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3 (31) september 2012

3 (31) september 2012
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РЖД-Партнер

Investment Projects to Match Finance

Russian Railways has to optimise investment programmes this year in line with the funding available.
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Infrastructure Projects and Profitability

The long-term development of railway infrastructure in Russia is defined in three basic documents: “The RF Transport Strategy until 2030,” “The Strategy of Railway Transport Development in the RF until 2030,” and “The Strategy of the RZD Holding Company Development until 2030.” Specialists believe that these strategies should now be updated, because they describe the Russian economy’s need for cargo transportation on the Russian railway network, but not the funding sources necessary to reach the goals set are mentioned in them. Already now it is clear that RZD’s profits are not enough to carry out all the projects. Scientists are trying to determine the priorities and estimate which of them may be most profitable for the transporter.
According to the Institute of Economy and Transport Development (IERT), RZD has more than 3,500 stations where loading and unloading operations take place. Over 82% of the freight operations occur at just 500 stations. Therefore, the wagon flows are unevenly distributed on the network, and their concentration on some lines is very high. 16% of cargo volume carried via the railway network is intermodal traffic, where sea transport is used and freight is handled in Russian sea ports; another 19% is Russian exports carried via railway border crossings with other countries. These zones motivate the development of a number of scaled investment programmes in the railway sector.
Experts at the IERT believe that the largest increase in the cargo volume is expected on the railway accesses to the Vanino – Sovetskaya Gavan hub (+220% by 2020 in comparison with the figures in 2011), in the North-West of Russia (+70%) and in the North Caucasus region (+60%). For this volume of freight transportation, it is necessary to develop the rail sections adjacent to the ports in the North-Western federal region of Russia (first of all, to the Ust-Luga port, including the Sonkovo line), accesses to the sea terminals in the Russian south (reconstruction of the M. Gorky – Kotelnikovo – Tikhoretskaya – Krymskaya line with the Krasnodar hub bypass).
To service the increasing cargo flow here, local as well as distant accesses to the Russian sea ports should be extended. This means developing the Baikal-Amur Mainline and the Trans-Siberian Railway, including the Mezhdurechensk – Taishet line, and rail sections between the largest railway hubs, including those to the Polar Urals and Western Siberia (among them there are the Tobolsk – Surgut – Korotchaevo and the Konosha – Chum –
Salekhard lines if the Northern Latitudinal Railway is constructed). Also, the infrastructure of Moscow, St Petersburg, Yekaterinburg and other transport hubs should be extended to create a route for wagon flows destined for the Russian northwestern and southern ports.
Another factor influencing the freight base of the Russian railways is the pace of new mineral deposits development (especially, coal, iron ore, and hydrocarbons). The “point of growth” of the freight base is concentrated in the Far Eastern region, Siberia, and the Urals. Consequently, according to the IERT’s research, the upgrade of existing rail tracks and the construction of new ones are badly needed in these regions.
Valery Veremeev, Head of the Department of Economic Situation and Strategic Development of RZD, says that these capital-intensive projects differ in the payback for the transporter. If there is not enough investment for all of them, it will be quite reasonable to carry out the most profitable projects first. They concern transportation in the North-West of Russia. A number of development programmes to be carried out in the Far East may be loss-making for RZD – they are based on low-yielding cargo transportation (for example, coal).
A number of projects are so capital-intensive that they cannot be carried out by RZD only. For example, if the Sovetskaya Gavan special economic zone is united with the Vanino port into a single transport and industrial hub, the capacity of sea terminals will be greater than RZD planned. In this case, tracks on distant railway accesses to the ports are to be reconstructed, and a new 60 km long section is to be built. The state is going to invest RUB 50 billion into the transport hub, but no budget funding is envisaged for railway infrastructure development. In this situation, RZD can build a new railway line to the Sovetskaya Gavan port to the detriment of its other investment projects. The question is whether it will be a rational decision for the rail transporter?
Scientists believe there is another aspect – the projects which seemed attractive in 2010 may become unprofitable for the transporter because of changes in the global market. In the words of Mr Veremeev, these risks should be analysed and priorities may be changed during the plans update.
According to “The Strategy of Railway Transport Development in the RF until 2030”, 20,700 km long new lines were supposed to be constructed and a significant part of existing tracks was to be modernised by 2030. Specialists of the IERT say that planned investment into it was RUB 10.7 trillion (in 2007 prices, excluding the VAT and expenditure on land acquisition). Of that, 55.2% is RZD’s funds, 26.7% - investment from the federal budget, 12.3% - private investments, and 5.8% - investments from the RF regional budgets. However, since 2008, the major burden of funding railway network modernisation projects has been placed upon RZD, and the planned ratio of investments was not met, which has caused a deficit of investment.
To reach earlier set goals, investment into infrastructure development must be increased annually by at least 40% in comparison with the sum invested in 2010. Then the total capital investments into infrastructure and freight transportation (excluding the development of high-speed transportation) is to amount to RUB 1.85 trillion according to the optimistic outlook and RUB 1.6 trillion according to the pessimistic outlook. Therefore, the deficit of investments into railway projects till 2015 will exceed RUB 400 billion.
Amid the lack of funding from the state budget, RZD will have to limit its annual investment into the projects at 2009 level. According to scientists from the IERT, it would be more useful to remove the bottle-necks, which restrain cargo flow to the sea ports in the Russian North-West, and provide transportation to the southern ports, which are being constructed.

Upgraded Rolling Stock

RZD has one of the largest locomotive fleets in the world – about 11,200 cargo locomotives and 6,000 shunting locomotives. The life time of most of them is 23 years, and a significant part of the machinery is outdated. Old locomotives consume a lot of energy, so their usage is rather expensive.
One more problem is the required redistribution of capacities because of changes in the cargo flows after the wagon fleet extension. It will require not only locomotive fleet extension, but optimisation of the work of depots and node stations, where locomotives are changed en route. Specialists at the IERT suggest analysing rolling stock upgrading programmes once again, taking into account expected changes in the management of railcars and locomotives, or in other words, taking into account a wider use of block trains, scheduled train dispatches, and through technologies of locomotive usage (in the last case, the system of locomotive crews relief and locomotive maintenance is to be changed during the development of a new hierarchical structure of locomotive facilities management). All these measures create the basis for harmonisation of the use of locomotives for cargo transportation. Therefore, there appear to be additional opportunities to save investment. Meanwhile, assessments of this market sector should be treated very carefully: according to Alexey Vorotilkin, Vice President of RZD, the average daily performance of a locomotive in cargo traffic reached 1.8 million gross tonne-kilometres, a 10.6% increase compared with 2004. Thus, locomotives are used more intensively, but reserves in this sector are limited.
One of the company’s major tasks to be fulfilled by 2015 is to provide a 3.5% increase in the average weight of a cargo train by means of train weight standards extension on some routes, growth of cargo volume carried by heavy trains, and cargo railcar empty mileage reduction. Therefore, the plan of locomotive facilities renewal needs corrections.
The company developed and adopted the programme of enhancing the efficiency and reliability of the locomotive complex in a mid-term prospect. According to it, the investment into locomotive fleet upgrade is assessed at more that RUB 90 billion per annum. The demand for purchase is 725 new locomotives a year. It was planned earlier to acquire 800-900 new locomotives per annum.
They said in the Traction Directorate that the axle load of the new locomotives must be 27-30 t. The fuel and power consumption must be reduced by 15%. The company plans to put into operation a distributed power system controlled via radio.

Specified Logistics

Specialists believe that RZD should optimise its logistics plans, including expenditure on improving wagon turnover control or reducing the burden on available mainlines to diminish inefficient idling of rolling stock, and investments into informational support for these processes. These measures are to extend the share of block trains and concentration of freight work at the most efficient stations and terminals, which will improve cargo delivery on “on time” principle.
The programme of rail logistics centres development may be corrected.
RZD plans to invest in the development of a network of large service centres, where customers will be provided with detailed transport forwarding and logistic services, and “door-to-door” cargo delivery. For that, the company plans to strengthen cooperation with road transport enterprises and renew its truck fleet. Investments into terminals, A- and B-class warehouses, and marshalling yards were to help increase cargo handling there by at least 35% in comparison with 2009. Also, it was planned to invest into the business of operating entry lines to large enterprises and merging them with the mainline network.
Specialists at the IERT say that one should think carefully before deciding on carrying out such projects amid deficit. They should be developed only if private companies do not have enough sources to carry out such projects near available marshalling yards by themselves. Otherwise, the return on investment may be lower than planned.
For example, authorities in the Moscow region spent a lot of time persuading RZD to invest into the “Bely Rast” logistics centre. Nowadays, it turns out that private investors are ready to invest into construction of a similar terminal near it. Why did the transporter invest into non-core business instead of construction of rail facilities at the “Bely Rast?
It shows that RZD should interact more with private investors. This would help increase investment into logistics. Nevertheless, RZD is not going to stop carrying out investment projects in this sector. Such programmes are a part of the system targeted to improve the rolling stock park, they will allow the holding company to make its business in the cargo transportation sector more stable by 2015 due to services diversification, expansion of cooperation with other transport market players, and implementation of new transport forwarding and logistics services with the railway components.
The holding company will continue to cooperate with adjacent foreign railways to improve cross-border transport. The development of logistics services in the neighbouring countries remains one of RZD’s priorities. It means, the company does not give up its plans to launch new subsidiaries – transporters, cargo terminals, forwarding and logistics companies to expand the scale of foreign trade rail transportation. However, its approach to such projects will be quite balanced and pragmatic.

“Smart” Technologies as the Basis for Progress

Another capital-intensive direction of RZD’s development is the modernisation agenda.
There are 12 directions of the company’s research and technical development till 2015, which became the bases for relevant sections in the Programme of Innovative Development of RZD till 2015. Let’s talk about the most important of them.
One of the main directions is investments into innovative rolling stock development. In particular, in the cargo transportation sector, there is a direct current electric locomotive 2ES10 with asynchronous traction motors, a shunting double-diesel diesel locomotive, and a gas locomotive designed on the basis of ChME3 locomotives. A number of innovations have been offered to operators. They include special rolling stock with axle loads of 25-27 t., allowing an increase in railcar efficiency by 19-20% and to cut expenditure on wagon repair by 8-10%, including joint-type flat railcars for large-capacity containers.
In the section devoted to track structure, a priority is such innovations as non-ballast structures, geonets to strengthen the roadbed, W-30 fastening systems, and points (2956 project) and diverging section of track (2968 project) to provide traffic speeds of up to 250 kph.
The further renewal of key assets is to be carried out in the sectors of electrification, signalling and communication facilities, including putting into operation up-to-date overhead wiring systems of KS-160 type projects and microprocessor-based automatic blocking systems instead of analog equipment, and the reconstruction of traction substations.
Providing Centers for Infrastructure Maintenance Control (their creation envisages remote control over the condition of railway equipment and cable networks), the railways are equipped with such facilities as IR devices, devices to diagnose the condition of equipment, automated protective systems, chromatographs, devices to monitor the parameters of feeder draft load and smart diagnostic terminals.
A number of innovations are connected with improving the mechanisation of the railway transport, the system of repair works adjustment with traffic schedule, the optimisation of the system of materials purchase and storage, and technical audit and automation of diagnostics of risks in the transport process.
According to Igor Rozenberg, First Deputy CEO of NIIAS (Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport), RZD’s priorities are projects of intelligent railway transport and “smart” railway stations development. Natalya Tereshina, Head of the “Economy and Management in the Transport Sector” Department of the MIIT (Moscow Institute of Railways) specified that putting such systems into operation contributes to the company’s competitiveness – with the help of the innovations the company meets the new demands of its customers, therefore, its turnover increases due to new types of services provided.
It explains why RZD pays so much attention to enhancement of informational technologies for servicing clients and extending the scope of e-systems for them. Also, the integration of the company’s informational systems with other market players, state controlling and supervising bodies will continue to speed up document processing.
According to IERT, the cost of infrastructure maintenance and use will fall by 2-3% per annum thanks to the innovations.
The IERT specialists emphasise in their research that RZD’s innovative development envisages qualitative renewal and modernisation of the infrastructure. This will extend the operating time between repairs and increase the reliability of machinery and equipment.
Some projects cannot be carried out at only RZD’s expense. Relating to a number of projects in the sector of high-speed traffic – co-funding sources are needed for most of them.
In accordance with the order of the RF Government, the programmes of development of high-speed railway traffic between cities where the matches of the FIFA World Cup (2018) will take place, are being developed. The mechanisms of state support for the projects are to be defined before 2015, and the works to be fulfilled within that timeframe are to be coordinated with RZD’s plans of infrastructure upgrade. The justification of the Moscow – St Petersburg high-speed line project based on the concession mechanisms has not been finished yet, and the principles of RZD’s interaction with suppliers of rolling stock and equipment has not been specified either. (The package of modern solutions suggested for the project’s successful completion by RZD envisages usage of non-ballast track structure, a new system of the mainline operation control, intelligent systems for traffic management and the control over the condition of the rolling stock. For the sake of national safety, the RF Government insists that these new informational systems must be based on Russian developments).
Vyacheslav Rybkin, CEO of Lengiprotrans says that the discussion about the railway transport sectors, where the state must participate actively, has not stopped. For example, the RF Ministry of Transport discusses what should be constructed first – the second line of the Baikal-Amur Mainline or the high-speed line. That is why all steps to be made by RZD are specified as the system of public-private partnership in the railway transport sector is developed. Therefore, it is the state that will define the further investment strategy of RZD in the near future.
By Alexander Solntsev [~DETAIL_TEXT] =>

Infrastructure Projects and Profitability

The long-term development of railway infrastructure in Russia is defined in three basic documents: “The RF Transport Strategy until 2030,” “The Strategy of Railway Transport Development in the RF until 2030,” and “The Strategy of the RZD Holding Company Development until 2030.” Specialists believe that these strategies should now be updated, because they describe the Russian economy’s need for cargo transportation on the Russian railway network, but not the funding sources necessary to reach the goals set are mentioned in them. Already now it is clear that RZD’s profits are not enough to carry out all the projects. Scientists are trying to determine the priorities and estimate which of them may be most profitable for the transporter.
According to the Institute of Economy and Transport Development (IERT), RZD has more than 3,500 stations where loading and unloading operations take place. Over 82% of the freight operations occur at just 500 stations. Therefore, the wagon flows are unevenly distributed on the network, and their concentration on some lines is very high. 16% of cargo volume carried via the railway network is intermodal traffic, where sea transport is used and freight is handled in Russian sea ports; another 19% is Russian exports carried via railway border crossings with other countries. These zones motivate the development of a number of scaled investment programmes in the railway sector.
Experts at the IERT believe that the largest increase in the cargo volume is expected on the railway accesses to the Vanino – Sovetskaya Gavan hub (+220% by 2020 in comparison with the figures in 2011), in the North-West of Russia (+70%) and in the North Caucasus region (+60%). For this volume of freight transportation, it is necessary to develop the rail sections adjacent to the ports in the North-Western federal region of Russia (first of all, to the Ust-Luga port, including the Sonkovo line), accesses to the sea terminals in the Russian south (reconstruction of the M. Gorky – Kotelnikovo – Tikhoretskaya – Krymskaya line with the Krasnodar hub bypass).
To service the increasing cargo flow here, local as well as distant accesses to the Russian sea ports should be extended. This means developing the Baikal-Amur Mainline and the Trans-Siberian Railway, including the Mezhdurechensk – Taishet line, and rail sections between the largest railway hubs, including those to the Polar Urals and Western Siberia (among them there are the Tobolsk – Surgut – Korotchaevo and the Konosha – Chum –
Salekhard lines if the Northern Latitudinal Railway is constructed). Also, the infrastructure of Moscow, St Petersburg, Yekaterinburg and other transport hubs should be extended to create a route for wagon flows destined for the Russian northwestern and southern ports.
Another factor influencing the freight base of the Russian railways is the pace of new mineral deposits development (especially, coal, iron ore, and hydrocarbons). The “point of growth” of the freight base is concentrated in the Far Eastern region, Siberia, and the Urals. Consequently, according to the IERT’s research, the upgrade of existing rail tracks and the construction of new ones are badly needed in these regions.
Valery Veremeev, Head of the Department of Economic Situation and Strategic Development of RZD, says that these capital-intensive projects differ in the payback for the transporter. If there is not enough investment for all of them, it will be quite reasonable to carry out the most profitable projects first. They concern transportation in the North-West of Russia. A number of development programmes to be carried out in the Far East may be loss-making for RZD – they are based on low-yielding cargo transportation (for example, coal).
A number of projects are so capital-intensive that they cannot be carried out by RZD only. For example, if the Sovetskaya Gavan special economic zone is united with the Vanino port into a single transport and industrial hub, the capacity of sea terminals will be greater than RZD planned. In this case, tracks on distant railway accesses to the ports are to be reconstructed, and a new 60 km long section is to be built. The state is going to invest RUB 50 billion into the transport hub, but no budget funding is envisaged for railway infrastructure development. In this situation, RZD can build a new railway line to the Sovetskaya Gavan port to the detriment of its other investment projects. The question is whether it will be a rational decision for the rail transporter?
Scientists believe there is another aspect – the projects which seemed attractive in 2010 may become unprofitable for the transporter because of changes in the global market. In the words of Mr Veremeev, these risks should be analysed and priorities may be changed during the plans update.
According to “The Strategy of Railway Transport Development in the RF until 2030”, 20,700 km long new lines were supposed to be constructed and a significant part of existing tracks was to be modernised by 2030. Specialists of the IERT say that planned investment into it was RUB 10.7 trillion (in 2007 prices, excluding the VAT and expenditure on land acquisition). Of that, 55.2% is RZD’s funds, 26.7% - investment from the federal budget, 12.3% - private investments, and 5.8% - investments from the RF regional budgets. However, since 2008, the major burden of funding railway network modernisation projects has been placed upon RZD, and the planned ratio of investments was not met, which has caused a deficit of investment.
To reach earlier set goals, investment into infrastructure development must be increased annually by at least 40% in comparison with the sum invested in 2010. Then the total capital investments into infrastructure and freight transportation (excluding the development of high-speed transportation) is to amount to RUB 1.85 trillion according to the optimistic outlook and RUB 1.6 trillion according to the pessimistic outlook. Therefore, the deficit of investments into railway projects till 2015 will exceed RUB 400 billion.
Amid the lack of funding from the state budget, RZD will have to limit its annual investment into the projects at 2009 level. According to scientists from the IERT, it would be more useful to remove the bottle-necks, which restrain cargo flow to the sea ports in the Russian North-West, and provide transportation to the southern ports, which are being constructed.

Upgraded Rolling Stock

RZD has one of the largest locomotive fleets in the world – about 11,200 cargo locomotives and 6,000 shunting locomotives. The life time of most of them is 23 years, and a significant part of the machinery is outdated. Old locomotives consume a lot of energy, so their usage is rather expensive.
One more problem is the required redistribution of capacities because of changes in the cargo flows after the wagon fleet extension. It will require not only locomotive fleet extension, but optimisation of the work of depots and node stations, where locomotives are changed en route. Specialists at the IERT suggest analysing rolling stock upgrading programmes once again, taking into account expected changes in the management of railcars and locomotives, or in other words, taking into account a wider use of block trains, scheduled train dispatches, and through technologies of locomotive usage (in the last case, the system of locomotive crews relief and locomotive maintenance is to be changed during the development of a new hierarchical structure of locomotive facilities management). All these measures create the basis for harmonisation of the use of locomotives for cargo transportation. Therefore, there appear to be additional opportunities to save investment. Meanwhile, assessments of this market sector should be treated very carefully: according to Alexey Vorotilkin, Vice President of RZD, the average daily performance of a locomotive in cargo traffic reached 1.8 million gross tonne-kilometres, a 10.6% increase compared with 2004. Thus, locomotives are used more intensively, but reserves in this sector are limited.
One of the company’s major tasks to be fulfilled by 2015 is to provide a 3.5% increase in the average weight of a cargo train by means of train weight standards extension on some routes, growth of cargo volume carried by heavy trains, and cargo railcar empty mileage reduction. Therefore, the plan of locomotive facilities renewal needs corrections.
The company developed and adopted the programme of enhancing the efficiency and reliability of the locomotive complex in a mid-term prospect. According to it, the investment into locomotive fleet upgrade is assessed at more that RUB 90 billion per annum. The demand for purchase is 725 new locomotives a year. It was planned earlier to acquire 800-900 new locomotives per annum.
They said in the Traction Directorate that the axle load of the new locomotives must be 27-30 t. The fuel and power consumption must be reduced by 15%. The company plans to put into operation a distributed power system controlled via radio.

Specified Logistics

Specialists believe that RZD should optimise its logistics plans, including expenditure on improving wagon turnover control or reducing the burden on available mainlines to diminish inefficient idling of rolling stock, and investments into informational support for these processes. These measures are to extend the share of block trains and concentration of freight work at the most efficient stations and terminals, which will improve cargo delivery on “on time” principle.
The programme of rail logistics centres development may be corrected.
RZD plans to invest in the development of a network of large service centres, where customers will be provided with detailed transport forwarding and logistic services, and “door-to-door” cargo delivery. For that, the company plans to strengthen cooperation with road transport enterprises and renew its truck fleet. Investments into terminals, A- and B-class warehouses, and marshalling yards were to help increase cargo handling there by at least 35% in comparison with 2009. Also, it was planned to invest into the business of operating entry lines to large enterprises and merging them with the mainline network.
Specialists at the IERT say that one should think carefully before deciding on carrying out such projects amid deficit. They should be developed only if private companies do not have enough sources to carry out such projects near available marshalling yards by themselves. Otherwise, the return on investment may be lower than planned.
For example, authorities in the Moscow region spent a lot of time persuading RZD to invest into the “Bely Rast” logistics centre. Nowadays, it turns out that private investors are ready to invest into construction of a similar terminal near it. Why did the transporter invest into non-core business instead of construction of rail facilities at the “Bely Rast?
It shows that RZD should interact more with private investors. This would help increase investment into logistics. Nevertheless, RZD is not going to stop carrying out investment projects in this sector. Such programmes are a part of the system targeted to improve the rolling stock park, they will allow the holding company to make its business in the cargo transportation sector more stable by 2015 due to services diversification, expansion of cooperation with other transport market players, and implementation of new transport forwarding and logistics services with the railway components.
The holding company will continue to cooperate with adjacent foreign railways to improve cross-border transport. The development of logistics services in the neighbouring countries remains one of RZD’s priorities. It means, the company does not give up its plans to launch new subsidiaries – transporters, cargo terminals, forwarding and logistics companies to expand the scale of foreign trade rail transportation. However, its approach to such projects will be quite balanced and pragmatic.

“Smart” Technologies as the Basis for Progress

Another capital-intensive direction of RZD’s development is the modernisation agenda.
There are 12 directions of the company’s research and technical development till 2015, which became the bases for relevant sections in the Programme of Innovative Development of RZD till 2015. Let’s talk about the most important of them.
One of the main directions is investments into innovative rolling stock development. In particular, in the cargo transportation sector, there is a direct current electric locomotive 2ES10 with asynchronous traction motors, a shunting double-diesel diesel locomotive, and a gas locomotive designed on the basis of ChME3 locomotives. A number of innovations have been offered to operators. They include special rolling stock with axle loads of 25-27 t., allowing an increase in railcar efficiency by 19-20% and to cut expenditure on wagon repair by 8-10%, including joint-type flat railcars for large-capacity containers.
In the section devoted to track structure, a priority is such innovations as non-ballast structures, geonets to strengthen the roadbed, W-30 fastening systems, and points (2956 project) and diverging section of track (2968 project) to provide traffic speeds of up to 250 kph.
The further renewal of key assets is to be carried out in the sectors of electrification, signalling and communication facilities, including putting into operation up-to-date overhead wiring systems of KS-160 type projects and microprocessor-based automatic blocking systems instead of analog equipment, and the reconstruction of traction substations.
Providing Centers for Infrastructure Maintenance Control (their creation envisages remote control over the condition of railway equipment and cable networks), the railways are equipped with such facilities as IR devices, devices to diagnose the condition of equipment, automated protective systems, chromatographs, devices to monitor the parameters of feeder draft load and smart diagnostic terminals.
A number of innovations are connected with improving the mechanisation of the railway transport, the system of repair works adjustment with traffic schedule, the optimisation of the system of materials purchase and storage, and technical audit and automation of diagnostics of risks in the transport process.
According to Igor Rozenberg, First Deputy CEO of NIIAS (Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport), RZD’s priorities are projects of intelligent railway transport and “smart” railway stations development. Natalya Tereshina, Head of the “Economy and Management in the Transport Sector” Department of the MIIT (Moscow Institute of Railways) specified that putting such systems into operation contributes to the company’s competitiveness – with the help of the innovations the company meets the new demands of its customers, therefore, its turnover increases due to new types of services provided.
It explains why RZD pays so much attention to enhancement of informational technologies for servicing clients and extending the scope of e-systems for them. Also, the integration of the company’s informational systems with other market players, state controlling and supervising bodies will continue to speed up document processing.
According to IERT, the cost of infrastructure maintenance and use will fall by 2-3% per annum thanks to the innovations.
The IERT specialists emphasise in their research that RZD’s innovative development envisages qualitative renewal and modernisation of the infrastructure. This will extend the operating time between repairs and increase the reliability of machinery and equipment.
Some projects cannot be carried out at only RZD’s expense. Relating to a number of projects in the sector of high-speed traffic – co-funding sources are needed for most of them.
In accordance with the order of the RF Government, the programmes of development of high-speed railway traffic between cities where the matches of the FIFA World Cup (2018) will take place, are being developed. The mechanisms of state support for the projects are to be defined before 2015, and the works to be fulfilled within that timeframe are to be coordinated with RZD’s plans of infrastructure upgrade. The justification of the Moscow – St Petersburg high-speed line project based on the concession mechanisms has not been finished yet, and the principles of RZD’s interaction with suppliers of rolling stock and equipment has not been specified either. (The package of modern solutions suggested for the project’s successful completion by RZD envisages usage of non-ballast track structure, a new system of the mainline operation control, intelligent systems for traffic management and the control over the condition of the rolling stock. For the sake of national safety, the RF Government insists that these new informational systems must be based on Russian developments).
Vyacheslav Rybkin, CEO of Lengiprotrans says that the discussion about the railway transport sectors, where the state must participate actively, has not stopped. For example, the RF Ministry of Transport discusses what should be constructed first – the second line of the Baikal-Amur Mainline or the high-speed line. That is why all steps to be made by RZD are specified as the system of public-private partnership in the railway transport sector is developed. Therefore, it is the state that will define the further investment strategy of RZD in the near future.
By Alexander Solntsev [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Russian Railways has to optimise investment programmes this year in line with the funding available. [~PREVIEW_TEXT] => Russian Railways has to optimise investment programmes this year in line with the funding available. 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Infrastructure Projects and Profitability

The long-term development of railway infrastructure in Russia is defined in three basic documents: “The RF Transport Strategy until 2030,” “The Strategy of Railway Transport Development in the RF until 2030,” and “The Strategy of the RZD Holding Company Development until 2030.” Specialists believe that these strategies should now be updated, because they describe the Russian economy’s need for cargo transportation on the Russian railway network, but not the funding sources necessary to reach the goals set are mentioned in them. Already now it is clear that RZD’s profits are not enough to carry out all the projects. Scientists are trying to determine the priorities and estimate which of them may be most profitable for the transporter.
According to the Institute of Economy and Transport Development (IERT), RZD has more than 3,500 stations where loading and unloading operations take place. Over 82% of the freight operations occur at just 500 stations. Therefore, the wagon flows are unevenly distributed on the network, and their concentration on some lines is very high. 16% of cargo volume carried via the railway network is intermodal traffic, where sea transport is used and freight is handled in Russian sea ports; another 19% is Russian exports carried via railway border crossings with other countries. These zones motivate the development of a number of scaled investment programmes in the railway sector.
Experts at the IERT believe that the largest increase in the cargo volume is expected on the railway accesses to the Vanino – Sovetskaya Gavan hub (+220% by 2020 in comparison with the figures in 2011), in the North-West of Russia (+70%) and in the North Caucasus region (+60%). For this volume of freight transportation, it is necessary to develop the rail sections adjacent to the ports in the North-Western federal region of Russia (first of all, to the Ust-Luga port, including the Sonkovo line), accesses to the sea terminals in the Russian south (reconstruction of the M. Gorky – Kotelnikovo – Tikhoretskaya – Krymskaya line with the Krasnodar hub bypass).
To service the increasing cargo flow here, local as well as distant accesses to the Russian sea ports should be extended. This means developing the Baikal-Amur Mainline and the Trans-Siberian Railway, including the Mezhdurechensk – Taishet line, and rail sections between the largest railway hubs, including those to the Polar Urals and Western Siberia (among them there are the Tobolsk – Surgut – Korotchaevo and the Konosha – Chum –
Salekhard lines if the Northern Latitudinal Railway is constructed). Also, the infrastructure of Moscow, St Petersburg, Yekaterinburg and other transport hubs should be extended to create a route for wagon flows destined for the Russian northwestern and southern ports.
Another factor influencing the freight base of the Russian railways is the pace of new mineral deposits development (especially, coal, iron ore, and hydrocarbons). The “point of growth” of the freight base is concentrated in the Far Eastern region, Siberia, and the Urals. Consequently, according to the IERT’s research, the upgrade of existing rail tracks and the construction of new ones are badly needed in these regions.
Valery Veremeev, Head of the Department of Economic Situation and Strategic Development of RZD, says that these capital-intensive projects differ in the payback for the transporter. If there is not enough investment for all of them, it will be quite reasonable to carry out the most profitable projects first. They concern transportation in the North-West of Russia. A number of development programmes to be carried out in the Far East may be loss-making for RZD – they are based on low-yielding cargo transportation (for example, coal).
A number of projects are so capital-intensive that they cannot be carried out by RZD only. For example, if the Sovetskaya Gavan special economic zone is united with the Vanino port into a single transport and industrial hub, the capacity of sea terminals will be greater than RZD planned. In this case, tracks on distant railway accesses to the ports are to be reconstructed, and a new 60 km long section is to be built. The state is going to invest RUB 50 billion into the transport hub, but no budget funding is envisaged for railway infrastructure development. In this situation, RZD can build a new railway line to the Sovetskaya Gavan port to the detriment of its other investment projects. The question is whether it will be a rational decision for the rail transporter?
Scientists believe there is another aspect – the projects which seemed attractive in 2010 may become unprofitable for the transporter because of changes in the global market. In the words of Mr Veremeev, these risks should be analysed and priorities may be changed during the plans update.
According to “The Strategy of Railway Transport Development in the RF until 2030”, 20,700 km long new lines were supposed to be constructed and a significant part of existing tracks was to be modernised by 2030. Specialists of the IERT say that planned investment into it was RUB 10.7 trillion (in 2007 prices, excluding the VAT and expenditure on land acquisition). Of that, 55.2% is RZD’s funds, 26.7% - investment from the federal budget, 12.3% - private investments, and 5.8% - investments from the RF regional budgets. However, since 2008, the major burden of funding railway network modernisation projects has been placed upon RZD, and the planned ratio of investments was not met, which has caused a deficit of investment.
To reach earlier set goals, investment into infrastructure development must be increased annually by at least 40% in comparison with the sum invested in 2010. Then the total capital investments into infrastructure and freight transportation (excluding the development of high-speed transportation) is to amount to RUB 1.85 trillion according to the optimistic outlook and RUB 1.6 trillion according to the pessimistic outlook. Therefore, the deficit of investments into railway projects till 2015 will exceed RUB 400 billion.
Amid the lack of funding from the state budget, RZD will have to limit its annual investment into the projects at 2009 level. According to scientists from the IERT, it would be more useful to remove the bottle-necks, which restrain cargo flow to the sea ports in the Russian North-West, and provide transportation to the southern ports, which are being constructed.

Upgraded Rolling Stock

RZD has one of the largest locomotive fleets in the world – about 11,200 cargo locomotives and 6,000 shunting locomotives. The life time of most of them is 23 years, and a significant part of the machinery is outdated. Old locomotives consume a lot of energy, so their usage is rather expensive.
One more problem is the required redistribution of capacities because of changes in the cargo flows after the wagon fleet extension. It will require not only locomotive fleet extension, but optimisation of the work of depots and node stations, where locomotives are changed en route. Specialists at the IERT suggest analysing rolling stock upgrading programmes once again, taking into account expected changes in the management of railcars and locomotives, or in other words, taking into account a wider use of block trains, scheduled train dispatches, and through technologies of locomotive usage (in the last case, the system of locomotive crews relief and locomotive maintenance is to be changed during the development of a new hierarchical structure of locomotive facilities management). All these measures create the basis for harmonisation of the use of locomotives for cargo transportation. Therefore, there appear to be additional opportunities to save investment. Meanwhile, assessments of this market sector should be treated very carefully: according to Alexey Vorotilkin, Vice President of RZD, the average daily performance of a locomotive in cargo traffic reached 1.8 million gross tonne-kilometres, a 10.6% increase compared with 2004. Thus, locomotives are used more intensively, but reserves in this sector are limited.
One of the company’s major tasks to be fulfilled by 2015 is to provide a 3.5% increase in the average weight of a cargo train by means of train weight standards extension on some routes, growth of cargo volume carried by heavy trains, and cargo railcar empty mileage reduction. Therefore, the plan of locomotive facilities renewal needs corrections.
The company developed and adopted the programme of enhancing the efficiency and reliability of the locomotive complex in a mid-term prospect. According to it, the investment into locomotive fleet upgrade is assessed at more that RUB 90 billion per annum. The demand for purchase is 725 new locomotives a year. It was planned earlier to acquire 800-900 new locomotives per annum.
They said in the Traction Directorate that the axle load of the new locomotives must be 27-30 t. The fuel and power consumption must be reduced by 15%. The company plans to put into operation a distributed power system controlled via radio.

Specified Logistics

Specialists believe that RZD should optimise its logistics plans, including expenditure on improving wagon turnover control or reducing the burden on available mainlines to diminish inefficient idling of rolling stock, and investments into informational support for these processes. These measures are to extend the share of block trains and concentration of freight work at the most efficient stations and terminals, which will improve cargo delivery on “on time” principle.
The programme of rail logistics centres development may be corrected.
RZD plans to invest in the development of a network of large service centres, where customers will be provided with detailed transport forwarding and logistic services, and “door-to-door” cargo delivery. For that, the company plans to strengthen cooperation with road transport enterprises and renew its truck fleet. Investments into terminals, A- and B-class warehouses, and marshalling yards were to help increase cargo handling there by at least 35% in comparison with 2009. Also, it was planned to invest into the business of operating entry lines to large enterprises and merging them with the mainline network.
Specialists at the IERT say that one should think carefully before deciding on carrying out such projects amid deficit. They should be developed only if private companies do not have enough sources to carry out such projects near available marshalling yards by themselves. Otherwise, the return on investment may be lower than planned.
For example, authorities in the Moscow region spent a lot of time persuading RZD to invest into the “Bely Rast” logistics centre. Nowadays, it turns out that private investors are ready to invest into construction of a similar terminal near it. Why did the transporter invest into non-core business instead of construction of rail facilities at the “Bely Rast?
It shows that RZD should interact more with private investors. This would help increase investment into logistics. Nevertheless, RZD is not going to stop carrying out investment projects in this sector. Such programmes are a part of the system targeted to improve the rolling stock park, they will allow the holding company to make its business in the cargo transportation sector more stable by 2015 due to services diversification, expansion of cooperation with other transport market players, and implementation of new transport forwarding and logistics services with the railway components.
The holding company will continue to cooperate with adjacent foreign railways to improve cross-border transport. The development of logistics services in the neighbouring countries remains one of RZD’s priorities. It means, the company does not give up its plans to launch new subsidiaries – transporters, cargo terminals, forwarding and logistics companies to expand the scale of foreign trade rail transportation. However, its approach to such projects will be quite balanced and pragmatic.

“Smart” Technologies as the Basis for Progress

Another capital-intensive direction of RZD’s development is the modernisation agenda.
There are 12 directions of the company’s research and technical development till 2015, which became the bases for relevant sections in the Programme of Innovative Development of RZD till 2015. Let’s talk about the most important of them.
One of the main directions is investments into innovative rolling stock development. In particular, in the cargo transportation sector, there is a direct current electric locomotive 2ES10 with asynchronous traction motors, a shunting double-diesel diesel locomotive, and a gas locomotive designed on the basis of ChME3 locomotives. A number of innovations have been offered to operators. They include special rolling stock with axle loads of 25-27 t., allowing an increase in railcar efficiency by 19-20% and to cut expenditure on wagon repair by 8-10%, including joint-type flat railcars for large-capacity containers.
In the section devoted to track structure, a priority is such innovations as non-ballast structures, geonets to strengthen the roadbed, W-30 fastening systems, and points (2956 project) and diverging section of track (2968 project) to provide traffic speeds of up to 250 kph.
The further renewal of key assets is to be carried out in the sectors of electrification, signalling and communication facilities, including putting into operation up-to-date overhead wiring systems of KS-160 type projects and microprocessor-based automatic blocking systems instead of analog equipment, and the reconstruction of traction substations.
Providing Centers for Infrastructure Maintenance Control (their creation envisages remote control over the condition of railway equipment and cable networks), the railways are equipped with such facilities as IR devices, devices to diagnose the condition of equipment, automated protective systems, chromatographs, devices to monitor the parameters of feeder draft load and smart diagnostic terminals.
A number of innovations are connected with improving the mechanisation of the railway transport, the system of repair works adjustment with traffic schedule, the optimisation of the system of materials purchase and storage, and technical audit and automation of diagnostics of risks in the transport process.
According to Igor Rozenberg, First Deputy CEO of NIIAS (Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport), RZD’s priorities are projects of intelligent railway transport and “smart” railway stations development. Natalya Tereshina, Head of the “Economy and Management in the Transport Sector” Department of the MIIT (Moscow Institute of Railways) specified that putting such systems into operation contributes to the company’s competitiveness – with the help of the innovations the company meets the new demands of its customers, therefore, its turnover increases due to new types of services provided.
It explains why RZD pays so much attention to enhancement of informational technologies for servicing clients and extending the scope of e-systems for them. Also, the integration of the company’s informational systems with other market players, state controlling and supervising bodies will continue to speed up document processing.
According to IERT, the cost of infrastructure maintenance and use will fall by 2-3% per annum thanks to the innovations.
The IERT specialists emphasise in their research that RZD’s innovative development envisages qualitative renewal and modernisation of the infrastructure. This will extend the operating time between repairs and increase the reliability of machinery and equipment.
Some projects cannot be carried out at only RZD’s expense. Relating to a number of projects in the sector of high-speed traffic – co-funding sources are needed for most of them.
In accordance with the order of the RF Government, the programmes of development of high-speed railway traffic between cities where the matches of the FIFA World Cup (2018) will take place, are being developed. The mechanisms of state support for the projects are to be defined before 2015, and the works to be fulfilled within that timeframe are to be coordinated with RZD’s plans of infrastructure upgrade. The justification of the Moscow – St Petersburg high-speed line project based on the concession mechanisms has not been finished yet, and the principles of RZD’s interaction with suppliers of rolling stock and equipment has not been specified either. (The package of modern solutions suggested for the project’s successful completion by RZD envisages usage of non-ballast track structure, a new system of the mainline operation control, intelligent systems for traffic management and the control over the condition of the rolling stock. For the sake of national safety, the RF Government insists that these new informational systems must be based on Russian developments).
Vyacheslav Rybkin, CEO of Lengiprotrans says that the discussion about the railway transport sectors, where the state must participate actively, has not stopped. For example, the RF Ministry of Transport discusses what should be constructed first – the second line of the Baikal-Amur Mainline or the high-speed line. That is why all steps to be made by RZD are specified as the system of public-private partnership in the railway transport sector is developed. Therefore, it is the state that will define the further investment strategy of RZD in the near future.
By Alexander Solntsev [~DETAIL_TEXT] =>

Infrastructure Projects and Profitability

The long-term development of railway infrastructure in Russia is defined in three basic documents: “The RF Transport Strategy until 2030,” “The Strategy of Railway Transport Development in the RF until 2030,” and “The Strategy of the RZD Holding Company Development until 2030.” Specialists believe that these strategies should now be updated, because they describe the Russian economy’s need for cargo transportation on the Russian railway network, but not the funding sources necessary to reach the goals set are mentioned in them. Already now it is clear that RZD’s profits are not enough to carry out all the projects. Scientists are trying to determine the priorities and estimate which of them may be most profitable for the transporter.
According to the Institute of Economy and Transport Development (IERT), RZD has more than 3,500 stations where loading and unloading operations take place. Over 82% of the freight operations occur at just 500 stations. Therefore, the wagon flows are unevenly distributed on the network, and their concentration on some lines is very high. 16% of cargo volume carried via the railway network is intermodal traffic, where sea transport is used and freight is handled in Russian sea ports; another 19% is Russian exports carried via railway border crossings with other countries. These zones motivate the development of a number of scaled investment programmes in the railway sector.
Experts at the IERT believe that the largest increase in the cargo volume is expected on the railway accesses to the Vanino – Sovetskaya Gavan hub (+220% by 2020 in comparison with the figures in 2011), in the North-West of Russia (+70%) and in the North Caucasus region (+60%). For this volume of freight transportation, it is necessary to develop the rail sections adjacent to the ports in the North-Western federal region of Russia (first of all, to the Ust-Luga port, including the Sonkovo line), accesses to the sea terminals in the Russian south (reconstruction of the M. Gorky – Kotelnikovo – Tikhoretskaya – Krymskaya line with the Krasnodar hub bypass).
To service the increasing cargo flow here, local as well as distant accesses to the Russian sea ports should be extended. This means developing the Baikal-Amur Mainline and the Trans-Siberian Railway, including the Mezhdurechensk – Taishet line, and rail sections between the largest railway hubs, including those to the Polar Urals and Western Siberia (among them there are the Tobolsk – Surgut – Korotchaevo and the Konosha – Chum –
Salekhard lines if the Northern Latitudinal Railway is constructed). Also, the infrastructure of Moscow, St Petersburg, Yekaterinburg and other transport hubs should be extended to create a route for wagon flows destined for the Russian northwestern and southern ports.
Another factor influencing the freight base of the Russian railways is the pace of new mineral deposits development (especially, coal, iron ore, and hydrocarbons). The “point of growth” of the freight base is concentrated in the Far Eastern region, Siberia, and the Urals. Consequently, according to the IERT’s research, the upgrade of existing rail tracks and the construction of new ones are badly needed in these regions.
Valery Veremeev, Head of the Department of Economic Situation and Strategic Development of RZD, says that these capital-intensive projects differ in the payback for the transporter. If there is not enough investment for all of them, it will be quite reasonable to carry out the most profitable projects first. They concern transportation in the North-West of Russia. A number of development programmes to be carried out in the Far East may be loss-making for RZD – they are based on low-yielding cargo transportation (for example, coal).
A number of projects are so capital-intensive that they cannot be carried out by RZD only. For example, if the Sovetskaya Gavan special economic zone is united with the Vanino port into a single transport and industrial hub, the capacity of sea terminals will be greater than RZD planned. In this case, tracks on distant railway accesses to the ports are to be reconstructed, and a new 60 km long section is to be built. The state is going to invest RUB 50 billion into the transport hub, but no budget funding is envisaged for railway infrastructure development. In this situation, RZD can build a new railway line to the Sovetskaya Gavan port to the detriment of its other investment projects. The question is whether it will be a rational decision for the rail transporter?
Scientists believe there is another aspect – the projects which seemed attractive in 2010 may become unprofitable for the transporter because of changes in the global market. In the words of Mr Veremeev, these risks should be analysed and priorities may be changed during the plans update.
According to “The Strategy of Railway Transport Development in the RF until 2030”, 20,700 km long new lines were supposed to be constructed and a significant part of existing tracks was to be modernised by 2030. Specialists of the IERT say that planned investment into it was RUB 10.7 trillion (in 2007 prices, excluding the VAT and expenditure on land acquisition). Of that, 55.2% is RZD’s funds, 26.7% - investment from the federal budget, 12.3% - private investments, and 5.8% - investments from the RF regional budgets. However, since 2008, the major burden of funding railway network modernisation projects has been placed upon RZD, and the planned ratio of investments was not met, which has caused a deficit of investment.
To reach earlier set goals, investment into infrastructure development must be increased annually by at least 40% in comparison with the sum invested in 2010. Then the total capital investments into infrastructure and freight transportation (excluding the development of high-speed transportation) is to amount to RUB 1.85 trillion according to the optimistic outlook and RUB 1.6 trillion according to the pessimistic outlook. Therefore, the deficit of investments into railway projects till 2015 will exceed RUB 400 billion.
Amid the lack of funding from the state budget, RZD will have to limit its annual investment into the projects at 2009 level. According to scientists from the IERT, it would be more useful to remove the bottle-necks, which restrain cargo flow to the sea ports in the Russian North-West, and provide transportation to the southern ports, which are being constructed.

Upgraded Rolling Stock

RZD has one of the largest locomotive fleets in the world – about 11,200 cargo locomotives and 6,000 shunting locomotives. The life time of most of them is 23 years, and a significant part of the machinery is outdated. Old locomotives consume a lot of energy, so their usage is rather expensive.
One more problem is the required redistribution of capacities because of changes in the cargo flows after the wagon fleet extension. It will require not only locomotive fleet extension, but optimisation of the work of depots and node stations, where locomotives are changed en route. Specialists at the IERT suggest analysing rolling stock upgrading programmes once again, taking into account expected changes in the management of railcars and locomotives, or in other words, taking into account a wider use of block trains, scheduled train dispatches, and through technologies of locomotive usage (in the last case, the system of locomotive crews relief and locomotive maintenance is to be changed during the development of a new hierarchical structure of locomotive facilities management). All these measures create the basis for harmonisation of the use of locomotives for cargo transportation. Therefore, there appear to be additional opportunities to save investment. Meanwhile, assessments of this market sector should be treated very carefully: according to Alexey Vorotilkin, Vice President of RZD, the average daily performance of a locomotive in cargo traffic reached 1.8 million gross tonne-kilometres, a 10.6% increase compared with 2004. Thus, locomotives are used more intensively, but reserves in this sector are limited.
One of the company’s major tasks to be fulfilled by 2015 is to provide a 3.5% increase in the average weight of a cargo train by means of train weight standards extension on some routes, growth of cargo volume carried by heavy trains, and cargo railcar empty mileage reduction. Therefore, the plan of locomotive facilities renewal needs corrections.
The company developed and adopted the programme of enhancing the efficiency and reliability of the locomotive complex in a mid-term prospect. According to it, the investment into locomotive fleet upgrade is assessed at more that RUB 90 billion per annum. The demand for purchase is 725 new locomotives a year. It was planned earlier to acquire 800-900 new locomotives per annum.
They said in the Traction Directorate that the axle load of the new locomotives must be 27-30 t. The fuel and power consumption must be reduced by 15%. The company plans to put into operation a distributed power system controlled via radio.

Specified Logistics

Specialists believe that RZD should optimise its logistics plans, including expenditure on improving wagon turnover control or reducing the burden on available mainlines to diminish inefficient idling of rolling stock, and investments into informational support for these processes. These measures are to extend the share of block trains and concentration of freight work at the most efficient stations and terminals, which will improve cargo delivery on “on time” principle.
The programme of rail logistics centres development may be corrected.
RZD plans to invest in the development of a network of large service centres, where customers will be provided with detailed transport forwarding and logistic services, and “door-to-door” cargo delivery. For that, the company plans to strengthen cooperation with road transport enterprises and renew its truck fleet. Investments into terminals, A- and B-class warehouses, and marshalling yards were to help increase cargo handling there by at least 35% in comparison with 2009. Also, it was planned to invest into the business of operating entry lines to large enterprises and merging them with the mainline network.
Specialists at the IERT say that one should think carefully before deciding on carrying out such projects amid deficit. They should be developed only if private companies do not have enough sources to carry out such projects near available marshalling yards by themselves. Otherwise, the return on investment may be lower than planned.
For example, authorities in the Moscow region spent a lot of time persuading RZD to invest into the “Bely Rast” logistics centre. Nowadays, it turns out that private investors are ready to invest into construction of a similar terminal near it. Why did the transporter invest into non-core business instead of construction of rail facilities at the “Bely Rast?
It shows that RZD should interact more with private investors. This would help increase investment into logistics. Nevertheless, RZD is not going to stop carrying out investment projects in this sector. Such programmes are a part of the system targeted to improve the rolling stock park, they will allow the holding company to make its business in the cargo transportation sector more stable by 2015 due to services diversification, expansion of cooperation with other transport market players, and implementation of new transport forwarding and logistics services with the railway components.
The holding company will continue to cooperate with adjacent foreign railways to improve cross-border transport. The development of logistics services in the neighbouring countries remains one of RZD’s priorities. It means, the company does not give up its plans to launch new subsidiaries – transporters, cargo terminals, forwarding and logistics companies to expand the scale of foreign trade rail transportation. However, its approach to such projects will be quite balanced and pragmatic.

“Smart” Technologies as the Basis for Progress

Another capital-intensive direction of RZD’s development is the modernisation agenda.
There are 12 directions of the company’s research and technical development till 2015, which became the bases for relevant sections in the Programme of Innovative Development of RZD till 2015. Let’s talk about the most important of them.
One of the main directions is investments into innovative rolling stock development. In particular, in the cargo transportation sector, there is a direct current electric locomotive 2ES10 with asynchronous traction motors, a shunting double-diesel diesel locomotive, and a gas locomotive designed on the basis of ChME3 locomotives. A number of innovations have been offered to operators. They include special rolling stock with axle loads of 25-27 t., allowing an increase in railcar efficiency by 19-20% and to cut expenditure on wagon repair by 8-10%, including joint-type flat railcars for large-capacity containers.
In the section devoted to track structure, a priority is such innovations as non-ballast structures, geonets to strengthen the roadbed, W-30 fastening systems, and points (2956 project) and diverging section of track (2968 project) to provide traffic speeds of up to 250 kph.
The further renewal of key assets is to be carried out in the sectors of electrification, signalling and communication facilities, including putting into operation up-to-date overhead wiring systems of KS-160 type projects and microprocessor-based automatic blocking systems instead of analog equipment, and the reconstruction of traction substations.
Providing Centers for Infrastructure Maintenance Control (their creation envisages remote control over the condition of railway equipment and cable networks), the railways are equipped with such facilities as IR devices, devices to diagnose the condition of equipment, automated protective systems, chromatographs, devices to monitor the parameters of feeder draft load and smart diagnostic terminals.
A number of innovations are connected with improving the mechanisation of the railway transport, the system of repair works adjustment with traffic schedule, the optimisation of the system of materials purchase and storage, and technical audit and automation of diagnostics of risks in the transport process.
According to Igor Rozenberg, First Deputy CEO of NIIAS (Research and Design Institute for Information Technology, Signalling and Telecommunications on Railway Transport), RZD’s priorities are projects of intelligent railway transport and “smart” railway stations development. Natalya Tereshina, Head of the “Economy and Management in the Transport Sector” Department of the MIIT (Moscow Institute of Railways) specified that putting such systems into operation contributes to the company’s competitiveness – with the help of the innovations the company meets the new demands of its customers, therefore, its turnover increases due to new types of services provided.
It explains why RZD pays so much attention to enhancement of informational technologies for servicing clients and extending the scope of e-systems for them. Also, the integration of the company’s informational systems with other market players, state controlling and supervising bodies will continue to speed up document processing.
According to IERT, the cost of infrastructure maintenance and use will fall by 2-3% per annum thanks to the innovations.
The IERT specialists emphasise in their research that RZD’s innovative development envisages qualitative renewal and modernisation of the infrastructure. This will extend the operating time between repairs and increase the reliability of machinery and equipment.
Some projects cannot be carried out at only RZD’s expense. Relating to a number of projects in the sector of high-speed traffic – co-funding sources are needed for most of them.
In accordance with the order of the RF Government, the programmes of development of high-speed railway traffic between cities where the matches of the FIFA World Cup (2018) will take place, are being developed. The mechanisms of state support for the projects are to be defined before 2015, and the works to be fulfilled within that timeframe are to be coordinated with RZD’s plans of infrastructure upgrade. The justification of the Moscow – St Petersburg high-speed line project based on the concession mechanisms has not been finished yet, and the principles of RZD’s interaction with suppliers of rolling stock and equipment has not been specified either. (The package of modern solutions suggested for the project’s successful completion by RZD envisages usage of non-ballast track structure, a new system of the mainline operation control, intelligent systems for traffic management and the control over the condition of the rolling stock. For the sake of national safety, the RF Government insists that these new informational systems must be based on Russian developments).
Vyacheslav Rybkin, CEO of Lengiprotrans says that the discussion about the railway transport sectors, where the state must participate actively, has not stopped. For example, the RF Ministry of Transport discusses what should be constructed first – the second line of the Baikal-Amur Mainline or the high-speed line. That is why all steps to be made by RZD are specified as the system of public-private partnership in the railway transport sector is developed. Therefore, it is the state that will define the further investment strategy of RZD in the near future.
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РЖД-Партнер

A Lifeline for a Cargo Owner

The situation with fulfillment of customers’ needs for cargo transportation on the Russian railway network was rather difficult last year. The entire Russian railcar fleet had become private by then, so prices for rolling stock supply, especially for small and medium enterprises, went up. In 2012 RZD had to organise a special park of railcars rented from private companies. These wagons are now supplied to consignors at knockdown prices.
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Attempt to Interest Operators Failed

At the end of 2011, the RF Government adopted decree № 1051 “Ordering of Renting Rail Rolling Stock for Cargo Transportation by Russian Railways and Setting a Special Order of Price Formation for Cargo Transportation Rolling Stock.” Then, the RF Federal Tariff Service issued order № 444-t/4 dated December 27, 2011 “The Order of Calculation of Tariffs on Cargo Transportation in Rented Railcars and Rules of Their Use,” which sets the cost of such rolling stock rent.
Starting from January 2012, RZD rents private railcars thus forming the Rented Private Railcar fleet (RPR), and the Russian transporter has faced several problems already. Firstly, trying to motivate operators to rent their railcars to the RPR fleet failed because of the low level of payments for the rolling stock. In the words of Dmitry Bogomazov, Head of the IT Department of Freight One (a subsidiary of RZD, which took its wagons from the RPR fleet, after Independent Transportation Company bought a 75% stake in it), the figures speak for themselves: the profitability of a railcar in the RPR park was 900 roubles per day, and now it is 1,300 roubles per day on average.
Naturally, the main factor for an operator deciding on renting his wagon to the RPR fleet is the economy, so if the profitability of railcars in the RPR park was high enough, there would be a lot of companies willing to rent out their rolling stock. According to Georgy Davydov, President of the National Association of Transporters, the lack of flexible tariff policy is the main barrier to adding operators’ railcars to the RPR park.
In accordance with governmental decree № 1056, RZD now operates using a tariff range, but the rates in this range may be changed by the Federal Tariff Service only once a quarter. In the opinion of Mr Davydov, the mechanism of adaptation of railcars in the RPR park to market prices must be connected with governmental decree №643 (“On State Regulation and Control of Tariffs, Dues, and Fee for Works (Services) Provided by Natural Monopoly Subjects in Rail Transportation Sector”). For the mechanism to work efficiently, a transporter should be free to set any prices within the framework of the tariff range; i.e. the Federal Tariff Service should just adjust the regulated tariff, and the government compensate for the losses suffered by the transporter in line with established procedures.

Losses Again

As a result, the RPR park consists of railcars of the Second Cargo Company, a subsidiary of RZD (and this situation seems to continue till the end of 2012, i.e. the end of the period of the RPR park existence set in the governmental decree). Russian Railways and its subsidiary concluded an agreement regulating the order and conditions for renting gondola cars from the Second Cargo Company. RZD manages approximately 106,000 gondola cars owned by the Second Cargo Company. “This scheme improved transparency, and consequently the predictability of the tariff policy and prices,” say specialists at RZD. RPR park helped to partially take over the system of regulating task of moving empty railcars, due to which there was a positive effect on key transport process efficiency figures.
They say in RZD, however, they did not expect that a lot of operators would rent their wagons to the RPR park, because this scheme may be useful for companies which bought rolling stock ad hoc and consider it an investment. They have no repeat customers and well-organised logistic schemes. “Large players will surely earn more than RZD is ready to pay for a rented railcar today,” notes Roman Saibatalov, First Deputy Chief of the Central Directorate for Traffic Control of RZD.
Secondly, on some estimates, RZD’s loss from managing this park exceeded RUB 3 billion in a six-month period. The RPR wagons are meant to transport different low-yielding cargoes, previously carried in accordance with the tariffs of the public railcar park. First of all, it is coal, crushed stone and other construction materials. Anyway, the transporter is interested in making the transportation maximally profitable. According to Mr Saibatalov, this may happen after a set of conditions is created.
In accordance with RZD’s estimations, the RPR fleet must consist of approximately 250,000 railcars. The daily load must be at least 7,000 units. The transportation distance must not exceed 2,000 km. “Like operators, we would like these railcars to service some technological ring-routes, to work with guaranteed cargo volume. Nowadays, the share of block trains in the RPR park is about 20%, in private fleets that figure is usually at about 40%,” says Mr Saibatalov.

A Problem for the Whole 1520 Network

Meanwhile, the issue “Can rented private railcar fleet be efficient?” concerns not only the Russian transporter. The entire wagon park on the 1520 network may walk into the same trap. Adapting the way the railways are administered it has been suggested aiming to recreate the public wagon park through the mechanism of renting private railcars to the Unified System of Cargo Railcars Management and Usage (ESUPGV).
In the words of Vitaly Evdokimenko, CEO of the Second Cargo Company (his speech at the VII International railway business forum “Strategic Partnership 1520”), on the one hand, work with the ESUPGV wagon fleet has fewer advantages for a rolling stock owner than for other transport market players, therefore, there must be serious stimuli (for example, good prices for a railcar rent – not lower than market ones). On the other hand, limited profitability of wagons given to the ESUPGV park (based on its tariff range) and their usage on potentially inefficient routes with freight base formation on leftovers causes direct damage to the transporter. As a result, the ESUPGV park may be completely forced out of the sectors of transportation by block trains and transportation of high-yielding cargoes (the third tariff class), and on the lines with low empty mileage index. Consequently, national railway administrations will fail to get enough revenue to pay railcar owners for the rented rolling stock.
Therefore, the transporter as well as operators renting their wagons to the RPR park are interested in its economically efficient working. If there are no attractive conditions for wagon owners and the work of RPR park remains loss-making for railway administrations, the RPR park functioning will be profitable for neither operators nor the transporter. And the present-day situation in Russia, when only cargo owners feel the positive effect from the RPR park, proves it.

Clients Are Satisfied

The fleet of railcars rented by RZD has been working for more than half a year, and it has contributed to fulfillment of cargo owners’ demand for rolling stock. Clients say that the RPR park has facilitated their work. According to research of OPORA Russia (organisation for small and medium enterprises), the small and medium business’ demand for railway transportation was fulfilled by 94-96% by the end of June.
Transportation in railcars rented by RZD, according to OPORA Russia, makes approximately 30-40% of the total number of shipments in gondola cars (the RPR park consists of gondola cars only), therefore, one can say that the wagon park helps to stabilise the situation on the network. “It is difficult to imagine what the situation would have been, if the Government had not adopted that decree. Undoubtedly, the opportunity to use this resource had a positive influence on cargo owners’ relations with operators,” believes Gleb Kinder, member of the Presidium of OPORA Russia.
Naturally, the RPR park cannot be considered a panacea for all the problems with availability and pricing for rolling stock provided to small and medium cargo owners, but it helped a lot of companies to find necessary wagons to carry their freight.
Meanwhile, a number of side effects have been revealed during the period while the RPR fleet was in use. For example, it can hardly be used for double operations, because of heavy fines for idling (it is more profitable to send empty railcars back than to pay fines for their being idle before they get back load). Moreover, rolling stock supplies are often irregular, and do not coincide with declared terms, volumes, etc.
Nevertheless, most cargo owners would like to see the period of the RPR park operation extended. “Without a doubt, the RPR fleet must be kept. It contributes to building a more efficient scheme for wagon flow management on the network and to guarantee supplies of rolling stock to cargo owners,” says Vsevolod Kovshov, Director of Uralkhim-Trans. “Moreover, the park should be extended. I support RZD’s suggestions to create mechanisms for operators’ railcars to be rented to RZD. These are necessary measures for the creation of a properly functioning rational railway system in the RF.”
The final decision on the fate of the RPR park has not been made yet. It may be dissolved in January 2013 as planned earlier. RZD now develops a new technology of private park management, which will be put into operation on a continuing basis. Still, we can’t but admit that the idea of implementing such a lifeline for transportation of cargoes of small companies turned out to be timely and useful from the consignors’ standpoint. ®
By Nadezhda Vtorushina [~DETAIL_TEXT] =>

Attempt to Interest Operators Failed

At the end of 2011, the RF Government adopted decree № 1051 “Ordering of Renting Rail Rolling Stock for Cargo Transportation by Russian Railways and Setting a Special Order of Price Formation for Cargo Transportation Rolling Stock.” Then, the RF Federal Tariff Service issued order № 444-t/4 dated December 27, 2011 “The Order of Calculation of Tariffs on Cargo Transportation in Rented Railcars and Rules of Their Use,” which sets the cost of such rolling stock rent.
Starting from January 2012, RZD rents private railcars thus forming the Rented Private Railcar fleet (RPR), and the Russian transporter has faced several problems already. Firstly, trying to motivate operators to rent their railcars to the RPR fleet failed because of the low level of payments for the rolling stock. In the words of Dmitry Bogomazov, Head of the IT Department of Freight One (a subsidiary of RZD, which took its wagons from the RPR fleet, after Independent Transportation Company bought a 75% stake in it), the figures speak for themselves: the profitability of a railcar in the RPR park was 900 roubles per day, and now it is 1,300 roubles per day on average.
Naturally, the main factor for an operator deciding on renting his wagon to the RPR fleet is the economy, so if the profitability of railcars in the RPR park was high enough, there would be a lot of companies willing to rent out their rolling stock. According to Georgy Davydov, President of the National Association of Transporters, the lack of flexible tariff policy is the main barrier to adding operators’ railcars to the RPR park.
In accordance with governmental decree № 1056, RZD now operates using a tariff range, but the rates in this range may be changed by the Federal Tariff Service only once a quarter. In the opinion of Mr Davydov, the mechanism of adaptation of railcars in the RPR park to market prices must be connected with governmental decree №643 (“On State Regulation and Control of Tariffs, Dues, and Fee for Works (Services) Provided by Natural Monopoly Subjects in Rail Transportation Sector”). For the mechanism to work efficiently, a transporter should be free to set any prices within the framework of the tariff range; i.e. the Federal Tariff Service should just adjust the regulated tariff, and the government compensate for the losses suffered by the transporter in line with established procedures.

Losses Again

As a result, the RPR park consists of railcars of the Second Cargo Company, a subsidiary of RZD (and this situation seems to continue till the end of 2012, i.e. the end of the period of the RPR park existence set in the governmental decree). Russian Railways and its subsidiary concluded an agreement regulating the order and conditions for renting gondola cars from the Second Cargo Company. RZD manages approximately 106,000 gondola cars owned by the Second Cargo Company. “This scheme improved transparency, and consequently the predictability of the tariff policy and prices,” say specialists at RZD. RPR park helped to partially take over the system of regulating task of moving empty railcars, due to which there was a positive effect on key transport process efficiency figures.
They say in RZD, however, they did not expect that a lot of operators would rent their wagons to the RPR park, because this scheme may be useful for companies which bought rolling stock ad hoc and consider it an investment. They have no repeat customers and well-organised logistic schemes. “Large players will surely earn more than RZD is ready to pay for a rented railcar today,” notes Roman Saibatalov, First Deputy Chief of the Central Directorate for Traffic Control of RZD.
Secondly, on some estimates, RZD’s loss from managing this park exceeded RUB 3 billion in a six-month period. The RPR wagons are meant to transport different low-yielding cargoes, previously carried in accordance with the tariffs of the public railcar park. First of all, it is coal, crushed stone and other construction materials. Anyway, the transporter is interested in making the transportation maximally profitable. According to Mr Saibatalov, this may happen after a set of conditions is created.
In accordance with RZD’s estimations, the RPR fleet must consist of approximately 250,000 railcars. The daily load must be at least 7,000 units. The transportation distance must not exceed 2,000 km. “Like operators, we would like these railcars to service some technological ring-routes, to work with guaranteed cargo volume. Nowadays, the share of block trains in the RPR park is about 20%, in private fleets that figure is usually at about 40%,” says Mr Saibatalov.

A Problem for the Whole 1520 Network

Meanwhile, the issue “Can rented private railcar fleet be efficient?” concerns not only the Russian transporter. The entire wagon park on the 1520 network may walk into the same trap. Adapting the way the railways are administered it has been suggested aiming to recreate the public wagon park through the mechanism of renting private railcars to the Unified System of Cargo Railcars Management and Usage (ESUPGV).
In the words of Vitaly Evdokimenko, CEO of the Second Cargo Company (his speech at the VII International railway business forum “Strategic Partnership 1520”), on the one hand, work with the ESUPGV wagon fleet has fewer advantages for a rolling stock owner than for other transport market players, therefore, there must be serious stimuli (for example, good prices for a railcar rent – not lower than market ones). On the other hand, limited profitability of wagons given to the ESUPGV park (based on its tariff range) and their usage on potentially inefficient routes with freight base formation on leftovers causes direct damage to the transporter. As a result, the ESUPGV park may be completely forced out of the sectors of transportation by block trains and transportation of high-yielding cargoes (the third tariff class), and on the lines with low empty mileage index. Consequently, national railway administrations will fail to get enough revenue to pay railcar owners for the rented rolling stock.
Therefore, the transporter as well as operators renting their wagons to the RPR park are interested in its economically efficient working. If there are no attractive conditions for wagon owners and the work of RPR park remains loss-making for railway administrations, the RPR park functioning will be profitable for neither operators nor the transporter. And the present-day situation in Russia, when only cargo owners feel the positive effect from the RPR park, proves it.

Clients Are Satisfied

The fleet of railcars rented by RZD has been working for more than half a year, and it has contributed to fulfillment of cargo owners’ demand for rolling stock. Clients say that the RPR park has facilitated their work. According to research of OPORA Russia (organisation for small and medium enterprises), the small and medium business’ demand for railway transportation was fulfilled by 94-96% by the end of June.
Transportation in railcars rented by RZD, according to OPORA Russia, makes approximately 30-40% of the total number of shipments in gondola cars (the RPR park consists of gondola cars only), therefore, one can say that the wagon park helps to stabilise the situation on the network. “It is difficult to imagine what the situation would have been, if the Government had not adopted that decree. Undoubtedly, the opportunity to use this resource had a positive influence on cargo owners’ relations with operators,” believes Gleb Kinder, member of the Presidium of OPORA Russia.
Naturally, the RPR park cannot be considered a panacea for all the problems with availability and pricing for rolling stock provided to small and medium cargo owners, but it helped a lot of companies to find necessary wagons to carry their freight.
Meanwhile, a number of side effects have been revealed during the period while the RPR fleet was in use. For example, it can hardly be used for double operations, because of heavy fines for idling (it is more profitable to send empty railcars back than to pay fines for their being idle before they get back load). Moreover, rolling stock supplies are often irregular, and do not coincide with declared terms, volumes, etc.
Nevertheless, most cargo owners would like to see the period of the RPR park operation extended. “Without a doubt, the RPR fleet must be kept. It contributes to building a more efficient scheme for wagon flow management on the network and to guarantee supplies of rolling stock to cargo owners,” says Vsevolod Kovshov, Director of Uralkhim-Trans. “Moreover, the park should be extended. I support RZD’s suggestions to create mechanisms for operators’ railcars to be rented to RZD. These are necessary measures for the creation of a properly functioning rational railway system in the RF.”
The final decision on the fate of the RPR park has not been made yet. It may be dissolved in January 2013 as planned earlier. RZD now develops a new technology of private park management, which will be put into operation on a continuing basis. Still, we can’t but admit that the idea of implementing such a lifeline for transportation of cargoes of small companies turned out to be timely and useful from the consignors’ standpoint. ®
By Nadezhda Vtorushina [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => The situation with fulfillment of customers’ needs for cargo transportation on the Russian railway network was rather difficult last year. The entire Russian railcar fleet had become private by then, so prices for rolling stock supply, especially for small and medium enterprises, went up. In 2012 RZD had to organise a special park of railcars rented from private companies. These wagons are now supplied to consignors at knockdown prices. [~PREVIEW_TEXT] => The situation with fulfillment of customers’ needs for cargo transportation on the Russian railway network was rather difficult last year. The entire Russian railcar fleet had become private by then, so prices for rolling stock supply, especially for small and medium enterprises, went up. In 2012 RZD had to organise a special park of railcars rented from private companies. These wagons are now supplied to consignors at knockdown prices. 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Attempt to Interest Operators Failed

At the end of 2011, the RF Government adopted decree № 1051 “Ordering of Renting Rail Rolling Stock for Cargo Transportation by Russian Railways and Setting a Special Order of Price Formation for Cargo Transportation Rolling Stock.” Then, the RF Federal Tariff Service issued order № 444-t/4 dated December 27, 2011 “The Order of Calculation of Tariffs on Cargo Transportation in Rented Railcars and Rules of Their Use,” which sets the cost of such rolling stock rent.
Starting from January 2012, RZD rents private railcars thus forming the Rented Private Railcar fleet (RPR), and the Russian transporter has faced several problems already. Firstly, trying to motivate operators to rent their railcars to the RPR fleet failed because of the low level of payments for the rolling stock. In the words of Dmitry Bogomazov, Head of the IT Department of Freight One (a subsidiary of RZD, which took its wagons from the RPR fleet, after Independent Transportation Company bought a 75% stake in it), the figures speak for themselves: the profitability of a railcar in the RPR park was 900 roubles per day, and now it is 1,300 roubles per day on average.
Naturally, the main factor for an operator deciding on renting his wagon to the RPR fleet is the economy, so if the profitability of railcars in the RPR park was high enough, there would be a lot of companies willing to rent out their rolling stock. According to Georgy Davydov, President of the National Association of Transporters, the lack of flexible tariff policy is the main barrier to adding operators’ railcars to the RPR park.
In accordance with governmental decree № 1056, RZD now operates using a tariff range, but the rates in this range may be changed by the Federal Tariff Service only once a quarter. In the opinion of Mr Davydov, the mechanism of adaptation of railcars in the RPR park to market prices must be connected with governmental decree №643 (“On State Regulation and Control of Tariffs, Dues, and Fee for Works (Services) Provided by Natural Monopoly Subjects in Rail Transportation Sector”). For the mechanism to work efficiently, a transporter should be free to set any prices within the framework of the tariff range; i.e. the Federal Tariff Service should just adjust the regulated tariff, and the government compensate for the losses suffered by the transporter in line with established procedures.

Losses Again

As a result, the RPR park consists of railcars of the Second Cargo Company, a subsidiary of RZD (and this situation seems to continue till the end of 2012, i.e. the end of the period of the RPR park existence set in the governmental decree). Russian Railways and its subsidiary concluded an agreement regulating the order and conditions for renting gondola cars from the Second Cargo Company. RZD manages approximately 106,000 gondola cars owned by the Second Cargo Company. “This scheme improved transparency, and consequently the predictability of the tariff policy and prices,” say specialists at RZD. RPR park helped to partially take over the system of regulating task of moving empty railcars, due to which there was a positive effect on key transport process efficiency figures.
They say in RZD, however, they did not expect that a lot of operators would rent their wagons to the RPR park, because this scheme may be useful for companies which bought rolling stock ad hoc and consider it an investment. They have no repeat customers and well-organised logistic schemes. “Large players will surely earn more than RZD is ready to pay for a rented railcar today,” notes Roman Saibatalov, First Deputy Chief of the Central Directorate for Traffic Control of RZD.
Secondly, on some estimates, RZD’s loss from managing this park exceeded RUB 3 billion in a six-month period. The RPR wagons are meant to transport different low-yielding cargoes, previously carried in accordance with the tariffs of the public railcar park. First of all, it is coal, crushed stone and other construction materials. Anyway, the transporter is interested in making the transportation maximally profitable. According to Mr Saibatalov, this may happen after a set of conditions is created.
In accordance with RZD’s estimations, the RPR fleet must consist of approximately 250,000 railcars. The daily load must be at least 7,000 units. The transportation distance must not exceed 2,000 km. “Like operators, we would like these railcars to service some technological ring-routes, to work with guaranteed cargo volume. Nowadays, the share of block trains in the RPR park is about 20%, in private fleets that figure is usually at about 40%,” says Mr Saibatalov.

A Problem for the Whole 1520 Network

Meanwhile, the issue “Can rented private railcar fleet be efficient?” concerns not only the Russian transporter. The entire wagon park on the 1520 network may walk into the same trap. Adapting the way the railways are administered it has been suggested aiming to recreate the public wagon park through the mechanism of renting private railcars to the Unified System of Cargo Railcars Management and Usage (ESUPGV).
In the words of Vitaly Evdokimenko, CEO of the Second Cargo Company (his speech at the VII International railway business forum “Strategic Partnership 1520”), on the one hand, work with the ESUPGV wagon fleet has fewer advantages for a rolling stock owner than for other transport market players, therefore, there must be serious stimuli (for example, good prices for a railcar rent – not lower than market ones). On the other hand, limited profitability of wagons given to the ESUPGV park (based on its tariff range) and their usage on potentially inefficient routes with freight base formation on leftovers causes direct damage to the transporter. As a result, the ESUPGV park may be completely forced out of the sectors of transportation by block trains and transportation of high-yielding cargoes (the third tariff class), and on the lines with low empty mileage index. Consequently, national railway administrations will fail to get enough revenue to pay railcar owners for the rented rolling stock.
Therefore, the transporter as well as operators renting their wagons to the RPR park are interested in its economically efficient working. If there are no attractive conditions for wagon owners and the work of RPR park remains loss-making for railway administrations, the RPR park functioning will be profitable for neither operators nor the transporter. And the present-day situation in Russia, when only cargo owners feel the positive effect from the RPR park, proves it.

Clients Are Satisfied

The fleet of railcars rented by RZD has been working for more than half a year, and it has contributed to fulfillment of cargo owners’ demand for rolling stock. Clients say that the RPR park has facilitated their work. According to research of OPORA Russia (organisation for small and medium enterprises), the small and medium business’ demand for railway transportation was fulfilled by 94-96% by the end of June.
Transportation in railcars rented by RZD, according to OPORA Russia, makes approximately 30-40% of the total number of shipments in gondola cars (the RPR park consists of gondola cars only), therefore, one can say that the wagon park helps to stabilise the situation on the network. “It is difficult to imagine what the situation would have been, if the Government had not adopted that decree. Undoubtedly, the opportunity to use this resource had a positive influence on cargo owners’ relations with operators,” believes Gleb Kinder, member of the Presidium of OPORA Russia.
Naturally, the RPR park cannot be considered a panacea for all the problems with availability and pricing for rolling stock provided to small and medium cargo owners, but it helped a lot of companies to find necessary wagons to carry their freight.
Meanwhile, a number of side effects have been revealed during the period while the RPR fleet was in use. For example, it can hardly be used for double operations, because of heavy fines for idling (it is more profitable to send empty railcars back than to pay fines for their being idle before they get back load). Moreover, rolling stock supplies are often irregular, and do not coincide with declared terms, volumes, etc.
Nevertheless, most cargo owners would like to see the period of the RPR park operation extended. “Without a doubt, the RPR fleet must be kept. It contributes to building a more efficient scheme for wagon flow management on the network and to guarantee supplies of rolling stock to cargo owners,” says Vsevolod Kovshov, Director of Uralkhim-Trans. “Moreover, the park should be extended. I support RZD’s suggestions to create mechanisms for operators’ railcars to be rented to RZD. These are necessary measures for the creation of a properly functioning rational railway system in the RF.”
The final decision on the fate of the RPR park has not been made yet. It may be dissolved in January 2013 as planned earlier. RZD now develops a new technology of private park management, which will be put into operation on a continuing basis. Still, we can’t but admit that the idea of implementing such a lifeline for transportation of cargoes of small companies turned out to be timely and useful from the consignors’ standpoint. ®
By Nadezhda Vtorushina [~DETAIL_TEXT] =>

Attempt to Interest Operators Failed

At the end of 2011, the RF Government adopted decree № 1051 “Ordering of Renting Rail Rolling Stock for Cargo Transportation by Russian Railways and Setting a Special Order of Price Formation for Cargo Transportation Rolling Stock.” Then, the RF Federal Tariff Service issued order № 444-t/4 dated December 27, 2011 “The Order of Calculation of Tariffs on Cargo Transportation in Rented Railcars and Rules of Their Use,” which sets the cost of such rolling stock rent.
Starting from January 2012, RZD rents private railcars thus forming the Rented Private Railcar fleet (RPR), and the Russian transporter has faced several problems already. Firstly, trying to motivate operators to rent their railcars to the RPR fleet failed because of the low level of payments for the rolling stock. In the words of Dmitry Bogomazov, Head of the IT Department of Freight One (a subsidiary of RZD, which took its wagons from the RPR fleet, after Independent Transportation Company bought a 75% stake in it), the figures speak for themselves: the profitability of a railcar in the RPR park was 900 roubles per day, and now it is 1,300 roubles per day on average.
Naturally, the main factor for an operator deciding on renting his wagon to the RPR fleet is the economy, so if the profitability of railcars in the RPR park was high enough, there would be a lot of companies willing to rent out their rolling stock. According to Georgy Davydov, President of the National Association of Transporters, the lack of flexible tariff policy is the main barrier to adding operators’ railcars to the RPR park.
In accordance with governmental decree № 1056, RZD now operates using a tariff range, but the rates in this range may be changed by the Federal Tariff Service only once a quarter. In the opinion of Mr Davydov, the mechanism of adaptation of railcars in the RPR park to market prices must be connected with governmental decree №643 (“On State Regulation and Control of Tariffs, Dues, and Fee for Works (Services) Provided by Natural Monopoly Subjects in Rail Transportation Sector”). For the mechanism to work efficiently, a transporter should be free to set any prices within the framework of the tariff range; i.e. the Federal Tariff Service should just adjust the regulated tariff, and the government compensate for the losses suffered by the transporter in line with established procedures.

Losses Again

As a result, the RPR park consists of railcars of the Second Cargo Company, a subsidiary of RZD (and this situation seems to continue till the end of 2012, i.e. the end of the period of the RPR park existence set in the governmental decree). Russian Railways and its subsidiary concluded an agreement regulating the order and conditions for renting gondola cars from the Second Cargo Company. RZD manages approximately 106,000 gondola cars owned by the Second Cargo Company. “This scheme improved transparency, and consequently the predictability of the tariff policy and prices,” say specialists at RZD. RPR park helped to partially take over the system of regulating task of moving empty railcars, due to which there was a positive effect on key transport process efficiency figures.
They say in RZD, however, they did not expect that a lot of operators would rent their wagons to the RPR park, because this scheme may be useful for companies which bought rolling stock ad hoc and consider it an investment. They have no repeat customers and well-organised logistic schemes. “Large players will surely earn more than RZD is ready to pay for a rented railcar today,” notes Roman Saibatalov, First Deputy Chief of the Central Directorate for Traffic Control of RZD.
Secondly, on some estimates, RZD’s loss from managing this park exceeded RUB 3 billion in a six-month period. The RPR wagons are meant to transport different low-yielding cargoes, previously carried in accordance with the tariffs of the public railcar park. First of all, it is coal, crushed stone and other construction materials. Anyway, the transporter is interested in making the transportation maximally profitable. According to Mr Saibatalov, this may happen after a set of conditions is created.
In accordance with RZD’s estimations, the RPR fleet must consist of approximately 250,000 railcars. The daily load must be at least 7,000 units. The transportation distance must not exceed 2,000 km. “Like operators, we would like these railcars to service some technological ring-routes, to work with guaranteed cargo volume. Nowadays, the share of block trains in the RPR park is about 20%, in private fleets that figure is usually at about 40%,” says Mr Saibatalov.

A Problem for the Whole 1520 Network

Meanwhile, the issue “Can rented private railcar fleet be efficient?” concerns not only the Russian transporter. The entire wagon park on the 1520 network may walk into the same trap. Adapting the way the railways are administered it has been suggested aiming to recreate the public wagon park through the mechanism of renting private railcars to the Unified System of Cargo Railcars Management and Usage (ESUPGV).
In the words of Vitaly Evdokimenko, CEO of the Second Cargo Company (his speech at the VII International railway business forum “Strategic Partnership 1520”), on the one hand, work with the ESUPGV wagon fleet has fewer advantages for a rolling stock owner than for other transport market players, therefore, there must be serious stimuli (for example, good prices for a railcar rent – not lower than market ones). On the other hand, limited profitability of wagons given to the ESUPGV park (based on its tariff range) and their usage on potentially inefficient routes with freight base formation on leftovers causes direct damage to the transporter. As a result, the ESUPGV park may be completely forced out of the sectors of transportation by block trains and transportation of high-yielding cargoes (the third tariff class), and on the lines with low empty mileage index. Consequently, national railway administrations will fail to get enough revenue to pay railcar owners for the rented rolling stock.
Therefore, the transporter as well as operators renting their wagons to the RPR park are interested in its economically efficient working. If there are no attractive conditions for wagon owners and the work of RPR park remains loss-making for railway administrations, the RPR park functioning will be profitable for neither operators nor the transporter. And the present-day situation in Russia, when only cargo owners feel the positive effect from the RPR park, proves it.

Clients Are Satisfied

The fleet of railcars rented by RZD has been working for more than half a year, and it has contributed to fulfillment of cargo owners’ demand for rolling stock. Clients say that the RPR park has facilitated their work. According to research of OPORA Russia (organisation for small and medium enterprises), the small and medium business’ demand for railway transportation was fulfilled by 94-96% by the end of June.
Transportation in railcars rented by RZD, according to OPORA Russia, makes approximately 30-40% of the total number of shipments in gondola cars (the RPR park consists of gondola cars only), therefore, one can say that the wagon park helps to stabilise the situation on the network. “It is difficult to imagine what the situation would have been, if the Government had not adopted that decree. Undoubtedly, the opportunity to use this resource had a positive influence on cargo owners’ relations with operators,” believes Gleb Kinder, member of the Presidium of OPORA Russia.
Naturally, the RPR park cannot be considered a panacea for all the problems with availability and pricing for rolling stock provided to small and medium cargo owners, but it helped a lot of companies to find necessary wagons to carry their freight.
Meanwhile, a number of side effects have been revealed during the period while the RPR fleet was in use. For example, it can hardly be used for double operations, because of heavy fines for idling (it is more profitable to send empty railcars back than to pay fines for their being idle before they get back load). Moreover, rolling stock supplies are often irregular, and do not coincide with declared terms, volumes, etc.
Nevertheless, most cargo owners would like to see the period of the RPR park operation extended. “Without a doubt, the RPR fleet must be kept. It contributes to building a more efficient scheme for wagon flow management on the network and to guarantee supplies of rolling stock to cargo owners,” says Vsevolod Kovshov, Director of Uralkhim-Trans. “Moreover, the park should be extended. I support RZD’s suggestions to create mechanisms for operators’ railcars to be rented to RZD. These are necessary measures for the creation of a properly functioning rational railway system in the RF.”
The final decision on the fate of the RPR park has not been made yet. It may be dissolved in January 2013 as planned earlier. RZD now develops a new technology of private park management, which will be put into operation on a continuing basis. Still, we can’t but admit that the idea of implementing such a lifeline for transportation of cargoes of small companies turned out to be timely and useful from the consignors’ standpoint. ®
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РЖД-Партнер

The Railroad of Yakutia: We Need to Face the Future Head-On

After the rail line to the Nizhny Bestyakh settlement is constructed, the Railroad of Yakutia JSC will have good prospects and the increase in the company’s passenger- and cargo turnover will contribute to it. To capitalise on this moment, Yakutian railwaymen are preparing traction rolling stock for new loads using the latest international developments in the world of railway machine building.
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    [DETAIL_TEXT] => At present, the Railroad of Yakutia is a stable company actively extending the pace of its development. According to the results of 2011, the company’s revenue amounted to RUB 2.2 billion, more than a 50% increase compared with the previous year.
The net profit of the Railroad of Yakutia was RUB 5.4 million, a 17% increase compared with 2010. And the growth in the volume of freight transportation (especially such cargoes as construction materials and containers) contributed to the increase in the revenue.
A priority project for the Railroad of Yakutia is the construction of the Berkakit – Tommot – Yakutsk railway which will become the main avenue of the Republic’s development in the near future. Obviously, the further industrialisation, social and economic development of Yakutia and efficient use of its raw materials are fully dependant on the new rail line.
According to Vasily Shimokhin, CEO of the Railroad of Yakutia, one can predict a serious increase in cargo turnover as soon as the new line is put into operation. Simultaneously, the volume of seasonal cargoes which previously could be delivered only by river, will fall. After the railway reaches Yakutsk, 47% of the Republic’s area will be accessible to transport all year round. According to forecasts, the amount of all-year round inert construction materials transported to Yakutsk, Aldan, Tommot, and Neryungri via the Railroad of Yakutia’s network, will grow. Railway tariffs on transportation of this freight will be much cheaper than the road transport’s (and there is practically no alternative to road haulages today), so the construction sector of Yakutia will benefit greatly from it.
The company’s plans, however, cannot be carried out without renewal and updating of its existing rolling stock, especially the traction fleet. Shukhrat Tashpulatov, Head of the Locomotive Facilities Department at the Railroad of Yakutia says that implementation of the new lines will increase the scope of transportation for sure. The Railroad is ready to serve these areas, however, the fleet of diesel locomotives extension will be badly needed when the volume of shipments increases.
The priority of the Railroad of Yakutia currently is to update its shunting locomotives, and the second phase of the programme which will start in 2014, envisages renewal of the mainline locomotive park. TE-8 locomotives developed by Sinara – Transport Machines in cooperation with General Electric are to be supplied to the Railroad of Yakutia. According to a preliminary agreement, 12 locomotives of the new series TE-8 are to be delivered to the Railroad of Yakutia before the end of 2017.
“One of our company’s priorities has always been and always will be the use of reliable machinery designed with the climatic peculiarities of the Sakha Republic (Yakutia), in mind. Some characteristics of this locomotive are similar to those of its equivalents, and others are even better in terms of the diesel-generator set capacity,” notes Mr Tashpulatov.
The experience of the Railroad of Yakutia in rolling stock renewal is important not only for the company – senior managers at Russian Railways (incorporating the Railroad of Yakutia) pay careful attention to the successful implementation of this programme. In future, the experience of the Railroad of Yakutia may be applied to similar RZD projects involving traction capacity update. [~DETAIL_TEXT] => At present, the Railroad of Yakutia is a stable company actively extending the pace of its development. According to the results of 2011, the company’s revenue amounted to RUB 2.2 billion, more than a 50% increase compared with the previous year.
The net profit of the Railroad of Yakutia was RUB 5.4 million, a 17% increase compared with 2010. And the growth in the volume of freight transportation (especially such cargoes as construction materials and containers) contributed to the increase in the revenue.
A priority project for the Railroad of Yakutia is the construction of the Berkakit – Tommot – Yakutsk railway which will become the main avenue of the Republic’s development in the near future. Obviously, the further industrialisation, social and economic development of Yakutia and efficient use of its raw materials are fully dependant on the new rail line.
According to Vasily Shimokhin, CEO of the Railroad of Yakutia, one can predict a serious increase in cargo turnover as soon as the new line is put into operation. Simultaneously, the volume of seasonal cargoes which previously could be delivered only by river, will fall. After the railway reaches Yakutsk, 47% of the Republic’s area will be accessible to transport all year round. According to forecasts, the amount of all-year round inert construction materials transported to Yakutsk, Aldan, Tommot, and Neryungri via the Railroad of Yakutia’s network, will grow. Railway tariffs on transportation of this freight will be much cheaper than the road transport’s (and there is practically no alternative to road haulages today), so the construction sector of Yakutia will benefit greatly from it.
The company’s plans, however, cannot be carried out without renewal and updating of its existing rolling stock, especially the traction fleet. Shukhrat Tashpulatov, Head of the Locomotive Facilities Department at the Railroad of Yakutia says that implementation of the new lines will increase the scope of transportation for sure. The Railroad is ready to serve these areas, however, the fleet of diesel locomotives extension will be badly needed when the volume of shipments increases.
The priority of the Railroad of Yakutia currently is to update its shunting locomotives, and the second phase of the programme which will start in 2014, envisages renewal of the mainline locomotive park. TE-8 locomotives developed by Sinara – Transport Machines in cooperation with General Electric are to be supplied to the Railroad of Yakutia. According to a preliminary agreement, 12 locomotives of the new series TE-8 are to be delivered to the Railroad of Yakutia before the end of 2017.
“One of our company’s priorities has always been and always will be the use of reliable machinery designed with the climatic peculiarities of the Sakha Republic (Yakutia), in mind. Some characteristics of this locomotive are similar to those of its equivalents, and others are even better in terms of the diesel-generator set capacity,” notes Mr Tashpulatov.
The experience of the Railroad of Yakutia in rolling stock renewal is important not only for the company – senior managers at Russian Railways (incorporating the Railroad of Yakutia) pay careful attention to the successful implementation of this programme. In future, the experience of the Railroad of Yakutia may be applied to similar RZD projects involving traction capacity update. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => After the rail line to the Nizhny Bestyakh settlement is constructed, the Railroad of Yakutia JSC will have good prospects and the increase in the company’s passenger- and cargo turnover will contribute to it. To capitalise on this moment, Yakutian railwaymen are preparing traction rolling stock for new loads using the latest international developments in the world of railway machine building. 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    [DETAIL_TEXT] => At present, the Railroad of Yakutia is a stable company actively extending the pace of its development. According to the results of 2011, the company’s revenue amounted to RUB 2.2 billion, more than a 50% increase compared with the previous year.
The net profit of the Railroad of Yakutia was RUB 5.4 million, a 17% increase compared with 2010. And the growth in the volume of freight transportation (especially such cargoes as construction materials and containers) contributed to the increase in the revenue.
A priority project for the Railroad of Yakutia is the construction of the Berkakit – Tommot – Yakutsk railway which will become the main avenue of the Republic’s development in the near future. Obviously, the further industrialisation, social and economic development of Yakutia and efficient use of its raw materials are fully dependant on the new rail line.
According to Vasily Shimokhin, CEO of the Railroad of Yakutia, one can predict a serious increase in cargo turnover as soon as the new line is put into operation. Simultaneously, the volume of seasonal cargoes which previously could be delivered only by river, will fall. After the railway reaches Yakutsk, 47% of the Republic’s area will be accessible to transport all year round. According to forecasts, the amount of all-year round inert construction materials transported to Yakutsk, Aldan, Tommot, and Neryungri via the Railroad of Yakutia’s network, will grow. Railway tariffs on transportation of this freight will be much cheaper than the road transport’s (and there is practically no alternative to road haulages today), so the construction sector of Yakutia will benefit greatly from it.
The company’s plans, however, cannot be carried out without renewal and updating of its existing rolling stock, especially the traction fleet. Shukhrat Tashpulatov, Head of the Locomotive Facilities Department at the Railroad of Yakutia says that implementation of the new lines will increase the scope of transportation for sure. The Railroad is ready to serve these areas, however, the fleet of diesel locomotives extension will be badly needed when the volume of shipments increases.
The priority of the Railroad of Yakutia currently is to update its shunting locomotives, and the second phase of the programme which will start in 2014, envisages renewal of the mainline locomotive park. TE-8 locomotives developed by Sinara – Transport Machines in cooperation with General Electric are to be supplied to the Railroad of Yakutia. According to a preliminary agreement, 12 locomotives of the new series TE-8 are to be delivered to the Railroad of Yakutia before the end of 2017.
“One of our company’s priorities has always been and always will be the use of reliable machinery designed with the climatic peculiarities of the Sakha Republic (Yakutia), in mind. Some characteristics of this locomotive are similar to those of its equivalents, and others are even better in terms of the diesel-generator set capacity,” notes Mr Tashpulatov.
The experience of the Railroad of Yakutia in rolling stock renewal is important not only for the company – senior managers at Russian Railways (incorporating the Railroad of Yakutia) pay careful attention to the successful implementation of this programme. In future, the experience of the Railroad of Yakutia may be applied to similar RZD projects involving traction capacity update. [~DETAIL_TEXT] => At present, the Railroad of Yakutia is a stable company actively extending the pace of its development. According to the results of 2011, the company’s revenue amounted to RUB 2.2 billion, more than a 50% increase compared with the previous year.
The net profit of the Railroad of Yakutia was RUB 5.4 million, a 17% increase compared with 2010. And the growth in the volume of freight transportation (especially such cargoes as construction materials and containers) contributed to the increase in the revenue.
A priority project for the Railroad of Yakutia is the construction of the Berkakit – Tommot – Yakutsk railway which will become the main avenue of the Republic’s development in the near future. Obviously, the further industrialisation, social and economic development of Yakutia and efficient use of its raw materials are fully dependant on the new rail line.
According to Vasily Shimokhin, CEO of the Railroad of Yakutia, one can predict a serious increase in cargo turnover as soon as the new line is put into operation. Simultaneously, the volume of seasonal cargoes which previously could be delivered only by river, will fall. After the railway reaches Yakutsk, 47% of the Republic’s area will be accessible to transport all year round. According to forecasts, the amount of all-year round inert construction materials transported to Yakutsk, Aldan, Tommot, and Neryungri via the Railroad of Yakutia’s network, will grow. Railway tariffs on transportation of this freight will be much cheaper than the road transport’s (and there is practically no alternative to road haulages today), so the construction sector of Yakutia will benefit greatly from it.
The company’s plans, however, cannot be carried out without renewal and updating of its existing rolling stock, especially the traction fleet. Shukhrat Tashpulatov, Head of the Locomotive Facilities Department at the Railroad of Yakutia says that implementation of the new lines will increase the scope of transportation for sure. The Railroad is ready to serve these areas, however, the fleet of diesel locomotives extension will be badly needed when the volume of shipments increases.
The priority of the Railroad of Yakutia currently is to update its shunting locomotives, and the second phase of the programme which will start in 2014, envisages renewal of the mainline locomotive park. TE-8 locomotives developed by Sinara – Transport Machines in cooperation with General Electric are to be supplied to the Railroad of Yakutia. According to a preliminary agreement, 12 locomotives of the new series TE-8 are to be delivered to the Railroad of Yakutia before the end of 2017.
“One of our company’s priorities has always been and always will be the use of reliable machinery designed with the climatic peculiarities of the Sakha Republic (Yakutia), in mind. Some characteristics of this locomotive are similar to those of its equivalents, and others are even better in terms of the diesel-generator set capacity,” notes Mr Tashpulatov.
The experience of the Railroad of Yakutia in rolling stock renewal is important not only for the company – senior managers at Russian Railways (incorporating the Railroad of Yakutia) pay careful attention to the successful implementation of this programme. In future, the experience of the Railroad of Yakutia may be applied to similar RZD projects involving traction capacity update. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => After the rail line to the Nizhny Bestyakh settlement is constructed, the Railroad of Yakutia JSC will have good prospects and the increase in the company’s passenger- and cargo turnover will contribute to it. To capitalise on this moment, Yakutian railwaymen are preparing traction rolling stock for new loads using the latest international developments in the world of railway machine building. 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РЖД-Партнер

Speed Ahead

 The construction of the first high speed rail route in Russia will be implemented according to the scheme of the contract life-cycle; this financial model will be used in the country for the first time. Despite the fact that this project may sound too risky, the largest international companies are going to participate anyway.
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We Have a Plan

High-speed rail projects between Moscow and St Petersburg (HSR-1) are ready for implementation. “The concept of this project was approved in December last year by the Board of Directors of RZD. Financing the scheme was also agreed upon by executive federal bodies. Further socio-economic effects were carefully calculated, and now we know the cost of construction,” High-Speed Rail CEO Denis Muratov said.
A number of major western companies have already announced a desire to take part in this project as contractors. The German Deutsche Bahn, Spanish ADIF, Chinese Railway Engineering Corporation, South Korean Hyundai Construction and French Inexia are in the list. Among the applicants for the construction of rolling stock are Siemens and Alstom. But by the beginning of the tender this list may be increased.
“Six consortiums have already formally tendered for the construction of the HSR-1, - D. Muratov said. -Each participant of the tender has considerable experience. In France, high-speed trains have been operated since 1981. In Asia, HSR is also being developed actively - in just a few years China built as many HSR lines as Europe has. Anyway, if the competition is intensive, we will get the higher quality and lower price of construction”.
The cost of one km of HSR varies because of the terrain - on plains it is minimal, in the mountains it is higher. “The line between Cologne and Frankfurt-am-Main, about 180 km long, built in 1995-2002, cost about €6 billion, i.e. approximately €3,1 million per kilometer. It can be assumed that today’s price has increased by approximately 1.3 – 1.5 times. Another example: construction of 1318 km HSR in China between Beijing and Shanghai cost €26 billion, i.e. approximately €2 million per kilometer,” says Arkady Wolfson, CEO of the consulting company Communication World.
Last May it was decided that 70% of the project will be funded by the government, 30% will be put in by private investors. According to the latest figures, public investment will be 795 billion rubles, private - 329.6 billion rubles. According to D. Muratov, to make private investors be willing to put their money in the construction of the HSR, the state should guarantee them a certain rate of return - 20% compensation investment during construction and 15% – during operation. As payback for the infrastructure provider is based only on profit from ticket sales, the difference between what he should receive each year, what he actually receives from the service, the state should compensate by way of subsidy. Without these minimum guarantees attracting large scale investment is just impossible,” he said.

Consortiums are Ready

What will the line look like? Until the tender process is complete, it is difficult to say. But consortiums that want to participate in this project have already proposed a number of ideas. For example, DB International GmbH is considering applying “non-ballasted track” technology. “At the conference in Sochi, we have been advised during a presentation that its advantages will only be effective when based on the ground research, which in turn requires information as to whether freight trains will run on this track and with what axle load. For example, if this technology is introduced using the estimated figures for passenger traffic but heavy coal transports are then sent across this track 5 years later, it will be difficult to convince the formerly assigned construction companies to cover the expensive repairs on the rail system as part of their warranties. As well as basing the system design on its intended use, a main focus would be the capability of each system to deliver the best possible LCC (life cycle cost) and ensuring that the overall system LCC are optimized. On the design side, this can be achieved with modern 5 dimensional tools including 3D CAD which at the same time includes the fouth dimension of time for each part to be completed and the fifth dimension controlling the cost,” said Martin Kretschmer, the regional director of DB International.
Spanish company Adif is supporting a Spanish consortium, which is made up of prominent Spanish companies, with vast international experience in each of the subsystems included the high speed lines (design and planning, civil engineering and rail equipment, tracks, electrification, signaling and traffic management). These companies, together with ADIF, are part of the consortium Haramain, which has recently won the tender for the construction and operation of the new high speed line between Mecca and Medina in Saudi Arabia.
“Spain offers cutting edge solutions for high speed rail in different areas: civil engineering (large viaducts and tunnels that are global brands in scope and construction efficiency), tracks and railway turnouts, catenary and substations, implementing European Rail Traffic Management System (ERTMS), installation of the DaVinci platform in the Spanish railway system (an integrated railway technological platform that supports and manages the entire railway operation life cycle), and automatic gauge changes, - CEO of ADIF Enrique Puig said. - But we want to emphasize a factor that is very important for us: interoperability. To satisfy strict European standards, our infrastructures are suitable for trains made by all European manufacturers with different characteristics, from trains that could be called pure high speed (our lines are designed for commercial speed of 350 kph), made by Talgo, Alstom, Siemens and the new Oaris CAF, to high speed regional trains (250 kph) or those with gauge change possibility, such as Talgo and CAF. This leads to maintaining a highly competitive market that we understand is also key to the success of Spanish high speed rail, and that we want to offer to our Russian colleagues and friends as a reference of success for their own objectives, to which we are fully committed”.
Rolling stock manufacturers have also shared their ideas. According to the Director of the Siemens departments “Rail Systems” and “Mobility and logistics” Dmitry Macenov, the best solution for HSR-1 are Velaro trains. “The HSR is normally a long distance line, and the equipment in charge of security, installed throughout the line, must be monitored and managed centrally. Reliability also plays an important role: any failure causes the system to go into a safe mode, and it is almost always associated with a significant decrease in speed or even with the full stop of the train. In the case of the HSR, it always leads to departure from the schedule,” he said. Production of high-speed trains can be fully localized in Russia.
“If there is a programme for the development of the HSR in Russia, which involves the construction of new lines, such as Moscow-Yekaterinburg and others, orders from local manufacturers – of 60 trains – might be achieved,” D. Matsenov said.
Another manufacturer Alstom claimed that transportation is not limited to the flow of passengers. “It’s about making the entire process, from understanding customer needs to building and maintenance solutions, run smoothly and efficiently. For that matter we apply Alstom’s principle of fluidity, creating systems that benefit everyone they serve: public authorities, transport operators and individual passengers. Any very high speed line project is very complex and should be considered as an integrated system, because a proper interface between rolling stock, tracks, catenaries and the signaling system is absolutely crucial, as was proved by last year’s accident in China when a high-speed train derailed after being hit by another express,” Vice President of Alstom Transport Bernard Gonnet said.
If the company wins the tender, it is going to suggest AGV trains for Russia. “The safety would be accompanied by availability and maintainability. With regards to passenger comfort, its on-board technology is designed to satisfy all types of travelers, with spacious interior compartments, wide gangways, large windows, a smooth ride and lower levels of interior noise, as well as multimedia amenities. The trains will have to be adapted to operating at low temperatures, which is no issue for Alstom - we already did that for the locomotives EP20 and 2ES5, which are being manufactured for RZD – this rolling stock is fit for the temperatures between +40 and -40 degrees Centigrade,” Bernard Gonnet said.

Without Risk

However, regardless of the solutions that the company offers, the winners will end up waiting for another innovation. As has already been noted, HSR-1 promises to be the first project implemented using the process of the contract lifecycle. “This financial model is used extensively in many countries during the construction of the HSR. It has already proved its effectiveness, - said D. Muratov. -The proposed investment mechanism carries obvious benefits both for the government, which eliminates technological and project risks and for the contractor, who receives a guaranteed volume of works and a guaranteed rate of return, and, of course, for society”.
For Russia, the life-cycle contract is a completely new innovation. The design, construction and operation of an infrastructure facility was usually carried out by different companies.
According to the life-cycle contract process all these functions will be provided by one company. “And it will be done to the highest standards because the company will receive money from the government only in the case of really good work. Thus, the contractor will have motivation to create a high quality of service,” D. Muratov said.
The tender will be announced soon – earlier it was reported that it should be started no later than 1st September this year, there is very little time left and the remaining issues must be addressed as soon as possible.
Meanwhile, the construction of the HSR-2 is currently being discussed - it would be a new line Moscow – Vladimir –
Nizhny Novgorod – Kazan – Yekaterinburg. In addition, as experts say, Moscow – Minsk and Moscow – Kiev are also promising directions. ®
By Christina Alexandrova [~DETAIL_TEXT] =>

We Have a Plan

High-speed rail projects between Moscow and St Petersburg (HSR-1) are ready for implementation. “The concept of this project was approved in December last year by the Board of Directors of RZD. Financing the scheme was also agreed upon by executive federal bodies. Further socio-economic effects were carefully calculated, and now we know the cost of construction,” High-Speed Rail CEO Denis Muratov said.
A number of major western companies have already announced a desire to take part in this project as contractors. The German Deutsche Bahn, Spanish ADIF, Chinese Railway Engineering Corporation, South Korean Hyundai Construction and French Inexia are in the list. Among the applicants for the construction of rolling stock are Siemens and Alstom. But by the beginning of the tender this list may be increased.
“Six consortiums have already formally tendered for the construction of the HSR-1, - D. Muratov said. -Each participant of the tender has considerable experience. In France, high-speed trains have been operated since 1981. In Asia, HSR is also being developed actively - in just a few years China built as many HSR lines as Europe has. Anyway, if the competition is intensive, we will get the higher quality and lower price of construction”.
The cost of one km of HSR varies because of the terrain - on plains it is minimal, in the mountains it is higher. “The line between Cologne and Frankfurt-am-Main, about 180 km long, built in 1995-2002, cost about €6 billion, i.e. approximately €3,1 million per kilometer. It can be assumed that today’s price has increased by approximately 1.3 – 1.5 times. Another example: construction of 1318 km HSR in China between Beijing and Shanghai cost €26 billion, i.e. approximately €2 million per kilometer,” says Arkady Wolfson, CEO of the consulting company Communication World.
Last May it was decided that 70% of the project will be funded by the government, 30% will be put in by private investors. According to the latest figures, public investment will be 795 billion rubles, private - 329.6 billion rubles. According to D. Muratov, to make private investors be willing to put their money in the construction of the HSR, the state should guarantee them a certain rate of return - 20% compensation investment during construction and 15% – during operation. As payback for the infrastructure provider is based only on profit from ticket sales, the difference between what he should receive each year, what he actually receives from the service, the state should compensate by way of subsidy. Without these minimum guarantees attracting large scale investment is just impossible,” he said.

Consortiums are Ready

What will the line look like? Until the tender process is complete, it is difficult to say. But consortiums that want to participate in this project have already proposed a number of ideas. For example, DB International GmbH is considering applying “non-ballasted track” technology. “At the conference in Sochi, we have been advised during a presentation that its advantages will only be effective when based on the ground research, which in turn requires information as to whether freight trains will run on this track and with what axle load. For example, if this technology is introduced using the estimated figures for passenger traffic but heavy coal transports are then sent across this track 5 years later, it will be difficult to convince the formerly assigned construction companies to cover the expensive repairs on the rail system as part of their warranties. As well as basing the system design on its intended use, a main focus would be the capability of each system to deliver the best possible LCC (life cycle cost) and ensuring that the overall system LCC are optimized. On the design side, this can be achieved with modern 5 dimensional tools including 3D CAD which at the same time includes the fouth dimension of time for each part to be completed and the fifth dimension controlling the cost,” said Martin Kretschmer, the regional director of DB International.
Spanish company Adif is supporting a Spanish consortium, which is made up of prominent Spanish companies, with vast international experience in each of the subsystems included the high speed lines (design and planning, civil engineering and rail equipment, tracks, electrification, signaling and traffic management). These companies, together with ADIF, are part of the consortium Haramain, which has recently won the tender for the construction and operation of the new high speed line between Mecca and Medina in Saudi Arabia.
“Spain offers cutting edge solutions for high speed rail in different areas: civil engineering (large viaducts and tunnels that are global brands in scope and construction efficiency), tracks and railway turnouts, catenary and substations, implementing European Rail Traffic Management System (ERTMS), installation of the DaVinci platform in the Spanish railway system (an integrated railway technological platform that supports and manages the entire railway operation life cycle), and automatic gauge changes, - CEO of ADIF Enrique Puig said. - But we want to emphasize a factor that is very important for us: interoperability. To satisfy strict European standards, our infrastructures are suitable for trains made by all European manufacturers with different characteristics, from trains that could be called pure high speed (our lines are designed for commercial speed of 350 kph), made by Talgo, Alstom, Siemens and the new Oaris CAF, to high speed regional trains (250 kph) or those with gauge change possibility, such as Talgo and CAF. This leads to maintaining a highly competitive market that we understand is also key to the success of Spanish high speed rail, and that we want to offer to our Russian colleagues and friends as a reference of success for their own objectives, to which we are fully committed”.
Rolling stock manufacturers have also shared their ideas. According to the Director of the Siemens departments “Rail Systems” and “Mobility and logistics” Dmitry Macenov, the best solution for HSR-1 are Velaro trains. “The HSR is normally a long distance line, and the equipment in charge of security, installed throughout the line, must be monitored and managed centrally. Reliability also plays an important role: any failure causes the system to go into a safe mode, and it is almost always associated with a significant decrease in speed or even with the full stop of the train. In the case of the HSR, it always leads to departure from the schedule,” he said. Production of high-speed trains can be fully localized in Russia.
“If there is a programme for the development of the HSR in Russia, which involves the construction of new lines, such as Moscow-Yekaterinburg and others, orders from local manufacturers – of 60 trains – might be achieved,” D. Matsenov said.
Another manufacturer Alstom claimed that transportation is not limited to the flow of passengers. “It’s about making the entire process, from understanding customer needs to building and maintenance solutions, run smoothly and efficiently. For that matter we apply Alstom’s principle of fluidity, creating systems that benefit everyone they serve: public authorities, transport operators and individual passengers. Any very high speed line project is very complex and should be considered as an integrated system, because a proper interface between rolling stock, tracks, catenaries and the signaling system is absolutely crucial, as was proved by last year’s accident in China when a high-speed train derailed after being hit by another express,” Vice President of Alstom Transport Bernard Gonnet said.
If the company wins the tender, it is going to suggest AGV trains for Russia. “The safety would be accompanied by availability and maintainability. With regards to passenger comfort, its on-board technology is designed to satisfy all types of travelers, with spacious interior compartments, wide gangways, large windows, a smooth ride and lower levels of interior noise, as well as multimedia amenities. The trains will have to be adapted to operating at low temperatures, which is no issue for Alstom - we already did that for the locomotives EP20 and 2ES5, which are being manufactured for RZD – this rolling stock is fit for the temperatures between +40 and -40 degrees Centigrade,” Bernard Gonnet said.

Without Risk

However, regardless of the solutions that the company offers, the winners will end up waiting for another innovation. As has already been noted, HSR-1 promises to be the first project implemented using the process of the contract lifecycle. “This financial model is used extensively in many countries during the construction of the HSR. It has already proved its effectiveness, - said D. Muratov. -The proposed investment mechanism carries obvious benefits both for the government, which eliminates technological and project risks and for the contractor, who receives a guaranteed volume of works and a guaranteed rate of return, and, of course, for society”.
For Russia, the life-cycle contract is a completely new innovation. The design, construction and operation of an infrastructure facility was usually carried out by different companies.
According to the life-cycle contract process all these functions will be provided by one company. “And it will be done to the highest standards because the company will receive money from the government only in the case of really good work. Thus, the contractor will have motivation to create a high quality of service,” D. Muratov said.
The tender will be announced soon – earlier it was reported that it should be started no later than 1st September this year, there is very little time left and the remaining issues must be addressed as soon as possible.
Meanwhile, the construction of the HSR-2 is currently being discussed - it would be a new line Moscow – Vladimir –
Nizhny Novgorod – Kazan – Yekaterinburg. In addition, as experts say, Moscow – Minsk and Moscow – Kiev are also promising directions. ®
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We Have a Plan

High-speed rail projects between Moscow and St Petersburg (HSR-1) are ready for implementation. “The concept of this project was approved in December last year by the Board of Directors of RZD. Financing the scheme was also agreed upon by executive federal bodies. Further socio-economic effects were carefully calculated, and now we know the cost of construction,” High-Speed Rail CEO Denis Muratov said.
A number of major western companies have already announced a desire to take part in this project as contractors. The German Deutsche Bahn, Spanish ADIF, Chinese Railway Engineering Corporation, South Korean Hyundai Construction and French Inexia are in the list. Among the applicants for the construction of rolling stock are Siemens and Alstom. But by the beginning of the tender this list may be increased.
“Six consortiums have already formally tendered for the construction of the HSR-1, - D. Muratov said. -Each participant of the tender has considerable experience. In France, high-speed trains have been operated since 1981. In Asia, HSR is also being developed actively - in just a few years China built as many HSR lines as Europe has. Anyway, if the competition is intensive, we will get the higher quality and lower price of construction”.
The cost of one km of HSR varies because of the terrain - on plains it is minimal, in the mountains it is higher. “The line between Cologne and Frankfurt-am-Main, about 180 km long, built in 1995-2002, cost about €6 billion, i.e. approximately €3,1 million per kilometer. It can be assumed that today’s price has increased by approximately 1.3 – 1.5 times. Another example: construction of 1318 km HSR in China between Beijing and Shanghai cost €26 billion, i.e. approximately €2 million per kilometer,” says Arkady Wolfson, CEO of the consulting company Communication World.
Last May it was decided that 70% of the project will be funded by the government, 30% will be put in by private investors. According to the latest figures, public investment will be 795 billion rubles, private - 329.6 billion rubles. According to D. Muratov, to make private investors be willing to put their money in the construction of the HSR, the state should guarantee them a certain rate of return - 20% compensation investment during construction and 15% – during operation. As payback for the infrastructure provider is based only on profit from ticket sales, the difference between what he should receive each year, what he actually receives from the service, the state should compensate by way of subsidy. Without these minimum guarantees attracting large scale investment is just impossible,” he said.

Consortiums are Ready

What will the line look like? Until the tender process is complete, it is difficult to say. But consortiums that want to participate in this project have already proposed a number of ideas. For example, DB International GmbH is considering applying “non-ballasted track” technology. “At the conference in Sochi, we have been advised during a presentation that its advantages will only be effective when based on the ground research, which in turn requires information as to whether freight trains will run on this track and with what axle load. For example, if this technology is introduced using the estimated figures for passenger traffic but heavy coal transports are then sent across this track 5 years later, it will be difficult to convince the formerly assigned construction companies to cover the expensive repairs on the rail system as part of their warranties. As well as basing the system design on its intended use, a main focus would be the capability of each system to deliver the best possible LCC (life cycle cost) and ensuring that the overall system LCC are optimized. On the design side, this can be achieved with modern 5 dimensional tools including 3D CAD which at the same time includes the fouth dimension of time for each part to be completed and the fifth dimension controlling the cost,” said Martin Kretschmer, the regional director of DB International.
Spanish company Adif is supporting a Spanish consortium, which is made up of prominent Spanish companies, with vast international experience in each of the subsystems included the high speed lines (design and planning, civil engineering and rail equipment, tracks, electrification, signaling and traffic management). These companies, together with ADIF, are part of the consortium Haramain, which has recently won the tender for the construction and operation of the new high speed line between Mecca and Medina in Saudi Arabia.
“Spain offers cutting edge solutions for high speed rail in different areas: civil engineering (large viaducts and tunnels that are global brands in scope and construction efficiency), tracks and railway turnouts, catenary and substations, implementing European Rail Traffic Management System (ERTMS), installation of the DaVinci platform in the Spanish railway system (an integrated railway technological platform that supports and manages the entire railway operation life cycle), and automatic gauge changes, - CEO of ADIF Enrique Puig said. - But we want to emphasize a factor that is very important for us: interoperability. To satisfy strict European standards, our infrastructures are suitable for trains made by all European manufacturers with different characteristics, from trains that could be called pure high speed (our lines are designed for commercial speed of 350 kph), made by Talgo, Alstom, Siemens and the new Oaris CAF, to high speed regional trains (250 kph) or those with gauge change possibility, such as Talgo and CAF. This leads to maintaining a highly competitive market that we understand is also key to the success of Spanish high speed rail, and that we want to offer to our Russian colleagues and friends as a reference of success for their own objectives, to which we are fully committed”.
Rolling stock manufacturers have also shared their ideas. According to the Director of the Siemens departments “Rail Systems” and “Mobility and logistics” Dmitry Macenov, the best solution for HSR-1 are Velaro trains. “The HSR is normally a long distance line, and the equipment in charge of security, installed throughout the line, must be monitored and managed centrally. Reliability also plays an important role: any failure causes the system to go into a safe mode, and it is almost always associated with a significant decrease in speed or even with the full stop of the train. In the case of the HSR, it always leads to departure from the schedule,” he said. Production of high-speed trains can be fully localized in Russia.
“If there is a programme for the development of the HSR in Russia, which involves the construction of new lines, such as Moscow-Yekaterinburg and others, orders from local manufacturers – of 60 trains – might be achieved,” D. Matsenov said.
Another manufacturer Alstom claimed that transportation is not limited to the flow of passengers. “It’s about making the entire process, from understanding customer needs to building and maintenance solutions, run smoothly and efficiently. For that matter we apply Alstom’s principle of fluidity, creating systems that benefit everyone they serve: public authorities, transport operators and individual passengers. Any very high speed line project is very complex and should be considered as an integrated system, because a proper interface between rolling stock, tracks, catenaries and the signaling system is absolutely crucial, as was proved by last year’s accident in China when a high-speed train derailed after being hit by another express,” Vice President of Alstom Transport Bernard Gonnet said.
If the company wins the tender, it is going to suggest AGV trains for Russia. “The safety would be accompanied by availability and maintainability. With regards to passenger comfort, its on-board technology is designed to satisfy all types of travelers, with spacious interior compartments, wide gangways, large windows, a smooth ride and lower levels of interior noise, as well as multimedia amenities. The trains will have to be adapted to operating at low temperatures, which is no issue for Alstom - we already did that for the locomotives EP20 and 2ES5, which are being manufactured for RZD – this rolling stock is fit for the temperatures between +40 and -40 degrees Centigrade,” Bernard Gonnet said.

Without Risk

However, regardless of the solutions that the company offers, the winners will end up waiting for another innovation. As has already been noted, HSR-1 promises to be the first project implemented using the process of the contract lifecycle. “This financial model is used extensively in many countries during the construction of the HSR. It has already proved its effectiveness, - said D. Muratov. -The proposed investment mechanism carries obvious benefits both for the government, which eliminates technological and project risks and for the contractor, who receives a guaranteed volume of works and a guaranteed rate of return, and, of course, for society”.
For Russia, the life-cycle contract is a completely new innovation. The design, construction and operation of an infrastructure facility was usually carried out by different companies.
According to the life-cycle contract process all these functions will be provided by one company. “And it will be done to the highest standards because the company will receive money from the government only in the case of really good work. Thus, the contractor will have motivation to create a high quality of service,” D. Muratov said.
The tender will be announced soon – earlier it was reported that it should be started no later than 1st September this year, there is very little time left and the remaining issues must be addressed as soon as possible.
Meanwhile, the construction of the HSR-2 is currently being discussed - it would be a new line Moscow – Vladimir –
Nizhny Novgorod – Kazan – Yekaterinburg. In addition, as experts say, Moscow – Minsk and Moscow – Kiev are also promising directions. ®
By Christina Alexandrova [~DETAIL_TEXT] =>

We Have a Plan

High-speed rail projects between Moscow and St Petersburg (HSR-1) are ready for implementation. “The concept of this project was approved in December last year by the Board of Directors of RZD. Financing the scheme was also agreed upon by executive federal bodies. Further socio-economic effects were carefully calculated, and now we know the cost of construction,” High-Speed Rail CEO Denis Muratov said.
A number of major western companies have already announced a desire to take part in this project as contractors. The German Deutsche Bahn, Spanish ADIF, Chinese Railway Engineering Corporation, South Korean Hyundai Construction and French Inexia are in the list. Among the applicants for the construction of rolling stock are Siemens and Alstom. But by the beginning of the tender this list may be increased.
“Six consortiums have already formally tendered for the construction of the HSR-1, - D. Muratov said. -Each participant of the tender has considerable experience. In France, high-speed trains have been operated since 1981. In Asia, HSR is also being developed actively - in just a few years China built as many HSR lines as Europe has. Anyway, if the competition is intensive, we will get the higher quality and lower price of construction”.
The cost of one km of HSR varies because of the terrain - on plains it is minimal, in the mountains it is higher. “The line between Cologne and Frankfurt-am-Main, about 180 km long, built in 1995-2002, cost about €6 billion, i.e. approximately €3,1 million per kilometer. It can be assumed that today’s price has increased by approximately 1.3 – 1.5 times. Another example: construction of 1318 km HSR in China between Beijing and Shanghai cost €26 billion, i.e. approximately €2 million per kilometer,” says Arkady Wolfson, CEO of the consulting company Communication World.
Last May it was decided that 70% of the project will be funded by the government, 30% will be put in by private investors. According to the latest figures, public investment will be 795 billion rubles, private - 329.6 billion rubles. According to D. Muratov, to make private investors be willing to put their money in the construction of the HSR, the state should guarantee them a certain rate of return - 20% compensation investment during construction and 15% – during operation. As payback for the infrastructure provider is based only on profit from ticket sales, the difference between what he should receive each year, what he actually receives from the service, the state should compensate by way of subsidy. Without these minimum guarantees attracting large scale investment is just impossible,” he said.

Consortiums are Ready

What will the line look like? Until the tender process is complete, it is difficult to say. But consortiums that want to participate in this project have already proposed a number of ideas. For example, DB International GmbH is considering applying “non-ballasted track” technology. “At the conference in Sochi, we have been advised during a presentation that its advantages will only be effective when based on the ground research, which in turn requires information as to whether freight trains will run on this track and with what axle load. For example, if this technology is introduced using the estimated figures for passenger traffic but heavy coal transports are then sent across this track 5 years later, it will be difficult to convince the formerly assigned construction companies to cover the expensive repairs on the rail system as part of their warranties. As well as basing the system design on its intended use, a main focus would be the capability of each system to deliver the best possible LCC (life cycle cost) and ensuring that the overall system LCC are optimized. On the design side, this can be achieved with modern 5 dimensional tools including 3D CAD which at the same time includes the fouth dimension of time for each part to be completed and the fifth dimension controlling the cost,” said Martin Kretschmer, the regional director of DB International.
Spanish company Adif is supporting a Spanish consortium, which is made up of prominent Spanish companies, with vast international experience in each of the subsystems included the high speed lines (design and planning, civil engineering and rail equipment, tracks, electrification, signaling and traffic management). These companies, together with ADIF, are part of the consortium Haramain, which has recently won the tender for the construction and operation of the new high speed line between Mecca and Medina in Saudi Arabia.
“Spain offers cutting edge solutions for high speed rail in different areas: civil engineering (large viaducts and tunnels that are global brands in scope and construction efficiency), tracks and railway turnouts, catenary and substations, implementing European Rail Traffic Management System (ERTMS), installation of the DaVinci platform in the Spanish railway system (an integrated railway technological platform that supports and manages the entire railway operation life cycle), and automatic gauge changes, - CEO of ADIF Enrique Puig said. - But we want to emphasize a factor that is very important for us: interoperability. To satisfy strict European standards, our infrastructures are suitable for trains made by all European manufacturers with different characteristics, from trains that could be called pure high speed (our lines are designed for commercial speed of 350 kph), made by Talgo, Alstom, Siemens and the new Oaris CAF, to high speed regional trains (250 kph) or those with gauge change possibility, such as Talgo and CAF. This leads to maintaining a highly competitive market that we understand is also key to the success of Spanish high speed rail, and that we want to offer to our Russian colleagues and friends as a reference of success for their own objectives, to which we are fully committed”.
Rolling stock manufacturers have also shared their ideas. According to the Director of the Siemens departments “Rail Systems” and “Mobility and logistics” Dmitry Macenov, the best solution for HSR-1 are Velaro trains. “The HSR is normally a long distance line, and the equipment in charge of security, installed throughout the line, must be monitored and managed centrally. Reliability also plays an important role: any failure causes the system to go into a safe mode, and it is almost always associated with a significant decrease in speed or even with the full stop of the train. In the case of the HSR, it always leads to departure from the schedule,” he said. Production of high-speed trains can be fully localized in Russia.
“If there is a programme for the development of the HSR in Russia, which involves the construction of new lines, such as Moscow-Yekaterinburg and others, orders from local manufacturers – of 60 trains – might be achieved,” D. Matsenov said.
Another manufacturer Alstom claimed that transportation is not limited to the flow of passengers. “It’s about making the entire process, from understanding customer needs to building and maintenance solutions, run smoothly and efficiently. For that matter we apply Alstom’s principle of fluidity, creating systems that benefit everyone they serve: public authorities, transport operators and individual passengers. Any very high speed line project is very complex and should be considered as an integrated system, because a proper interface between rolling stock, tracks, catenaries and the signaling system is absolutely crucial, as was proved by last year’s accident in China when a high-speed train derailed after being hit by another express,” Vice President of Alstom Transport Bernard Gonnet said.
If the company wins the tender, it is going to suggest AGV trains for Russia. “The safety would be accompanied by availability and maintainability. With regards to passenger comfort, its on-board technology is designed to satisfy all types of travelers, with spacious interior compartments, wide gangways, large windows, a smooth ride and lower levels of interior noise, as well as multimedia amenities. The trains will have to be adapted to operating at low temperatures, which is no issue for Alstom - we already did that for the locomotives EP20 and 2ES5, which are being manufactured for RZD – this rolling stock is fit for the temperatures between +40 and -40 degrees Centigrade,” Bernard Gonnet said.

Without Risk

However, regardless of the solutions that the company offers, the winners will end up waiting for another innovation. As has already been noted, HSR-1 promises to be the first project implemented using the process of the contract lifecycle. “This financial model is used extensively in many countries during the construction of the HSR. It has already proved its effectiveness, - said D. Muratov. -The proposed investment mechanism carries obvious benefits both for the government, which eliminates technological and project risks and for the contractor, who receives a guaranteed volume of works and a guaranteed rate of return, and, of course, for society”.
For Russia, the life-cycle contract is a completely new innovation. The design, construction and operation of an infrastructure facility was usually carried out by different companies.
According to the life-cycle contract process all these functions will be provided by one company. “And it will be done to the highest standards because the company will receive money from the government only in the case of really good work. Thus, the contractor will have motivation to create a high quality of service,” D. Muratov said.
The tender will be announced soon – earlier it was reported that it should be started no later than 1st September this year, there is very little time left and the remaining issues must be addressed as soon as possible.
Meanwhile, the construction of the HSR-2 is currently being discussed - it would be a new line Moscow – Vladimir –
Nizhny Novgorod – Kazan – Yekaterinburg. In addition, as experts say, Moscow – Minsk and Moscow – Kiev are also promising directions. ®
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РЖД-Партнер

Panorama. Economics

To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia. That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi.
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Construction of Railway Line Košice - Bratislava - Vienna Will Strengthen Economic Ties between EU, CIS and Asia

To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia.
That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi.
The participants in the “Uniting Eurasia” strategic dialogue noted that the European Union devotes considerable attention to enhancing cooperation with neighbouring countries in the transport field and supports measures to switch freight to rail. One way of attracting new freight could be to realise the transit potential of the 1520 mm broad gauge system, which forms a natural land bridge between Europe and Asia.
“The most ambitious plan to develop rail infrastructure is the broad gauge project to Vienna,” said Christian Kern, CEO of ÖBB-Holding AG. This project involves the construction of a new railway line between Košice, Bratislava and Vienna with a total of length of 390-430 km, depending on the final route chosen. Investment in the project is estimated at 6 billion euros, excluding the construction costs for the terminals and related logistics infrastructure and the cost of modernising the rail systems of the countries taking part in the project.
The participants in the strategic dialogue noted that when implemented, the project will form a single stable transport corridor with a total length of 10,000 km which will provide a highly efficient method of shipping freight between Europe and Asia and which will lead to an increase in global economic activity.

Cargo Flow on the Belkomur Railway to Reach 35 Million Tons per Annum

The cargo flow at the Belkomur railway, which will connect the Komi, Arkhangelsk, and Perm regions, is estimated at 35 million tons per annum, according to Elman Khudazarov, CEO of Interregional Company Belkomur OJSC.
The complex programme of industrial and infrastructure developments by the authorities in the Komi, Arkhangelsk, and Perm regions “Belkomur” envisages construction of a 1,155 km long railway mainline. Of that, 715 km will be new sections, and the rest of the railway will be reconstructed and strengthened. The project will help to reduce the distance of cargo transportation in the region by up to 800 km (between the Ural region to ports).
According to Mr Khudazarov, the working group, chaired by Valery Reshetnikov, Senior Vice President of RZD, had a conference in Moscow in July. Representatives of the three regions of Russia also took part in it.
“We approved one of the key parameters of the project – the potential freight base of companies, which will use the mainline. The volume of cargo flow is estimated at 35 million tons,” noted Mr Khudazarov.
He said that the working group also discussed the issue of the official involvement of RZD in the project. In particular, they decided that existing railway sections (including the Vendinga – Mikun and the Mikun – Yazen sections) should be involved in the “Belkomur” project.
The concept of implementation, tariffs formation and interaction of the participants of the “Belkomur” project is being developed now. In September, the draft concept will be submitted to the RF Transport Ministry.
“Realisation of “Belkomur” and “Salekhard – Nadym” projects, development of the Murmansk transport node together with projects of strengthening RZD’s lines will help to form a qualitatively new transport system in the northwest of Russia. It will provide long-term development due to formation of the Northern Latitudinal Railway, international transit corridors, and the Northern Sea Route,” said Alexander Burov, Deputy Head of the Komi Republic.

NOVATEK Starts Construction of Sabetta Port

NOVATEK OJSC held an official ceremony on July 20, 2012, to mark the start of construction at the Sabetta port and laid a commemorative capsule into its foundation. The Sabetta port will be located on the North-East of the Yamal Peninsula in the Yamal-Nenets Autonomous Region.
The Sabetta port will serve as a key element of the transport infrastructure for the Yamal LNG project, which includes the design and construction of an onshore, integrated LNG facility with the feedstock for the Yamal LNG facility based on the resources of the Company’s South-Tambeyskoye field. Construction of the Sabetta port facilities will create the foundation for the development of hydrocarbon fields located in the Yamal Peninsula and the Gulf of Ob. Additionally it will provide year-round navigation along the Northern Sea Route and contribute to the development of Russia’s icebreaker fleet.
The Yamal LNG Project is included in the Comprehensive Plan for the development of liquefied natural gas production on the Yamal Peninsula approved by the Russian Government. Construction of the port facility near the village of Sabetta is an integral part of the Comprehensive Plan and will be implemented in two phases. The first phase will include the construction of piers for receiving large LNG plant process modules and construction materials. The first modules are expected to arrive in July 2014, with loading for LNG and gas condensate to be built during the second phase. [~DETAIL_TEXT] =>

Construction of Railway Line Košice - Bratislava - Vienna Will Strengthen Economic Ties between EU, CIS and Asia

To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia.
That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi.
The participants in the “Uniting Eurasia” strategic dialogue noted that the European Union devotes considerable attention to enhancing cooperation with neighbouring countries in the transport field and supports measures to switch freight to rail. One way of attracting new freight could be to realise the transit potential of the 1520 mm broad gauge system, which forms a natural land bridge between Europe and Asia.
“The most ambitious plan to develop rail infrastructure is the broad gauge project to Vienna,” said Christian Kern, CEO of ÖBB-Holding AG. This project involves the construction of a new railway line between Košice, Bratislava and Vienna with a total of length of 390-430 km, depending on the final route chosen. Investment in the project is estimated at 6 billion euros, excluding the construction costs for the terminals and related logistics infrastructure and the cost of modernising the rail systems of the countries taking part in the project.
The participants in the strategic dialogue noted that when implemented, the project will form a single stable transport corridor with a total length of 10,000 km which will provide a highly efficient method of shipping freight between Europe and Asia and which will lead to an increase in global economic activity.

Cargo Flow on the Belkomur Railway to Reach 35 Million Tons per Annum

The cargo flow at the Belkomur railway, which will connect the Komi, Arkhangelsk, and Perm regions, is estimated at 35 million tons per annum, according to Elman Khudazarov, CEO of Interregional Company Belkomur OJSC.
The complex programme of industrial and infrastructure developments by the authorities in the Komi, Arkhangelsk, and Perm regions “Belkomur” envisages construction of a 1,155 km long railway mainline. Of that, 715 km will be new sections, and the rest of the railway will be reconstructed and strengthened. The project will help to reduce the distance of cargo transportation in the region by up to 800 km (between the Ural region to ports).
According to Mr Khudazarov, the working group, chaired by Valery Reshetnikov, Senior Vice President of RZD, had a conference in Moscow in July. Representatives of the three regions of Russia also took part in it.
“We approved one of the key parameters of the project – the potential freight base of companies, which will use the mainline. The volume of cargo flow is estimated at 35 million tons,” noted Mr Khudazarov.
He said that the working group also discussed the issue of the official involvement of RZD in the project. In particular, they decided that existing railway sections (including the Vendinga – Mikun and the Mikun – Yazen sections) should be involved in the “Belkomur” project.
The concept of implementation, tariffs formation and interaction of the participants of the “Belkomur” project is being developed now. In September, the draft concept will be submitted to the RF Transport Ministry.
“Realisation of “Belkomur” and “Salekhard – Nadym” projects, development of the Murmansk transport node together with projects of strengthening RZD’s lines will help to form a qualitatively new transport system in the northwest of Russia. It will provide long-term development due to formation of the Northern Latitudinal Railway, international transit corridors, and the Northern Sea Route,” said Alexander Burov, Deputy Head of the Komi Republic.

NOVATEK Starts Construction of Sabetta Port

NOVATEK OJSC held an official ceremony on July 20, 2012, to mark the start of construction at the Sabetta port and laid a commemorative capsule into its foundation. The Sabetta port will be located on the North-East of the Yamal Peninsula in the Yamal-Nenets Autonomous Region.
The Sabetta port will serve as a key element of the transport infrastructure for the Yamal LNG project, which includes the design and construction of an onshore, integrated LNG facility with the feedstock for the Yamal LNG facility based on the resources of the Company’s South-Tambeyskoye field. Construction of the Sabetta port facilities will create the foundation for the development of hydrocarbon fields located in the Yamal Peninsula and the Gulf of Ob. Additionally it will provide year-round navigation along the Northern Sea Route and contribute to the development of Russia’s icebreaker fleet.
The Yamal LNG Project is included in the Comprehensive Plan for the development of liquefied natural gas production on the Yamal Peninsula approved by the Russian Government. Construction of the port facility near the village of Sabetta is an integral part of the Comprehensive Plan and will be implemented in two phases. The first phase will include the construction of piers for receiving large LNG plant process modules and construction materials. The first modules are expected to arrive in July 2014, with loading for LNG and gas condensate to be built during the second phase. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia. That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi. [~PREVIEW_TEXT] => To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia. That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi. 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Construction of Railway Line Košice - Bratislava - Vienna Will Strengthen Economic Ties between EU, CIS and Asia

To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia.
That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi.
The participants in the “Uniting Eurasia” strategic dialogue noted that the European Union devotes considerable attention to enhancing cooperation with neighbouring countries in the transport field and supports measures to switch freight to rail. One way of attracting new freight could be to realise the transit potential of the 1520 mm broad gauge system, which forms a natural land bridge between Europe and Asia.
“The most ambitious plan to develop rail infrastructure is the broad gauge project to Vienna,” said Christian Kern, CEO of ÖBB-Holding AG. This project involves the construction of a new railway line between Košice, Bratislava and Vienna with a total of length of 390-430 km, depending on the final route chosen. Investment in the project is estimated at 6 billion euros, excluding the construction costs for the terminals and related logistics infrastructure and the cost of modernising the rail systems of the countries taking part in the project.
The participants in the strategic dialogue noted that when implemented, the project will form a single stable transport corridor with a total length of 10,000 km which will provide a highly efficient method of shipping freight between Europe and Asia and which will lead to an increase in global economic activity.

Cargo Flow on the Belkomur Railway to Reach 35 Million Tons per Annum

The cargo flow at the Belkomur railway, which will connect the Komi, Arkhangelsk, and Perm regions, is estimated at 35 million tons per annum, according to Elman Khudazarov, CEO of Interregional Company Belkomur OJSC.
The complex programme of industrial and infrastructure developments by the authorities in the Komi, Arkhangelsk, and Perm regions “Belkomur” envisages construction of a 1,155 km long railway mainline. Of that, 715 km will be new sections, and the rest of the railway will be reconstructed and strengthened. The project will help to reduce the distance of cargo transportation in the region by up to 800 km (between the Ural region to ports).
According to Mr Khudazarov, the working group, chaired by Valery Reshetnikov, Senior Vice President of RZD, had a conference in Moscow in July. Representatives of the three regions of Russia also took part in it.
“We approved one of the key parameters of the project – the potential freight base of companies, which will use the mainline. The volume of cargo flow is estimated at 35 million tons,” noted Mr Khudazarov.
He said that the working group also discussed the issue of the official involvement of RZD in the project. In particular, they decided that existing railway sections (including the Vendinga – Mikun and the Mikun – Yazen sections) should be involved in the “Belkomur” project.
The concept of implementation, tariffs formation and interaction of the participants of the “Belkomur” project is being developed now. In September, the draft concept will be submitted to the RF Transport Ministry.
“Realisation of “Belkomur” and “Salekhard – Nadym” projects, development of the Murmansk transport node together with projects of strengthening RZD’s lines will help to form a qualitatively new transport system in the northwest of Russia. It will provide long-term development due to formation of the Northern Latitudinal Railway, international transit corridors, and the Northern Sea Route,” said Alexander Burov, Deputy Head of the Komi Republic.

NOVATEK Starts Construction of Sabetta Port

NOVATEK OJSC held an official ceremony on July 20, 2012, to mark the start of construction at the Sabetta port and laid a commemorative capsule into its foundation. The Sabetta port will be located on the North-East of the Yamal Peninsula in the Yamal-Nenets Autonomous Region.
The Sabetta port will serve as a key element of the transport infrastructure for the Yamal LNG project, which includes the design and construction of an onshore, integrated LNG facility with the feedstock for the Yamal LNG facility based on the resources of the Company’s South-Tambeyskoye field. Construction of the Sabetta port facilities will create the foundation for the development of hydrocarbon fields located in the Yamal Peninsula and the Gulf of Ob. Additionally it will provide year-round navigation along the Northern Sea Route and contribute to the development of Russia’s icebreaker fleet.
The Yamal LNG Project is included in the Comprehensive Plan for the development of liquefied natural gas production on the Yamal Peninsula approved by the Russian Government. Construction of the port facility near the village of Sabetta is an integral part of the Comprehensive Plan and will be implemented in two phases. The first phase will include the construction of piers for receiving large LNG plant process modules and construction materials. The first modules are expected to arrive in July 2014, with loading for LNG and gas condensate to be built during the second phase. [~DETAIL_TEXT] =>

Construction of Railway Line Košice - Bratislava - Vienna Will Strengthen Economic Ties between EU, CIS and Asia

To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia.
That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi.
The participants in the “Uniting Eurasia” strategic dialogue noted that the European Union devotes considerable attention to enhancing cooperation with neighbouring countries in the transport field and supports measures to switch freight to rail. One way of attracting new freight could be to realise the transit potential of the 1520 mm broad gauge system, which forms a natural land bridge between Europe and Asia.
“The most ambitious plan to develop rail infrastructure is the broad gauge project to Vienna,” said Christian Kern, CEO of ÖBB-Holding AG. This project involves the construction of a new railway line between Košice, Bratislava and Vienna with a total of length of 390-430 km, depending on the final route chosen. Investment in the project is estimated at 6 billion euros, excluding the construction costs for the terminals and related logistics infrastructure and the cost of modernising the rail systems of the countries taking part in the project.
The participants in the strategic dialogue noted that when implemented, the project will form a single stable transport corridor with a total length of 10,000 km which will provide a highly efficient method of shipping freight between Europe and Asia and which will lead to an increase in global economic activity.

Cargo Flow on the Belkomur Railway to Reach 35 Million Tons per Annum

The cargo flow at the Belkomur railway, which will connect the Komi, Arkhangelsk, and Perm regions, is estimated at 35 million tons per annum, according to Elman Khudazarov, CEO of Interregional Company Belkomur OJSC.
The complex programme of industrial and infrastructure developments by the authorities in the Komi, Arkhangelsk, and Perm regions “Belkomur” envisages construction of a 1,155 km long railway mainline. Of that, 715 km will be new sections, and the rest of the railway will be reconstructed and strengthened. The project will help to reduce the distance of cargo transportation in the region by up to 800 km (between the Ural region to ports).
According to Mr Khudazarov, the working group, chaired by Valery Reshetnikov, Senior Vice President of RZD, had a conference in Moscow in July. Representatives of the three regions of Russia also took part in it.
“We approved one of the key parameters of the project – the potential freight base of companies, which will use the mainline. The volume of cargo flow is estimated at 35 million tons,” noted Mr Khudazarov.
He said that the working group also discussed the issue of the official involvement of RZD in the project. In particular, they decided that existing railway sections (including the Vendinga – Mikun and the Mikun – Yazen sections) should be involved in the “Belkomur” project.
The concept of implementation, tariffs formation and interaction of the participants of the “Belkomur” project is being developed now. In September, the draft concept will be submitted to the RF Transport Ministry.
“Realisation of “Belkomur” and “Salekhard – Nadym” projects, development of the Murmansk transport node together with projects of strengthening RZD’s lines will help to form a qualitatively new transport system in the northwest of Russia. It will provide long-term development due to formation of the Northern Latitudinal Railway, international transit corridors, and the Northern Sea Route,” said Alexander Burov, Deputy Head of the Komi Republic.

NOVATEK Starts Construction of Sabetta Port

NOVATEK OJSC held an official ceremony on July 20, 2012, to mark the start of construction at the Sabetta port and laid a commemorative capsule into its foundation. The Sabetta port will be located on the North-East of the Yamal Peninsula in the Yamal-Nenets Autonomous Region.
The Sabetta port will serve as a key element of the transport infrastructure for the Yamal LNG project, which includes the design and construction of an onshore, integrated LNG facility with the feedstock for the Yamal LNG facility based on the resources of the Company’s South-Tambeyskoye field. Construction of the Sabetta port facilities will create the foundation for the development of hydrocarbon fields located in the Yamal Peninsula and the Gulf of Ob. Additionally it will provide year-round navigation along the Northern Sea Route and contribute to the development of Russia’s icebreaker fleet.
The Yamal LNG Project is included in the Comprehensive Plan for the development of liquefied natural gas production on the Yamal Peninsula approved by the Russian Government. Construction of the port facility near the village of Sabetta is an integral part of the Comprehensive Plan and will be implemented in two phases. The first phase will include the construction of piers for receiving large LNG plant process modules and construction materials. The first modules are expected to arrive in July 2014, with loading for LNG and gas condensate to be built during the second phase. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia. That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi. [~PREVIEW_TEXT] => To attract new cargo and develop competitive advantages over other modes of transport, the railways have to cooperate successfully and harmonise the different systems across the EU member states and the CIS and Asia. That is the conclusion reached at the strategic dialogue “Uniting Eurasia,” which was held during the VII International Rail Business Forum 1520 Strategic Partnership at the end of May 2012 in Sochi. 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РЖД-Партнер

Railcar Repair: Quality and Reliability

 Vagonremmash OJSC has three railcar repair plants (Voronezh, Novorossiysk, and Tambov railcar repair plants) and is the sector leader with well developed R&D base.
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    [DETAIL_TEXT] => Using its wealth of experience in passenger rolling stock repair and scientific developments, the company’s plants operate efficiently, which decreases the period between the order and the product delivery to a customer and to carry out all stages of the production processes to the highest quality standards.
All products made by Vagonremmash are certified by the Certification Register at the Federal Railway Transport and comply with all current standards.
In 2002-2008, a large investment programme was carried out at the company’s plants – the fixed assets were reconstructed and updated, and modern technological and bench equipment was purchased including:
• painting and drying complexes for car body mechanised painting, which helped to reduce the processing time and enhance the quality of railcar repair;
• automated blasting chambers made by Carlo Banfi S.p.A. to remove old paint from a car body and prepare it for painting;
• NC machine tools;
• ACUTE AС 255 NT2 laser cutting machine made by AMADA to shape cuts to any configuration with pinpoint accuracy;
• E5x punch press produced by FINN-POWER;
• testing and measuring equipment, including automated railcar testing benches to test the electrical equipment of railcars imitating its movement at different speeds;
• specialist technological equipment.
Plants affiliated with Vagonremmash specialise in repair of almost any type of passenger railcar: first-class coaches, compartment coaches, third-class sleepers, dining cars, RIC wagons, interregional, mail, baggage, service and technical coaches, etc.
The company provides a wide range of services:
• Repair of passenger coaches (KR-1, KR-2);
• Reconditioning and capital repair of passenger coaches (KVR/KRM);
• Updating and re-equipping of passenger railcars into wagons of different types (a wagon simulator, a mobile consultative diagnostic centre railcar, a military car, an escort railcar, a lounge) and laboratories (environmental, brake testing, metrological, communication, pull and energy efficiency testing laboratories, rail spotters, and signalling and interlocking laboratories);
• Repair of mail and mail-baggage railcars CMB-61-524, V-60M2, V-60SK models;
• Repair of cargo wagons (gondola cars);
• Repair and assembly of cargo railcar bogies;
• New cargo and passenger wheel-sets assembly;
• Production of spares, nodes, and components for rolling stock;
• Reconditioning and capital repair of V-type compressors, generators, and drive gearboxes for generators of all types.
Also, Vagonremmash produces spares for passenger and cargo rolling stock such as a cargo railcar axle-box body, a fixed car retarder, a retarder hanger, an axle-box securing cover, an access cover, a self-claw bracket (upper, lower), an anti-rattle bushing, an axle-box plate shield, a labyrinth ring, etc. And this is just a part of the list of products and services. The company constantly develops new innovations.
The geographic location of the three plants allows provision of services covering the central and southern regions of Russia with minimum transport expenses. Services offered by Vagonremmash are popular with transporters and rolling stock owners in Russia and the CIS countries.
Competitive prices, high quality, and reliability are an essential part of the company’s ethos, and create a good basis for long-term and successful operation. We greatly value the honesty and business qualities of our partners, and consider business relation development to be of great benefit in the development of future business. We hope that new customers will be interested in our services, and want them to become our partners for long-term and mutually beneficial development and growth.
Valery Nikolaev,
CEO of Vagonremmash OJSC
[~DETAIL_TEXT] => Using its wealth of experience in passenger rolling stock repair and scientific developments, the company’s plants operate efficiently, which decreases the period between the order and the product delivery to a customer and to carry out all stages of the production processes to the highest quality standards.
All products made by Vagonremmash are certified by the Certification Register at the Federal Railway Transport and comply with all current standards.
In 2002-2008, a large investment programme was carried out at the company’s plants – the fixed assets were reconstructed and updated, and modern technological and bench equipment was purchased including:
• painting and drying complexes for car body mechanised painting, which helped to reduce the processing time and enhance the quality of railcar repair;
• automated blasting chambers made by Carlo Banfi S.p.A. to remove old paint from a car body and prepare it for painting;
• NC machine tools;
• ACUTE AС 255 NT2 laser cutting machine made by AMADA to shape cuts to any configuration with pinpoint accuracy;
• E5x punch press produced by FINN-POWER;
• testing and measuring equipment, including automated railcar testing benches to test the electrical equipment of railcars imitating its movement at different speeds;
• specialist technological equipment.
Plants affiliated with Vagonremmash specialise in repair of almost any type of passenger railcar: first-class coaches, compartment coaches, third-class sleepers, dining cars, RIC wagons, interregional, mail, baggage, service and technical coaches, etc.
The company provides a wide range of services:
• Repair of passenger coaches (KR-1, KR-2);
• Reconditioning and capital repair of passenger coaches (KVR/KRM);
• Updating and re-equipping of passenger railcars into wagons of different types (a wagon simulator, a mobile consultative diagnostic centre railcar, a military car, an escort railcar, a lounge) and laboratories (environmental, brake testing, metrological, communication, pull and energy efficiency testing laboratories, rail spotters, and signalling and interlocking laboratories);
• Repair of mail and mail-baggage railcars CMB-61-524, V-60M2, V-60SK models;
• Repair of cargo wagons (gondola cars);
• Repair and assembly of cargo railcar bogies;
• New cargo and passenger wheel-sets assembly;
• Production of spares, nodes, and components for rolling stock;
• Reconditioning and capital repair of V-type compressors, generators, and drive gearboxes for generators of all types.
Also, Vagonremmash produces spares for passenger and cargo rolling stock such as a cargo railcar axle-box body, a fixed car retarder, a retarder hanger, an axle-box securing cover, an access cover, a self-claw bracket (upper, lower), an anti-rattle bushing, an axle-box plate shield, a labyrinth ring, etc. And this is just a part of the list of products and services. The company constantly develops new innovations.
The geographic location of the three plants allows provision of services covering the central and southern regions of Russia with minimum transport expenses. Services offered by Vagonremmash are popular with transporters and rolling stock owners in Russia and the CIS countries.
Competitive prices, high quality, and reliability are an essential part of the company’s ethos, and create a good basis for long-term and successful operation. We greatly value the honesty and business qualities of our partners, and consider business relation development to be of great benefit in the development of future business. We hope that new customers will be interested in our services, and want them to become our partners for long-term and mutually beneficial development and growth.
Valery Nikolaev,
CEO of Vagonremmash OJSC
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border="1" alt=" " hspace="5" width="200" height="266" align="left" />Vagonremmash OJSC has three railcar repair plants (Voronezh, Novorossiysk, and Tambov railcar repair plants) and is the sector leader with well developed R&amp;D base. 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[SECTION_PICTURE_FILE_ALT] => Railcar Repair: Quality and Reliability [SECTION_PICTURE_FILE_TITLE] => Railcar Repair: Quality and Reliability [SECTION_DETAIL_PICTURE_FILE_ALT] => Railcar Repair: Quality and Reliability [SECTION_DETAIL_PICTURE_FILE_TITLE] => Railcar Repair: Quality and Reliability [ELEMENT_PREVIEW_PICTURE_FILE_ALT] => Railcar Repair: Quality and Reliability [ELEMENT_PREVIEW_PICTURE_FILE_TITLE] => Railcar Repair: Quality and Reliability [ELEMENT_DETAIL_PICTURE_FILE_ALT] => Railcar Repair: Quality and Reliability [ELEMENT_DETAIL_PICTURE_FILE_TITLE] => Railcar Repair: Quality and Reliability ) )

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    [DETAIL_TEXT] => Using its wealth of experience in passenger rolling stock repair and scientific developments, the company’s plants operate efficiently, which decreases the period between the order and the product delivery to a customer and to carry out all stages of the production processes to the highest quality standards.
All products made by Vagonremmash are certified by the Certification Register at the Federal Railway Transport and comply with all current standards.
In 2002-2008, a large investment programme was carried out at the company’s plants – the fixed assets were reconstructed and updated, and modern technological and bench equipment was purchased including:
• painting and drying complexes for car body mechanised painting, which helped to reduce the processing time and enhance the quality of railcar repair;
• automated blasting chambers made by Carlo Banfi S.p.A. to remove old paint from a car body and prepare it for painting;
• NC machine tools;
• ACUTE AС 255 NT2 laser cutting machine made by AMADA to shape cuts to any configuration with pinpoint accuracy;
• E5x punch press produced by FINN-POWER;
• testing and measuring equipment, including automated railcar testing benches to test the electrical equipment of railcars imitating its movement at different speeds;
• specialist technological equipment.
Plants affiliated with Vagonremmash specialise in repair of almost any type of passenger railcar: first-class coaches, compartment coaches, third-class sleepers, dining cars, RIC wagons, interregional, mail, baggage, service and technical coaches, etc.
The company provides a wide range of services:
• Repair of passenger coaches (KR-1, KR-2);
• Reconditioning and capital repair of passenger coaches (KVR/KRM);
• Updating and re-equipping of passenger railcars into wagons of different types (a wagon simulator, a mobile consultative diagnostic centre railcar, a military car, an escort railcar, a lounge) and laboratories (environmental, brake testing, metrological, communication, pull and energy efficiency testing laboratories, rail spotters, and signalling and interlocking laboratories);
• Repair of mail and mail-baggage railcars CMB-61-524, V-60M2, V-60SK models;
• Repair of cargo wagons (gondola cars);
• Repair and assembly of cargo railcar bogies;
• New cargo and passenger wheel-sets assembly;
• Production of spares, nodes, and components for rolling stock;
• Reconditioning and capital repair of V-type compressors, generators, and drive gearboxes for generators of all types.
Also, Vagonremmash produces spares for passenger and cargo rolling stock such as a cargo railcar axle-box body, a fixed car retarder, a retarder hanger, an axle-box securing cover, an access cover, a self-claw bracket (upper, lower), an anti-rattle bushing, an axle-box plate shield, a labyrinth ring, etc. And this is just a part of the list of products and services. The company constantly develops new innovations.
The geographic location of the three plants allows provision of services covering the central and southern regions of Russia with minimum transport expenses. Services offered by Vagonremmash are popular with transporters and rolling stock owners in Russia and the CIS countries.
Competitive prices, high quality, and reliability are an essential part of the company’s ethos, and create a good basis for long-term and successful operation. We greatly value the honesty and business qualities of our partners, and consider business relation development to be of great benefit in the development of future business. We hope that new customers will be interested in our services, and want them to become our partners for long-term and mutually beneficial development and growth.
Valery Nikolaev,
CEO of Vagonremmash OJSC
[~DETAIL_TEXT] => Using its wealth of experience in passenger rolling stock repair and scientific developments, the company’s plants operate efficiently, which decreases the period between the order and the product delivery to a customer and to carry out all stages of the production processes to the highest quality standards.
All products made by Vagonremmash are certified by the Certification Register at the Federal Railway Transport and comply with all current standards.
In 2002-2008, a large investment programme was carried out at the company’s plants – the fixed assets were reconstructed and updated, and modern technological and bench equipment was purchased including:
• painting and drying complexes for car body mechanised painting, which helped to reduce the processing time and enhance the quality of railcar repair;
• automated blasting chambers made by Carlo Banfi S.p.A. to remove old paint from a car body and prepare it for painting;
• NC machine tools;
• ACUTE AС 255 NT2 laser cutting machine made by AMADA to shape cuts to any configuration with pinpoint accuracy;
• E5x punch press produced by FINN-POWER;
• testing and measuring equipment, including automated railcar testing benches to test the electrical equipment of railcars imitating its movement at different speeds;
• specialist technological equipment.
Plants affiliated with Vagonremmash specialise in repair of almost any type of passenger railcar: first-class coaches, compartment coaches, third-class sleepers, dining cars, RIC wagons, interregional, mail, baggage, service and technical coaches, etc.
The company provides a wide range of services:
• Repair of passenger coaches (KR-1, KR-2);
• Reconditioning and capital repair of passenger coaches (KVR/KRM);
• Updating and re-equipping of passenger railcars into wagons of different types (a wagon simulator, a mobile consultative diagnostic centre railcar, a military car, an escort railcar, a lounge) and laboratories (environmental, brake testing, metrological, communication, pull and energy efficiency testing laboratories, rail spotters, and signalling and interlocking laboratories);
• Repair of mail and mail-baggage railcars CMB-61-524, V-60M2, V-60SK models;
• Repair of cargo wagons (gondola cars);
• Repair and assembly of cargo railcar bogies;
• New cargo and passenger wheel-sets assembly;
• Production of spares, nodes, and components for rolling stock;
• Reconditioning and capital repair of V-type compressors, generators, and drive gearboxes for generators of all types.
Also, Vagonremmash produces spares for passenger and cargo rolling stock such as a cargo railcar axle-box body, a fixed car retarder, a retarder hanger, an axle-box securing cover, an access cover, a self-claw bracket (upper, lower), an anti-rattle bushing, an axle-box plate shield, a labyrinth ring, etc. And this is just a part of the list of products and services. The company constantly develops new innovations.
The geographic location of the three plants allows provision of services covering the central and southern regions of Russia with minimum transport expenses. Services offered by Vagonremmash are popular with transporters and rolling stock owners in Russia and the CIS countries.
Competitive prices, high quality, and reliability are an essential part of the company’s ethos, and create a good basis for long-term and successful operation. We greatly value the honesty and business qualities of our partners, and consider business relation development to be of great benefit in the development of future business. We hope that new customers will be interested in our services, and want them to become our partners for long-term and mutually beneficial development and growth.
Valery Nikolaev,
CEO of Vagonremmash OJSC
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РЖД-Партнер

Arriving in the Modern Era

 Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector.
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    [DETAIL_TEXT] => – Mr Emelyanov, is the progress, about which experts have spoken, really seen in the Russian locomotive building market? 

– No doubt about it, in recent years the situation in the Russian locomotive building market has improved. In the last five years, for example, Sinara – Transport Machines (CTM) holding company developed seven new locomotives (TEM7AM, TEM9, EU-500, TEM14, TEM9N, TE8, TG16M), which proves that the potential of CMT and the entire sector is huge.
In 2008-2009 the company produced the TEM7AM updated high-capacity shunting diesel locomotive and the TEM9 average-capacity diesel locomotive. They became the basis for new developments. The EU-500 power supply unit was made in 2011. It is a special type of machinery to supply energy to electric locomotives at non-electrified rail sections. Another innovation presented last year is the TEM14 one-section two-diesel shunting locomotive. And already in 2012 we produced the first Russian modern locomotive with the smart asynchronous hybrid drive TEM9N SinaraHybrid. We understand what sort of locomotives our customers need, and respond to market demand fast. Advanced engineering solutions are applied to the design of all new locomotives to guarantee enhanced performance. Such machines are more efficient in comparison with old locomotives.

– Could you, please tell us about the new projects currently being carried out by CTM?

– The CTM Innovative Development Centre was established in 2010 to develop the holding company’s research and engineering activities. The most important result of its work was the development of the TEM9N SinaraHybrid diesel locomotive. The customer, Russian Railways set us a difficult technical task in developing a diesel locomotive with meeting modern economic and environmental criteria, with much lower expenditure needed over its life-cycle. And we did it! According to specialists, harmful emissions from the TEM9N SinaraHybrid model are 55% lower, which complies with the current environmental standards of the EU, and the locomotive saves approximately 60 tons of diesel fuel per annum. Also, a new one-section eight-axle cargo diesel locomotive with 2,200 kW capacity and better performance will come to the market in 2012. We are now developing the TG16M mainline two-section diesel locomotive for RZD, the supply of which is to start in 2013.

– What projects do you plan to carry out in the near future?

– CTM actively participates in the scaled project of gas turbine locomotives – next-generation mainline locomotives running on natural gas. Also, CTM is developing a mainline cargo diesel locomotive with 3,500 kW capacity. These locomotives are attractive to RZD and private companies.
I’d like to talk about the progress of our specialists in diesel engine building. In 2012 the Urals Diesel Engine Plant (incorporated into CTM) won the competition and got the right for federal budget funding of its research and design and experimental works to develop basic models of high-speed V-shaped diesel engines with 1,000-3,000 kW capacity.
To fulfill the schedule of works from the development to the series production of the range of up-to-date diesel engines, the Urals Diesel Engine Plant concluded a partnership agreement with FEV GmbH engineering company (Germany).

– Do company specialists develop new machinery by themselves?

– If necessary, the company cooperates with specialised scientific and research institutes and leading Russian and foreign scientists. For example, we partner with specialists from the USA (Massachusetts Institute of Technology) and Poland (Cracow University of Technology) working on asynchronous drives and energy storage units. Today the company’s specialists are developing microprocessor-based control and diagnostic systems for diesel locomotives (PMSUiD), an auxiliary converter (PSN), and an electric brake controller (RET) for operation with MPSUiD, and other projects.
A consortium of leading Russian research and production companies participated in the development of the first Russian locomotive with the hybrid power equipment. Among them was SAUT R&D and production union, Privodnaya Tekhnika (Driving Machinery) R&D and production union, the Urals Locomotives LLC, and Automatics R&D and production union.

– What is CTM’s attitude to current market trends – and maintenance of locomotives during their entire life cycle?

– For CTM maintenance of its products is one of the key competencies contributing to the company’s competitiveness in the present-day market. In 2011 the company established CTM-Service, a subsidiary specialising in maintenance of the electric locomotives 2ES6, 2ES10, VL10, VL11, and RZD’s shunting locomotives.

– What is your assessment of the further development of the rail machinery market in Russia and the CIS and what prospects does CTM have?

– We believe that the demand for shunting locomotives in the RF and the CIS markets will grow, and in the mid-term it may amount to at least 200 diesel locomotives per annum. Thanks to such rapid development in the sector, CTM as a producer with a wide range of competencies from engineering and machinery manufacture to maintenance will be able to remain a leader in the market and succeed in new projects. [~DETAIL_TEXT] => – Mr Emelyanov, is the progress, about which experts have spoken, really seen in the Russian locomotive building market?

– No doubt about it, in recent years the situation in the Russian locomotive building market has improved. In the last five years, for example, Sinara – Transport Machines (CTM) holding company developed seven new locomotives (TEM7AM, TEM9, EU-500, TEM14, TEM9N, TE8, TG16M), which proves that the potential of CMT and the entire sector is huge.
In 2008-2009 the company produced the TEM7AM updated high-capacity shunting diesel locomotive and the TEM9 average-capacity diesel locomotive. They became the basis for new developments. The EU-500 power supply unit was made in 2011. It is a special type of machinery to supply energy to electric locomotives at non-electrified rail sections. Another innovation presented last year is the TEM14 one-section two-diesel shunting locomotive. And already in 2012 we produced the first Russian modern locomotive with the smart asynchronous hybrid drive TEM9N SinaraHybrid. We understand what sort of locomotives our customers need, and respond to market demand fast. Advanced engineering solutions are applied to the design of all new locomotives to guarantee enhanced performance. Such machines are more efficient in comparison with old locomotives.

– Could you, please tell us about the new projects currently being carried out by CTM?

– The CTM Innovative Development Centre was established in 2010 to develop the holding company’s research and engineering activities. The most important result of its work was the development of the TEM9N SinaraHybrid diesel locomotive. The customer, Russian Railways set us a difficult technical task in developing a diesel locomotive with meeting modern economic and environmental criteria, with much lower expenditure needed over its life-cycle. And we did it! According to specialists, harmful emissions from the TEM9N SinaraHybrid model are 55% lower, which complies with the current environmental standards of the EU, and the locomotive saves approximately 60 tons of diesel fuel per annum. Also, a new one-section eight-axle cargo diesel locomotive with 2,200 kW capacity and better performance will come to the market in 2012. We are now developing the TG16M mainline two-section diesel locomotive for RZD, the supply of which is to start in 2013.

– What projects do you plan to carry out in the near future?

– CTM actively participates in the scaled project of gas turbine locomotives – next-generation mainline locomotives running on natural gas. Also, CTM is developing a mainline cargo diesel locomotive with 3,500 kW capacity. These locomotives are attractive to RZD and private companies.
I’d like to talk about the progress of our specialists in diesel engine building. In 2012 the Urals Diesel Engine Plant (incorporated into CTM) won the competition and got the right for federal budget funding of its research and design and experimental works to develop basic models of high-speed V-shaped diesel engines with 1,000-3,000 kW capacity.
To fulfill the schedule of works from the development to the series production of the range of up-to-date diesel engines, the Urals Diesel Engine Plant concluded a partnership agreement with FEV GmbH engineering company (Germany).

– Do company specialists develop new machinery by themselves?

– If necessary, the company cooperates with specialised scientific and research institutes and leading Russian and foreign scientists. For example, we partner with specialists from the USA (Massachusetts Institute of Technology) and Poland (Cracow University of Technology) working on asynchronous drives and energy storage units. Today the company’s specialists are developing microprocessor-based control and diagnostic systems for diesel locomotives (PMSUiD), an auxiliary converter (PSN), and an electric brake controller (RET) for operation with MPSUiD, and other projects.
A consortium of leading Russian research and production companies participated in the development of the first Russian locomotive with the hybrid power equipment. Among them was SAUT R&D and production union, Privodnaya Tekhnika (Driving Machinery) R&D and production union, the Urals Locomotives LLC, and Automatics R&D and production union.

– What is CTM’s attitude to current market trends – and maintenance of locomotives during their entire life cycle?

– For CTM maintenance of its products is one of the key competencies contributing to the company’s competitiveness in the present-day market. In 2011 the company established CTM-Service, a subsidiary specialising in maintenance of the electric locomotives 2ES6, 2ES10, VL10, VL11, and RZD’s shunting locomotives.

– What is your assessment of the further development of the rail machinery market in Russia and the CIS and what prospects does CTM have?

– We believe that the demand for shunting locomotives in the RF and the CIS markets will grow, and in the mid-term it may amount to at least 200 diesel locomotives per annum. Thanks to such rapid development in the sector, CTM as a producer with a wide range of competencies from engineering and machinery manufacture to maintenance will be able to remain a leader in the market and succeed in new projects. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>  Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. [~PREVIEW_TEXT] =>  Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. 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width="200" height="224" align="left" />Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. [ELEMENT_META_TITLE] => Arriving in the Modern Era [ELEMENT_META_KEYWORDS] => arriving in the modern era [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2012/3/7.jpg" border="1" alt=" " hspace="5" width="200" height="224" align="left" />Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. 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    [DETAIL_TEXT] => – Mr Emelyanov, is the progress, about which experts have spoken, really seen in the Russian locomotive building market? 

– No doubt about it, in recent years the situation in the Russian locomotive building market has improved. In the last five years, for example, Sinara – Transport Machines (CTM) holding company developed seven new locomotives (TEM7AM, TEM9, EU-500, TEM14, TEM9N, TE8, TG16M), which proves that the potential of CMT and the entire sector is huge.
In 2008-2009 the company produced the TEM7AM updated high-capacity shunting diesel locomotive and the TEM9 average-capacity diesel locomotive. They became the basis for new developments. The EU-500 power supply unit was made in 2011. It is a special type of machinery to supply energy to electric locomotives at non-electrified rail sections. Another innovation presented last year is the TEM14 one-section two-diesel shunting locomotive. And already in 2012 we produced the first Russian modern locomotive with the smart asynchronous hybrid drive TEM9N SinaraHybrid. We understand what sort of locomotives our customers need, and respond to market demand fast. Advanced engineering solutions are applied to the design of all new locomotives to guarantee enhanced performance. Such machines are more efficient in comparison with old locomotives.

– Could you, please tell us about the new projects currently being carried out by CTM?

– The CTM Innovative Development Centre was established in 2010 to develop the holding company’s research and engineering activities. The most important result of its work was the development of the TEM9N SinaraHybrid diesel locomotive. The customer, Russian Railways set us a difficult technical task in developing a diesel locomotive with meeting modern economic and environmental criteria, with much lower expenditure needed over its life-cycle. And we did it! According to specialists, harmful emissions from the TEM9N SinaraHybrid model are 55% lower, which complies with the current environmental standards of the EU, and the locomotive saves approximately 60 tons of diesel fuel per annum. Also, a new one-section eight-axle cargo diesel locomotive with 2,200 kW capacity and better performance will come to the market in 2012. We are now developing the TG16M mainline two-section diesel locomotive for RZD, the supply of which is to start in 2013.

– What projects do you plan to carry out in the near future?

– CTM actively participates in the scaled project of gas turbine locomotives – next-generation mainline locomotives running on natural gas. Also, CTM is developing a mainline cargo diesel locomotive with 3,500 kW capacity. These locomotives are attractive to RZD and private companies.
I’d like to talk about the progress of our specialists in diesel engine building. In 2012 the Urals Diesel Engine Plant (incorporated into CTM) won the competition and got the right for federal budget funding of its research and design and experimental works to develop basic models of high-speed V-shaped diesel engines with 1,000-3,000 kW capacity.
To fulfill the schedule of works from the development to the series production of the range of up-to-date diesel engines, the Urals Diesel Engine Plant concluded a partnership agreement with FEV GmbH engineering company (Germany).

– Do company specialists develop new machinery by themselves?

– If necessary, the company cooperates with specialised scientific and research institutes and leading Russian and foreign scientists. For example, we partner with specialists from the USA (Massachusetts Institute of Technology) and Poland (Cracow University of Technology) working on asynchronous drives and energy storage units. Today the company’s specialists are developing microprocessor-based control and diagnostic systems for diesel locomotives (PMSUiD), an auxiliary converter (PSN), and an electric brake controller (RET) for operation with MPSUiD, and other projects.
A consortium of leading Russian research and production companies participated in the development of the first Russian locomotive with the hybrid power equipment. Among them was SAUT R&D and production union, Privodnaya Tekhnika (Driving Machinery) R&D and production union, the Urals Locomotives LLC, and Automatics R&D and production union.

– What is CTM’s attitude to current market trends – and maintenance of locomotives during their entire life cycle?

– For CTM maintenance of its products is one of the key competencies contributing to the company’s competitiveness in the present-day market. In 2011 the company established CTM-Service, a subsidiary specialising in maintenance of the electric locomotives 2ES6, 2ES10, VL10, VL11, and RZD’s shunting locomotives.

– What is your assessment of the further development of the rail machinery market in Russia and the CIS and what prospects does CTM have?

– We believe that the demand for shunting locomotives in the RF and the CIS markets will grow, and in the mid-term it may amount to at least 200 diesel locomotives per annum. Thanks to such rapid development in the sector, CTM as a producer with a wide range of competencies from engineering and machinery manufacture to maintenance will be able to remain a leader in the market and succeed in new projects. [~DETAIL_TEXT] => – Mr Emelyanov, is the progress, about which experts have spoken, really seen in the Russian locomotive building market?

– No doubt about it, in recent years the situation in the Russian locomotive building market has improved. In the last five years, for example, Sinara – Transport Machines (CTM) holding company developed seven new locomotives (TEM7AM, TEM9, EU-500, TEM14, TEM9N, TE8, TG16M), which proves that the potential of CMT and the entire sector is huge.
In 2008-2009 the company produced the TEM7AM updated high-capacity shunting diesel locomotive and the TEM9 average-capacity diesel locomotive. They became the basis for new developments. The EU-500 power supply unit was made in 2011. It is a special type of machinery to supply energy to electric locomotives at non-electrified rail sections. Another innovation presented last year is the TEM14 one-section two-diesel shunting locomotive. And already in 2012 we produced the first Russian modern locomotive with the smart asynchronous hybrid drive TEM9N SinaraHybrid. We understand what sort of locomotives our customers need, and respond to market demand fast. Advanced engineering solutions are applied to the design of all new locomotives to guarantee enhanced performance. Such machines are more efficient in comparison with old locomotives.

– Could you, please tell us about the new projects currently being carried out by CTM?

– The CTM Innovative Development Centre was established in 2010 to develop the holding company’s research and engineering activities. The most important result of its work was the development of the TEM9N SinaraHybrid diesel locomotive. The customer, Russian Railways set us a difficult technical task in developing a diesel locomotive with meeting modern economic and environmental criteria, with much lower expenditure needed over its life-cycle. And we did it! According to specialists, harmful emissions from the TEM9N SinaraHybrid model are 55% lower, which complies with the current environmental standards of the EU, and the locomotive saves approximately 60 tons of diesel fuel per annum. Also, a new one-section eight-axle cargo diesel locomotive with 2,200 kW capacity and better performance will come to the market in 2012. We are now developing the TG16M mainline two-section diesel locomotive for RZD, the supply of which is to start in 2013.

– What projects do you plan to carry out in the near future?

– CTM actively participates in the scaled project of gas turbine locomotives – next-generation mainline locomotives running on natural gas. Also, CTM is developing a mainline cargo diesel locomotive with 3,500 kW capacity. These locomotives are attractive to RZD and private companies.
I’d like to talk about the progress of our specialists in diesel engine building. In 2012 the Urals Diesel Engine Plant (incorporated into CTM) won the competition and got the right for federal budget funding of its research and design and experimental works to develop basic models of high-speed V-shaped diesel engines with 1,000-3,000 kW capacity.
To fulfill the schedule of works from the development to the series production of the range of up-to-date diesel engines, the Urals Diesel Engine Plant concluded a partnership agreement with FEV GmbH engineering company (Germany).

– Do company specialists develop new machinery by themselves?

– If necessary, the company cooperates with specialised scientific and research institutes and leading Russian and foreign scientists. For example, we partner with specialists from the USA (Massachusetts Institute of Technology) and Poland (Cracow University of Technology) working on asynchronous drives and energy storage units. Today the company’s specialists are developing microprocessor-based control and diagnostic systems for diesel locomotives (PMSUiD), an auxiliary converter (PSN), and an electric brake controller (RET) for operation with MPSUiD, and other projects.
A consortium of leading Russian research and production companies participated in the development of the first Russian locomotive with the hybrid power equipment. Among them was SAUT R&D and production union, Privodnaya Tekhnika (Driving Machinery) R&D and production union, the Urals Locomotives LLC, and Automatics R&D and production union.

– What is CTM’s attitude to current market trends – and maintenance of locomotives during their entire life cycle?

– For CTM maintenance of its products is one of the key competencies contributing to the company’s competitiveness in the present-day market. In 2011 the company established CTM-Service, a subsidiary specialising in maintenance of the electric locomotives 2ES6, 2ES10, VL10, VL11, and RZD’s shunting locomotives.

– What is your assessment of the further development of the rail machinery market in Russia and the CIS and what prospects does CTM have?

– We believe that the demand for shunting locomotives in the RF and the CIS markets will grow, and in the mid-term it may amount to at least 200 diesel locomotives per annum. Thanks to such rapid development in the sector, CTM as a producer with a wide range of competencies from engineering and machinery manufacture to maintenance will be able to remain a leader in the market and succeed in new projects. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>  Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. [~PREVIEW_TEXT] =>  Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. 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width="200" height="224" align="left" />Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. [ELEMENT_META_TITLE] => Arriving in the Modern Era [ELEMENT_META_KEYWORDS] => arriving in the modern era [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2012/3/7.jpg" border="1" alt=" " hspace="5" width="200" height="224" align="left" />Russian machine builders have been catching up with foreign companies recently. This trend is especially noticeable in the locomotive building sector: new models appear, new engineering solutions and materials are used. Oleg Emelyanov, CEO of Sinara – Transport Machines (CTM) talks about the projects carried out by one of the largest companies in the sector. 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РЖД-Партнер

Complex Solutions for Train Traffic Safety

Railway transport is strategically important mode of transport and train traffic safety and control are especially vital and science-intensive missions, which can be accomplished by means of railway signalling and telecommunication systems.
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    [DETAIL_TEXT] => Being one of the leading companies in Russia, R&P Centre “Promelectronica” for more than 20 years executes development and implementation of microprocessor railway signalling and telecommunication systems for the main line railway transport, approach tracks for industrial enterprises and metro lines. 
Nowadays, systems produced by R&P Centre “Promelectronica”
ensure traffic safety and control on the railroads of OJSC “Russian Railways”, on the railways of Kazakhstan, Uzbekistan, Latvia, Lithuania, Armenia, Democratic People’s Republic of Korea, and on tens of industrial enterprises.

Complex of modern railway signalling and telecommunication systems

R&P Centre “Promelectronica”, an enterprise with a full production cycle and a system integrator, offers a wide range of modern microprocessor railway signalling systems for equipping of rail sections of any length at stations, railway hauls and level-crossings. Due to unique technologies, these systems provide a high level of train traffic safety in different conditions and on sections with any traffic density.
The company’s basic developments are:
• Microprocessor Interlocking MPC-I is a system for centralized control of wayside facilities (points, light-signals, level-crossings, etc.) at stations of any size with any type of train and shunting operations. It can be station at public or non-public tracks, in mine or a subway.
The functional capabilities of MPC-I include automatic logging and archiving of data about the system operation and actions of the station operator, remote monitoring of the system operation and train situation at the station, joining of several stations into a single zone to be controlled from one post and creation of several control zones at one station.
• Axle counting system ESSO is intended for vacancy detection of track sections of any complexity and configuration at stations and railway hauls. ESSO operates at any up to zero ballast insulation resistance, including sections with metal sleepers and joints as well as on all-metal bridges. It enables control vacancy of level-crossing approach sections, block-sections with automatic block system, point sections, receiving-and-departure tracks on the stations, point and non-point sections in the systems of hump automatic interlocking.
• Microprocessor semi-automatic block system MPB is designed for train traffic control on the railway hauls and executes all functions of semi-automatic relay block system, supplemented by automatic control of train arrival to the station in full. Data can be transmitted between the stations both via physical line, main cable, fiber-optical line and radio channel. If it is necessary to extend traffic capacity of the railway haul, MPB is supplemented by automatic block-post that is based on MPB sub-system.
• Microprocessor level-crossing protection system MAPS is intended for ensuring traffic safety and control of traffic over level-crossings at the railway hauls. It allows control approach sections near single-, double-, and multi-track level-crossings, foot paths and regulation of all types of obstruction and warning facilities. [~DETAIL_TEXT] => Being one of the leading companies in Russia, R&P Centre “Promelectronica” for more than 20 years executes development and implementation of microprocessor railway signalling and telecommunication systems for the main line railway transport, approach tracks for industrial enterprises and metro lines.
Nowadays, systems produced by R&P Centre “Promelectronica”
ensure traffic safety and control on the railroads of OJSC “Russian Railways”, on the railways of Kazakhstan, Uzbekistan, Latvia, Lithuania, Armenia, Democratic People’s Republic of Korea, and on tens of industrial enterprises.

Complex of modern railway signalling and telecommunication systems

R&P Centre “Promelectronica”, an enterprise with a full production cycle and a system integrator, offers a wide range of modern microprocessor railway signalling systems for equipping of rail sections of any length at stations, railway hauls and level-crossings. Due to unique technologies, these systems provide a high level of train traffic safety in different conditions and on sections with any traffic density.
The company’s basic developments are:
• Microprocessor Interlocking MPC-I is a system for centralized control of wayside facilities (points, light-signals, level-crossings, etc.) at stations of any size with any type of train and shunting operations. It can be station at public or non-public tracks, in mine or a subway.
The functional capabilities of MPC-I include automatic logging and archiving of data about the system operation and actions of the station operator, remote monitoring of the system operation and train situation at the station, joining of several stations into a single zone to be controlled from one post and creation of several control zones at one station.
• Axle counting system ESSO is intended for vacancy detection of track sections of any complexity and configuration at stations and railway hauls. ESSO operates at any up to zero ballast insulation resistance, including sections with metal sleepers and joints as well as on all-metal bridges. It enables control vacancy of level-crossing approach sections, block-sections with automatic block system, point sections, receiving-and-departure tracks on the stations, point and non-point sections in the systems of hump automatic interlocking.
• Microprocessor semi-automatic block system MPB is designed for train traffic control on the railway hauls and executes all functions of semi-automatic relay block system, supplemented by automatic control of train arrival to the station in full. Data can be transmitted between the stations both via physical line, main cable, fiber-optical line and radio channel. If it is necessary to extend traffic capacity of the railway haul, MPB is supplemented by automatic block-post that is based on MPB sub-system.
• Microprocessor level-crossing protection system MAPS is intended for ensuring traffic safety and control of traffic over level-crossings at the railway hauls. It allows control approach sections near single-, double-, and multi-track level-crossings, foot paths and regulation of all types of obstruction and warning facilities. [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] => Railway transport is strategically important mode of transport and train traffic safety and control are especially vital and science-intensive missions, which can be accomplished by means of railway signalling and telecommunication systems. [~PREVIEW_TEXT] => Railway transport is strategically important mode of transport and train traffic safety and control are especially vital and science-intensive missions, which can be accomplished by means of railway signalling and telecommunication systems. 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    [DETAIL_TEXT] => Being one of the leading companies in Russia, R&P Centre “Promelectronica” for more than 20 years executes development and implementation of microprocessor railway signalling and telecommunication systems for the main line railway transport, approach tracks for industrial enterprises and metro lines. 
Nowadays, systems produced by R&P Centre “Promelectronica”
ensure traffic safety and control on the railroads of OJSC “Russian Railways”, on the railways of Kazakhstan, Uzbekistan, Latvia, Lithuania, Armenia, Democratic People’s Republic of Korea, and on tens of industrial enterprises.

Complex of modern railway signalling and telecommunication systems

R&P Centre “Promelectronica”, an enterprise with a full production cycle and a system integrator, offers a wide range of modern microprocessor railway signalling systems for equipping of rail sections of any length at stations, railway hauls and level-crossings. Due to unique technologies, these systems provide a high level of train traffic safety in different conditions and on sections with any traffic density.
The company’s basic developments are:
• Microprocessor Interlocking MPC-I is a system for centralized control of wayside facilities (points, light-signals, level-crossings, etc.) at stations of any size with any type of train and shunting operations. It can be station at public or non-public tracks, in mine or a subway.
The functional capabilities of MPC-I include automatic logging and archiving of data about the system operation and actions of the station operator, remote monitoring of the system operation and train situation at the station, joining of several stations into a single zone to be controlled from one post and creation of several control zones at one station.
• Axle counting system ESSO is intended for vacancy detection of track sections of any complexity and configuration at stations and railway hauls. ESSO operates at any up to zero ballast insulation resistance, including sections with metal sleepers and joints as well as on all-metal bridges. It enables control vacancy of level-crossing approach sections, block-sections with automatic block system, point sections, receiving-and-departure tracks on the stations, point and non-point sections in the systems of hump automatic interlocking.
• Microprocessor semi-automatic block system MPB is designed for train traffic control on the railway hauls and executes all functions of semi-automatic relay block system, supplemented by automatic control of train arrival to the station in full. Data can be transmitted between the stations both via physical line, main cable, fiber-optical line and radio channel. If it is necessary to extend traffic capacity of the railway haul, MPB is supplemented by automatic block-post that is based on MPB sub-system.
• Microprocessor level-crossing protection system MAPS is intended for ensuring traffic safety and control of traffic over level-crossings at the railway hauls. It allows control approach sections near single-, double-, and multi-track level-crossings, foot paths and regulation of all types of obstruction and warning facilities. [~DETAIL_TEXT] => Being one of the leading companies in Russia, R&P Centre “Promelectronica” for more than 20 years executes development and implementation of microprocessor railway signalling and telecommunication systems for the main line railway transport, approach tracks for industrial enterprises and metro lines.
Nowadays, systems produced by R&P Centre “Promelectronica”
ensure traffic safety and control on the railroads of OJSC “Russian Railways”, on the railways of Kazakhstan, Uzbekistan, Latvia, Lithuania, Armenia, Democratic People’s Republic of Korea, and on tens of industrial enterprises.

Complex of modern railway signalling and telecommunication systems

R&P Centre “Promelectronica”, an enterprise with a full production cycle and a system integrator, offers a wide range of modern microprocessor railway signalling systems for equipping of rail sections of any length at stations, railway hauls and level-crossings. Due to unique technologies, these systems provide a high level of train traffic safety in different conditions and on sections with any traffic density.
The company’s basic developments are:
• Microprocessor Interlocking MPC-I is a system for centralized control of wayside facilities (points, light-signals, level-crossings, etc.) at stations of any size with any type of train and shunting operations. It can be station at public or non-public tracks, in mine or a subway.
The functional capabilities of MPC-I include automatic logging and archiving of data about the system operation and actions of the station operator, remote monitoring of the system operation and train situation at the station, joining of several stations into a single zone to be controlled from one post and creation of several control zones at one station.
• Axle counting system ESSO is intended for vacancy detection of track sections of any complexity and configuration at stations and railway hauls. ESSO operates at any up to zero ballast insulation resistance, including sections with metal sleepers and joints as well as on all-metal bridges. It enables control vacancy of level-crossing approach sections, block-sections with automatic block system, point sections, receiving-and-departure tracks on the stations, point and non-point sections in the systems of hump automatic interlocking.
• Microprocessor semi-automatic block system MPB is designed for train traffic control on the railway hauls and executes all functions of semi-automatic relay block system, supplemented by automatic control of train arrival to the station in full. Data can be transmitted between the stations both via physical line, main cable, fiber-optical line and radio channel. If it is necessary to extend traffic capacity of the railway haul, MPB is supplemented by automatic block-post that is based on MPB sub-system.
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РЖД-Партнер

Russian Machine Building Sector Development: Catching up within Five Years

 The traditionally well developed Russian machine building is on the brink of changes – the market has entered an active phase of globalization, and nobody knows what the WTO has in store for national machinery development. Can Russian innovations be popular abroad in such conditions? What must be done for Russia to be competitive in this sector of the global market?
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Conservative and Non-Competitive

The problems of the national machine building sector stretch back to the 1990s, when after the collapse of the USSR companies with large investment budgets took note of western technologies and began to buy foreign machinery. As a result, the competition in the market was unwelcome to Russian engineering companies. And there are many examples. For example, it happened to refrigerator car production, when the Bryansk machine building plant was restructured for a different function and started to produce rolling stock for perishables transportation. This sector was practically replaced by imported products. Some plants turned to be outside the RF territory (Riga Plant for Electric Multiple-Unit Trains Manufacture), enterprises in the German Democratic Republic got beyond the control of the USSR. Later it became more simple to buy machinery abroad, and all innovations were delivered from there.
There is no lack of new technologies. Piggyback transportation is actively discussed this year, and special rolling stock is to be designed for it. A double-deck passenger railcar – the first on RZD’s network – is scheduled for construction. Preparatory work is underway to carry out the first high-speed rail line project. Meanwhile, there are no Russian companies in the list of bidders, i.e. all innovations are developed with the help of foreign specialists. Why doesn’t the strongest sector of the economy have a strong position in the advanced technologies sector? Experts say that the country is too conservative. The first wave of globalization – the collapse of the USSR and Russia’s entry to the global market – had drastic consequences for the industry. The second wave is now expected – the country has joined the WTO and the consequences of this step are still to be felt. Its supporters usually mention the experience of China as a positive example. It joined the WTO in 2001. It had a colossal effect on the economy of the Asian country: exports increased sixfold, the investment flow grew significantly. According to Philippe Pegorier, President of Alstom Russia, it happened because Chinese products have a low final cost. Speaking at the forum “Engineering Technologies - 2012”, he also noted that the major problems of this industry in Russia were the poor quality of products and high credit rates. “According to the level of technologies, the industry has fallen far behind the leaders, as for the wagon building sector, the gap is not that serious, there are up-to-date plants, for example, the Tikhvin Railcar Building Plant,” notes Dmitry Bovykin, Executive Director of the United Wagon Company LLC. “Despite the increase in the technological level, there is no mass replacement of old machinery by modern machinery – the lion’s share of the fleet is rolling stock produced using fifty-year-old technology. It is because of the common conservatism of the sector, and the long life time of a railcar. Even very old, it is able to generate profit, that’s why owners prefer to prolong the length of the railcar’s operational service. ”Railway machinery manufacture is being updated but slowly. One of the latest and the only serious innovation is the opening of the Tikhvin Railcar Building Plant. It is a success from the standpoint of advanced competitive production (it manufactures the modern Barber bogies developed in accordance with American standards) and its own casting, which allows greater competitiveness, and opportunities to attract the necessary number of specialists – the plant built houses for its employees.         
The last aspect – the search for professionals – is in most cases the most important for the advancement of the Russian machine building industry. According to Flavio Kanetti, Senior Director for Business Development of Bombardier Transportation, no serious investment has been made in the transport sector in Russia in the last 25 years; few projects requiring engineers were carried out, and as a result, the profession became unappealing.
Specialists training remains at a low level in the country, which is why few patents come to the world market from Russia today. Although, according to forecasts of Valentin Gapanovich, Senior Vice President of RZD, their number will increase. The number of patents is supposed to be 1,160 this year, and it will grow to 1,610 by 2015. Four years ago the number of received patents was 206.

Machine Builders Not to Blame

Russia has every chance of success in the global engineering market. Mr Gapanovich notes that when talking about the current condition of the industry, one must understand about which sector he is talking.
The situation in cargo wagon building sector is good; the gap between Russian manufacturers and world-leading producers is gradually decreasing. In particular, work is constantly underway to develop next-generation railcars, and their pilot samples are ready. “Wagons with classic axle load – 23.5 tons and 25 tons and 27 tons – are offered to the market, and manufacturers are even ready to produce railcars with axle load of 30 tons,” says Senior Vice President of RZD. “We are glad that our wagon builders offer such solutions and are looking towards the future.” The progress in locomotive building is obvious as well – there is an order for new rolling stock, and new designs have appeared already – mainline electric locomotives EP20, 2ES5, 2ES6, 2ES10, and GT-1 gas turbine locomotive amongst others. All these models can compete with foreign products and even surpass them. For that, time is needed to test the locomotives and prepare them for use. Again, everything depends on the contract purchase size. The main customer is Russian Railways, whose investment programme is limited. Therefore, the demand in this sector is indirectly regulated by the state.
An obvious weak link in the national machine building industry is its passenger sector. It is not the fault of engineering companies who are ready to offer new technologies. The problem stems from the lack of orders, and the imperfect system of passenger transportation regulation, which does not provide adequate funding of transporter’s investment programmes. “Tver Railcar Building Plant is ready to produce railcars with any level of amenities – even with walk-in showers and satellite TV in every compartment,” says Mr Gapanovich. “The current order volume, however, provides enough work for just 50% of full output capacity, so the plant faces difficulty in reaching its full potential. Although, even in such conditions it managed to bring to the market double-deck railcars, and a double-deck electric train will appear soon.”

Who Must Play The Most Significant Role

In the words of Yury Saakyan, CEO of the Institute of Natural Monopolies’, “machinery and technologies, which will be popular in the future, must be designed now for the prototype models to be ready in time.” A manufacturer will be able to compete in the domestic and in the international markets only if he can predict today the requirements for machinery which will be in use in several years time. Significant funds are needed to produce advanced machinery. Who must play the most significant role in the national engineering industry revival – the state or private investors? Is it possible to find new efficient ways of financing this sector? Joint ventures will have a positive influence on the sector. Private companies will develop new products and put them into operation, and the state will create the right conditions for business innovations to flourish. “The role of the state is growing in the passenger rolling stock sector, because it impacts on the formation of the investment programme of the Federal Passenger Company and suburban passenger transportation companies. Consequently this affects the development of innovative products,” says Mr Gapanovich.
 In the current situation, private companies fear long-term investments, and the state funding is insufficient. The problem is that a manufacturer cannot predict the revenue part of the budget. In the locomotive building sector, revenue is earned on the basis of tariffs for RZD. “Nowadays, tariffs are set for only one year, and provisional ones – for the next two years, that is why we cannot adequately assess the RZD’s volume of locomotive purchase (and consequently, the revenue a manufacturer will get) for several years,” states Mr Gapanovich. “I’d like to emphasise it once again – it is not the fault of RZD. If tariffs were formed on a long-term basis (for five years at least), it would be easier for enterprises to attract long-term investment, create new products, and upgrade manufacturing capacities.”
The conference chaired by Dmitry Medvedev, Chairman of the RF Government, in August was devoted to long-term tariff policy in the railway transport sector. The movement to setting tariffs for a five-year period was discussed there. If it happens, machine builders will only benefit.
The state can help engineering enterprises by increasing funding. It currently regulates the infrastructure and locomotive component of the tariff, with the provision of wagon supplies being deregulated.
The state can expand funding of RZD’s investment programme by raising the tariff. In the words of Mr Gapanovich, for it not adversely impact on a cargo owner (in the form of increased costs), the increase in the cost of services provided by wagon owners should be limited (i.e. the wagon component of the tariff). “Regarding the difference between the profitability of operators’ and RZD’s activities, it will allow re-distributing revenues in the company’s favour without making transportation more expensive by means of a small reduction in the profitability of railcar owners. This will increase funding of the locomotive fleet and for infrastructure renewal, which will increase orders for rolling stock and components,” notes the company’s Senior Vice President.
In the opinion of Dmitry Zotov, CEO of TransFin-M, the state must now act as the regulator, i.e. to create conditions for efficient and fair business, for creating an investment-attracting climate in the industry and in the entire country, and provide targeted financial support to separate strategically important sectors. In such conditions, entrepreneurs will favour more efficient and cost-effective technologies.
Dependence on imports can be reduced, if the state is interested in it. Putting the transport engineering strategy into action in the field of import-substituting manufacturing may have a positive influence. For example, the amount of imported high-tech electrical equipment used in the new double-system electric locomotive EP20, developed by Alstom and Transmashholding, is large. There are a lot of imported components in other new electric locomotives as well – 2ES5 and 2ES10. “If there is a large order for the locomotives, there will be an economic stimulus to develop production of the relevant components within this country. Therefore, everything again depends on the investment programme so that some concrete decisions can be made, as with the development of a range of up-to-date diesel engines for railway transport. A special sub-programme of the Federal Target Programme “National Technological Base” with allocations from the budget was formed for that,” says Mr Gapanovich.     

More Attention to Leasing

One of the serious achievements of the railway sector reform is liberalization of the market of rolling stock supply for loading. “The bulk of investment is made by private companies, and this scheme shouldn’t be given up. The task of the state is to create conditions for private companies to invest not in the number of railcars (there is a surplus of them on the network), but in qualitative renewal of their rolling stock,” says Mr Bovykin. In his opinion, the private sector fears not long-term investments, but uncertainty. An advantage of the wagon market is that the demand for rolling stock is practically guaranteed in the long-term.
The quality, mentioned by the expert, will only be achieved if engineering sources (the lack of which currently seriously impedes the sector’s development) are renewed. For that, according to experts, attention should be paid to the mechanism of leasing – it can be used either separately or in combination with a credit. The equipment is badly worn (often up to 60-80%); and banks are afraid of investing in the sector, because a lessor needs to understand how much time it will take  to sell this equipment in case of the lessee’s default, what the discount will be, and whether it will be possible to sell it at all. “Factors making the machine building sector less attractive for a lessor include a non-transparent second-hand market for equipment and a serious increase in its cost to pay for dismantling. Financing of industrial complexes – equipment and the building where the machinery is used – may be used to decrease the lessor’s risks. In this case, the lessor does not need to dismantle the equipment, consequently, its cost will not increase seriously, and a potential buyer of the facility will receive an enterprise ready to work, in fact,” says Mr Zotov.
A possible efficient financial instrument for the sector is the leaseback, which allows an enterprise to get funds to expand its production. The state could support the sector by subsidizing a part of the interest rate or the pre-payment. Similar subsidizing programmes were applied to aviation, national road transport, agricultural machinery, and within the network of small and medium business support in the regions. ®
By Christina Alexandrova [~DETAIL_TEXT] =>

Conservative and Non-Competitive

The problems of the national machine building sector stretch back to the 1990s, when after the collapse of the USSR companies with large investment budgets took note of western technologies and began to buy foreign machinery. As a result, the competition in the market was unwelcome to Russian engineering companies. And there are many examples. For example, it happened to refrigerator car production, when the Bryansk machine building plant was restructured for a different function and started to produce rolling stock for perishables transportation. This sector was practically replaced by imported products. Some plants turned to be outside the RF territory (Riga Plant for Electric Multiple-Unit Trains Manufacture), enterprises in the German Democratic Republic got beyond the control of the USSR. Later it became more simple to buy machinery abroad, and all innovations were delivered from there.
There is no lack of new technologies. Piggyback transportation is actively discussed this year, and special rolling stock is to be designed for it. A double-deck passenger railcar – the first on RZD’s network – is scheduled for construction. Preparatory work is underway to carry out the first high-speed rail line project. Meanwhile, there are no Russian companies in the list of bidders, i.e. all innovations are developed with the help of foreign specialists. Why doesn’t the strongest sector of the economy have a strong position in the advanced technologies sector? Experts say that the country is too conservative. The first wave of globalization – the collapse of the USSR and Russia’s entry to the global market – had drastic consequences for the industry. The second wave is now expected – the country has joined the WTO and the consequences of this step are still to be felt. Its supporters usually mention the experience of China as a positive example. It joined the WTO in 2001. It had a colossal effect on the economy of the Asian country: exports increased sixfold, the investment flow grew significantly. According to Philippe Pegorier, President of Alstom Russia, it happened because Chinese products have a low final cost. Speaking at the forum “Engineering Technologies - 2012”, he also noted that the major problems of this industry in Russia were the poor quality of products and high credit rates. “According to the level of technologies, the industry has fallen far behind the leaders, as for the wagon building sector, the gap is not that serious, there are up-to-date plants, for example, the Tikhvin Railcar Building Plant,” notes Dmitry Bovykin, Executive Director of the United Wagon Company LLC. “Despite the increase in the technological level, there is no mass replacement of old machinery by modern machinery – the lion’s share of the fleet is rolling stock produced using fifty-year-old technology. It is because of the common conservatism of the sector, and the long life time of a railcar. Even very old, it is able to generate profit, that’s why owners prefer to prolong the length of the railcar’s operational service. ”Railway machinery manufacture is being updated but slowly. One of the latest and the only serious innovation is the opening of the Tikhvin Railcar Building Plant. It is a success from the standpoint of advanced competitive production (it manufactures the modern Barber bogies developed in accordance with American standards) and its own casting, which allows greater competitiveness, and opportunities to attract the necessary number of specialists – the plant built houses for its employees.         
The last aspect – the search for professionals – is in most cases the most important for the advancement of the Russian machine building industry. According to Flavio Kanetti, Senior Director for Business Development of Bombardier Transportation, no serious investment has been made in the transport sector in Russia in the last 25 years; few projects requiring engineers were carried out, and as a result, the profession became unappealing.
Specialists training remains at a low level in the country, which is why few patents come to the world market from Russia today. Although, according to forecasts of Valentin Gapanovich, Senior Vice President of RZD, their number will increase. The number of patents is supposed to be 1,160 this year, and it will grow to 1,610 by 2015. Four years ago the number of received patents was 206.

Machine Builders Not to Blame

Russia has every chance of success in the global engineering market. Mr Gapanovich notes that when talking about the current condition of the industry, one must understand about which sector he is talking.
The situation in cargo wagon building sector is good; the gap between Russian manufacturers and world-leading producers is gradually decreasing. In particular, work is constantly underway to develop next-generation railcars, and their pilot samples are ready. “Wagons with classic axle load – 23.5 tons and 25 tons and 27 tons – are offered to the market, and manufacturers are even ready to produce railcars with axle load of 30 tons,” says Senior Vice President of RZD. “We are glad that our wagon builders offer such solutions and are looking towards the future.” The progress in locomotive building is obvious as well – there is an order for new rolling stock, and new designs have appeared already – mainline electric locomotives EP20, 2ES5, 2ES6, 2ES10, and GT-1 gas turbine locomotive amongst others. All these models can compete with foreign products and even surpass them. For that, time is needed to test the locomotives and prepare them for use. Again, everything depends on the contract purchase size. The main customer is Russian Railways, whose investment programme is limited. Therefore, the demand in this sector is indirectly regulated by the state.
An obvious weak link in the national machine building industry is its passenger sector. It is not the fault of engineering companies who are ready to offer new technologies. The problem stems from the lack of orders, and the imperfect system of passenger transportation regulation, which does not provide adequate funding of transporter’s investment programmes. “Tver Railcar Building Plant is ready to produce railcars with any level of amenities – even with walk-in showers and satellite TV in every compartment,” says Mr Gapanovich. “The current order volume, however, provides enough work for just 50% of full output capacity, so the plant faces difficulty in reaching its full potential. Although, even in such conditions it managed to bring to the market double-deck railcars, and a double-deck electric train will appear soon.”

Who Must Play The Most Significant Role

In the words of Yury Saakyan, CEO of the Institute of Natural Monopolies’, “machinery and technologies, which will be popular in the future, must be designed now for the prototype models to be ready in time.” A manufacturer will be able to compete in the domestic and in the international markets only if he can predict today the requirements for machinery which will be in use in several years time. Significant funds are needed to produce advanced machinery. Who must play the most significant role in the national engineering industry revival – the state or private investors? Is it possible to find new efficient ways of financing this sector? Joint ventures will have a positive influence on the sector. Private companies will develop new products and put them into operation, and the state will create the right conditions for business innovations to flourish. “The role of the state is growing in the passenger rolling stock sector, because it impacts on the formation of the investment programme of the Federal Passenger Company and suburban passenger transportation companies. Consequently this affects the development of innovative products,” says Mr Gapanovich.
 In the current situation, private companies fear long-term investments, and the state funding is insufficient. The problem is that a manufacturer cannot predict the revenue part of the budget. In the locomotive building sector, revenue is earned on the basis of tariffs for RZD. “Nowadays, tariffs are set for only one year, and provisional ones – for the next two years, that is why we cannot adequately assess the RZD’s volume of locomotive purchase (and consequently, the revenue a manufacturer will get) for several years,” states Mr Gapanovich. “I’d like to emphasise it once again – it is not the fault of RZD. If tariffs were formed on a long-term basis (for five years at least), it would be easier for enterprises to attract long-term investment, create new products, and upgrade manufacturing capacities.”
The conference chaired by Dmitry Medvedev, Chairman of the RF Government, in August was devoted to long-term tariff policy in the railway transport sector. The movement to setting tariffs for a five-year period was discussed there. If it happens, machine builders will only benefit.
The state can help engineering enterprises by increasing funding. It currently regulates the infrastructure and locomotive component of the tariff, with the provision of wagon supplies being deregulated.
The state can expand funding of RZD’s investment programme by raising the tariff. In the words of Mr Gapanovich, for it not adversely impact on a cargo owner (in the form of increased costs), the increase in the cost of services provided by wagon owners should be limited (i.e. the wagon component of the tariff). “Regarding the difference between the profitability of operators’ and RZD’s activities, it will allow re-distributing revenues in the company’s favour without making transportation more expensive by means of a small reduction in the profitability of railcar owners. This will increase funding of the locomotive fleet and for infrastructure renewal, which will increase orders for rolling stock and components,” notes the company’s Senior Vice President.
In the opinion of Dmitry Zotov, CEO of TransFin-M, the state must now act as the regulator, i.e. to create conditions for efficient and fair business, for creating an investment-attracting climate in the industry and in the entire country, and provide targeted financial support to separate strategically important sectors. In such conditions, entrepreneurs will favour more efficient and cost-effective technologies.
Dependence on imports can be reduced, if the state is interested in it. Putting the transport engineering strategy into action in the field of import-substituting manufacturing may have a positive influence. For example, the amount of imported high-tech electrical equipment used in the new double-system electric locomotive EP20, developed by Alstom and Transmashholding, is large. There are a lot of imported components in other new electric locomotives as well – 2ES5 and 2ES10. “If there is a large order for the locomotives, there will be an economic stimulus to develop production of the relevant components within this country. Therefore, everything again depends on the investment programme so that some concrete decisions can be made, as with the development of a range of up-to-date diesel engines for railway transport. A special sub-programme of the Federal Target Programme “National Technological Base” with allocations from the budget was formed for that,” says Mr Gapanovich.     

More Attention to Leasing

One of the serious achievements of the railway sector reform is liberalization of the market of rolling stock supply for loading. “The bulk of investment is made by private companies, and this scheme shouldn’t be given up. The task of the state is to create conditions for private companies to invest not in the number of railcars (there is a surplus of them on the network), but in qualitative renewal of their rolling stock,” says Mr Bovykin. In his opinion, the private sector fears not long-term investments, but uncertainty. An advantage of the wagon market is that the demand for rolling stock is practically guaranteed in the long-term.
The quality, mentioned by the expert, will only be achieved if engineering sources (the lack of which currently seriously impedes the sector’s development) are renewed. For that, according to experts, attention should be paid to the mechanism of leasing – it can be used either separately or in combination with a credit. The equipment is badly worn (often up to 60-80%); and banks are afraid of investing in the sector, because a lessor needs to understand how much time it will take  to sell this equipment in case of the lessee’s default, what the discount will be, and whether it will be possible to sell it at all. “Factors making the machine building sector less attractive for a lessor include a non-transparent second-hand market for equipment and a serious increase in its cost to pay for dismantling. Financing of industrial complexes – equipment and the building where the machinery is used – may be used to decrease the lessor’s risks. In this case, the lessor does not need to dismantle the equipment, consequently, its cost will not increase seriously, and a potential buyer of the facility will receive an enterprise ready to work, in fact,” says Mr Zotov.
A possible efficient financial instrument for the sector is the leaseback, which allows an enterprise to get funds to expand its production. The state could support the sector by subsidizing a part of the interest rate or the pre-payment. Similar subsidizing programmes were applied to aviation, national road transport, agricultural machinery, and within the network of small and medium business support in the regions. ®
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Conservative and Non-Competitive

The problems of the national machine building sector stretch back to the 1990s, when after the collapse of the USSR companies with large investment budgets took note of western technologies and began to buy foreign machinery. As a result, the competition in the market was unwelcome to Russian engineering companies. And there are many examples. For example, it happened to refrigerator car production, when the Bryansk machine building plant was restructured for a different function and started to produce rolling stock for perishables transportation. This sector was practically replaced by imported products. Some plants turned to be outside the RF territory (Riga Plant for Electric Multiple-Unit Trains Manufacture), enterprises in the German Democratic Republic got beyond the control of the USSR. Later it became more simple to buy machinery abroad, and all innovations were delivered from there.
There is no lack of new technologies. Piggyback transportation is actively discussed this year, and special rolling stock is to be designed for it. A double-deck passenger railcar – the first on RZD’s network – is scheduled for construction. Preparatory work is underway to carry out the first high-speed rail line project. Meanwhile, there are no Russian companies in the list of bidders, i.e. all innovations are developed with the help of foreign specialists. Why doesn’t the strongest sector of the economy have a strong position in the advanced technologies sector? Experts say that the country is too conservative. The first wave of globalization – the collapse of the USSR and Russia’s entry to the global market – had drastic consequences for the industry. The second wave is now expected – the country has joined the WTO and the consequences of this step are still to be felt. Its supporters usually mention the experience of China as a positive example. It joined the WTO in 2001. It had a colossal effect on the economy of the Asian country: exports increased sixfold, the investment flow grew significantly. According to Philippe Pegorier, President of Alstom Russia, it happened because Chinese products have a low final cost. Speaking at the forum “Engineering Technologies - 2012”, he also noted that the major problems of this industry in Russia were the poor quality of products and high credit rates. “According to the level of technologies, the industry has fallen far behind the leaders, as for the wagon building sector, the gap is not that serious, there are up-to-date plants, for example, the Tikhvin Railcar Building Plant,” notes Dmitry Bovykin, Executive Director of the United Wagon Company LLC. “Despite the increase in the technological level, there is no mass replacement of old machinery by modern machinery – the lion’s share of the fleet is rolling stock produced using fifty-year-old technology. It is because of the common conservatism of the sector, and the long life time of a railcar. Even very old, it is able to generate profit, that’s why owners prefer to prolong the length of the railcar’s operational service. ”Railway machinery manufacture is being updated but slowly. One of the latest and the only serious innovation is the opening of the Tikhvin Railcar Building Plant. It is a success from the standpoint of advanced competitive production (it manufactures the modern Barber bogies developed in accordance with American standards) and its own casting, which allows greater competitiveness, and opportunities to attract the necessary number of specialists – the plant built houses for its employees.         
The last aspect – the search for professionals – is in most cases the most important for the advancement of the Russian machine building industry. According to Flavio Kanetti, Senior Director for Business Development of Bombardier Transportation, no serious investment has been made in the transport sector in Russia in the last 25 years; few projects requiring engineers were carried out, and as a result, the profession became unappealing.
Specialists training remains at a low level in the country, which is why few patents come to the world market from Russia today. Although, according to forecasts of Valentin Gapanovich, Senior Vice President of RZD, their number will increase. The number of patents is supposed to be 1,160 this year, and it will grow to 1,610 by 2015. Four years ago the number of received patents was 206.

Machine Builders Not to Blame

Russia has every chance of success in the global engineering market. Mr Gapanovich notes that when talking about the current condition of the industry, one must understand about which sector he is talking.
The situation in cargo wagon building sector is good; the gap between Russian manufacturers and world-leading producers is gradually decreasing. In particular, work is constantly underway to develop next-generation railcars, and their pilot samples are ready. “Wagons with classic axle load – 23.5 tons and 25 tons and 27 tons – are offered to the market, and manufacturers are even ready to produce railcars with axle load of 30 tons,” says Senior Vice President of RZD. “We are glad that our wagon builders offer such solutions and are looking towards the future.” The progress in locomotive building is obvious as well – there is an order for new rolling stock, and new designs have appeared already – mainline electric locomotives EP20, 2ES5, 2ES6, 2ES10, and GT-1 gas turbine locomotive amongst others. All these models can compete with foreign products and even surpass them. For that, time is needed to test the locomotives and prepare them for use. Again, everything depends on the contract purchase size. The main customer is Russian Railways, whose investment programme is limited. Therefore, the demand in this sector is indirectly regulated by the state.
An obvious weak link in the national machine building industry is its passenger sector. It is not the fault of engineering companies who are ready to offer new technologies. The problem stems from the lack of orders, and the imperfect system of passenger transportation regulation, which does not provide adequate funding of transporter’s investment programmes. “Tver Railcar Building Plant is ready to produce railcars with any level of amenities – even with walk-in showers and satellite TV in every compartment,” says Mr Gapanovich. “The current order volume, however, provides enough work for just 50% of full output capacity, so the plant faces difficulty in reaching its full potential. Although, even in such conditions it managed to bring to the market double-deck railcars, and a double-deck electric train will appear soon.”

Who Must Play The Most Significant Role

In the words of Yury Saakyan, CEO of the Institute of Natural Monopolies’, “machinery and technologies, which will be popular in the future, must be designed now for the prototype models to be ready in time.” A manufacturer will be able to compete in the domestic and in the international markets only if he can predict today the requirements for machinery which will be in use in several years time. Significant funds are needed to produce advanced machinery. Who must play the most significant role in the national engineering industry revival – the state or private investors? Is it possible to find new efficient ways of financing this sector? Joint ventures will have a positive influence on the sector. Private companies will develop new products and put them into operation, and the state will create the right conditions for business innovations to flourish. “The role of the state is growing in the passenger rolling stock sector, because it impacts on the formation of the investment programme of the Federal Passenger Company and suburban passenger transportation companies. Consequently this affects the development of innovative products,” says Mr Gapanovich.
 In the current situation, private companies fear long-term investments, and the state funding is insufficient. The problem is that a manufacturer cannot predict the revenue part of the budget. In the locomotive building sector, revenue is earned on the basis of tariffs for RZD. “Nowadays, tariffs are set for only one year, and provisional ones – for the next two years, that is why we cannot adequately assess the RZD’s volume of locomotive purchase (and consequently, the revenue a manufacturer will get) for several years,” states Mr Gapanovich. “I’d like to emphasise it once again – it is not the fault of RZD. If tariffs were formed on a long-term basis (for five years at least), it would be easier for enterprises to attract long-term investment, create new products, and upgrade manufacturing capacities.”
The conference chaired by Dmitry Medvedev, Chairman of the RF Government, in August was devoted to long-term tariff policy in the railway transport sector. The movement to setting tariffs for a five-year period was discussed there. If it happens, machine builders will only benefit.
The state can help engineering enterprises by increasing funding. It currently regulates the infrastructure and locomotive component of the tariff, with the provision of wagon supplies being deregulated.
The state can expand funding of RZD’s investment programme by raising the tariff. In the words of Mr Gapanovich, for it not adversely impact on a cargo owner (in the form of increased costs), the increase in the cost of services provided by wagon owners should be limited (i.e. the wagon component of the tariff). “Regarding the difference between the profitability of operators’ and RZD’s activities, it will allow re-distributing revenues in the company’s favour without making transportation more expensive by means of a small reduction in the profitability of railcar owners. This will increase funding of the locomotive fleet and for infrastructure renewal, which will increase orders for rolling stock and components,” notes the company’s Senior Vice President.
In the opinion of Dmitry Zotov, CEO of TransFin-M, the state must now act as the regulator, i.e. to create conditions for efficient and fair business, for creating an investment-attracting climate in the industry and in the entire country, and provide targeted financial support to separate strategically important sectors. In such conditions, entrepreneurs will favour more efficient and cost-effective technologies.
Dependence on imports can be reduced, if the state is interested in it. Putting the transport engineering strategy into action in the field of import-substituting manufacturing may have a positive influence. For example, the amount of imported high-tech electrical equipment used in the new double-system electric locomotive EP20, developed by Alstom and Transmashholding, is large. There are a lot of imported components in other new electric locomotives as well – 2ES5 and 2ES10. “If there is a large order for the locomotives, there will be an economic stimulus to develop production of the relevant components within this country. Therefore, everything again depends on the investment programme so that some concrete decisions can be made, as with the development of a range of up-to-date diesel engines for railway transport. A special sub-programme of the Federal Target Programme “National Technological Base” with allocations from the budget was formed for that,” says Mr Gapanovich.     

More Attention to Leasing

One of the serious achievements of the railway sector reform is liberalization of the market of rolling stock supply for loading. “The bulk of investment is made by private companies, and this scheme shouldn’t be given up. The task of the state is to create conditions for private companies to invest not in the number of railcars (there is a surplus of them on the network), but in qualitative renewal of their rolling stock,” says Mr Bovykin. In his opinion, the private sector fears not long-term investments, but uncertainty. An advantage of the wagon market is that the demand for rolling stock is practically guaranteed in the long-term.
The quality, mentioned by the expert, will only be achieved if engineering sources (the lack of which currently seriously impedes the sector’s development) are renewed. For that, according to experts, attention should be paid to the mechanism of leasing – it can be used either separately or in combination with a credit. The equipment is badly worn (often up to 60-80%); and banks are afraid of investing in the sector, because a lessor needs to understand how much time it will take  to sell this equipment in case of the lessee’s default, what the discount will be, and whether it will be possible to sell it at all. “Factors making the machine building sector less attractive for a lessor include a non-transparent second-hand market for equipment and a serious increase in its cost to pay for dismantling. Financing of industrial complexes – equipment and the building where the machinery is used – may be used to decrease the lessor’s risks. In this case, the lessor does not need to dismantle the equipment, consequently, its cost will not increase seriously, and a potential buyer of the facility will receive an enterprise ready to work, in fact,” says Mr Zotov.
A possible efficient financial instrument for the sector is the leaseback, which allows an enterprise to get funds to expand its production. The state could support the sector by subsidizing a part of the interest rate or the pre-payment. Similar subsidizing programmes were applied to aviation, national road transport, agricultural machinery, and within the network of small and medium business support in the regions. ®
By Christina Alexandrova [~DETAIL_TEXT] =>

Conservative and Non-Competitive

The problems of the national machine building sector stretch back to the 1990s, when after the collapse of the USSR companies with large investment budgets took note of western technologies and began to buy foreign machinery. As a result, the competition in the market was unwelcome to Russian engineering companies. And there are many examples. For example, it happened to refrigerator car production, when the Bryansk machine building plant was restructured for a different function and started to produce rolling stock for perishables transportation. This sector was practically replaced by imported products. Some plants turned to be outside the RF territory (Riga Plant for Electric Multiple-Unit Trains Manufacture), enterprises in the German Democratic Republic got beyond the control of the USSR. Later it became more simple to buy machinery abroad, and all innovations were delivered from there.
There is no lack of new technologies. Piggyback transportation is actively discussed this year, and special rolling stock is to be designed for it. A double-deck passenger railcar – the first on RZD’s network – is scheduled for construction. Preparatory work is underway to carry out the first high-speed rail line project. Meanwhile, there are no Russian companies in the list of bidders, i.e. all innovations are developed with the help of foreign specialists. Why doesn’t the strongest sector of the economy have a strong position in the advanced technologies sector? Experts say that the country is too conservative. The first wave of globalization – the collapse of the USSR and Russia’s entry to the global market – had drastic consequences for the industry. The second wave is now expected – the country has joined the WTO and the consequences of this step are still to be felt. Its supporters usually mention the experience of China as a positive example. It joined the WTO in 2001. It had a colossal effect on the economy of the Asian country: exports increased sixfold, the investment flow grew significantly. According to Philippe Pegorier, President of Alstom Russia, it happened because Chinese products have a low final cost. Speaking at the forum “Engineering Technologies - 2012”, he also noted that the major problems of this industry in Russia were the poor quality of products and high credit rates. “According to the level of technologies, the industry has fallen far behind the leaders, as for the wagon building sector, the gap is not that serious, there are up-to-date plants, for example, the Tikhvin Railcar Building Plant,” notes Dmitry Bovykin, Executive Director of the United Wagon Company LLC. “Despite the increase in the technological level, there is no mass replacement of old machinery by modern machinery – the lion’s share of the fleet is rolling stock produced using fifty-year-old technology. It is because of the common conservatism of the sector, and the long life time of a railcar. Even very old, it is able to generate profit, that’s why owners prefer to prolong the length of the railcar’s operational service. ”Railway machinery manufacture is being updated but slowly. One of the latest and the only serious innovation is the opening of the Tikhvin Railcar Building Plant. It is a success from the standpoint of advanced competitive production (it manufactures the modern Barber bogies developed in accordance with American standards) and its own casting, which allows greater competitiveness, and opportunities to attract the necessary number of specialists – the plant built houses for its employees.         
The last aspect – the search for professionals – is in most cases the most important for the advancement of the Russian machine building industry. According to Flavio Kanetti, Senior Director for Business Development of Bombardier Transportation, no serious investment has been made in the transport sector in Russia in the last 25 years; few projects requiring engineers were carried out, and as a result, the profession became unappealing.
Specialists training remains at a low level in the country, which is why few patents come to the world market from Russia today. Although, according to forecasts of Valentin Gapanovich, Senior Vice President of RZD, their number will increase. The number of patents is supposed to be 1,160 this year, and it will grow to 1,610 by 2015. Four years ago the number of received patents was 206.

Machine Builders Not to Blame

Russia has every chance of success in the global engineering market. Mr Gapanovich notes that when talking about the current condition of the industry, one must understand about which sector he is talking.
The situation in cargo wagon building sector is good; the gap between Russian manufacturers and world-leading producers is gradually decreasing. In particular, work is constantly underway to develop next-generation railcars, and their pilot samples are ready. “Wagons with classic axle load – 23.5 tons and 25 tons and 27 tons – are offered to the market, and manufacturers are even ready to produce railcars with axle load of 30 tons,” says Senior Vice President of RZD. “We are glad that our wagon builders offer such solutions and are looking towards the future.” The progress in locomotive building is obvious as well – there is an order for new rolling stock, and new designs have appeared already – mainline electric locomotives EP20, 2ES5, 2ES6, 2ES10, and GT-1 gas turbine locomotive amongst others. All these models can compete with foreign products and even surpass them. For that, time is needed to test the locomotives and prepare them for use. Again, everything depends on the contract purchase size. The main customer is Russian Railways, whose investment programme is limited. Therefore, the demand in this sector is indirectly regulated by the state.
An obvious weak link in the national machine building industry is its passenger sector. It is not the fault of engineering companies who are ready to offer new technologies. The problem stems from the lack of orders, and the imperfect system of passenger transportation regulation, which does not provide adequate funding of transporter’s investment programmes. “Tver Railcar Building Plant is ready to produce railcars with any level of amenities – even with walk-in showers and satellite TV in every compartment,” says Mr Gapanovich. “The current order volume, however, provides enough work for just 50% of full output capacity, so the plant faces difficulty in reaching its full potential. Although, even in such conditions it managed to bring to the market double-deck railcars, and a double-deck electric train will appear soon.”

Who Must Play The Most Significant Role

In the words of Yury Saakyan, CEO of the Institute of Natural Monopolies’, “machinery and technologies, which will be popular in the future, must be designed now for the prototype models to be ready in time.” A manufacturer will be able to compete in the domestic and in the international markets only if he can predict today the requirements for machinery which will be in use in several years time. Significant funds are needed to produce advanced machinery. Who must play the most significant role in the national engineering industry revival – the state or private investors? Is it possible to find new efficient ways of financing this sector? Joint ventures will have a positive influence on the sector. Private companies will develop new products and put them into operation, and the state will create the right conditions for business innovations to flourish. “The role of the state is growing in the passenger rolling stock sector, because it impacts on the formation of the investment programme of the Federal Passenger Company and suburban passenger transportation companies. Consequently this affects the development of innovative products,” says Mr Gapanovich.
 In the current situation, private companies fear long-term investments, and the state funding is insufficient. The problem is that a manufacturer cannot predict the revenue part of the budget. In the locomotive building sector, revenue is earned on the basis of tariffs for RZD. “Nowadays, tariffs are set for only one year, and provisional ones – for the next two years, that is why we cannot adequately assess the RZD’s volume of locomotive purchase (and consequently, the revenue a manufacturer will get) for several years,” states Mr Gapanovich. “I’d like to emphasise it once again – it is not the fault of RZD. If tariffs were formed on a long-term basis (for five years at least), it would be easier for enterprises to attract long-term investment, create new products, and upgrade manufacturing capacities.”
The conference chaired by Dmitry Medvedev, Chairman of the RF Government, in August was devoted to long-term tariff policy in the railway transport sector. The movement to setting tariffs for a five-year period was discussed there. If it happens, machine builders will only benefit.
The state can help engineering enterprises by increasing funding. It currently regulates the infrastructure and locomotive component of the tariff, with the provision of wagon supplies being deregulated.
The state can expand funding of RZD’s investment programme by raising the tariff. In the words of Mr Gapanovich, for it not adversely impact on a cargo owner (in the form of increased costs), the increase in the cost of services provided by wagon owners should be limited (i.e. the wagon component of the tariff). “Regarding the difference between the profitability of operators’ and RZD’s activities, it will allow re-distributing revenues in the company’s favour without making transportation more expensive by means of a small reduction in the profitability of railcar owners. This will increase funding of the locomotive fleet and for infrastructure renewal, which will increase orders for rolling stock and components,” notes the company’s Senior Vice President.
In the opinion of Dmitry Zotov, CEO of TransFin-M, the state must now act as the regulator, i.e. to create conditions for efficient and fair business, for creating an investment-attracting climate in the industry and in the entire country, and provide targeted financial support to separate strategically important sectors. In such conditions, entrepreneurs will favour more efficient and cost-effective technologies.
Dependence on imports can be reduced, if the state is interested in it. Putting the transport engineering strategy into action in the field of import-substituting manufacturing may have a positive influence. For example, the amount of imported high-tech electrical equipment used in the new double-system electric locomotive EP20, developed by Alstom and Transmashholding, is large. There are a lot of imported components in other new electric locomotives as well – 2ES5 and 2ES10. “If there is a large order for the locomotives, there will be an economic stimulus to develop production of the relevant components within this country. Therefore, everything again depends on the investment programme so that some concrete decisions can be made, as with the development of a range of up-to-date diesel engines for railway transport. A special sub-programme of the Federal Target Programme “National Technological Base” with allocations from the budget was formed for that,” says Mr Gapanovich.     

More Attention to Leasing

One of the serious achievements of the railway sector reform is liberalization of the market of rolling stock supply for loading. “The bulk of investment is made by private companies, and this scheme shouldn’t be given up. The task of the state is to create conditions for private companies to invest not in the number of railcars (there is a surplus of them on the network), but in qualitative renewal of their rolling stock,” says Mr Bovykin. In his opinion, the private sector fears not long-term investments, but uncertainty. An advantage of the wagon market is that the demand for rolling stock is practically guaranteed in the long-term.
The quality, mentioned by the expert, will only be achieved if engineering sources (the lack of which currently seriously impedes the sector’s development) are renewed. For that, according to experts, attention should be paid to the mechanism of leasing – it can be used either separately or in combination with a credit. The equipment is badly worn (often up to 60-80%); and banks are afraid of investing in the sector, because a lessor needs to understand how much time it will take  to sell this equipment in case of the lessee’s default, what the discount will be, and whether it will be possible to sell it at all. “Factors making the machine building sector less attractive for a lessor include a non-transparent second-hand market for equipment and a serious increase in its cost to pay for dismantling. Financing of industrial complexes – equipment and the building where the machinery is used – may be used to decrease the lessor’s risks. In this case, the lessor does not need to dismantle the equipment, consequently, its cost will not increase seriously, and a potential buyer of the facility will receive an enterprise ready to work, in fact,” says Mr Zotov.
A possible efficient financial instrument for the sector is the leaseback, which allows an enterprise to get funds to expand its production. The state could support the sector by subsidizing a part of the interest rate or the pre-payment. Similar subsidizing programmes were applied to aviation, national road transport, agricultural machinery, and within the network of small and medium business support in the regions. ®
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РЖД-Партнер

Overtake and Surpass

 It’s not right to say that the Russian rolling stock manufacturing industry is weak, but it is obvious that this segment has a lack of innovation. Senior Vice President at Russian Railways Valentin Gapanovich told us what puts the brakes on the development of this sector and what has to be done to become competitive in the global market.
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“Long Term” Money Is Important

– Mr Gapanovich, Russia recently joined the WTO, and many experts expressed their misgivings about the further development of the domestic railway engineering industry. According to their opinion, the country is not yet ready to compete in this market. But, in your opinion, could Russia take a worthy place in the world market of engineering technologies today?

– I believe that it is within our power. But we need to specify what exactly we are talking about. So, if we talk about freight wagon building, there are no problems there, as we confidently closing the gap on world leading manufacturers. There are already new ideas and ready-to-use samples of next-generation cars, new engineering solutions, and new materials. New innovative plants are being created. For locomotive building, there is also very noticeable progress: there is an order for new rolling stock, new engineering solutions. All that we need now is the time to test new technologies to cure so-called “childhood diseases”, before putting it into full operation. By the way, all these examples satisfy world standards, and some even surpass them.

– Then what prevents us from entering the world market?

– Our manufacturers offer quite good models, but it all depends on the size of the purchase. The more you will purchase, the more new ideas will be implemented. But here in Russia the main customer is RZD, and there are certain limitations on the amount of investment. Therefore, in this regard, the procurement volumes are regulated by the state.
The situation in the segment of passenger wagon and motor carriage rolling stock building is much worse. A distinct lack of orders makes development in this sector very complicated. The problem is not manufacturers, but current management system of railway transport, which doesn’t provide for the financing of carrier investment programs at the appropriate level. For example, the Tver Railcar Building Plant is ready to produce innovative modern carriages with showers and satellite TV, but the current volume of orders doesn’t allow this plant to do it. But even in such circumstances manufacturers were able to present double-deck carriages on locomotive traction, and soon double-deck suburban trains will be made.

– So who do you think should play the main part in helping in the revival of the domestic machinery industry - the state or the private sector?

– I think, both. The private sector should do its best to create and implement new products, and the state should create comfortable conditions for industry development. But if we talk about passenger rolling stock, the role of the state is greatly increased in this field, because it directly affects the formation of the investment program of Federal Passenger Company and suburban companies.
But as we see, the private sector today is afraid of long-term investments in this sector.

– What are the main risks?

– For making long-term investments, they have to involve independent finance, because it is impossible to develop without this money. But the involvement of independent finance is only possible when we have long-term planning.
Producers can calculate costs today, but with revenues everything is much more complicated. So if, for example, we are talking about locomotives, the revenue part of the project is largely based on tariffs for RZD. Currently, rates are set for 1 year and indicative for the following 2 years, therefore, it is impossible to assess the volume of locomotive purchases by RZD for several years. Again, it is not the fault of the company, but we have such procedure for establishing tariffs for carrier services.
But if tariffs are set up on a long-term basis (at least 5 years), it will be much easier for manufacturers to attract long-term investment, create new products and modernize production.

– By how much, in your opinion, does funding in this area need to be increased by the state? What other investment mechanisms can be used to improve the situation?

– The state, of course, can increase funding. For example, the state now regulates the so-called “infrastructure and locomotive” part of tariff, while the wagon services are deregulated. The state can increase funding of the investment program of RZD by increasing the tariff. But we should limit the increase in the “wagon” part of tariff.
The difference in profitability of private operators and RZD services will allow the redistribution of income in favor of RZD without raising the cost of transportation for cargo and a small decline in the profitability of owners of cars. This option will substantially increase the amount of funding for infrastructure upgrades and the locomotive fleet.
Also I would like to mention investment tools such as pension funds via infrastructure bonds. It is a very reliable way to invest for future pension payments, because the railways will never disappear, and their role and importance will only continue increasing, especially with the full implementation of the corridor between Europe and Asia. At the moment we don’t have enough long term money for important infrastructure projects.

Cooperation Is The Answer

– The tender for construction of rolling stock for the High Speed Rail-1 project (HSR-1) will be opened soon. And foreign manufacturers would like to bid for it. Why do you think Russian companies are not included in the list of candidates?

– In fact, some Russian companies are taking part in the project as a part of some consortia. Because under the terms of the concession agreement the concessionaire will be obliged to undertake design and construction, but without the involvement of local companies, he simply will not be able to do it. This will require not only the existing building capacity of RZD, but also the industry as a whole. For example, the construction of the railroad tracks, ties and rails, construction of artificial structures, delivery of concrete, gravel, etc. will require the participation of a large number of domestic suppliers. In our view, the concessionaire just has to attract a number of Russian companies to the production process.

– Do you think that the process of improvement of domestic railway engineering requires cooperation between Russian factories and foreign manufacturers? Is it a pre-requisite condition for the development of innovations?

– Yes, it’s probably the only right decision now, when we need to reduce the technology gap. And as I have previously noted, in some segments of railway engineering it was successfully achieved. For example, collaboration with Alstom and Siemens in the area of locomotives turned out to be very productive. It is essential that our technicians do not spend unnecessary efforts inventing technology that has been already used abroad for a long time. This is the process of technology transfer. It is enough to close the gap on world leaders relatively quickly: possibly within 3-5 years, and then we will be able to develop without help of foreign colleagues. The design and engineering potential of our engineers will continue to evolve independently.

– How can dependency on imports in this segment be reduced?

– Reducing dependence on imports depends on the interest of the state in the development of the domestic rail industry, creating the necessary conditions for their development, such as the mainstreaming strategy. For example, there is a high proportion of imported high-technology electro technical equipment in a new electric locomotive ÈP20, created jointly by Alstom and Transmashholding.
In other new electric locomotives – 2ES5, 2ES10 – we also see a lot of imported components. If a big order for these locomotives is placed, manufacturers will receive the economic stimulus to produce these models in Russia, alone or in partnership. Thus, everything again depends on the size of the investment program. Or maybe some concrete solutions can be made as it was with the project of modern diesel engines for railway transport, for which a separate subprogram was developed with allocation of federal funds.

– But access for innovative machinery to the RZD network is difficult because of the complicated procedure of certification. So it puts the brakes on development. How long does the certification procedure for foreign rolling stock in Russia usually take?

– The certification procedure for foreign rolling stock, methods and testing according to the law “On technical regulation” may not differ from the procedure of certification of rolling stock produced by domestic enterprises. Because the foreign equipment for Russian roads is brand new, not previously operated, it must pass through the innovation technology certification procedure.
This certification process is difficult because foreign rolling stock is created in other conditions, and has other normative documents. Moreover, in some cases, our regulatory documents cannot be fully applied to this process.
Therefore we need to organize all types of tests of rolling stock and components, while domestic production can be set-off of the analogue test results, as usually there is a certain level of continuity. And some of the applied components are mass-produced and have a certificate.
But for foreign companies it is not possible. First, there is no agreement with European manufacturers on the recognition of the results. Secondly, according to the requirements of European standards, testing of the rolling stock must be carried out on the infrastructure where it will be operated.
General reasons – operating conditions significantly differ from the European, and regulatory requirements in many cases are stricter in Russia. In addition, as noted above, in some cases it is necessary to make changes and additions to our regulatory documents and in some cases we need to prove the security of foreign rolling stock according to our own standards.
A technical regulation in the Customs Union will make standard documents more accessible and open; simplifying the procedure of amending the regulations. However, this does not affect the need for objective and reliable evidence of safety and this is as it should be.
The process of certification of rolling stock in Europe is perhaps more complex and expensive, and may seem too complicated for our manufacturers, as our procedures seem too difficult for Europeans.
By Christina Alexandrova [~DETAIL_TEXT] =>

“Long Term” Money Is Important

– Mr Gapanovich, Russia recently joined the WTO, and many experts expressed their misgivings about the further development of the domestic railway engineering industry. According to their opinion, the country is not yet ready to compete in this market. But, in your opinion, could Russia take a worthy place in the world market of engineering technologies today?

– I believe that it is within our power. But we need to specify what exactly we are talking about. So, if we talk about freight wagon building, there are no problems there, as we confidently closing the gap on world leading manufacturers. There are already new ideas and ready-to-use samples of next-generation cars, new engineering solutions, and new materials. New innovative plants are being created. For locomotive building, there is also very noticeable progress: there is an order for new rolling stock, new engineering solutions. All that we need now is the time to test new technologies to cure so-called “childhood diseases”, before putting it into full operation. By the way, all these examples satisfy world standards, and some even surpass them.

– Then what prevents us from entering the world market?

– Our manufacturers offer quite good models, but it all depends on the size of the purchase. The more you will purchase, the more new ideas will be implemented. But here in Russia the main customer is RZD, and there are certain limitations on the amount of investment. Therefore, in this regard, the procurement volumes are regulated by the state.
The situation in the segment of passenger wagon and motor carriage rolling stock building is much worse. A distinct lack of orders makes development in this sector very complicated. The problem is not manufacturers, but current management system of railway transport, which doesn’t provide for the financing of carrier investment programs at the appropriate level. For example, the Tver Railcar Building Plant is ready to produce innovative modern carriages with showers and satellite TV, but the current volume of orders doesn’t allow this plant to do it. But even in such circumstances manufacturers were able to present double-deck carriages on locomotive traction, and soon double-deck suburban trains will be made.

– So who do you think should play the main part in helping in the revival of the domestic machinery industry - the state or the private sector?

– I think, both. The private sector should do its best to create and implement new products, and the state should create comfortable conditions for industry development. But if we talk about passenger rolling stock, the role of the state is greatly increased in this field, because it directly affects the formation of the investment program of Federal Passenger Company and suburban companies.
But as we see, the private sector today is afraid of long-term investments in this sector.

– What are the main risks?

– For making long-term investments, they have to involve independent finance, because it is impossible to develop without this money. But the involvement of independent finance is only possible when we have long-term planning.
Producers can calculate costs today, but with revenues everything is much more complicated. So if, for example, we are talking about locomotives, the revenue part of the project is largely based on tariffs for RZD. Currently, rates are set for 1 year and indicative for the following 2 years, therefore, it is impossible to assess the volume of locomotive purchases by RZD for several years. Again, it is not the fault of the company, but we have such procedure for establishing tariffs for carrier services.
But if tariffs are set up on a long-term basis (at least 5 years), it will be much easier for manufacturers to attract long-term investment, create new products and modernize production.

– By how much, in your opinion, does funding in this area need to be increased by the state? What other investment mechanisms can be used to improve the situation?

– The state, of course, can increase funding. For example, the state now regulates the so-called “infrastructure and locomotive” part of tariff, while the wagon services are deregulated. The state can increase funding of the investment program of RZD by increasing the tariff. But we should limit the increase in the “wagon” part of tariff.
The difference in profitability of private operators and RZD services will allow the redistribution of income in favor of RZD without raising the cost of transportation for cargo and a small decline in the profitability of owners of cars. This option will substantially increase the amount of funding for infrastructure upgrades and the locomotive fleet.
Also I would like to mention investment tools such as pension funds via infrastructure bonds. It is a very reliable way to invest for future pension payments, because the railways will never disappear, and their role and importance will only continue increasing, especially with the full implementation of the corridor between Europe and Asia. At the moment we don’t have enough long term money for important infrastructure projects.

Cooperation Is The Answer

– The tender for construction of rolling stock for the High Speed Rail-1 project (HSR-1) will be opened soon. And foreign manufacturers would like to bid for it. Why do you think Russian companies are not included in the list of candidates?

– In fact, some Russian companies are taking part in the project as a part of some consortia. Because under the terms of the concession agreement the concessionaire will be obliged to undertake design and construction, but without the involvement of local companies, he simply will not be able to do it. This will require not only the existing building capacity of RZD, but also the industry as a whole. For example, the construction of the railroad tracks, ties and rails, construction of artificial structures, delivery of concrete, gravel, etc. will require the participation of a large number of domestic suppliers. In our view, the concessionaire just has to attract a number of Russian companies to the production process.

– Do you think that the process of improvement of domestic railway engineering requires cooperation between Russian factories and foreign manufacturers? Is it a pre-requisite condition for the development of innovations?

– Yes, it’s probably the only right decision now, when we need to reduce the technology gap. And as I have previously noted, in some segments of railway engineering it was successfully achieved. For example, collaboration with Alstom and Siemens in the area of locomotives turned out to be very productive. It is essential that our technicians do not spend unnecessary efforts inventing technology that has been already used abroad for a long time. This is the process of technology transfer. It is enough to close the gap on world leaders relatively quickly: possibly within 3-5 years, and then we will be able to develop without help of foreign colleagues. The design and engineering potential of our engineers will continue to evolve independently.

– How can dependency on imports in this segment be reduced?

– Reducing dependence on imports depends on the interest of the state in the development of the domestic rail industry, creating the necessary conditions for their development, such as the mainstreaming strategy. For example, there is a high proportion of imported high-technology electro technical equipment in a new electric locomotive ÈP20, created jointly by Alstom and Transmashholding.
In other new electric locomotives – 2ES5, 2ES10 – we also see a lot of imported components. If a big order for these locomotives is placed, manufacturers will receive the economic stimulus to produce these models in Russia, alone or in partnership. Thus, everything again depends on the size of the investment program. Or maybe some concrete solutions can be made as it was with the project of modern diesel engines for railway transport, for which a separate subprogram was developed with allocation of federal funds.

– But access for innovative machinery to the RZD network is difficult because of the complicated procedure of certification. So it puts the brakes on development. How long does the certification procedure for foreign rolling stock in Russia usually take?

– The certification procedure for foreign rolling stock, methods and testing according to the law “On technical regulation” may not differ from the procedure of certification of rolling stock produced by domestic enterprises. Because the foreign equipment for Russian roads is brand new, not previously operated, it must pass through the innovation technology certification procedure.
This certification process is difficult because foreign rolling stock is created in other conditions, and has other normative documents. Moreover, in some cases, our regulatory documents cannot be fully applied to this process.
Therefore we need to organize all types of tests of rolling stock and components, while domestic production can be set-off of the analogue test results, as usually there is a certain level of continuity. And some of the applied components are mass-produced and have a certificate.
But for foreign companies it is not possible. First, there is no agreement with European manufacturers on the recognition of the results. Secondly, according to the requirements of European standards, testing of the rolling stock must be carried out on the infrastructure where it will be operated.
General reasons – operating conditions significantly differ from the European, and regulatory requirements in many cases are stricter in Russia. In addition, as noted above, in some cases it is necessary to make changes and additions to our regulatory documents and in some cases we need to prove the security of foreign rolling stock according to our own standards.
A technical regulation in the Customs Union will make standard documents more accessible and open; simplifying the procedure of amending the regulations. However, this does not affect the need for objective and reliable evidence of safety and this is as it should be.
The process of certification of rolling stock in Europe is perhaps more complex and expensive, and may seem too complicated for our manufacturers, as our procedures seem too difficult for Europeans.
By Christina Alexandrova [DETAIL_TEXT_TYPE] => html [~DETAIL_TEXT_TYPE] => html [PREVIEW_TEXT] =>  It’s not right to say that the Russian rolling stock manufacturing industry is weak, but it is obvious that this segment has a lack of innovation. Senior Vice President at Russian Railways Valentin Gapanovich told us what puts the brakes on the development of this sector and what has to be done to become competitive in the global market. [~PREVIEW_TEXT] =>  It’s not right to say that the Russian rolling stock manufacturing industry is weak, but it is obvious that this segment has a lack of innovation. Senior Vice President at Russian Railways Valentin Gapanovich told us what puts the brakes on the development of this sector and what has to be done to become competitive in the global market. 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height="234" align="left" />It’s not right to say that the Russian rolling stock manufacturing industry is weak, but it is obvious that this segment has a lack of innovation. Senior Vice President at Russian Railways Valentin Gapanovich told us what puts the brakes on the development of this sector and what has to be done to become competitive in the global market. [ELEMENT_META_TITLE] => Overtake and Surpass [ELEMENT_META_KEYWORDS] => overtake and surpass [ELEMENT_META_DESCRIPTION] => <img src="/ufiles/image/rus/inter/2012/3/5.jpg" border="1" alt=" " hspace="5" width="200" height="234" align="left" />It’s not right to say that the Russian rolling stock manufacturing industry is weak, but it is obvious that this segment has a lack of innovation. Senior Vice President at Russian Railways Valentin Gapanovich told us what puts the brakes on the development of this sector and what has to be done to become competitive in the global market. 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“Long Term” Money Is Important

– Mr Gapanovich, Russia recently joined the WTO, and many experts expressed their misgivings about the further development of the domestic railway engineering industry. According to their opinion, the country is not yet ready to compete in this market. But, in your opinion, could Russia take a worthy place in the world market of engineering technologies today?

– I believe that it is within our power. But we need to specify what exactly we are talking about. So, if we talk about freight wagon building, there are no problems there, as we confidently closing the gap on world leading manufacturers. There are already new ideas and ready-to-use samples of next-generation cars, new engineering solutions, and new materials. New innovative plants are being created. For locomotive building, there is also very noticeable progress: there is an order for new rolling stock, new engineering solutions. All that we need now is the time to test new technologies to cure so-called “childhood diseases”, before putting it into full operation. By the way, all these examples satisfy world standards, and some even surpass them.

– Then what prevents us from entering the world market?

– Our manufacturers offer quite good models, but it all depends on the size of the purchase. The more you will purchase, the more new ideas will be implemented. But here in Russia the main customer is RZD, and there are certain limitations on the amount of investment. Therefore, in this regard, the procurement volumes are regulated by the state.
The situation in the segment of passenger wagon and motor carriage rolling stock building is much worse. A distinct lack of orders makes development in this sector very complicated. The problem is not manufacturers, but current management system of railway transport, which doesn’t provide for the financing of carrier investment programs at the appropriate level. For example, the Tver Railcar Building Plant is ready to produce innovative modern carriages with showers and satellite TV, but the current volume of orders doesn’t allow this plant to do it. But even in such circumstances manufacturers were able to present double-deck carriages on locomotive traction, and soon double-deck suburban trains will be made.

– So who do you think should play the main part in helping in the revival of the domestic machinery industry - the state or the private sector?

– I think, both. The private sector should do its best to create and implement new products, and the state should create comfortable conditions for industry development. But if we talk about passenger rolling stock, the role of the state is greatly increased in this field, because it directly affects the formation of the investment program of Federal Passenger Company and suburban companies.
But as we see, the private sector today is afraid of long-term investments in this sector.

– What are the main risks?

– For making long-term investments, they have to involve independent finance, because it is impossible to develop without this money. But the involvement of independent finance is only possible when we have long-term planning.
Producers can calculate costs today, but with revenues everything is much more complicated. So if, for example, we are talking about locomotives, the revenue part of the project is largely based on tariffs for RZD. Currently, rates are set for 1 year and indicative for the following 2 years, therefore, it is impossible to assess the volume of locomotive purchases by RZD for several years. Again, it is not the fault of the company, but we have such procedure for establishing tariffs for carrier services.
But if tariffs are set up on a long-term basis (at least 5 years), it will be much easier for manufacturers to attract long-term investment, create new products and modernize production.

– By how much, in your opinion, does funding in this area need to be increased by the state? What other investment mechanisms can be used to improve the situation?

– The state, of course, can increase funding. For example, the state now regulates the so-called “infrastructure and locomotive” part of tariff, while the wagon services are deregulated. The state can increase funding of the investment program of RZD by increasing the tariff. But we should limit the increase in the “wagon” part of tariff.
The difference in profitability of private operators and RZD services will allow the redistribution of income in favor of RZD without raising the cost of transportation for cargo and a small decline in the profitability of owners of cars. This option will substantially increase the amount of funding for infrastructure upgrades and the locomotive fleet.
Also I would like to mention investment tools such as pension funds via infrastructure bonds. It is a very reliable way to invest for future pension payments, because the railways will never disappear, and their role and importance will only continue increasing, especially with the full implementation of the corridor between Europe and Asia. At the moment we don’t have enough long term money for important infrastructure projects.

Cooperation Is The Answer

– The tender for construction of rolling stock for the High Speed Rail-1 project (HSR-1) will be opened soon. And foreign manufacturers would like to bid for it. Why do you think Russian companies are not included in the list of candidates?

– In fact, some Russian companies are taking part in the project as a part of some consortia. Because under the terms of the concession agreement the concessionaire will be obliged to undertake design and construction, but without the involvement of local companies, he simply will not be able to do it. This will require not only the existing building capacity of RZD, but also the industry as a whole. For example, the construction of the railroad tracks, ties and rails, construction of artificial structures, delivery of concrete, gravel, etc. will require the participation of a large number of domestic suppliers. In our view, the concessionaire just has to attract a number of Russian companies to the production process.

– Do you think that the process of improvement of domestic railway engineering requires cooperation between Russian factories and foreign manufacturers? Is it a pre-requisite condition for the development of innovations?

– Yes, it’s probably the only right decision now, when we need to reduce the technology gap. And as I have previously noted, in some segments of railway engineering it was successfully achieved. For example, collaboration with Alstom and Siemens in the area of locomotives turned out to be very productive. It is essential that our technicians do not spend unnecessary efforts inventing technology that has been already used abroad for a long time. This is the process of technology transfer. It is enough to close the gap on world leaders relatively quickly: possibly within 3-5 years, and then we will be able to develop without help of foreign colleagues. The design and engineering potential of our engineers will continue to evolve independently.

– How can dependency on imports in this segment be reduced?

– Reducing dependence on imports depends on the interest of the state in the development of the domestic rail industry, creating the necessary conditions for their development, such as the mainstreaming strategy. For example, there is a high proportion of imported high-technology electro technical equipment in a new electric locomotive ÈP20, created jointly by Alstom and Transmashholding.
In other new electric locomotives – 2ES5, 2ES10 – we also see a lot of imported components. If a big order for these locomotives is placed, manufacturers will receive the economic stimulus to produce these models in Russia, alone or in partnership. Thus, everything again depends on the size of the investment program. Or maybe some concrete solutions can be made as it was with the project of modern diesel engines for railway transport, for which a separate subprogram was developed with allocation of federal funds.

– But access for innovative machinery to the RZD network is difficult because of the complicated procedure of certification. So it puts the brakes on development. How long does the certification procedure for foreign rolling stock in Russia usually take?

– The certification procedure for foreign rolling stock, methods and testing according to the law “On technical regulation” may not differ from the procedure of certification of rolling stock produced by domestic enterprises. Because the foreign equipment for Russian roads is brand new, not previously operated, it must pass through the innovation technology certification procedure.
This certification process is difficult because foreign rolling stock is created in other conditions, and has other normative documents. Moreover, in some cases, our regulatory documents cannot be fully applied to this process.
Therefore we need to organize all types of tests of rolling stock and components, while domestic production can be set-off of the analogue test results, as usually there is a certain level of continuity. And some of the applied components are mass-produced and have a certificate.
But for foreign companies it is not possible. First, there is no agreement with European manufacturers on the recognition of the results. Secondly, according to the requirements of European standards, testing of the rolling stock must be carried out on the infrastructure where it will be operated.
General reasons – operating conditions significantly differ from the European, and regulatory requirements in many cases are stricter in Russia. In addition, as noted above, in some cases it is necessary to make changes and additions to our regulatory documents and in some cases we need to prove the security of foreign rolling stock according to our own standards.
A technical regulation in the Customs Union will make standard documents more accessible and open; simplifying the procedure of amending the regulations. However, this does not affect the need for objective and reliable evidence of safety and this is as it should be.
The process of certification of rolling stock in Europe is perhaps more complex and expensive, and may seem too complicated for our manufacturers, as our procedures seem too difficult for Europeans.
By Christina Alexandrova [~DETAIL_TEXT] =>

“Long Term” Money Is Important

– Mr Gapanovich, Russia recently joined the WTO, and many experts expressed their misgivings about the further development of the domestic railway engineering industry. According to their opinion, the country is not yet ready to compete in this market. But, in your opinion, could Russia take a worthy place in the world market of engineering technologies today?

– I believe that it is within our power. But we need to specify what exactly we are talking about. So, if we talk about freight wagon building, there are no problems there, as we confidently closing the gap on world leading manufacturers. There are already new ideas and ready-to-use samples of next-generation cars, new engineering solutions, and new materials. New innovative plants are being created. For locomotive building, there is also very noticeable progress: there is an order for new rolling stock, new engineering solutions. All that we need now is the time to test new technologies to cure so-called “childhood diseases”, before putting it into full operation. By the way, all these examples satisfy world standards, and some even surpass them.

– Then what prevents us from entering the world market?

– Our manufacturers offer quite good models, but it all depends on the size of the purchase. The more you will purchase, the more new ideas will be implemented. But here in Russia the main customer is RZD, and there are certain limitations on the amount of investment. Therefore, in this regard, the procurement volumes are regulated by the state.
The situation in the segment of passenger wagon and motor carriage rolling stock building is much worse. A distinct lack of orders makes development in this sector very complicated. The problem is not manufacturers, but current management system of railway transport, which doesn’t provide for the financing of carrier investment programs at the appropriate level. For example, the Tver Railcar Building Plant is ready to produce innovative modern carriages with showers and satellite TV, but the current volume of orders doesn’t allow this plant to do it. But even in such circumstances manufacturers were able to present double-deck carriages on locomotive traction, and soon double-deck suburban trains will be made.

– So who do you think should play the main part in helping in the revival of the domestic machinery industry - the state or the private sector?

– I think, both. The private sector should do its best to create and implement new products, and the state should create comfortable conditions for industry development. But if we talk about passenger rolling stock, the role of the state is greatly increased in this field, because it directly affects the formation of the investment program of Federal Passenger Company and suburban companies.
But as we see, the private sector today is afraid of long-term investments in this sector.

– What are the main risks?

– For making long-term investments, they have to involve independent finance, because it is impossible to develop without this money. But the involvement of independent finance is only possible when we have long-term planning.
Producers can calculate costs today, but with revenues everything is much more complicated. So if, for example, we are talking about locomotives, the revenue part of the project is largely based on tariffs for RZD. Currently, rates are set for 1 year and indicative for the following 2 years, therefore, it is impossible to assess the volume of locomotive purchases by RZD for several years. Again, it is not the fault of the company, but we have such procedure for establishing tariffs for carrier services.
But if tariffs are set up on a long-term basis (at least 5 years), it will be much easier for manufacturers to attract long-term investment, create new products and modernize production.

– By how much, in your opinion, does funding in this area need to be increased by the state? What other investment mechanisms can be used to improve the situation?

– The state, of course, can increase funding. For example, the state now regulates the so-called “infrastructure and locomotive” part of tariff, while the wagon services are deregulated. The state can increase funding of the investment program of RZD by increasing the tariff. But we should limit the increase in the “wagon” part of tariff.
The difference in profitability of private operators and RZD services will allow the redistribution of income in favor of RZD without raising the cost of transportation for cargo and a small decline in the profitability of owners of cars. This option will substantially increase the amount of funding for infrastructure upgrades and the locomotive fleet.
Also I would like to mention investment tools such as pension funds via infrastructure bonds. It is a very reliable way to invest for future pension payments, because the railways will never disappear, and their role and importance will only continue increasing, especially with the full implementation of the corridor between Europe and Asia. At the moment we don’t have enough long term money for important infrastructure projects.

Cooperation Is The Answer

– The tender for construction of rolling stock for the High Speed Rail-1 project (HSR-1) will be opened soon. And foreign manufacturers would like to bid for it. Why do you think Russian companies are not included in the list of candidates?

– In fact, some Russian companies are taking part in the project as a part of some consortia. Because under the terms of the concession agreement the concessionaire will be obliged to undertake design and construction, but without the involvement of local companies, he simply will not be able to do it. This will require not only the existing building capacity of RZD, but also the industry as a whole. For example, the construction of the railroad tracks, ties and rails, construction of artificial structures, delivery of concrete, gravel, etc. will require the participation of a large number of domestic suppliers. In our view, the concessionaire just has to attract a number of Russian companies to the production process.

– Do you think that the process of improvement of domestic railway engineering requires cooperation between Russian factories and foreign manufacturers? Is it a pre-requisite condition for the development of innovations?

– Yes, it’s probably the only right decision now, when we need to reduce the technology gap. And as I have previously noted, in some segments of railway engineering it was successfully achieved. For example, collaboration with Alstom and Siemens in the area of locomotives turned out to be very productive. It is essential that our technicians do not spend unnecessary efforts inventing technology that has been already used abroad for a long time. This is the process of technology transfer. It is enough to close the gap on world leaders relatively quickly: possibly within 3-5 years, and then we will be able to develop without help of foreign colleagues. The design and engineering potential of our engineers will continue to evolve independently.

– How can dependency on imports in this segment be reduced?

– Reducing dependence on imports depends on the interest of the state in the development of the domestic rail industry, creating the necessary conditions for their development, such as the mainstreaming strategy. For example, there is a high proportion of imported high-technology electro technical equipment in a new electric locomotive ÈP20, created jointly by Alstom and Transmashholding.
In other new electric locomotives – 2ES5, 2ES10 – we also see a lot of imported components. If a big order for these locomotives is placed, manufacturers will receive the economic stimulus to produce these models in Russia, alone or in partnership. Thus, everything again depends on the size of the investment program. Or maybe some concrete solutions can be made as it was with the project of modern diesel engines for railway transport, for which a separate subprogram was developed with allocation of federal funds.

– But access for innovative machinery to the RZD network is difficult because of the complicated procedure of certification. So it puts the brakes on development. How long does the certification procedure for foreign rolling stock in Russia usually take?

– The certification procedure for foreign rolling stock, methods and testing according to the law “On technical regulation” may not differ from the procedure of certification of rolling stock produced by domestic enterprises. Because the foreign equipment for Russian roads is brand new, not previously operated, it must pass through the innovation technology certification procedure.
This certification process is difficult because foreign rolling stock is created in other conditions, and has other normative documents. Moreover, in some cases, our regulatory documents cannot be fully applied to this process.
Therefore we need to organize all types of tests of rolling stock and components, while domestic production can be set-off of the analogue test results, as usually there is a certain level of continuity. And some of the applied components are mass-produced and have a certificate.
But for foreign companies it is not possible. First, there is no agreement with European manufacturers on the recognition of the results. Secondly, according to the requirements of European standards, testing of the rolling stock must be carried out on the infrastructure where it will be operated.
General reasons – operating conditions significantly differ from the European, and regulatory requirements in many cases are stricter in Russia. In addition, as noted above, in some cases it is necessary to make changes and additions to our regulatory documents and in some cases we need to prove the security of foreign rolling stock according to our own standards.
A technical regulation in the Customs Union will make standard documents more accessible and open; simplifying the procedure of amending the regulations. However, this does not affect the need for objective and reliable evidence of safety and this is as it should be.
The process of certification of rolling stock in Europe is perhaps more complex and expensive, and may seem too complicated for our manufacturers, as our procedures seem too difficult for Europeans.
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height="234" align="left" />It’s not right to say that the Russian rolling stock manufacturing industry is weak, but it is obvious that this segment has a lack of innovation. 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