their transportation, that of 2nd class cargoes (iron ore) was similar to the cost price of transportation, and that of 3rd class cargoes (oil, ferrous metals) exceeded it. Thus, the owners of 3rd class cargoes, the most expensive one, subsidised owners of 1st class cargoes.
The sections were arranged according to the direction of transportation. Section №2 contained rates on transportation inside Russia and to Russian ports, section №3 had rates on transportation to border crossings, i.e. to foreign consignees. The rates in section №3 were higher than those in section №2. Until 2001, transportation to Russian ports was considered export transportation and tariffs on it were higher. 
However, in 2001, it was decided to support national stevedoring companies, and since then tariffs on transportation to them have been calculated according to section №2 and become half those on transportation destined for foreign ports. 
The so-called ‘wagon constituent’ was implemented in Tariff Regulation 10-01 in 2003. Since that time, tariffs have consisted of two parts – wagon and infrastructure. The share of the wagon constituent was 15% on average and that of infrastructure 85%. This was done to stimulate private businesses to purchase railcars and to compensate for the shortage of rolling stock on RZD’s network. 
A cargo owner or transport company which had its own wagons paid just 85% of the tariff set by the state. The remaining 15% was the stimulus to make the business invest in non-core assets. Due to the implementation of the wagon constituent, there appeared a lot of operators in Russia.
Since then, the rail transportation industry looked like this: RZD as a public transporter was obliged to carry any volume of cargo in any direction according to the rates envisaged by Tariff Regulation 10-01. An operator could choose cargo, clients, and directions and it was to pay 85% of the rate set in Tariff Regulation 10-01 to the owner of the infrastructure (RZD). 
The sum paid by a client to the operator depended on the arrangement between the wagon owner and the consignor. In 2008, before the crisis, when there was a deficit of rolling stock, the tariffs of operators were 20-50% higher than those in Tariff Regulation 10-01, in accordance with which RZD worked. When there was a surplus of railcars, operators transported cargo at prices 5-10% lower than the rates set in the Tariff Regulation. 
Nowadays, the situation is radically different from the one mentioned above. The entire wagon park of RZD, which used to operate in accordance with tariffs set by the state, has been given over to two daughter companies – Freight One and Freight Two. These two companies are operators and can pursue a flexible price policy via the wagon constituent. Naturally, RZD, as before, receives 85% of the tariff set in Tariff Regulation 10-01. Freight One and Freight Two, as well as other operators, pay the infrastructure constituent to Russian Railways.
How do operators form their prices? The most popular way now is daily rental of a railcar. A cargo owner orders transportation from a transport company, an operator calculates the infrastructure constituent of the tariff, to which he adds the price for his services. This price is easily calculated – the number of days necessary to fulfill the order multiplied by the daily rental rate. The latter consists of the cost of the wagon, leasing payments, and maintenance costs, including repair.
So, we can say that there is a real market in the Russian railway transportation sector. A cargo owner can choose any of the offers made by several operators, and they can compete with each other on price or quality of service.

Constantly Improving 
However, the present-day situation is a sort of an interim condition of the tariff system. In the near future it will be transformed. The measures aimed at stimulating the loading of Russian ports, due to which transportation destined for domestic stevedoring companies was half that of foreign harbours, were scrapped stage-by-stage. 
In 2005, the state started to hold a different policy – transportation to Russian ports has become more expensive, while that to foreign ones has remained the same. Nowadays, there is no difference in 90% of cargo turnover.
Also, the Government and RZD are working together to remove cross-subsidisation between 1st and 3rd class cargoes. There are different tariffs for running both loaded and empty railcars, and operators make use of it to optimise payments. For example, an operator transports cargo of the 3rd (expensive) class, and earns a good profit. For the transportation of an empty wagon in the opposite direction he is to pay as if it were a 3rd class cargo. 
But the operator can avoid this situation by transporting any 1st class cargo a small distance and then transporting the empty rolling stock a long distance at the lowest rate. Such a situation causes failures in control of wagon flows on RZD’s network and makes a logistical mess. 
It is rather difficult to unify rates on the empty run, because if they are considered as the 2nd or the 3rd class, it will mean a higher financial loading on the cargo owners from the poor sectors of economy. If they are unified as 1st class, RZD will suffer losses, which is also unreasonable. All in all, it is a difficult problem, and one that has not been solved yet. 
In any case, the removal of cross-subsidising will make the railway transportation market more competitive and more attractive to investors. 

There Will Be Enough Money 
Another important event concerning railway tariffs on freight transportation was the adoption of the Methods to calculate the rates of Tariff Regulation 10-01 – the infrastructure constituent – in 2010. Every year, the government approves a tariff increase, and every time there is a heated discussion among authorities, cargo owners and RZD. 
Until now, there has been no document containing the parameters and formulae to calculate the indexation level. There were heated debates about the approaches and absolute figures. Now, the sector has a document which contains the formulae to calculate the tariff increase.
The approaches on which the Methods are based were developed so that RZD as an infrastructure company had enough revenue to fulfill all necessary works to maintain tracks, facilities, and the locomotive park. If the state is not ready to increase tariffs so that RZD could carry out its obligations, the Government must pay the difference in compensation. 1% of ‘missing’ revenue (according to the figures calculated by the Government) will cost the state budget RUR 8 billion.
On the whole, the system of tariffs on freight transportation adapts more and more to the present realities of the market. It is becoming increasingly simple and transparent, and shows the real expenditures suffered by the transporter and operators. At the same time, it allows transport companies to create profit by making use of the market situation and the arrangements with clients, which improves the financial structure of operators and makes them more attractive from an investment standpoint. 
By Ivan Stupachenko
    [~DETAIL_TEXT] => 
The Old System Is Out Of Time
 The present-day tariff system started to form in the 1990s. At that time, and up to the beginning of the 2000s, almost 100% of cargo was transported by the RF Ministry of Railways (in October 2003 it was transferred to Russian Railways JSC). Under these conditions, ‘tariff’ meant the rate for which the Ministry of Railways transported goods. All the rates could be found in a document named Tariff Regulation 10-01.
Its structure was rather complicated. The price of transportation depended on distance as well as class and the section of the Tariff Regulation to which the cargo was referred.
There were three classes and the criterion for them was the yield of this or that good. Taking into consideration Russian economic and geographic reality, the profitability of each sector was different. 
Considering social motives and the need to support some sectors of the economy, the tariff on transportation of 1st class cargoes (for example, coal and ballast) was lower than the cost price of their transportation, that of 2nd class cargoes (iron ore) was similar to the cost price of transportation, and that of 3rd class cargoes (oil, ferrous metals) exceeded it. Thus, the owners of 3rd class cargoes, the most expensive one, subsidised owners of 1st class cargoes.
The sections were arranged according to the direction of transportation. Section №2 contained rates on transportation inside Russia and to Russian ports, section №3 had rates on transportation to border crossings, i.e. to foreign consignees. The rates in section №3 were higher than those in section №2. Until 2001, transportation to Russian ports was considered export transportation and tariffs on it were higher. 
However, in 2001, it was decided to support national stevedoring companies, and since then tariffs on transportation to them have been calculated according to section №2 and become half those on transportation destined for foreign ports. 
The so-called ‘wagon constituent’ was implemented in Tariff Regulation 10-01 in 2003. Since that time, tariffs have consisted of two parts – wagon and infrastructure. The share of the wagon constituent was 15% on average and that of infrastructure 85%. This was done to stimulate private businesses to purchase railcars and to compensate for the shortage of rolling stock on RZD’s network. 
A cargo owner or transport company which had its own wagons paid just 85% of the tariff set by the state. The remaining 15% was the stimulus to make the business invest in non-core assets. Due to the implementation of the wagon constituent, there appeared a lot of operators in Russia.
Since then, the rail transportation industry looked like this: RZD as a public transporter was obliged to carry any volume of cargo in any direction according to the rates envisaged by Tariff Regulation 10-01. An operator could choose cargo, clients, and directions and it was to pay 85% of the rate set in Tariff Regulation 10-01 to the owner of the infrastructure (RZD). 
The sum paid by a client to the operator depended on the arrangement between the wagon owner and the consignor. In 2008, before the crisis, when there was a deficit of rolling stock, the tariffs of operators were 20-50% higher than those in Tariff Regulation 10-01, in accordance with which RZD worked. When there was a surplus of railcars, operators transported cargo at prices 5-10% lower than the rates set in the Tariff Regulation. 
Nowadays, the situation is radically different from the one mentioned above. The entire wagon park of RZD, which used to operate in accordance with tariffs set by the state, has been given over to two daughter companies – Freight One and Freight Two. These two companies are operators and can pursue a flexible price policy via the wagon constituent. Naturally, RZD, as before, receives 85% of the tariff set in Tariff Regulation 10-01. Freight One and Freight Two, as well as other operators, pay the infrastructure constituent to Russian Railways.
How do operators form their prices? The most popular way now is daily rental of a railcar. A cargo owner orders transportation from a transport company, an operator calculates the infrastructure constituent of the tariff, to which he adds the price for his services. This price is easily calculated – the number of days necessary to fulfill the order multiplied by the daily rental rate. The latter consists of the cost of the wagon, leasing payments, and maintenance costs, including repair.
So, we can say that there is a real market in the Russian railway transportation sector. A cargo owner can choose any of the offers made by several operators, and they can compete with each other on price or quality of service.

Constantly Improving 
However, the present-day situation is a sort of an interim condition of the tariff system. In the near future it will be transformed. The measures aimed at stimulating the loading of Russian ports, due to which transportation destined for domestic stevedoring companies was half that of foreign harbours, were scrapped stage-by-stage. 
In 2005, the state started to hold a different policy – transportation to Russian ports has become more expensive, while that to foreign ones has remained the same. Nowadays, there is no difference in 90% of cargo turnover.
Also, the Government and RZD are working together to remove cross-subsidisation between 1st and 3rd class cargoes. There are different tariffs for running both loaded and empty railcars, and operators make use of it to optimise payments. For example, an operator transports cargo of the 3rd (expensive) class, and earns a good profit. For the transportation of an empty wagon in the opposite direction he is to pay as if it were a 3rd class cargo. 
But the operator can avoid this situation by transporting any 1st class cargo a small distance and then transporting the empty rolling stock a long distance at the lowest rate. Such a situation causes failures in control of wagon flows on RZD’s network and makes a logistical mess. 
It is rather difficult to unify rates on the empty run, because if they are considered as the 2nd or the 3rd class, it will mean a higher financial loading on the cargo owners from the poor sectors of economy. If they are unified as 1st class, RZD will suffer losses, which is also unreasonable. All in all, it is a difficult problem, and one that has not been solved yet. 
In any case, the removal of cross-subsidising will make the railway transportation market more competitive and more attractive to investors. 

There Will Be Enough Money 
Another important event concerning railway tariffs on freight transportation was the adoption of the Methods to calculate the rates of Tariff Regulation 10-01 – the infrastructure constituent – in 2010. Every year, the government approves a tariff increase, and every time there is a heated discussion among authorities, cargo owners and RZD. 
Until now, there has been no document containing the parameters and formulae to calculate the indexation level. There were heated debates about the approaches and absolute figures. Now, the sector has a document which contains the formulae to calculate the tariff increase.
The approaches on which the Methods are based were developed so that RZD as an infrastructure company had enough revenue to fulfill all necessary works to maintain tracks, facilities, and the locomotive park. If the state is not ready to increase tariffs so that RZD could carry out its obligations, the Government must pay the difference in compensation. 1% of ‘missing’ revenue (according to the figures calculated by the Government) will cost the state budget RUR 8 billion.
On the whole, the system of tariffs on freight transportation adapts more and more to the present realities of the market. It is becoming increasingly simple and transparent, and shows the real expenditures suffered by the transporter and operators. At the same time, it allows transport companies to create profit by making use of the market situation and the arrangements with clients, which improves the financial structure of operators and makes them more attractive from an investment standpoint. 
By Ivan Stupachenko
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    [DETAIL_TEXT] => 
Who Built and Who Purchased
The Russian park of covered wagons amounts to approximately 75,500 units at the moment. Most of them (54.9% or 41,400 units) belong to Russian Railways, but in the near future 26,500 wagons will be given to Freight Two. Thus, the share of the latter will amount to 35.1%. RZD will keep 19.7% of this type of rolling stock to fulfill the state’s needs. The market share of Freight One is 21% (15,900 boxcars). Other operators and leasing companies manage about 24% of the total park.
In Russia and the CIS, only five plants can make covered wagons (see the table), but just three of them produced rolling stock of this type in 2010. The share of Altaivagon in the market amounted to 70.7%, that of Armavir Heavy Machine Building Plant (AZTM) was 25.1%, and that of the DP Casting and Mechanical Plant (Uzbekistan) was 4.2%.
At the same time, Kazakhstan Wagon Building Company plans to launch a second production complex in Pavlodar (Kazakhstan). Its planned capacity is 2,000 gondola cars and 500 covered railcars. Moreover, TMH Vagonostroyenie (Transmashholding) and Slovak company Tatravagonka signed an agreement on the launch of a joint venture to produce modern rolling stock, including universal covered railcars.
Last year, the largest buyers in the sector were Pipe Transport Company (incorporated into Rail Garant group of companies), Freight One and firm Transgarant. The rolling stock of this type was also purchased for the inventory parks of the Uzbek Railways, Kazakhstan Temir Zholy and the railways of other CIS countries. 
In 2010, Rail Garant group of companies purchased 1,500 new boxcars with a total volume of 138 cubic metres; thus, its rolling stock park of this type amounted to 2,000 units. Now, Rail Garant, in cooperation with Altaivagon, is participating in the development of a new model of boxcar with a larger cubic volume and carrying capacity. 
Production of the model will start in the third quarter of 2011. As a result of this cooperation, at least 500 railcars of the new model will be added to the park of Rail Garant before the end of this year. ‘We also may buy covered rolling stock on the second-hand market,’ emphasises Nikolay Falin, a representative of Rail Garant.
Last year, Freight One purchased 546 boxcars made by the Armavir Heavy Machine Building Plant. The company chose a model with a larger body volume (up to 158 cubic metres of cargo; the volume of the basic model is 138 cubic metres). ‘We consider that our priority is to use a cargo wagon efficiently. Adding wagons with a larger capacity to our rolling stock park will increase the competitiveness of railway transportation,’ say specialists at Freight One. The company’s 2011 investment programme envisages the purchase of about 500 boxcars, i.e. enough to renew the park.
Transgarant bought 100 new covered railcars last year. The volume of the wagon’s body is 138 cubic metres (model 11-280 produced by Altaivagon). Nowadays, the company manages 1,244 boxcars.
3P owns 1,172 boxcars. Of that, 25 units were purchased from the AZTM in 2010. The volume of the wagon is 158 cubic metres. ‘We do our best to keep good long-term relations with all rolling stock producers. Sometimes, there appear situations when we stop working with a company because of failure to agree on a price and other terms, but we usually recommence negotiations later,’ tells Dmitry Nikolaev, Head of Transport Administration of 3P.
There were interesting changes in the park of the Baltika Breweries. According to the rating made by IA INFOLine, the number of boxcars owned by the company fell by more than 80% between 2007 and 2009 (from 1,607 to 301). Sergey Babinsky, Director of Logistics at Baltika Breweries, explained that, during this period, universal covered wagons were re-equipped to become thermally-insulated railcars. The company now has 1,303 such units. 
Another 301 boxcars are still used for transportation of packing and raw materials, etc. Thus, the number of railcars did not change, they were simply given a different name. Last time, Baltika purchased 100 covered railcars in 2007. The seller was AZTM. ‘We have no objections to quality and guarantee maintenance. We do not plan to buy boxcars in 2011,’ said Mr Babinsky.

Prices Are Growing, But the Quality Is Questionable
Operators’ requirements regarding the quality of rolling stock are increasing, because the condition of railcars is one of the most important competitive advantages of a company providing transportation services. ‘The market demands new technical solutions, so we’d like wagon builders to react faster and make the necessary changes to wagon construction,’ says Nikolay Koshelev, Director of the Wagon Facilities Department at firm Transgarant. ‘Also, the cost of transportation depends on the quality of rolling stock. Can we speak about stable prices, if an operator has to repair wagons off-schedule?’
Transgarant is going to enlarge its boxcar park by 20%. ‘Our plans depend on two major factors – the price of a wagon and its quality. The situation becomes rather complicated because the cost of a wagon is growing, but quality is falling, and there is an increase in the number of current uncoupling repairs covered by the warranty. This increases an operator’s expenditure on park maintenance and cuts revenue, since the rolling stock idles when it is being repaired,’ he emphasised.
In turn, Mr Nikolaev notes that there are problems with the quality of rolling stock produced by almost all plants. ‘The quality of casting is worse in comparison with the 1990s and the beginning of this century. Use of wagons produced in 2006-2007 was put on hold at times because of casting defects. Rolling stock owners had to spend more money on off-schedule repairs to check problem areas and details, and they also suffered enormous losses because the railcars were taken out of the transportation process,’ recognises the expert.
In the pre-crisis period, the price of boxcars grew practically every month. They increased from RUR 1.8 million in the middle of 2007 to RUR 2.6 to 2.85 million in September 2008.
Thus, growth exceeded 50%. In November 2008, after an abrupt reduction in transportation volumes, and consequently in the need for rolling stock, the price of a covered wagon fell to RUR 2.3 million. And in 2009, it reduced to RUR 1.2 to 1.33 million. Some operators said that it was possible to agree an even lower price.
In October 2009, wagon prices started to grow. A boxcar sold for RUR 1.4-1.5 million in December. And a year later, the price amounted to RUR 2.3 million, i.e. the increase was more than 60%. ‘This happened primarily due to the recovery of the wagon building sector and demand,’ notes Mr Falin.
Specialists at 3P told that the company purchased covered wagons from the AZTM for $85,000 (approximately RUR 2.6 million) in 2010. Moreover, almost all experts think that prices will continue to increase in 2011. ‘It seems to me that there will be significant demand for covered wagons with a larger cubic volume, because there are few of them on the network,’ considers Mr Nikolaev.

Overestimated Prices
The range of industrial enterprises using boxcars to transport their products is large enough. For example, over 500 companies use rolling stock owned by Freight One. Of that, 80% are loyal clients of the operator. Monthly freight shipment varies from 
1 wagon to 1,000 railcars. 
Freight One has long-term partner relations with construction enterprises, including cement plants Serebryakovcement, Novoroscement, and Topkinsky Cement, sugar and flour mills, bakeries, chemical and petrochemical enterprises, etc. Among the strategic partners of Transgarant in this segment are Mondy Business Paper (Syktyvkar), Nurminen Logistics, Yuzhuralnickel, Nizhnekamskneftekhim, etc.
Covered wagons are popular among consignors due to the advantages of transportation in closed rolling stock – cargo safety, better protection against environmental and climate factors, and the option of transporting small lots. Also, a boxcar can be used in winter to carry cargo requiring low temperatures. 
Despite a huge variety of ways to use this type of rolling stock, demand for it is not very large. Mr Falin highlighted the fact that in 2010 the share of covered wagons in the total volume of railcars produced in Russia and the CIS varied from 1% to 5% every month. Consequently, the railcar manufacturing capacities were engaged in production of other types of rolling stock.
The moderate interest in boxcar exploitation is explained by the specific features of loading and unloading work. To use such wagons, a company should have developed infrastructure (warehouses, docks, freight sheds, etc.), special mobile loading facilities, insurance, forwarding, security and other conditions necessary for transportation of valuable loads.
Nonetheless, there is competition in this sector, which depends on the balance of demand and supply in the regional transport markets. In the European part of Russia, where the industry is developed and the flows of different transport modes cross, the competition is rather tough and it is defined by the owner. 
There are fewer industrial enterprises in the regions, so it is cargo owners who dictate terms. They run down prices for renting rolling stock, and wagon owners interested in dispatching their loaded railcars have to agree on not very profitable terms. There is price dumping too.
According to Freight One, the market price for renting a boxcar with a volume of 120 cubic metres is RUR 900-1,000 and that of covered wagons with a body volume of 138 and 158 cubic metres is RUR 1,300 (in early 2010, the price was 800 roubles). However, at the beginning of winter, the latter reduced to RUR 1,000-1,100 because of the seasonal factor. 
Specialists at 3P say that the average price is RUR 1,400-1,500 per day, and that of larger volume boxcars amounts even to RUR 2,000. And this is comparable to pre-crisis prices. In the most unfavourable period, prices dropped to RUR 900 and as much as RUR 600. In the words of operators, the wagons remained profitable even at that time.
Since the current price is rather high, experts believe that it will hardly continue to increase. At the same time, consignors’ demand for boxcars is growing because of the significant rise in prices for renting universal rolling stock. The volume of the covered wagons park practically did not change in recent years; no new large companies owning this type of rolling stock appeared, consequently, there may be a shortage of such railcars, and this can provoke price growth.
By Elena Ushkova
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Who Built and Who Purchased
The Russian park of covered wagons amounts to approximately 75,500 units at the moment. Most of them (54.9% or 41,400 units) belong to Russian Railways, but in the near future 26,500 wagons will be given to Freight Two. Thus, the share of the latter will amount to 35.1%. RZD will keep 19.7% of this type of rolling stock to fulfill the state’s needs. The market share of Freight One is 21% (15,900 boxcars). Other operators and leasing companies manage about 24% of the total park.
In Russia and the CIS, only five plants can make covered wagons (see the table), but just three of them produced rolling stock of this type in 2010. The share of Altaivagon in the market amounted to 70.7%, that of Armavir Heavy Machine Building Plant (AZTM) was 25.1%, and that of the DP Casting and Mechanical Plant (Uzbekistan) was 4.2%.
At the same time, Kazakhstan Wagon Building Company plans to launch a second production complex in Pavlodar (Kazakhstan). Its planned capacity is 2,000 gondola cars and 500 covered railcars. Moreover, TMH Vagonostroyenie (Transmashholding) and Slovak company Tatravagonka signed an agreement on the launch of a joint venture to produce modern rolling stock, including universal covered railcars.
Last year, the largest buyers in the sector were Pipe Transport Company (incorporated into Rail Garant group of companies), Freight One and firm Transgarant. The rolling stock of this type was also purchased for the inventory parks of the Uzbek Railways, Kazakhstan Temir Zholy and the railways of other CIS countries. 
In 2010, Rail Garant group of companies purchased 1,500 new boxcars with a total volume of 138 cubic metres; thus, its rolling stock park of this type amounted to 2,000 units. Now, Rail Garant, in cooperation with Altaivagon, is participating in the development of a new model of boxcar with a larger cubic volume and carrying capacity. 
Production of the model will start in the third quarter of 2011. As a result of this cooperation, at least 500 railcars of the new model will be added to the park of Rail Garant before the end of this year. ‘We also may buy covered rolling stock on the second-hand market,’ emphasises Nikolay Falin, a representative of Rail Garant.
Last year, Freight One purchased 546 boxcars made by the Armavir Heavy Machine Building Plant. The company chose a model with a larger body volume (up to 158 cubic metres of cargo; the volume of the basic model is 138 cubic metres). ‘We consider that our priority is to use a cargo wagon efficiently. Adding wagons with a larger capacity to our rolling stock park will increase the competitiveness of railway transportation,’ say specialists at Freight One. The company’s 2011 investment programme envisages the purchase of about 500 boxcars, i.e. enough to renew the park.
Transgarant bought 100 new covered railcars last year. The volume of the wagon’s body is 138 cubic metres (model 11-280 produced by Altaivagon). Nowadays, the company manages 1,244 boxcars.
3P owns 1,172 boxcars. Of that, 25 units were purchased from the AZTM in 2010. The volume of the wagon is 158 cubic metres. ‘We do our best to keep good long-term relations with all rolling stock producers. Sometimes, there appear situations when we stop working with a company because of failure to agree on a price and other terms, but we usually recommence negotiations later,’ tells Dmitry Nikolaev, Head of Transport Administration of 3P.
There were interesting changes in the park of the Baltika Breweries. According to the rating made by IA INFOLine, the number of boxcars owned by the company fell by more than 80% between 2007 and 2009 (from 1,607 to 301). Sergey Babinsky, Director of Logistics at Baltika Breweries, explained that, during this period, universal covered wagons were re-equipped to become thermally-insulated railcars. The company now has 1,303 such units. 
Another 301 boxcars are still used for transportation of packing and raw materials, etc. Thus, the number of railcars did not change, they were simply given a different name. Last time, Baltika purchased 100 covered railcars in 2007. The seller was AZTM. ‘We have no objections to quality and guarantee maintenance. We do not plan to buy boxcars in 2011,’ said Mr Babinsky.

Prices Are Growing, But the Quality Is Questionable
Operators’ requirements regarding the quality of rolling stock are increasing, because the condition of railcars is one of the most important competitive advantages of a company providing transportation services. ‘The market demands new technical solutions, so we’d like wagon builders to react faster and make the necessary changes to wagon construction,’ says Nikolay Koshelev, Director of the Wagon Facilities Department at firm Transgarant. ‘Also, the cost of transportation depends on the quality of rolling stock. Can we speak about stable prices, if an operator has to repair wagons off-schedule?’
Transgarant is going to enlarge its boxcar park by 20%. ‘Our plans depend on two major factors – the price of a wagon and its quality. The situation becomes rather complicated because the cost of a wagon is growing, but quality is falling, and there is an increase in the number of current uncoupling repairs covered by the warranty. This increases an operator’s expenditure on park maintenance and cuts revenue, since the rolling stock idles when it is being repaired,’ he emphasised.
In turn, Mr Nikolaev notes that there are problems with the quality of rolling stock produced by almost all plants. ‘The quality of casting is worse in comparison with the 1990s and the beginning of this century. Use of wagons produced in 2006-2007 was put on hold at times because of casting defects. Rolling stock owners had to spend more money on off-schedule repairs to check problem areas and details, and they also suffered enormous losses because the railcars were taken out of the transportation process,’ recognises the expert.
In the pre-crisis period, the price of boxcars grew practically every month. They increased from RUR 1.8 million in the middle of 2007 to RUR 2.6 to 2.85 million in September 2008.
Thus, growth exceeded 50%. In November 2008, after an abrupt reduction in transportation volumes, and consequently in the need for rolling stock, the price of a covered wagon fell to RUR 2.3 million. And in 2009, it reduced to RUR 1.2 to 1.33 million. Some operators said that it was possible to agree an even lower price.
In October 2009, wagon prices started to grow. A boxcar sold for RUR 1.4-1.5 million in December. And a year later, the price amounted to RUR 2.3 million, i.e. the increase was more than 60%. ‘This happened primarily due to the recovery of the wagon building sector and demand,’ notes Mr Falin.
Specialists at 3P told that the company purchased covered wagons from the AZTM for $85,000 (approximately RUR 2.6 million) in 2010. Moreover, almost all experts think that prices will continue to increase in 2011. ‘It seems to me that there will be significant demand for covered wagons with a larger cubic volume, because there are few of them on the network,’ considers Mr Nikolaev.

Overestimated Prices
The range of industrial enterprises using boxcars to transport their products is large enough. For example, over 500 companies use rolling stock owned by Freight One. Of that, 80% are loyal clients of the operator. Monthly freight shipment varies from 
1 wagon to 1,000 railcars. 
Freight One has long-term partner relations with construction enterprises, including cement plants Serebryakovcement, Novoroscement, and Topkinsky Cement, sugar and flour mills, bakeries, chemical and petrochemical enterprises, etc. Among the strategic partners of Transgarant in this segment are Mondy Business Paper (Syktyvkar), Nurminen Logistics, Yuzhuralnickel, Nizhnekamskneftekhim, etc.
Covered wagons are popular among consignors due to the advantages of transportation in closed rolling stock – cargo safety, better protection against environmental and climate factors, and the option of transporting small lots. Also, a boxcar can be used in winter to carry cargo requiring low temperatures. 
Despite a huge variety of ways to use this type of rolling stock, demand for it is not very large. Mr Falin highlighted the fact that in 2010 the share of covered wagons in the total volume of railcars produced in Russia and the CIS varied from 1% to 5% every month. Consequently, the railcar manufacturing capacities were engaged in production of other types of rolling stock.
The moderate interest in boxcar exploitation is explained by the specific features of loading and unloading work. To use such wagons, a company should have developed infrastructure (warehouses, docks, freight sheds, etc.), special mobile loading facilities, insurance, forwarding, security and other conditions necessary for transportation of valuable loads.
Nonetheless, there is competition in this sector, which depends on the balance of demand and supply in the regional transport markets. In the European part of Russia, where the industry is developed and the flows of different transport modes cross, the competition is rather tough and it is defined by the owner. 
There are fewer industrial enterprises in the regions, so it is cargo owners who dictate terms. They run down prices for renting rolling stock, and wagon owners interested in dispatching their loaded railcars have to agree on not very profitable terms. There is price dumping too.
According to Freight One, the market price for renting a boxcar with a volume of 120 cubic metres is RUR 900-1,000 and that of covered wagons with a body volume of 138 and 158 cubic metres is RUR 1,300 (in early 2010, the price was 800 roubles). However, at the beginning of winter, the latter reduced to RUR 1,000-1,100 because of the seasonal factor. 
Specialists at 3P say that the average price is RUR 1,400-1,500 per day, and that of larger volume boxcars amounts even to RUR 2,000. And this is comparable to pre-crisis prices. In the most unfavourable period, prices dropped to RUR 900 and as much as RUR 600. In the words of operators, the wagons remained profitable even at that time.
Since the current price is rather high, experts believe that it will hardly continue to increase. At the same time, consignors’ demand for boxcars is growing because of the significant rise in prices for renting universal rolling stock. The volume of the covered wagons park practically did not change in recent years; no new large companies owning this type of rolling stock appeared, consequently, there may be a shortage of such railcars, and this can provoke price growth.
By Elena Ushkova
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    [DETAIL_TEXT] => 
Who Built and Who Purchased
The Russian park of covered wagons amounts to approximately 75,500 units at the moment. Most of them (54.9% or 41,400 units) belong to Russian Railways, but in the near future 26,500 wagons will be given to Freight Two. Thus, the share of the latter will amount to 35.1%. RZD will keep 19.7% of this type of rolling stock to fulfill the state’s needs. The market share of Freight One is 21% (15,900 boxcars). Other operators and leasing companies manage about 24% of the total park.
In Russia and the CIS, only five plants can make covered wagons (see the table), but just three of them produced rolling stock of this type in 2010. The share of Altaivagon in the market amounted to 70.7%, that of Armavir Heavy Machine Building Plant (AZTM) was 25.1%, and that of the DP Casting and Mechanical Plant (Uzbekistan) was 4.2%.
At the same time, Kazakhstan Wagon Building Company plans to launch a second production complex in Pavlodar (Kazakhstan). Its planned capacity is 2,000 gondola cars and 500 covered railcars. Moreover, TMH Vagonostroyenie (Transmashholding) and Slovak company Tatravagonka signed an agreement on the launch of a joint venture to produce modern rolling stock, including universal covered railcars.
Last year, the largest buyers in the sector were Pipe Transport Company (incorporated into Rail Garant group of companies), Freight One and firm Transgarant. The rolling stock of this type was also purchased for the inventory parks of the Uzbek Railways, Kazakhstan Temir Zholy and the railways of other CIS countries. 
In 2010, Rail Garant group of companies purchased 1,500 new boxcars with a total volume of 138 cubic metres; thus, its rolling stock park of this type amounted to 2,000 units. Now, Rail Garant, in cooperation with Altaivagon, is participating in the development of a new model of boxcar with a larger cubic volume and carrying capacity. 
Production of the model will start in the third quarter of 2011. As a result of this cooperation, at least 500 railcars of the new model will be added to the park of Rail Garant before the end of this year. ‘We also may buy covered rolling stock on the second-hand market,’ emphasises Nikolay Falin, a representative of Rail Garant.
Last year, Freight One purchased 546 boxcars made by the Armavir Heavy Machine Building Plant. The company chose a model with a larger body volume (up to 158 cubic metres of cargo; the volume of the basic model is 138 cubic metres). ‘We consider that our priority is to use a cargo wagon efficiently. Adding wagons with a larger capacity to our rolling stock park will increase the competitiveness of railway transportation,’ say specialists at Freight One. The company’s 2011 investment programme envisages the purchase of about 500 boxcars, i.e. enough to renew the park.
Transgarant bought 100 new covered railcars last year. The volume of the wagon’s body is 138 cubic metres (model 11-280 produced by Altaivagon). Nowadays, the company manages 1,244 boxcars.
3P owns 1,172 boxcars. Of that, 25 units were purchased from the AZTM in 2010. The volume of the wagon is 158 cubic metres. ‘We do our best to keep good long-term relations with all rolling stock producers. Sometimes, there appear situations when we stop working with a company because of failure to agree on a price and other terms, but we usually recommence negotiations later,’ tells Dmitry Nikolaev, Head of Transport Administration of 3P.
There were interesting changes in the park of the Baltika Breweries. According to the rating made by IA INFOLine, the number of boxcars owned by the company fell by more than 80% between 2007 and 2009 (from 1,607 to 301). Sergey Babinsky, Director of Logistics at Baltika Breweries, explained that, during this period, universal covered wagons were re-equipped to become thermally-insulated railcars. The company now has 1,303 such units. 
Another 301 boxcars are still used for transportation of packing and raw materials, etc. Thus, the number of railcars did not change, they were simply given a different name. Last time, Baltika purchased 100 covered railcars in 2007. The seller was AZTM. ‘We have no objections to quality and guarantee maintenance. We do not plan to buy boxcars in 2011,’ said Mr Babinsky.

Prices Are Growing, But the Quality Is Questionable
Operators’ requirements regarding the quality of rolling stock are increasing, because the condition of railcars is one of the most important competitive advantages of a company providing transportation services. ‘The market demands new technical solutions, so we’d like wagon builders to react faster and make the necessary changes to wagon construction,’ says Nikolay Koshelev, Director of the Wagon Facilities Department at firm Transgarant. ‘Also, the cost of transportation depends on the quality of rolling stock. Can we speak about stable prices, if an operator has to repair wagons off-schedule?’
Transgarant is going to enlarge its boxcar park by 20%. ‘Our plans depend on two major factors – the price of a wagon and its quality. The situation becomes rather complicated because the cost of a wagon is growing, but quality is falling, and there is an increase in the number of current uncoupling repairs covered by the warranty. This increases an operator’s expenditure on park maintenance and cuts revenue, since the rolling stock idles when it is being repaired,’ he emphasised.
In turn, Mr Nikolaev notes that there are problems with the quality of rolling stock produced by almost all plants. ‘The quality of casting is worse in comparison with the 1990s and the beginning of this century. Use of wagons produced in 2006-2007 was put on hold at times because of casting defects. Rolling stock owners had to spend more money on off-schedule repairs to check problem areas and details, and they also suffered enormous losses because the railcars were taken out of the transportation process,’ recognises the expert.
In the pre-crisis period, the price of boxcars grew practically every month. They increased from RUR 1.8 million in the middle of 2007 to RUR 2.6 to 2.85 million in September 2008.
Thus, growth exceeded 50%. In November 2008, after an abrupt reduction in transportation volumes, and consequently in the need for rolling stock, the price of a covered wagon fell to RUR 2.3 million. And in 2009, it reduced to RUR 1.2 to 1.33 million. Some operators said that it was possible to agree an even lower price.
In October 2009, wagon prices started to grow. A boxcar sold for RUR 1.4-1.5 million in December. And a year later, the price amounted to RUR 2.3 million, i.e. the increase was more than 60%. ‘This happened primarily due to the recovery of the wagon building sector and demand,’ notes Mr Falin.
Specialists at 3P told that the company purchased covered wagons from the AZTM for $85,000 (approximately RUR 2.6 million) in 2010. Moreover, almost all experts think that prices will continue to increase in 2011. ‘It seems to me that there will be significant demand for covered wagons with a larger cubic volume, because there are few of them on the network,’ considers Mr Nikolaev.

Overestimated Prices
The range of industrial enterprises using boxcars to transport their products is large enough. For example, over 500 companies use rolling stock owned by Freight One. Of that, 80% are loyal clients of the operator. Monthly freight shipment varies from 
1 wagon to 1,000 railcars. 
Freight One has long-term partner relations with construction enterprises, including cement plants Serebryakovcement, Novoroscement, and Topkinsky Cement, sugar and flour mills, bakeries, chemical and petrochemical enterprises, etc. Among the strategic partners of Transgarant in this segment are Mondy Business Paper (Syktyvkar), Nurminen Logistics, Yuzhuralnickel, Nizhnekamskneftekhim, etc.
Covered wagons are popular among consignors due to the advantages of transportation in closed rolling stock – cargo safety, better protection against environmental and climate factors, and the option of transporting small lots. Also, a boxcar can be used in winter to carry cargo requiring low temperatures. 
Despite a huge variety of ways to use this type of rolling stock, demand for it is not very large. Mr Falin highlighted the fact that in 2010 the share of covered wagons in the total volume of railcars produced in Russia and the CIS varied from 1% to 5% every month. Consequently, the railcar manufacturing capacities were engaged in production of other types of rolling stock.
The moderate interest in boxcar exploitation is explained by the specific features of loading and unloading work. To use such wagons, a company should have developed infrastructure (warehouses, docks, freight sheds, etc.), special mobile loading facilities, insurance, forwarding, security and other conditions necessary for transportation of valuable loads.
Nonetheless, there is competition in this sector, which depends on the balance of demand and supply in the regional transport markets. In the European part of Russia, where the industry is developed and the flows of different transport modes cross, the competition is rather tough and it is defined by the owner. 
There are fewer industrial enterprises in the regions, so it is cargo owners who dictate terms. They run down prices for renting rolling stock, and wagon owners interested in dispatching their loaded railcars have to agree on not very profitable terms. There is price dumping too.
According to Freight One, the market price for renting a boxcar with a volume of 120 cubic metres is RUR 900-1,000 and that of covered wagons with a body volume of 138 and 158 cubic metres is RUR 1,300 (in early 2010, the price was 800 roubles). However, at the beginning of winter, the latter reduced to RUR 1,000-1,100 because of the seasonal factor. 
Specialists at 3P say that the average price is RUR 1,400-1,500 per day, and that of larger volume boxcars amounts even to RUR 2,000. And this is comparable to pre-crisis prices. In the most unfavourable period, prices dropped to RUR 900 and as much as RUR 600. In the words of operators, the wagons remained profitable even at that time.
Since the current price is rather high, experts believe that it will hardly continue to increase. At the same time, consignors’ demand for boxcars is growing because of the significant rise in prices for renting universal rolling stock. The volume of the covered wagons park practically did not change in recent years; no new large companies owning this type of rolling stock appeared, consequently, there may be a shortage of such railcars, and this can provoke price growth.
By Elena Ushkova
    [~DETAIL_TEXT] => 
Who Built and Who Purchased
The Russian park of covered wagons amounts to approximately 75,500 units at the moment. Most of them (54.9% or 41,400 units) belong to Russian Railways, but in the near future 26,500 wagons will be given to Freight Two. Thus, the share of the latter will amount to 35.1%. RZD will keep 19.7% of this type of rolling stock to fulfill the state’s needs. The market share of Freight One is 21% (15,900 boxcars). Other operators and leasing companies manage about 24% of the total park.
In Russia and the CIS, only five plants can make covered wagons (see the table), but just three of them produced rolling stock of this type in 2010. The share of Altaivagon in the market amounted to 70.7%, that of Armavir Heavy Machine Building Plant (AZTM) was 25.1%, and that of the DP Casting and Mechanical Plant (Uzbekistan) was 4.2%.
At the same time, Kazakhstan Wagon Building Company plans to launch a second production complex in Pavlodar (Kazakhstan). Its planned capacity is 2,000 gondola cars and 500 covered railcars. Moreover, TMH Vagonostroyenie (Transmashholding) and Slovak company Tatravagonka signed an agreement on the launch of a joint venture to produce modern rolling stock, including universal covered railcars.
Last year, the largest buyers in the sector were Pipe Transport Company (incorporated into Rail Garant group of companies), Freight One and firm Transgarant. The rolling stock of this type was also purchased for the inventory parks of the Uzbek Railways, Kazakhstan Temir Zholy and the railways of other CIS countries. 
In 2010, Rail Garant group of companies purchased 1,500 new boxcars with a total volume of 138 cubic metres; thus, its rolling stock park of this type amounted to 2,000 units. Now, Rail Garant, in cooperation with Altaivagon, is participating in the development of a new model of boxcar with a larger cubic volume and carrying capacity. 
Production of the model will start in the third quarter of 2011. As a result of this cooperation, at least 500 railcars of the new model will be added to the park of Rail Garant before the end of this year. ‘We also may buy covered rolling stock on the second-hand market,’ emphasises Nikolay Falin, a representative of Rail Garant.
Last year, Freight One purchased 546 boxcars made by the Armavir Heavy Machine Building Plant. The company chose a model with a larger body volume (up to 158 cubic metres of cargo; the volume of the basic model is 138 cubic metres). ‘We consider that our priority is to use a cargo wagon efficiently. Adding wagons with a larger capacity to our rolling stock park will increase the competitiveness of railway transportation,’ say specialists at Freight One. The company’s 2011 investment programme envisages the purchase of about 500 boxcars, i.e. enough to renew the park.
Transgarant bought 100 new covered railcars last year. The volume of the wagon’s body is 138 cubic metres (model 11-280 produced by Altaivagon). Nowadays, the company manages 1,244 boxcars.
3P owns 1,172 boxcars. Of that, 25 units were purchased from the AZTM in 2010. The volume of the wagon is 158 cubic metres. ‘We do our best to keep good long-term relations with all rolling stock producers. Sometimes, there appear situations when we stop working with a company because of failure to agree on a price and other terms, but we usually recommence negotiations later,’ tells Dmitry Nikolaev, Head of Transport Administration of 3P.
There were interesting changes in the park of the Baltika Breweries. According to the rating made by IA INFOLine, the number of boxcars owned by the company fell by more than 80% between 2007 and 2009 (from 1,607 to 301). Sergey Babinsky, Director of Logistics at Baltika Breweries, explained that, during this period, universal covered wagons were re-equipped to become thermally-insulated railcars. The company now has 1,303 such units. 
Another 301 boxcars are still used for transportation of packing and raw materials, etc. Thus, the number of railcars did not change, they were simply given a different name. Last time, Baltika purchased 100 covered railcars in 2007. The seller was AZTM. ‘We have no objections to quality and guarantee maintenance. We do not plan to buy boxcars in 2011,’ said Mr Babinsky.

Prices Are Growing, But the Quality Is Questionable
Operators’ requirements regarding the quality of rolling stock are increasing, because the condition of railcars is one of the most important competitive advantages of a company providing transportation services. ‘The market demands new technical solutions, so we’d like wagon builders to react faster and make the necessary changes to wagon construction,’ says Nikolay Koshelev, Director of the Wagon Facilities Department at firm Transgarant. ‘Also, the cost of transportation depends on the quality of rolling stock. Can we speak about stable prices, if an operator has to repair wagons off-schedule?’
Transgarant is going to enlarge its boxcar park by 20%. ‘Our plans depend on two major factors – the price of a wagon and its quality. The situation becomes rather complicated because the cost of a wagon is growing, but quality is falling, and there is an increase in the number of current uncoupling repairs covered by the warranty. This increases an operator’s expenditure on park maintenance and cuts revenue, since the rolling stock idles when it is being repaired,’ he emphasised.
In turn, Mr Nikolaev notes that there are problems with the quality of rolling stock produced by almost all plants. ‘The quality of casting is worse in comparison with the 1990s and the beginning of this century. Use of wagons produced in 2006-2007 was put on hold at times because of casting defects. Rolling stock owners had to spend more money on off-schedule repairs to check problem areas and details, and they also suffered enormous losses because the railcars were taken out of the transportation process,’ recognises the expert.
In the pre-crisis period, the price of boxcars grew practically every month. They increased from RUR 1.8 million in the middle of 2007 to RUR 2.6 to 2.85 million in September 2008.
Thus, growth exceeded 50%. In November 2008, after an abrupt reduction in transportation volumes, and consequently in the need for rolling stock, the price of a covered wagon fell to RUR 2.3 million. And in 2009, it reduced to RUR 1.2 to 1.33 million. Some operators said that it was possible to agree an even lower price.
In October 2009, wagon prices started to grow. A boxcar sold for RUR 1.4-1.5 million in December. And a year later, the price amounted to RUR 2.3 million, i.e. the increase was more than 60%. ‘This happened primarily due to the recovery of the wagon building sector and demand,’ notes Mr Falin.
Specialists at 3P told that the company purchased covered wagons from the AZTM for $85,000 (approximately RUR 2.6 million) in 2010. Moreover, almost all experts think that prices will continue to increase in 2011. ‘It seems to me that there will be significant demand for covered wagons with a larger cubic volume, because there are few of them on the network,’ considers Mr Nikolaev.

Overestimated Prices
The range of industrial enterprises using boxcars to transport their products is large enough. For example, over 500 companies use rolling stock owned by Freight One. Of that, 80% are loyal clients of the operator. Monthly freight shipment varies from 
1 wagon to 1,000 railcars. 
Freight One has long-term partner relations with construction enterprises, including cement plants Serebryakovcement, Novoroscement, and Topkinsky Cement, sugar and flour mills, bakeries, chemical and petrochemical enterprises, etc. Among the strategic partners of Transgarant in this segment are Mondy Business Paper (Syktyvkar), Nurminen Logistics, Yuzhuralnickel, Nizhnekamskneftekhim, etc.
Covered wagons are popular among consignors due to the advantages of transportation in closed rolling stock – cargo safety, better protection against environmental and climate factors, and the option of transporting small lots. Also, a boxcar can be used in winter to carry cargo requiring low temperatures. 
Despite a huge variety of ways to use this type of rolling stock, demand for it is not very large. Mr Falin highlighted the fact that in 2010 the share of covered wagons in the total volume of railcars produced in Russia and the CIS varied from 1% to 5% every month. Consequently, the railcar manufacturing capacities were engaged in production of other types of rolling stock.
The moderate interest in boxcar exploitation is explained by the specific features of loading and unloading work. To use such wagons, a company should have developed infrastructure (warehouses, docks, freight sheds, etc.), special mobile loading facilities, insurance, forwarding, security and other conditions necessary for transportation of valuable loads.
Nonetheless, there is competition in this sector, which depends on the balance of demand and supply in the regional transport markets. In the European part of Russia, where the industry is developed and the flows of different transport modes cross, the competition is rather tough and it is defined by the owner. 
There are fewer industrial enterprises in the regions, so it is cargo owners who dictate terms. They run down prices for renting rolling stock, and wagon owners interested in dispatching their loaded railcars have to agree on not very profitable terms. There is price dumping too.
According to Freight One, the market price for renting a boxcar with a volume of 120 cubic metres is RUR 900-1,000 and that of covered wagons with a body volume of 138 and 158 cubic metres is RUR 1,300 (in early 2010, the price was 800 roubles). However, at the beginning of winter, the latter reduced to RUR 1,000-1,100 because of the seasonal factor. 
Specialists at 3P say that the average price is RUR 1,400-1,500 per day, and that of larger volume boxcars amounts even to RUR 2,000. And this is comparable to pre-crisis prices. In the most unfavourable period, prices dropped to RUR 900 and as much as RUR 600. In the words of operators, the wagons remained profitable even at that time.
Since the current price is rather high, experts believe that it will hardly continue to increase. At the same time, consignors’ demand for boxcars is growing because of the significant rise in prices for renting universal rolling stock. The volume of the covered wagons park practically did not change in recent years; no new large companies owning this type of rolling stock appeared, consequently, there may be a shortage of such railcars, and this can provoke price growth.
By Elena Ushkova
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‘I Need To Deliver Something To Norilsk’
– Mr Marley, what’s the core of your company’s business in Russia? 

– Both in Russia and in the rest of CIS, we operate and provide Time Definite delivery services for our customers and we’ve been offering these services now in Russia for the past 27 years. Our core products are express time definite services. If you give us a shipment today we will give you a specified time for delivery (in some cases tomorrow) in many locations, in either this country or another country, as either a domestic delivery or an international delivery. And we also offer a guaranteed money-back service for our 9:00, 10:30 and 12:00 services. It’s a service which we are very pleased to offer. It communicates what we believe is the strength of our network, the fact that over the years we’ve built up a network in which we have sufficient confidence to be able to give a money-back guarantee to our customers. We believe we have the right network here in place and are very proud of it. 
Our work is about getting something to the right place at the right time as quickly as possible, and this is what our customers from different industries ask for. We also offer some tailored services to some of our customers, particularly in automotive and hi-tech. An example in automotive would be the fact that we have customers for whom we stock and store all of the registration documents for their vehicles, and supply them to the dealer at the right time. That allows a customer to be able to purchase a car today and also to be able to get documentation today. In previous years, a customer would have to wait some significant time while the documentation was delivered to them. 
It’s all about providing customers with the best possible service and if we can do that for our customers, it will link us very strongly to them. It means that the relationship is longer-lasting.

– What was behind the decision for your company to start doing business here? 

– DHL is a network organization and to be a network organization you have to have strong presence in all parts of the network around the world. And of course it was very important for us to have a presence in Russia. Also, nobody could ever deny that the potential has always been there in terms of growth in Russia. That’s been borne out by the last 27 years. If you look at our development over the time that we’ve been here, it has been fantastic, spectacular.
The first time I came to Russia would have been in 1999, just after the first financial crisis. Essentially from that point onwards up until the recent financial crisis we’ve seen steady and in some cases staggering strong double-digit growth year-on-year. There was an acceleration in terms of growth following the first financial crisis in 1998 – 1999. 
Behind our constant growth was a combination of our customer demands and organic market growth. You have a customer who says to you: ‘I need to deliver something to Norilsk’ and if somebody calls you 50 times a day and asks for the same thing you realize that it’s time to open something in Norilsk. It’s really driven by the needs of our customers. And it’s quite specific in Russia, because you have many areas particularly to do with mining and excavation, for example, where these are not necessarily heavily populated areas, but they are areas in which there is a need for a high speed and good reliable service for the maintenance of equipment and machinery which is used for mining or engineering– that also is a part of our work. 

The Moscow Morning. Minus 25 Degrees.
– What are the main features which differ doing business in Russia from doing business in other countries? I mean all imaginable matters -- clients, regulation, and even the weather.

– All of those things (smiling) in different quantities on different days. But those are the things that you have to cope with regularly, and frankly those are the things that make it interesting. Because if you are in an environment where things can change quite quickly, that’s far more exciting than when you know exactly what is going to happen every day. So you find that you develop better in an environment like this because you’re faced with having to deal with things that you wouldn’t normally have to deal with. That’s certainly appealing to me.
In terms of growing a business in Russia it is pretty similar to growing a business elsewhere. You know, there is a lot of bureaucracy in Russia but if you get your people to work out the documentation right, things tend to happen the same way they would anywhere else. Sometimes it just takes a little longer.
If you look back over the whole 27 years of the existence of this organization, its place in the DHL global network is very secure, and I think that what our Russian business does in terms of the network is make the delivery process look easier than it actually is. So from a network perspective people send a shipment to Russia and they are not fully aware of what that can mean in terms of weather or distance or some of the other difficulties that we face sometimes. We make it look seamless to the network and I think that’s an enormous achievement. 
I’m always happy when people come and visit us in Russia because they get a small understanding of the amount of effort required to actually perform at a very high level. If you look at our performance in comparison to other parts of our network you’ll see that we perform extremely well – operationally and in every other way.
One of the best ways of giving people a flavour of what it’s like to work in DHL Express Russia is to allow people who come to Russia to go and have a trip with one of our couriers in Moscow. If you give them an opportunity to go on a drive with a courier at 8-00 AM in a very-very cold – minus 25 degrees - Moscow morning and see how they would feel by 5 PM, and that will give them some indication of how difficult it could be to operate with the traffic, the weather and just the general congestion. That’s the biggest thing – the fact that we perform as we do.

– What’s your opinion – is the competition between logistics companies in Russia tough? Is there any special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is the origin of a company irrelevant? 

– I think there is competition between all logistics companies and I welcome it because it helps to improve everybody’s quality of service. If you go back 25-27 years, there were very few operators in this country and there was very little pressure on them to improve the quality of their service. In any commercial environment, the more competition you put into it the better quality goes to the customer. And ultimately, everybody wins in that situation. The customer gets a far better quality product. We and our competitors in Russia are all looking for the same thing – to satisfy customers’ requirements. That’s a competitive market and that’s how it should be. The more competitors are coming to the market, the better.

– What’s your strategy of developing DHL Express business in Russia? 

– To continue to provide the right products at the right time to our customers, to always satisfy what they need in terms of our services. And to be innovative in our approach – it’s not enough just to assume that because your customer service levels are good that’s enough. You have to constantly innovate, you have to look internally at what you are doing with your business and ensure that wherever possible you are improving. Because that’s what will give you a competitive edge over your competitors.
We have to be in the right place for our customers at the right time. Having been here for 27 years we’ve got our network in place where it needs to be. What we have to do with that network is to continue to improve the quality of service that we provide. Essentially, if you look at the network that we operate, both inside Russia and out of Russia, it’s there for a reason – because we believe it to be an optimum network. If we see a need to open anywhere that has value for our customers, then of course we would do that.
A good example of that would be in Kaluga (city in western Russia, located on the Oka River 150 km southwest of Moscow, population over 334,000), where, as industry began to develop, we saw the need to open an entity, making sure that we were better able to service our customers. We’ve found with our customers in that region that we’ve got a partnership now which is going from strength to strength. We will open where we need to open if necessary.

Infrastructure Is Constantly Improving 
 – What is your estimation of the quality of transport services in Russia compared to Europe?

– There are good services and there are bad services in terms of quality. I genuinely believe that the reason why people buy our products is because they can trust what we do in on-time delivery, security and transparency for the customer in understanding where something is at any given time with track and trace. So those services, when operated properly, differentiate you from the competition. In Russia you have people who are offering good services, and people who are offering bad services and that’s true in any country. 
The logistics market in Russia has certainly developed in the last 20 years quite significantly - through technology, through competition, through the needs of the market. For example, when I first came here in 1999, automotive manufacturers were relatively small and their dealer networks throughout Russia were also fairly small. So it was more important for them to move big volumes of spare parts from the centre here in Russia out. That’s now changed because the demand for vehicles throughout Russia has grown so significantly, so those same companies now have regional warehouses for that region’s spare parts. So the whole tempo of logistics has changed: where before, everything was express overnight, now you will also have some customers who require consolidated deliveries over a specific period of time. That’s how the market’s changed.
In Europe there is something else that needs to be taken into account, for example within the EU it’s easy in most cases to get from A to В overnight by road, but it’s not necessarily the case in Russia, because you’ve got much greater distances, issues like weather and the road infrastructure. You’re constantly looking at differences between road and air; the challenge faced by many customers is: ‘Do I hold a central parts stock or do I put it out to the regions in an expensive property?’ The market has matured over the years to the point where customers have much bigger infrastructures of their own in the regions now. It’s constantly improving.

– It’s a commonplace that transport infrastructure is developed poorly in Russia. What are the weakest fields, where are the most difficult bottlenecks? 

– Customs can still be a bottleneck, both in terms of import and export. You know, the whole system is still very often focused on policing rather than on trade enablement and it limits opportunities, certainly in terms of export from Russia and to a certain extent import. However, you do need to take into account the heightened issue of global security which dictates the need for more stringent checks. We spend a great deal of time in consultation with customs to try to find ways to speed up the clearance process and we are making progress. 
The main concern with Russian customs is paperwork and documentation. As I said earlier, the perception of Russian customs is that they are a police force. Whilst that perception stays that way it will always be difficult to import into this country. You must have the right documentation, show the right value and everything else. And the only way to deal with that in a legal and acceptable way for customers is to ensure that you have sufficient resource in place. If you do that then you could deliver acceptable levels of clearance. There is no mystery to it – if you send something in with bad documentation it will be delayed.
Dialogue is always a good thing, even if sometimes it is not that easy for all of us. We are not in an area where people can plan sufficiently to make sure all is right for their business and operations and often it’s a learning curve that everybody has to follow.
We as DHL and as a member of the Association of Express Carriers have very strong relationships with both federal state and local customs, which involve regular meetings where we discuss ways of making life easier, constantly talking and lobbying to ensure that we change things for the better.
Within the country there are areas where the road infrastructure needs to be significantly improved, though it’s improving in many places. Within Moscow for instance it is becoming more and more difficult with the traffic, there needs to be some movement towards a much stronger traffic management system. If you look at the road structure within Moscow it is actually very good – you have the rings around Moscow. The problem in Moscow from my perspective is actually the management of traffic. For example, most of the problems arise because as you drive off from one of the main roads to a side road, there is no control of the parking on those roads. Consequently, lanes become narrower and that’s what often causes the problems. Remarkably in Russia – I am amazed – there are no parking meters; it’s a great source of revenue in most countries and yet they haven’t explored this in Russia.

– If we talk about the kind of cargo you are dealing with, do you see any new trends here? I mean, some kind of cargo becomes more popular and another one is decreasing?

– As with everybody else, we are seeing growth in the B2C segment, which is mainly driven by the Internet. The choice which most people want is now coming heavily from the Internet. Traditionally you still see our services being used for automotive and hi-tech, healthcare, even fashion and textiles – these industries are big users of our products. But without question the Internet is changing quickly the market in which we work – we’ve spoken to a lot of customers in the last six to twelve months who are heavily into Internet shopping and looking for quality services. It’s a new challenge because it means that the customer requirements are different to those when you are doing B2B because now you are looking also at servicing residential addresses. Perhaps you will be servicing residential addresses in the evening because people are working, collecting cash, providing extra services – those are the services of the future.

You Can Achieve Anything With Great Team
– And, of course, the crisis. Has it influenced the sphere you are working in? And how? Does it bring any threats to Russian logistics?

– I think the financial crisis was a very good wake-up call in Russia for people’s understanding of how to operate their business, particularly with regard to cost control and cost management. So, when you came from a business which was growing in high double digits to a business which wasn’t growing at all it makes you understand very clearly about what your costs are and what drives your business. It was a very good learning process for a lot of people and a lot of companies. The positive side to that is that we are seeing stronger companies emerging from the financial crisis.
I personally understood that what you need is to go with your gut feeling as quickly as possible. We reacted very quickly here in Russia, which sometimes wasn’t that easy – you are going from this high level of growth to a sudden drop, and you didn’t know how long you could wait to see what was going to happen. In the very early days of the financial crisis, we took a decision as a management team to deal with it right away, and it proved to be the right choice.

– Do the coming Olympic Games in Sochi-2014 provide opportunities for logistics companies? Are you involved somehow in the ‘Olympic business’? 

– I think the most important thing regarding Sochi is that it will give Russia the opportunity to showcase improvements in infrastructure, how things have changed. If you look at China for example you’ll see that the Olympic Games gave people a different perspective about what China can do. Without question, as you are watching the Olympic Games it gives you a better understanding of the culture of the country. To be able to host the Olympic Games is a great opportunity for Russia – and I have no doubt that Russia will make it great.

– When you hire Russian specialists, are there any difficulties in terms of cultural communication?

– I’ve been working overseas for some 32-33 years and working in Russia has been most pleasing simply because once you are able to create an environment in which people realize, that if they work hard, if they are safe and they’re in a good environment, everything will fly. People strive to their best performance in Russia and that is something that I’ve not seen to the same extent in any other country I’ve ever worked in. It is probably why I’m still here – if you have a great team in Russia you can achieve anything. If you really want to establish your business here, make sure that you look after your people, make sure that your people know what is it that you are trying to achieve and that they feel part of it and they know that there is opportunity for them.
Also one of the biggest surprises I found when I came here was how big hearted people are, how they care. It’s really fantastic to see how many people here are involved on a regular basis in helping others. In fact, here in Russia we have more helpers within DHL Russia and volunteers for regular charitable work than in any other country in the DHL network. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– I think the Union is a good thing for two reasons – firstly, yes; it does make it easier for logistics companies or will do once it is properly defined, but secondly and probably more importantly it causes the customs authorities to face up to how they improve themselves, particularly Russian customs. When faced with the new Union there were things that had to be done to make it work properly, things like electronic declarations, which speeded up the process of development which is in fact now helping in terms of import into Russia. The Customs Union has been a good learning opportunity for everybody – for logistics companies, for customers and for customs too. So it’s a healthy move forward. 
Interviewed by Ivan Stupachenko 
    [~DETAIL_TEXT] => 
‘I Need To Deliver Something To Norilsk’
– Mr Marley, what’s the core of your company’s business in Russia? 

– Both in Russia and in the rest of CIS, we operate and provide Time Definite delivery services for our customers and we’ve been offering these services now in Russia for the past 27 years. Our core products are express time definite services. If you give us a shipment today we will give you a specified time for delivery (in some cases tomorrow) in many locations, in either this country or another country, as either a domestic delivery or an international delivery. And we also offer a guaranteed money-back service for our 9:00, 10:30 and 12:00 services. It’s a service which we are very pleased to offer. It communicates what we believe is the strength of our network, the fact that over the years we’ve built up a network in which we have sufficient confidence to be able to give a money-back guarantee to our customers. We believe we have the right network here in place and are very proud of it. 
Our work is about getting something to the right place at the right time as quickly as possible, and this is what our customers from different industries ask for. We also offer some tailored services to some of our customers, particularly in automotive and hi-tech. An example in automotive would be the fact that we have customers for whom we stock and store all of the registration documents for their vehicles, and supply them to the dealer at the right time. That allows a customer to be able to purchase a car today and also to be able to get documentation today. In previous years, a customer would have to wait some significant time while the documentation was delivered to them. 
It’s all about providing customers with the best possible service and if we can do that for our customers, it will link us very strongly to them. It means that the relationship is longer-lasting.

– What was behind the decision for your company to start doing business here? 

– DHL is a network organization and to be a network organization you have to have strong presence in all parts of the network around the world. And of course it was very important for us to have a presence in Russia. Also, nobody could ever deny that the potential has always been there in terms of growth in Russia. That’s been borne out by the last 27 years. If you look at our development over the time that we’ve been here, it has been fantastic, spectacular.
The first time I came to Russia would have been in 1999, just after the first financial crisis. Essentially from that point onwards up until the recent financial crisis we’ve seen steady and in some cases staggering strong double-digit growth year-on-year. There was an acceleration in terms of growth following the first financial crisis in 1998 – 1999. 
Behind our constant growth was a combination of our customer demands and organic market growth. You have a customer who says to you: ‘I need to deliver something to Norilsk’ and if somebody calls you 50 times a day and asks for the same thing you realize that it’s time to open something in Norilsk. It’s really driven by the needs of our customers. And it’s quite specific in Russia, because you have many areas particularly to do with mining and excavation, for example, where these are not necessarily heavily populated areas, but they are areas in which there is a need for a high speed and good reliable service for the maintenance of equipment and machinery which is used for mining or engineering– that also is a part of our work. 

The Moscow Morning. Minus 25 Degrees.
– What are the main features which differ doing business in Russia from doing business in other countries? I mean all imaginable matters -- clients, regulation, and even the weather.

– All of those things (smiling) in different quantities on different days. But those are the things that you have to cope with regularly, and frankly those are the things that make it interesting. Because if you are in an environment where things can change quite quickly, that’s far more exciting than when you know exactly what is going to happen every day. So you find that you develop better in an environment like this because you’re faced with having to deal with things that you wouldn’t normally have to deal with. That’s certainly appealing to me.
In terms of growing a business in Russia it is pretty similar to growing a business elsewhere. You know, there is a lot of bureaucracy in Russia but if you get your people to work out the documentation right, things tend to happen the same way they would anywhere else. Sometimes it just takes a little longer.
If you look back over the whole 27 years of the existence of this organization, its place in the DHL global network is very secure, and I think that what our Russian business does in terms of the network is make the delivery process look easier than it actually is. So from a network perspective people send a shipment to Russia and they are not fully aware of what that can mean in terms of weather or distance or some of the other difficulties that we face sometimes. We make it look seamless to the network and I think that’s an enormous achievement. 
I’m always happy when people come and visit us in Russia because they get a small understanding of the amount of effort required to actually perform at a very high level. If you look at our performance in comparison to other parts of our network you’ll see that we perform extremely well – operationally and in every other way.
One of the best ways of giving people a flavour of what it’s like to work in DHL Express Russia is to allow people who come to Russia to go and have a trip with one of our couriers in Moscow. If you give them an opportunity to go on a drive with a courier at 8-00 AM in a very-very cold – minus 25 degrees - Moscow morning and see how they would feel by 5 PM, and that will give them some indication of how difficult it could be to operate with the traffic, the weather and just the general congestion. That’s the biggest thing – the fact that we perform as we do.

– What’s your opinion – is the competition between logistics companies in Russia tough? Is there any special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is the origin of a company irrelevant? 

– I think there is competition between all logistics companies and I welcome it because it helps to improve everybody’s quality of service. If you go back 25-27 years, there were very few operators in this country and there was very little pressure on them to improve the quality of their service. In any commercial environment, the more competition you put into it the better quality goes to the customer. And ultimately, everybody wins in that situation. The customer gets a far better quality product. We and our competitors in Russia are all looking for the same thing – to satisfy customers’ requirements. That’s a competitive market and that’s how it should be. The more competitors are coming to the market, the better.

– What’s your strategy of developing DHL Express business in Russia? 

– To continue to provide the right products at the right time to our customers, to always satisfy what they need in terms of our services. And to be innovative in our approach – it’s not enough just to assume that because your customer service levels are good that’s enough. You have to constantly innovate, you have to look internally at what you are doing with your business and ensure that wherever possible you are improving. Because that’s what will give you a competitive edge over your competitors.
We have to be in the right place for our customers at the right time. Having been here for 27 years we’ve got our network in place where it needs to be. What we have to do with that network is to continue to improve the quality of service that we provide. Essentially, if you look at the network that we operate, both inside Russia and out of Russia, it’s there for a reason – because we believe it to be an optimum network. If we see a need to open anywhere that has value for our customers, then of course we would do that.
A good example of that would be in Kaluga (city in western Russia, located on the Oka River 150 km southwest of Moscow, population over 334,000), where, as industry began to develop, we saw the need to open an entity, making sure that we were better able to service our customers. We’ve found with our customers in that region that we’ve got a partnership now which is going from strength to strength. We will open where we need to open if necessary.

Infrastructure Is Constantly Improving 
 – What is your estimation of the quality of transport services in Russia compared to Europe?

– There are good services and there are bad services in terms of quality. I genuinely believe that the reason why people buy our products is because they can trust what we do in on-time delivery, security and transparency for the customer in understanding where something is at any given time with track and trace. So those services, when operated properly, differentiate you from the competition. In Russia you have people who are offering good services, and people who are offering bad services and that’s true in any country. 
The logistics market in Russia has certainly developed in the last 20 years quite significantly - through technology, through competition, through the needs of the market. For example, when I first came here in 1999, automotive manufacturers were relatively small and their dealer networks throughout Russia were also fairly small. So it was more important for them to move big volumes of spare parts from the centre here in Russia out. That’s now changed because the demand for vehicles throughout Russia has grown so significantly, so those same companies now have regional warehouses for that region’s spare parts. So the whole tempo of logistics has changed: where before, everything was express overnight, now you will also have some customers who require consolidated deliveries over a specific period of time. That’s how the market’s changed.
In Europe there is something else that needs to be taken into account, for example within the EU it’s easy in most cases to get from A to В overnight by road, but it’s not necessarily the case in Russia, because you’ve got much greater distances, issues like weather and the road infrastructure. You’re constantly looking at differences between road and air; the challenge faced by many customers is: ‘Do I hold a central parts stock or do I put it out to the regions in an expensive property?’ The market has matured over the years to the point where customers have much bigger infrastructures of their own in the regions now. It’s constantly improving.

– It’s a commonplace that transport infrastructure is developed poorly in Russia. What are the weakest fields, where are the most difficult bottlenecks? 

– Customs can still be a bottleneck, both in terms of import and export. You know, the whole system is still very often focused on policing rather than on trade enablement and it limits opportunities, certainly in terms of export from Russia and to a certain extent import. However, you do need to take into account the heightened issue of global security which dictates the need for more stringent checks. We spend a great deal of time in consultation with customs to try to find ways to speed up the clearance process and we are making progress. 
The main concern with Russian customs is paperwork and documentation. As I said earlier, the perception of Russian customs is that they are a police force. Whilst that perception stays that way it will always be difficult to import into this country. You must have the right documentation, show the right value and everything else. And the only way to deal with that in a legal and acceptable way for customers is to ensure that you have sufficient resource in place. If you do that then you could deliver acceptable levels of clearance. There is no mystery to it – if you send something in with bad documentation it will be delayed.
Dialogue is always a good thing, even if sometimes it is not that easy for all of us. We are not in an area where people can plan sufficiently to make sure all is right for their business and operations and often it’s a learning curve that everybody has to follow.
We as DHL and as a member of the Association of Express Carriers have very strong relationships with both federal state and local customs, which involve regular meetings where we discuss ways of making life easier, constantly talking and lobbying to ensure that we change things for the better.
Within the country there are areas where the road infrastructure needs to be significantly improved, though it’s improving in many places. Within Moscow for instance it is becoming more and more difficult with the traffic, there needs to be some movement towards a much stronger traffic management system. If you look at the road structure within Moscow it is actually very good – you have the rings around Moscow. The problem in Moscow from my perspective is actually the management of traffic. For example, most of the problems arise because as you drive off from one of the main roads to a side road, there is no control of the parking on those roads. Consequently, lanes become narrower and that’s what often causes the problems. Remarkably in Russia – I am amazed – there are no parking meters; it’s a great source of revenue in most countries and yet they haven’t explored this in Russia.

– If we talk about the kind of cargo you are dealing with, do you see any new trends here? I mean, some kind of cargo becomes more popular and another one is decreasing?

– As with everybody else, we are seeing growth in the B2C segment, which is mainly driven by the Internet. The choice which most people want is now coming heavily from the Internet. Traditionally you still see our services being used for automotive and hi-tech, healthcare, even fashion and textiles – these industries are big users of our products. But without question the Internet is changing quickly the market in which we work – we’ve spoken to a lot of customers in the last six to twelve months who are heavily into Internet shopping and looking for quality services. It’s a new challenge because it means that the customer requirements are different to those when you are doing B2B because now you are looking also at servicing residential addresses. Perhaps you will be servicing residential addresses in the evening because people are working, collecting cash, providing extra services – those are the services of the future.

You Can Achieve Anything With Great Team
– And, of course, the crisis. Has it influenced the sphere you are working in? And how? Does it bring any threats to Russian logistics?

– I think the financial crisis was a very good wake-up call in Russia for people’s understanding of how to operate their business, particularly with regard to cost control and cost management. So, when you came from a business which was growing in high double digits to a business which wasn’t growing at all it makes you understand very clearly about what your costs are and what drives your business. It was a very good learning process for a lot of people and a lot of companies. The positive side to that is that we are seeing stronger companies emerging from the financial crisis.
I personally understood that what you need is to go with your gut feeling as quickly as possible. We reacted very quickly here in Russia, which sometimes wasn’t that easy – you are going from this high level of growth to a sudden drop, and you didn’t know how long you could wait to see what was going to happen. In the very early days of the financial crisis, we took a decision as a management team to deal with it right away, and it proved to be the right choice.

– Do the coming Olympic Games in Sochi-2014 provide opportunities for logistics companies? Are you involved somehow in the ‘Olympic business’? 

– I think the most important thing regarding Sochi is that it will give Russia the opportunity to showcase improvements in infrastructure, how things have changed. If you look at China for example you’ll see that the Olympic Games gave people a different perspective about what China can do. Without question, as you are watching the Olympic Games it gives you a better understanding of the culture of the country. To be able to host the Olympic Games is a great opportunity for Russia – and I have no doubt that Russia will make it great.

– When you hire Russian specialists, are there any difficulties in terms of cultural communication?

– I’ve been working overseas for some 32-33 years and working in Russia has been most pleasing simply because once you are able to create an environment in which people realize, that if they work hard, if they are safe and they’re in a good environment, everything will fly. People strive to their best performance in Russia and that is something that I’ve not seen to the same extent in any other country I’ve ever worked in. It is probably why I’m still here – if you have a great team in Russia you can achieve anything. If you really want to establish your business here, make sure that you look after your people, make sure that your people know what is it that you are trying to achieve and that they feel part of it and they know that there is opportunity for them.
Also one of the biggest surprises I found when I came here was how big hearted people are, how they care. It’s really fantastic to see how many people here are involved on a regular basis in helping others. In fact, here in Russia we have more helpers within DHL Russia and volunteers for regular charitable work than in any other country in the DHL network. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– I think the Union is a good thing for two reasons – firstly, yes; it does make it easier for logistics companies or will do once it is properly defined, but secondly and probably more importantly it causes the customs authorities to face up to how they improve themselves, particularly Russian customs. When faced with the new Union there were things that had to be done to make it work properly, things like electronic declarations, which speeded up the process of development which is in fact now helping in terms of import into Russia. The Customs Union has been a good learning opportunity for everybody – for logistics companies, for customers and for customs too. So it’s a healthy move forward. 
Interviewed by Ivan Stupachenko 
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‘I Need To Deliver Something To Norilsk’
– Mr Marley, what’s the core of your company’s business in Russia? 

– Both in Russia and in the rest of CIS, we operate and provide Time Definite delivery services for our customers and we’ve been offering these services now in Russia for the past 27 years. Our core products are express time definite services. If you give us a shipment today we will give you a specified time for delivery (in some cases tomorrow) in many locations, in either this country or another country, as either a domestic delivery or an international delivery. And we also offer a guaranteed money-back service for our 9:00, 10:30 and 12:00 services. It’s a service which we are very pleased to offer. It communicates what we believe is the strength of our network, the fact that over the years we’ve built up a network in which we have sufficient confidence to be able to give a money-back guarantee to our customers. We believe we have the right network here in place and are very proud of it. 
Our work is about getting something to the right place at the right time as quickly as possible, and this is what our customers from different industries ask for. We also offer some tailored services to some of our customers, particularly in automotive and hi-tech. An example in automotive would be the fact that we have customers for whom we stock and store all of the registration documents for their vehicles, and supply them to the dealer at the right time. That allows a customer to be able to purchase a car today and also to be able to get documentation today. In previous years, a customer would have to wait some significant time while the documentation was delivered to them. 
It’s all about providing customers with the best possible service and if we can do that for our customers, it will link us very strongly to them. It means that the relationship is longer-lasting.

– What was behind the decision for your company to start doing business here? 

– DHL is a network organization and to be a network organization you have to have strong presence in all parts of the network around the world. And of course it was very important for us to have a presence in Russia. Also, nobody could ever deny that the potential has always been there in terms of growth in Russia. That’s been borne out by the last 27 years. If you look at our development over the time that we’ve been here, it has been fantastic, spectacular.
The first time I came to Russia would have been in 1999, just after the first financial crisis. Essentially from that point onwards up until the recent financial crisis we’ve seen steady and in some cases staggering strong double-digit growth year-on-year. There was an acceleration in terms of growth following the first financial crisis in 1998 – 1999. 
Behind our constant growth was a combination of our customer demands and organic market growth. You have a customer who says to you: ‘I need to deliver something to Norilsk’ and if somebody calls you 50 times a day and asks for the same thing you realize that it’s time to open something in Norilsk. It’s really driven by the needs of our customers. And it’s quite specific in Russia, because you have many areas particularly to do with mining and excavation, for example, where these are not necessarily heavily populated areas, but they are areas in which there is a need for a high speed and good reliable service for the maintenance of equipment and machinery which is used for mining or engineering– that also is a part of our work. 

The Moscow Morning. Minus 25 Degrees.
– What are the main features which differ doing business in Russia from doing business in other countries? I mean all imaginable matters -- clients, regulation, and even the weather.

– All of those things (smiling) in different quantities on different days. But those are the things that you have to cope with regularly, and frankly those are the things that make it interesting. Because if you are in an environment where things can change quite quickly, that’s far more exciting than when you know exactly what is going to happen every day. So you find that you develop better in an environment like this because you’re faced with having to deal with things that you wouldn’t normally have to deal with. That’s certainly appealing to me.
In terms of growing a business in Russia it is pretty similar to growing a business elsewhere. You know, there is a lot of bureaucracy in Russia but if you get your people to work out the documentation right, things tend to happen the same way they would anywhere else. Sometimes it just takes a little longer.
If you look back over the whole 27 years of the existence of this organization, its place in the DHL global network is very secure, and I think that what our Russian business does in terms of the network is make the delivery process look easier than it actually is. So from a network perspective people send a shipment to Russia and they are not fully aware of what that can mean in terms of weather or distance or some of the other difficulties that we face sometimes. We make it look seamless to the network and I think that’s an enormous achievement. 
I’m always happy when people come and visit us in Russia because they get a small understanding of the amount of effort required to actually perform at a very high level. If you look at our performance in comparison to other parts of our network you’ll see that we perform extremely well – operationally and in every other way.
One of the best ways of giving people a flavour of what it’s like to work in DHL Express Russia is to allow people who come to Russia to go and have a trip with one of our couriers in Moscow. If you give them an opportunity to go on a drive with a courier at 8-00 AM in a very-very cold – minus 25 degrees - Moscow morning and see how they would feel by 5 PM, and that will give them some indication of how difficult it could be to operate with the traffic, the weather and just the general congestion. That’s the biggest thing – the fact that we perform as we do.

– What’s your opinion – is the competition between logistics companies in Russia tough? Is there any special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is the origin of a company irrelevant? 

– I think there is competition between all logistics companies and I welcome it because it helps to improve everybody’s quality of service. If you go back 25-27 years, there were very few operators in this country and there was very little pressure on them to improve the quality of their service. In any commercial environment, the more competition you put into it the better quality goes to the customer. And ultimately, everybody wins in that situation. The customer gets a far better quality product. We and our competitors in Russia are all looking for the same thing – to satisfy customers’ requirements. That’s a competitive market and that’s how it should be. The more competitors are coming to the market, the better.

– What’s your strategy of developing DHL Express business in Russia? 

– To continue to provide the right products at the right time to our customers, to always satisfy what they need in terms of our services. And to be innovative in our approach – it’s not enough just to assume that because your customer service levels are good that’s enough. You have to constantly innovate, you have to look internally at what you are doing with your business and ensure that wherever possible you are improving. Because that’s what will give you a competitive edge over your competitors.
We have to be in the right place for our customers at the right time. Having been here for 27 years we’ve got our network in place where it needs to be. What we have to do with that network is to continue to improve the quality of service that we provide. Essentially, if you look at the network that we operate, both inside Russia and out of Russia, it’s there for a reason – because we believe it to be an optimum network. If we see a need to open anywhere that has value for our customers, then of course we would do that.
A good example of that would be in Kaluga (city in western Russia, located on the Oka River 150 km southwest of Moscow, population over 334,000), where, as industry began to develop, we saw the need to open an entity, making sure that we were better able to service our customers. We’ve found with our customers in that region that we’ve got a partnership now which is going from strength to strength. We will open where we need to open if necessary.

Infrastructure Is Constantly Improving 
 – What is your estimation of the quality of transport services in Russia compared to Europe?

– There are good services and there are bad services in terms of quality. I genuinely believe that the reason why people buy our products is because they can trust what we do in on-time delivery, security and transparency for the customer in understanding where something is at any given time with track and trace. So those services, when operated properly, differentiate you from the competition. In Russia you have people who are offering good services, and people who are offering bad services and that’s true in any country. 
The logistics market in Russia has certainly developed in the last 20 years quite significantly - through technology, through competition, through the needs of the market. For example, when I first came here in 1999, automotive manufacturers were relatively small and their dealer networks throughout Russia were also fairly small. So it was more important for them to move big volumes of spare parts from the centre here in Russia out. That’s now changed because the demand for vehicles throughout Russia has grown so significantly, so those same companies now have regional warehouses for that region’s spare parts. So the whole tempo of logistics has changed: where before, everything was express overnight, now you will also have some customers who require consolidated deliveries over a specific period of time. That’s how the market’s changed.
In Europe there is something else that needs to be taken into account, for example within the EU it’s easy in most cases to get from A to В overnight by road, but it’s not necessarily the case in Russia, because you’ve got much greater distances, issues like weather and the road infrastructure. You’re constantly looking at differences between road and air; the challenge faced by many customers is: ‘Do I hold a central parts stock or do I put it out to the regions in an expensive property?’ The market has matured over the years to the point where customers have much bigger infrastructures of their own in the regions now. It’s constantly improving.

– It’s a commonplace that transport infrastructure is developed poorly in Russia. What are the weakest fields, where are the most difficult bottlenecks? 

– Customs can still be a bottleneck, both in terms of import and export. You know, the whole system is still very often focused on policing rather than on trade enablement and it limits opportunities, certainly in terms of export from Russia and to a certain extent import. However, you do need to take into account the heightened issue of global security which dictates the need for more stringent checks. We spend a great deal of time in consultation with customs to try to find ways to speed up the clearance process and we are making progress. 
The main concern with Russian customs is paperwork and documentation. As I said earlier, the perception of Russian customs is that they are a police force. Whilst that perception stays that way it will always be difficult to import into this country. You must have the right documentation, show the right value and everything else. And the only way to deal with that in a legal and acceptable way for customers is to ensure that you have sufficient resource in place. If you do that then you could deliver acceptable levels of clearance. There is no mystery to it – if you send something in with bad documentation it will be delayed.
Dialogue is always a good thing, even if sometimes it is not that easy for all of us. We are not in an area where people can plan sufficiently to make sure all is right for their business and operations and often it’s a learning curve that everybody has to follow.
We as DHL and as a member of the Association of Express Carriers have very strong relationships with both federal state and local customs, which involve regular meetings where we discuss ways of making life easier, constantly talking and lobbying to ensure that we change things for the better.
Within the country there are areas where the road infrastructure needs to be significantly improved, though it’s improving in many places. Within Moscow for instance it is becoming more and more difficult with the traffic, there needs to be some movement towards a much stronger traffic management system. If you look at the road structure within Moscow it is actually very good – you have the rings around Moscow. The problem in Moscow from my perspective is actually the management of traffic. For example, most of the problems arise because as you drive off from one of the main roads to a side road, there is no control of the parking on those roads. Consequently, lanes become narrower and that’s what often causes the problems. Remarkably in Russia – I am amazed – there are no parking meters; it’s a great source of revenue in most countries and yet they haven’t explored this in Russia.

– If we talk about the kind of cargo you are dealing with, do you see any new trends here? I mean, some kind of cargo becomes more popular and another one is decreasing?

– As with everybody else, we are seeing growth in the B2C segment, which is mainly driven by the Internet. The choice which most people want is now coming heavily from the Internet. Traditionally you still see our services being used for automotive and hi-tech, healthcare, even fashion and textiles – these industries are big users of our products. But without question the Internet is changing quickly the market in which we work – we’ve spoken to a lot of customers in the last six to twelve months who are heavily into Internet shopping and looking for quality services. It’s a new challenge because it means that the customer requirements are different to those when you are doing B2B because now you are looking also at servicing residential addresses. Perhaps you will be servicing residential addresses in the evening because people are working, collecting cash, providing extra services – those are the services of the future.

You Can Achieve Anything With Great Team
– And, of course, the crisis. Has it influenced the sphere you are working in? And how? Does it bring any threats to Russian logistics?

– I think the financial crisis was a very good wake-up call in Russia for people’s understanding of how to operate their business, particularly with regard to cost control and cost management. So, when you came from a business which was growing in high double digits to a business which wasn’t growing at all it makes you understand very clearly about what your costs are and what drives your business. It was a very good learning process for a lot of people and a lot of companies. The positive side to that is that we are seeing stronger companies emerging from the financial crisis.
I personally understood that what you need is to go with your gut feeling as quickly as possible. We reacted very quickly here in Russia, which sometimes wasn’t that easy – you are going from this high level of growth to a sudden drop, and you didn’t know how long you could wait to see what was going to happen. In the very early days of the financial crisis, we took a decision as a management team to deal with it right away, and it proved to be the right choice.

– Do the coming Olympic Games in Sochi-2014 provide opportunities for logistics companies? Are you involved somehow in the ‘Olympic business’? 

– I think the most important thing regarding Sochi is that it will give Russia the opportunity to showcase improvements in infrastructure, how things have changed. If you look at China for example you’ll see that the Olympic Games gave people a different perspective about what China can do. Without question, as you are watching the Olympic Games it gives you a better understanding of the culture of the country. To be able to host the Olympic Games is a great opportunity for Russia – and I have no doubt that Russia will make it great.

– When you hire Russian specialists, are there any difficulties in terms of cultural communication?

– I’ve been working overseas for some 32-33 years and working in Russia has been most pleasing simply because once you are able to create an environment in which people realize, that if they work hard, if they are safe and they’re in a good environment, everything will fly. People strive to their best performance in Russia and that is something that I’ve not seen to the same extent in any other country I’ve ever worked in. It is probably why I’m still here – if you have a great team in Russia you can achieve anything. If you really want to establish your business here, make sure that you look after your people, make sure that your people know what is it that you are trying to achieve and that they feel part of it and they know that there is opportunity for them.
Also one of the biggest surprises I found when I came here was how big hearted people are, how they care. It’s really fantastic to see how many people here are involved on a regular basis in helping others. In fact, here in Russia we have more helpers within DHL Russia and volunteers for regular charitable work than in any other country in the DHL network. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– I think the Union is a good thing for two reasons – firstly, yes; it does make it easier for logistics companies or will do once it is properly defined, but secondly and probably more importantly it causes the customs authorities to face up to how they improve themselves, particularly Russian customs. When faced with the new Union there were things that had to be done to make it work properly, things like electronic declarations, which speeded up the process of development which is in fact now helping in terms of import into Russia. The Customs Union has been a good learning opportunity for everybody – for logistics companies, for customers and for customs too. So it’s a healthy move forward. 
Interviewed by Ivan Stupachenko 
    [~DETAIL_TEXT] => 
‘I Need To Deliver Something To Norilsk’
– Mr Marley, what’s the core of your company’s business in Russia? 

– Both in Russia and in the rest of CIS, we operate and provide Time Definite delivery services for our customers and we’ve been offering these services now in Russia for the past 27 years. Our core products are express time definite services. If you give us a shipment today we will give you a specified time for delivery (in some cases tomorrow) in many locations, in either this country or another country, as either a domestic delivery or an international delivery. And we also offer a guaranteed money-back service for our 9:00, 10:30 and 12:00 services. It’s a service which we are very pleased to offer. It communicates what we believe is the strength of our network, the fact that over the years we’ve built up a network in which we have sufficient confidence to be able to give a money-back guarantee to our customers. We believe we have the right network here in place and are very proud of it. 
Our work is about getting something to the right place at the right time as quickly as possible, and this is what our customers from different industries ask for. We also offer some tailored services to some of our customers, particularly in automotive and hi-tech. An example in automotive would be the fact that we have customers for whom we stock and store all of the registration documents for their vehicles, and supply them to the dealer at the right time. That allows a customer to be able to purchase a car today and also to be able to get documentation today. In previous years, a customer would have to wait some significant time while the documentation was delivered to them. 
It’s all about providing customers with the best possible service and if we can do that for our customers, it will link us very strongly to them. It means that the relationship is longer-lasting.

– What was behind the decision for your company to start doing business here? 

– DHL is a network organization and to be a network organization you have to have strong presence in all parts of the network around the world. And of course it was very important for us to have a presence in Russia. Also, nobody could ever deny that the potential has always been there in terms of growth in Russia. That’s been borne out by the last 27 years. If you look at our development over the time that we’ve been here, it has been fantastic, spectacular.
The first time I came to Russia would have been in 1999, just after the first financial crisis. Essentially from that point onwards up until the recent financial crisis we’ve seen steady and in some cases staggering strong double-digit growth year-on-year. There was an acceleration in terms of growth following the first financial crisis in 1998 – 1999. 
Behind our constant growth was a combination of our customer demands and organic market growth. You have a customer who says to you: ‘I need to deliver something to Norilsk’ and if somebody calls you 50 times a day and asks for the same thing you realize that it’s time to open something in Norilsk. It’s really driven by the needs of our customers. And it’s quite specific in Russia, because you have many areas particularly to do with mining and excavation, for example, where these are not necessarily heavily populated areas, but they are areas in which there is a need for a high speed and good reliable service for the maintenance of equipment and machinery which is used for mining or engineering– that also is a part of our work. 

The Moscow Morning. Minus 25 Degrees.
– What are the main features which differ doing business in Russia from doing business in other countries? I mean all imaginable matters -- clients, regulation, and even the weather.

– All of those things (smiling) in different quantities on different days. But those are the things that you have to cope with regularly, and frankly those are the things that make it interesting. Because if you are in an environment where things can change quite quickly, that’s far more exciting than when you know exactly what is going to happen every day. So you find that you develop better in an environment like this because you’re faced with having to deal with things that you wouldn’t normally have to deal with. That’s certainly appealing to me.
In terms of growing a business in Russia it is pretty similar to growing a business elsewhere. You know, there is a lot of bureaucracy in Russia but if you get your people to work out the documentation right, things tend to happen the same way they would anywhere else. Sometimes it just takes a little longer.
If you look back over the whole 27 years of the existence of this organization, its place in the DHL global network is very secure, and I think that what our Russian business does in terms of the network is make the delivery process look easier than it actually is. So from a network perspective people send a shipment to Russia and they are not fully aware of what that can mean in terms of weather or distance or some of the other difficulties that we face sometimes. We make it look seamless to the network and I think that’s an enormous achievement. 
I’m always happy when people come and visit us in Russia because they get a small understanding of the amount of effort required to actually perform at a very high level. If you look at our performance in comparison to other parts of our network you’ll see that we perform extremely well – operationally and in every other way.
One of the best ways of giving people a flavour of what it’s like to work in DHL Express Russia is to allow people who come to Russia to go and have a trip with one of our couriers in Moscow. If you give them an opportunity to go on a drive with a courier at 8-00 AM in a very-very cold – minus 25 degrees - Moscow morning and see how they would feel by 5 PM, and that will give them some indication of how difficult it could be to operate with the traffic, the weather and just the general congestion. That’s the biggest thing – the fact that we perform as we do.

– What’s your opinion – is the competition between logistics companies in Russia tough? Is there any special competition between Russian and non-Russian companies, I mean, should we talk about these two categories or is the origin of a company irrelevant? 

– I think there is competition between all logistics companies and I welcome it because it helps to improve everybody’s quality of service. If you go back 25-27 years, there were very few operators in this country and there was very little pressure on them to improve the quality of their service. In any commercial environment, the more competition you put into it the better quality goes to the customer. And ultimately, everybody wins in that situation. The customer gets a far better quality product. We and our competitors in Russia are all looking for the same thing – to satisfy customers’ requirements. That’s a competitive market and that’s how it should be. The more competitors are coming to the market, the better.

– What’s your strategy of developing DHL Express business in Russia? 

– To continue to provide the right products at the right time to our customers, to always satisfy what they need in terms of our services. And to be innovative in our approach – it’s not enough just to assume that because your customer service levels are good that’s enough. You have to constantly innovate, you have to look internally at what you are doing with your business and ensure that wherever possible you are improving. Because that’s what will give you a competitive edge over your competitors.
We have to be in the right place for our customers at the right time. Having been here for 27 years we’ve got our network in place where it needs to be. What we have to do with that network is to continue to improve the quality of service that we provide. Essentially, if you look at the network that we operate, both inside Russia and out of Russia, it’s there for a reason – because we believe it to be an optimum network. If we see a need to open anywhere that has value for our customers, then of course we would do that.
A good example of that would be in Kaluga (city in western Russia, located on the Oka River 150 km southwest of Moscow, population over 334,000), where, as industry began to develop, we saw the need to open an entity, making sure that we were better able to service our customers. We’ve found with our customers in that region that we’ve got a partnership now which is going from strength to strength. We will open where we need to open if necessary.

Infrastructure Is Constantly Improving 
 – What is your estimation of the quality of transport services in Russia compared to Europe?

– There are good services and there are bad services in terms of quality. I genuinely believe that the reason why people buy our products is because they can trust what we do in on-time delivery, security and transparency for the customer in understanding where something is at any given time with track and trace. So those services, when operated properly, differentiate you from the competition. In Russia you have people who are offering good services, and people who are offering bad services and that’s true in any country. 
The logistics market in Russia has certainly developed in the last 20 years quite significantly - through technology, through competition, through the needs of the market. For example, when I first came here in 1999, automotive manufacturers were relatively small and their dealer networks throughout Russia were also fairly small. So it was more important for them to move big volumes of spare parts from the centre here in Russia out. That’s now changed because the demand for vehicles throughout Russia has grown so significantly, so those same companies now have regional warehouses for that region’s spare parts. So the whole tempo of logistics has changed: where before, everything was express overnight, now you will also have some customers who require consolidated deliveries over a specific period of time. That’s how the market’s changed.
In Europe there is something else that needs to be taken into account, for example within the EU it’s easy in most cases to get from A to В overnight by road, but it’s not necessarily the case in Russia, because you’ve got much greater distances, issues like weather and the road infrastructure. You’re constantly looking at differences between road and air; the challenge faced by many customers is: ‘Do I hold a central parts stock or do I put it out to the regions in an expensive property?’ The market has matured over the years to the point where customers have much bigger infrastructures of their own in the regions now. It’s constantly improving.

– It’s a commonplace that transport infrastructure is developed poorly in Russia. What are the weakest fields, where are the most difficult bottlenecks? 

– Customs can still be a bottleneck, both in terms of import and export. You know, the whole system is still very often focused on policing rather than on trade enablement and it limits opportunities, certainly in terms of export from Russia and to a certain extent import. However, you do need to take into account the heightened issue of global security which dictates the need for more stringent checks. We spend a great deal of time in consultation with customs to try to find ways to speed up the clearance process and we are making progress. 
The main concern with Russian customs is paperwork and documentation. As I said earlier, the perception of Russian customs is that they are a police force. Whilst that perception stays that way it will always be difficult to import into this country. You must have the right documentation, show the right value and everything else. And the only way to deal with that in a legal and acceptable way for customers is to ensure that you have sufficient resource in place. If you do that then you could deliver acceptable levels of clearance. There is no mystery to it – if you send something in with bad documentation it will be delayed.
Dialogue is always a good thing, even if sometimes it is not that easy for all of us. We are not in an area where people can plan sufficiently to make sure all is right for their business and operations and often it’s a learning curve that everybody has to follow.
We as DHL and as a member of the Association of Express Carriers have very strong relationships with both federal state and local customs, which involve regular meetings where we discuss ways of making life easier, constantly talking and lobbying to ensure that we change things for the better.
Within the country there are areas where the road infrastructure needs to be significantly improved, though it’s improving in many places. Within Moscow for instance it is becoming more and more difficult with the traffic, there needs to be some movement towards a much stronger traffic management system. If you look at the road structure within Moscow it is actually very good – you have the rings around Moscow. The problem in Moscow from my perspective is actually the management of traffic. For example, most of the problems arise because as you drive off from one of the main roads to a side road, there is no control of the parking on those roads. Consequently, lanes become narrower and that’s what often causes the problems. Remarkably in Russia – I am amazed – there are no parking meters; it’s a great source of revenue in most countries and yet they haven’t explored this in Russia.

– If we talk about the kind of cargo you are dealing with, do you see any new trends here? I mean, some kind of cargo becomes more popular and another one is decreasing?

– As with everybody else, we are seeing growth in the B2C segment, which is mainly driven by the Internet. The choice which most people want is now coming heavily from the Internet. Traditionally you still see our services being used for automotive and hi-tech, healthcare, even fashion and textiles – these industries are big users of our products. But without question the Internet is changing quickly the market in which we work – we’ve spoken to a lot of customers in the last six to twelve months who are heavily into Internet shopping and looking for quality services. It’s a new challenge because it means that the customer requirements are different to those when you are doing B2B because now you are looking also at servicing residential addresses. Perhaps you will be servicing residential addresses in the evening because people are working, collecting cash, providing extra services – those are the services of the future.

You Can Achieve Anything With Great Team
– And, of course, the crisis. Has it influenced the sphere you are working in? And how? Does it bring any threats to Russian logistics?

– I think the financial crisis was a very good wake-up call in Russia for people’s understanding of how to operate their business, particularly with regard to cost control and cost management. So, when you came from a business which was growing in high double digits to a business which wasn’t growing at all it makes you understand very clearly about what your costs are and what drives your business. It was a very good learning process for a lot of people and a lot of companies. The positive side to that is that we are seeing stronger companies emerging from the financial crisis.
I personally understood that what you need is to go with your gut feeling as quickly as possible. We reacted very quickly here in Russia, which sometimes wasn’t that easy – you are going from this high level of growth to a sudden drop, and you didn’t know how long you could wait to see what was going to happen. In the very early days of the financial crisis, we took a decision as a management team to deal with it right away, and it proved to be the right choice.

– Do the coming Olympic Games in Sochi-2014 provide opportunities for logistics companies? Are you involved somehow in the ‘Olympic business’? 

– I think the most important thing regarding Sochi is that it will give Russia the opportunity to showcase improvements in infrastructure, how things have changed. If you look at China for example you’ll see that the Olympic Games gave people a different perspective about what China can do. Without question, as you are watching the Olympic Games it gives you a better understanding of the culture of the country. To be able to host the Olympic Games is a great opportunity for Russia – and I have no doubt that Russia will make it great.

– When you hire Russian specialists, are there any difficulties in terms of cultural communication?

– I’ve been working overseas for some 32-33 years and working in Russia has been most pleasing simply because once you are able to create an environment in which people realize, that if they work hard, if they are safe and they’re in a good environment, everything will fly. People strive to their best performance in Russia and that is something that I’ve not seen to the same extent in any other country I’ve ever worked in. It is probably why I’m still here – if you have a great team in Russia you can achieve anything. If you really want to establish your business here, make sure that you look after your people, make sure that your people know what is it that you are trying to achieve and that they feel part of it and they know that there is opportunity for them.
Also one of the biggest surprises I found when I came here was how big hearted people are, how they care. It’s really fantastic to see how many people here are involved on a regular basis in helping others. In fact, here in Russia we have more helpers within DHL Russia and volunteers for regular charitable work than in any other country in the DHL network. 

– Russia, Kazakhstan and Belarus have established The Customs Union. What’s your opinion, will it make the life of logistics and trade companies easier? Have you faced any problems caused by the Union? 

– I think the Union is a good thing for two reasons – firstly, yes; it does make it easier for logistics companies or will do once it is properly defined, but secondly and probably more importantly it causes the customs authorities to face up to how they improve themselves, particularly Russian customs. When faced with the new Union there were things that had to be done to make it work properly, things like electronic declarations, which speeded up the process of development which is in fact now helping in terms of import into Russia. The Customs Union has been a good learning opportunity for everybody – for logistics companies, for customers and for customs too. So it’s a healthy move forward. 
Interviewed by Ivan Stupachenko 
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A VERY EXPENSIVE COMPANY
The idea of selling RZD through an IPO has been discussed for a long time, but was an idea rather than a project. Just a few years ago, it was impossible to imagine the sale of shares of the company to investors. The fact is that RZD JSC is not just a transportation company, providing 80% of the turnover of the country, but also a strategically important subject for national security. 
In addition, the reform of railway transport in Russia is not yet complete, therefore even in the short term it is difficult to predict how the company will look: its financial and industrial performance, structure and other parameters that are crucial to potential buyers of the shares.
However, in late 2010 Igor Shuvalov, the First Vice Premier of Russia, announced that the state plans to sell some of its own assets, including the assets of RZD JSC. 
Motivation is trite: the government is implementing large-scale expensive projects, including the organization of the Olympic Games in Sochi in 2014 and the Football World Cup in 2018, in connection with which the federal budget will inevitably face a serious deficit.
The specific approach to the sale will be determined later. At present, three ways are being discussed: selling to a strategic investor, selling through an IPO or a combination of these two options. Each way has its strengths and weaknesses.  It will be difficult to find a strategic investor because even a 10% stake of RZD JSC would cost at least $10 billion, there is hardly a railway company in the world that can raise such a sum, let alone the price tag for a larger slice. 
It is possible, of course, to sell the assets to an investor who is not related to the rail business, but in this case the investor can hardly be expected to bring any new technologies or expertise. And RZD JSC does not need just money, the company’s management has repeatedly emphasized its interest in exchanging experience in technology and logistics solutions that will see both the carrier and the economy as a whole benefit from the resulting synergies.
Selling through an IPO is usually done when the issuer is interested in selling a set of small blocks of shares among portfolio investors, investment and hedge funds. This option is good because it allows the selling of a large stake. But at the same time the company acquires a set of minority shareholders and therefore it is not protected from corporate scandals. Back in 2009 this path was chosen by the largest of non-Russian Railways rail operators – Globaltrans Investment Plc – and the company was pleased with the results of the placement of almost a third of its share capital and as for minority shareholders, they have not disturb the company’s management yet.
The combined version is the most likely to be used. However, it requires a colossal amount of work on the part of government officials and the management of RZD. However, there is the following questionable point. It may happen that even the mechanism of IPO, in which the investor has the opportunity to purchase virtually any quantity of shares, even the smallest, will not see the starting sum raised. Will there be demand for shares that cost at least $10 billion on the global financial markets? It is impossible to answer this question with any certainty.
What percentage of the shares may eventually be sold? A decision on this matter would be taken closer to the date of sale because the current macroeconomic situation and state of public finances would have to be taken into account.
Currently, out of the key figures in this area, only Igor Levitin, the Russian Transport Minister, and Vladimir Yakunin, President of RZD, have spoken. According to Mr Levitin, it makes sense to sell a 10% stake because, as mentioned above, is unlikely that investors willing to pay enough to purchase very large stakes will be found. 
Mr Yakunin has a different opinion: he believes that 15% of the assets should be sold.

A VERY TRANSPARENT COMPANY 
Nobody doubts that the shares of RZD JSC will see buyers queuing up. Regardless of how the rail transport reforms in Russia go and in which phase the country’s economy is, the revenues of the carrier will be large. Another question is what will be the dividend policy of the issuer, but this is an issue that will become clear during the negotiations with potential investors in RZD. Without a doubt, the company will follow universal practice of reasonably spending net profit on dividends and long-term development.
It should be remembered that, in 2013–2015, RZD will be a company that bears little resemblance to itself in 2003 when it officially came into being, and especially little resemblance to conglomerate the Soviet Ministry of Railways. In 2003, RZD JSC was occupied with everything: transportation, infrastructure management, traffic control, as well as many European companies were.
Currently, the whole rolling stock park is divided up into two subsidiaries – Freight One and The Second Cargo Company, which do not function as carriers obliged to provide their services to anyone at state-set rates, but as operators who have the opportunity to conduct flexible price policies and choose the most interesting customers. Control over the Freight One Company is planned to be sold this year. RZD will leave itself with the infrastructure, including the locomotive park.
The corporate structure of the company has been also changed. Before, all the key areas were controlled from a single centre, now they are distributed among subsidiaries, and some of them will also be partially sold. For example, long-distance passenger transportation is now controlled by Federal Passenger Company JSC, suburban transportation is provided by regional carriers created with the participation of RZD and local authorities. Similar steps have been taken in respect of the repair business as well as many other activities.
In addition, since 2008, RZD has taken over the management of revenues and expenditures in certain areas so that investors can easily assess which areas are unprofitable or profitable, and to what extent. Such transparency, which by the time of the IPO can only have improved, will no doubt increase the confidence of investors.

CASH FLOWS BECOME PREDICTABLE 
It is worth mentioning that the state has moved forward the process of calculating tariffs on a systemic basis, which will accurately predict the revenue base of RZD several years in advance. And here it is necessary to make a small clarification. Rates for transportation by rail in Russia are divided into two parts: infrastructure and rolling stock (you can read more details on tariffs in this issue on page).
The infrastructure part, which occupies about 85%, is set by the state and is executed by the owner of the infrastructure, RZD JSC. The remaining 15% is the price that the owner of the car charges for their services to the customer. As a rule, this is the operating company, such as Freight One, The Second Freight Company or Globaltrans.
Some time ago, each day there would be a fierce debate between RZD, cargo owners and the state about the absolute value of the tariff on infrastructure. RZD was, logically, interested in the maximum possible increase in tariffs, while freight owners insisted on the minimum possible tariff and the state, which made the final decision, had to find a compromise that would satisfy the two sides.
Last year, the government developed and approved an important document – the methodology for calculating tariffs which clearly defines how, and with what parameters, specific rates are calculated. Now, anyone armed with the necessary data, a calculator and the formulas published on the Internet can independently estimate what size the tariff index will be in the next year. In general, its usefulness lies in the fact that investors can now work out the revenue of RZD themselves and draw their own conclusions about the fairness of the company’s asset prices.

FINANCIAL MARKETS ARE WAITING 
The market is awaiting the placement of RZD, judging by past IPOs of Russian railway operators, as well as the resounding success of RZD’s eurobonds issue. It has been noted that, in 2009, Globaltrans successfully sold a 29% stake for $449.5 million on the London Stock Exchange. 
It happened in the midst of the crisis, when the turnover of railroads in Russia was falling, insecurity was growing, the price of oil constantly fluctuated, and investors were searching for the markets to invest in as shares, commodities and currencies suddenly became dangerous places to be. So, Globaltrans managed to create a sort of miracle.
In a calmer 2010, TransContainer, the largest rail operator in the sector of container traffic and a subsidiary of RZD, held a not-so-brilliant but generally successful IPO. It sold a 35% stake for $389 million, which fell within the boundaries of the set range. 
In addition, TransContainer had several foreign funds among its investors for several years, as well as The European Bank For Reconstruction and Development. The Eurobonds issue of RZD has already become a classic move in the Russian financial market and has every chance of making it into the textbooks on financial management. In 2010, the company sold assets of  $1.5 billion, while initially it was planned to implement a bond of $1 billion, but in the end the amount was increased due to the tremendous demand.
In 2011, RZD JSC sold assets worth £350 million by choosing a rather difficult segment of the financial market – the pound sterling market - and the Irish Stock Exchange. Still, investors have taken the bond with enthusiasm. So, the rehearsals have been conducted successfully. We look forward to the main character’s appearance on the financial stage. 
By Ivan Stupachenko 
    [~DETAIL_TEXT] => 
A VERY EXPENSIVE COMPANY
The idea of selling RZD through an IPO has been discussed for a long time, but was an idea rather than a project. Just a few years ago, it was impossible to imagine the sale of shares of the company to investors. The fact is that RZD JSC is not just a transportation company, providing 80% of the turnover of the country, but also a strategically important subject for national security. 
In addition, the reform of railway transport in Russia is not yet complete, therefore even in the short term it is difficult to predict how the company will look: its financial and industrial performance, structure and other parameters that are crucial to potential buyers of the shares.
However, in late 2010 Igor Shuvalov, the First Vice Premier of Russia, announced that the state plans to sell some of its own assets, including the assets of RZD JSC. 
Motivation is trite: the government is implementing large-scale expensive projects, including the organization of the Olympic Games in Sochi in 2014 and the Football World Cup in 2018, in connection with which the federal budget will inevitably face a serious deficit.
The specific approach to the sale will be determined later. At present, three ways are being discussed: selling to a strategic investor, selling through an IPO or a combination of these two options. Each way has its strengths and weaknesses.  It will be difficult to find a strategic investor because even a 10% stake of RZD JSC would cost at least $10 billion, there is hardly a railway company in the world that can raise such a sum, let alone the price tag for a larger slice. 
It is possible, of course, to sell the assets to an investor who is not related to the rail business, but in this case the investor can hardly be expected to bring any new technologies or expertise. And RZD JSC does not need just money, the company’s management has repeatedly emphasized its interest in exchanging experience in technology and logistics solutions that will see both the carrier and the economy as a whole benefit from the resulting synergies.
Selling through an IPO is usually done when the issuer is interested in selling a set of small blocks of shares among portfolio investors, investment and hedge funds. This option is good because it allows the selling of a large stake. But at the same time the company acquires a set of minority shareholders and therefore it is not protected from corporate scandals. Back in 2009 this path was chosen by the largest of non-Russian Railways rail operators – Globaltrans Investment Plc – and the company was pleased with the results of the placement of almost a third of its share capital and as for minority shareholders, they have not disturb the company’s management yet.
The combined version is the most likely to be used. However, it requires a colossal amount of work on the part of government officials and the management of RZD. However, there is the following questionable point. It may happen that even the mechanism of IPO, in which the investor has the opportunity to purchase virtually any quantity of shares, even the smallest, will not see the starting sum raised. Will there be demand for shares that cost at least $10 billion on the global financial markets? It is impossible to answer this question with any certainty.
What percentage of the shares may eventually be sold? A decision on this matter would be taken closer to the date of sale because the current macroeconomic situation and state of public finances would have to be taken into account.
Currently, out of the key figures in this area, only Igor Levitin, the Russian Transport Minister, and Vladimir Yakunin, President of RZD, have spoken. According to Mr Levitin, it makes sense to sell a 10% stake because, as mentioned above, is unlikely that investors willing to pay enough to purchase very large stakes will be found. 
Mr Yakunin has a different opinion: he believes that 15% of the assets should be sold.

A VERY TRANSPARENT COMPANY 
Nobody doubts that the shares of RZD JSC will see buyers queuing up. Regardless of how the rail transport reforms in Russia go and in which phase the country’s economy is, the revenues of the carrier will be large. Another question is what will be the dividend policy of the issuer, but this is an issue that will become clear during the negotiations with potential investors in RZD. Without a doubt, the company will follow universal practice of reasonably spending net profit on dividends and long-term development.
It should be remembered that, in 2013–2015, RZD will be a company that bears little resemblance to itself in 2003 when it officially came into being, and especially little resemblance to conglomerate the Soviet Ministry of Railways. In 2003, RZD JSC was occupied with everything: transportation, infrastructure management, traffic control, as well as many European companies were.
Currently, the whole rolling stock park is divided up into two subsidiaries – Freight One and The Second Cargo Company, which do not function as carriers obliged to provide their services to anyone at state-set rates, but as operators who have the opportunity to conduct flexible price policies and choose the most interesting customers. Control over the Freight One Company is planned to be sold this year. RZD will leave itself with the infrastructure, including the locomotive park.
The corporate structure of the company has been also changed. Before, all the key areas were controlled from a single centre, now they are distributed among subsidiaries, and some of them will also be partially sold. For example, long-distance passenger transportation is now controlled by Federal Passenger Company JSC, suburban transportation is provided by regional carriers created with the participation of RZD and local authorities. Similar steps have been taken in respect of the repair business as well as many other activities.
In addition, since 2008, RZD has taken over the management of revenues and expenditures in certain areas so that investors can easily assess which areas are unprofitable or profitable, and to what extent. Such transparency, which by the time of the IPO can only have improved, will no doubt increase the confidence of investors.

CASH FLOWS BECOME PREDICTABLE 
It is worth mentioning that the state has moved forward the process of calculating tariffs on a systemic basis, which will accurately predict the revenue base of RZD several years in advance. And here it is necessary to make a small clarification. Rates for transportation by rail in Russia are divided into two parts: infrastructure and rolling stock (you can read more details on tariffs in this issue on page).
The infrastructure part, which occupies about 85%, is set by the state and is executed by the owner of the infrastructure, RZD JSC. The remaining 15% is the price that the owner of the car charges for their services to the customer. As a rule, this is the operating company, such as Freight One, The Second Freight Company or Globaltrans.
Some time ago, each day there would be a fierce debate between RZD, cargo owners and the state about the absolute value of the tariff on infrastructure. RZD was, logically, interested in the maximum possible increase in tariffs, while freight owners insisted on the minimum possible tariff and the state, which made the final decision, had to find a compromise that would satisfy the two sides.
Last year, the government developed and approved an important document – the methodology for calculating tariffs which clearly defines how, and with what parameters, specific rates are calculated. Now, anyone armed with the necessary data, a calculator and the formulas published on the Internet can independently estimate what size the tariff index will be in the next year. In general, its usefulness lies in the fact that investors can now work out the revenue of RZD themselves and draw their own conclusions about the fairness of the company’s asset prices.

FINANCIAL MARKETS ARE WAITING 
The market is awaiting the placement of RZD, judging by past IPOs of Russian railway operators, as well as the resounding success of RZD’s eurobonds issue. It has been noted that, in 2009, Globaltrans successfully sold a 29% stake for $449.5 million on the London Stock Exchange. 
It happened in the midst of the crisis, when the turnover of railroads in Russia was falling, insecurity was growing, the price of oil constantly fluctuated, and investors were searching for the markets to invest in as shares, commodities and currencies suddenly became dangerous places to be. So, Globaltrans managed to create a sort of miracle.
In a calmer 2010, TransContainer, the largest rail operator in the sector of container traffic and a subsidiary of RZD, held a not-so-brilliant but generally successful IPO. It sold a 35% stake for $389 million, which fell within the boundaries of the set range. 
In addition, TransContainer had several foreign funds among its investors for several years, as well as The European Bank For Reconstruction and Development. The Eurobonds issue of RZD has already become a classic move in the Russian financial market and has every chance of making it into the textbooks on financial management. In 2010, the company sold assets of  $1.5 billion, while initially it was planned to implement a bond of $1 billion, but in the end the amount was increased due to the tremendous demand.
In 2011, RZD JSC sold assets worth £350 million by choosing a rather difficult segment of the financial market – the pound sterling market - and the Irish Stock Exchange. Still, investors have taken the bond with enthusiasm. So, the rehearsals have been conducted successfully. We look forward to the main character’s appearance on the financial stage. 
By Ivan Stupachenko 
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/24.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Russian Railways JSC, the largest transport company in Europe and one of the largest in the world, is preparing for a partial sale. Currently, options for the sale of 10-15% of the company with an estimated starting price of $ 10-15 billion respectively, is being discussed for between 2013 and 2015 . The experts have no doubt that there will be a lot of investors. This, incidentally, confirms the success of the placing of Eurobonds of RZD JSC in the last two years.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/24.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Russian Railways JSC, the largest transport company in Europe and one of the largest in the world, is preparing for a partial sale. Currently, options for the sale of 10-15% of the company with an estimated starting price of $ 10-15 billion respectively, is being discussed for between 2013 and 2015 . The experts have no doubt that there will be a lot of investors. This, incidentally, confirms the success of the placing of Eurobonds of RZD JSC in the last two years.
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A VERY EXPENSIVE COMPANY
The idea of selling RZD through an IPO has been discussed for a long time, but was an idea rather than a project. Just a few years ago, it was impossible to imagine the sale of shares of the company to investors. The fact is that RZD JSC is not just a transportation company, providing 80% of the turnover of the country, but also a strategically important subject for national security. 
In addition, the reform of railway transport in Russia is not yet complete, therefore even in the short term it is difficult to predict how the company will look: its financial and industrial performance, structure and other parameters that are crucial to potential buyers of the shares.
However, in late 2010 Igor Shuvalov, the First Vice Premier of Russia, announced that the state plans to sell some of its own assets, including the assets of RZD JSC. 
Motivation is trite: the government is implementing large-scale expensive projects, including the organization of the Olympic Games in Sochi in 2014 and the Football World Cup in 2018, in connection with which the federal budget will inevitably face a serious deficit.
The specific approach to the sale will be determined later. At present, three ways are being discussed: selling to a strategic investor, selling through an IPO or a combination of these two options. Each way has its strengths and weaknesses.  It will be difficult to find a strategic investor because even a 10% stake of RZD JSC would cost at least $10 billion, there is hardly a railway company in the world that can raise such a sum, let alone the price tag for a larger slice. 
It is possible, of course, to sell the assets to an investor who is not related to the rail business, but in this case the investor can hardly be expected to bring any new technologies or expertise. And RZD JSC does not need just money, the company’s management has repeatedly emphasized its interest in exchanging experience in technology and logistics solutions that will see both the carrier and the economy as a whole benefit from the resulting synergies.
Selling through an IPO is usually done when the issuer is interested in selling a set of small blocks of shares among portfolio investors, investment and hedge funds. This option is good because it allows the selling of a large stake. But at the same time the company acquires a set of minority shareholders and therefore it is not protected from corporate scandals. Back in 2009 this path was chosen by the largest of non-Russian Railways rail operators – Globaltrans Investment Plc – and the company was pleased with the results of the placement of almost a third of its share capital and as for minority shareholders, they have not disturb the company’s management yet.
The combined version is the most likely to be used. However, it requires a colossal amount of work on the part of government officials and the management of RZD. However, there is the following questionable point. It may happen that even the mechanism of IPO, in which the investor has the opportunity to purchase virtually any quantity of shares, even the smallest, will not see the starting sum raised. Will there be demand for shares that cost at least $10 billion on the global financial markets? It is impossible to answer this question with any certainty.
What percentage of the shares may eventually be sold? A decision on this matter would be taken closer to the date of sale because the current macroeconomic situation and state of public finances would have to be taken into account.
Currently, out of the key figures in this area, only Igor Levitin, the Russian Transport Minister, and Vladimir Yakunin, President of RZD, have spoken. According to Mr Levitin, it makes sense to sell a 10% stake because, as mentioned above, is unlikely that investors willing to pay enough to purchase very large stakes will be found. 
Mr Yakunin has a different opinion: he believes that 15% of the assets should be sold.

A VERY TRANSPARENT COMPANY 
Nobody doubts that the shares of RZD JSC will see buyers queuing up. Regardless of how the rail transport reforms in Russia go and in which phase the country’s economy is, the revenues of the carrier will be large. Another question is what will be the dividend policy of the issuer, but this is an issue that will become clear during the negotiations with potential investors in RZD. Without a doubt, the company will follow universal practice of reasonably spending net profit on dividends and long-term development.
It should be remembered that, in 2013–2015, RZD will be a company that bears little resemblance to itself in 2003 when it officially came into being, and especially little resemblance to conglomerate the Soviet Ministry of Railways. In 2003, RZD JSC was occupied with everything: transportation, infrastructure management, traffic control, as well as many European companies were.
Currently, the whole rolling stock park is divided up into two subsidiaries – Freight One and The Second Cargo Company, which do not function as carriers obliged to provide their services to anyone at state-set rates, but as operators who have the opportunity to conduct flexible price policies and choose the most interesting customers. Control over the Freight One Company is planned to be sold this year. RZD will leave itself with the infrastructure, including the locomotive park.
The corporate structure of the company has been also changed. Before, all the key areas were controlled from a single centre, now they are distributed among subsidiaries, and some of them will also be partially sold. For example, long-distance passenger transportation is now controlled by Federal Passenger Company JSC, suburban transportation is provided by regional carriers created with the participation of RZD and local authorities. Similar steps have been taken in respect of the repair business as well as many other activities.
In addition, since 2008, RZD has taken over the management of revenues and expenditures in certain areas so that investors can easily assess which areas are unprofitable or profitable, and to what extent. Such transparency, which by the time of the IPO can only have improved, will no doubt increase the confidence of investors.

CASH FLOWS BECOME PREDICTABLE 
It is worth mentioning that the state has moved forward the process of calculating tariffs on a systemic basis, which will accurately predict the revenue base of RZD several years in advance. And here it is necessary to make a small clarification. Rates for transportation by rail in Russia are divided into two parts: infrastructure and rolling stock (you can read more details on tariffs in this issue on page).
The infrastructure part, which occupies about 85%, is set by the state and is executed by the owner of the infrastructure, RZD JSC. The remaining 15% is the price that the owner of the car charges for their services to the customer. As a rule, this is the operating company, such as Freight One, The Second Freight Company or Globaltrans.
Some time ago, each day there would be a fierce debate between RZD, cargo owners and the state about the absolute value of the tariff on infrastructure. RZD was, logically, interested in the maximum possible increase in tariffs, while freight owners insisted on the minimum possible tariff and the state, which made the final decision, had to find a compromise that would satisfy the two sides.
Last year, the government developed and approved an important document – the methodology for calculating tariffs which clearly defines how, and with what parameters, specific rates are calculated. Now, anyone armed with the necessary data, a calculator and the formulas published on the Internet can independently estimate what size the tariff index will be in the next year. In general, its usefulness lies in the fact that investors can now work out the revenue of RZD themselves and draw their own conclusions about the fairness of the company’s asset prices.

FINANCIAL MARKETS ARE WAITING 
The market is awaiting the placement of RZD, judging by past IPOs of Russian railway operators, as well as the resounding success of RZD’s eurobonds issue. It has been noted that, in 2009, Globaltrans successfully sold a 29% stake for $449.5 million on the London Stock Exchange. 
It happened in the midst of the crisis, when the turnover of railroads in Russia was falling, insecurity was growing, the price of oil constantly fluctuated, and investors were searching for the markets to invest in as shares, commodities and currencies suddenly became dangerous places to be. So, Globaltrans managed to create a sort of miracle.
In a calmer 2010, TransContainer, the largest rail operator in the sector of container traffic and a subsidiary of RZD, held a not-so-brilliant but generally successful IPO. It sold a 35% stake for $389 million, which fell within the boundaries of the set range. 
In addition, TransContainer had several foreign funds among its investors for several years, as well as The European Bank For Reconstruction and Development. The Eurobonds issue of RZD has already become a classic move in the Russian financial market and has every chance of making it into the textbooks on financial management. In 2010, the company sold assets of  $1.5 billion, while initially it was planned to implement a bond of $1 billion, but in the end the amount was increased due to the tremendous demand.
In 2011, RZD JSC sold assets worth £350 million by choosing a rather difficult segment of the financial market – the pound sterling market - and the Irish Stock Exchange. Still, investors have taken the bond with enthusiasm. So, the rehearsals have been conducted successfully. We look forward to the main character’s appearance on the financial stage. 
By Ivan Stupachenko 
    [~DETAIL_TEXT] => 
A VERY EXPENSIVE COMPANY
The idea of selling RZD through an IPO has been discussed for a long time, but was an idea rather than a project. Just a few years ago, it was impossible to imagine the sale of shares of the company to investors. The fact is that RZD JSC is not just a transportation company, providing 80% of the turnover of the country, but also a strategically important subject for national security. 
In addition, the reform of railway transport in Russia is not yet complete, therefore even in the short term it is difficult to predict how the company will look: its financial and industrial performance, structure and other parameters that are crucial to potential buyers of the shares.
However, in late 2010 Igor Shuvalov, the First Vice Premier of Russia, announced that the state plans to sell some of its own assets, including the assets of RZD JSC. 
Motivation is trite: the government is implementing large-scale expensive projects, including the organization of the Olympic Games in Sochi in 2014 and the Football World Cup in 2018, in connection with which the federal budget will inevitably face a serious deficit.
The specific approach to the sale will be determined later. At present, three ways are being discussed: selling to a strategic investor, selling through an IPO or a combination of these two options. Each way has its strengths and weaknesses.  It will be difficult to find a strategic investor because even a 10% stake of RZD JSC would cost at least $10 billion, there is hardly a railway company in the world that can raise such a sum, let alone the price tag for a larger slice. 
It is possible, of course, to sell the assets to an investor who is not related to the rail business, but in this case the investor can hardly be expected to bring any new technologies or expertise. And RZD JSC does not need just money, the company’s management has repeatedly emphasized its interest in exchanging experience in technology and logistics solutions that will see both the carrier and the economy as a whole benefit from the resulting synergies.
Selling through an IPO is usually done when the issuer is interested in selling a set of small blocks of shares among portfolio investors, investment and hedge funds. This option is good because it allows the selling of a large stake. But at the same time the company acquires a set of minority shareholders and therefore it is not protected from corporate scandals. Back in 2009 this path was chosen by the largest of non-Russian Railways rail operators – Globaltrans Investment Plc – and the company was pleased with the results of the placement of almost a third of its share capital and as for minority shareholders, they have not disturb the company’s management yet.
The combined version is the most likely to be used. However, it requires a colossal amount of work on the part of government officials and the management of RZD. However, there is the following questionable point. It may happen that even the mechanism of IPO, in which the investor has the opportunity to purchase virtually any quantity of shares, even the smallest, will not see the starting sum raised. Will there be demand for shares that cost at least $10 billion on the global financial markets? It is impossible to answer this question with any certainty.
What percentage of the shares may eventually be sold? A decision on this matter would be taken closer to the date of sale because the current macroeconomic situation and state of public finances would have to be taken into account.
Currently, out of the key figures in this area, only Igor Levitin, the Russian Transport Minister, and Vladimir Yakunin, President of RZD, have spoken. According to Mr Levitin, it makes sense to sell a 10% stake because, as mentioned above, is unlikely that investors willing to pay enough to purchase very large stakes will be found. 
Mr Yakunin has a different opinion: he believes that 15% of the assets should be sold.

A VERY TRANSPARENT COMPANY 
Nobody doubts that the shares of RZD JSC will see buyers queuing up. Regardless of how the rail transport reforms in Russia go and in which phase the country’s economy is, the revenues of the carrier will be large. Another question is what will be the dividend policy of the issuer, but this is an issue that will become clear during the negotiations with potential investors in RZD. Without a doubt, the company will follow universal practice of reasonably spending net profit on dividends and long-term development.
It should be remembered that, in 2013–2015, RZD will be a company that bears little resemblance to itself in 2003 when it officially came into being, and especially little resemblance to conglomerate the Soviet Ministry of Railways. In 2003, RZD JSC was occupied with everything: transportation, infrastructure management, traffic control, as well as many European companies were.
Currently, the whole rolling stock park is divided up into two subsidiaries – Freight One and The Second Cargo Company, which do not function as carriers obliged to provide their services to anyone at state-set rates, but as operators who have the opportunity to conduct flexible price policies and choose the most interesting customers. Control over the Freight One Company is planned to be sold this year. RZD will leave itself with the infrastructure, including the locomotive park.
The corporate structure of the company has been also changed. Before, all the key areas were controlled from a single centre, now they are distributed among subsidiaries, and some of them will also be partially sold. For example, long-distance passenger transportation is now controlled by Federal Passenger Company JSC, suburban transportation is provided by regional carriers created with the participation of RZD and local authorities. Similar steps have been taken in respect of the repair business as well as many other activities.
In addition, since 2008, RZD has taken over the management of revenues and expenditures in certain areas so that investors can easily assess which areas are unprofitable or profitable, and to what extent. Such transparency, which by the time of the IPO can only have improved, will no doubt increase the confidence of investors.

CASH FLOWS BECOME PREDICTABLE 
It is worth mentioning that the state has moved forward the process of calculating tariffs on a systemic basis, which will accurately predict the revenue base of RZD several years in advance. And here it is necessary to make a small clarification. Rates for transportation by rail in Russia are divided into two parts: infrastructure and rolling stock (you can read more details on tariffs in this issue on page).
The infrastructure part, which occupies about 85%, is set by the state and is executed by the owner of the infrastructure, RZD JSC. The remaining 15% is the price that the owner of the car charges for their services to the customer. As a rule, this is the operating company, such as Freight One, The Second Freight Company or Globaltrans.
Some time ago, each day there would be a fierce debate between RZD, cargo owners and the state about the absolute value of the tariff on infrastructure. RZD was, logically, interested in the maximum possible increase in tariffs, while freight owners insisted on the minimum possible tariff and the state, which made the final decision, had to find a compromise that would satisfy the two sides.
Last year, the government developed and approved an important document – the methodology for calculating tariffs which clearly defines how, and with what parameters, specific rates are calculated. Now, anyone armed with the necessary data, a calculator and the formulas published on the Internet can independently estimate what size the tariff index will be in the next year. In general, its usefulness lies in the fact that investors can now work out the revenue of RZD themselves and draw their own conclusions about the fairness of the company’s asset prices.

FINANCIAL MARKETS ARE WAITING 
The market is awaiting the placement of RZD, judging by past IPOs of Russian railway operators, as well as the resounding success of RZD’s eurobonds issue. It has been noted that, in 2009, Globaltrans successfully sold a 29% stake for $449.5 million on the London Stock Exchange. 
It happened in the midst of the crisis, when the turnover of railroads in Russia was falling, insecurity was growing, the price of oil constantly fluctuated, and investors were searching for the markets to invest in as shares, commodities and currencies suddenly became dangerous places to be. So, Globaltrans managed to create a sort of miracle.
In a calmer 2010, TransContainer, the largest rail operator in the sector of container traffic and a subsidiary of RZD, held a not-so-brilliant but generally successful IPO. It sold a 35% stake for $389 million, which fell within the boundaries of the set range. 
In addition, TransContainer had several foreign funds among its investors for several years, as well as The European Bank For Reconstruction and Development. The Eurobonds issue of RZD has already become a classic move in the Russian financial market and has every chance of making it into the textbooks on financial management. In 2010, the company sold assets of  $1.5 billion, while initially it was planned to implement a bond of $1 billion, but in the end the amount was increased due to the tremendous demand.
In 2011, RZD JSC sold assets worth £350 million by choosing a rather difficult segment of the financial market – the pound sterling market - and the Irish Stock Exchange. Still, investors have taken the bond with enthusiasm. So, the rehearsals have been conducted successfully. We look forward to the main character’s appearance on the financial stage. 
By Ivan Stupachenko 
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RZD will take part in Rasht - Astara project 
The President of Russian Railways, Vladimir Yakunin, signed a tripartite Memorandum of Understanding on cooperation on the project Rasht – Astara with Azerbaijan Railways and Iranian railways in Tehran on February 8, 2011. 
‘In order to develop and strengthen co-operation on railway transport between our three countries, we have agreed to a joint project to build a railway line Rasht - Astara,’ Mr Yakunin said after signing the memorandum, which was also signed by CEO of Iranian Railways Saheb Mohammadi and Chairman of Azerbaijan Railways Arif Askerov.
A direct rail link between Russian and Iran via Azerbaijan and the project to build the railway line Rasht - Astara (Iran) - Astara (Azerbaijan) is of great importance for the development of the North-South International Transport Corridor.
A joint venture will be set up to implement the project, with the partners to agree on the details in the near future.

Freight One And UVZ Extend Collaboration to 2014
Freight One and Uralvagonzavod (UVZ) have extended their collaboration until 2014. Last February, UVZ agreed to deliver 20,000 gondola cars to Freight One by 2014. The deliveries will be made in uniform batches over a two-year period.
The new contract was the result of lengthy negotiations and consultations between representatives of both companies. The companies completed a very labour-intensive assessment of how many gondolas Freight One will need in the next few years, taking into account such factors as rolling stock replacement and growth in industrial production.
Replacing its freight cars is a strategic objective for Freight One. In 2008–2010 the company purchased over 30,000 units of rolling stock from various manufacturers, including about 20,000 gondola cars. Currently, one in seven of the cars the company operates is new (purchased in 2008–2010).

Vnesheconombank and the EDB Increase Credit for Tikhvin Railway Car Building Works
On February 18, 2011, the Eurasian Development Bank (EDB) and State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ increased the credit line limit for the construction of the Tikhvin Railway Car Building Works in the Leningrad region from $ 430 million to $ 660 million. Thus, Vnesheconombank and EDB will provide $ 330 million each to the Tikhvin Railway Car Building Works.
An Agreement on opening a non-renewable credit line to build a high-technology production facility on the site of the new railway car building works in the Leningrad region was signed by Vnesheconombank, EDB and the Tikhvin Railway Car Building Works in October 2008. The funds are intended to pay for building the production facility, purchasing equipment and commissioning the plant.
A growth in the amount of borrowed funds was caused by the increased level of production automation and the increased manufacturing capacity of new-generation freight wagons and scarce railway car casting options.
The total amount of capital investment for the construction of the Tikhvin Railway Car Building Works exceeds one billion US dollars, and this is the largest production facility under construction in Europe in mechanical engineering. Production is scheduled to be started in phases in this year.

Prototype of new open wagon developed at BMZ	
A prototype universal open-top wagon of 12-3090 model with discharge hatches was produced at Bryansk Engineering Plant.
The new wagon has a capacity of 69.5 tons and 88 cubic metres of body space. The identifying feature of the Bryansk railcar lies in the fact that it is designed with axle load of 25 tons (the majority of serial wagons are designed for 23.5 tons of axle load). This open-top wagon is designated for the transportation of cargoes which do not require protection from rain and snow. 
At the present moment the open wagon has passed the first stage of preliminary testing, which was executed by experts at LLC Rolling Stock Engineering Center (ECPS, Saint-Petersburg). The braking system and parking brake have passed stationary tests. The open-top wagon has passed strength tests in empty and loaded conditions. Wagon impact tests and discharge hatch strength checks were also included in the planned scope of tests. 
At the present moment the wagon has been sent for further tests in Tver. Forces simulating operational loads will be applied to the wagon at a special bench (stretching – pressing). Open wagon (model 12-3090) tests will be finished by brake tests at a high-speed test ground at Belorechenskaya station in the Krasnodar Territory. 

FESCO Launches Additional Container Service FESCO Amur Shuttle
On April 5, 2011, FESCO Transport Group dispatched the first fast block container train as part of the new regular service of containerized cargo transportation from Silikatnaya railway station (Moscow) to Krasnaya Rechka railway station (Khabarovsk).
The name of the new project is FESCO Amur Shuttle. 
It envisages weekly transportation via fast block trains. Each of the trains will consist of 38 80-TEU container flat wagons. 
The project was carried out thanks to the cooperation of the companies incorporated into the FESCO Transport Group and in accordance with the strategy targeted at giving clients the best quality of service using the one-contact principle.
The following companies are participating in the project: FESCO Integrated Transport (responsible for working with clients), Transgarant and Russian Troyka (rolling stock providers). Containers at the destination point are serviced at a warehouse owned by Transgarant. The Ekodor terminal located at Silikatnaya station in Moscow acted as a partner of FESCO in the framework of this project.
Representatives of the FESCO Transport Group emphasized the role of RZD, which made for the development of fast container block trains. Russian Railways gave a separate train path and provided a schedule for the train to run to. Specialists at FESCO are sure that such cooperation with RZD will help to solve the imbalance in container flows and develop the distribution system of Khabarovsk, the most important consumer centre in the Far East. 

Outsourcing is the way to efficiency 
Non-commercial partnership the Outsourcing Operators’ Union was established in 2007 and now unites 60 enterprises operating in different sectors, where outsourcing is used. It is a member of the Chamber of Commerce and Industry of the Russian Federation, and a participant in the Russian Business’ Social Charter of the Russian Union of Industrialists and Entrepreneurs.
An important activity of the Union is giving assistance to small and medium businesses operating in the outsourcing sector, providing services to the housing and utilities sector, providing outsourcing of real estate facilities, maintenance and repair of power facilities, water supplies and canalisation systems.  
Other activities include consulting and all-round support to foreign businesses in Russia, deal safety support outsourcing. 
One of the basic activities of the Union is supporting and organizing professional services to develop, implement and certify management systems in accordance with international and Russian standards (ISO), integrated management systems. It also holds seminars and training sessions for specialists. 
Specialists at the Union developed and registered a system of self certification in the transport sector RosTransStandard. The system has been a success and has wider possibilities, including in the personnel certification sector and elsewhere in the transport sector.  
A prospective activity of the Union is transport machine building. The Union is a full member of non-commercial partnership the Union of Industries of Railway Equipment and it promotes the application of the International Railway Industry Standard (IRIS) in the sector’s enterprises.
A new interesting activity of partnership members is the provision of outsourcing services to state authorities and local administrations. 
Much attention is paid to the professional training and re-training of staff, recruitment, and employment assistance for dismissed personnel. 
Members of the Union have great potential to provide outsourcing help in logistics and forwarding services, IT, accountancy (outside accounting departments, auditors), cleaning (clearance of offices, hotels, commercial premises, warehouses, factories and entire territories), security and concierge services, material and technical supply services, gardening and landscaping services, etc.
One of the important businesses of the Union’s members is provision of services in the staff records management sector – outsourcing, auditing.
The partnership’s members have successfully provided operators who can provide outsourcing of basic and branch business processes for the management sector, human resources and services sector. This allows customers to make their business more efficient and get opportunity to reach their key targets. 
Contacts:
Moscow, Komsomolskaya Square, 3/30, 
building 4, office 432, 
phone: +7(499) 503 93 38
St Petersburg, Constitution Square, 7, 
BC LEADER, office 639, 
phone/fax: +7(812) 676 48 84
e-mail: info@upcoo.ru      
www.upcoo.ru
Andrey Schepochkin, 
Vice President, Chairman of the Board of non-commercial partnership, Outsourcing Operators’ Union

TransContainer acquired a 67% stake in KedenTransService	
In March 2011, TransContainer obtained control over a 67% stake in KedenTransService (20.1% directly and 46.9% indirectly through a subsidiary). KedenTransService is a leading private operator of cargo handling terminals in Kazakhstan. KedenTransService operates 17 terminal facilities across Kazakhstan and also owns a fleet of 30 freight locomotives.  In addition, KedenTransService provides customers with a wide range of freight forwarding, logistics and customs clearance services, as well as cargo transshipment at the Dostyk cross border terminal to and from China.
TransContainer obtained bank financing to fund the acquisition of this stake in KedenTransService. Following this acquisition, Kazakhstan Temir Zholy, the Kazakh state-owned railway company, will hold a 33% stake in KedenTransService. 
Kazakhstan Temir Zholy also has an option to buy back a stake of up to 17% in KedenTransService from TransContainer. TransContainer and Kazakhstan Temir Zholy have also agreed on the general principles of co-operation in the Republic of Kazakhstan targeted at increasing transit rail container traffic between Asia and Europe by means of the provision of integrated logistics services both in Russia and Kazakhstan, as well as to establish a unified container handling infrastructure and optimise the terminal handling business for transit container transportation.
    [~DETAIL_TEXT] => 
RZD will take part in Rasht - Astara project 
The President of Russian Railways, Vladimir Yakunin, signed a tripartite Memorandum of Understanding on cooperation on the project Rasht – Astara with Azerbaijan Railways and Iranian railways in Tehran on February 8, 2011. 
‘In order to develop and strengthen co-operation on railway transport between our three countries, we have agreed to a joint project to build a railway line Rasht - Astara,’ Mr Yakunin said after signing the memorandum, which was also signed by CEO of Iranian Railways Saheb Mohammadi and Chairman of Azerbaijan Railways Arif Askerov.
A direct rail link between Russian and Iran via Azerbaijan and the project to build the railway line Rasht - Astara (Iran) - Astara (Azerbaijan) is of great importance for the development of the North-South International Transport Corridor.
A joint venture will be set up to implement the project, with the partners to agree on the details in the near future.

Freight One And UVZ Extend Collaboration to 2014
Freight One and Uralvagonzavod (UVZ) have extended their collaboration until 2014. Last February, UVZ agreed to deliver 20,000 gondola cars to Freight One by 2014. The deliveries will be made in uniform batches over a two-year period.
The new contract was the result of lengthy negotiations and consultations between representatives of both companies. The companies completed a very labour-intensive assessment of how many gondolas Freight One will need in the next few years, taking into account such factors as rolling stock replacement and growth in industrial production.
Replacing its freight cars is a strategic objective for Freight One. In 2008–2010 the company purchased over 30,000 units of rolling stock from various manufacturers, including about 20,000 gondola cars. Currently, one in seven of the cars the company operates is new (purchased in 2008–2010).

Vnesheconombank and the EDB Increase Credit for Tikhvin Railway Car Building Works
On February 18, 2011, the Eurasian Development Bank (EDB) and State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ increased the credit line limit for the construction of the Tikhvin Railway Car Building Works in the Leningrad region from $ 430 million to $ 660 million. Thus, Vnesheconombank and EDB will provide $ 330 million each to the Tikhvin Railway Car Building Works.
An Agreement on opening a non-renewable credit line to build a high-technology production facility on the site of the new railway car building works in the Leningrad region was signed by Vnesheconombank, EDB and the Tikhvin Railway Car Building Works in October 2008. The funds are intended to pay for building the production facility, purchasing equipment and commissioning the plant.
A growth in the amount of borrowed funds was caused by the increased level of production automation and the increased manufacturing capacity of new-generation freight wagons and scarce railway car casting options.
The total amount of capital investment for the construction of the Tikhvin Railway Car Building Works exceeds one billion US dollars, and this is the largest production facility under construction in Europe in mechanical engineering. Production is scheduled to be started in phases in this year.

Prototype of new open wagon developed at BMZ	
A prototype universal open-top wagon of 12-3090 model with discharge hatches was produced at Bryansk Engineering Plant.
The new wagon has a capacity of 69.5 tons and 88 cubic metres of body space. The identifying feature of the Bryansk railcar lies in the fact that it is designed with axle load of 25 tons (the majority of serial wagons are designed for 23.5 tons of axle load). This open-top wagon is designated for the transportation of cargoes which do not require protection from rain and snow. 
At the present moment the open wagon has passed the first stage of preliminary testing, which was executed by experts at LLC Rolling Stock Engineering Center (ECPS, Saint-Petersburg). The braking system and parking brake have passed stationary tests. The open-top wagon has passed strength tests in empty and loaded conditions. Wagon impact tests and discharge hatch strength checks were also included in the planned scope of tests. 
At the present moment the wagon has been sent for further tests in Tver. Forces simulating operational loads will be applied to the wagon at a special bench (stretching – pressing). Open wagon (model 12-3090) tests will be finished by brake tests at a high-speed test ground at Belorechenskaya station in the Krasnodar Territory. 

FESCO Launches Additional Container Service FESCO Amur Shuttle
On April 5, 2011, FESCO Transport Group dispatched the first fast block container train as part of the new regular service of containerized cargo transportation from Silikatnaya railway station (Moscow) to Krasnaya Rechka railway station (Khabarovsk).
The name of the new project is FESCO Amur Shuttle. 
It envisages weekly transportation via fast block trains. Each of the trains will consist of 38 80-TEU container flat wagons. 
The project was carried out thanks to the cooperation of the companies incorporated into the FESCO Transport Group and in accordance with the strategy targeted at giving clients the best quality of service using the one-contact principle.
The following companies are participating in the project: FESCO Integrated Transport (responsible for working with clients), Transgarant and Russian Troyka (rolling stock providers). Containers at the destination point are serviced at a warehouse owned by Transgarant. The Ekodor terminal located at Silikatnaya station in Moscow acted as a partner of FESCO in the framework of this project.
Representatives of the FESCO Transport Group emphasized the role of RZD, which made for the development of fast container block trains. Russian Railways gave a separate train path and provided a schedule for the train to run to. Specialists at FESCO are sure that such cooperation with RZD will help to solve the imbalance in container flows and develop the distribution system of Khabarovsk, the most important consumer centre in the Far East. 

Outsourcing is the way to efficiency 
Non-commercial partnership the Outsourcing Operators’ Union was established in 2007 and now unites 60 enterprises operating in different sectors, where outsourcing is used. It is a member of the Chamber of Commerce and Industry of the Russian Federation, and a participant in the Russian Business’ Social Charter of the Russian Union of Industrialists and Entrepreneurs.
An important activity of the Union is giving assistance to small and medium businesses operating in the outsourcing sector, providing services to the housing and utilities sector, providing outsourcing of real estate facilities, maintenance and repair of power facilities, water supplies and canalisation systems.  
Other activities include consulting and all-round support to foreign businesses in Russia, deal safety support outsourcing. 
One of the basic activities of the Union is supporting and organizing professional services to develop, implement and certify management systems in accordance with international and Russian standards (ISO), integrated management systems. It also holds seminars and training sessions for specialists. 
Specialists at the Union developed and registered a system of self certification in the transport sector RosTransStandard. The system has been a success and has wider possibilities, including in the personnel certification sector and elsewhere in the transport sector.  
A prospective activity of the Union is transport machine building. The Union is a full member of non-commercial partnership the Union of Industries of Railway Equipment and it promotes the application of the International Railway Industry Standard (IRIS) in the sector’s enterprises.
A new interesting activity of partnership members is the provision of outsourcing services to state authorities and local administrations. 
Much attention is paid to the professional training and re-training of staff, recruitment, and employment assistance for dismissed personnel. 
Members of the Union have great potential to provide outsourcing help in logistics and forwarding services, IT, accountancy (outside accounting departments, auditors), cleaning (clearance of offices, hotels, commercial premises, warehouses, factories and entire territories), security and concierge services, material and technical supply services, gardening and landscaping services, etc.
One of the important businesses of the Union’s members is provision of services in the staff records management sector – outsourcing, auditing.
The partnership’s members have successfully provided operators who can provide outsourcing of basic and branch business processes for the management sector, human resources and services sector. This allows customers to make their business more efficient and get opportunity to reach their key targets. 
Contacts:
Moscow, Komsomolskaya Square, 3/30, 
building 4, office 432, 
phone: +7(499) 503 93 38
St Petersburg, Constitution Square, 7, 
BC LEADER, office 639, 
phone/fax: +7(812) 676 48 84
e-mail: info@upcoo.ru      
www.upcoo.ru
Andrey Schepochkin, 
Vice President, Chairman of the Board of non-commercial partnership, Outsourcing Operators’ Union

TransContainer acquired a 67% stake in KedenTransService	
In March 2011, TransContainer obtained control over a 67% stake in KedenTransService (20.1% directly and 46.9% indirectly through a subsidiary). KedenTransService is a leading private operator of cargo handling terminals in Kazakhstan. KedenTransService operates 17 terminal facilities across Kazakhstan and also owns a fleet of 30 freight locomotives.  In addition, KedenTransService provides customers with a wide range of freight forwarding, logistics and customs clearance services, as well as cargo transshipment at the Dostyk cross border terminal to and from China.
TransContainer obtained bank financing to fund the acquisition of this stake in KedenTransService. Following this acquisition, Kazakhstan Temir Zholy, the Kazakh state-owned railway company, will hold a 33% stake in KedenTransService. 
Kazakhstan Temir Zholy also has an option to buy back a stake of up to 17% in KedenTransService from TransContainer. TransContainer and Kazakhstan Temir Zholy have also agreed on the general principles of co-operation in the Republic of Kazakhstan targeted at increasing transit rail container traffic between Asia and Europe by means of the provision of integrated logistics services both in Russia and Kazakhstan, as well as to establish a unified container handling infrastructure and optimise the terminal handling business for transit container transportation.
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    [PREVIEW_TEXT] => The President of Russian Railways, Vladimir Yakunin, signed a tripartite Memorandum of Understanding on cooperation on the project Rasht – Astara with Azerbaijan Railways and Iranian railways in Tehran on February 8, 2011.
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RZD will take part in Rasht - Astara project 
The President of Russian Railways, Vladimir Yakunin, signed a tripartite Memorandum of Understanding on cooperation on the project Rasht – Astara with Azerbaijan Railways and Iranian railways in Tehran on February 8, 2011. 
‘In order to develop and strengthen co-operation on railway transport between our three countries, we have agreed to a joint project to build a railway line Rasht - Astara,’ Mr Yakunin said after signing the memorandum, which was also signed by CEO of Iranian Railways Saheb Mohammadi and Chairman of Azerbaijan Railways Arif Askerov.
A direct rail link between Russian and Iran via Azerbaijan and the project to build the railway line Rasht - Astara (Iran) - Astara (Azerbaijan) is of great importance for the development of the North-South International Transport Corridor.
A joint venture will be set up to implement the project, with the partners to agree on the details in the near future.

Freight One And UVZ Extend Collaboration to 2014
Freight One and Uralvagonzavod (UVZ) have extended their collaboration until 2014. Last February, UVZ agreed to deliver 20,000 gondola cars to Freight One by 2014. The deliveries will be made in uniform batches over a two-year period.
The new contract was the result of lengthy negotiations and consultations between representatives of both companies. The companies completed a very labour-intensive assessment of how many gondolas Freight One will need in the next few years, taking into account such factors as rolling stock replacement and growth in industrial production.
Replacing its freight cars is a strategic objective for Freight One. In 2008–2010 the company purchased over 30,000 units of rolling stock from various manufacturers, including about 20,000 gondola cars. Currently, one in seven of the cars the company operates is new (purchased in 2008–2010).

Vnesheconombank and the EDB Increase Credit for Tikhvin Railway Car Building Works
On February 18, 2011, the Eurasian Development Bank (EDB) and State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ increased the credit line limit for the construction of the Tikhvin Railway Car Building Works in the Leningrad region from $ 430 million to $ 660 million. Thus, Vnesheconombank and EDB will provide $ 330 million each to the Tikhvin Railway Car Building Works.
An Agreement on opening a non-renewable credit line to build a high-technology production facility on the site of the new railway car building works in the Leningrad region was signed by Vnesheconombank, EDB and the Tikhvin Railway Car Building Works in October 2008. The funds are intended to pay for building the production facility, purchasing equipment and commissioning the plant.
A growth in the amount of borrowed funds was caused by the increased level of production automation and the increased manufacturing capacity of new-generation freight wagons and scarce railway car casting options.
The total amount of capital investment for the construction of the Tikhvin Railway Car Building Works exceeds one billion US dollars, and this is the largest production facility under construction in Europe in mechanical engineering. Production is scheduled to be started in phases in this year.

Prototype of new open wagon developed at BMZ	
A prototype universal open-top wagon of 12-3090 model with discharge hatches was produced at Bryansk Engineering Plant.
The new wagon has a capacity of 69.5 tons and 88 cubic metres of body space. The identifying feature of the Bryansk railcar lies in the fact that it is designed with axle load of 25 tons (the majority of serial wagons are designed for 23.5 tons of axle load). This open-top wagon is designated for the transportation of cargoes which do not require protection from rain and snow. 
At the present moment the open wagon has passed the first stage of preliminary testing, which was executed by experts at LLC Rolling Stock Engineering Center (ECPS, Saint-Petersburg). The braking system and parking brake have passed stationary tests. The open-top wagon has passed strength tests in empty and loaded conditions. Wagon impact tests and discharge hatch strength checks were also included in the planned scope of tests. 
At the present moment the wagon has been sent for further tests in Tver. Forces simulating operational loads will be applied to the wagon at a special bench (stretching – pressing). Open wagon (model 12-3090) tests will be finished by brake tests at a high-speed test ground at Belorechenskaya station in the Krasnodar Territory. 

FESCO Launches Additional Container Service FESCO Amur Shuttle
On April 5, 2011, FESCO Transport Group dispatched the first fast block container train as part of the new regular service of containerized cargo transportation from Silikatnaya railway station (Moscow) to Krasnaya Rechka railway station (Khabarovsk).
The name of the new project is FESCO Amur Shuttle. 
It envisages weekly transportation via fast block trains. Each of the trains will consist of 38 80-TEU container flat wagons. 
The project was carried out thanks to the cooperation of the companies incorporated into the FESCO Transport Group and in accordance with the strategy targeted at giving clients the best quality of service using the one-contact principle.
The following companies are participating in the project: FESCO Integrated Transport (responsible for working with clients), Transgarant and Russian Troyka (rolling stock providers). Containers at the destination point are serviced at a warehouse owned by Transgarant. The Ekodor terminal located at Silikatnaya station in Moscow acted as a partner of FESCO in the framework of this project.
Representatives of the FESCO Transport Group emphasized the role of RZD, which made for the development of fast container block trains. Russian Railways gave a separate train path and provided a schedule for the train to run to. Specialists at FESCO are sure that such cooperation with RZD will help to solve the imbalance in container flows and develop the distribution system of Khabarovsk, the most important consumer centre in the Far East. 

Outsourcing is the way to efficiency 
Non-commercial partnership the Outsourcing Operators’ Union was established in 2007 and now unites 60 enterprises operating in different sectors, where outsourcing is used. It is a member of the Chamber of Commerce and Industry of the Russian Federation, and a participant in the Russian Business’ Social Charter of the Russian Union of Industrialists and Entrepreneurs.
An important activity of the Union is giving assistance to small and medium businesses operating in the outsourcing sector, providing services to the housing and utilities sector, providing outsourcing of real estate facilities, maintenance and repair of power facilities, water supplies and canalisation systems.  
Other activities include consulting and all-round support to foreign businesses in Russia, deal safety support outsourcing. 
One of the basic activities of the Union is supporting and organizing professional services to develop, implement and certify management systems in accordance with international and Russian standards (ISO), integrated management systems. It also holds seminars and training sessions for specialists. 
Specialists at the Union developed and registered a system of self certification in the transport sector RosTransStandard. The system has been a success and has wider possibilities, including in the personnel certification sector and elsewhere in the transport sector.  
A prospective activity of the Union is transport machine building. The Union is a full member of non-commercial partnership the Union of Industries of Railway Equipment and it promotes the application of the International Railway Industry Standard (IRIS) in the sector’s enterprises.
A new interesting activity of partnership members is the provision of outsourcing services to state authorities and local administrations. 
Much attention is paid to the professional training and re-training of staff, recruitment, and employment assistance for dismissed personnel. 
Members of the Union have great potential to provide outsourcing help in logistics and forwarding services, IT, accountancy (outside accounting departments, auditors), cleaning (clearance of offices, hotels, commercial premises, warehouses, factories and entire territories), security and concierge services, material and technical supply services, gardening and landscaping services, etc.
One of the important businesses of the Union’s members is provision of services in the staff records management sector – outsourcing, auditing.
The partnership’s members have successfully provided operators who can provide outsourcing of basic and branch business processes for the management sector, human resources and services sector. This allows customers to make their business more efficient and get opportunity to reach their key targets. 
Contacts:
Moscow, Komsomolskaya Square, 3/30, 
building 4, office 432, 
phone: +7(499) 503 93 38
St Petersburg, Constitution Square, 7, 
BC LEADER, office 639, 
phone/fax: +7(812) 676 48 84
e-mail: info@upcoo.ru      
www.upcoo.ru
Andrey Schepochkin, 
Vice President, Chairman of the Board of non-commercial partnership, Outsourcing Operators’ Union

TransContainer acquired a 67% stake in KedenTransService	
In March 2011, TransContainer obtained control over a 67% stake in KedenTransService (20.1% directly and 46.9% indirectly through a subsidiary). KedenTransService is a leading private operator of cargo handling terminals in Kazakhstan. KedenTransService operates 17 terminal facilities across Kazakhstan and also owns a fleet of 30 freight locomotives.  In addition, KedenTransService provides customers with a wide range of freight forwarding, logistics and customs clearance services, as well as cargo transshipment at the Dostyk cross border terminal to and from China.
TransContainer obtained bank financing to fund the acquisition of this stake in KedenTransService. Following this acquisition, Kazakhstan Temir Zholy, the Kazakh state-owned railway company, will hold a 33% stake in KedenTransService. 
Kazakhstan Temir Zholy also has an option to buy back a stake of up to 17% in KedenTransService from TransContainer. TransContainer and Kazakhstan Temir Zholy have also agreed on the general principles of co-operation in the Republic of Kazakhstan targeted at increasing transit rail container traffic between Asia and Europe by means of the provision of integrated logistics services both in Russia and Kazakhstan, as well as to establish a unified container handling infrastructure and optimise the terminal handling business for transit container transportation.
    [~DETAIL_TEXT] => 
RZD will take part in Rasht - Astara project 
The President of Russian Railways, Vladimir Yakunin, signed a tripartite Memorandum of Understanding on cooperation on the project Rasht – Astara with Azerbaijan Railways and Iranian railways in Tehran on February 8, 2011. 
‘In order to develop and strengthen co-operation on railway transport between our three countries, we have agreed to a joint project to build a railway line Rasht - Astara,’ Mr Yakunin said after signing the memorandum, which was also signed by CEO of Iranian Railways Saheb Mohammadi and Chairman of Azerbaijan Railways Arif Askerov.
A direct rail link between Russian and Iran via Azerbaijan and the project to build the railway line Rasht - Astara (Iran) - Astara (Azerbaijan) is of great importance for the development of the North-South International Transport Corridor.
A joint venture will be set up to implement the project, with the partners to agree on the details in the near future.

Freight One And UVZ Extend Collaboration to 2014
Freight One and Uralvagonzavod (UVZ) have extended their collaboration until 2014. Last February, UVZ agreed to deliver 20,000 gondola cars to Freight One by 2014. The deliveries will be made in uniform batches over a two-year period.
The new contract was the result of lengthy negotiations and consultations between representatives of both companies. The companies completed a very labour-intensive assessment of how many gondolas Freight One will need in the next few years, taking into account such factors as rolling stock replacement and growth in industrial production.
Replacing its freight cars is a strategic objective for Freight One. In 2008–2010 the company purchased over 30,000 units of rolling stock from various manufacturers, including about 20,000 gondola cars. Currently, one in seven of the cars the company operates is new (purchased in 2008–2010).

Vnesheconombank and the EDB Increase Credit for Tikhvin Railway Car Building Works
On February 18, 2011, the Eurasian Development Bank (EDB) and State Corporation ‘Bank for Development and Foreign Economic Affairs (Vnesheconombank)’ increased the credit line limit for the construction of the Tikhvin Railway Car Building Works in the Leningrad region from $ 430 million to $ 660 million. Thus, Vnesheconombank and EDB will provide $ 330 million each to the Tikhvin Railway Car Building Works.
An Agreement on opening a non-renewable credit line to build a high-technology production facility on the site of the new railway car building works in the Leningrad region was signed by Vnesheconombank, EDB and the Tikhvin Railway Car Building Works in October 2008. The funds are intended to pay for building the production facility, purchasing equipment and commissioning the plant.
A growth in the amount of borrowed funds was caused by the increased level of production automation and the increased manufacturing capacity of new-generation freight wagons and scarce railway car casting options.
The total amount of capital investment for the construction of the Tikhvin Railway Car Building Works exceeds one billion US dollars, and this is the largest production facility under construction in Europe in mechanical engineering. Production is scheduled to be started in phases in this year.

Prototype of new open wagon developed at BMZ	
A prototype universal open-top wagon of 12-3090 model with discharge hatches was produced at Bryansk Engineering Plant.
The new wagon has a capacity of 69.5 tons and 88 cubic metres of body space. The identifying feature of the Bryansk railcar lies in the fact that it is designed with axle load of 25 tons (the majority of serial wagons are designed for 23.5 tons of axle load). This open-top wagon is designated for the transportation of cargoes which do not require protection from rain and snow. 
At the present moment the open wagon has passed the first stage of preliminary testing, which was executed by experts at LLC Rolling Stock Engineering Center (ECPS, Saint-Petersburg). The braking system and parking brake have passed stationary tests. The open-top wagon has passed strength tests in empty and loaded conditions. Wagon impact tests and discharge hatch strength checks were also included in the planned scope of tests. 
At the present moment the wagon has been sent for further tests in Tver. Forces simulating operational loads will be applied to the wagon at a special bench (stretching – pressing). Open wagon (model 12-3090) tests will be finished by brake tests at a high-speed test ground at Belorechenskaya station in the Krasnodar Territory. 

FESCO Launches Additional Container Service FESCO Amur Shuttle
On April 5, 2011, FESCO Transport Group dispatched the first fast block container train as part of the new regular service of containerized cargo transportation from Silikatnaya railway station (Moscow) to Krasnaya Rechka railway station (Khabarovsk).
The name of the new project is FESCO Amur Shuttle. 
It envisages weekly transportation via fast block trains. Each of the trains will consist of 38 80-TEU container flat wagons. 
The project was carried out thanks to the cooperation of the companies incorporated into the FESCO Transport Group and in accordance with the strategy targeted at giving clients the best quality of service using the one-contact principle.
The following companies are participating in the project: FESCO Integrated Transport (responsible for working with clients), Transgarant and Russian Troyka (rolling stock providers). Containers at the destination point are serviced at a warehouse owned by Transgarant. The Ekodor terminal located at Silikatnaya station in Moscow acted as a partner of FESCO in the framework of this project.
Representatives of the FESCO Transport Group emphasized the role of RZD, which made for the development of fast container block trains. Russian Railways gave a separate train path and provided a schedule for the train to run to. Specialists at FESCO are sure that such cooperation with RZD will help to solve the imbalance in container flows and develop the distribution system of Khabarovsk, the most important consumer centre in the Far East. 

Outsourcing is the way to efficiency 
Non-commercial partnership the Outsourcing Operators’ Union was established in 2007 and now unites 60 enterprises operating in different sectors, where outsourcing is used. It is a member of the Chamber of Commerce and Industry of the Russian Federation, and a participant in the Russian Business’ Social Charter of the Russian Union of Industrialists and Entrepreneurs.
An important activity of the Union is giving assistance to small and medium businesses operating in the outsourcing sector, providing services to the housing and utilities sector, providing outsourcing of real estate facilities, maintenance and repair of power facilities, water supplies and canalisation systems.  
Other activities include consulting and all-round support to foreign businesses in Russia, deal safety support outsourcing. 
One of the basic activities of the Union is supporting and organizing professional services to develop, implement and certify management systems in accordance with international and Russian standards (ISO), integrated management systems. It also holds seminars and training sessions for specialists. 
Specialists at the Union developed and registered a system of self certification in the transport sector RosTransStandard. The system has been a success and has wider possibilities, including in the personnel certification sector and elsewhere in the transport sector.  
A prospective activity of the Union is transport machine building. The Union is a full member of non-commercial partnership the Union of Industries of Railway Equipment and it promotes the application of the International Railway Industry Standard (IRIS) in the sector’s enterprises.
A new interesting activity of partnership members is the provision of outsourcing services to state authorities and local administrations. 
Much attention is paid to the professional training and re-training of staff, recruitment, and employment assistance for dismissed personnel. 
Members of the Union have great potential to provide outsourcing help in logistics and forwarding services, IT, accountancy (outside accounting departments, auditors), cleaning (clearance of offices, hotels, commercial premises, warehouses, factories and entire territories), security and concierge services, material and technical supply services, gardening and landscaping services, etc.
One of the important businesses of the Union’s members is provision of services in the staff records management sector – outsourcing, auditing.
The partnership’s members have successfully provided operators who can provide outsourcing of basic and branch business processes for the management sector, human resources and services sector. This allows customers to make their business more efficient and get opportunity to reach their key targets. 
Contacts:
Moscow, Komsomolskaya Square, 3/30, 
building 4, office 432, 
phone: +7(499) 503 93 38
St Petersburg, Constitution Square, 7, 
BC LEADER, office 639, 
phone/fax: +7(812) 676 48 84
e-mail: info@upcoo.ru      
www.upcoo.ru
Andrey Schepochkin, 
Vice President, Chairman of the Board of non-commercial partnership, Outsourcing Operators’ Union

TransContainer acquired a 67% stake in KedenTransService	
In March 2011, TransContainer obtained control over a 67% stake in KedenTransService (20.1% directly and 46.9% indirectly through a subsidiary). KedenTransService is a leading private operator of cargo handling terminals in Kazakhstan. KedenTransService operates 17 terminal facilities across Kazakhstan and also owns a fleet of 30 freight locomotives.  In addition, KedenTransService provides customers with a wide range of freight forwarding, logistics and customs clearance services, as well as cargo transshipment at the Dostyk cross border terminal to and from China.
TransContainer obtained bank financing to fund the acquisition of this stake in KedenTransService. Following this acquisition, Kazakhstan Temir Zholy, the Kazakh state-owned railway company, will hold a 33% stake in KedenTransService. 
Kazakhstan Temir Zholy also has an option to buy back a stake of up to 17% in KedenTransService from TransContainer. TransContainer and Kazakhstan Temir Zholy have also agreed on the general principles of co-operation in the Republic of Kazakhstan targeted at increasing transit rail container traffic between Asia and Europe by means of the provision of integrated logistics services both in Russia and Kazakhstan, as well as to establish a unified container handling infrastructure and optimise the terminal handling business for transit container transportation.
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Heading East
One of the major trends that gained a foothold last year was the increase of the share of Far Eastern sea ports in the total cargo handling volume. In comparison with 2009, it grew by 3.9%, while those of the North-Western and the Southern ports fell by 1.7% and 2.1% respectively. In total, operators at the Far Eastern sea terminals handled 118.1 million tons in 2010, a 28.1% increase as compared with the previous year.
Such a significant growth was to some degree brought about by liquid bulk – its handling volume increased by 60% to 53.6 million tons. This was due to the new handling capacities for hydrocarbons, which were put into operation recently. Remember, a special sea port for oil handling was opened in the Kozmino Bay more than a year ago. It is the final point of the East Siberia –Pacific Ocean oil pipeline (the ESPO). In 2010, it handled over 15.3 million tons of crude oil. Moreover, Russian oil is actively exported from the Sakhalin shelf fields, in particular, 16.1 million tons of this cargo was handled via the port of Prigorodnoye last year.
Meanwhile, dry cargoes make the larger share of the throughput of the Far Eastern ports, and in 2010 their volume grew by 10.3% year-on-year to 64.5 million tons. Of that, coal amounted to 34.9 million tons (+15.1% year-on-year). The growth was brought about by two factors – the growing demand in the countries of the Asian and the Pacific region, and the special coal terminal (owned by Daltransugol, located in the Vanino sea port) reaching 66 per cent of its projected capacity. 
In comparison, the results of other cargoes seem to be less outstanding, but it is worth mentioning the increase in containerised cargo handling volume (+27.1% to 7.4 million tons). As Vyacheslav Pertsev, CEO of Vladivostok Sea Commercial Port (VMTP) noted, it was a consequence of the economic recovery after the global crisis. ‘VMTP has reached the mark of changing its freight flow radically in favour of containers. Last year, we serviced 338,893 TEU. It is a sign for the stevedore business in the region. 
Earlier, such volume was handled by our colleagues operating at special terminals, which are physically larger than the VMTP’s area for container handling. We are becoming more attractive for line service, and this is proved by the fact that in 2010 such famous sea operators as KMTC Line and Maersk Line came to us. Nowadays, we are negotiating with other companies,’ tells Mr Pertsev. In his words, the company plans to handle approximately 400,000 TEU in 2011, and according to the company’s development strategy, annual container handling volume is to grow to 650,000 TEU by 2015. ‘The present-day figures show that we can reach this volume earlier than 2015,’ he sums up.
Stevedores in the Southern basin, who used to lead according to throughput growth rates, saw a small decline last year. In 2010, the total handling volume of the Southern ports was 180.2 million tons, a 0.4% decrease as compared with the previous year. Throughput of both liquid and dry cargoes dropped. That of liquid bulk fell by 0.5% year-on-year to 115.9 million tons. The handling volume of dry cargoes reduced by 0.2% to 64.3 million tons. According to experts at the Sea Commercial Ports Association (the ASOP), such a result was caused by the abrupt reduction in grain supplies (the RF Government banned grain export in July 2010). Thus, the volume of one of the basic cargoes for the southern ports fell by 35.8% to 13.7 million tons. Crude oil transportation via the ports also reduced (-2.5% to 85.4 million tons). The decline was not even compensated for by the growth in petrochemicals handling volume (+6.8% to 29.2 million tons).
  Earlier, the total dynamics of sea terminals of the Russian South were positive due to, first of all, Novorossiysk stevedores. In 2010, the smaller figures of the latter caused the overall negative result. In particular, the throughput of Novorossiysk Commercial Sea Port (NMTP) reduced by 8.4% (to 73.9 million tons) due to the decline in volumes of grain, ferrous metals, ore and liquid bulk. The increasing volume of mineral fertilisers, sugar and non-ferrous metals failed to improve the situation. Meanwhile, Novoroslesexport (incorporated into the NMTP group of companies) improved its 2009 results by 34.6% (to 3.26 million tons) due to the growth of containerised and forest cargo handling volumes. 
When commenting on the results of 2010, Igor Vilinov, CEO of the NMTP, remarked, ‘According to the results of the year, the company showed a forecasted balanced result that proved the importance of further investment into our cargo and geographical base diversification as the basis for growth. The success in the container segment indicated that we chose the correct strategic priorities for investments.’
Operators of sea terminals in the North-Western basin demonstrated stable results last year. Their throughput grew by 2% in comparison with 2009, and amounted to 227.7 million tons. Unlike the previous year, the increase was brought about by dry cargoes, the handling volume of which rose by 9.7% to 82.8 million tons. Handling of containerised cargoes, mineral fertilisers, ferrous metals and ore grew most of all. 
At the same time, coal handling volumes fell by 9.6% to 24.9 million tons. Liquid bulk handling decreased too (-2% to 144.89 million tons). Of that, 95.8 million tons of crude oil was handled, a 4.8% decline compared with 2009. 
These data show that there is a trend for oil and coal export re-orientation from the western direction to the eastern. Experts blame weak prospects for raw hydrocarbons consumption growth in Europe and a fast increase of demand in the countries of the Asian and the Pacific region.

Plans and Forecasts 
As for forecasts for this and the coming years, in the opinion of analysts, raw hydrocarbon exports via Russia’s north-western ports will continue to stagnate, and its flow in an easterly direction will increase. Thus, there appears the problem of a lack of handling capacities, especially at coal terminals. According to Viktor Olersky, Deputy Transport Minister of Russia, in the whole country the lack of port capacities in this sector amounts to 50 millions tons per annum. In particular, a number of large projects have been announced in the Far Eastern basin. 
For example, the coal handling capacities in the Vostochny port are to be enlarged by 40%, and SUEK’s terminal at the Muchka Bay is to reach its projected capacity of 12 million tons per annum. Experts note, however, that further prospects for dry cargo handling in the Far East depend on the expansion of railway infrastructure carrying capacity in this direction. Thus, in 2010, the railway failed to fulfill cargo owners’ applications for transportation of 10 million tons to Far Eastern ports. 
Also, there are serious plans for the Northern Sea Route. In spring 2011, a 70,000 dwt tanker loaded with stable gas condensate is to make its first trip from the Vitino port to the countries of the Asian and the Pacific region. All in all, at least three such trips are supposed to take place in summer.  At the end of August, through trips from the west to the east will be made by vessels, the ice class of which is lower than that of 70,000 dwt ships, but their deadweight will be 100,000 and 150,000 tons. Nuclear icebreakers will escort them. During this period, NOVATEK (one of the major consignors on the Northern Sea Route) plans to transport about 400,000 tons of stable gas condensate. Also, approximately 150,000 tons of oil and 600,000-700,000 tons of iron-ore concentrate is planned to be carried via the Northern Sea Route to China in 2011. Nowadays, the possibilities for back loading and cargo transportation from Japan to Europe are being examined.    

Stevedoring Business Enlarges
Special attention should be paid to the assets consolidation processes, which are going on in the Russian port sector. Last year, one remarkable event was the announcement  of the biggest deal in the history of Russian stevedoring – the merger of the Novorossiysk Sea Port (NMTP) – and the leader according to handling volume in the Baltic Sea – the Primorsk Commercial Port, specialising in oil and petrochemicals exports. The contract was concluded last January. As a result, port assets were consolidated in the framework of one company. Its new controlling shareholder is the alliance of state oil pipeline monopolist Transneft and a private company Summa Capital (Ziyavudin Magomedov is considered its main owner). 
Experts note the unusual type of deal, which included two interconnected operations. Transneft and Summa Capital, which own the Primorsk Commercial Port, sold the NMTP 100% of their assets for $2.15 billion. The money was spent on purchasing a 50.1% shareholding in the NMTP from its majority shareholders – Alexander Skorobogatko, Alexander Ponomarenko, and Arkady Rottenberg. Experts have different visions of the prospects for the merger, but all of them agree that the result of the contract is the formation of the largest stevedoring company in Russia, whose share is about one third of all foreign trade sea transportation in the country.
It is worth mentioning another event that happened in 2011. Recently, it became known that the structures owned by Gennady Timchenko, a trader, were purchasing Murmansk Commercial Sea Port (MMTP) for $250 million. Nowadays, 25.49% of the port belongs to the state, 34.97% is owned by Specialized Project InvestmentsB.V. and 12.68% – by Laterium Commercial Limited. In August 2010, Vladimir Putin, the Russian Premier, signed a decree on the implementation of a ‘golden share’ for two Russian commercial sea ports – the NMPT and the MMTP. The ‘golden share’ gives the state the right to block shareholders’ decisions on amendments to the company’s charter, as well as on liquidation, restructuring, large contracts and interest contracts.
Nowadays, the MMTP is one of the key terminals for Russia’s coal exports and the fourth largest port in Russia. At present, the port is underloaded – its technical capacity is 20 million tons, but its throughput in 2010 was 12.87 million tons, a 14.8% decline in comparison with 2009. Of that, 9.64 million tons was coal. The larger part of the coal (7 million tons) was exported by Siberian Coal Energy Company (SUEK).
We should remember that the structures owned by Mr Timchenko started to buy assets in the oil and gas sector in 2009. The trader started with the purchase of a 23% share in Novatek (the second largest gas producer in Russia), and then he consolidated almost 80% of Stroytransgas, arranged the purchase of a large oil servicing company, Geotech Oil Services, bought a terminal for oil bulk handling in Ust-Luga at the Baltic Sea and 30% of the Lagansky block on the Caspian shelf. Also, Mr Timchenko has a project in Novorossiysk – his Gunvor and the NMTP will build there a black oil terminal. Its capacity will amount to 4 million tons per annum, and its cost will be $50-60 million.
Representatives of Gunvor refuse to comment on the deal concerning the MMTP. According to some data sources, it is to be completed in the first quarter of 2011.
Analysts consider that the merger of the port companies fits well into the strategy of large business consolidation supported by the Russian authorities, and the formation of structures able to compete in the markets of developed countries.  
by Olga Gorbunova 
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Heading East
One of the major trends that gained a foothold last year was the increase of the share of Far Eastern sea ports in the total cargo handling volume. In comparison with 2009, it grew by 3.9%, while those of the North-Western and the Southern ports fell by 1.7% and 2.1% respectively. In total, operators at the Far Eastern sea terminals handled 118.1 million tons in 2010, a 28.1% increase as compared with the previous year.
Such a significant growth was to some degree brought about by liquid bulk – its handling volume increased by 60% to 53.6 million tons. This was due to the new handling capacities for hydrocarbons, which were put into operation recently. Remember, a special sea port for oil handling was opened in the Kozmino Bay more than a year ago. It is the final point of the East Siberia –Pacific Ocean oil pipeline (the ESPO). In 2010, it handled over 15.3 million tons of crude oil. Moreover, Russian oil is actively exported from the Sakhalin shelf fields, in particular, 16.1 million tons of this cargo was handled via the port of Prigorodnoye last year.
Meanwhile, dry cargoes make the larger share of the throughput of the Far Eastern ports, and in 2010 their volume grew by 10.3% year-on-year to 64.5 million tons. Of that, coal amounted to 34.9 million tons (+15.1% year-on-year). The growth was brought about by two factors – the growing demand in the countries of the Asian and the Pacific region, and the special coal terminal (owned by Daltransugol, located in the Vanino sea port) reaching 66 per cent of its projected capacity. 
In comparison, the results of other cargoes seem to be less outstanding, but it is worth mentioning the increase in containerised cargo handling volume (+27.1% to 7.4 million tons). As Vyacheslav Pertsev, CEO of Vladivostok Sea Commercial Port (VMTP) noted, it was a consequence of the economic recovery after the global crisis. ‘VMTP has reached the mark of changing its freight flow radically in favour of containers. Last year, we serviced 338,893 TEU. It is a sign for the stevedore business in the region. 
Earlier, such volume was handled by our colleagues operating at special terminals, which are physically larger than the VMTP’s area for container handling. We are becoming more attractive for line service, and this is proved by the fact that in 2010 such famous sea operators as KMTC Line and Maersk Line came to us. Nowadays, we are negotiating with other companies,’ tells Mr Pertsev. In his words, the company plans to handle approximately 400,000 TEU in 2011, and according to the company’s development strategy, annual container handling volume is to grow to 650,000 TEU by 2015. ‘The present-day figures show that we can reach this volume earlier than 2015,’ he sums up.
Stevedores in the Southern basin, who used to lead according to throughput growth rates, saw a small decline last year. In 2010, the total handling volume of the Southern ports was 180.2 million tons, a 0.4% decrease as compared with the previous year. Throughput of both liquid and dry cargoes dropped. That of liquid bulk fell by 0.5% year-on-year to 115.9 million tons. The handling volume of dry cargoes reduced by 0.2% to 64.3 million tons. According to experts at the Sea Commercial Ports Association (the ASOP), such a result was caused by the abrupt reduction in grain supplies (the RF Government banned grain export in July 2010). Thus, the volume of one of the basic cargoes for the southern ports fell by 35.8% to 13.7 million tons. Crude oil transportation via the ports also reduced (-2.5% to 85.4 million tons). The decline was not even compensated for by the growth in petrochemicals handling volume (+6.8% to 29.2 million tons).
  Earlier, the total dynamics of sea terminals of the Russian South were positive due to, first of all, Novorossiysk stevedores. In 2010, the smaller figures of the latter caused the overall negative result. In particular, the throughput of Novorossiysk Commercial Sea Port (NMTP) reduced by 8.4% (to 73.9 million tons) due to the decline in volumes of grain, ferrous metals, ore and liquid bulk. The increasing volume of mineral fertilisers, sugar and non-ferrous metals failed to improve the situation. Meanwhile, Novoroslesexport (incorporated into the NMTP group of companies) improved its 2009 results by 34.6% (to 3.26 million tons) due to the growth of containerised and forest cargo handling volumes. 
When commenting on the results of 2010, Igor Vilinov, CEO of the NMTP, remarked, ‘According to the results of the year, the company showed a forecasted balanced result that proved the importance of further investment into our cargo and geographical base diversification as the basis for growth. The success in the container segment indicated that we chose the correct strategic priorities for investments.’
Operators of sea terminals in the North-Western basin demonstrated stable results last year. Their throughput grew by 2% in comparison with 2009, and amounted to 227.7 million tons. Unlike the previous year, the increase was brought about by dry cargoes, the handling volume of which rose by 9.7% to 82.8 million tons. Handling of containerised cargoes, mineral fertilisers, ferrous metals and ore grew most of all. 
At the same time, coal handling volumes fell by 9.6% to 24.9 million tons. Liquid bulk handling decreased too (-2% to 144.89 million tons). Of that, 95.8 million tons of crude oil was handled, a 4.8% decline compared with 2009. 
These data show that there is a trend for oil and coal export re-orientation from the western direction to the eastern. Experts blame weak prospects for raw hydrocarbons consumption growth in Europe and a fast increase of demand in the countries of the Asian and the Pacific region.

Plans and Forecasts 
As for forecasts for this and the coming years, in the opinion of analysts, raw hydrocarbon exports via Russia’s north-western ports will continue to stagnate, and its flow in an easterly direction will increase. Thus, there appears the problem of a lack of handling capacities, especially at coal terminals. According to Viktor Olersky, Deputy Transport Minister of Russia, in the whole country the lack of port capacities in this sector amounts to 50 millions tons per annum. In particular, a number of large projects have been announced in the Far Eastern basin. 
For example, the coal handling capacities in the Vostochny port are to be enlarged by 40%, and SUEK’s terminal at the Muchka Bay is to reach its projected capacity of 12 million tons per annum. Experts note, however, that further prospects for dry cargo handling in the Far East depend on the expansion of railway infrastructure carrying capacity in this direction. Thus, in 2010, the railway failed to fulfill cargo owners’ applications for transportation of 10 million tons to Far Eastern ports. 
Also, there are serious plans for the Northern Sea Route. In spring 2011, a 70,000 dwt tanker loaded with stable gas condensate is to make its first trip from the Vitino port to the countries of the Asian and the Pacific region. All in all, at least three such trips are supposed to take place in summer.  At the end of August, through trips from the west to the east will be made by vessels, the ice class of which is lower than that of 70,000 dwt ships, but their deadweight will be 100,000 and 150,000 tons. Nuclear icebreakers will escort them. During this period, NOVATEK (one of the major consignors on the Northern Sea Route) plans to transport about 400,000 tons of stable gas condensate. Also, approximately 150,000 tons of oil and 600,000-700,000 tons of iron-ore concentrate is planned to be carried via the Northern Sea Route to China in 2011. Nowadays, the possibilities for back loading and cargo transportation from Japan to Europe are being examined.    

Stevedoring Business Enlarges
Special attention should be paid to the assets consolidation processes, which are going on in the Russian port sector. Last year, one remarkable event was the announcement  of the biggest deal in the history of Russian stevedoring – the merger of the Novorossiysk Sea Port (NMTP) – and the leader according to handling volume in the Baltic Sea – the Primorsk Commercial Port, specialising in oil and petrochemicals exports. The contract was concluded last January. As a result, port assets were consolidated in the framework of one company. Its new controlling shareholder is the alliance of state oil pipeline monopolist Transneft and a private company Summa Capital (Ziyavudin Magomedov is considered its main owner). 
Experts note the unusual type of deal, which included two interconnected operations. Transneft and Summa Capital, which own the Primorsk Commercial Port, sold the NMTP 100% of their assets for $2.15 billion. The money was spent on purchasing a 50.1% shareholding in the NMTP from its majority shareholders – Alexander Skorobogatko, Alexander Ponomarenko, and Arkady Rottenberg. Experts have different visions of the prospects for the merger, but all of them agree that the result of the contract is the formation of the largest stevedoring company in Russia, whose share is about one third of all foreign trade sea transportation in the country.
It is worth mentioning another event that happened in 2011. Recently, it became known that the structures owned by Gennady Timchenko, a trader, were purchasing Murmansk Commercial Sea Port (MMTP) for $250 million. Nowadays, 25.49% of the port belongs to the state, 34.97% is owned by Specialized Project InvestmentsB.V. and 12.68% – by Laterium Commercial Limited. In August 2010, Vladimir Putin, the Russian Premier, signed a decree on the implementation of a ‘golden share’ for two Russian commercial sea ports – the NMPT and the MMTP. The ‘golden share’ gives the state the right to block shareholders’ decisions on amendments to the company’s charter, as well as on liquidation, restructuring, large contracts and interest contracts.
Nowadays, the MMTP is one of the key terminals for Russia’s coal exports and the fourth largest port in Russia. At present, the port is underloaded – its technical capacity is 20 million tons, but its throughput in 2010 was 12.87 million tons, a 14.8% decline in comparison with 2009. Of that, 9.64 million tons was coal. The larger part of the coal (7 million tons) was exported by Siberian Coal Energy Company (SUEK).
We should remember that the structures owned by Mr Timchenko started to buy assets in the oil and gas sector in 2009. The trader started with the purchase of a 23% share in Novatek (the second largest gas producer in Russia), and then he consolidated almost 80% of Stroytransgas, arranged the purchase of a large oil servicing company, Geotech Oil Services, bought a terminal for oil bulk handling in Ust-Luga at the Baltic Sea and 30% of the Lagansky block on the Caspian shelf. Also, Mr Timchenko has a project in Novorossiysk – his Gunvor and the NMTP will build there a black oil terminal. Its capacity will amount to 4 million tons per annum, and its cost will be $50-60 million.
Representatives of Gunvor refuse to comment on the deal concerning the MMTP. According to some data sources, it is to be completed in the first quarter of 2011.
Analysts consider that the merger of the port companies fits well into the strategy of large business consolidation supported by the Russian authorities, and the formation of structures able to compete in the markets of developed countries.  
by Olga Gorbunova 
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/19.jpg" border="1" alt=" " hspace="5" width="300" height="200" align="left" />It was 2010 when the throughput of Russian sea ports set a new record – it exceeded the 500 million ton mark and amounted to 526 million tons. Meanwhile, the growth dynamics reduced and amounted to just 6% in comparison with 2009. Also, last year there appeared new trends in the Russian port sector which, as expected, may determine its direction in the coming years.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/19.jpg" border="1" alt=" " hspace="5" width="300" height="200" align="left" />It was 2010 when the throughput of Russian sea ports set a new record – it exceeded the 500 million ton mark and amounted to 526 million tons. Meanwhile, the growth dynamics reduced and amounted to just 6% in comparison with 2009. Also, last year there appeared new trends in the Russian port sector which, as expected, may determine its direction in the coming years.
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Heading East
One of the major trends that gained a foothold last year was the increase of the share of Far Eastern sea ports in the total cargo handling volume. In comparison with 2009, it grew by 3.9%, while those of the North-Western and the Southern ports fell by 1.7% and 2.1% respectively. In total, operators at the Far Eastern sea terminals handled 118.1 million tons in 2010, a 28.1% increase as compared with the previous year.
Such a significant growth was to some degree brought about by liquid bulk – its handling volume increased by 60% to 53.6 million tons. This was due to the new handling capacities for hydrocarbons, which were put into operation recently. Remember, a special sea port for oil handling was opened in the Kozmino Bay more than a year ago. It is the final point of the East Siberia –Pacific Ocean oil pipeline (the ESPO). In 2010, it handled over 15.3 million tons of crude oil. Moreover, Russian oil is actively exported from the Sakhalin shelf fields, in particular, 16.1 million tons of this cargo was handled via the port of Prigorodnoye last year.
Meanwhile, dry cargoes make the larger share of the throughput of the Far Eastern ports, and in 2010 their volume grew by 10.3% year-on-year to 64.5 million tons. Of that, coal amounted to 34.9 million tons (+15.1% year-on-year). The growth was brought about by two factors – the growing demand in the countries of the Asian and the Pacific region, and the special coal terminal (owned by Daltransugol, located in the Vanino sea port) reaching 66 per cent of its projected capacity. 
In comparison, the results of other cargoes seem to be less outstanding, but it is worth mentioning the increase in containerised cargo handling volume (+27.1% to 7.4 million tons). As Vyacheslav Pertsev, CEO of Vladivostok Sea Commercial Port (VMTP) noted, it was a consequence of the economic recovery after the global crisis. ‘VMTP has reached the mark of changing its freight flow radically in favour of containers. Last year, we serviced 338,893 TEU. It is a sign for the stevedore business in the region. 
Earlier, such volume was handled by our colleagues operating at special terminals, which are physically larger than the VMTP’s area for container handling. We are becoming more attractive for line service, and this is proved by the fact that in 2010 such famous sea operators as KMTC Line and Maersk Line came to us. Nowadays, we are negotiating with other companies,’ tells Mr Pertsev. In his words, the company plans to handle approximately 400,000 TEU in 2011, and according to the company’s development strategy, annual container handling volume is to grow to 650,000 TEU by 2015. ‘The present-day figures show that we can reach this volume earlier than 2015,’ he sums up.
Stevedores in the Southern basin, who used to lead according to throughput growth rates, saw a small decline last year. In 2010, the total handling volume of the Southern ports was 180.2 million tons, a 0.4% decrease as compared with the previous year. Throughput of both liquid and dry cargoes dropped. That of liquid bulk fell by 0.5% year-on-year to 115.9 million tons. The handling volume of dry cargoes reduced by 0.2% to 64.3 million tons. According to experts at the Sea Commercial Ports Association (the ASOP), such a result was caused by the abrupt reduction in grain supplies (the RF Government banned grain export in July 2010). Thus, the volume of one of the basic cargoes for the southern ports fell by 35.8% to 13.7 million tons. Crude oil transportation via the ports also reduced (-2.5% to 85.4 million tons). The decline was not even compensated for by the growth in petrochemicals handling volume (+6.8% to 29.2 million tons).
  Earlier, the total dynamics of sea terminals of the Russian South were positive due to, first of all, Novorossiysk stevedores. In 2010, the smaller figures of the latter caused the overall negative result. In particular, the throughput of Novorossiysk Commercial Sea Port (NMTP) reduced by 8.4% (to 73.9 million tons) due to the decline in volumes of grain, ferrous metals, ore and liquid bulk. The increasing volume of mineral fertilisers, sugar and non-ferrous metals failed to improve the situation. Meanwhile, Novoroslesexport (incorporated into the NMTP group of companies) improved its 2009 results by 34.6% (to 3.26 million tons) due to the growth of containerised and forest cargo handling volumes. 
When commenting on the results of 2010, Igor Vilinov, CEO of the NMTP, remarked, ‘According to the results of the year, the company showed a forecasted balanced result that proved the importance of further investment into our cargo and geographical base diversification as the basis for growth. The success in the container segment indicated that we chose the correct strategic priorities for investments.’
Operators of sea terminals in the North-Western basin demonstrated stable results last year. Their throughput grew by 2% in comparison with 2009, and amounted to 227.7 million tons. Unlike the previous year, the increase was brought about by dry cargoes, the handling volume of which rose by 9.7% to 82.8 million tons. Handling of containerised cargoes, mineral fertilisers, ferrous metals and ore grew most of all. 
At the same time, coal handling volumes fell by 9.6% to 24.9 million tons. Liquid bulk handling decreased too (-2% to 144.89 million tons). Of that, 95.8 million tons of crude oil was handled, a 4.8% decline compared with 2009. 
These data show that there is a trend for oil and coal export re-orientation from the western direction to the eastern. Experts blame weak prospects for raw hydrocarbons consumption growth in Europe and a fast increase of demand in the countries of the Asian and the Pacific region.

Plans and Forecasts 
As for forecasts for this and the coming years, in the opinion of analysts, raw hydrocarbon exports via Russia’s north-western ports will continue to stagnate, and its flow in an easterly direction will increase. Thus, there appears the problem of a lack of handling capacities, especially at coal terminals. According to Viktor Olersky, Deputy Transport Minister of Russia, in the whole country the lack of port capacities in this sector amounts to 50 millions tons per annum. In particular, a number of large projects have been announced in the Far Eastern basin. 
For example, the coal handling capacities in the Vostochny port are to be enlarged by 40%, and SUEK’s terminal at the Muchka Bay is to reach its projected capacity of 12 million tons per annum. Experts note, however, that further prospects for dry cargo handling in the Far East depend on the expansion of railway infrastructure carrying capacity in this direction. Thus, in 2010, the railway failed to fulfill cargo owners’ applications for transportation of 10 million tons to Far Eastern ports. 
Also, there are serious plans for the Northern Sea Route. In spring 2011, a 70,000 dwt tanker loaded with stable gas condensate is to make its first trip from the Vitino port to the countries of the Asian and the Pacific region. All in all, at least three such trips are supposed to take place in summer.  At the end of August, through trips from the west to the east will be made by vessels, the ice class of which is lower than that of 70,000 dwt ships, but their deadweight will be 100,000 and 150,000 tons. Nuclear icebreakers will escort them. During this period, NOVATEK (one of the major consignors on the Northern Sea Route) plans to transport about 400,000 tons of stable gas condensate. Also, approximately 150,000 tons of oil and 600,000-700,000 tons of iron-ore concentrate is planned to be carried via the Northern Sea Route to China in 2011. Nowadays, the possibilities for back loading and cargo transportation from Japan to Europe are being examined.    

Stevedoring Business Enlarges
Special attention should be paid to the assets consolidation processes, which are going on in the Russian port sector. Last year, one remarkable event was the announcement  of the biggest deal in the history of Russian stevedoring – the merger of the Novorossiysk Sea Port (NMTP) – and the leader according to handling volume in the Baltic Sea – the Primorsk Commercial Port, specialising in oil and petrochemicals exports. The contract was concluded last January. As a result, port assets were consolidated in the framework of one company. Its new controlling shareholder is the alliance of state oil pipeline monopolist Transneft and a private company Summa Capital (Ziyavudin Magomedov is considered its main owner). 
Experts note the unusual type of deal, which included two interconnected operations. Transneft and Summa Capital, which own the Primorsk Commercial Port, sold the NMTP 100% of their assets for $2.15 billion. The money was spent on purchasing a 50.1% shareholding in the NMTP from its majority shareholders – Alexander Skorobogatko, Alexander Ponomarenko, and Arkady Rottenberg. Experts have different visions of the prospects for the merger, but all of them agree that the result of the contract is the formation of the largest stevedoring company in Russia, whose share is about one third of all foreign trade sea transportation in the country.
It is worth mentioning another event that happened in 2011. Recently, it became known that the structures owned by Gennady Timchenko, a trader, were purchasing Murmansk Commercial Sea Port (MMTP) for $250 million. Nowadays, 25.49% of the port belongs to the state, 34.97% is owned by Specialized Project InvestmentsB.V. and 12.68% – by Laterium Commercial Limited. In August 2010, Vladimir Putin, the Russian Premier, signed a decree on the implementation of a ‘golden share’ for two Russian commercial sea ports – the NMPT and the MMTP. The ‘golden share’ gives the state the right to block shareholders’ decisions on amendments to the company’s charter, as well as on liquidation, restructuring, large contracts and interest contracts.
Nowadays, the MMTP is one of the key terminals for Russia’s coal exports and the fourth largest port in Russia. At present, the port is underloaded – its technical capacity is 20 million tons, but its throughput in 2010 was 12.87 million tons, a 14.8% decline in comparison with 2009. Of that, 9.64 million tons was coal. The larger part of the coal (7 million tons) was exported by Siberian Coal Energy Company (SUEK).
We should remember that the structures owned by Mr Timchenko started to buy assets in the oil and gas sector in 2009. The trader started with the purchase of a 23% share in Novatek (the second largest gas producer in Russia), and then he consolidated almost 80% of Stroytransgas, arranged the purchase of a large oil servicing company, Geotech Oil Services, bought a terminal for oil bulk handling in Ust-Luga at the Baltic Sea and 30% of the Lagansky block on the Caspian shelf. Also, Mr Timchenko has a project in Novorossiysk – his Gunvor and the NMTP will build there a black oil terminal. Its capacity will amount to 4 million tons per annum, and its cost will be $50-60 million.
Representatives of Gunvor refuse to comment on the deal concerning the MMTP. According to some data sources, it is to be completed in the first quarter of 2011.
Analysts consider that the merger of the port companies fits well into the strategy of large business consolidation supported by the Russian authorities, and the formation of structures able to compete in the markets of developed countries.  
by Olga Gorbunova 
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Heading East
One of the major trends that gained a foothold last year was the increase of the share of Far Eastern sea ports in the total cargo handling volume. In comparison with 2009, it grew by 3.9%, while those of the North-Western and the Southern ports fell by 1.7% and 2.1% respectively. In total, operators at the Far Eastern sea terminals handled 118.1 million tons in 2010, a 28.1% increase as compared with the previous year.
Such a significant growth was to some degree brought about by liquid bulk – its handling volume increased by 60% to 53.6 million tons. This was due to the new handling capacities for hydrocarbons, which were put into operation recently. Remember, a special sea port for oil handling was opened in the Kozmino Bay more than a year ago. It is the final point of the East Siberia –Pacific Ocean oil pipeline (the ESPO). In 2010, it handled over 15.3 million tons of crude oil. Moreover, Russian oil is actively exported from the Sakhalin shelf fields, in particular, 16.1 million tons of this cargo was handled via the port of Prigorodnoye last year.
Meanwhile, dry cargoes make the larger share of the throughput of the Far Eastern ports, and in 2010 their volume grew by 10.3% year-on-year to 64.5 million tons. Of that, coal amounted to 34.9 million tons (+15.1% year-on-year). The growth was brought about by two factors – the growing demand in the countries of the Asian and the Pacific region, and the special coal terminal (owned by Daltransugol, located in the Vanino sea port) reaching 66 per cent of its projected capacity. 
In comparison, the results of other cargoes seem to be less outstanding, but it is worth mentioning the increase in containerised cargo handling volume (+27.1% to 7.4 million tons). As Vyacheslav Pertsev, CEO of Vladivostok Sea Commercial Port (VMTP) noted, it was a consequence of the economic recovery after the global crisis. ‘VMTP has reached the mark of changing its freight flow radically in favour of containers. Last year, we serviced 338,893 TEU. It is a sign for the stevedore business in the region. 
Earlier, such volume was handled by our colleagues operating at special terminals, which are physically larger than the VMTP’s area for container handling. We are becoming more attractive for line service, and this is proved by the fact that in 2010 such famous sea operators as KMTC Line and Maersk Line came to us. Nowadays, we are negotiating with other companies,’ tells Mr Pertsev. In his words, the company plans to handle approximately 400,000 TEU in 2011, and according to the company’s development strategy, annual container handling volume is to grow to 650,000 TEU by 2015. ‘The present-day figures show that we can reach this volume earlier than 2015,’ he sums up.
Stevedores in the Southern basin, who used to lead according to throughput growth rates, saw a small decline last year. In 2010, the total handling volume of the Southern ports was 180.2 million tons, a 0.4% decrease as compared with the previous year. Throughput of both liquid and dry cargoes dropped. That of liquid bulk fell by 0.5% year-on-year to 115.9 million tons. The handling volume of dry cargoes reduced by 0.2% to 64.3 million tons. According to experts at the Sea Commercial Ports Association (the ASOP), such a result was caused by the abrupt reduction in grain supplies (the RF Government banned grain export in July 2010). Thus, the volume of one of the basic cargoes for the southern ports fell by 35.8% to 13.7 million tons. Crude oil transportation via the ports also reduced (-2.5% to 85.4 million tons). The decline was not even compensated for by the growth in petrochemicals handling volume (+6.8% to 29.2 million tons).
  Earlier, the total dynamics of sea terminals of the Russian South were positive due to, first of all, Novorossiysk stevedores. In 2010, the smaller figures of the latter caused the overall negative result. In particular, the throughput of Novorossiysk Commercial Sea Port (NMTP) reduced by 8.4% (to 73.9 million tons) due to the decline in volumes of grain, ferrous metals, ore and liquid bulk. The increasing volume of mineral fertilisers, sugar and non-ferrous metals failed to improve the situation. Meanwhile, Novoroslesexport (incorporated into the NMTP group of companies) improved its 2009 results by 34.6% (to 3.26 million tons) due to the growth of containerised and forest cargo handling volumes. 
When commenting on the results of 2010, Igor Vilinov, CEO of the NMTP, remarked, ‘According to the results of the year, the company showed a forecasted balanced result that proved the importance of further investment into our cargo and geographical base diversification as the basis for growth. The success in the container segment indicated that we chose the correct strategic priorities for investments.’
Operators of sea terminals in the North-Western basin demonstrated stable results last year. Their throughput grew by 2% in comparison with 2009, and amounted to 227.7 million tons. Unlike the previous year, the increase was brought about by dry cargoes, the handling volume of which rose by 9.7% to 82.8 million tons. Handling of containerised cargoes, mineral fertilisers, ferrous metals and ore grew most of all. 
At the same time, coal handling volumes fell by 9.6% to 24.9 million tons. Liquid bulk handling decreased too (-2% to 144.89 million tons). Of that, 95.8 million tons of crude oil was handled, a 4.8% decline compared with 2009. 
These data show that there is a trend for oil and coal export re-orientation from the western direction to the eastern. Experts blame weak prospects for raw hydrocarbons consumption growth in Europe and a fast increase of demand in the countries of the Asian and the Pacific region.

Plans and Forecasts 
As for forecasts for this and the coming years, in the opinion of analysts, raw hydrocarbon exports via Russia’s north-western ports will continue to stagnate, and its flow in an easterly direction will increase. Thus, there appears the problem of a lack of handling capacities, especially at coal terminals. According to Viktor Olersky, Deputy Transport Minister of Russia, in the whole country the lack of port capacities in this sector amounts to 50 millions tons per annum. In particular, a number of large projects have been announced in the Far Eastern basin. 
For example, the coal handling capacities in the Vostochny port are to be enlarged by 40%, and SUEK’s terminal at the Muchka Bay is to reach its projected capacity of 12 million tons per annum. Experts note, however, that further prospects for dry cargo handling in the Far East depend on the expansion of railway infrastructure carrying capacity in this direction. Thus, in 2010, the railway failed to fulfill cargo owners’ applications for transportation of 10 million tons to Far Eastern ports. 
Also, there are serious plans for the Northern Sea Route. In spring 2011, a 70,000 dwt tanker loaded with stable gas condensate is to make its first trip from the Vitino port to the countries of the Asian and the Pacific region. All in all, at least three such trips are supposed to take place in summer.  At the end of August, through trips from the west to the east will be made by vessels, the ice class of which is lower than that of 70,000 dwt ships, but their deadweight will be 100,000 and 150,000 tons. Nuclear icebreakers will escort them. During this period, NOVATEK (one of the major consignors on the Northern Sea Route) plans to transport about 400,000 tons of stable gas condensate. Also, approximately 150,000 tons of oil and 600,000-700,000 tons of iron-ore concentrate is planned to be carried via the Northern Sea Route to China in 2011. Nowadays, the possibilities for back loading and cargo transportation from Japan to Europe are being examined.    

Stevedoring Business Enlarges
Special attention should be paid to the assets consolidation processes, which are going on in the Russian port sector. Last year, one remarkable event was the announcement  of the biggest deal in the history of Russian stevedoring – the merger of the Novorossiysk Sea Port (NMTP) – and the leader according to handling volume in the Baltic Sea – the Primorsk Commercial Port, specialising in oil and petrochemicals exports. The contract was concluded last January. As a result, port assets were consolidated in the framework of one company. Its new controlling shareholder is the alliance of state oil pipeline monopolist Transneft and a private company Summa Capital (Ziyavudin Magomedov is considered its main owner). 
Experts note the unusual type of deal, which included two interconnected operations. Transneft and Summa Capital, which own the Primorsk Commercial Port, sold the NMTP 100% of their assets for $2.15 billion. The money was spent on purchasing a 50.1% shareholding in the NMTP from its majority shareholders – Alexander Skorobogatko, Alexander Ponomarenko, and Arkady Rottenberg. Experts have different visions of the prospects for the merger, but all of them agree that the result of the contract is the formation of the largest stevedoring company in Russia, whose share is about one third of all foreign trade sea transportation in the country.
It is worth mentioning another event that happened in 2011. Recently, it became known that the structures owned by Gennady Timchenko, a trader, were purchasing Murmansk Commercial Sea Port (MMTP) for $250 million. Nowadays, 25.49% of the port belongs to the state, 34.97% is owned by Specialized Project InvestmentsB.V. and 12.68% – by Laterium Commercial Limited. In August 2010, Vladimir Putin, the Russian Premier, signed a decree on the implementation of a ‘golden share’ for two Russian commercial sea ports – the NMPT and the MMTP. The ‘golden share’ gives the state the right to block shareholders’ decisions on amendments to the company’s charter, as well as on liquidation, restructuring, large contracts and interest contracts.
Nowadays, the MMTP is one of the key terminals for Russia’s coal exports and the fourth largest port in Russia. At present, the port is underloaded – its technical capacity is 20 million tons, but its throughput in 2010 was 12.87 million tons, a 14.8% decline in comparison with 2009. Of that, 9.64 million tons was coal. The larger part of the coal (7 million tons) was exported by Siberian Coal Energy Company (SUEK).
We should remember that the structures owned by Mr Timchenko started to buy assets in the oil and gas sector in 2009. The trader started with the purchase of a 23% share in Novatek (the second largest gas producer in Russia), and then he consolidated almost 80% of Stroytransgas, arranged the purchase of a large oil servicing company, Geotech Oil Services, bought a terminal for oil bulk handling in Ust-Luga at the Baltic Sea and 30% of the Lagansky block on the Caspian shelf. Also, Mr Timchenko has a project in Novorossiysk – his Gunvor and the NMTP will build there a black oil terminal. Its capacity will amount to 4 million tons per annum, and its cost will be $50-60 million.
Representatives of Gunvor refuse to comment on the deal concerning the MMTP. According to some data sources, it is to be completed in the first quarter of 2011.
Analysts consider that the merger of the port companies fits well into the strategy of large business consolidation supported by the Russian authorities, and the formation of structures able to compete in the markets of developed countries.  
by Olga Gorbunova 
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Connecting the cities
On 2nd December, 2010, Russia won an absolute majority of the votes of the FIFA executive committee and the right to hold the 2018 World Cup . 
Vladimir Putin, Prime Minister of the Russian Federation, suggested connecting all the host cities via one high-speed network. He also noted, there should be corrected the development program of high-speed main lines, the process should be accelerated, and the plans should also allow for new routes. 
Now the high-speed trains run on three routes: Moscow – St Petersburg, Moscow – Nizhny Novgorod and St Petersburg – Helsinki. If the Russian prime minister’s suggestion is realized, high-speed main lines will connect all 13 cities where the games will be held. The issue is building high-speed routes to help fans get from Vladimir to Nizhny Novgorod, from Nizhny Novgorod to Kazan, and from Kazan to Yekaterinburg. 
It is also planned to create a branch line to Samara. The main line between Yekaterinburg and Kazan will be built by the government of Sverdlovskaya oblast. Alexander Misharin, the region’s Governor, has already showed initiative and work on the project has already started. The final list of cities, where the games will take place, will be revealed later. 
As for Vladimir, Nizhny Novgorod and Samara, there will doubtless be not high-speed but fast trains. In other words, the existing rail bed will be reconstructed to let the trains go at a speed of 200 kph. 
It may well be that, after the launch of the separate main line where the speed will be 400 kph between Moscow and St Petersburg, Sapsan trains will be put on the route Vladimir - Samara. 
Vladimir Yakunin, President of RZD, said that organization of a high-speed railway service on this route is an unwarranted expense. The road between the cities is about 600 km long. According to world experience, you don’t need to use such speeds over such distances; it is possible to do it with less speed.
‘For such purposes the Sapsan cannot be used, because the distance between the cities is rather small. So you don’t need 400 kph speeds,’ said the Head of RZD. So the most logical way out is the delivery of tested Sapsan trains on this rail lines. For the present, Russian Railways JSC has eight trains, and for the service of new routes it is needed to buy an additional two or three trains.

The first swallow
Recently, High-Speed Rail Lines JSC, the daughter company of RZD JSC, presented a project for the development of high-speed railway traffic till 2018. As explained by Denis Muratov, General Director, by that time on the routes Moscow-Petersburg and Moscow – Yekaterinburg (omitting Vladimir, Nizhny Novgorod and Kazan with the branch from Kazan to Samara) it is planned to build separated tracks, where trains will go at a speed of up to 400 kph
The total length of high-speed railway will be about 3,000 km. At the same time, railwaymen decided against increasing the speed in the direction of Sochi for 2014.
The building of high-speed sections between two capitals is the first project, but its route isn’t defined yet. Also it isn’t clear if the new line would pass through ‘Sheremetyevo’ airport.
The route should have been approved in March 2011, and at the same time the potential investors become documentation. Tendering for building and maintenance of this section will happen in December 2011. The details should become clear in a year and in 2013 construction of the new main line should commence. It should be put into operation in 2017.
The route to Yekaterinburg and Samara should be built in 2018. As predicted by Mr Muratov, passenger flow towards 
St Petersburg will be 8 million people a year, and trains will run every half an hour.
The construction cost of the line will be about €14-22 million per km. But that is the lowest cost scenario which doesn’t take into account the building of stations, cost of land, construction of bridges, draining of marshes, etc. On some difficult sections, costs may rise to €50 million per km of track. According to Mr Muratov the cost of the high-speed network will be about €50 billion, including €10-15 billion for the distance from Moscow to St Petersburg.

Disagreeing on the calculations
At that time, the Ministry of finance of the Russian Federation said organization of a fast rail service for the World Cup will cost 5.5 trillion rubles.
Such a valuation (about €137,5 billion or $190 billion) was announced by the deputy minister of finance, Alexander Novak. According to him, the calculation was based on the construction costs of 1 km of fast branch line between Moscow and St Petersburg, which was $9-14 million (263.7 – 410.2 million rubles). The figure of 5.5 trillion rubles assumed the building of new fast branch lines, and that Moscow would be directly connected not with all the host cities but only with Sochi, Yekaterinburg and Samara, explained Mr Novak.
A Moscow-Saint-Petersburg high-speed main line should also be built. ‘This is serious sum for budget,’ said Mr Novak, adding that the financial model was still being developed by the Ministry of Finance and RZD JSC. There has been no final decision.
Apparently, the calculations of the Ministry of Finance are fundamentally different from RZD JSC’s appraisal. The difference can be explained by different counting systems, suggested Vladimir Savchuk, Expert at the Institute of Natural Monopolies.
‘The variation of estimates is specified by the fact that different variants of the project with a different size of railway network, etc. have been used,’ said Dmitry Adamidov, co-manager of Analytical Department ‘Investcafe’.
According to him, the problem lies not in the fact that fast branch lines themselves are expensive, but that, in the absence of an efficient plan, how a transport system will be supplied during the championship.
‘It is unclear how the different types of transport will interact and what the traffic capacity of this system is. Judging whether it’s expensive or cheap will be possible only after the plan is finished,’ explained the expert. In this case it is important not to repeat the mistakes of the Sochi Olympic Games which saw the facilities built first before anyone started to plan how to get to them, added Mr Adamidov.
Alexander Filimonov, expert at company AKG ‘Business systems’ development’, thinks that RZD’s estimate is in general an objective one. However, ‘by that time the prices of land and materials can grow, and nobody can predict what the cost ceiling will be’, he said.

Potential interest
It is planned to spend no more than 50 billion rubles on buying land for further building. All expenses will be met by the government. In the Petersburg direction this cost could be zero because High-Speed Rail Lines JSC tried at the beginning of 1990 to build a Moscow–St Petersburg high-speed main line and has reserved the land needed. But the route of the new main line may be different.
New high-speed main lines will be built with the use of a special kind of concession – the life cycle contract model. The company will be chosen by tender. It will be responsible for planning, raising capital, construction and maintenance of the main line. This offers the greatest scope to reduce costs and to complete construction in the shortest possible time. 
This is because the concession company is paid by the government only after the rail line starts to work. The project’s criteria and payments volume will be confirmed primordially. So the more concessioner save the more return he becomes, agrees Mr Savchuk. So the state will not bear any risks, only paying for fulfilled services.
The state will pay up to 70% of the total cost of the project; with the rest coming from private investors. Financing will be realized by the major international financial institutions, ‘Fast main-lines’ has already negotiated with them. According to Mr Muratov, in Russia Vnesheconombank, Sberbank and VTB are interested in the project. ‘The project is potentially interesting, but it’s too early now to speak about the details,’ noted Oleg Pankratov, co-manager of the Department for investment banking activity ‘VTB capital’. 
Sberbank is now at the stage of primary analysis of the project, said its representative. Such projects are almost always realized with the participation of the state, noted Mr Savchuk and Andrey Timofeev, Partner at The Boston Consulting Group. But the state’s costs could go higher. For example it is doubtful whether it would be possible to get more than 20% of the project’s value from investors, thinks Mr Timofeev. 

Summary
‘We expect that the preparations for, and the holding of, the World Cup will play a big positive role in the life of our country. Everything indicates that the infrastructure will be developed. The point is that not only stadia, but also airports, streets, connections and railways will be built. We have an idea to connect the host cities with a fast railway service. These are things that will be used not only by football fans but also by all the citizens of the Russian Federation,’ said Vladimir Putin at a meeting with Sepp Blatter, President of the FIFA executive committee. Yet there is still no answer not only to the question of how much it will cost for a trip on a 400 kph line, but also to the many other questions that remain. 
by Stanislav Russkov
    [~DETAIL_TEXT] => 
Connecting the cities
On 2nd December, 2010, Russia won an absolute majority of the votes of the FIFA executive committee and the right to hold the 2018 World Cup . 
Vladimir Putin, Prime Minister of the Russian Federation, suggested connecting all the host cities via one high-speed network. He also noted, there should be corrected the development program of high-speed main lines, the process should be accelerated, and the plans should also allow for new routes. 
Now the high-speed trains run on three routes: Moscow – St Petersburg, Moscow – Nizhny Novgorod and St Petersburg – Helsinki. If the Russian prime minister’s suggestion is realized, high-speed main lines will connect all 13 cities where the games will be held. The issue is building high-speed routes to help fans get from Vladimir to Nizhny Novgorod, from Nizhny Novgorod to Kazan, and from Kazan to Yekaterinburg. 
It is also planned to create a branch line to Samara. The main line between Yekaterinburg and Kazan will be built by the government of Sverdlovskaya oblast. Alexander Misharin, the region’s Governor, has already showed initiative and work on the project has already started. The final list of cities, where the games will take place, will be revealed later. 
As for Vladimir, Nizhny Novgorod and Samara, there will doubtless be not high-speed but fast trains. In other words, the existing rail bed will be reconstructed to let the trains go at a speed of 200 kph. 
It may well be that, after the launch of the separate main line where the speed will be 400 kph between Moscow and St Petersburg, Sapsan trains will be put on the route Vladimir - Samara. 
Vladimir Yakunin, President of RZD, said that organization of a high-speed railway service on this route is an unwarranted expense. The road between the cities is about 600 km long. According to world experience, you don’t need to use such speeds over such distances; it is possible to do it with less speed.
‘For such purposes the Sapsan cannot be used, because the distance between the cities is rather small. So you don’t need 400 kph speeds,’ said the Head of RZD. So the most logical way out is the delivery of tested Sapsan trains on this rail lines. For the present, Russian Railways JSC has eight trains, and for the service of new routes it is needed to buy an additional two or three trains.

The first swallow
Recently, High-Speed Rail Lines JSC, the daughter company of RZD JSC, presented a project for the development of high-speed railway traffic till 2018. As explained by Denis Muratov, General Director, by that time on the routes Moscow-Petersburg and Moscow – Yekaterinburg (omitting Vladimir, Nizhny Novgorod and Kazan with the branch from Kazan to Samara) it is planned to build separated tracks, where trains will go at a speed of up to 400 kph
The total length of high-speed railway will be about 3,000 km. At the same time, railwaymen decided against increasing the speed in the direction of Sochi for 2014.
The building of high-speed sections between two capitals is the first project, but its route isn’t defined yet. Also it isn’t clear if the new line would pass through ‘Sheremetyevo’ airport.
The route should have been approved in March 2011, and at the same time the potential investors become documentation. Tendering for building and maintenance of this section will happen in December 2011. The details should become clear in a year and in 2013 construction of the new main line should commence. It should be put into operation in 2017.
The route to Yekaterinburg and Samara should be built in 2018. As predicted by Mr Muratov, passenger flow towards 
St Petersburg will be 8 million people a year, and trains will run every half an hour.
The construction cost of the line will be about €14-22 million per km. But that is the lowest cost scenario which doesn’t take into account the building of stations, cost of land, construction of bridges, draining of marshes, etc. On some difficult sections, costs may rise to €50 million per km of track. According to Mr Muratov the cost of the high-speed network will be about €50 billion, including €10-15 billion for the distance from Moscow to St Petersburg.

Disagreeing on the calculations
At that time, the Ministry of finance of the Russian Federation said organization of a fast rail service for the World Cup will cost 5.5 trillion rubles.
Such a valuation (about €137,5 billion or $190 billion) was announced by the deputy minister of finance, Alexander Novak. According to him, the calculation was based on the construction costs of 1 km of fast branch line between Moscow and St Petersburg, which was $9-14 million (263.7 – 410.2 million rubles). The figure of 5.5 trillion rubles assumed the building of new fast branch lines, and that Moscow would be directly connected not with all the host cities but only with Sochi, Yekaterinburg and Samara, explained Mr Novak.
A Moscow-Saint-Petersburg high-speed main line should also be built. ‘This is serious sum for budget,’ said Mr Novak, adding that the financial model was still being developed by the Ministry of Finance and RZD JSC. There has been no final decision.
Apparently, the calculations of the Ministry of Finance are fundamentally different from RZD JSC’s appraisal. The difference can be explained by different counting systems, suggested Vladimir Savchuk, Expert at the Institute of Natural Monopolies.
‘The variation of estimates is specified by the fact that different variants of the project with a different size of railway network, etc. have been used,’ said Dmitry Adamidov, co-manager of Analytical Department ‘Investcafe’.
According to him, the problem lies not in the fact that fast branch lines themselves are expensive, but that, in the absence of an efficient plan, how a transport system will be supplied during the championship.
‘It is unclear how the different types of transport will interact and what the traffic capacity of this system is. Judging whether it’s expensive or cheap will be possible only after the plan is finished,’ explained the expert. In this case it is important not to repeat the mistakes of the Sochi Olympic Games which saw the facilities built first before anyone started to plan how to get to them, added Mr Adamidov.
Alexander Filimonov, expert at company AKG ‘Business systems’ development’, thinks that RZD’s estimate is in general an objective one. However, ‘by that time the prices of land and materials can grow, and nobody can predict what the cost ceiling will be’, he said.

Potential interest
It is planned to spend no more than 50 billion rubles on buying land for further building. All expenses will be met by the government. In the Petersburg direction this cost could be zero because High-Speed Rail Lines JSC tried at the beginning of 1990 to build a Moscow–St Petersburg high-speed main line and has reserved the land needed. But the route of the new main line may be different.
New high-speed main lines will be built with the use of a special kind of concession – the life cycle contract model. The company will be chosen by tender. It will be responsible for planning, raising capital, construction and maintenance of the main line. This offers the greatest scope to reduce costs and to complete construction in the shortest possible time. 
This is because the concession company is paid by the government only after the rail line starts to work. The project’s criteria and payments volume will be confirmed primordially. So the more concessioner save the more return he becomes, agrees Mr Savchuk. So the state will not bear any risks, only paying for fulfilled services.
The state will pay up to 70% of the total cost of the project; with the rest coming from private investors. Financing will be realized by the major international financial institutions, ‘Fast main-lines’ has already negotiated with them. According to Mr Muratov, in Russia Vnesheconombank, Sberbank and VTB are interested in the project. ‘The project is potentially interesting, but it’s too early now to speak about the details,’ noted Oleg Pankratov, co-manager of the Department for investment banking activity ‘VTB capital’. 
Sberbank is now at the stage of primary analysis of the project, said its representative. Such projects are almost always realized with the participation of the state, noted Mr Savchuk and Andrey Timofeev, Partner at The Boston Consulting Group. But the state’s costs could go higher. For example it is doubtful whether it would be possible to get more than 20% of the project’s value from investors, thinks Mr Timofeev. 

Summary
‘We expect that the preparations for, and the holding of, the World Cup will play a big positive role in the life of our country. Everything indicates that the infrastructure will be developed. The point is that not only stadia, but also airports, streets, connections and railways will be built. We have an idea to connect the host cities with a fast railway service. These are things that will be used not only by football fans but also by all the citizens of the Russian Federation,’ said Vladimir Putin at a meeting with Sepp Blatter, President of the FIFA executive committee. Yet there is still no answer not only to the question of how much it will cost for a trip on a 400 kph line, but also to the many other questions that remain. 
by Stanislav Russkov
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    [DETAIL_TEXT] => 
Connecting the cities
On 2nd December, 2010, Russia won an absolute majority of the votes of the FIFA executive committee and the right to hold the 2018 World Cup . 
Vladimir Putin, Prime Minister of the Russian Federation, suggested connecting all the host cities via one high-speed network. He also noted, there should be corrected the development program of high-speed main lines, the process should be accelerated, and the plans should also allow for new routes. 
Now the high-speed trains run on three routes: Moscow – St Petersburg, Moscow – Nizhny Novgorod and St Petersburg – Helsinki. If the Russian prime minister’s suggestion is realized, high-speed main lines will connect all 13 cities where the games will be held. The issue is building high-speed routes to help fans get from Vladimir to Nizhny Novgorod, from Nizhny Novgorod to Kazan, and from Kazan to Yekaterinburg. 
It is also planned to create a branch line to Samara. The main line between Yekaterinburg and Kazan will be built by the government of Sverdlovskaya oblast. Alexander Misharin, the region’s Governor, has already showed initiative and work on the project has already started. The final list of cities, where the games will take place, will be revealed later. 
As for Vladimir, Nizhny Novgorod and Samara, there will doubtless be not high-speed but fast trains. In other words, the existing rail bed will be reconstructed to let the trains go at a speed of 200 kph. 
It may well be that, after the launch of the separate main line where the speed will be 400 kph between Moscow and St Petersburg, Sapsan trains will be put on the route Vladimir - Samara. 
Vladimir Yakunin, President of RZD, said that organization of a high-speed railway service on this route is an unwarranted expense. The road between the cities is about 600 km long. According to world experience, you don’t need to use such speeds over such distances; it is possible to do it with less speed.
‘For such purposes the Sapsan cannot be used, because the distance between the cities is rather small. So you don’t need 400 kph speeds,’ said the Head of RZD. So the most logical way out is the delivery of tested Sapsan trains on this rail lines. For the present, Russian Railways JSC has eight trains, and for the service of new routes it is needed to buy an additional two or three trains.

The first swallow
Recently, High-Speed Rail Lines JSC, the daughter company of RZD JSC, presented a project for the development of high-speed railway traffic till 2018. As explained by Denis Muratov, General Director, by that time on the routes Moscow-Petersburg and Moscow – Yekaterinburg (omitting Vladimir, Nizhny Novgorod and Kazan with the branch from Kazan to Samara) it is planned to build separated tracks, where trains will go at a speed of up to 400 kph
The total length of high-speed railway will be about 3,000 km. At the same time, railwaymen decided against increasing the speed in the direction of Sochi for 2014.
The building of high-speed sections between two capitals is the first project, but its route isn’t defined yet. Also it isn’t clear if the new line would pass through ‘Sheremetyevo’ airport.
The route should have been approved in March 2011, and at the same time the potential investors become documentation. Tendering for building and maintenance of this section will happen in December 2011. The details should become clear in a year and in 2013 construction of the new main line should commence. It should be put into operation in 2017.
The route to Yekaterinburg and Samara should be built in 2018. As predicted by Mr Muratov, passenger flow towards 
St Petersburg will be 8 million people a year, and trains will run every half an hour.
The construction cost of the line will be about €14-22 million per km. But that is the lowest cost scenario which doesn’t take into account the building of stations, cost of land, construction of bridges, draining of marshes, etc. On some difficult sections, costs may rise to €50 million per km of track. According to Mr Muratov the cost of the high-speed network will be about €50 billion, including €10-15 billion for the distance from Moscow to St Petersburg.

Disagreeing on the calculations
At that time, the Ministry of finance of the Russian Federation said organization of a fast rail service for the World Cup will cost 5.5 trillion rubles.
Such a valuation (about €137,5 billion or $190 billion) was announced by the deputy minister of finance, Alexander Novak. According to him, the calculation was based on the construction costs of 1 km of fast branch line between Moscow and St Petersburg, which was $9-14 million (263.7 – 410.2 million rubles). The figure of 5.5 trillion rubles assumed the building of new fast branch lines, and that Moscow would be directly connected not with all the host cities but only with Sochi, Yekaterinburg and Samara, explained Mr Novak.
A Moscow-Saint-Petersburg high-speed main line should also be built. ‘This is serious sum for budget,’ said Mr Novak, adding that the financial model was still being developed by the Ministry of Finance and RZD JSC. There has been no final decision.
Apparently, the calculations of the Ministry of Finance are fundamentally different from RZD JSC’s appraisal. The difference can be explained by different counting systems, suggested Vladimir Savchuk, Expert at the Institute of Natural Monopolies.
‘The variation of estimates is specified by the fact that different variants of the project with a different size of railway network, etc. have been used,’ said Dmitry Adamidov, co-manager of Analytical Department ‘Investcafe’.
According to him, the problem lies not in the fact that fast branch lines themselves are expensive, but that, in the absence of an efficient plan, how a transport system will be supplied during the championship.
‘It is unclear how the different types of transport will interact and what the traffic capacity of this system is. Judging whether it’s expensive or cheap will be possible only after the plan is finished,’ explained the expert. In this case it is important not to repeat the mistakes of the Sochi Olympic Games which saw the facilities built first before anyone started to plan how to get to them, added Mr Adamidov.
Alexander Filimonov, expert at company AKG ‘Business systems’ development’, thinks that RZD’s estimate is in general an objective one. However, ‘by that time the prices of land and materials can grow, and nobody can predict what the cost ceiling will be’, he said.

Potential interest
It is planned to spend no more than 50 billion rubles on buying land for further building. All expenses will be met by the government. In the Petersburg direction this cost could be zero because High-Speed Rail Lines JSC tried at the beginning of 1990 to build a Moscow–St Petersburg high-speed main line and has reserved the land needed. But the route of the new main line may be different.
New high-speed main lines will be built with the use of a special kind of concession – the life cycle contract model. The company will be chosen by tender. It will be responsible for planning, raising capital, construction and maintenance of the main line. This offers the greatest scope to reduce costs and to complete construction in the shortest possible time. 
This is because the concession company is paid by the government only after the rail line starts to work. The project’s criteria and payments volume will be confirmed primordially. So the more concessioner save the more return he becomes, agrees Mr Savchuk. So the state will not bear any risks, only paying for fulfilled services.
The state will pay up to 70% of the total cost of the project; with the rest coming from private investors. Financing will be realized by the major international financial institutions, ‘Fast main-lines’ has already negotiated with them. According to Mr Muratov, in Russia Vnesheconombank, Sberbank and VTB are interested in the project. ‘The project is potentially interesting, but it’s too early now to speak about the details,’ noted Oleg Pankratov, co-manager of the Department for investment banking activity ‘VTB capital’. 
Sberbank is now at the stage of primary analysis of the project, said its representative. Such projects are almost always realized with the participation of the state, noted Mr Savchuk and Andrey Timofeev, Partner at The Boston Consulting Group. But the state’s costs could go higher. For example it is doubtful whether it would be possible to get more than 20% of the project’s value from investors, thinks Mr Timofeev. 

Summary
‘We expect that the preparations for, and the holding of, the World Cup will play a big positive role in the life of our country. Everything indicates that the infrastructure will be developed. The point is that not only stadia, but also airports, streets, connections and railways will be built. We have an idea to connect the host cities with a fast railway service. These are things that will be used not only by football fans but also by all the citizens of the Russian Federation,’ said Vladimir Putin at a meeting with Sepp Blatter, President of the FIFA executive committee. Yet there is still no answer not only to the question of how much it will cost for a trip on a 400 kph line, but also to the many other questions that remain. 
by Stanislav Russkov
    [~DETAIL_TEXT] => 
Connecting the cities
On 2nd December, 2010, Russia won an absolute majority of the votes of the FIFA executive committee and the right to hold the 2018 World Cup . 
Vladimir Putin, Prime Minister of the Russian Federation, suggested connecting all the host cities via one high-speed network. He also noted, there should be corrected the development program of high-speed main lines, the process should be accelerated, and the plans should also allow for new routes. 
Now the high-speed trains run on three routes: Moscow – St Petersburg, Moscow – Nizhny Novgorod and St Petersburg – Helsinki. If the Russian prime minister’s suggestion is realized, high-speed main lines will connect all 13 cities where the games will be held. The issue is building high-speed routes to help fans get from Vladimir to Nizhny Novgorod, from Nizhny Novgorod to Kazan, and from Kazan to Yekaterinburg. 
It is also planned to create a branch line to Samara. The main line between Yekaterinburg and Kazan will be built by the government of Sverdlovskaya oblast. Alexander Misharin, the region’s Governor, has already showed initiative and work on the project has already started. The final list of cities, where the games will take place, will be revealed later. 
As for Vladimir, Nizhny Novgorod and Samara, there will doubtless be not high-speed but fast trains. In other words, the existing rail bed will be reconstructed to let the trains go at a speed of 200 kph. 
It may well be that, after the launch of the separate main line where the speed will be 400 kph between Moscow and St Petersburg, Sapsan trains will be put on the route Vladimir - Samara. 
Vladimir Yakunin, President of RZD, said that organization of a high-speed railway service on this route is an unwarranted expense. The road between the cities is about 600 km long. According to world experience, you don’t need to use such speeds over such distances; it is possible to do it with less speed.
‘For such purposes the Sapsan cannot be used, because the distance between the cities is rather small. So you don’t need 400 kph speeds,’ said the Head of RZD. So the most logical way out is the delivery of tested Sapsan trains on this rail lines. For the present, Russian Railways JSC has eight trains, and for the service of new routes it is needed to buy an additional two or three trains.

The first swallow
Recently, High-Speed Rail Lines JSC, the daughter company of RZD JSC, presented a project for the development of high-speed railway traffic till 2018. As explained by Denis Muratov, General Director, by that time on the routes Moscow-Petersburg and Moscow – Yekaterinburg (omitting Vladimir, Nizhny Novgorod and Kazan with the branch from Kazan to Samara) it is planned to build separated tracks, where trains will go at a speed of up to 400 kph
The total length of high-speed railway will be about 3,000 km. At the same time, railwaymen decided against increasing the speed in the direction of Sochi for 2014.
The building of high-speed sections between two capitals is the first project, but its route isn’t defined yet. Also it isn’t clear if the new line would pass through ‘Sheremetyevo’ airport.
The route should have been approved in March 2011, and at the same time the potential investors become documentation. Tendering for building and maintenance of this section will happen in December 2011. The details should become clear in a year and in 2013 construction of the new main line should commence. It should be put into operation in 2017.
The route to Yekaterinburg and Samara should be built in 2018. As predicted by Mr Muratov, passenger flow towards 
St Petersburg will be 8 million people a year, and trains will run every half an hour.
The construction cost of the line will be about €14-22 million per km. But that is the lowest cost scenario which doesn’t take into account the building of stations, cost of land, construction of bridges, draining of marshes, etc. On some difficult sections, costs may rise to €50 million per km of track. According to Mr Muratov the cost of the high-speed network will be about €50 billion, including €10-15 billion for the distance from Moscow to St Petersburg.

Disagreeing on the calculations
At that time, the Ministry of finance of the Russian Federation said organization of a fast rail service for the World Cup will cost 5.5 trillion rubles.
Such a valuation (about €137,5 billion or $190 billion) was announced by the deputy minister of finance, Alexander Novak. According to him, the calculation was based on the construction costs of 1 km of fast branch line between Moscow and St Petersburg, which was $9-14 million (263.7 – 410.2 million rubles). The figure of 5.5 trillion rubles assumed the building of new fast branch lines, and that Moscow would be directly connected not with all the host cities but only with Sochi, Yekaterinburg and Samara, explained Mr Novak.
A Moscow-Saint-Petersburg high-speed main line should also be built. ‘This is serious sum for budget,’ said Mr Novak, adding that the financial model was still being developed by the Ministry of Finance and RZD JSC. There has been no final decision.
Apparently, the calculations of the Ministry of Finance are fundamentally different from RZD JSC’s appraisal. The difference can be explained by different counting systems, suggested Vladimir Savchuk, Expert at the Institute of Natural Monopolies.
‘The variation of estimates is specified by the fact that different variants of the project with a different size of railway network, etc. have been used,’ said Dmitry Adamidov, co-manager of Analytical Department ‘Investcafe’.
According to him, the problem lies not in the fact that fast branch lines themselves are expensive, but that, in the absence of an efficient plan, how a transport system will be supplied during the championship.
‘It is unclear how the different types of transport will interact and what the traffic capacity of this system is. Judging whether it’s expensive or cheap will be possible only after the plan is finished,’ explained the expert. In this case it is important not to repeat the mistakes of the Sochi Olympic Games which saw the facilities built first before anyone started to plan how to get to them, added Mr Adamidov.
Alexander Filimonov, expert at company AKG ‘Business systems’ development’, thinks that RZD’s estimate is in general an objective one. However, ‘by that time the prices of land and materials can grow, and nobody can predict what the cost ceiling will be’, he said.

Potential interest
It is planned to spend no more than 50 billion rubles on buying land for further building. All expenses will be met by the government. In the Petersburg direction this cost could be zero because High-Speed Rail Lines JSC tried at the beginning of 1990 to build a Moscow–St Petersburg high-speed main line and has reserved the land needed. But the route of the new main line may be different.
New high-speed main lines will be built with the use of a special kind of concession – the life cycle contract model. The company will be chosen by tender. It will be responsible for planning, raising capital, construction and maintenance of the main line. This offers the greatest scope to reduce costs and to complete construction in the shortest possible time. 
This is because the concession company is paid by the government only after the rail line starts to work. The project’s criteria and payments volume will be confirmed primordially. So the more concessioner save the more return he becomes, agrees Mr Savchuk. So the state will not bear any risks, only paying for fulfilled services.
The state will pay up to 70% of the total cost of the project; with the rest coming from private investors. Financing will be realized by the major international financial institutions, ‘Fast main-lines’ has already negotiated with them. According to Mr Muratov, in Russia Vnesheconombank, Sberbank and VTB are interested in the project. ‘The project is potentially interesting, but it’s too early now to speak about the details,’ noted Oleg Pankratov, co-manager of the Department for investment banking activity ‘VTB capital’. 
Sberbank is now at the stage of primary analysis of the project, said its representative. Such projects are almost always realized with the participation of the state, noted Mr Savchuk and Andrey Timofeev, Partner at The Boston Consulting Group. But the state’s costs could go higher. For example it is doubtful whether it would be possible to get more than 20% of the project’s value from investors, thinks Mr Timofeev. 

Summary
‘We expect that the preparations for, and the holding of, the World Cup will play a big positive role in the life of our country. Everything indicates that the infrastructure will be developed. The point is that not only stadia, but also airports, streets, connections and railways will be built. We have an idea to connect the host cities with a fast railway service. These are things that will be used not only by football fans but also by all the citizens of the Russian Federation,’ said Vladimir Putin at a meeting with Sepp Blatter, President of the FIFA executive committee. Yet there is still no answer not only to the question of how much it will cost for a trip on a 400 kph line, but also to the many other questions that remain. 
by Stanislav Russkov
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New Players are entering the Market 
 As we know, supply is determined by demand and the demand for forest industry products seriously suffered during 2008-2009. Thus, according to the United Nations Economic Commission for Europe, wood and paper products consumption in 2008 fell 8%, and in 2009 it sharply reduced another 12%, which was the most significant reduction percentage-wise in the context of the current global economic crisis. Production of industrial roundwood for these products fell to record levels. In addition, the reduction of the prices of timber industry products was the natural result of these trends, and this motivated manufacturers to seek cheaper sources of raw materials.
 In these circumstances, the Russian Government’s announcement of prohibitive duties (while governments of other exporting countries actually got rid of them) have led to a change in habitual supply patterns together with the reorientation of a number of traditional consumers of Russian forest in China, Japan and Western Europe for products from North and South America, New Zealand and Africa. 
 In addition, it has become more difficult to carry out trade operations connected with illegally stored timber and products made of it due to new European Union and United States legislation, according to which the burden of responsibility is now laid on importers and even buyers (before the crisis, shadow exports from Russia was estimated at 15-20% of the volume of legal export). This led to a reduction of export flows by almost a quarter.
 The problem is that even a moratorium on the prohibitive duties did not lead to radical improvements for timber industry companies, because their place has already been taken by competitors. ‘At the end of 2009, we tried to sign a contract on the new terms with our Japanese partners, taking into account the possibility of introduction of export duties, says Stepan Vdovichenkov, Commercial Director of Khorskoe LLC. ‘Buyers insisted on firm pricing, which is why we were forced to withdraw from the contract. After the question of duties has been resolved, we attempted to resume our long-term relationships, but were faced with the fact that the entire volume of consumption was already provided by a Canadian company’.
Accordingly, the structure, orientation and delivery volumes are changing. For example, the facilities of Olgales JSC (one of the largest forestry companies that exported wood from Maritime Territory in the past) have in fact been standing idle since July 2010. And the reason is that the main supplier of forest – Kavalerovsky Individual Farms LLC having found new customers in China and decided to sent roundwood by rail instead of by sea, as it used to do. Other suppliers were less fortunate, because the reduction of logging industry was on average from 20 to 60%. And, moreover, according to some data each tenth logging company had to suspend or terminate its activities. 
‘In the last year we were finally forced to curtail logging,’ complains Yegor Pet­rakov, former director of one of the enterprises of Karelia. 

It will be hard to break out
Practically the whole of 2010 was a year of struggle for deficient rolling-stock. According to Vyacheslav Beketov, Manager of Dauria LLC, it is disadvantageous for the railways to transport timber, because carriers can earn much more on the transportation of other goods. The cost of metal transportation, for example, is several times higher than wood transportation. In addition, timber is usually transported short distances, which makes its transportation even less profitable.
Thus, loggers across the country face challenges. However, there is still no alternative for timber manufacturers, only the railway. ‘We have appealed to the Freight One Company, but we were told that the company doesn’t transport forest products. And the tariffs of small private companies are 30% higher than RZD’s. We cannot afford that sum of money. Wood is now very poorly sold. And whatever is sold often can’t be delivered to the customer,’ said Valery Palichev, General Director of Sverdles Close Corporation.
The railway operators have their own logic. ‘We can take a car with timber to any town, but who would pay for its return?’ asks Igor Chushkin, Production Director at NerudTrans LLC. With transportion in RZD wagons, payment for returning empty wagons is already included in the tariff. When transporting in private cars, loaded wagons and the return of empty wagons to the station of departure are paid for separately. 
If loggers are willing to pay more attention to empty wagon return, we will give them cars. But still it is more profitable for us to transport metal, because the payment is 4-5 times higher than for timber.’ Of course, all transportation costs are included in the cost of products and that doesn’t increase the chances of domestic manufacturers winning against the competition.
Alexander Ivanov, Head of the TIS Freight-Forwarding Group of Companies, draws attention to the following issue: ‘Based on extensive experience in sending goods by railway, I am unfortunately compelled to note a number of cases of substantiated complaints of cargo owners about railway companies, including rolling stock loading. It is obvious that a problem of supply of rolling stock is often connected with car owners’ low interest in a number of transportation areas, particularly, transportation of timber,’ he says. 
Mr Ivanov continues that the logical solution, at first glance, seemed an increase in tariffs, but as practice shows, the growth of cost of services, unfortunately, is not always associated with improvements in quality or speed. That is why, in this case a change in pricing policy does not seem to us an acceptable solution. In addition, at the moment the ‘inconvenient’ cargo owners occupy a major share of dispatches and their leaving of the railway transportation market will bring very serious consequences, including problems for the transporters themselves.

Small Parties – But This is a Big Problem
The other side of timber logistics, which is not clear yet, is the inadequacy of exis­ting approaches to the organization of the transport service sector and the development of market demand. Now everything, from the level of development of transport infrastructure to implemented business models, is planned in accordance with the demands of transporting routes in the direction of state borders of Russia. Any changes in this model are often by reason of poorly explained complexities. ‘We signed a contract with a wood processing plant in the Voronezh region,’ says Victor Konovitsyn, Chief Engineer at Sterhovsky Private Farm LLC. ‘According to it, we had to transport 40 cars a month from two neighbouring stations. 
‘The problem was that it turned out that Russian Railways JSC and other railway operators were not able to provide supplies. Violation of filing deadlines for cars and their number were the rule rather than the exception. As a result, we had to terminate our contract, and, if I understand it correctly, our partner has found alternative ways to deliver the product without the usage of railway transport’. 
The logic of the timber industry development is in conflict with the ideology which occupies the minds of railway operators. While the most effective way of development for the producers is to reduce the distances between places of logging and subsequent processing, as well as launching small specialized production in order to penetrate the market wisely and carefully, owners of the rolling stock, on the contrary, tend to maximize both batch sizes and the distances the goods are transported. 
It is hard to say who is right and who to blame and whether such concepts are applicable in the present market conditions, but a solution should be found, otherwise both sides will suffer. After all, as practice shows, the existence of large forest reserves is not a competitive advantage. And if effective solutions are not found, a 2% growth in timber transshipment on the railways will remain a one-off against the background of general downward trend. 
By Dmitry Hancewich

interview
‘There will be Volumes. Is There Enough Traffic Capacity?’
While Russian producers are struggling because of problems in dealing with railway operators, there are investors willing to build new capacities here. Swedish company Sodra, which is among the world leaders in the pulp and paper industry, has announced its intention to build a plant in Krasnoyarsk region. Igor Ryvkin, Head of Russian Wood Products Industry Consulting Company, is sure that this event can dramatically increase transportation in the forestry industry. 

– Mr Ryvkin, what do you think about the short-and medium-term development prospects of roundwood, lumber and cellulose pulp railroad transportation?

– Speaking about the volumes, the prospects are pretty good. And Sondra’s intentions prove it. What is interesting is that this concern belongs to a cooperative of more than 50,000 Swedish coppice owners. So, imagine that conservative Swedish countrymen are thinking seriously of investing in the Far Siberia region about which it is only known that it is cold there and there are bears on the streets. They also know rumours of a bad investment climate, which is untrue, at least, in the timber industry. If Swedish foresters have already come to us, it means the interest is really huge. It could be concluded that we are waiting for new production and volume increases.
It is necessary to notice aspects connected with Sondra’s project. During the Soviet Union era, two similar territorial production complexes, consisting of hydropower, timber mills and aluminium smelters, were being built in the Irkutsk region and Krasnoyarsk territory (in Angara and Enisey respectively). The complex in Irkutsk was successfully built. By the way, its PPC (pulp and paper complex) and other forest complexes there half belong to American giant International Paper.
As for the Krasnoyarsk territory and its Boguchanskaya GES region, the building was somehow mired in delays but it keeps moving as well. At the moment, the aluminium plant and the railway line are under construction. But a PPC is needed there. So, what I mean is, if Sodra rethink, there will be a PPC anyway. Its output will be the same as in the Irkutsk region and this is very solid. But the question of rail transportation arises here.

– … connected with limited infrastructure… 

- Exactly. The fact is that whoever builds the PPC will see practically all of its volume exported to China, as there is a deficit of cellulose there. However, we also know eastern transportation volumes are increasing dramatically both to border crossings and to ports. And it will be increasing, because we remember that even in 2009, at the peak of the crisis, transportation volumes to China didn`t fall but increased on a number of product lines. China is very successful and there are no tendencies that show if this will change. 
Moreover, the PPC location in the Krasnoyarsk territory indicates that the shortest way to the Far East is the Baikal-Amur railway. This is a very positive fact as railwaymen themselves are interested in unloading of the railway line. However, it is needed to extend limited sections, or particularly, to build a second line. There is also a need for a timely increase in the capability of the Transsiberian and Baikal-Amur railways as well as portside stations and border crossings. 
At the moment RZD, together with Transport Ministry, is working on this and foreign investors as well as I wish them good luck for purely mercenary motives: in terms of road capability, forest projects will appear in Siberia like mushrooms after the rain. Nowadays, this region is one of the most attractive in the world from the viewpoint of return on investments in woodworking and pulp production. And, by the way, the region will be interesting for private rolling stock operators as cellulose, being quite an expensive cargo, is more resistant to the tariff burden than roundwood or lumber.
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New Players are entering the Market 
 As we know, supply is determined by demand and the demand for forest industry products seriously suffered during 2008-2009. Thus, according to the United Nations Economic Commission for Europe, wood and paper products consumption in 2008 fell 8%, and in 2009 it sharply reduced another 12%, which was the most significant reduction percentage-wise in the context of the current global economic crisis. Production of industrial roundwood for these products fell to record levels. In addition, the reduction of the prices of timber industry products was the natural result of these trends, and this motivated manufacturers to seek cheaper sources of raw materials.
 In these circumstances, the Russian Government’s announcement of prohibitive duties (while governments of other exporting countries actually got rid of them) have led to a change in habitual supply patterns together with the reorientation of a number of traditional consumers of Russian forest in China, Japan and Western Europe for products from North and South America, New Zealand and Africa. 
 In addition, it has become more difficult to carry out trade operations connected with illegally stored timber and products made of it due to new European Union and United States legislation, according to which the burden of responsibility is now laid on importers and even buyers (before the crisis, shadow exports from Russia was estimated at 15-20% of the volume of legal export). This led to a reduction of export flows by almost a quarter.
 The problem is that even a moratorium on the prohibitive duties did not lead to radical improvements for timber industry companies, because their place has already been taken by competitors. ‘At the end of 2009, we tried to sign a contract on the new terms with our Japanese partners, taking into account the possibility of introduction of export duties, says Stepan Vdovichenkov, Commercial Director of Khorskoe LLC. ‘Buyers insisted on firm pricing, which is why we were forced to withdraw from the contract. After the question of duties has been resolved, we attempted to resume our long-term relationships, but were faced with the fact that the entire volume of consumption was already provided by a Canadian company’.
Accordingly, the structure, orientation and delivery volumes are changing. For example, the facilities of Olgales JSC (one of the largest forestry companies that exported wood from Maritime Territory in the past) have in fact been standing idle since July 2010. And the reason is that the main supplier of forest – Kavalerovsky Individual Farms LLC having found new customers in China and decided to sent roundwood by rail instead of by sea, as it used to do. Other suppliers were less fortunate, because the reduction of logging industry was on average from 20 to 60%. And, moreover, according to some data each tenth logging company had to suspend or terminate its activities. 
‘In the last year we were finally forced to curtail logging,’ complains Yegor Pet­rakov, former director of one of the enterprises of Karelia. 

It will be hard to break out
Practically the whole of 2010 was a year of struggle for deficient rolling-stock. According to Vyacheslav Beketov, Manager of Dauria LLC, it is disadvantageous for the railways to transport timber, because carriers can earn much more on the transportation of other goods. The cost of metal transportation, for example, is several times higher than wood transportation. In addition, timber is usually transported short distances, which makes its transportation even less profitable.
Thus, loggers across the country face challenges. However, there is still no alternative for timber manufacturers, only the railway. ‘We have appealed to the Freight One Company, but we were told that the company doesn’t transport forest products. And the tariffs of small private companies are 30% higher than RZD’s. We cannot afford that sum of money. Wood is now very poorly sold. And whatever is sold often can’t be delivered to the customer,’ said Valery Palichev, General Director of Sverdles Close Corporation.
The railway operators have their own logic. ‘We can take a car with timber to any town, but who would pay for its return?’ asks Igor Chushkin, Production Director at NerudTrans LLC. With transportion in RZD wagons, payment for returning empty wagons is already included in the tariff. When transporting in private cars, loaded wagons and the return of empty wagons to the station of departure are paid for separately. 
If loggers are willing to pay more attention to empty wagon return, we will give them cars. But still it is more profitable for us to transport metal, because the payment is 4-5 times higher than for timber.’ Of course, all transportation costs are included in the cost of products and that doesn’t increase the chances of domestic manufacturers winning against the competition.
Alexander Ivanov, Head of the TIS Freight-Forwarding Group of Companies, draws attention to the following issue: ‘Based on extensive experience in sending goods by railway, I am unfortunately compelled to note a number of cases of substantiated complaints of cargo owners about railway companies, including rolling stock loading. It is obvious that a problem of supply of rolling stock is often connected with car owners’ low interest in a number of transportation areas, particularly, transportation of timber,’ he says. 
Mr Ivanov continues that the logical solution, at first glance, seemed an increase in tariffs, but as practice shows, the growth of cost of services, unfortunately, is not always associated with improvements in quality or speed. That is why, in this case a change in pricing policy does not seem to us an acceptable solution. In addition, at the moment the ‘inconvenient’ cargo owners occupy a major share of dispatches and their leaving of the railway transportation market will bring very serious consequences, including problems for the transporters themselves.

Small Parties – But This is a Big Problem
The other side of timber logistics, which is not clear yet, is the inadequacy of exis­ting approaches to the organization of the transport service sector and the development of market demand. Now everything, from the level of development of transport infrastructure to implemented business models, is planned in accordance with the demands of transporting routes in the direction of state borders of Russia. Any changes in this model are often by reason of poorly explained complexities. ‘We signed a contract with a wood processing plant in the Voronezh region,’ says Victor Konovitsyn, Chief Engineer at Sterhovsky Private Farm LLC. ‘According to it, we had to transport 40 cars a month from two neighbouring stations. 
‘The problem was that it turned out that Russian Railways JSC and other railway operators were not able to provide supplies. Violation of filing deadlines for cars and their number were the rule rather than the exception. As a result, we had to terminate our contract, and, if I understand it correctly, our partner has found alternative ways to deliver the product without the usage of railway transport’. 
The logic of the timber industry development is in conflict with the ideology which occupies the minds of railway operators. While the most effective way of development for the producers is to reduce the distances between places of logging and subsequent processing, as well as launching small specialized production in order to penetrate the market wisely and carefully, owners of the rolling stock, on the contrary, tend to maximize both batch sizes and the distances the goods are transported. 
It is hard to say who is right and who to blame and whether such concepts are applicable in the present market conditions, but a solution should be found, otherwise both sides will suffer. After all, as practice shows, the existence of large forest reserves is not a competitive advantage. And if effective solutions are not found, a 2% growth in timber transshipment on the railways will remain a one-off against the background of general downward trend. 
By Dmitry Hancewich

interview
‘There will be Volumes. Is There Enough Traffic Capacity?’
While Russian producers are struggling because of problems in dealing with railway operators, there are investors willing to build new capacities here. Swedish company Sodra, which is among the world leaders in the pulp and paper industry, has announced its intention to build a plant in Krasnoyarsk region. Igor Ryvkin, Head of Russian Wood Products Industry Consulting Company, is sure that this event can dramatically increase transportation in the forestry industry. 

– Mr Ryvkin, what do you think about the short-and medium-term development prospects of roundwood, lumber and cellulose pulp railroad transportation?

– Speaking about the volumes, the prospects are pretty good. And Sondra’s intentions prove it. What is interesting is that this concern belongs to a cooperative of more than 50,000 Swedish coppice owners. So, imagine that conservative Swedish countrymen are thinking seriously of investing in the Far Siberia region about which it is only known that it is cold there and there are bears on the streets. They also know rumours of a bad investment climate, which is untrue, at least, in the timber industry. If Swedish foresters have already come to us, it means the interest is really huge. It could be concluded that we are waiting for new production and volume increases.
It is necessary to notice aspects connected with Sondra’s project. During the Soviet Union era, two similar territorial production complexes, consisting of hydropower, timber mills and aluminium smelters, were being built in the Irkutsk region and Krasnoyarsk territory (in Angara and Enisey respectively). The complex in Irkutsk was successfully built. By the way, its PPC (pulp and paper complex) and other forest complexes there half belong to American giant International Paper.
As for the Krasnoyarsk territory and its Boguchanskaya GES region, the building was somehow mired in delays but it keeps moving as well. At the moment, the aluminium plant and the railway line are under construction. But a PPC is needed there. So, what I mean is, if Sodra rethink, there will be a PPC anyway. Its output will be the same as in the Irkutsk region and this is very solid. But the question of rail transportation arises here.

– … connected with limited infrastructure… 

- Exactly. The fact is that whoever builds the PPC will see practically all of its volume exported to China, as there is a deficit of cellulose there. However, we also know eastern transportation volumes are increasing dramatically both to border crossings and to ports. And it will be increasing, because we remember that even in 2009, at the peak of the crisis, transportation volumes to China didn`t fall but increased on a number of product lines. China is very successful and there are no tendencies that show if this will change. 
Moreover, the PPC location in the Krasnoyarsk territory indicates that the shortest way to the Far East is the Baikal-Amur railway. This is a very positive fact as railwaymen themselves are interested in unloading of the railway line. However, it is needed to extend limited sections, or particularly, to build a second line. There is also a need for a timely increase in the capability of the Transsiberian and Baikal-Amur railways as well as portside stations and border crossings. 
At the moment RZD, together with Transport Ministry, is working on this and foreign investors as well as I wish them good luck for purely mercenary motives: in terms of road capability, forest projects will appear in Siberia like mushrooms after the rain. Nowadays, this region is one of the most attractive in the world from the viewpoint of return on investments in woodworking and pulp production. And, by the way, the region will be interesting for private rolling stock operators as cellulose, being quite an expensive cargo, is more resistant to the tariff burden than roundwood or lumber.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/16.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Despite the cautious growth in the field of timber transportation recorded on RZD’s network last year, a recovery to pre-crisis volumes, supposedly, is not expected, even in the light of the general economic recovery. The potential of this type of transportation is huge, but putting it into practice requires finding a solution to a whole range of issues, most of which are not directly related to the transport sector.
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New Players are entering the Market 
 As we know, supply is determined by demand and the demand for forest industry products seriously suffered during 2008-2009. Thus, according to the United Nations Economic Commission for Europe, wood and paper products consumption in 2008 fell 8%, and in 2009 it sharply reduced another 12%, which was the most significant reduction percentage-wise in the context of the current global economic crisis. Production of industrial roundwood for these products fell to record levels. In addition, the reduction of the prices of timber industry products was the natural result of these trends, and this motivated manufacturers to seek cheaper sources of raw materials.
 In these circumstances, the Russian Government’s announcement of prohibitive duties (while governments of other exporting countries actually got rid of them) have led to a change in habitual supply patterns together with the reorientation of a number of traditional consumers of Russian forest in China, Japan and Western Europe for products from North and South America, New Zealand and Africa. 
 In addition, it has become more difficult to carry out trade operations connected with illegally stored timber and products made of it due to new European Union and United States legislation, according to which the burden of responsibility is now laid on importers and even buyers (before the crisis, shadow exports from Russia was estimated at 15-20% of the volume of legal export). This led to a reduction of export flows by almost a quarter.
 The problem is that even a moratorium on the prohibitive duties did not lead to radical improvements for timber industry companies, because their place has already been taken by competitors. ‘At the end of 2009, we tried to sign a contract on the new terms with our Japanese partners, taking into account the possibility of introduction of export duties, says Stepan Vdovichenkov, Commercial Director of Khorskoe LLC. ‘Buyers insisted on firm pricing, which is why we were forced to withdraw from the contract. After the question of duties has been resolved, we attempted to resume our long-term relationships, but were faced with the fact that the entire volume of consumption was already provided by a Canadian company’.
Accordingly, the structure, orientation and delivery volumes are changing. For example, the facilities of Olgales JSC (one of the largest forestry companies that exported wood from Maritime Territory in the past) have in fact been standing idle since July 2010. And the reason is that the main supplier of forest – Kavalerovsky Individual Farms LLC having found new customers in China and decided to sent roundwood by rail instead of by sea, as it used to do. Other suppliers were less fortunate, because the reduction of logging industry was on average from 20 to 60%. And, moreover, according to some data each tenth logging company had to suspend or terminate its activities. 
‘In the last year we were finally forced to curtail logging,’ complains Yegor Pet­rakov, former director of one of the enterprises of Karelia. 

It will be hard to break out
Practically the whole of 2010 was a year of struggle for deficient rolling-stock. According to Vyacheslav Beketov, Manager of Dauria LLC, it is disadvantageous for the railways to transport timber, because carriers can earn much more on the transportation of other goods. The cost of metal transportation, for example, is several times higher than wood transportation. In addition, timber is usually transported short distances, which makes its transportation even less profitable.
Thus, loggers across the country face challenges. However, there is still no alternative for timber manufacturers, only the railway. ‘We have appealed to the Freight One Company, but we were told that the company doesn’t transport forest products. And the tariffs of small private companies are 30% higher than RZD’s. We cannot afford that sum of money. Wood is now very poorly sold. And whatever is sold often can’t be delivered to the customer,’ said Valery Palichev, General Director of Sverdles Close Corporation.
The railway operators have their own logic. ‘We can take a car with timber to any town, but who would pay for its return?’ asks Igor Chushkin, Production Director at NerudTrans LLC. With transportion in RZD wagons, payment for returning empty wagons is already included in the tariff. When transporting in private cars, loaded wagons and the return of empty wagons to the station of departure are paid for separately. 
If loggers are willing to pay more attention to empty wagon return, we will give them cars. But still it is more profitable for us to transport metal, because the payment is 4-5 times higher than for timber.’ Of course, all transportation costs are included in the cost of products and that doesn’t increase the chances of domestic manufacturers winning against the competition.
Alexander Ivanov, Head of the TIS Freight-Forwarding Group of Companies, draws attention to the following issue: ‘Based on extensive experience in sending goods by railway, I am unfortunately compelled to note a number of cases of substantiated complaints of cargo owners about railway companies, including rolling stock loading. It is obvious that a problem of supply of rolling stock is often connected with car owners’ low interest in a number of transportation areas, particularly, transportation of timber,’ he says. 
Mr Ivanov continues that the logical solution, at first glance, seemed an increase in tariffs, but as practice shows, the growth of cost of services, unfortunately, is not always associated with improvements in quality or speed. That is why, in this case a change in pricing policy does not seem to us an acceptable solution. In addition, at the moment the ‘inconvenient’ cargo owners occupy a major share of dispatches and their leaving of the railway transportation market will bring very serious consequences, including problems for the transporters themselves.

Small Parties – But This is a Big Problem
The other side of timber logistics, which is not clear yet, is the inadequacy of exis­ting approaches to the organization of the transport service sector and the development of market demand. Now everything, from the level of development of transport infrastructure to implemented business models, is planned in accordance with the demands of transporting routes in the direction of state borders of Russia. Any changes in this model are often by reason of poorly explained complexities. ‘We signed a contract with a wood processing plant in the Voronezh region,’ says Victor Konovitsyn, Chief Engineer at Sterhovsky Private Farm LLC. ‘According to it, we had to transport 40 cars a month from two neighbouring stations. 
‘The problem was that it turned out that Russian Railways JSC and other railway operators were not able to provide supplies. Violation of filing deadlines for cars and their number were the rule rather than the exception. As a result, we had to terminate our contract, and, if I understand it correctly, our partner has found alternative ways to deliver the product without the usage of railway transport’. 
The logic of the timber industry development is in conflict with the ideology which occupies the minds of railway operators. While the most effective way of development for the producers is to reduce the distances between places of logging and subsequent processing, as well as launching small specialized production in order to penetrate the market wisely and carefully, owners of the rolling stock, on the contrary, tend to maximize both batch sizes and the distances the goods are transported. 
It is hard to say who is right and who to blame and whether such concepts are applicable in the present market conditions, but a solution should be found, otherwise both sides will suffer. After all, as practice shows, the existence of large forest reserves is not a competitive advantage. And if effective solutions are not found, a 2% growth in timber transshipment on the railways will remain a one-off against the background of general downward trend. 
By Dmitry Hancewich

interview
‘There will be Volumes. Is There Enough Traffic Capacity?’
While Russian producers are struggling because of problems in dealing with railway operators, there are investors willing to build new capacities here. Swedish company Sodra, which is among the world leaders in the pulp and paper industry, has announced its intention to build a plant in Krasnoyarsk region. Igor Ryvkin, Head of Russian Wood Products Industry Consulting Company, is sure that this event can dramatically increase transportation in the forestry industry. 

– Mr Ryvkin, what do you think about the short-and medium-term development prospects of roundwood, lumber and cellulose pulp railroad transportation?

– Speaking about the volumes, the prospects are pretty good. And Sondra’s intentions prove it. What is interesting is that this concern belongs to a cooperative of more than 50,000 Swedish coppice owners. So, imagine that conservative Swedish countrymen are thinking seriously of investing in the Far Siberia region about which it is only known that it is cold there and there are bears on the streets. They also know rumours of a bad investment climate, which is untrue, at least, in the timber industry. If Swedish foresters have already come to us, it means the interest is really huge. It could be concluded that we are waiting for new production and volume increases.
It is necessary to notice aspects connected with Sondra’s project. During the Soviet Union era, two similar territorial production complexes, consisting of hydropower, timber mills and aluminium smelters, were being built in the Irkutsk region and Krasnoyarsk territory (in Angara and Enisey respectively). The complex in Irkutsk was successfully built. By the way, its PPC (pulp and paper complex) and other forest complexes there half belong to American giant International Paper.
As for the Krasnoyarsk territory and its Boguchanskaya GES region, the building was somehow mired in delays but it keeps moving as well. At the moment, the aluminium plant and the railway line are under construction. But a PPC is needed there. So, what I mean is, if Sodra rethink, there will be a PPC anyway. Its output will be the same as in the Irkutsk region and this is very solid. But the question of rail transportation arises here.

– … connected with limited infrastructure… 

- Exactly. The fact is that whoever builds the PPC will see practically all of its volume exported to China, as there is a deficit of cellulose there. However, we also know eastern transportation volumes are increasing dramatically both to border crossings and to ports. And it will be increasing, because we remember that even in 2009, at the peak of the crisis, transportation volumes to China didn`t fall but increased on a number of product lines. China is very successful and there are no tendencies that show if this will change. 
Moreover, the PPC location in the Krasnoyarsk territory indicates that the shortest way to the Far East is the Baikal-Amur railway. This is a very positive fact as railwaymen themselves are interested in unloading of the railway line. However, it is needed to extend limited sections, or particularly, to build a second line. There is also a need for a timely increase in the capability of the Transsiberian and Baikal-Amur railways as well as portside stations and border crossings. 
At the moment RZD, together with Transport Ministry, is working on this and foreign investors as well as I wish them good luck for purely mercenary motives: in terms of road capability, forest projects will appear in Siberia like mushrooms after the rain. Nowadays, this region is one of the most attractive in the world from the viewpoint of return on investments in woodworking and pulp production. And, by the way, the region will be interesting for private rolling stock operators as cellulose, being quite an expensive cargo, is more resistant to the tariff burden than roundwood or lumber.
    [~DETAIL_TEXT] => 
New Players are entering the Market 
 As we know, supply is determined by demand and the demand for forest industry products seriously suffered during 2008-2009. Thus, according to the United Nations Economic Commission for Europe, wood and paper products consumption in 2008 fell 8%, and in 2009 it sharply reduced another 12%, which was the most significant reduction percentage-wise in the context of the current global economic crisis. Production of industrial roundwood for these products fell to record levels. In addition, the reduction of the prices of timber industry products was the natural result of these trends, and this motivated manufacturers to seek cheaper sources of raw materials.
 In these circumstances, the Russian Government’s announcement of prohibitive duties (while governments of other exporting countries actually got rid of them) have led to a change in habitual supply patterns together with the reorientation of a number of traditional consumers of Russian forest in China, Japan and Western Europe for products from North and South America, New Zealand and Africa. 
 In addition, it has become more difficult to carry out trade operations connected with illegally stored timber and products made of it due to new European Union and United States legislation, according to which the burden of responsibility is now laid on importers and even buyers (before the crisis, shadow exports from Russia was estimated at 15-20% of the volume of legal export). This led to a reduction of export flows by almost a quarter.
 The problem is that even a moratorium on the prohibitive duties did not lead to radical improvements for timber industry companies, because their place has already been taken by competitors. ‘At the end of 2009, we tried to sign a contract on the new terms with our Japanese partners, taking into account the possibility of introduction of export duties, says Stepan Vdovichenkov, Commercial Director of Khorskoe LLC. ‘Buyers insisted on firm pricing, which is why we were forced to withdraw from the contract. After the question of duties has been resolved, we attempted to resume our long-term relationships, but were faced with the fact that the entire volume of consumption was already provided by a Canadian company’.
Accordingly, the structure, orientation and delivery volumes are changing. For example, the facilities of Olgales JSC (one of the largest forestry companies that exported wood from Maritime Territory in the past) have in fact been standing idle since July 2010. And the reason is that the main supplier of forest – Kavalerovsky Individual Farms LLC having found new customers in China and decided to sent roundwood by rail instead of by sea, as it used to do. Other suppliers were less fortunate, because the reduction of logging industry was on average from 20 to 60%. And, moreover, according to some data each tenth logging company had to suspend or terminate its activities. 
‘In the last year we were finally forced to curtail logging,’ complains Yegor Pet­rakov, former director of one of the enterprises of Karelia. 

It will be hard to break out
Practically the whole of 2010 was a year of struggle for deficient rolling-stock. According to Vyacheslav Beketov, Manager of Dauria LLC, it is disadvantageous for the railways to transport timber, because carriers can earn much more on the transportation of other goods. The cost of metal transportation, for example, is several times higher than wood transportation. In addition, timber is usually transported short distances, which makes its transportation even less profitable.
Thus, loggers across the country face challenges. However, there is still no alternative for timber manufacturers, only the railway. ‘We have appealed to the Freight One Company, but we were told that the company doesn’t transport forest products. And the tariffs of small private companies are 30% higher than RZD’s. We cannot afford that sum of money. Wood is now very poorly sold. And whatever is sold often can’t be delivered to the customer,’ said Valery Palichev, General Director of Sverdles Close Corporation.
The railway operators have their own logic. ‘We can take a car with timber to any town, but who would pay for its return?’ asks Igor Chushkin, Production Director at NerudTrans LLC. With transportion in RZD wagons, payment for returning empty wagons is already included in the tariff. When transporting in private cars, loaded wagons and the return of empty wagons to the station of departure are paid for separately. 
If loggers are willing to pay more attention to empty wagon return, we will give them cars. But still it is more profitable for us to transport metal, because the payment is 4-5 times higher than for timber.’ Of course, all transportation costs are included in the cost of products and that doesn’t increase the chances of domestic manufacturers winning against the competition.
Alexander Ivanov, Head of the TIS Freight-Forwarding Group of Companies, draws attention to the following issue: ‘Based on extensive experience in sending goods by railway, I am unfortunately compelled to note a number of cases of substantiated complaints of cargo owners about railway companies, including rolling stock loading. It is obvious that a problem of supply of rolling stock is often connected with car owners’ low interest in a number of transportation areas, particularly, transportation of timber,’ he says. 
Mr Ivanov continues that the logical solution, at first glance, seemed an increase in tariffs, but as practice shows, the growth of cost of services, unfortunately, is not always associated with improvements in quality or speed. That is why, in this case a change in pricing policy does not seem to us an acceptable solution. In addition, at the moment the ‘inconvenient’ cargo owners occupy a major share of dispatches and their leaving of the railway transportation market will bring very serious consequences, including problems for the transporters themselves.

Small Parties – But This is a Big Problem
The other side of timber logistics, which is not clear yet, is the inadequacy of exis­ting approaches to the organization of the transport service sector and the development of market demand. Now everything, from the level of development of transport infrastructure to implemented business models, is planned in accordance with the demands of transporting routes in the direction of state borders of Russia. Any changes in this model are often by reason of poorly explained complexities. ‘We signed a contract with a wood processing plant in the Voronezh region,’ says Victor Konovitsyn, Chief Engineer at Sterhovsky Private Farm LLC. ‘According to it, we had to transport 40 cars a month from two neighbouring stations. 
‘The problem was that it turned out that Russian Railways JSC and other railway operators were not able to provide supplies. Violation of filing deadlines for cars and their number were the rule rather than the exception. As a result, we had to terminate our contract, and, if I understand it correctly, our partner has found alternative ways to deliver the product without the usage of railway transport’. 
The logic of the timber industry development is in conflict with the ideology which occupies the minds of railway operators. While the most effective way of development for the producers is to reduce the distances between places of logging and subsequent processing, as well as launching small specialized production in order to penetrate the market wisely and carefully, owners of the rolling stock, on the contrary, tend to maximize both batch sizes and the distances the goods are transported. 
It is hard to say who is right and who to blame and whether such concepts are applicable in the present market conditions, but a solution should be found, otherwise both sides will suffer. After all, as practice shows, the existence of large forest reserves is not a competitive advantage. And if effective solutions are not found, a 2% growth in timber transshipment on the railways will remain a one-off against the background of general downward trend. 
By Dmitry Hancewich

interview
‘There will be Volumes. Is There Enough Traffic Capacity?’
While Russian producers are struggling because of problems in dealing with railway operators, there are investors willing to build new capacities here. Swedish company Sodra, which is among the world leaders in the pulp and paper industry, has announced its intention to build a plant in Krasnoyarsk region. Igor Ryvkin, Head of Russian Wood Products Industry Consulting Company, is sure that this event can dramatically increase transportation in the forestry industry. 

– Mr Ryvkin, what do you think about the short-and medium-term development prospects of roundwood, lumber and cellulose pulp railroad transportation?

– Speaking about the volumes, the prospects are pretty good. And Sondra’s intentions prove it. What is interesting is that this concern belongs to a cooperative of more than 50,000 Swedish coppice owners. So, imagine that conservative Swedish countrymen are thinking seriously of investing in the Far Siberia region about which it is only known that it is cold there and there are bears on the streets. They also know rumours of a bad investment climate, which is untrue, at least, in the timber industry. If Swedish foresters have already come to us, it means the interest is really huge. It could be concluded that we are waiting for new production and volume increases.
It is necessary to notice aspects connected with Sondra’s project. During the Soviet Union era, two similar territorial production complexes, consisting of hydropower, timber mills and aluminium smelters, were being built in the Irkutsk region and Krasnoyarsk territory (in Angara and Enisey respectively). The complex in Irkutsk was successfully built. By the way, its PPC (pulp and paper complex) and other forest complexes there half belong to American giant International Paper.
As for the Krasnoyarsk territory and its Boguchanskaya GES region, the building was somehow mired in delays but it keeps moving as well. At the moment, the aluminium plant and the railway line are under construction. But a PPC is needed there. So, what I mean is, if Sodra rethink, there will be a PPC anyway. Its output will be the same as in the Irkutsk region and this is very solid. But the question of rail transportation arises here.

– … connected with limited infrastructure… 

- Exactly. The fact is that whoever builds the PPC will see practically all of its volume exported to China, as there is a deficit of cellulose there. However, we also know eastern transportation volumes are increasing dramatically both to border crossings and to ports. And it will be increasing, because we remember that even in 2009, at the peak of the crisis, transportation volumes to China didn`t fall but increased on a number of product lines. China is very successful and there are no tendencies that show if this will change. 
Moreover, the PPC location in the Krasnoyarsk territory indicates that the shortest way to the Far East is the Baikal-Amur railway. This is a very positive fact as railwaymen themselves are interested in unloading of the railway line. However, it is needed to extend limited sections, or particularly, to build a second line. There is also a need for a timely increase in the capability of the Transsiberian and Baikal-Amur railways as well as portside stations and border crossings. 
At the moment RZD, together with Transport Ministry, is working on this and foreign investors as well as I wish them good luck for purely mercenary motives: in terms of road capability, forest projects will appear in Siberia like mushrooms after the rain. Nowadays, this region is one of the most attractive in the world from the viewpoint of return on investments in woodworking and pulp production. And, by the way, the region will be interesting for private rolling stock operators as cellulose, being quite an expensive cargo, is more resistant to the tariff burden than roundwood or lumber.
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/16.jpg" border="1" alt=" " hspace="5" width="200" height="264" align="left" />Despite the cautious growth in the field of timber transportation recorded on RZD’s network last year, a recovery to pre-crisis volumes, supposedly, is not expected, even in the light of the general economic recovery. The potential of this type of transportation is huge, but putting it into practice requires finding a solution to a whole range of issues, most of which are not directly related to the transport sector.
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Russian Railways implementing innovative passenger projects	
At the Passenger Forum 2011, held in Moscow on 29 March, 2011, Mikhail Akulov, Vice-President of Russian Railways, said that modern rail services were pointless if the sector could not offer passengers high-speed rail links, but that Russia was among the countries which could do so. Over the past year, the express Sapsan trains have carried some 2 million passengers and were filled to 90-100% capacity.
Mr Akulov also said that Russian Railways was developing a Concept for the Organisation of Faster High-Speed Passenger Services During the 2018 World Cup in order to transport fans between the various venues of the tournament, which is being held in Russia. The plan will be presented for discussion in June 2011 and envisages in particular specialised high-speed routes between Moscow – St Petersburg and Nizhny Novgorod – Kazan which will be capable of handling trains travelling at up to 400 kph.
With regard to international services, RZD envisages high-speed links with European countries between Moscow – Minsk – Warsaw – Berlin. However, the international timetable for 2011 – 2012 will extend the route of train No. 13/14 Moscow - Berlin on to Paris and reduce the travel time of train No. 17/18 Moscow - Nice by 15% to 44 hours.
Mr Akulov emphasised that nowadays it was vital to integrate the various modes of transport. Moscow’s City Government and Russian Railways have therefore approved a Concept of the Comprehensive Investment Project for the Development of Suburban Services in the Moscow Transport Hub. The Concept aims to integrate the various modes of transport and create a unified regional transport space.
In terms of long-distance services, integration can be achieved by linking up a large number of services operated as a single entity, but also by using multiple modes of transport which channel incoming passengers and reassign them to outgoing services via the right connections. A pilot project along these lines will be implemented around Novosibirsk.

Russian Companies Will Use Baltic Ports for a Long Time
A share of Russian cargoes will be transported vie the ports of the Baltic states for a long time, said Igor Levitin, Russian Transport Minister, during his visit to Riga in early April.
“Annually, the volume of cargo handled in sea ports in Russia increases by 30 million tons, but the port infrastructure is not keeping pace, which is why a large portion of our freight will be transported via the Baltic ports for a long time yet,” said Mr Levitin.
Also, he emphasized that, when Russia joins the WTO, it will cut tariffs on railway transportation of cargo via the Baltic ports.
Thus, tariffs on transportation of cargo to Russian and Baltic ports will be the same, added Mr Levitin. 

Railway Transportation of Hazardous Cargo Will Be Insured
The Ministry of Transport has started to develop a draft decree on railway transportation of hazardous cargo, said Sergey Aristov, the RF Deputy Minister of Transport, at the international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding.”  
Nowadays, a lot of experts support introducing obligatory liability insurance for railway transportation of hazardous cargo, such as almost all petrochemicals. 

Pipeline Development in the RF Will Not Influence Oil Transportation by Railway
Russia’s plans to put into operation new pipelines before 2015 will not have a significant impact on the volume of oil and petrochemicals transported by railway, considers Semen Rezer, the President of non-commercial partnership the Guild of Forwarders, a Doctor of Engineering and Professor.
In his words, oil companies will develop new oil fields by that time. Also, tank wagons for oil transportation may be needed on the Murmansk direction, where a new oil port is to be built. “Even if export railway transportation of crude oil reduces, there will be work for the tank wagons,” says Mr Rezer. “The share of light oil products on the railway network grows constantly.”
Meanwhile, the expert notes that new services (for example, oil transportation in tank-containers) should be developed to maintain the volume of cargo transported by rail. 

The FAS Will Check Operators’ Extra Expenditure on Oil Transportation 
The RF Transport Ministry is going to ask the Federal Antimonopoly Service (The FAS) to monitor the efficiency of applying extra expenditure when calculating the wagon constituent for bulk transportation of oil by operators, said Sergey Aristov, the RF Deputy Minister of Transport, at international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding” on April 8, 2011.
“The fee for the services of RZD is 60-75%, the rest is spent on additional services. Moreover, companies have to pay for washing and steaming operations envisaged by the technology of oil bulk transportation by railway,” he explained.
“The monitoring is necessary to make the formation of prices for additional services transparent. Then we will understand what are the extra costs which, in fact, level the reduction of prices in the regulated part of the sector,” he said 
In the words of Mr Aristov, the analysis of the share of transport expenses in the final price of oil and petrochemicals showed that, in December 2010, it was lower than in 2003. For example, before Tariff Regulation 10-01 was put into operation, the transport constituent in the price of crude oil was 8%, and now this figure has shrunk by 1%. “That is why the present-day tariff policy in the railway sector cannot be the factor restraining cargo transportation,” emphasised Mr Aristov.

Georgia and Moldova Will Join the Viking Project
Georgia and Moldova intend to join the global project Viking – a system of container transportation between the Baltic Sea and the Black Sea.
According to the Ukrainian Ministry of Infrastructure, the relevant official documents will be signed in the framework of the second meeting of the Coordinating Council for Cargo Transportation Development from the Baltic Sea to the Black Sea (Kiev).
At the meeting, the parties will discuss the prospects for increasing freight transportation volumes on the route Lithuania – Belarus – Ukraine. In particular, they will discuss the issue of enlarging the loading of the combined train “Viking” (Ilyichevsk/Odessa - Klaipeda) using the potential of railway ferries. Another key issue will be the development of the railway constituent in multimodal transportation between Europe and Asia (in both directions).
Representatives of the transport ministries of Lithuania, Belarus, Ukraine, Georgia, Moldova, and Azerbaijan will take part in the meeting. 

River Cargo Transportation in Russia Increased by 17.6% in 2010
In 2010, the volume of cargo transportation via Russia’s inner waterways by shipping companies – members of the Association of Shipping Companies (ASC) – grew by 17.6% in comparison with the previous year and amounted to 25.5 million tons, said Alexey Klyavin, President of the ASC.
Liquid bulk transportation volumes increased by 14% year-on-year, timber by 47.4%, construction materials by 25.9%, grain by 19%, containerised freight by 11.1%, and other cargoes by 25.9%.
The cargo turnovers of the companies – members of the ASC – amounted to 43.3 billion tonne-kilometres, a 15.5% increase compared with 2009. Their share of the total transportation via rivers in Russia was approximately 80%.
Members of the ASC delivered 3.8 million tons of cargo to the regions of the Far North (+9.7%). Passenger transportation increased by 1.8% to 1.2 million people.
According to the ASC, as of January 1, 2011, the transport fleet under the control of shipping companies that are members of the ASC amounted to 2,200 units with a total deadweight of 5 million tons. Of that, 101 vessels are registered on the Russian International Vessel Register, 62 ships in the bareboat-charter register, and 40 vessels work flying a foreign flag.  

FAS Adjusted the Order of Railcar Provision by RZD, Freight One and Freight Two to Consignors	
On February 18, 2011, the Federal Antimonopoly Service of Russia (the FAS) adjusted the draft order of railcar provision by RZD, Freight One and Freight Two to consignors.
The order was developed by operators in accordance with the instructions given by the FAS. 
If RZD receives applications for transportation using its wagons and it lacks the necessary rolling stock, Russian Railways is obliged to take measures envisaged by the RF legislation and this Order, so that the transporter could use railcars owned by Freight One or Freight Two. 
The order to use the wagons owned by Freight One, Freight Two, and other operators was developed in cooperation with interested persons, adjusted in the FAS of Russia, and is an essential part of this Order.
The FAS emphasized that the Order covers the relations of the parties in those commodities markets of rolling stock provision, where a group of entities – RZD, Freight One, and Freight Two – is recognised to dominate. 

Russian Railways to Conduct Test Piggyback Shipments in 2011 
A joint meeting of the Russian Union of Industrialists and Entrepreneurs’ (RUIE) Commission on Transport and Transport Infrastructure and the State Duma’s Committee on Transport to discuss piggyback transportation was held at the headquarters of Russian Railways on March 15, 2011.
In rail transport, piggybacking involves carrying trailers, semi-trailers or containers in a train atop a flatcar (intermodal freight transport).
According to Vyacheslav Lemeshko, Vice President of Russian Railways, the Company is currently considering the results of pre-project studies to create rail ports, where loading and trans-shipment of heavy trucks will be carried out in Primorye, the Shushary industrial zone St Petersburg and the Krasnodar region. It is also considering business plans for the creation of terminal and logistics centres in Novosibirsk, Nizhny Novgorod, Kaliningrad and Moscow. 
Russian Railways is working actively in these areas with the administration of more than 20 federal subjects in Russia.
“Piggyback transportation can be highly successful between Helsinki - St Petersburg - Moscow if there are the requisite logistic centres there. This will also accelerate the movement of goods across the borders with Poland, Lithuania and Latvia,” said the head of the RUIE’s Commission on Transport and Transport Infrastructure Vladimir Yakunin, who is also the President of Russian Railways.
It was also noted at the meeting that piggyback shipments have significant potential for development within the State Customs Union between Russia, Kazakhstan and Belarus.
In the words of Mr Lemeshko, a managing company is to be launched to develop the new type of transportation. Its activity could link the interests of different participants in the project - rolling stock manufacturers, investors and infrastructure developers, transport companies and logistics operators.
    [~DETAIL_TEXT] => 
Russian Railways implementing innovative passenger projects	
At the Passenger Forum 2011, held in Moscow on 29 March, 2011, Mikhail Akulov, Vice-President of Russian Railways, said that modern rail services were pointless if the sector could not offer passengers high-speed rail links, but that Russia was among the countries which could do so. Over the past year, the express Sapsan trains have carried some 2 million passengers and were filled to 90-100% capacity.
Mr Akulov also said that Russian Railways was developing a Concept for the Organisation of Faster High-Speed Passenger Services During the 2018 World Cup in order to transport fans between the various venues of the tournament, which is being held in Russia. The plan will be presented for discussion in June 2011 and envisages in particular specialised high-speed routes between Moscow – St Petersburg and Nizhny Novgorod – Kazan which will be capable of handling trains travelling at up to 400 kph.
With regard to international services, RZD envisages high-speed links with European countries between Moscow – Minsk – Warsaw – Berlin. However, the international timetable for 2011 – 2012 will extend the route of train No. 13/14 Moscow - Berlin on to Paris and reduce the travel time of train No. 17/18 Moscow - Nice by 15% to 44 hours.
Mr Akulov emphasised that nowadays it was vital to integrate the various modes of transport. Moscow’s City Government and Russian Railways have therefore approved a Concept of the Comprehensive Investment Project for the Development of Suburban Services in the Moscow Transport Hub. The Concept aims to integrate the various modes of transport and create a unified regional transport space.
In terms of long-distance services, integration can be achieved by linking up a large number of services operated as a single entity, but also by using multiple modes of transport which channel incoming passengers and reassign them to outgoing services via the right connections. A pilot project along these lines will be implemented around Novosibirsk.

Russian Companies Will Use Baltic Ports for a Long Time
A share of Russian cargoes will be transported vie the ports of the Baltic states for a long time, said Igor Levitin, Russian Transport Minister, during his visit to Riga in early April.
“Annually, the volume of cargo handled in sea ports in Russia increases by 30 million tons, but the port infrastructure is not keeping pace, which is why a large portion of our freight will be transported via the Baltic ports for a long time yet,” said Mr Levitin.
Also, he emphasized that, when Russia joins the WTO, it will cut tariffs on railway transportation of cargo via the Baltic ports.
Thus, tariffs on transportation of cargo to Russian and Baltic ports will be the same, added Mr Levitin. 

Railway Transportation of Hazardous Cargo Will Be Insured
The Ministry of Transport has started to develop a draft decree on railway transportation of hazardous cargo, said Sergey Aristov, the RF Deputy Minister of Transport, at the international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding.”  
Nowadays, a lot of experts support introducing obligatory liability insurance for railway transportation of hazardous cargo, such as almost all petrochemicals. 

Pipeline Development in the RF Will Not Influence Oil Transportation by Railway
Russia’s plans to put into operation new pipelines before 2015 will not have a significant impact on the volume of oil and petrochemicals transported by railway, considers Semen Rezer, the President of non-commercial partnership the Guild of Forwarders, a Doctor of Engineering and Professor.
In his words, oil companies will develop new oil fields by that time. Also, tank wagons for oil transportation may be needed on the Murmansk direction, where a new oil port is to be built. “Even if export railway transportation of crude oil reduces, there will be work for the tank wagons,” says Mr Rezer. “The share of light oil products on the railway network grows constantly.”
Meanwhile, the expert notes that new services (for example, oil transportation in tank-containers) should be developed to maintain the volume of cargo transported by rail. 

The FAS Will Check Operators’ Extra Expenditure on Oil Transportation 
The RF Transport Ministry is going to ask the Federal Antimonopoly Service (The FAS) to monitor the efficiency of applying extra expenditure when calculating the wagon constituent for bulk transportation of oil by operators, said Sergey Aristov, the RF Deputy Minister of Transport, at international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding” on April 8, 2011.
“The fee for the services of RZD is 60-75%, the rest is spent on additional services. Moreover, companies have to pay for washing and steaming operations envisaged by the technology of oil bulk transportation by railway,” he explained.
“The monitoring is necessary to make the formation of prices for additional services transparent. Then we will understand what are the extra costs which, in fact, level the reduction of prices in the regulated part of the sector,” he said 
In the words of Mr Aristov, the analysis of the share of transport expenses in the final price of oil and petrochemicals showed that, in December 2010, it was lower than in 2003. For example, before Tariff Regulation 10-01 was put into operation, the transport constituent in the price of crude oil was 8%, and now this figure has shrunk by 1%. “That is why the present-day tariff policy in the railway sector cannot be the factor restraining cargo transportation,” emphasised Mr Aristov.

Georgia and Moldova Will Join the Viking Project
Georgia and Moldova intend to join the global project Viking – a system of container transportation between the Baltic Sea and the Black Sea.
According to the Ukrainian Ministry of Infrastructure, the relevant official documents will be signed in the framework of the second meeting of the Coordinating Council for Cargo Transportation Development from the Baltic Sea to the Black Sea (Kiev).
At the meeting, the parties will discuss the prospects for increasing freight transportation volumes on the route Lithuania – Belarus – Ukraine. In particular, they will discuss the issue of enlarging the loading of the combined train “Viking” (Ilyichevsk/Odessa - Klaipeda) using the potential of railway ferries. Another key issue will be the development of the railway constituent in multimodal transportation between Europe and Asia (in both directions).
Representatives of the transport ministries of Lithuania, Belarus, Ukraine, Georgia, Moldova, and Azerbaijan will take part in the meeting. 

River Cargo Transportation in Russia Increased by 17.6% in 2010
In 2010, the volume of cargo transportation via Russia’s inner waterways by shipping companies – members of the Association of Shipping Companies (ASC) – grew by 17.6% in comparison with the previous year and amounted to 25.5 million tons, said Alexey Klyavin, President of the ASC.
Liquid bulk transportation volumes increased by 14% year-on-year, timber by 47.4%, construction materials by 25.9%, grain by 19%, containerised freight by 11.1%, and other cargoes by 25.9%.
The cargo turnovers of the companies – members of the ASC – amounted to 43.3 billion tonne-kilometres, a 15.5% increase compared with 2009. Their share of the total transportation via rivers in Russia was approximately 80%.
Members of the ASC delivered 3.8 million tons of cargo to the regions of the Far North (+9.7%). Passenger transportation increased by 1.8% to 1.2 million people.
According to the ASC, as of January 1, 2011, the transport fleet under the control of shipping companies that are members of the ASC amounted to 2,200 units with a total deadweight of 5 million tons. Of that, 101 vessels are registered on the Russian International Vessel Register, 62 ships in the bareboat-charter register, and 40 vessels work flying a foreign flag.  

FAS Adjusted the Order of Railcar Provision by RZD, Freight One and Freight Two to Consignors	
On February 18, 2011, the Federal Antimonopoly Service of Russia (the FAS) adjusted the draft order of railcar provision by RZD, Freight One and Freight Two to consignors.
The order was developed by operators in accordance with the instructions given by the FAS. 
If RZD receives applications for transportation using its wagons and it lacks the necessary rolling stock, Russian Railways is obliged to take measures envisaged by the RF legislation and this Order, so that the transporter could use railcars owned by Freight One or Freight Two. 
The order to use the wagons owned by Freight One, Freight Two, and other operators was developed in cooperation with interested persons, adjusted in the FAS of Russia, and is an essential part of this Order.
The FAS emphasized that the Order covers the relations of the parties in those commodities markets of rolling stock provision, where a group of entities – RZD, Freight One, and Freight Two – is recognised to dominate. 

Russian Railways to Conduct Test Piggyback Shipments in 2011 
A joint meeting of the Russian Union of Industrialists and Entrepreneurs’ (RUIE) Commission on Transport and Transport Infrastructure and the State Duma’s Committee on Transport to discuss piggyback transportation was held at the headquarters of Russian Railways on March 15, 2011.
In rail transport, piggybacking involves carrying trailers, semi-trailers or containers in a train atop a flatcar (intermodal freight transport).
According to Vyacheslav Lemeshko, Vice President of Russian Railways, the Company is currently considering the results of pre-project studies to create rail ports, where loading and trans-shipment of heavy trucks will be carried out in Primorye, the Shushary industrial zone St Petersburg and the Krasnodar region. It is also considering business plans for the creation of terminal and logistics centres in Novosibirsk, Nizhny Novgorod, Kaliningrad and Moscow. 
Russian Railways is working actively in these areas with the administration of more than 20 federal subjects in Russia.
“Piggyback transportation can be highly successful between Helsinki - St Petersburg - Moscow if there are the requisite logistic centres there. This will also accelerate the movement of goods across the borders with Poland, Lithuania and Latvia,” said the head of the RUIE’s Commission on Transport and Transport Infrastructure Vladimir Yakunin, who is also the President of Russian Railways.
It was also noted at the meeting that piggyback shipments have significant potential for development within the State Customs Union between Russia, Kazakhstan and Belarus.
In the words of Mr Lemeshko, a managing company is to be launched to develop the new type of transportation. Its activity could link the interests of different participants in the project - rolling stock manufacturers, investors and infrastructure developers, transport companies and logistics operators.
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Russian Railways implementing innovative passenger projects	
At the Passenger Forum 2011, held in Moscow on 29 March, 2011, Mikhail Akulov, Vice-President of Russian Railways, said that modern rail services were pointless if the sector could not offer passengers high-speed rail links, but that Russia was among the countries which could do so. Over the past year, the express Sapsan trains have carried some 2 million passengers and were filled to 90-100% capacity.
Mr Akulov also said that Russian Railways was developing a Concept for the Organisation of Faster High-Speed Passenger Services During the 2018 World Cup in order to transport fans between the various venues of the tournament, which is being held in Russia. The plan will be presented for discussion in June 2011 and envisages in particular specialised high-speed routes between Moscow – St Petersburg and Nizhny Novgorod – Kazan which will be capable of handling trains travelling at up to 400 kph.
With regard to international services, RZD envisages high-speed links with European countries between Moscow – Minsk – Warsaw – Berlin. However, the international timetable for 2011 – 2012 will extend the route of train No. 13/14 Moscow - Berlin on to Paris and reduce the travel time of train No. 17/18 Moscow - Nice by 15% to 44 hours.
Mr Akulov emphasised that nowadays it was vital to integrate the various modes of transport. Moscow’s City Government and Russian Railways have therefore approved a Concept of the Comprehensive Investment Project for the Development of Suburban Services in the Moscow Transport Hub. The Concept aims to integrate the various modes of transport and create a unified regional transport space.
In terms of long-distance services, integration can be achieved by linking up a large number of services operated as a single entity, but also by using multiple modes of transport which channel incoming passengers and reassign them to outgoing services via the right connections. A pilot project along these lines will be implemented around Novosibirsk.

Russian Companies Will Use Baltic Ports for a Long Time
A share of Russian cargoes will be transported vie the ports of the Baltic states for a long time, said Igor Levitin, Russian Transport Minister, during his visit to Riga in early April.
“Annually, the volume of cargo handled in sea ports in Russia increases by 30 million tons, but the port infrastructure is not keeping pace, which is why a large portion of our freight will be transported via the Baltic ports for a long time yet,” said Mr Levitin.
Also, he emphasized that, when Russia joins the WTO, it will cut tariffs on railway transportation of cargo via the Baltic ports.
Thus, tariffs on transportation of cargo to Russian and Baltic ports will be the same, added Mr Levitin. 

Railway Transportation of Hazardous Cargo Will Be Insured
The Ministry of Transport has started to develop a draft decree on railway transportation of hazardous cargo, said Sergey Aristov, the RF Deputy Minister of Transport, at the international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding.”  
Nowadays, a lot of experts support introducing obligatory liability insurance for railway transportation of hazardous cargo, such as almost all petrochemicals. 

Pipeline Development in the RF Will Not Influence Oil Transportation by Railway
Russia’s plans to put into operation new pipelines before 2015 will not have a significant impact on the volume of oil and petrochemicals transported by railway, considers Semen Rezer, the President of non-commercial partnership the Guild of Forwarders, a Doctor of Engineering and Professor.
In his words, oil companies will develop new oil fields by that time. Also, tank wagons for oil transportation may be needed on the Murmansk direction, where a new oil port is to be built. “Even if export railway transportation of crude oil reduces, there will be work for the tank wagons,” says Mr Rezer. “The share of light oil products on the railway network grows constantly.”
Meanwhile, the expert notes that new services (for example, oil transportation in tank-containers) should be developed to maintain the volume of cargo transported by rail. 

The FAS Will Check Operators’ Extra Expenditure on Oil Transportation 
The RF Transport Ministry is going to ask the Federal Antimonopoly Service (The FAS) to monitor the efficiency of applying extra expenditure when calculating the wagon constituent for bulk transportation of oil by operators, said Sergey Aristov, the RF Deputy Minister of Transport, at international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding” on April 8, 2011.
“The fee for the services of RZD is 60-75%, the rest is spent on additional services. Moreover, companies have to pay for washing and steaming operations envisaged by the technology of oil bulk transportation by railway,” he explained.
“The monitoring is necessary to make the formation of prices for additional services transparent. Then we will understand what are the extra costs which, in fact, level the reduction of prices in the regulated part of the sector,” he said 
In the words of Mr Aristov, the analysis of the share of transport expenses in the final price of oil and petrochemicals showed that, in December 2010, it was lower than in 2003. For example, before Tariff Regulation 10-01 was put into operation, the transport constituent in the price of crude oil was 8%, and now this figure has shrunk by 1%. “That is why the present-day tariff policy in the railway sector cannot be the factor restraining cargo transportation,” emphasised Mr Aristov.

Georgia and Moldova Will Join the Viking Project
Georgia and Moldova intend to join the global project Viking – a system of container transportation between the Baltic Sea and the Black Sea.
According to the Ukrainian Ministry of Infrastructure, the relevant official documents will be signed in the framework of the second meeting of the Coordinating Council for Cargo Transportation Development from the Baltic Sea to the Black Sea (Kiev).
At the meeting, the parties will discuss the prospects for increasing freight transportation volumes on the route Lithuania – Belarus – Ukraine. In particular, they will discuss the issue of enlarging the loading of the combined train “Viking” (Ilyichevsk/Odessa - Klaipeda) using the potential of railway ferries. Another key issue will be the development of the railway constituent in multimodal transportation between Europe and Asia (in both directions).
Representatives of the transport ministries of Lithuania, Belarus, Ukraine, Georgia, Moldova, and Azerbaijan will take part in the meeting. 

River Cargo Transportation in Russia Increased by 17.6% in 2010
In 2010, the volume of cargo transportation via Russia’s inner waterways by shipping companies – members of the Association of Shipping Companies (ASC) – grew by 17.6% in comparison with the previous year and amounted to 25.5 million tons, said Alexey Klyavin, President of the ASC.
Liquid bulk transportation volumes increased by 14% year-on-year, timber by 47.4%, construction materials by 25.9%, grain by 19%, containerised freight by 11.1%, and other cargoes by 25.9%.
The cargo turnovers of the companies – members of the ASC – amounted to 43.3 billion tonne-kilometres, a 15.5% increase compared with 2009. Their share of the total transportation via rivers in Russia was approximately 80%.
Members of the ASC delivered 3.8 million tons of cargo to the regions of the Far North (+9.7%). Passenger transportation increased by 1.8% to 1.2 million people.
According to the ASC, as of January 1, 2011, the transport fleet under the control of shipping companies that are members of the ASC amounted to 2,200 units with a total deadweight of 5 million tons. Of that, 101 vessels are registered on the Russian International Vessel Register, 62 ships in the bareboat-charter register, and 40 vessels work flying a foreign flag.  

FAS Adjusted the Order of Railcar Provision by RZD, Freight One and Freight Two to Consignors	
On February 18, 2011, the Federal Antimonopoly Service of Russia (the FAS) adjusted the draft order of railcar provision by RZD, Freight One and Freight Two to consignors.
The order was developed by operators in accordance with the instructions given by the FAS. 
If RZD receives applications for transportation using its wagons and it lacks the necessary rolling stock, Russian Railways is obliged to take measures envisaged by the RF legislation and this Order, so that the transporter could use railcars owned by Freight One or Freight Two. 
The order to use the wagons owned by Freight One, Freight Two, and other operators was developed in cooperation with interested persons, adjusted in the FAS of Russia, and is an essential part of this Order.
The FAS emphasized that the Order covers the relations of the parties in those commodities markets of rolling stock provision, where a group of entities – RZD, Freight One, and Freight Two – is recognised to dominate. 

Russian Railways to Conduct Test Piggyback Shipments in 2011 
A joint meeting of the Russian Union of Industrialists and Entrepreneurs’ (RUIE) Commission on Transport and Transport Infrastructure and the State Duma’s Committee on Transport to discuss piggyback transportation was held at the headquarters of Russian Railways on March 15, 2011.
In rail transport, piggybacking involves carrying trailers, semi-trailers or containers in a train atop a flatcar (intermodal freight transport).
According to Vyacheslav Lemeshko, Vice President of Russian Railways, the Company is currently considering the results of pre-project studies to create rail ports, where loading and trans-shipment of heavy trucks will be carried out in Primorye, the Shushary industrial zone St Petersburg and the Krasnodar region. It is also considering business plans for the creation of terminal and logistics centres in Novosibirsk, Nizhny Novgorod, Kaliningrad and Moscow. 
Russian Railways is working actively in these areas with the administration of more than 20 federal subjects in Russia.
“Piggyback transportation can be highly successful between Helsinki - St Petersburg - Moscow if there are the requisite logistic centres there. This will also accelerate the movement of goods across the borders with Poland, Lithuania and Latvia,” said the head of the RUIE’s Commission on Transport and Transport Infrastructure Vladimir Yakunin, who is also the President of Russian Railways.
It was also noted at the meeting that piggyback shipments have significant potential for development within the State Customs Union between Russia, Kazakhstan and Belarus.
In the words of Mr Lemeshko, a managing company is to be launched to develop the new type of transportation. Its activity could link the interests of different participants in the project - rolling stock manufacturers, investors and infrastructure developers, transport companies and logistics operators.
    [~DETAIL_TEXT] => 
Russian Railways implementing innovative passenger projects	
At the Passenger Forum 2011, held in Moscow on 29 March, 2011, Mikhail Akulov, Vice-President of Russian Railways, said that modern rail services were pointless if the sector could not offer passengers high-speed rail links, but that Russia was among the countries which could do so. Over the past year, the express Sapsan trains have carried some 2 million passengers and were filled to 90-100% capacity.
Mr Akulov also said that Russian Railways was developing a Concept for the Organisation of Faster High-Speed Passenger Services During the 2018 World Cup in order to transport fans between the various venues of the tournament, which is being held in Russia. The plan will be presented for discussion in June 2011 and envisages in particular specialised high-speed routes between Moscow – St Petersburg and Nizhny Novgorod – Kazan which will be capable of handling trains travelling at up to 400 kph.
With regard to international services, RZD envisages high-speed links with European countries between Moscow – Minsk – Warsaw – Berlin. However, the international timetable for 2011 – 2012 will extend the route of train No. 13/14 Moscow - Berlin on to Paris and reduce the travel time of train No. 17/18 Moscow - Nice by 15% to 44 hours.
Mr Akulov emphasised that nowadays it was vital to integrate the various modes of transport. Moscow’s City Government and Russian Railways have therefore approved a Concept of the Comprehensive Investment Project for the Development of Suburban Services in the Moscow Transport Hub. The Concept aims to integrate the various modes of transport and create a unified regional transport space.
In terms of long-distance services, integration can be achieved by linking up a large number of services operated as a single entity, but also by using multiple modes of transport which channel incoming passengers and reassign them to outgoing services via the right connections. A pilot project along these lines will be implemented around Novosibirsk.

Russian Companies Will Use Baltic Ports for a Long Time
A share of Russian cargoes will be transported vie the ports of the Baltic states for a long time, said Igor Levitin, Russian Transport Minister, during his visit to Riga in early April.
“Annually, the volume of cargo handled in sea ports in Russia increases by 30 million tons, but the port infrastructure is not keeping pace, which is why a large portion of our freight will be transported via the Baltic ports for a long time yet,” said Mr Levitin.
Also, he emphasized that, when Russia joins the WTO, it will cut tariffs on railway transportation of cargo via the Baltic ports.
Thus, tariffs on transportation of cargo to Russian and Baltic ports will be the same, added Mr Levitin. 

Railway Transportation of Hazardous Cargo Will Be Insured
The Ministry of Transport has started to develop a draft decree on railway transportation of hazardous cargo, said Sergey Aristov, the RF Deputy Minister of Transport, at the international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding.”  
Nowadays, a lot of experts support introducing obligatory liability insurance for railway transportation of hazardous cargo, such as almost all petrochemicals. 

Pipeline Development in the RF Will Not Influence Oil Transportation by Railway
Russia’s plans to put into operation new pipelines before 2015 will not have a significant impact on the volume of oil and petrochemicals transported by railway, considers Semen Rezer, the President of non-commercial partnership the Guild of Forwarders, a Doctor of Engineering and Professor.
In his words, oil companies will develop new oil fields by that time. Also, tank wagons for oil transportation may be needed on the Murmansk direction, where a new oil port is to be built. “Even if export railway transportation of crude oil reduces, there will be work for the tank wagons,” says Mr Rezer. “The share of light oil products on the railway network grows constantly.”
Meanwhile, the expert notes that new services (for example, oil transportation in tank-containers) should be developed to maintain the volume of cargo transported by rail. 

The FAS Will Check Operators’ Extra Expenditure on Oil Transportation 
The RF Transport Ministry is going to ask the Federal Antimonopoly Service (The FAS) to monitor the efficiency of applying extra expenditure when calculating the wagon constituent for bulk transportation of oil by operators, said Sergey Aristov, the RF Deputy Minister of Transport, at international scientific and practical conference “Logistics of Oil Cargo Transportation And Forwarding” on April 8, 2011.
“The fee for the services of RZD is 60-75%, the rest is spent on additional services. Moreover, companies have to pay for washing and steaming operations envisaged by the technology of oil bulk transportation by railway,” he explained.
“The monitoring is necessary to make the formation of prices for additional services transparent. Then we will understand what are the extra costs which, in fact, level the reduction of prices in the regulated part of the sector,” he said 
In the words of Mr Aristov, the analysis of the share of transport expenses in the final price of oil and petrochemicals showed that, in December 2010, it was lower than in 2003. For example, before Tariff Regulation 10-01 was put into operation, the transport constituent in the price of crude oil was 8%, and now this figure has shrunk by 1%. “That is why the present-day tariff policy in the railway sector cannot be the factor restraining cargo transportation,” emphasised Mr Aristov.

Georgia and Moldova Will Join the Viking Project
Georgia and Moldova intend to join the global project Viking – a system of container transportation between the Baltic Sea and the Black Sea.
According to the Ukrainian Ministry of Infrastructure, the relevant official documents will be signed in the framework of the second meeting of the Coordinating Council for Cargo Transportation Development from the Baltic Sea to the Black Sea (Kiev).
At the meeting, the parties will discuss the prospects for increasing freight transportation volumes on the route Lithuania – Belarus – Ukraine. In particular, they will discuss the issue of enlarging the loading of the combined train “Viking” (Ilyichevsk/Odessa - Klaipeda) using the potential of railway ferries. Another key issue will be the development of the railway constituent in multimodal transportation between Europe and Asia (in both directions).
Representatives of the transport ministries of Lithuania, Belarus, Ukraine, Georgia, Moldova, and Azerbaijan will take part in the meeting. 

River Cargo Transportation in Russia Increased by 17.6% in 2010
In 2010, the volume of cargo transportation via Russia’s inner waterways by shipping companies – members of the Association of Shipping Companies (ASC) – grew by 17.6% in comparison with the previous year and amounted to 25.5 million tons, said Alexey Klyavin, President of the ASC.
Liquid bulk transportation volumes increased by 14% year-on-year, timber by 47.4%, construction materials by 25.9%, grain by 19%, containerised freight by 11.1%, and other cargoes by 25.9%.
The cargo turnovers of the companies – members of the ASC – amounted to 43.3 billion tonne-kilometres, a 15.5% increase compared with 2009. Their share of the total transportation via rivers in Russia was approximately 80%.
Members of the ASC delivered 3.8 million tons of cargo to the regions of the Far North (+9.7%). Passenger transportation increased by 1.8% to 1.2 million people.
According to the ASC, as of January 1, 2011, the transport fleet under the control of shipping companies that are members of the ASC amounted to 2,200 units with a total deadweight of 5 million tons. Of that, 101 vessels are registered on the Russian International Vessel Register, 62 ships in the bareboat-charter register, and 40 vessels work flying a foreign flag.  

FAS Adjusted the Order of Railcar Provision by RZD, Freight One and Freight Two to Consignors	
On February 18, 2011, the Federal Antimonopoly Service of Russia (the FAS) adjusted the draft order of railcar provision by RZD, Freight One and Freight Two to consignors.
The order was developed by operators in accordance with the instructions given by the FAS. 
If RZD receives applications for transportation using its wagons and it lacks the necessary rolling stock, Russian Railways is obliged to take measures envisaged by the RF legislation and this Order, so that the transporter could use railcars owned by Freight One or Freight Two. 
The order to use the wagons owned by Freight One, Freight Two, and other operators was developed in cooperation with interested persons, adjusted in the FAS of Russia, and is an essential part of this Order.
The FAS emphasized that the Order covers the relations of the parties in those commodities markets of rolling stock provision, where a group of entities – RZD, Freight One, and Freight Two – is recognised to dominate. 

Russian Railways to Conduct Test Piggyback Shipments in 2011 
A joint meeting of the Russian Union of Industrialists and Entrepreneurs’ (RUIE) Commission on Transport and Transport Infrastructure and the State Duma’s Committee on Transport to discuss piggyback transportation was held at the headquarters of Russian Railways on March 15, 2011.
In rail transport, piggybacking involves carrying trailers, semi-trailers or containers in a train atop a flatcar (intermodal freight transport).
According to Vyacheslav Lemeshko, Vice President of Russian Railways, the Company is currently considering the results of pre-project studies to create rail ports, where loading and trans-shipment of heavy trucks will be carried out in Primorye, the Shushary industrial zone St Petersburg and the Krasnodar region. It is also considering business plans for the creation of terminal and logistics centres in Novosibirsk, Nizhny Novgorod, Kaliningrad and Moscow. 
Russian Railways is working actively in these areas with the administration of more than 20 federal subjects in Russia.
“Piggyback transportation can be highly successful between Helsinki - St Petersburg - Moscow if there are the requisite logistic centres there. This will also accelerate the movement of goods across the borders with Poland, Lithuania and Latvia,” said the head of the RUIE’s Commission on Transport and Transport Infrastructure Vladimir Yakunin, who is also the President of Russian Railways.
It was also noted at the meeting that piggyback shipments have significant potential for development within the State Customs Union between Russia, Kazakhstan and Belarus.
In the words of Mr Lemeshko, a managing company is to be launched to develop the new type of transportation. Its activity could link the interests of different participants in the project - rolling stock manufacturers, investors and infrastructure developers, transport companies and logistics operators.
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Priority of the Railway
– Mr. Frolov, there is a list with a number of areas of activity in the founding documents of your company, tell us about one of them.

– One of the main and priority activities of RZD Trade JSC is export-import operations. And it is obvious that it is expanding exports that is a priority in the activity of many modern companies today, as well as of the state in general, because this plays huge role in the qualitative development of the industry, in consolidating of presence in foreign markets and in the positive balance of payments.
So, RZD Trade JSC is an exporter of railway products and services. Along this line, we are cooperating with many countries - former republics of the Soviet Union, with the non-CIS countries, especially with the “1520 space” countries. The economic integration of enterprises and countries, being built over the years, is continuing to grow, while the role of the RZD, as the link is still great. Our company, as a foreign trade agent of the RZD, basing on its experience and professionalism, tries to fulfill the function at the highest level.

– What kind of products does RZD Trade supply to “1520 space” countries?

– Our company is a qualified link between producers and consumers, first of all, of rail industry area. In this regard, our list of priority partners includes the administrations of national railways. We supply them with track materials, different types of rolling stock and locomotives, units and assemblies for them and other equipment that is used in Commonwealth countries. It should be noted that we supply not only new but also used rolling stock, that is associated with a sensible approach of our customers in terms of saving their money. In this case, the end user gets a product that is absolutely suitable for further usage in terms of adequate repair. At the request of the customer RZD Trade JSC can provide a repair of rolling stock purchased by the client - it all depends on the customer. In addition, we are actively implementing in other industries in the course of our commercial activities. In particular, there are private mining and energy companies among our partners.

From the Steppes of Transbaikalia to the Baltic Sea
– With which countries of the “1520 space” your cooperation is the most productive?

– If we are talking about cooperation, which has already had a real impact in the form of exports then companies and enterprises of Mongolia, Armenia, Abkhazia, Tajikistan, the Ukraine, Baltic States, etc are among our key partners. For example, in Mongolia, our cooperation with the participants of rail industry sphere of the country continues for several years and performs in the active mode. Here, our position as a country whose railroads are included in “1520 space” is the most durable. Every year we welcome a steady positive trend in results of this direction.
Success is ensured by implemented export contracts, as well as by continuing work on the preparation of new ones. We carry out orders to repair and to supply rolling stock, spare parts, track materials and much more for Mongolian railways.
In Armenia we are cooperating with the South Caucasian Railway. We have signed and at the moment are executing long term supply contracts for rather large volume of production. With Latvia – a permanent partner of RZD Trade JSC in the Baltics, we already have several projects on supply of spare parts and accessories in our joint luggage.
Much work has been done in cooperation with the Ukraine. Today, we have concluded the contract and also results in a form of executed agreements.
We are in a stage of intensive negotiations with a number of other countries, we are searching common interests. In some areas we already have some specific developments that, we hope, will come out on the level of export contracts in the nearest future.
Today the great promise of long-term and successful cooperation is developing between RZD Trade JSC and National Railways of Kazakhstan. There is a plan for implementing the directions of strategic cooperation between the RZD and the JSC “Kazakhstan Temir Joly”, which has enshrined the role of RZD Trade JSC, as a potential supplier of products and services to the enterprises of the holding.
At the present stage we are looking for opportunities of mutually beneficial activities with Kazakh colleagues. I should add that in addition to Kazakhstan KTZ JSC our specialists are actively monitoring the needs of the various independent bodies, including the mining sector and independent carriers, which there are in this country too.
There is a similar work with the administration of the national railways of Uzbekistan, Kyrgyzstan, Lithuania and Estonia. In terms of the task of the RZD on the line of foreign economic activity we are carrying out the supply of rolling stock to Tajikistan.
Currently, there are opened broad prospects for working with Belarus. Earlier we have worked with the structure of “Belzheldorsnab” in this country, which is the organization that procures the state railways with all the necessary.
At a present moment, we have received in our address a sufficient number of applications from enterprises of the Belarusian railway industry and from independent producers. In addition, some options for bilateral cooperation are appearing. For example, on one hand, it is the supply of goods to the Belarusian enterprises, and on the other hand, it is promotion of their products on the markets of other countries.
Speaking of our achievements and prospects it should especially be noted that the status of RZD Trade JSC as a foreign trade agent of the RZD means that the top priority for us is to supply products of the enterprises that are parts of the RZD JSC holding. Nevertheless, our capacity allows us to represent the interests of other companies on foreign markets.
In addition, a number of foreign contracts for repair of rolling stock are currently realized. And as for us, the development of this area is one of perspective.

– What Russian companies are in the list of your business partners? Are you satisfied with the cooperation with them?

– The format of the publication won’t be enough to enumerate all the Russian partners of RZD Trade JSC. The most basic are companies included into the RZD JSC holding, but also there are some companies that are not parts of the holding.
The vast majority of cooperation is carried out at a high organizational level. Strong business relationships have been formed with a number of subsidiaries of the RZD, as well as with other enterprises of railway and engineering industry. Most of these enterprises delivery to us spare parts, units and assemblies of the rolling stock, materials of track materials, etc.

The Most Important are the Flexibility and Quality
– How does the dynamics of sales of railroad equipment and parts look like at your company in recent years?

– From the moment of RZD Trade JSC establishment we observe positive trend in the development of foreign economic activities of the company, growth of the volume of supply, as well as increase of the nomenclature and of the geography of foreign trade operations. We are actively searching new markets, expanding cooperation with companies and organizations with who we have already established cooperation with and propose new solutions and services.

– Foreign manufacturers of railway equipment and components are being actively introduced on the markets of “1520 space” countries. What helps RZD Trade JSC to win the competition?

– We prefer to cooperate. It is not a secret that there are established and traditional business links in our segment, on the markets of “1520 space” countries. Of course, there is a price competition and competition in quality, as well as competition in conditions and terms of delivery and payment. But we should understand that it is healthy competition that both the producer and the supplier benefit from, and, of course, the consumers. If we are talking about our advantages then, first of all, it is good value of the “price-quality” ratio criterion, as well as constant improvement of business efficiency and integrated and individual approach to each our client. Cooperating with RZD Trade JSC, you can minimize the commercial risks of the company, as well as significantly save expenses. This is achieved due the fact that we have the knowledge of world and Russian markets of railway products, of key manufacturers and service providers. We also have established connections and the algorithm of interaction with all the major railway companies of the complex, staff of professionals with extensive experience in foreign trade activity. Flexible payment conditions, letters of credit, developed logistics, certification of the delivered goods - all this allows us to occupy high positions in this segment of the economy. Confirmation of our high level consists in confidence of the RZD JSC, as well as in confidence of multiple partners, both in Russia and abroad. 
Tatyana Svyatkina
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Priority of the Railway
– Mr. Frolov, there is a list with a number of areas of activity in the founding documents of your company, tell us about one of them.

– One of the main and priority activities of RZD Trade JSC is export-import operations. And it is obvious that it is expanding exports that is a priority in the activity of many modern companies today, as well as of the state in general, because this plays huge role in the qualitative development of the industry, in consolidating of presence in foreign markets and in the positive balance of payments.
So, RZD Trade JSC is an exporter of railway products and services. Along this line, we are cooperating with many countries - former republics of the Soviet Union, with the non-CIS countries, especially with the “1520 space” countries. The economic integration of enterprises and countries, being built over the years, is continuing to grow, while the role of the RZD, as the link is still great. Our company, as a foreign trade agent of the RZD, basing on its experience and professionalism, tries to fulfill the function at the highest level.

– What kind of products does RZD Trade supply to “1520 space” countries?

– Our company is a qualified link between producers and consumers, first of all, of rail industry area. In this regard, our list of priority partners includes the administrations of national railways. We supply them with track materials, different types of rolling stock and locomotives, units and assemblies for them and other equipment that is used in Commonwealth countries. It should be noted that we supply not only new but also used rolling stock, that is associated with a sensible approach of our customers in terms of saving their money. In this case, the end user gets a product that is absolutely suitable for further usage in terms of adequate repair. At the request of the customer RZD Trade JSC can provide a repair of rolling stock purchased by the client - it all depends on the customer. In addition, we are actively implementing in other industries in the course of our commercial activities. In particular, there are private mining and energy companies among our partners.

From the Steppes of Transbaikalia to the Baltic Sea
– With which countries of the “1520 space” your cooperation is the most productive?

– If we are talking about cooperation, which has already had a real impact in the form of exports then companies and enterprises of Mongolia, Armenia, Abkhazia, Tajikistan, the Ukraine, Baltic States, etc are among our key partners. For example, in Mongolia, our cooperation with the participants of rail industry sphere of the country continues for several years and performs in the active mode. Here, our position as a country whose railroads are included in “1520 space” is the most durable. Every year we welcome a steady positive trend in results of this direction.
Success is ensured by implemented export contracts, as well as by continuing work on the preparation of new ones. We carry out orders to repair and to supply rolling stock, spare parts, track materials and much more for Mongolian railways.
In Armenia we are cooperating with the South Caucasian Railway. We have signed and at the moment are executing long term supply contracts for rather large volume of production. With Latvia – a permanent partner of RZD Trade JSC in the Baltics, we already have several projects on supply of spare parts and accessories in our joint luggage.
Much work has been done in cooperation with the Ukraine. Today, we have concluded the contract and also results in a form of executed agreements.
We are in a stage of intensive negotiations with a number of other countries, we are searching common interests. In some areas we already have some specific developments that, we hope, will come out on the level of export contracts in the nearest future.
Today the great promise of long-term and successful cooperation is developing between RZD Trade JSC and National Railways of Kazakhstan. There is a plan for implementing the directions of strategic cooperation between the RZD and the JSC “Kazakhstan Temir Joly”, which has enshrined the role of RZD Trade JSC, as a potential supplier of products and services to the enterprises of the holding.
At the present stage we are looking for opportunities of mutually beneficial activities with Kazakh colleagues. I should add that in addition to Kazakhstan KTZ JSC our specialists are actively monitoring the needs of the various independent bodies, including the mining sector and independent carriers, which there are in this country too.
There is a similar work with the administration of the national railways of Uzbekistan, Kyrgyzstan, Lithuania and Estonia. In terms of the task of the RZD on the line of foreign economic activity we are carrying out the supply of rolling stock to Tajikistan.
Currently, there are opened broad prospects for working with Belarus. Earlier we have worked with the structure of “Belzheldorsnab” in this country, which is the organization that procures the state railways with all the necessary.
At a present moment, we have received in our address a sufficient number of applications from enterprises of the Belarusian railway industry and from independent producers. In addition, some options for bilateral cooperation are appearing. For example, on one hand, it is the supply of goods to the Belarusian enterprises, and on the other hand, it is promotion of their products on the markets of other countries.
Speaking of our achievements and prospects it should especially be noted that the status of RZD Trade JSC as a foreign trade agent of the RZD means that the top priority for us is to supply products of the enterprises that are parts of the RZD JSC holding. Nevertheless, our capacity allows us to represent the interests of other companies on foreign markets.
In addition, a number of foreign contracts for repair of rolling stock are currently realized. And as for us, the development of this area is one of perspective.

– What Russian companies are in the list of your business partners? Are you satisfied with the cooperation with them?

– The format of the publication won’t be enough to enumerate all the Russian partners of RZD Trade JSC. The most basic are companies included into the RZD JSC holding, but also there are some companies that are not parts of the holding.
The vast majority of cooperation is carried out at a high organizational level. Strong business relationships have been formed with a number of subsidiaries of the RZD, as well as with other enterprises of railway and engineering industry. Most of these enterprises delivery to us spare parts, units and assemblies of the rolling stock, materials of track materials, etc.

The Most Important are the Flexibility and Quality
– How does the dynamics of sales of railroad equipment and parts look like at your company in recent years?

– From the moment of RZD Trade JSC establishment we observe positive trend in the development of foreign economic activities of the company, growth of the volume of supply, as well as increase of the nomenclature and of the geography of foreign trade operations. We are actively searching new markets, expanding cooperation with companies and organizations with who we have already established cooperation with and propose new solutions and services.

– Foreign manufacturers of railway equipment and components are being actively introduced on the markets of “1520 space” countries. What helps RZD Trade JSC to win the competition?

– We prefer to cooperate. It is not a secret that there are established and traditional business links in our segment, on the markets of “1520 space” countries. Of course, there is a price competition and competition in quality, as well as competition in conditions and terms of delivery and payment. But we should understand that it is healthy competition that both the producer and the supplier benefit from, and, of course, the consumers. If we are talking about our advantages then, first of all, it is good value of the “price-quality” ratio criterion, as well as constant improvement of business efficiency and integrated and individual approach to each our client. Cooperating with RZD Trade JSC, you can minimize the commercial risks of the company, as well as significantly save expenses. This is achieved due the fact that we have the knowledge of world and Russian markets of railway products, of key manufacturers and service providers. We also have established connections and the algorithm of interaction with all the major railway companies of the complex, staff of professionals with extensive experience in foreign trade activity. Flexible payment conditions, letters of credit, developed logistics, certification of the delivered goods - all this allows us to occupy high positions in this segment of the economy. Confirmation of our high level consists in confidence of the RZD JSC, as well as in confidence of multiple partners, both in Russia and abroad. 
Tatyana Svyatkina
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            [SECTION_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/15.jpg" border="1" alt=" " hspace="5" width="200" height="267" align="left" />Over the years, the Joint Stock Company “RZD Trading Company” (RZD Trade JSC) is the official foreign trade agent of the JSC “Russian Railways”. One of the main branches of activity of the Company is the provision of railway enterprises of “1520 space” with the necessary railway products and services. Oleg Frolov, Head of Foreign Trade Department of RZD Trade JSC, told us about cooperation with the national railway administrations of “1520 space” countries and prospects of this cooperation.
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            [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/partner/2011/15.jpg" border="1" alt=" " hspace="5" width="200" height="267" align="left" />Over the years, the Joint Stock Company “RZD Trading Company” (RZD Trade JSC) is the official foreign trade agent of the JSC “Russian Railways”. One of the main branches of activity of the Company is the provision of railway enterprises of “1520 space” with the necessary railway products and services. Oleg Frolov, Head of Foreign Trade Department of RZD Trade JSC, told us about cooperation with the national railway administrations of “1520 space” countries and prospects of this cooperation.
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Priority of the Railway
– Mr. Frolov, there is a list with a number of areas of activity in the founding documents of your company, tell us about one of them.

– One of the main and priority activities of RZD Trade JSC is export-import operations. And it is obvious that it is expanding exports that is a priority in the activity of many modern companies today, as well as of the state in general, because this plays huge role in the qualitative development of the industry, in consolidating of presence in foreign markets and in the positive balance of payments.
So, RZD Trade JSC is an exporter of railway products and services. Along this line, we are cooperating with many countries - former republics of the Soviet Union, with the non-CIS countries, especially with the “1520 space” countries. The economic integration of enterprises and countries, being built over the years, is continuing to grow, while the role of the RZD, as the link is still great. Our company, as a foreign trade agent of the RZD, basing on its experience and professionalism, tries to fulfill the function at the highest level.

– What kind of products does RZD Trade supply to “1520 space” countries?

– Our company is a qualified link between producers and consumers, first of all, of rail industry area. In this regard, our list of priority partners includes the administrations of national railways. We supply them with track materials, different types of rolling stock and locomotives, units and assemblies for them and other equipment that is used in Commonwealth countries. It should be noted that we supply not only new but also used rolling stock, that is associated with a sensible approach of our customers in terms of saving their money. In this case, the end user gets a product that is absolutely suitable for further usage in terms of adequate repair. At the request of the customer RZD Trade JSC can provide a repair of rolling stock purchased by the client - it all depends on the customer. In addition, we are actively implementing in other industries in the course of our commercial activities. In particular, there are private mining and energy companies among our partners.

From the Steppes of Transbaikalia to the Baltic Sea
– With which countries of the “1520 space” your cooperation is the most productive?

– If we are talking about cooperation, which has already had a real impact in the form of exports then companies and enterprises of Mongolia, Armenia, Abkhazia, Tajikistan, the Ukraine, Baltic States, etc are among our key partners. For example, in Mongolia, our cooperation with the participants of rail industry sphere of the country continues for several years and performs in the active mode. Here, our position as a country whose railroads are included in “1520 space” is the most durable. Every year we welcome a steady positive trend in results of this direction.
Success is ensured by implemented export contracts, as well as by continuing work on the preparation of new ones. We carry out orders to repair and to supply rolling stock, spare parts, track materials and much more for Mongolian railways.
In Armenia we are cooperating with the South Caucasian Railway. We have signed and at the moment are executing long term supply contracts for rather large volume of production. With Latvia – a permanent partner of RZD Trade JSC in the Baltics, we already have several projects on supply of spare parts and accessories in our joint luggage.
Much work has been done in cooperation with the Ukraine. Today, we have concluded the contract and also results in a form of executed agreements.
We are in a stage of intensive negotiations with a number of other countries, we are searching common interests. In some areas we already have some specific developments that, we hope, will come out on the level of export contracts in the nearest future.
Today the great promise of long-term and successful cooperation is developing between RZD Trade JSC and National Railways of Kazakhstan. There is a plan for implementing the directions of strategic cooperation between the RZD and the JSC “Kazakhstan Temir Joly”, which has enshrined the role of RZD Trade JSC, as a potential supplier of products and services to the enterprises of the holding.
At the present stage we are looking for opportunities of mutually beneficial activities with Kazakh colleagues. I should add that in addition to Kazakhstan KTZ JSC our specialists are actively monitoring the needs of the various independent bodies, including the mining sector and independent carriers, which there are in this country too.
There is a similar work with the administration of the national railways of Uzbekistan, Kyrgyzstan, Lithuania and Estonia. In terms of the task of the RZD on the line of foreign economic activity we are carrying out the supply of rolling stock to Tajikistan.
Currently, there are opened broad prospects for working with Belarus. Earlier we have worked with the structure of “Belzheldorsnab” in this country, which is the organization that procures the state railways with all the necessary.
At a present moment, we have received in our address a sufficient number of applications from enterprises of the Belarusian railway industry and from independent producers. In addition, some options for bilateral cooperation are appearing. For example, on one hand, it is the supply of goods to the Belarusian enterprises, and on the other hand, it is promotion of their products on the markets of other countries.
Speaking of our achievements and prospects it should especially be noted that the status of RZD Trade JSC as a foreign trade agent of the RZD means that the top priority for us is to supply products of the enterprises that are parts of the RZD JSC holding. Nevertheless, our capacity allows us to represent the interests of other companies on foreign markets.
In addition, a number of foreign contracts for repair of rolling stock are currently realized. And as for us, the development of this area is one of perspective.

– What Russian companies are in the list of your business partners? Are you satisfied with the cooperation with them?

– The format of the publication won’t be enough to enumerate all the Russian partners of RZD Trade JSC. The most basic are companies included into the RZD JSC holding, but also there are some companies that are not parts of the holding.
The vast majority of cooperation is carried out at a high organizational level. Strong business relationships have been formed with a number of subsidiaries of the RZD, as well as with other enterprises of railway and engineering industry. Most of these enterprises delivery to us spare parts, units and assemblies of the rolling stock, materials of track materials, etc.

The Most Important are the Flexibility and Quality
– How does the dynamics of sales of railroad equipment and parts look like at your company in recent years?

– From the moment of RZD Trade JSC establishment we observe positive trend in the development of foreign economic activities of the company, growth of the volume of supply, as well as increase of the nomenclature and of the geography of foreign trade operations. We are actively searching new markets, expanding cooperation with companies and organizations with who we have already established cooperation with and propose new solutions and services.

– Foreign manufacturers of railway equipment and components are being actively introduced on the markets of “1520 space” countries. What helps RZD Trade JSC to win the competition?

– We prefer to cooperate. It is not a secret that there are established and traditional business links in our segment, on the markets of “1520 space” countries. Of course, there is a price competition and competition in quality, as well as competition in conditions and terms of delivery and payment. But we should understand that it is healthy competition that both the producer and the supplier benefit from, and, of course, the consumers. If we are talking about our advantages then, first of all, it is good value of the “price-quality” ratio criterion, as well as constant improvement of business efficiency and integrated and individual approach to each our client. Cooperating with RZD Trade JSC, you can minimize the commercial risks of the company, as well as significantly save expenses. This is achieved due the fact that we have the knowledge of world and Russian markets of railway products, of key manufacturers and service providers. We also have established connections and the algorithm of interaction with all the major railway companies of the complex, staff of professionals with extensive experience in foreign trade activity. Flexible payment conditions, letters of credit, developed logistics, certification of the delivered goods - all this allows us to occupy high positions in this segment of the economy. Confirmation of our high level consists in confidence of the RZD JSC, as well as in confidence of multiple partners, both in Russia and abroad. 
Tatyana Svyatkina
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Priority of the Railway
– Mr. Frolov, there is a list with a number of areas of activity in the founding documents of your company, tell us about one of them.

– One of the main and priority activities of RZD Trade JSC is export-import operations. And it is obvious that it is expanding exports that is a priority in the activity of many modern companies today, as well as of the state in general, because this plays huge role in the qualitative development of the industry, in consolidating of presence in foreign markets and in the positive balance of payments.
So, RZD Trade JSC is an exporter of railway products and services. Along this line, we are cooperating with many countries - former republics of the Soviet Union, with the non-CIS countries, especially with the “1520 space” countries. The economic integration of enterprises and countries, being built over the years, is continuing to grow, while the role of the RZD, as the link is still great. Our company, as a foreign trade agent of the RZD, basing on its experience and professionalism, tries to fulfill the function at the highest level.

– What kind of products does RZD Trade supply to “1520 space” countries?

– Our company is a qualified link between producers and consumers, first of all, of rail industry area. In this regard, our list of priority partners includes the administrations of national railways. We supply them with track materials, different types of rolling stock and locomotives, units and assemblies for them and other equipment that is used in Commonwealth countries. It should be noted that we supply not only new but also used rolling stock, that is associated with a sensible approach of our customers in terms of saving their money. In this case, the end user gets a product that is absolutely suitable for further usage in terms of adequate repair. At the request of the customer RZD Trade JSC can provide a repair of rolling stock purchased by the client - it all depends on the customer. In addition, we are actively implementing in other industries in the course of our commercial activities. In particular, there are private mining and energy companies among our partners.

From the Steppes of Transbaikalia to the Baltic Sea
– With which countries of the “1520 space” your cooperation is the most productive?

– If we are talking about cooperation, which has already had a real impact in the form of exports then companies and enterprises of Mongolia, Armenia, Abkhazia, Tajikistan, the Ukraine, Baltic States, etc are among our key partners. For example, in Mongolia, our cooperation with the participants of rail industry sphere of the country continues for several years and performs in the active mode. Here, our position as a country whose railroads are included in “1520 space” is the most durable. Every year we welcome a steady positive trend in results of this direction.
Success is ensured by implemented export contracts, as well as by continuing work on the preparation of new ones. We carry out orders to repair and to supply rolling stock, spare parts, track materials and much more for Mongolian railways.
In Armenia we are cooperating with the South Caucasian Railway. We have signed and at the moment are executing long term supply contracts for rather large volume of production. With Latvia – a permanent partner of RZD Trade JSC in the Baltics, we already have several projects on supply of spare parts and accessories in our joint luggage.
Much work has been done in cooperation with the Ukraine. Today, we have concluded the contract and also results in a form of executed agreements.
We are in a stage of intensive negotiations with a number of other countries, we are searching common interests. In some areas we already have some specific developments that, we hope, will come out on the level of export contracts in the nearest future.
Today the great promise of long-term and successful cooperation is developing between RZD Trade JSC and National Railways of Kazakhstan. There is a plan for implementing the directions of strategic cooperation between the RZD and the JSC “Kazakhstan Temir Joly”, which has enshrined the role of RZD Trade JSC, as a potential supplier of products and services to the enterprises of the holding.
At the present stage we are looking for opportunities of mutually beneficial activities with Kazakh colleagues. I should add that in addition to Kazakhstan KTZ JSC our specialists are actively monitoring the needs of the various independent bodies, including the mining sector and independent carriers, which there are in this country too.
There is a similar work with the administration of the national railways of Uzbekistan, Kyrgyzstan, Lithuania and Estonia. In terms of the task of the RZD on the line of foreign economic activity we are carrying out the supply of rolling stock to Tajikistan.
Currently, there are opened broad prospects for working with Belarus. Earlier we have worked with the structure of “Belzheldorsnab” in this country, which is the organization that procures the state railways with all the necessary.
At a present moment, we have received in our address a sufficient number of applications from enterprises of the Belarusian railway industry and from independent producers. In addition, some options for bilateral cooperation are appearing. For example, on one hand, it is the supply of goods to the Belarusian enterprises, and on the other hand, it is promotion of their products on the markets of other countries.
Speaking of our achievements and prospects it should especially be noted that the status of RZD Trade JSC as a foreign trade agent of the RZD means that the top priority for us is to supply products of the enterprises that are parts of the RZD JSC holding. Nevertheless, our capacity allows us to represent the interests of other companies on foreign markets.
In addition, a number of foreign contracts for repair of rolling stock are currently realized. And as for us, the development of this area is one of perspective.

– What Russian companies are in the list of your business partners? Are you satisfied with the cooperation with them?

– The format of the publication won’t be enough to enumerate all the Russian partners of RZD Trade JSC. The most basic are companies included into the RZD JSC holding, but also there are some companies that are not parts of the holding.
The vast majority of cooperation is carried out at a high organizational level. Strong business relationships have been formed with a number of subsidiaries of the RZD, as well as with other enterprises of railway and engineering industry. Most of these enterprises delivery to us spare parts, units and assemblies of the rolling stock, materials of track materials, etc.

The Most Important are the Flexibility and Quality
– How does the dynamics of sales of railroad equipment and parts look like at your company in recent years?

– From the moment of RZD Trade JSC establishment we observe positive trend in the development of foreign economic activities of the company, growth of the volume of supply, as well as increase of the nomenclature and of the geography of foreign trade operations. We are actively searching new markets, expanding cooperation with companies and organizations with who we have already established cooperation with and propose new solutions and services.

– Foreign manufacturers of railway equipment and components are being actively introduced on the markets of “1520 space” countries. What helps RZD Trade JSC to win the competition?

– We prefer to cooperate. It is not a secret that there are established and traditional business links in our segment, on the markets of “1520 space” countries. Of course, there is a price competition and competition in quality, as well as competition in conditions and terms of delivery and payment. But we should understand that it is healthy competition that both the producer and the supplier benefit from, and, of course, the consumers. If we are talking about our advantages then, first of all, it is good value of the “price-quality” ratio criterion, as well as constant improvement of business efficiency and integrated and individual approach to each our client. Cooperating with RZD Trade JSC, you can minimize the commercial risks of the company, as well as significantly save expenses. This is achieved due the fact that we have the knowledge of world and Russian markets of railway products, of key manufacturers and service providers. We also have established connections and the algorithm of interaction with all the major railway companies of the complex, staff of professionals with extensive experience in foreign trade activity. Flexible payment conditions, letters of credit, developed logistics, certification of the delivered goods - all this allows us to occupy high positions in this segment of the economy. Confirmation of our high level consists in confidence of the RZD JSC, as well as in confidence of multiple partners, both in Russia and abroad. 
Tatyana Svyatkina
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