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It Is Just the Beginning



According to experts, after three WRCs were launched, the wagon repair market became more competitive. Each WRC looks for a client, trying to utilise its capacities as much as possible. In addition, new depots built from scratch appear on the Russian railway network and increase competition. 

It is interesting that from the 3rd quarter of 2011 to the 2nd quarter of 2013, the market share of each of the three subsidiaries of RZD changed by 1-2%, and private wagon repair companies expanded their share approximately by 4%. This proves that rolling stock owners and operators now have the options to choose a wagon repair company, but several years earlier they had no options.

Meanwhile, there is currently a decline at the market of freight wagon repair. According to the Main Computing Centre of RZD, the amount of railcars, which had scheduled repairs in Russia in 2012, decreased by 3.4% in comparison with 2011. Despite the narrowing market for wagon repair (mainly because of the switch to a system of wagon repair according to its mileage), the number of repair companies increases every year. Nowadays, the total capacities of wagon repair companies in Russia exceed the demand for scheduled repair. This and other factors stimulate the sector to search for solutions that allow maintaining current production and development levels. 

It was the first time in Russian experience, that market mechanisms stimulated an increase in the number of orders placed by rolling stock owners at wagon repair plants were introduced. “These mechanisms are implemented through provision of a system of discounts, special terms of payments, reduced purchase prices of materials and spares used for the repair of cargo railcars,” says Mikhail Sapetov, Director General of WRC-2 OJSC. 

“In spite of all efforts taken to launch independent repair companies and the growth in competition, the market has only just begun to change,” believes Dmitry Losev, Deputy Director General for Technical Development at United Wagon Company LLC (UWC). “In my opinion, the main emphasis should be made on keeping the balance of price and quality suitable for customers.”

Vadim Mikhalchuk, General Director of New Wagon Repair Company (NWC), notes that the concept of “competition” for the rolling stock repair market is still quite new. Private operators, who have their own depots, repair their fleet in them, and the Federal Cargo Company, a subsidiary of RZD, mainly uses the services of WRC-1, 2, 3. As a result, a truly competitive market sector is rather small, and the price and terms of railcar repair play an important role there. In recent years, amid a significant growth of railcars uncoupled for repair, wagon owners have to take into account the quality of services.

An important indicator of the competitiveness of a depot currently is the readiness to repair the new models of freight rolling stock, gradually emerging in the Russian market. For example, the Tikhvin Freight Car Building Plant (TVSZ) began serial production of freight railcars on innovative Barber S-2-R model bogies. The first scheduled repair will be carried out only after 4 years or after 500,000 kilometres, but already the plant is preparing for it. The first experience of repairing railcars on Barber bogies will be during the current uncoupling repair at service centers launched by TVSZ in cooperation with WRC-2. 

WRC-2 always strives to offer the market new approaches and solutions for cargo railcar repair. An important way of strengthening relations with customers is the new service pack offered in 2012: sophisticated maintenance of freight wagons and maintenance of modern nodes and components of cargo railcars introduced by the wagon building plants. Last year the company concluded contracts with large customers such as Severstal and RT Operator for complex maintenance of rolling stock and keeping it in working condition by means of all types of repair at facilities of WRC-2.

Apart from the strategic partnership with TVSZ, WRC-2 signed a cooperation agreement with Amsted Rail, Inc. It covers maintenance of the Brenco cassette-type journal bearings and Motor Control Truck bogies. The service network will consist of nine regional centres and depots certified for provision of maintenance works.

Independent repair companies also strive to renew their production base to fulfill the increasing requirements of the technology and quality of cargo wagon repair. V. Mikhalchuk confirms that NWC is partly ready to service new models. “Taking into account that the demand for modern rolling stock repair will only become stable after six or eight years, we will prepare our facilities to it if there are no any legislative barriers,” he assures.



Preparing for an Auction



One of the main issues, about which the railway community in Russia is anxious, is the future sale of stakes in WRC-2 and WRC-3. Initially, the concept of the reform of RZD wagon repair facilities envisaged is that the holding company will keep a controlling interest in WRC-1 and not less than blocking interests in WRC-2 and WRC-3. 

Late in July 2013, it became known that RZD had prepared a governmental draft decree about selling 100% shareholding minus one share in WRC-2 and WRC-3. The company does not plan to sell its largest repair subsidiary (WRC-1) in the near future. 

The companies will be sold at an auction. Their price will be defined by the Board of Directors when all preliminary procedures are over. Perhaps, the cost of the shareholdings will differ from the current one. 

WRC-2 appreciates changes. “We appreciate the decision about the sale made by the Government. Any changes are good. We are sure, when a new owner comes, the business will get on even better. The main thing is that the new owner must know the ropes of the business,” comments Evgeny Dmitriev, First Deputy CEO for Commerce and Production at WRC-2.

Experts think that the interest in wagon repair assets will be high, because the largest market players are for sale. For example, representatives of a former subsidiary of RZD, Freight One, explain that the purchase of new in-house wagon repair capacities will allow a reduction in expenditure, because rolling stock repair is the main expenditure item for operators of cargo wagons. “Having a large wagon fleet, Freight One would like to reduce expenses on all types of repair. For that, the company needs to develop rolling stock repair business and does not exclude the possible purchase of RZD’s wagon repair divisions. The purchase of an in-house repair capability can contribute to a reduction of expenditure,” says Dmitry Baukov, Head of the Corporate Communications Department at Freight One. 

Therefore, the sale of interests in WRC-2 and WRC-3 will be a new stage in the development of competition in the cargo rolling stock repair sector. At the same time, the market will face a new challenge – the crisis in the rail cargo transportation sector, which can impact on the wagon repair companies. Those companies, which will upgrade their production capacities and will be ready to offer high-quality services at an optimum price, will be in great demand. 

By Elena Nikolaeva



our reference

The decision to launch three subsidiaries engaged in cargo wagon repair –wagon repair companies WRC-1,2,3 – on the basis of the Central Directorate for cargo railcar repair, an affiliate of RZD, was adopted by the Board of Directors of RZD on December 20, 2010. They began business activity on July 1, 2011. 

The wagon repair complex of RZD was reformed in accordance with the extraterritorial approach applied when dividing depots between the subsidiaries. According to this approach, each of the three companies got depots located on the whole Russian railway network. 118 wagon repair facilities were given to the companies. At that time, their total production capacities were evaluated at 358,000 repairs per annum.
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It Is Just the Beginning



According to experts, after three WRCs were launched, the wagon repair market became more competitive. Each WRC looks for a client, trying to utilise its capacities as much as possible. In addition, new depots built from scratch appear on the Russian railway network and increase competition. 

It is interesting that from the 3rd quarter of 2011 to the 2nd quarter of 2013, the market share of each of the three subsidiaries of RZD changed by 1-2%, and private wagon repair companies expanded their share approximately by 4%. This proves that rolling stock owners and operators now have the options to choose a wagon repair company, but several years earlier they had no options.

Meanwhile, there is currently a decline at the market of freight wagon repair. According to the Main Computing Centre of RZD, the amount of railcars, which had scheduled repairs in Russia in 2012, decreased by 3.4% in comparison with 2011. Despite the narrowing market for wagon repair (mainly because of the switch to a system of wagon repair according to its mileage), the number of repair companies increases every year. Nowadays, the total capacities of wagon repair companies in Russia exceed the demand for scheduled repair. This and other factors stimulate the sector to search for solutions that allow maintaining current production and development levels. 

It was the first time in Russian experience, that market mechanisms stimulated an increase in the number of orders placed by rolling stock owners at wagon repair plants were introduced. “These mechanisms are implemented through provision of a system of discounts, special terms of payments, reduced purchase prices of materials and spares used for the repair of cargo railcars,” says Mikhail Sapetov, Director General of WRC-2 OJSC. 

“In spite of all efforts taken to launch independent repair companies and the growth in competition, the market has only just begun to change,” believes Dmitry Losev, Deputy Director General for Technical Development at United Wagon Company LLC (UWC). “In my opinion, the main emphasis should be made on keeping the balance of price and quality suitable for customers.”

Vadim Mikhalchuk, General Director of New Wagon Repair Company (NWC), notes that the concept of “competition” for the rolling stock repair market is still quite new. Private operators, who have their own depots, repair their fleet in them, and the Federal Cargo Company, a subsidiary of RZD, mainly uses the services of WRC-1, 2, 3. As a result, a truly competitive market sector is rather small, and the price and terms of railcar repair play an important role there. In recent years, amid a significant growth of railcars uncoupled for repair, wagon owners have to take into account the quality of services.

An important indicator of the competitiveness of a depot currently is the readiness to repair the new models of freight rolling stock, gradually emerging in the Russian market. For example, the Tikhvin Freight Car Building Plant (TVSZ) began serial production of freight railcars on innovative Barber S-2-R model bogies. The first scheduled repair will be carried out only after 4 years or after 500,000 kilometres, but already the plant is preparing for it. The first experience of repairing railcars on Barber bogies will be during the current uncoupling repair at service centers launched by TVSZ in cooperation with WRC-2. 

WRC-2 always strives to offer the market new approaches and solutions for cargo railcar repair. An important way of strengthening relations with customers is the new service pack offered in 2012: sophisticated maintenance of freight wagons and maintenance of modern nodes and components of cargo railcars introduced by the wagon building plants. Last year the company concluded contracts with large customers such as Severstal and RT Operator for complex maintenance of rolling stock and keeping it in working condition by means of all types of repair at facilities of WRC-2.

Apart from the strategic partnership with TVSZ, WRC-2 signed a cooperation agreement with Amsted Rail, Inc. It covers maintenance of the Brenco cassette-type journal bearings and Motor Control Truck bogies. The service network will consist of nine regional centres and depots certified for provision of maintenance works.

Independent repair companies also strive to renew their production base to fulfill the increasing requirements of the technology and quality of cargo wagon repair. V. Mikhalchuk confirms that NWC is partly ready to service new models. “Taking into account that the demand for modern rolling stock repair will only become stable after six or eight years, we will prepare our facilities to it if there are no any legislative barriers,” he assures.



Preparing for an Auction



One of the main issues, about which the railway community in Russia is anxious, is the future sale of stakes in WRC-2 and WRC-3. Initially, the concept of the reform of RZD wagon repair facilities envisaged is that the holding company will keep a controlling interest in WRC-1 and not less than blocking interests in WRC-2 and WRC-3. 

Late in July 2013, it became known that RZD had prepared a governmental draft decree about selling 100% shareholding minus one share in WRC-2 and WRC-3. The company does not plan to sell its largest repair subsidiary (WRC-1) in the near future. 

The companies will be sold at an auction. Their price will be defined by the Board of Directors when all preliminary procedures are over. Perhaps, the cost of the shareholdings will differ from the current one. 

WRC-2 appreciates changes. “We appreciate the decision about the sale made by the Government. Any changes are good. We are sure, when a new owner comes, the business will get on even better. The main thing is that the new owner must know the ropes of the business,” comments Evgeny Dmitriev, First Deputy CEO for Commerce and Production at WRC-2.

Experts think that the interest in wagon repair assets will be high, because the largest market players are for sale. For example, representatives of a former subsidiary of RZD, Freight One, explain that the purchase of new in-house wagon repair capacities will allow a reduction in expenditure, because rolling stock repair is the main expenditure item for operators of cargo wagons. “Having a large wagon fleet, Freight One would like to reduce expenses on all types of repair. For that, the company needs to develop rolling stock repair business and does not exclude the possible purchase of RZD’s wagon repair divisions. The purchase of an in-house repair capability can contribute to a reduction of expenditure,” says Dmitry Baukov, Head of the Corporate Communications Department at Freight One. 

Therefore, the sale of interests in WRC-2 and WRC-3 will be a new stage in the development of competition in the cargo rolling stock repair sector. At the same time, the market will face a new challenge – the crisis in the rail cargo transportation sector, which can impact on the wagon repair companies. Those companies, which will upgrade their production capacities and will be ready to offer high-quality services at an optimum price, will be in great demand. 

By Elena Nikolaeva



our reference

The decision to launch three subsidiaries engaged in cargo wagon repair –wagon repair companies WRC-1,2,3 – on the basis of the Central Directorate for cargo railcar repair, an affiliate of RZD, was adopted by the Board of Directors of RZD on December 20, 2010. They began business activity on July 1, 2011. 

The wagon repair complex of RZD was reformed in accordance with the extraterritorial approach applied when dividing depots between the subsidiaries. According to this approach, each of the three companies got depots located on the whole Russian railway network. 118 wagon repair facilities were given to the companies. At that time, their total production capacities were evaluated at 358,000 repairs per annum.
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It Is Just the Beginning



According to experts, after three WRCs were launched, the wagon repair market became more competitive. Each WRC looks for a client, trying to utilise its capacities as much as possible. In addition, new depots built from scratch appear on the Russian railway network and increase competition. 

It is interesting that from the 3rd quarter of 2011 to the 2nd quarter of 2013, the market share of each of the three subsidiaries of RZD changed by 1-2%, and private wagon repair companies expanded their share approximately by 4%. This proves that rolling stock owners and operators now have the options to choose a wagon repair company, but several years earlier they had no options.

Meanwhile, there is currently a decline at the market of freight wagon repair. According to the Main Computing Centre of RZD, the amount of railcars, which had scheduled repairs in Russia in 2012, decreased by 3.4% in comparison with 2011. Despite the narrowing market for wagon repair (mainly because of the switch to a system of wagon repair according to its mileage), the number of repair companies increases every year. Nowadays, the total capacities of wagon repair companies in Russia exceed the demand for scheduled repair. This and other factors stimulate the sector to search for solutions that allow maintaining current production and development levels. 

It was the first time in Russian experience, that market mechanisms stimulated an increase in the number of orders placed by rolling stock owners at wagon repair plants were introduced. “These mechanisms are implemented through provision of a system of discounts, special terms of payments, reduced purchase prices of materials and spares used for the repair of cargo railcars,” says Mikhail Sapetov, Director General of WRC-2 OJSC. 

“In spite of all efforts taken to launch independent repair companies and the growth in competition, the market has only just begun to change,” believes Dmitry Losev, Deputy Director General for Technical Development at United Wagon Company LLC (UWC). “In my opinion, the main emphasis should be made on keeping the balance of price and quality suitable for customers.”

Vadim Mikhalchuk, General Director of New Wagon Repair Company (NWC), notes that the concept of “competition” for the rolling stock repair market is still quite new. Private operators, who have their own depots, repair their fleet in them, and the Federal Cargo Company, a subsidiary of RZD, mainly uses the services of WRC-1, 2, 3. As a result, a truly competitive market sector is rather small, and the price and terms of railcar repair play an important role there. In recent years, amid a significant growth of railcars uncoupled for repair, wagon owners have to take into account the quality of services.

An important indicator of the competitiveness of a depot currently is the readiness to repair the new models of freight rolling stock, gradually emerging in the Russian market. For example, the Tikhvin Freight Car Building Plant (TVSZ) began serial production of freight railcars on innovative Barber S-2-R model bogies. The first scheduled repair will be carried out only after 4 years or after 500,000 kilometres, but already the plant is preparing for it. The first experience of repairing railcars on Barber bogies will be during the current uncoupling repair at service centers launched by TVSZ in cooperation with WRC-2. 

WRC-2 always strives to offer the market new approaches and solutions for cargo railcar repair. An important way of strengthening relations with customers is the new service pack offered in 2012: sophisticated maintenance of freight wagons and maintenance of modern nodes and components of cargo railcars introduced by the wagon building plants. Last year the company concluded contracts with large customers such as Severstal and RT Operator for complex maintenance of rolling stock and keeping it in working condition by means of all types of repair at facilities of WRC-2.

Apart from the strategic partnership with TVSZ, WRC-2 signed a cooperation agreement with Amsted Rail, Inc. It covers maintenance of the Brenco cassette-type journal bearings and Motor Control Truck bogies. The service network will consist of nine regional centres and depots certified for provision of maintenance works.

Independent repair companies also strive to renew their production base to fulfill the increasing requirements of the technology and quality of cargo wagon repair. V. Mikhalchuk confirms that NWC is partly ready to service new models. “Taking into account that the demand for modern rolling stock repair will only become stable after six or eight years, we will prepare our facilities to it if there are no any legislative barriers,” he assures.



Preparing for an Auction



One of the main issues, about which the railway community in Russia is anxious, is the future sale of stakes in WRC-2 and WRC-3. Initially, the concept of the reform of RZD wagon repair facilities envisaged is that the holding company will keep a controlling interest in WRC-1 and not less than blocking interests in WRC-2 and WRC-3. 

Late in July 2013, it became known that RZD had prepared a governmental draft decree about selling 100% shareholding minus one share in WRC-2 and WRC-3. The company does not plan to sell its largest repair subsidiary (WRC-1) in the near future. 

The companies will be sold at an auction. Their price will be defined by the Board of Directors when all preliminary procedures are over. Perhaps, the cost of the shareholdings will differ from the current one. 

WRC-2 appreciates changes. “We appreciate the decision about the sale made by the Government. Any changes are good. We are sure, when a new owner comes, the business will get on even better. The main thing is that the new owner must know the ropes of the business,” comments Evgeny Dmitriev, First Deputy CEO for Commerce and Production at WRC-2.

Experts think that the interest in wagon repair assets will be high, because the largest market players are for sale. For example, representatives of a former subsidiary of RZD, Freight One, explain that the purchase of new in-house wagon repair capacities will allow a reduction in expenditure, because rolling stock repair is the main expenditure item for operators of cargo wagons. “Having a large wagon fleet, Freight One would like to reduce expenses on all types of repair. For that, the company needs to develop rolling stock repair business and does not exclude the possible purchase of RZD’s wagon repair divisions. The purchase of an in-house repair capability can contribute to a reduction of expenditure,” says Dmitry Baukov, Head of the Corporate Communications Department at Freight One. 

Therefore, the sale of interests in WRC-2 and WRC-3 will be a new stage in the development of competition in the cargo rolling stock repair sector. At the same time, the market will face a new challenge – the crisis in the rail cargo transportation sector, which can impact on the wagon repair companies. Those companies, which will upgrade their production capacities and will be ready to offer high-quality services at an optimum price, will be in great demand. 

By Elena Nikolaeva



our reference

The decision to launch three subsidiaries engaged in cargo wagon repair –wagon repair companies WRC-1,2,3 – on the basis of the Central Directorate for cargo railcar repair, an affiliate of RZD, was adopted by the Board of Directors of RZD on December 20, 2010. They began business activity on July 1, 2011. 

The wagon repair complex of RZD was reformed in accordance with the extraterritorial approach applied when dividing depots between the subsidiaries. According to this approach, each of the three companies got depots located on the whole Russian railway network. 118 wagon repair facilities were given to the companies. At that time, their total production capacities were evaluated at 358,000 repairs per annum.
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It Is Just the Beginning



According to experts, after three WRCs were launched, the wagon repair market became more competitive. Each WRC looks for a client, trying to utilise its capacities as much as possible. In addition, new depots built from scratch appear on the Russian railway network and increase competition. 

It is interesting that from the 3rd quarter of 2011 to the 2nd quarter of 2013, the market share of each of the three subsidiaries of RZD changed by 1-2%, and private wagon repair companies expanded their share approximately by 4%. This proves that rolling stock owners and operators now have the options to choose a wagon repair company, but several years earlier they had no options.

Meanwhile, there is currently a decline at the market of freight wagon repair. According to the Main Computing Centre of RZD, the amount of railcars, which had scheduled repairs in Russia in 2012, decreased by 3.4% in comparison with 2011. Despite the narrowing market for wagon repair (mainly because of the switch to a system of wagon repair according to its mileage), the number of repair companies increases every year. Nowadays, the total capacities of wagon repair companies in Russia exceed the demand for scheduled repair. This and other factors stimulate the sector to search for solutions that allow maintaining current production and development levels. 

It was the first time in Russian experience, that market mechanisms stimulated an increase in the number of orders placed by rolling stock owners at wagon repair plants were introduced. “These mechanisms are implemented through provision of a system of discounts, special terms of payments, reduced purchase prices of materials and spares used for the repair of cargo railcars,” says Mikhail Sapetov, Director General of WRC-2 OJSC. 

“In spite of all efforts taken to launch independent repair companies and the growth in competition, the market has only just begun to change,” believes Dmitry Losev, Deputy Director General for Technical Development at United Wagon Company LLC (UWC). “In my opinion, the main emphasis should be made on keeping the balance of price and quality suitable for customers.”

Vadim Mikhalchuk, General Director of New Wagon Repair Company (NWC), notes that the concept of “competition” for the rolling stock repair market is still quite new. Private operators, who have their own depots, repair their fleet in them, and the Federal Cargo Company, a subsidiary of RZD, mainly uses the services of WRC-1, 2, 3. As a result, a truly competitive market sector is rather small, and the price and terms of railcar repair play an important role there. In recent years, amid a significant growth of railcars uncoupled for repair, wagon owners have to take into account the quality of services.

An important indicator of the competitiveness of a depot currently is the readiness to repair the new models of freight rolling stock, gradually emerging in the Russian market. For example, the Tikhvin Freight Car Building Plant (TVSZ) began serial production of freight railcars on innovative Barber S-2-R model bogies. The first scheduled repair will be carried out only after 4 years or after 500,000 kilometres, but already the plant is preparing for it. The first experience of repairing railcars on Barber bogies will be during the current uncoupling repair at service centers launched by TVSZ in cooperation with WRC-2. 

WRC-2 always strives to offer the market new approaches and solutions for cargo railcar repair. An important way of strengthening relations with customers is the new service pack offered in 2012: sophisticated maintenance of freight wagons and maintenance of modern nodes and components of cargo railcars introduced by the wagon building plants. Last year the company concluded contracts with large customers such as Severstal and RT Operator for complex maintenance of rolling stock and keeping it in working condition by means of all types of repair at facilities of WRC-2.

Apart from the strategic partnership with TVSZ, WRC-2 signed a cooperation agreement with Amsted Rail, Inc. It covers maintenance of the Brenco cassette-type journal bearings and Motor Control Truck bogies. The service network will consist of nine regional centres and depots certified for provision of maintenance works.

Independent repair companies also strive to renew their production base to fulfill the increasing requirements of the technology and quality of cargo wagon repair. V. Mikhalchuk confirms that NWC is partly ready to service new models. “Taking into account that the demand for modern rolling stock repair will only become stable after six or eight years, we will prepare our facilities to it if there are no any legislative barriers,” he assures.



Preparing for an Auction



One of the main issues, about which the railway community in Russia is anxious, is the future sale of stakes in WRC-2 and WRC-3. Initially, the concept of the reform of RZD wagon repair facilities envisaged is that the holding company will keep a controlling interest in WRC-1 and not less than blocking interests in WRC-2 and WRC-3. 

Late in July 2013, it became known that RZD had prepared a governmental draft decree about selling 100% shareholding minus one share in WRC-2 and WRC-3. The company does not plan to sell its largest repair subsidiary (WRC-1) in the near future. 

The companies will be sold at an auction. Their price will be defined by the Board of Directors when all preliminary procedures are over. Perhaps, the cost of the shareholdings will differ from the current one. 

WRC-2 appreciates changes. “We appreciate the decision about the sale made by the Government. Any changes are good. We are sure, when a new owner comes, the business will get on even better. The main thing is that the new owner must know the ropes of the business,” comments Evgeny Dmitriev, First Deputy CEO for Commerce and Production at WRC-2.

Experts think that the interest in wagon repair assets will be high, because the largest market players are for sale. For example, representatives of a former subsidiary of RZD, Freight One, explain that the purchase of new in-house wagon repair capacities will allow a reduction in expenditure, because rolling stock repair is the main expenditure item for operators of cargo wagons. “Having a large wagon fleet, Freight One would like to reduce expenses on all types of repair. For that, the company needs to develop rolling stock repair business and does not exclude the possible purchase of RZD’s wagon repair divisions. The purchase of an in-house repair capability can contribute to a reduction of expenditure,” says Dmitry Baukov, Head of the Corporate Communications Department at Freight One. 

Therefore, the sale of interests in WRC-2 and WRC-3 will be a new stage in the development of competition in the cargo rolling stock repair sector. At the same time, the market will face a new challenge – the crisis in the rail cargo transportation sector, which can impact on the wagon repair companies. Those companies, which will upgrade their production capacities and will be ready to offer high-quality services at an optimum price, will be in great demand. 

By Elena Nikolaeva



our reference

The decision to launch three subsidiaries engaged in cargo wagon repair –wagon repair companies WRC-1,2,3 – on the basis of the Central Directorate for cargo railcar repair, an affiliate of RZD, was adopted by the Board of Directors of RZD on December 20, 2010. They began business activity on July 1, 2011. 

The wagon repair complex of RZD was reformed in accordance with the extraterritorial approach applied when dividing depots between the subsidiaries. According to this approach, each of the three companies got depots located on the whole Russian railway network. 118 wagon repair facilities were given to the companies. At that time, their total production capacities were evaluated at 358,000 repairs per annum.
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Rzd’s Revenue Increased By 0.1% In H1 2013

In January-June 2013, the revenue of Russian Railways JSC (according to Russian accounting standards) grew by 0.1% year-on-year to RUB 678 billion.

RZD’s net costs increased by 3.6% to RUB 622.3 billion, “other expenses” grew by more than 41% to RUB 102.9 billion.

In the first half of 2013, net profit of RZD reduced by more than 75% to RUB 8.2 billion.



Russian Railways Prepared Governmental Draft Bill About Selling Wagon Repair Companies

RZD has prepared a governmental draft bill about the sale of 100% minus one share in wagon repair companies WRC-2 and WRC-3.

The company is currently not going to sell its largest wagon repair subsidiary WRC-1.

The Board of Directors preliminarily approved selling stakes in WRC-2 and WRC-3, and RZD has prepared a governmental draft bill about selling these companies, said a representative of the RZD’s Department for Controlling Subsidiaries.

The document was adjusted by the Federal Agency for Railway Transport, and it has been submitted to the Federal Agency for State Property Management.

The companies will be sold at auction. Their price will be defined by the Board of Directors, when all preparatory procedures are completed.



Rzd Plans To Expand Its Stake In Felb To 50% In 2013 

RZD’s holding company is going to expand its stake in Far East Land Bridge Ltd. (FELB, Austria) to 50% in 2013, according to the annex to the annual report published by RZD-Logistics (a subsidiary of Russian Railways JSC). FELB specialises in container transportation by railway between China and Europe.

In summer 2012, RZD-Logistics announced it had purchased a 10% stake in FELB and planned to expand its shareholding in the company to 25%. At the end of April 2013, it exercised an option on a 15.1% stake and expanded its stake to 25.3%

“The board of the company is confident that the funds FELB will get after all these actions (the expansion of RZD holding company’s stake in the FELB’s stock) will be enough to pay FELB’s debt of $22.5 million to RZD-Logistics,” says the annex to the annual report published by RZD-Logistics.

Earlier, a 10% interest in FELB belonged to TransContainer, but last summer the container operator and RZD-Logistics concluded an agreement about transferring to the latter the debt of FELB for the total sum of $22.5 million. According to the financial accounts of RZD-Logistics, RUB 683.4 million of FELB’s debt was added to the accounts receivable by RZD-Logistics.

“Senior management in the company are sure that the funds FELB will get as a result of all these actions (the expansion of RZD holding company’s interest in FELB) will be enough to pay the debts of FELB to RZD-Logistics,” says the annex.



Sudan Offered Rzd Participation In Its Railway Construction 

Sudan offered Russia a role in construction of the Dakar – Port-Sudan railway, said Omar Dahab Fadul, Sudan Ambassador to the Russian Federation. 

“Last week the Director of Sudan Railways was on a visit to Russia”, Dahab Fadul said. “At the meeting with RZD management he offered Russia to participate in building the Trans-African railway from the Senegal capital Dakar to Sudanese Port-Sudan at the Red Sea”. 

In his words, the Trans-African railway will link the capital of Senegal and Djibouti at the Gulf of Aden. This is one of the most important ports in the western part of the Indian Ocean.

The Sudan Ambassador noted that the project “will be carried out in cooperation with the Organisation of Islamic Cooperation.” “Russian companies have good prospects in developing this project. At least, we have made this offer,” added Mr Omar Dahab Fadul. 



Rzd And Ebrd Agree To Cooperate On Modernising Railway Infrastructure

Russian Railways and the European Bank for Reconstruction and Development (EBRD) have signed a Memorandum of Understanding and Cooperation on modernising their railway and related infrastructure.

The document was signed by Vladimir Yakunin, President of Russian Railways, and Suma Chakrabarti, EBRD President, at the St Petersburg International Economic Forum on June 20, 2013.

According to the Memorandum, the two parties intend to cooperate on developing high-speed transportation infrastructure, projects based on public-private partnership to modernise railway stations, and projects to develop transport and logistics activities.

Russian Railways intends to consider the EBRD’s participation in financing these projects.



Rzd And Serbian Railways Sign Contract To Construct And Reconstruct Serbia’s Railways

On May 23, 2013, RZD signed a contract to construct and reconstruct Serbian railways.

The contract provides for the construction and electrification of 16 km of a second track on the Belgrade - Pančevo railway line; reconstruction of six sections with a total length of 112 km on Pan-European Corridor X; reconstruction of the existing and construction of a new second new track on the 44 km section between Stara Pazova - Novi Sad; reconstruction of the Serbian section of the Belgrade - Bar railway line with a total length of 200 km (Belgrade - Vrbnitsa); supply of 26 diesel trains produced by Metrovagonmash OJSC (Russia).

Russian Railways International, a subsidiary of Russian Railways which specialises in implementing the Holding company’s infrastructure projects abroad, will carry out the work on behalf of Russian Railways.

The contract was signed as part of an agreement between the Russian and Serbian governments on granting the Republic of Serbia a state export credit in the amount of $800 million.The agreement was signed on 11 January 2013 at Russia’s Ministry of Finance by Anton Siluanov, Russia’s Minister of Finance, and Mladjan Dinkić, Serbia Minister’s of Finance and Economy.



Veb And Rzd Intend To Implement Export And Investment Projects In Foreign Countries

At the Petersburg International Economic Forum-2013, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and Russian Railways entered into an Agreement on Cooperation in implementing export and investment projects in foreign countries.

The parties intend to cooperate in implementing export and investment projects in foreign countries aimed at manufacturing and introducing Russian high-technology industrial products, supporting the export of products, services and technologies including in order to diversify national exports and boosting Russian institutions’ competitive edge on the world market.

Under the Agreement, Vnesheconombank and RZD agreed to conduct comprehensive examination of export and investment projects abroad to explore the possibility of their participation in funding them as well as make arrangements for funding projects in the case they are in line with requirements of the Memorandum on Vnesheconombank’s Financial Policies and in case of positive results of financial examination.

In the parties’ opinion, the Agreement’s implementation would help to secure expanded access to the world market for Russian companies and products manufactured by them.



Tests Of New Natural Gas-Powered Locomotive Will Finish In June 2014

The second sample of the gas turbine locomotive, using liquefied natural gas (LNG) as a fuel, will be made by Lyudinovo Diesel Locomotive Plant this September, and its testing will complete in June 2014.

“Taking into account the experience in the development of the first gas turbine locomotive, the development of the design documentation and production of the second industrial sample of the mainline two-section gas turbine locomotive of GT1-002 model has begun. Technical solutions tested on the first sample will be used in the new locomotive,” a representative of RZD said. The first sample (GT1-001) was tested at the Moscow Railway and was put into trial operation in the Sverdlovsk region last February.

The following companies have participated in the development of basic equipment for the second sample of the gas turbine locomotive: Kuznetsov from Samara (gas turbine), ETM-Privod from Lys’va (traction generator), Uralkriomash from Nizhny Tagil (liquid nitrogen tank), Kriomash-BZKM from Balashikha (cryogenic equipment).

In addition, in August 2013, Bryansk machine building plant will produce gas locomotive with a gas-fueled reciprocating engine. All tests will be finished by September-October 2014.



Russia Will Continue To Modernise The Port Infrastructure Of The Northern Sea Route

The Russian Federation will continue to modernise the port infrastructure, said Dmitry Medvedev, Prime Minister of the RF, at the plenary session of the Barents Euro-Arctic Council countries. 

The Russian Prime Minister emphasised that the development of transport communications is of major importance for enhancing the region’s competitive advantages. In particular, new railways and, of course, the commercial development of the Northern Sea Route, which is the shortest link between Europe and the Asia-Pacific Region, are very important. According to Mr Medvedev, cargo transportation volume of the Northern Sea Route increased ten-fold in the last three years.

“For its part, Russia will upgrade its coastal and port infrastructure and develop modern systems of monitoring, navigation and communications,” promised Mr Medvedev.

In his opinion, easier transportation access to the Arctic territories creates favourable conditions for implementing large-scale investment projects, including those on raw materials, hydrocarbons and the continental shelf.



Construction Of Amur-Yakut Mainline Almost Completed

The construction of the Amur-Yakut Mainline in Russia is almost completed.

It has become the largest project in the sector for the last 30 years. However, the railway is shorter than planned – it does not reach the capital of Yakutia.

The new railway links the Amurskaya oblast and the Republic of Sakha (Yakutia), it crosses the Trans-Siberian Mainline and the BAM. The length of the railway is 1,239 km. Works in the final point of the railway, Nizhny Bestyakh settlement, are now being completed. The railway station and adjacent station infrastructure – the largest facility on the railway – were recently put into operation.

After the railway is put into operation, it is possible to transport freight from many deposits located not far from the tracks of the railway, and to provide all-season delivery of cargoes to the Republic, and passenger transportation. 
    [~DETAIL_TEXT] => 
Rzd’s Revenue Increased By 0.1% In H1 2013

In January-June 2013, the revenue of Russian Railways JSC (according to Russian accounting standards) grew by 0.1% year-on-year to RUB 678 billion.

RZD’s net costs increased by 3.6% to RUB 622.3 billion, “other expenses” grew by more than 41% to RUB 102.9 billion.

In the first half of 2013, net profit of RZD reduced by more than 75% to RUB 8.2 billion.



Russian Railways Prepared Governmental Draft Bill About Selling Wagon Repair Companies

RZD has prepared a governmental draft bill about the sale of 100% minus one share in wagon repair companies WRC-2 and WRC-3.

The company is currently not going to sell its largest wagon repair subsidiary WRC-1.

The Board of Directors preliminarily approved selling stakes in WRC-2 and WRC-3, and RZD has prepared a governmental draft bill about selling these companies, said a representative of the RZD’s Department for Controlling Subsidiaries.

The document was adjusted by the Federal Agency for Railway Transport, and it has been submitted to the Federal Agency for State Property Management.

The companies will be sold at auction. Their price will be defined by the Board of Directors, when all preparatory procedures are completed.



Rzd Plans To Expand Its Stake In Felb To 50% In 2013 

RZD’s holding company is going to expand its stake in Far East Land Bridge Ltd. (FELB, Austria) to 50% in 2013, according to the annex to the annual report published by RZD-Logistics (a subsidiary of Russian Railways JSC). FELB specialises in container transportation by railway between China and Europe.

In summer 2012, RZD-Logistics announced it had purchased a 10% stake in FELB and planned to expand its shareholding in the company to 25%. At the end of April 2013, it exercised an option on a 15.1% stake and expanded its stake to 25.3%

“The board of the company is confident that the funds FELB will get after all these actions (the expansion of RZD holding company’s stake in the FELB’s stock) will be enough to pay FELB’s debt of $22.5 million to RZD-Logistics,” says the annex to the annual report published by RZD-Logistics.

Earlier, a 10% interest in FELB belonged to TransContainer, but last summer the container operator and RZD-Logistics concluded an agreement about transferring to the latter the debt of FELB for the total sum of $22.5 million. According to the financial accounts of RZD-Logistics, RUB 683.4 million of FELB’s debt was added to the accounts receivable by RZD-Logistics.

“Senior management in the company are sure that the funds FELB will get as a result of all these actions (the expansion of RZD holding company’s interest in FELB) will be enough to pay the debts of FELB to RZD-Logistics,” says the annex.



Sudan Offered Rzd Participation In Its Railway Construction 

Sudan offered Russia a role in construction of the Dakar – Port-Sudan railway, said Omar Dahab Fadul, Sudan Ambassador to the Russian Federation. 

“Last week the Director of Sudan Railways was on a visit to Russia”, Dahab Fadul said. “At the meeting with RZD management he offered Russia to participate in building the Trans-African railway from the Senegal capital Dakar to Sudanese Port-Sudan at the Red Sea”. 

In his words, the Trans-African railway will link the capital of Senegal and Djibouti at the Gulf of Aden. This is one of the most important ports in the western part of the Indian Ocean.

The Sudan Ambassador noted that the project “will be carried out in cooperation with the Organisation of Islamic Cooperation.” “Russian companies have good prospects in developing this project. At least, we have made this offer,” added Mr Omar Dahab Fadul. 



Rzd And Ebrd Agree To Cooperate On Modernising Railway Infrastructure

Russian Railways and the European Bank for Reconstruction and Development (EBRD) have signed a Memorandum of Understanding and Cooperation on modernising their railway and related infrastructure.

The document was signed by Vladimir Yakunin, President of Russian Railways, and Suma Chakrabarti, EBRD President, at the St Petersburg International Economic Forum on June 20, 2013.

According to the Memorandum, the two parties intend to cooperate on developing high-speed transportation infrastructure, projects based on public-private partnership to modernise railway stations, and projects to develop transport and logistics activities.

Russian Railways intends to consider the EBRD’s participation in financing these projects.



Rzd And Serbian Railways Sign Contract To Construct And Reconstruct Serbia’s Railways

On May 23, 2013, RZD signed a contract to construct and reconstruct Serbian railways.

The contract provides for the construction and electrification of 16 km of a second track on the Belgrade - Pančevo railway line; reconstruction of six sections with a total length of 112 km on Pan-European Corridor X; reconstruction of the existing and construction of a new second new track on the 44 km section between Stara Pazova - Novi Sad; reconstruction of the Serbian section of the Belgrade - Bar railway line with a total length of 200 km (Belgrade - Vrbnitsa); supply of 26 diesel trains produced by Metrovagonmash OJSC (Russia).

Russian Railways International, a subsidiary of Russian Railways which specialises in implementing the Holding company’s infrastructure projects abroad, will carry out the work on behalf of Russian Railways.

The contract was signed as part of an agreement between the Russian and Serbian governments on granting the Republic of Serbia a state export credit in the amount of $800 million.The agreement was signed on 11 January 2013 at Russia’s Ministry of Finance by Anton Siluanov, Russia’s Minister of Finance, and Mladjan Dinkić, Serbia Minister’s of Finance and Economy.



Veb And Rzd Intend To Implement Export And Investment Projects In Foreign Countries

At the Petersburg International Economic Forum-2013, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and Russian Railways entered into an Agreement on Cooperation in implementing export and investment projects in foreign countries.

The parties intend to cooperate in implementing export and investment projects in foreign countries aimed at manufacturing and introducing Russian high-technology industrial products, supporting the export of products, services and technologies including in order to diversify national exports and boosting Russian institutions’ competitive edge on the world market.

Under the Agreement, Vnesheconombank and RZD agreed to conduct comprehensive examination of export and investment projects abroad to explore the possibility of their participation in funding them as well as make arrangements for funding projects in the case they are in line with requirements of the Memorandum on Vnesheconombank’s Financial Policies and in case of positive results of financial examination.

In the parties’ opinion, the Agreement’s implementation would help to secure expanded access to the world market for Russian companies and products manufactured by them.



Tests Of New Natural Gas-Powered Locomotive Will Finish In June 2014

The second sample of the gas turbine locomotive, using liquefied natural gas (LNG) as a fuel, will be made by Lyudinovo Diesel Locomotive Plant this September, and its testing will complete in June 2014.

“Taking into account the experience in the development of the first gas turbine locomotive, the development of the design documentation and production of the second industrial sample of the mainline two-section gas turbine locomotive of GT1-002 model has begun. Technical solutions tested on the first sample will be used in the new locomotive,” a representative of RZD said. The first sample (GT1-001) was tested at the Moscow Railway and was put into trial operation in the Sverdlovsk region last February.

The following companies have participated in the development of basic equipment for the second sample of the gas turbine locomotive: Kuznetsov from Samara (gas turbine), ETM-Privod from Lys’va (traction generator), Uralkriomash from Nizhny Tagil (liquid nitrogen tank), Kriomash-BZKM from Balashikha (cryogenic equipment).

In addition, in August 2013, Bryansk machine building plant will produce gas locomotive with a gas-fueled reciprocating engine. All tests will be finished by September-October 2014.



Russia Will Continue To Modernise The Port Infrastructure Of The Northern Sea Route

The Russian Federation will continue to modernise the port infrastructure, said Dmitry Medvedev, Prime Minister of the RF, at the plenary session of the Barents Euro-Arctic Council countries. 

The Russian Prime Minister emphasised that the development of transport communications is of major importance for enhancing the region’s competitive advantages. In particular, new railways and, of course, the commercial development of the Northern Sea Route, which is the shortest link between Europe and the Asia-Pacific Region, are very important. According to Mr Medvedev, cargo transportation volume of the Northern Sea Route increased ten-fold in the last three years.

“For its part, Russia will upgrade its coastal and port infrastructure and develop modern systems of monitoring, navigation and communications,” promised Mr Medvedev.

In his opinion, easier transportation access to the Arctic territories creates favourable conditions for implementing large-scale investment projects, including those on raw materials, hydrocarbons and the continental shelf.



Construction Of Amur-Yakut Mainline Almost Completed

The construction of the Amur-Yakut Mainline in Russia is almost completed.

It has become the largest project in the sector for the last 30 years. However, the railway is shorter than planned – it does not reach the capital of Yakutia.

The new railway links the Amurskaya oblast and the Republic of Sakha (Yakutia), it crosses the Trans-Siberian Mainline and the BAM. The length of the railway is 1,239 km. Works in the final point of the railway, Nizhny Bestyakh settlement, are now being completed. The railway station and adjacent station infrastructure – the largest facility on the railway – were recently put into operation.

After the railway is put into operation, it is possible to transport freight from many deposits located not far from the tracks of the railway, and to provide all-season delivery of cargoes to the Republic, and passenger transportation. 
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Rzd’s Revenue Increased By 0.1% In H1 2013

In January-June 2013, the revenue of Russian Railways JSC (according to Russian accounting standards) grew by 0.1% year-on-year to RUB 678 billion.

RZD’s net costs increased by 3.6% to RUB 622.3 billion, “other expenses” grew by more than 41% to RUB 102.9 billion.

In the first half of 2013, net profit of RZD reduced by more than 75% to RUB 8.2 billion.



Russian Railways Prepared Governmental Draft Bill About Selling Wagon Repair Companies

RZD has prepared a governmental draft bill about the sale of 100% minus one share in wagon repair companies WRC-2 and WRC-3.

The company is currently not going to sell its largest wagon repair subsidiary WRC-1.

The Board of Directors preliminarily approved selling stakes in WRC-2 and WRC-3, and RZD has prepared a governmental draft bill about selling these companies, said a representative of the RZD’s Department for Controlling Subsidiaries.

The document was adjusted by the Federal Agency for Railway Transport, and it has been submitted to the Federal Agency for State Property Management.

The companies will be sold at auction. Their price will be defined by the Board of Directors, when all preparatory procedures are completed.



Rzd Plans To Expand Its Stake In Felb To 50% In 2013 

RZD’s holding company is going to expand its stake in Far East Land Bridge Ltd. (FELB, Austria) to 50% in 2013, according to the annex to the annual report published by RZD-Logistics (a subsidiary of Russian Railways JSC). FELB specialises in container transportation by railway between China and Europe.

In summer 2012, RZD-Logistics announced it had purchased a 10% stake in FELB and planned to expand its shareholding in the company to 25%. At the end of April 2013, it exercised an option on a 15.1% stake and expanded its stake to 25.3%

“The board of the company is confident that the funds FELB will get after all these actions (the expansion of RZD holding company’s stake in the FELB’s stock) will be enough to pay FELB’s debt of $22.5 million to RZD-Logistics,” says the annex to the annual report published by RZD-Logistics.

Earlier, a 10% interest in FELB belonged to TransContainer, but last summer the container operator and RZD-Logistics concluded an agreement about transferring to the latter the debt of FELB for the total sum of $22.5 million. According to the financial accounts of RZD-Logistics, RUB 683.4 million of FELB’s debt was added to the accounts receivable by RZD-Logistics.

“Senior management in the company are sure that the funds FELB will get as a result of all these actions (the expansion of RZD holding company’s interest in FELB) will be enough to pay the debts of FELB to RZD-Logistics,” says the annex.



Sudan Offered Rzd Participation In Its Railway Construction 

Sudan offered Russia a role in construction of the Dakar – Port-Sudan railway, said Omar Dahab Fadul, Sudan Ambassador to the Russian Federation. 

“Last week the Director of Sudan Railways was on a visit to Russia”, Dahab Fadul said. “At the meeting with RZD management he offered Russia to participate in building the Trans-African railway from the Senegal capital Dakar to Sudanese Port-Sudan at the Red Sea”. 

In his words, the Trans-African railway will link the capital of Senegal and Djibouti at the Gulf of Aden. This is one of the most important ports in the western part of the Indian Ocean.

The Sudan Ambassador noted that the project “will be carried out in cooperation with the Organisation of Islamic Cooperation.” “Russian companies have good prospects in developing this project. At least, we have made this offer,” added Mr Omar Dahab Fadul. 



Rzd And Ebrd Agree To Cooperate On Modernising Railway Infrastructure

Russian Railways and the European Bank for Reconstruction and Development (EBRD) have signed a Memorandum of Understanding and Cooperation on modernising their railway and related infrastructure.

The document was signed by Vladimir Yakunin, President of Russian Railways, and Suma Chakrabarti, EBRD President, at the St Petersburg International Economic Forum on June 20, 2013.

According to the Memorandum, the two parties intend to cooperate on developing high-speed transportation infrastructure, projects based on public-private partnership to modernise railway stations, and projects to develop transport and logistics activities.

Russian Railways intends to consider the EBRD’s participation in financing these projects.



Rzd And Serbian Railways Sign Contract To Construct And Reconstruct Serbia’s Railways

On May 23, 2013, RZD signed a contract to construct and reconstruct Serbian railways.

The contract provides for the construction and electrification of 16 km of a second track on the Belgrade - Pančevo railway line; reconstruction of six sections with a total length of 112 km on Pan-European Corridor X; reconstruction of the existing and construction of a new second new track on the 44 km section between Stara Pazova - Novi Sad; reconstruction of the Serbian section of the Belgrade - Bar railway line with a total length of 200 km (Belgrade - Vrbnitsa); supply of 26 diesel trains produced by Metrovagonmash OJSC (Russia).

Russian Railways International, a subsidiary of Russian Railways which specialises in implementing the Holding company’s infrastructure projects abroad, will carry out the work on behalf of Russian Railways.

The contract was signed as part of an agreement between the Russian and Serbian governments on granting the Republic of Serbia a state export credit in the amount of $800 million.The agreement was signed on 11 January 2013 at Russia’s Ministry of Finance by Anton Siluanov, Russia’s Minister of Finance, and Mladjan Dinkić, Serbia Minister’s of Finance and Economy.



Veb And Rzd Intend To Implement Export And Investment Projects In Foreign Countries

At the Petersburg International Economic Forum-2013, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and Russian Railways entered into an Agreement on Cooperation in implementing export and investment projects in foreign countries.

The parties intend to cooperate in implementing export and investment projects in foreign countries aimed at manufacturing and introducing Russian high-technology industrial products, supporting the export of products, services and technologies including in order to diversify national exports and boosting Russian institutions’ competitive edge on the world market.

Under the Agreement, Vnesheconombank and RZD agreed to conduct comprehensive examination of export and investment projects abroad to explore the possibility of their participation in funding them as well as make arrangements for funding projects in the case they are in line with requirements of the Memorandum on Vnesheconombank’s Financial Policies and in case of positive results of financial examination.

In the parties’ opinion, the Agreement’s implementation would help to secure expanded access to the world market for Russian companies and products manufactured by them.



Tests Of New Natural Gas-Powered Locomotive Will Finish In June 2014

The second sample of the gas turbine locomotive, using liquefied natural gas (LNG) as a fuel, will be made by Lyudinovo Diesel Locomotive Plant this September, and its testing will complete in June 2014.

“Taking into account the experience in the development of the first gas turbine locomotive, the development of the design documentation and production of the second industrial sample of the mainline two-section gas turbine locomotive of GT1-002 model has begun. Technical solutions tested on the first sample will be used in the new locomotive,” a representative of RZD said. The first sample (GT1-001) was tested at the Moscow Railway and was put into trial operation in the Sverdlovsk region last February.

The following companies have participated in the development of basic equipment for the second sample of the gas turbine locomotive: Kuznetsov from Samara (gas turbine), ETM-Privod from Lys’va (traction generator), Uralkriomash from Nizhny Tagil (liquid nitrogen tank), Kriomash-BZKM from Balashikha (cryogenic equipment).

In addition, in August 2013, Bryansk machine building plant will produce gas locomotive with a gas-fueled reciprocating engine. All tests will be finished by September-October 2014.



Russia Will Continue To Modernise The Port Infrastructure Of The Northern Sea Route

The Russian Federation will continue to modernise the port infrastructure, said Dmitry Medvedev, Prime Minister of the RF, at the plenary session of the Barents Euro-Arctic Council countries. 

The Russian Prime Minister emphasised that the development of transport communications is of major importance for enhancing the region’s competitive advantages. In particular, new railways and, of course, the commercial development of the Northern Sea Route, which is the shortest link between Europe and the Asia-Pacific Region, are very important. According to Mr Medvedev, cargo transportation volume of the Northern Sea Route increased ten-fold in the last three years.

“For its part, Russia will upgrade its coastal and port infrastructure and develop modern systems of monitoring, navigation and communications,” promised Mr Medvedev.

In his opinion, easier transportation access to the Arctic territories creates favourable conditions for implementing large-scale investment projects, including those on raw materials, hydrocarbons and the continental shelf.



Construction Of Amur-Yakut Mainline Almost Completed

The construction of the Amur-Yakut Mainline in Russia is almost completed.

It has become the largest project in the sector for the last 30 years. However, the railway is shorter than planned – it does not reach the capital of Yakutia.

The new railway links the Amurskaya oblast and the Republic of Sakha (Yakutia), it crosses the Trans-Siberian Mainline and the BAM. The length of the railway is 1,239 km. Works in the final point of the railway, Nizhny Bestyakh settlement, are now being completed. The railway station and adjacent station infrastructure – the largest facility on the railway – were recently put into operation.

After the railway is put into operation, it is possible to transport freight from many deposits located not far from the tracks of the railway, and to provide all-season delivery of cargoes to the Republic, and passenger transportation. 
    [~DETAIL_TEXT] => 
Rzd’s Revenue Increased By 0.1% In H1 2013

In January-June 2013, the revenue of Russian Railways JSC (according to Russian accounting standards) grew by 0.1% year-on-year to RUB 678 billion.

RZD’s net costs increased by 3.6% to RUB 622.3 billion, “other expenses” grew by more than 41% to RUB 102.9 billion.

In the first half of 2013, net profit of RZD reduced by more than 75% to RUB 8.2 billion.



Russian Railways Prepared Governmental Draft Bill About Selling Wagon Repair Companies

RZD has prepared a governmental draft bill about the sale of 100% minus one share in wagon repair companies WRC-2 and WRC-3.

The company is currently not going to sell its largest wagon repair subsidiary WRC-1.

The Board of Directors preliminarily approved selling stakes in WRC-2 and WRC-3, and RZD has prepared a governmental draft bill about selling these companies, said a representative of the RZD’s Department for Controlling Subsidiaries.

The document was adjusted by the Federal Agency for Railway Transport, and it has been submitted to the Federal Agency for State Property Management.

The companies will be sold at auction. Their price will be defined by the Board of Directors, when all preparatory procedures are completed.



Rzd Plans To Expand Its Stake In Felb To 50% In 2013 

RZD’s holding company is going to expand its stake in Far East Land Bridge Ltd. (FELB, Austria) to 50% in 2013, according to the annex to the annual report published by RZD-Logistics (a subsidiary of Russian Railways JSC). FELB specialises in container transportation by railway between China and Europe.

In summer 2012, RZD-Logistics announced it had purchased a 10% stake in FELB and planned to expand its shareholding in the company to 25%. At the end of April 2013, it exercised an option on a 15.1% stake and expanded its stake to 25.3%

“The board of the company is confident that the funds FELB will get after all these actions (the expansion of RZD holding company’s stake in the FELB’s stock) will be enough to pay FELB’s debt of $22.5 million to RZD-Logistics,” says the annex to the annual report published by RZD-Logistics.

Earlier, a 10% interest in FELB belonged to TransContainer, but last summer the container operator and RZD-Logistics concluded an agreement about transferring to the latter the debt of FELB for the total sum of $22.5 million. According to the financial accounts of RZD-Logistics, RUB 683.4 million of FELB’s debt was added to the accounts receivable by RZD-Logistics.

“Senior management in the company are sure that the funds FELB will get as a result of all these actions (the expansion of RZD holding company’s interest in FELB) will be enough to pay the debts of FELB to RZD-Logistics,” says the annex.



Sudan Offered Rzd Participation In Its Railway Construction 

Sudan offered Russia a role in construction of the Dakar – Port-Sudan railway, said Omar Dahab Fadul, Sudan Ambassador to the Russian Federation. 

“Last week the Director of Sudan Railways was on a visit to Russia”, Dahab Fadul said. “At the meeting with RZD management he offered Russia to participate in building the Trans-African railway from the Senegal capital Dakar to Sudanese Port-Sudan at the Red Sea”. 

In his words, the Trans-African railway will link the capital of Senegal and Djibouti at the Gulf of Aden. This is one of the most important ports in the western part of the Indian Ocean.

The Sudan Ambassador noted that the project “will be carried out in cooperation with the Organisation of Islamic Cooperation.” “Russian companies have good prospects in developing this project. At least, we have made this offer,” added Mr Omar Dahab Fadul. 



Rzd And Ebrd Agree To Cooperate On Modernising Railway Infrastructure

Russian Railways and the European Bank for Reconstruction and Development (EBRD) have signed a Memorandum of Understanding and Cooperation on modernising their railway and related infrastructure.

The document was signed by Vladimir Yakunin, President of Russian Railways, and Suma Chakrabarti, EBRD President, at the St Petersburg International Economic Forum on June 20, 2013.

According to the Memorandum, the two parties intend to cooperate on developing high-speed transportation infrastructure, projects based on public-private partnership to modernise railway stations, and projects to develop transport and logistics activities.

Russian Railways intends to consider the EBRD’s participation in financing these projects.



Rzd And Serbian Railways Sign Contract To Construct And Reconstruct Serbia’s Railways

On May 23, 2013, RZD signed a contract to construct and reconstruct Serbian railways.

The contract provides for the construction and electrification of 16 km of a second track on the Belgrade - Pančevo railway line; reconstruction of six sections with a total length of 112 km on Pan-European Corridor X; reconstruction of the existing and construction of a new second new track on the 44 km section between Stara Pazova - Novi Sad; reconstruction of the Serbian section of the Belgrade - Bar railway line with a total length of 200 km (Belgrade - Vrbnitsa); supply of 26 diesel trains produced by Metrovagonmash OJSC (Russia).

Russian Railways International, a subsidiary of Russian Railways which specialises in implementing the Holding company’s infrastructure projects abroad, will carry out the work on behalf of Russian Railways.

The contract was signed as part of an agreement between the Russian and Serbian governments on granting the Republic of Serbia a state export credit in the amount of $800 million.The agreement was signed on 11 January 2013 at Russia’s Ministry of Finance by Anton Siluanov, Russia’s Minister of Finance, and Mladjan Dinkić, Serbia Minister’s of Finance and Economy.



Veb And Rzd Intend To Implement Export And Investment Projects In Foreign Countries

At the Petersburg International Economic Forum-2013, State Corporation “Bank for Development and Foreign Economic Affairs (Vnesheconombank)” and Russian Railways entered into an Agreement on Cooperation in implementing export and investment projects in foreign countries.

The parties intend to cooperate in implementing export and investment projects in foreign countries aimed at manufacturing and introducing Russian high-technology industrial products, supporting the export of products, services and technologies including in order to diversify national exports and boosting Russian institutions’ competitive edge on the world market.

Under the Agreement, Vnesheconombank and RZD agreed to conduct comprehensive examination of export and investment projects abroad to explore the possibility of their participation in funding them as well as make arrangements for funding projects in the case they are in line with requirements of the Memorandum on Vnesheconombank’s Financial Policies and in case of positive results of financial examination.

In the parties’ opinion, the Agreement’s implementation would help to secure expanded access to the world market for Russian companies and products manufactured by them.



Tests Of New Natural Gas-Powered Locomotive Will Finish In June 2014

The second sample of the gas turbine locomotive, using liquefied natural gas (LNG) as a fuel, will be made by Lyudinovo Diesel Locomotive Plant this September, and its testing will complete in June 2014.

“Taking into account the experience in the development of the first gas turbine locomotive, the development of the design documentation and production of the second industrial sample of the mainline two-section gas turbine locomotive of GT1-002 model has begun. Technical solutions tested on the first sample will be used in the new locomotive,” a representative of RZD said. The first sample (GT1-001) was tested at the Moscow Railway and was put into trial operation in the Sverdlovsk region last February.

The following companies have participated in the development of basic equipment for the second sample of the gas turbine locomotive: Kuznetsov from Samara (gas turbine), ETM-Privod from Lys’va (traction generator), Uralkriomash from Nizhny Tagil (liquid nitrogen tank), Kriomash-BZKM from Balashikha (cryogenic equipment).

In addition, in August 2013, Bryansk machine building plant will produce gas locomotive with a gas-fueled reciprocating engine. All tests will be finished by September-October 2014.



Russia Will Continue To Modernise The Port Infrastructure Of The Northern Sea Route

The Russian Federation will continue to modernise the port infrastructure, said Dmitry Medvedev, Prime Minister of the RF, at the plenary session of the Barents Euro-Arctic Council countries. 

The Russian Prime Minister emphasised that the development of transport communications is of major importance for enhancing the region’s competitive advantages. In particular, new railways and, of course, the commercial development of the Northern Sea Route, which is the shortest link between Europe and the Asia-Pacific Region, are very important. According to Mr Medvedev, cargo transportation volume of the Northern Sea Route increased ten-fold in the last three years.

“For its part, Russia will upgrade its coastal and port infrastructure and develop modern systems of monitoring, navigation and communications,” promised Mr Medvedev.

In his opinion, easier transportation access to the Arctic territories creates favourable conditions for implementing large-scale investment projects, including those on raw materials, hydrocarbons and the continental shelf.



Construction Of Amur-Yakut Mainline Almost Completed

The construction of the Amur-Yakut Mainline in Russia is almost completed.

It has become the largest project in the sector for the last 30 years. However, the railway is shorter than planned – it does not reach the capital of Yakutia.

The new railway links the Amurskaya oblast and the Republic of Sakha (Yakutia), it crosses the Trans-Siberian Mainline and the BAM. The length of the railway is 1,239 km. Works in the final point of the railway, Nizhny Bestyakh settlement, are now being completed. The railway station and adjacent station infrastructure – the largest facility on the railway – were recently put into operation.

After the railway is put into operation, it is possible to transport freight from many deposits located not far from the tracks of the railway, and to provide all-season delivery of cargoes to the Republic, and passenger transportation. 
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Rights and Liabilities



The RF Government set two main objectives for the national industry: to increase the volume of high-level exports by 10% and to greatly increase competitiveness. Companies will have to do it, and there will be neither tariff barriers, nor protectionist measures. At the same time, members of the WTO use some measures to protect their market from unfair competition. 

“Two basic principles of the WTO are the most favoured treatment and the national treatment,” says Roman Gubenko, Director of International Business Centre Russia in WTO at World Trade Centre Moscow. “The first means that after confidential negotiation with every country we must provide the best tariff conditions, which we got, for all goods. The second is that we must provide foreign producers with conditions for trade, which must not be worse than those for national companies. It covers all taxes and dues,”

R. Gubenko emphasises that Russia has not joined the agreement of the WTO covering state purchases, i.e. the country has the right to introduce privileges for national producers in this sector. Privileges are inadmissible in all other cases. Simultaneously, there is a definition of a tariff limit, i.e. the level that cannot be exceeded. Most countries, however, use tariffs smaller than the maximum allowed ones. A country gets the formal right to initiate a discussion about changing the tariff level three years after it joins the WTO. Therefore, Ukraine used this right and offered to change tariffs for 350 types of goods. Strange it is, but all countries voted against even the beginning of such negotiations.

The basic instrument to prevent unsafe products being supplied to the market is technical regulation. “When developing regulations, some definite requirements to these or those products should be established. Therefore, technical barriers are created,” notes R. Gubenko.

Joseph Aronov, Head of the Department for Compliance Verification at Russian Research Institute for Certification (VNIIS), clarifies that regulation has three issues: the introduction, the use, and the fulfillment of standard requirements for products and life cycle processes impacting on their safety; the introduction and utilisation of requirements to products on a voluntary basis (during their whole life cycle), carrying out of works or provision of services; conformity assessment.



Suffered Damage? Prove it!



According to the WTO rules, licensing must not be a barrier for trade (the cost of the document cannot exceed the sum of expenses on its development), but there are other ways to protect trade: anti-dumping, special protective, and countervailing measures. However, the procedure for their introduction is rather complicated, says R. Gubenko.

If a company supplies a product at a price lower than the price it normally charges on its own home market, the WTO considers it as price dumping, i.e. they compare the prices of particular products at the importer’s home market and those he sets to sell the products in another country.

Special protective measures are introduced in response to sharply increasing imports to protect national producers. They are set for four years with the possibility of expansion for a similar period.

The introduction of countervailing measures depends on the price of a product. If it turns out that a company received specific subsidies (limited by the regional or goods market) when producing imported goods, and one can calculate their size, an additional duty per unit of the product can be introduced. However, as R. Gubenko notes, such investigation is very complicated and it does not always lead to the taking of appropriate measures.

For example, Ukraine put into operation a protective duty for Russian-made pointworks more than a decade ago, in response Ukrainian producers of this product use price dumping at the Russian market. A Russian plant producing similar products (the market share of which (alone or together with its colleagues) is not less than 25%) can apply to the Eurasian Economic Commission (EEC) and complain that there is an exposure or even financial loss. He must prove the cause-and-effect link between the unfair price policy of a foreign competitor and adverse consequences for the company. These consequences can be a decline in the production volume, sales volume, loading of capacities, margin, and profitability. “One should choose a proper time, when there are grounds enough to begin an investigation,” notes R. Gubenko.

The time for application proceeding is two months, and then it is the stage of filling questionnaires in. Within 45 days the opponent must provide comprehensive data about sales at his domestic and the market question. It is an enormous volume of information. If the company does not provide it, then the information given by the complainant will be used. After that, at the public hearings, the parties protect their interests in an adversarial manner. Then, the EEC makes a decision and publishes a report recommending either to implement anti-dumping measures or not.

By the way, there is such a precedent in Russia. In accordance with the decision of the College of the Eurasian Economic Commission, anti-dumping dues on commercial cars exported from Italy, Germany, and Turkey were put into operation on June 16, 2013. They vary between 11.1% and 29.6% of the customs value. The validity period of this measure is five years. 

The investigation was initiated by Sollers-Elabuga LLC. It was found that imports of commercial cars from Italy, Germany and Turkey increased by 23.2% in 2008-2011. It happened even despite a 29.1% decline in the total share of exports of this product from the mentioned above countries to the Customs Union. The share of price dumping exports of commercial cars was constantly increasing. In 2011 it amounted to 95.4%, i.e. 40.5% more than in 2008. The weighted average cost of commercial cars from Turkey, Germany, and Italy fell 0.5% in that period. In 2011, the demand for this type of cars grew in the Customs Union 3.7-fold in comparison with 2009. Simultaneously, the rates of production and sale in 2010-2011 were behind the volume of dumping imports.  

Therefore, the share of production of this type of vehicles decreased by 20.1% in the Customs Union in 2009-2011. It was the reason why in 2010 profits fell 17% in comparison with the previous year. In 2011, the Customs Union suffered losses, because the production became loss-making. Attempts were made to keep national producers competitive amid a rapidly growing share of price dumping exports, sales prices rose by 6.4%, and the cost of production increased by 42.7%

That’s why it was decided to introduce an anti-dumping duty on cars from Germany, Turkey, and Italy, because the expanding share of dumping imports significantly damaged the economy of the Customs Union member-states. In the opinion of Boris Vishnevsky, a member of the expert council for customs regulation at the Committee for Integration, Trade and Customs Policy, and the WTO at the Russian Union of Industrialists and Entrepreneurs, CEO of Compass-Invest, producers must take an active position and protect their rights.

Galina Balandina, Head of the Centre for the Support of Foreign Economic Activity and Regional Development, notes that the WTO does not ban subsidies, but regulates them. Only those subsidies are banned, which aim at stimulating exports or import-substitution. “Naturally, any support for national production development can be considered as import-substitution, but it is rather difficult to prove it. Meanwhile, subsidies to small enterprises, for the support of economically depressed regions, and for scientific research are allowed. Every country – member of the WTO supports its own industries, and gives subsidies in this or that way,” says G. Balandina.

Admissible subsidies can be implemented without adjustment, however, specific ones must be put into operation only after the adjustment with the Eurasian Economic Commission (this rule will come into force for Russia in 2017). Foreign producers assess whether the subsidies distort the rules of trade, i.e. whether they give advantages to national players and make entering the market more complicated for other companies. If one of these signals exists, there will be a trade dispute. “If the violation is proved, the whole sum received by a recipient of grant plus 1.5% refinancing rate is taken from him as a countervailing measure. However, this measure will be rare in the near future,” thinks G. Balandina. 



The Evolution of Regulation Methods



Alexander Grigoryev, Head of the Department for the Research of Fuel and Energy Sector at the Institute of Natural Monopolies, said that according to the criteria of the WTO, supportive measures are divided into forbidden, admissible, and permitted. During the recent economic recession, all countries supported their producers, though sometimes the support contradicted the WTO rules. To hide it, they used the following methods: funding a part of R&D, especially by means of military contracts; fiscal loosening; funding the development of needed infrastructure; soft lending; taking supportive measures at the regional level, not at the federal one; standard and technical regulation (a lot of competitors are filtered out by applying these parametres). 

We can give just some examples of the state support. In 2006 in Canada, a contract for almost 500 metro railcars (for the total sum of $1.2 billion) for the Montreal underground was concluded with a local producer, Bombardier, without a tendering competition. In response, the French Alstom threatened to complain to the WTO, but then applied to the local court with a petition about violation of local laws, in accordance with which a tender was to have been organised. The conflict was resolved through the creation of an alliance between the two companies to carry out the project, but the metro railcars were produced in Canada.

The passenger transport market in Japan is closed to foreign companies, and the federal government in Mexico provides local producers with a 10% price advantage. The rule covers foreign companies, if at least 50% of production capacities are located in Mexico. China demands that the share of local capacities in the production must be not less than 70%, and that technologies must be transferred. According to Canadian Manufacturers and Exporters, Germany has not imported metro railcars since the year 2000.

In its contracts with foreign companies, RZD demands that the localisation of the production must be up to 80%. Also, Russian car producers took an active role in transferring the industrial assembly of foreign vehicles to Russia.

R. Gubenko notes, that the conditions of the WTO ban placing demands about the localisation into the investment agreements. “During international negotiations, Russia achieved an unprecedented result: all agreements concluded earlier, which were added to a relevant list, are in force till July 1, 2018,” says the expert.

Vladimir Salamatov, Director General of World Trade Centre Moscow, said that a work in the sector of technical regulation and standardisation would be carried out in cooperation with the non-profit partnership Union of Industries of Railway Equipment (NP UIRE). In the words of Valentin Gapanovich, Senior Vice President of RZD, President of NP UIRE, there is no standard in Russia to regulate the physical depreciation of fixed assets. There is such a document in Europe and the USA. “We are developing a new standard, common to all facilities, no matter whether it is a railcar, a tram, or a metro wagon. We want to create a universal instrument, using which an owner can define whether the expansion of the resource or the lifespan of this or that machine meets the governing legislative standards. This will be an instrument to estimate the depreciation. The document will appear next year,” emphasised V. Gapanovich. 

On the whole, according to experts, joining the WTO is not as bad for Russia, as it seemed earlier. It is like a set of tools, which can be efficiently used to protect national interests. One should understand, however, that the regulation of international trade in the WTO ranges from tariff measures to non-tariff ones.

By Elena Ushkova



our reference

Basic statements of the Strategy of Transport Machine Building Sector Development in the RF in 2007-2010 and till 2015

• Long-term planning of activity for RZD

• R&D funding

• State support for export

• Measures for technical regulation in the Baltic States and the CIS

• Implementation of barriers for import of second-hand machinery

• Preferential customs duties on imported components for joint sectoral ventures till their production is completely localised

• Development of technical regulations in the transport machine building sector

• Creation of conditions for the expansion of Russian companies’ participation in investment projects of HSR construction, rolling stock manufacture, and equipping rail tracks with engineering facilities

• Programme of the development of human resource potential of transport machine building companies.
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Rights and Liabilities



The RF Government set two main objectives for the national industry: to increase the volume of high-level exports by 10% and to greatly increase competitiveness. Companies will have to do it, and there will be neither tariff barriers, nor protectionist measures. At the same time, members of the WTO use some measures to protect their market from unfair competition. 

“Two basic principles of the WTO are the most favoured treatment and the national treatment,” says Roman Gubenko, Director of International Business Centre Russia in WTO at World Trade Centre Moscow. “The first means that after confidential negotiation with every country we must provide the best tariff conditions, which we got, for all goods. The second is that we must provide foreign producers with conditions for trade, which must not be worse than those for national companies. It covers all taxes and dues,”

R. Gubenko emphasises that Russia has not joined the agreement of the WTO covering state purchases, i.e. the country has the right to introduce privileges for national producers in this sector. Privileges are inadmissible in all other cases. Simultaneously, there is a definition of a tariff limit, i.e. the level that cannot be exceeded. Most countries, however, use tariffs smaller than the maximum allowed ones. A country gets the formal right to initiate a discussion about changing the tariff level three years after it joins the WTO. Therefore, Ukraine used this right and offered to change tariffs for 350 types of goods. Strange it is, but all countries voted against even the beginning of such negotiations.

The basic instrument to prevent unsafe products being supplied to the market is technical regulation. “When developing regulations, some definite requirements to these or those products should be established. Therefore, technical barriers are created,” notes R. Gubenko.

Joseph Aronov, Head of the Department for Compliance Verification at Russian Research Institute for Certification (VNIIS), clarifies that regulation has three issues: the introduction, the use, and the fulfillment of standard requirements for products and life cycle processes impacting on their safety; the introduction and utilisation of requirements to products on a voluntary basis (during their whole life cycle), carrying out of works or provision of services; conformity assessment.



Suffered Damage? Prove it!



According to the WTO rules, licensing must not be a barrier for trade (the cost of the document cannot exceed the sum of expenses on its development), but there are other ways to protect trade: anti-dumping, special protective, and countervailing measures. However, the procedure for their introduction is rather complicated, says R. Gubenko.

If a company supplies a product at a price lower than the price it normally charges on its own home market, the WTO considers it as price dumping, i.e. they compare the prices of particular products at the importer’s home market and those he sets to sell the products in another country.

Special protective measures are introduced in response to sharply increasing imports to protect national producers. They are set for four years with the possibility of expansion for a similar period.

The introduction of countervailing measures depends on the price of a product. If it turns out that a company received specific subsidies (limited by the regional or goods market) when producing imported goods, and one can calculate their size, an additional duty per unit of the product can be introduced. However, as R. Gubenko notes, such investigation is very complicated and it does not always lead to the taking of appropriate measures.

For example, Ukraine put into operation a protective duty for Russian-made pointworks more than a decade ago, in response Ukrainian producers of this product use price dumping at the Russian market. A Russian plant producing similar products (the market share of which (alone or together with its colleagues) is not less than 25%) can apply to the Eurasian Economic Commission (EEC) and complain that there is an exposure or even financial loss. He must prove the cause-and-effect link between the unfair price policy of a foreign competitor and adverse consequences for the company. These consequences can be a decline in the production volume, sales volume, loading of capacities, margin, and profitability. “One should choose a proper time, when there are grounds enough to begin an investigation,” notes R. Gubenko.

The time for application proceeding is two months, and then it is the stage of filling questionnaires in. Within 45 days the opponent must provide comprehensive data about sales at his domestic and the market question. It is an enormous volume of information. If the company does not provide it, then the information given by the complainant will be used. After that, at the public hearings, the parties protect their interests in an adversarial manner. Then, the EEC makes a decision and publishes a report recommending either to implement anti-dumping measures or not.

By the way, there is such a precedent in Russia. In accordance with the decision of the College of the Eurasian Economic Commission, anti-dumping dues on commercial cars exported from Italy, Germany, and Turkey were put into operation on June 16, 2013. They vary between 11.1% and 29.6% of the customs value. The validity period of this measure is five years. 

The investigation was initiated by Sollers-Elabuga LLC. It was found that imports of commercial cars from Italy, Germany and Turkey increased by 23.2% in 2008-2011. It happened even despite a 29.1% decline in the total share of exports of this product from the mentioned above countries to the Customs Union. The share of price dumping exports of commercial cars was constantly increasing. In 2011 it amounted to 95.4%, i.e. 40.5% more than in 2008. The weighted average cost of commercial cars from Turkey, Germany, and Italy fell 0.5% in that period. In 2011, the demand for this type of cars grew in the Customs Union 3.7-fold in comparison with 2009. Simultaneously, the rates of production and sale in 2010-2011 were behind the volume of dumping imports.  

Therefore, the share of production of this type of vehicles decreased by 20.1% in the Customs Union in 2009-2011. It was the reason why in 2010 profits fell 17% in comparison with the previous year. In 2011, the Customs Union suffered losses, because the production became loss-making. Attempts were made to keep national producers competitive amid a rapidly growing share of price dumping exports, sales prices rose by 6.4%, and the cost of production increased by 42.7%

That’s why it was decided to introduce an anti-dumping duty on cars from Germany, Turkey, and Italy, because the expanding share of dumping imports significantly damaged the economy of the Customs Union member-states. In the opinion of Boris Vishnevsky, a member of the expert council for customs regulation at the Committee for Integration, Trade and Customs Policy, and the WTO at the Russian Union of Industrialists and Entrepreneurs, CEO of Compass-Invest, producers must take an active position and protect their rights.

Galina Balandina, Head of the Centre for the Support of Foreign Economic Activity and Regional Development, notes that the WTO does not ban subsidies, but regulates them. Only those subsidies are banned, which aim at stimulating exports or import-substitution. “Naturally, any support for national production development can be considered as import-substitution, but it is rather difficult to prove it. Meanwhile, subsidies to small enterprises, for the support of economically depressed regions, and for scientific research are allowed. Every country – member of the WTO supports its own industries, and gives subsidies in this or that way,” says G. Balandina.

Admissible subsidies can be implemented without adjustment, however, specific ones must be put into operation only after the adjustment with the Eurasian Economic Commission (this rule will come into force for Russia in 2017). Foreign producers assess whether the subsidies distort the rules of trade, i.e. whether they give advantages to national players and make entering the market more complicated for other companies. If one of these signals exists, there will be a trade dispute. “If the violation is proved, the whole sum received by a recipient of grant plus 1.5% refinancing rate is taken from him as a countervailing measure. However, this measure will be rare in the near future,” thinks G. Balandina. 



The Evolution of Regulation Methods



Alexander Grigoryev, Head of the Department for the Research of Fuel and Energy Sector at the Institute of Natural Monopolies, said that according to the criteria of the WTO, supportive measures are divided into forbidden, admissible, and permitted. During the recent economic recession, all countries supported their producers, though sometimes the support contradicted the WTO rules. To hide it, they used the following methods: funding a part of R&D, especially by means of military contracts; fiscal loosening; funding the development of needed infrastructure; soft lending; taking supportive measures at the regional level, not at the federal one; standard and technical regulation (a lot of competitors are filtered out by applying these parametres). 

We can give just some examples of the state support. In 2006 in Canada, a contract for almost 500 metro railcars (for the total sum of $1.2 billion) for the Montreal underground was concluded with a local producer, Bombardier, without a tendering competition. In response, the French Alstom threatened to complain to the WTO, but then applied to the local court with a petition about violation of local laws, in accordance with which a tender was to have been organised. The conflict was resolved through the creation of an alliance between the two companies to carry out the project, but the metro railcars were produced in Canada.

The passenger transport market in Japan is closed to foreign companies, and the federal government in Mexico provides local producers with a 10% price advantage. The rule covers foreign companies, if at least 50% of production capacities are located in Mexico. China demands that the share of local capacities in the production must be not less than 70%, and that technologies must be transferred. According to Canadian Manufacturers and Exporters, Germany has not imported metro railcars since the year 2000.

In its contracts with foreign companies, RZD demands that the localisation of the production must be up to 80%. Also, Russian car producers took an active role in transferring the industrial assembly of foreign vehicles to Russia.

R. Gubenko notes, that the conditions of the WTO ban placing demands about the localisation into the investment agreements. “During international negotiations, Russia achieved an unprecedented result: all agreements concluded earlier, which were added to a relevant list, are in force till July 1, 2018,” says the expert.

Vladimir Salamatov, Director General of World Trade Centre Moscow, said that a work in the sector of technical regulation and standardisation would be carried out in cooperation with the non-profit partnership Union of Industries of Railway Equipment (NP UIRE). In the words of Valentin Gapanovich, Senior Vice President of RZD, President of NP UIRE, there is no standard in Russia to regulate the physical depreciation of fixed assets. There is such a document in Europe and the USA. “We are developing a new standard, common to all facilities, no matter whether it is a railcar, a tram, or a metro wagon. We want to create a universal instrument, using which an owner can define whether the expansion of the resource or the lifespan of this or that machine meets the governing legislative standards. This will be an instrument to estimate the depreciation. The document will appear next year,” emphasised V. Gapanovich. 

On the whole, according to experts, joining the WTO is not as bad for Russia, as it seemed earlier. It is like a set of tools, which can be efficiently used to protect national interests. One should understand, however, that the regulation of international trade in the WTO ranges from tariff measures to non-tariff ones.

By Elena Ushkova



our reference

Basic statements of the Strategy of Transport Machine Building Sector Development in the RF in 2007-2010 and till 2015

• Long-term planning of activity for RZD

• R&D funding

• State support for export

• Measures for technical regulation in the Baltic States and the CIS

• Implementation of barriers for import of second-hand machinery

• Preferential customs duties on imported components for joint sectoral ventures till their production is completely localised

• Development of technical regulations in the transport machine building sector

• Creation of conditions for the expansion of Russian companies’ participation in investment projects of HSR construction, rolling stock manufacture, and equipping rail tracks with engineering facilities

• Programme of the development of human resource potential of transport machine building companies.
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Rights and Liabilities



The RF Government set two main objectives for the national industry: to increase the volume of high-level exports by 10% and to greatly increase competitiveness. Companies will have to do it, and there will be neither tariff barriers, nor protectionist measures. At the same time, members of the WTO use some measures to protect their market from unfair competition. 

“Two basic principles of the WTO are the most favoured treatment and the national treatment,” says Roman Gubenko, Director of International Business Centre Russia in WTO at World Trade Centre Moscow. “The first means that after confidential negotiation with every country we must provide the best tariff conditions, which we got, for all goods. The second is that we must provide foreign producers with conditions for trade, which must not be worse than those for national companies. It covers all taxes and dues,”

R. Gubenko emphasises that Russia has not joined the agreement of the WTO covering state purchases, i.e. the country has the right to introduce privileges for national producers in this sector. Privileges are inadmissible in all other cases. Simultaneously, there is a definition of a tariff limit, i.e. the level that cannot be exceeded. Most countries, however, use tariffs smaller than the maximum allowed ones. A country gets the formal right to initiate a discussion about changing the tariff level three years after it joins the WTO. Therefore, Ukraine used this right and offered to change tariffs for 350 types of goods. Strange it is, but all countries voted against even the beginning of such negotiations.

The basic instrument to prevent unsafe products being supplied to the market is technical regulation. “When developing regulations, some definite requirements to these or those products should be established. Therefore, technical barriers are created,” notes R. Gubenko.

Joseph Aronov, Head of the Department for Compliance Verification at Russian Research Institute for Certification (VNIIS), clarifies that regulation has three issues: the introduction, the use, and the fulfillment of standard requirements for products and life cycle processes impacting on their safety; the introduction and utilisation of requirements to products on a voluntary basis (during their whole life cycle), carrying out of works or provision of services; conformity assessment.



Suffered Damage? Prove it!



According to the WTO rules, licensing must not be a barrier for trade (the cost of the document cannot exceed the sum of expenses on its development), but there are other ways to protect trade: anti-dumping, special protective, and countervailing measures. However, the procedure for their introduction is rather complicated, says R. Gubenko.

If a company supplies a product at a price lower than the price it normally charges on its own home market, the WTO considers it as price dumping, i.e. they compare the prices of particular products at the importer’s home market and those he sets to sell the products in another country.

Special protective measures are introduced in response to sharply increasing imports to protect national producers. They are set for four years with the possibility of expansion for a similar period.

The introduction of countervailing measures depends on the price of a product. If it turns out that a company received specific subsidies (limited by the regional or goods market) when producing imported goods, and one can calculate their size, an additional duty per unit of the product can be introduced. However, as R. Gubenko notes, such investigation is very complicated and it does not always lead to the taking of appropriate measures.

For example, Ukraine put into operation a protective duty for Russian-made pointworks more than a decade ago, in response Ukrainian producers of this product use price dumping at the Russian market. A Russian plant producing similar products (the market share of which (alone or together with its colleagues) is not less than 25%) can apply to the Eurasian Economic Commission (EEC) and complain that there is an exposure or even financial loss. He must prove the cause-and-effect link between the unfair price policy of a foreign competitor and adverse consequences for the company. These consequences can be a decline in the production volume, sales volume, loading of capacities, margin, and profitability. “One should choose a proper time, when there are grounds enough to begin an investigation,” notes R. Gubenko.

The time for application proceeding is two months, and then it is the stage of filling questionnaires in. Within 45 days the opponent must provide comprehensive data about sales at his domestic and the market question. It is an enormous volume of information. If the company does not provide it, then the information given by the complainant will be used. After that, at the public hearings, the parties protect their interests in an adversarial manner. Then, the EEC makes a decision and publishes a report recommending either to implement anti-dumping measures or not.

By the way, there is such a precedent in Russia. In accordance with the decision of the College of the Eurasian Economic Commission, anti-dumping dues on commercial cars exported from Italy, Germany, and Turkey were put into operation on June 16, 2013. They vary between 11.1% and 29.6% of the customs value. The validity period of this measure is five years. 

The investigation was initiated by Sollers-Elabuga LLC. It was found that imports of commercial cars from Italy, Germany and Turkey increased by 23.2% in 2008-2011. It happened even despite a 29.1% decline in the total share of exports of this product from the mentioned above countries to the Customs Union. The share of price dumping exports of commercial cars was constantly increasing. In 2011 it amounted to 95.4%, i.e. 40.5% more than in 2008. The weighted average cost of commercial cars from Turkey, Germany, and Italy fell 0.5% in that period. In 2011, the demand for this type of cars grew in the Customs Union 3.7-fold in comparison with 2009. Simultaneously, the rates of production and sale in 2010-2011 were behind the volume of dumping imports.  

Therefore, the share of production of this type of vehicles decreased by 20.1% in the Customs Union in 2009-2011. It was the reason why in 2010 profits fell 17% in comparison with the previous year. In 2011, the Customs Union suffered losses, because the production became loss-making. Attempts were made to keep national producers competitive amid a rapidly growing share of price dumping exports, sales prices rose by 6.4%, and the cost of production increased by 42.7%

That’s why it was decided to introduce an anti-dumping duty on cars from Germany, Turkey, and Italy, because the expanding share of dumping imports significantly damaged the economy of the Customs Union member-states. In the opinion of Boris Vishnevsky, a member of the expert council for customs regulation at the Committee for Integration, Trade and Customs Policy, and the WTO at the Russian Union of Industrialists and Entrepreneurs, CEO of Compass-Invest, producers must take an active position and protect their rights.

Galina Balandina, Head of the Centre for the Support of Foreign Economic Activity and Regional Development, notes that the WTO does not ban subsidies, but regulates them. Only those subsidies are banned, which aim at stimulating exports or import-substitution. “Naturally, any support for national production development can be considered as import-substitution, but it is rather difficult to prove it. Meanwhile, subsidies to small enterprises, for the support of economically depressed regions, and for scientific research are allowed. Every country – member of the WTO supports its own industries, and gives subsidies in this or that way,” says G. Balandina.

Admissible subsidies can be implemented without adjustment, however, specific ones must be put into operation only after the adjustment with the Eurasian Economic Commission (this rule will come into force for Russia in 2017). Foreign producers assess whether the subsidies distort the rules of trade, i.e. whether they give advantages to national players and make entering the market more complicated for other companies. If one of these signals exists, there will be a trade dispute. “If the violation is proved, the whole sum received by a recipient of grant plus 1.5% refinancing rate is taken from him as a countervailing measure. However, this measure will be rare in the near future,” thinks G. Balandina. 



The Evolution of Regulation Methods



Alexander Grigoryev, Head of the Department for the Research of Fuel and Energy Sector at the Institute of Natural Monopolies, said that according to the criteria of the WTO, supportive measures are divided into forbidden, admissible, and permitted. During the recent economic recession, all countries supported their producers, though sometimes the support contradicted the WTO rules. To hide it, they used the following methods: funding a part of R&D, especially by means of military contracts; fiscal loosening; funding the development of needed infrastructure; soft lending; taking supportive measures at the regional level, not at the federal one; standard and technical regulation (a lot of competitors are filtered out by applying these parametres). 

We can give just some examples of the state support. In 2006 in Canada, a contract for almost 500 metro railcars (for the total sum of $1.2 billion) for the Montreal underground was concluded with a local producer, Bombardier, without a tendering competition. In response, the French Alstom threatened to complain to the WTO, but then applied to the local court with a petition about violation of local laws, in accordance with which a tender was to have been organised. The conflict was resolved through the creation of an alliance between the two companies to carry out the project, but the metro railcars were produced in Canada.

The passenger transport market in Japan is closed to foreign companies, and the federal government in Mexico provides local producers with a 10% price advantage. The rule covers foreign companies, if at least 50% of production capacities are located in Mexico. China demands that the share of local capacities in the production must be not less than 70%, and that technologies must be transferred. According to Canadian Manufacturers and Exporters, Germany has not imported metro railcars since the year 2000.

In its contracts with foreign companies, RZD demands that the localisation of the production must be up to 80%. Also, Russian car producers took an active role in transferring the industrial assembly of foreign vehicles to Russia.

R. Gubenko notes, that the conditions of the WTO ban placing demands about the localisation into the investment agreements. “During international negotiations, Russia achieved an unprecedented result: all agreements concluded earlier, which were added to a relevant list, are in force till July 1, 2018,” says the expert.

Vladimir Salamatov, Director General of World Trade Centre Moscow, said that a work in the sector of technical regulation and standardisation would be carried out in cooperation with the non-profit partnership Union of Industries of Railway Equipment (NP UIRE). In the words of Valentin Gapanovich, Senior Vice President of RZD, President of NP UIRE, there is no standard in Russia to regulate the physical depreciation of fixed assets. There is such a document in Europe and the USA. “We are developing a new standard, common to all facilities, no matter whether it is a railcar, a tram, or a metro wagon. We want to create a universal instrument, using which an owner can define whether the expansion of the resource or the lifespan of this or that machine meets the governing legislative standards. This will be an instrument to estimate the depreciation. The document will appear next year,” emphasised V. Gapanovich. 

On the whole, according to experts, joining the WTO is not as bad for Russia, as it seemed earlier. It is like a set of tools, which can be efficiently used to protect national interests. One should understand, however, that the regulation of international trade in the WTO ranges from tariff measures to non-tariff ones.

By Elena Ushkova



our reference

Basic statements of the Strategy of Transport Machine Building Sector Development in the RF in 2007-2010 and till 2015

• Long-term planning of activity for RZD

• R&D funding

• State support for export

• Measures for technical regulation in the Baltic States and the CIS

• Implementation of barriers for import of second-hand machinery

• Preferential customs duties on imported components for joint sectoral ventures till their production is completely localised

• Development of technical regulations in the transport machine building sector

• Creation of conditions for the expansion of Russian companies’ participation in investment projects of HSR construction, rolling stock manufacture, and equipping rail tracks with engineering facilities

• Programme of the development of human resource potential of transport machine building companies.
    [~DETAIL_TEXT] => 
Rights and Liabilities



The RF Government set two main objectives for the national industry: to increase the volume of high-level exports by 10% and to greatly increase competitiveness. Companies will have to do it, and there will be neither tariff barriers, nor protectionist measures. At the same time, members of the WTO use some measures to protect their market from unfair competition. 

“Two basic principles of the WTO are the most favoured treatment and the national treatment,” says Roman Gubenko, Director of International Business Centre Russia in WTO at World Trade Centre Moscow. “The first means that after confidential negotiation with every country we must provide the best tariff conditions, which we got, for all goods. The second is that we must provide foreign producers with conditions for trade, which must not be worse than those for national companies. It covers all taxes and dues,”

R. Gubenko emphasises that Russia has not joined the agreement of the WTO covering state purchases, i.e. the country has the right to introduce privileges for national producers in this sector. Privileges are inadmissible in all other cases. Simultaneously, there is a definition of a tariff limit, i.e. the level that cannot be exceeded. Most countries, however, use tariffs smaller than the maximum allowed ones. A country gets the formal right to initiate a discussion about changing the tariff level three years after it joins the WTO. Therefore, Ukraine used this right and offered to change tariffs for 350 types of goods. Strange it is, but all countries voted against even the beginning of such negotiations.

The basic instrument to prevent unsafe products being supplied to the market is technical regulation. “When developing regulations, some definite requirements to these or those products should be established. Therefore, technical barriers are created,” notes R. Gubenko.

Joseph Aronov, Head of the Department for Compliance Verification at Russian Research Institute for Certification (VNIIS), clarifies that regulation has three issues: the introduction, the use, and the fulfillment of standard requirements for products and life cycle processes impacting on their safety; the introduction and utilisation of requirements to products on a voluntary basis (during their whole life cycle), carrying out of works or provision of services; conformity assessment.



Suffered Damage? Prove it!



According to the WTO rules, licensing must not be a barrier for trade (the cost of the document cannot exceed the sum of expenses on its development), but there are other ways to protect trade: anti-dumping, special protective, and countervailing measures. However, the procedure for their introduction is rather complicated, says R. Gubenko.

If a company supplies a product at a price lower than the price it normally charges on its own home market, the WTO considers it as price dumping, i.e. they compare the prices of particular products at the importer’s home market and those he sets to sell the products in another country.

Special protective measures are introduced in response to sharply increasing imports to protect national producers. They are set for four years with the possibility of expansion for a similar period.

The introduction of countervailing measures depends on the price of a product. If it turns out that a company received specific subsidies (limited by the regional or goods market) when producing imported goods, and one can calculate their size, an additional duty per unit of the product can be introduced. However, as R. Gubenko notes, such investigation is very complicated and it does not always lead to the taking of appropriate measures.

For example, Ukraine put into operation a protective duty for Russian-made pointworks more than a decade ago, in response Ukrainian producers of this product use price dumping at the Russian market. A Russian plant producing similar products (the market share of which (alone or together with its colleagues) is not less than 25%) can apply to the Eurasian Economic Commission (EEC) and complain that there is an exposure or even financial loss. He must prove the cause-and-effect link between the unfair price policy of a foreign competitor and adverse consequences for the company. These consequences can be a decline in the production volume, sales volume, loading of capacities, margin, and profitability. “One should choose a proper time, when there are grounds enough to begin an investigation,” notes R. Gubenko.

The time for application proceeding is two months, and then it is the stage of filling questionnaires in. Within 45 days the opponent must provide comprehensive data about sales at his domestic and the market question. It is an enormous volume of information. If the company does not provide it, then the information given by the complainant will be used. After that, at the public hearings, the parties protect their interests in an adversarial manner. Then, the EEC makes a decision and publishes a report recommending either to implement anti-dumping measures or not.

By the way, there is such a precedent in Russia. In accordance with the decision of the College of the Eurasian Economic Commission, anti-dumping dues on commercial cars exported from Italy, Germany, and Turkey were put into operation on June 16, 2013. They vary between 11.1% and 29.6% of the customs value. The validity period of this measure is five years. 

The investigation was initiated by Sollers-Elabuga LLC. It was found that imports of commercial cars from Italy, Germany and Turkey increased by 23.2% in 2008-2011. It happened even despite a 29.1% decline in the total share of exports of this product from the mentioned above countries to the Customs Union. The share of price dumping exports of commercial cars was constantly increasing. In 2011 it amounted to 95.4%, i.e. 40.5% more than in 2008. The weighted average cost of commercial cars from Turkey, Germany, and Italy fell 0.5% in that period. In 2011, the demand for this type of cars grew in the Customs Union 3.7-fold in comparison with 2009. Simultaneously, the rates of production and sale in 2010-2011 were behind the volume of dumping imports.  

Therefore, the share of production of this type of vehicles decreased by 20.1% in the Customs Union in 2009-2011. It was the reason why in 2010 profits fell 17% in comparison with the previous year. In 2011, the Customs Union suffered losses, because the production became loss-making. Attempts were made to keep national producers competitive amid a rapidly growing share of price dumping exports, sales prices rose by 6.4%, and the cost of production increased by 42.7%

That’s why it was decided to introduce an anti-dumping duty on cars from Germany, Turkey, and Italy, because the expanding share of dumping imports significantly damaged the economy of the Customs Union member-states. In the opinion of Boris Vishnevsky, a member of the expert council for customs regulation at the Committee for Integration, Trade and Customs Policy, and the WTO at the Russian Union of Industrialists and Entrepreneurs, CEO of Compass-Invest, producers must take an active position and protect their rights.

Galina Balandina, Head of the Centre for the Support of Foreign Economic Activity and Regional Development, notes that the WTO does not ban subsidies, but regulates them. Only those subsidies are banned, which aim at stimulating exports or import-substitution. “Naturally, any support for national production development can be considered as import-substitution, but it is rather difficult to prove it. Meanwhile, subsidies to small enterprises, for the support of economically depressed regions, and for scientific research are allowed. Every country – member of the WTO supports its own industries, and gives subsidies in this or that way,” says G. Balandina.

Admissible subsidies can be implemented without adjustment, however, specific ones must be put into operation only after the adjustment with the Eurasian Economic Commission (this rule will come into force for Russia in 2017). Foreign producers assess whether the subsidies distort the rules of trade, i.e. whether they give advantages to national players and make entering the market more complicated for other companies. If one of these signals exists, there will be a trade dispute. “If the violation is proved, the whole sum received by a recipient of grant plus 1.5% refinancing rate is taken from him as a countervailing measure. However, this measure will be rare in the near future,” thinks G. Balandina. 



The Evolution of Regulation Methods



Alexander Grigoryev, Head of the Department for the Research of Fuel and Energy Sector at the Institute of Natural Monopolies, said that according to the criteria of the WTO, supportive measures are divided into forbidden, admissible, and permitted. During the recent economic recession, all countries supported their producers, though sometimes the support contradicted the WTO rules. To hide it, they used the following methods: funding a part of R&D, especially by means of military contracts; fiscal loosening; funding the development of needed infrastructure; soft lending; taking supportive measures at the regional level, not at the federal one; standard and technical regulation (a lot of competitors are filtered out by applying these parametres). 

We can give just some examples of the state support. In 2006 in Canada, a contract for almost 500 metro railcars (for the total sum of $1.2 billion) for the Montreal underground was concluded with a local producer, Bombardier, without a tendering competition. In response, the French Alstom threatened to complain to the WTO, but then applied to the local court with a petition about violation of local laws, in accordance with which a tender was to have been organised. The conflict was resolved through the creation of an alliance between the two companies to carry out the project, but the metro railcars were produced in Canada.

The passenger transport market in Japan is closed to foreign companies, and the federal government in Mexico provides local producers with a 10% price advantage. The rule covers foreign companies, if at least 50% of production capacities are located in Mexico. China demands that the share of local capacities in the production must be not less than 70%, and that technologies must be transferred. According to Canadian Manufacturers and Exporters, Germany has not imported metro railcars since the year 2000.

In its contracts with foreign companies, RZD demands that the localisation of the production must be up to 80%. Also, Russian car producers took an active role in transferring the industrial assembly of foreign vehicles to Russia.

R. Gubenko notes, that the conditions of the WTO ban placing demands about the localisation into the investment agreements. “During international negotiations, Russia achieved an unprecedented result: all agreements concluded earlier, which were added to a relevant list, are in force till July 1, 2018,” says the expert.

Vladimir Salamatov, Director General of World Trade Centre Moscow, said that a work in the sector of technical regulation and standardisation would be carried out in cooperation with the non-profit partnership Union of Industries of Railway Equipment (NP UIRE). In the words of Valentin Gapanovich, Senior Vice President of RZD, President of NP UIRE, there is no standard in Russia to regulate the physical depreciation of fixed assets. There is such a document in Europe and the USA. “We are developing a new standard, common to all facilities, no matter whether it is a railcar, a tram, or a metro wagon. We want to create a universal instrument, using which an owner can define whether the expansion of the resource or the lifespan of this or that machine meets the governing legislative standards. This will be an instrument to estimate the depreciation. The document will appear next year,” emphasised V. Gapanovich. 

On the whole, according to experts, joining the WTO is not as bad for Russia, as it seemed earlier. It is like a set of tools, which can be efficiently used to protect national interests. One should understand, however, that the regulation of international trade in the WTO ranges from tariff measures to non-tariff ones.

By Elena Ushkova



our reference

Basic statements of the Strategy of Transport Machine Building Sector Development in the RF in 2007-2010 and till 2015

• Long-term planning of activity for RZD

• R&D funding

• State support for export

• Measures for technical regulation in the Baltic States and the CIS

• Implementation of barriers for import of second-hand machinery

• Preferential customs duties on imported components for joint sectoral ventures till their production is completely localised

• Development of technical regulations in the transport machine building sector

• Creation of conditions for the expansion of Russian companies’ participation in investment projects of HSR construction, rolling stock manufacture, and equipping rail tracks with engineering facilities

• Programme of the development of human resource potential of transport machine building companies.
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– Mr Zubikhin, what are the most current developments in the field of engineering?



– In the Union of Industries of Railway Equipment we have recently held a meeting where, besides the rolling-stock manufacturers, we have also invited representatives of aircraft- and shipbuilding engineering companies as well as electrical engineering. One can say that we compared notes concerning the currently employed approach to engineering development. Our purpose involved studying problem solving experiences and achievements in order to adopt the best practices. The most essential and at the same time the most general problem for all the branches is the lack of qualified design personnel. The problem is that all engineers could be divided in developers (those who have knowledge and new ideas) and those who just write down others; ideas. In order to make a qualitative shift in this sphere it is necessary to make significant efforts that will contribute to the revival and development of various engineering schools.



– What do we need to do in particular?



– I would like to set out several goals and directions. The first one concerns training of new staff. Unfortunately, educational programs in many universities are now based on outdated educational standards that have not been renewed since Soviet times. These standards should be changed. Besides during the education students study software which cannot be used in practical work. As a result, young engineers coming to modern engineering centers have to be retrained. They start to work at a lower level than they should and long after they are still draftsmen.  At the same time through our experience the actual period of formation of a good engineer is at least seven years. But if the educational process incorporated better teaching techniques, graduates could get the status of top-ranked specialists several years earlier.

The second problem concerns retention of key personnel at the engineering research facilities. One way to achieve this goal could be solution of young specialists housing problems. For example, some companies subside mortgage interest rates. The amendments to the Tax Code of Russian Federation facilitating the process came into force on January 1, 2012. The expenses are taken from the costs rather than profits. However this mechanism is used rarely, because the planning time-frame for small and medium-sized business is only one year, for big business it is 3-5 years and mortgage loans start from 10 years and more. But at least this form of personnel retention is becoming more and more popular.



– What about knowledge and experience sharing in the field of engineering, specifically at interindustry level?



– This is a third focus area. Today we can already talk about engineering as a new knowledge branch. Engineering companies are becoming more and more diversified. Earlier there were separate planning and design offices in every industry, but now many companies offer an outsourced engineering service.  For example, the Airbus company designs different modules for the automotive industry. Now it also offers services in the field of transport engineering. It is essential for us to share knowledge and to ensure the adoption of best practices. 

Another sphere which is growing rapidly is related to computer simulation and modeling. If simulation of all processes is made at the initial stage of product development it allows companies to solve many problems that usually appear while making an actual test sample. Today there are many software suites on the market that in particular allow optimising different types of constructions in terms of integrity, security and consumer-oriented characteristics. Still there remains a lot to do to ensure compatibility of design documentation. Nowadays many companies design new types of equipment in such a way that they hand over the design documentation of each unit for manufacturing separately. It results in units and assemblies that are incompatible because their designs were made at different times; their alignment is made at the final phase of engineering design. Eventually companies run a risk of financial and reputational losses and lost time while making test samples and introducing the product to the market.

The practice that ensures 100% quality is based on a famous relation of costs: they increase tenfold with each stage of product progress - from design to manufacturing, installation of equipment and then to its operation. For example, if fault prevention and correction at the design stage costs 1 thousand roubles, at the stage of manufacturing it costs RUB 10 thousand, on the assemblage and fettling stage at the customer – RUB 100 thousand and during the operational – RUB 1million if it is possible at all. In the latter case a product is recalled from the market, which affects the company’s reputation. In order to solve these problems many companies increase the quality of engineering works, using new computational models. 

Interviewed by Elena Ushkova
    [~DETAIL_TEXT] => 
– Mr Zubikhin, what are the most current developments in the field of engineering?



– In the Union of Industries of Railway Equipment we have recently held a meeting where, besides the rolling-stock manufacturers, we have also invited representatives of aircraft- and shipbuilding engineering companies as well as electrical engineering. One can say that we compared notes concerning the currently employed approach to engineering development. Our purpose involved studying problem solving experiences and achievements in order to adopt the best practices. The most essential and at the same time the most general problem for all the branches is the lack of qualified design personnel. The problem is that all engineers could be divided in developers (those who have knowledge and new ideas) and those who just write down others; ideas. In order to make a qualitative shift in this sphere it is necessary to make significant efforts that will contribute to the revival and development of various engineering schools.



– What do we need to do in particular?



– I would like to set out several goals and directions. The first one concerns training of new staff. Unfortunately, educational programs in many universities are now based on outdated educational standards that have not been renewed since Soviet times. These standards should be changed. Besides during the education students study software which cannot be used in practical work. As a result, young engineers coming to modern engineering centers have to be retrained. They start to work at a lower level than they should and long after they are still draftsmen.  At the same time through our experience the actual period of formation of a good engineer is at least seven years. But if the educational process incorporated better teaching techniques, graduates could get the status of top-ranked specialists several years earlier.

The second problem concerns retention of key personnel at the engineering research facilities. One way to achieve this goal could be solution of young specialists housing problems. For example, some companies subside mortgage interest rates. The amendments to the Tax Code of Russian Federation facilitating the process came into force on January 1, 2012. The expenses are taken from the costs rather than profits. However this mechanism is used rarely, because the planning time-frame for small and medium-sized business is only one year, for big business it is 3-5 years and mortgage loans start from 10 years and more. But at least this form of personnel retention is becoming more and more popular.



– What about knowledge and experience sharing in the field of engineering, specifically at interindustry level?



– This is a third focus area. Today we can already talk about engineering as a new knowledge branch. Engineering companies are becoming more and more diversified. Earlier there were separate planning and design offices in every industry, but now many companies offer an outsourced engineering service.  For example, the Airbus company designs different modules for the automotive industry. Now it also offers services in the field of transport engineering. It is essential for us to share knowledge and to ensure the adoption of best practices. 

Another sphere which is growing rapidly is related to computer simulation and modeling. If simulation of all processes is made at the initial stage of product development it allows companies to solve many problems that usually appear while making an actual test sample. Today there are many software suites on the market that in particular allow optimising different types of constructions in terms of integrity, security and consumer-oriented characteristics. Still there remains a lot to do to ensure compatibility of design documentation. Nowadays many companies design new types of equipment in such a way that they hand over the design documentation of each unit for manufacturing separately. It results in units and assemblies that are incompatible because their designs were made at different times; their alignment is made at the final phase of engineering design. Eventually companies run a risk of financial and reputational losses and lost time while making test samples and introducing the product to the market.

The practice that ensures 100% quality is based on a famous relation of costs: they increase tenfold with each stage of product progress - from design to manufacturing, installation of equipment and then to its operation. For example, if fault prevention and correction at the design stage costs 1 thousand roubles, at the stage of manufacturing it costs RUB 10 thousand, on the assemblage and fettling stage at the customer – RUB 100 thousand and during the operational – RUB 1million if it is possible at all. In the latter case a product is recalled from the market, which affects the company’s reputation. In order to solve these problems many companies increase the quality of engineering works, using new computational models. 

Interviewed by Elena Ushkova
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– Mr Zubikhin, what are the most current developments in the field of engineering?



– In the Union of Industries of Railway Equipment we have recently held a meeting where, besides the rolling-stock manufacturers, we have also invited representatives of aircraft- and shipbuilding engineering companies as well as electrical engineering. One can say that we compared notes concerning the currently employed approach to engineering development. Our purpose involved studying problem solving experiences and achievements in order to adopt the best practices. The most essential and at the same time the most general problem for all the branches is the lack of qualified design personnel. The problem is that all engineers could be divided in developers (those who have knowledge and new ideas) and those who just write down others; ideas. In order to make a qualitative shift in this sphere it is necessary to make significant efforts that will contribute to the revival and development of various engineering schools.



– What do we need to do in particular?



– I would like to set out several goals and directions. The first one concerns training of new staff. Unfortunately, educational programs in many universities are now based on outdated educational standards that have not been renewed since Soviet times. These standards should be changed. Besides during the education students study software which cannot be used in practical work. As a result, young engineers coming to modern engineering centers have to be retrained. They start to work at a lower level than they should and long after they are still draftsmen.  At the same time through our experience the actual period of formation of a good engineer is at least seven years. But if the educational process incorporated better teaching techniques, graduates could get the status of top-ranked specialists several years earlier.

The second problem concerns retention of key personnel at the engineering research facilities. One way to achieve this goal could be solution of young specialists housing problems. For example, some companies subside mortgage interest rates. The amendments to the Tax Code of Russian Federation facilitating the process came into force on January 1, 2012. The expenses are taken from the costs rather than profits. However this mechanism is used rarely, because the planning time-frame for small and medium-sized business is only one year, for big business it is 3-5 years and mortgage loans start from 10 years and more. But at least this form of personnel retention is becoming more and more popular.



– What about knowledge and experience sharing in the field of engineering, specifically at interindustry level?



– This is a third focus area. Today we can already talk about engineering as a new knowledge branch. Engineering companies are becoming more and more diversified. Earlier there were separate planning and design offices in every industry, but now many companies offer an outsourced engineering service.  For example, the Airbus company designs different modules for the automotive industry. Now it also offers services in the field of transport engineering. It is essential for us to share knowledge and to ensure the adoption of best practices. 

Another sphere which is growing rapidly is related to computer simulation and modeling. If simulation of all processes is made at the initial stage of product development it allows companies to solve many problems that usually appear while making an actual test sample. Today there are many software suites on the market that in particular allow optimising different types of constructions in terms of integrity, security and consumer-oriented characteristics. Still there remains a lot to do to ensure compatibility of design documentation. Nowadays many companies design new types of equipment in such a way that they hand over the design documentation of each unit for manufacturing separately. It results in units and assemblies that are incompatible because their designs were made at different times; their alignment is made at the final phase of engineering design. Eventually companies run a risk of financial and reputational losses and lost time while making test samples and introducing the product to the market.

The practice that ensures 100% quality is based on a famous relation of costs: they increase tenfold with each stage of product progress - from design to manufacturing, installation of equipment and then to its operation. For example, if fault prevention and correction at the design stage costs 1 thousand roubles, at the stage of manufacturing it costs RUB 10 thousand, on the assemblage and fettling stage at the customer – RUB 100 thousand and during the operational – RUB 1million if it is possible at all. In the latter case a product is recalled from the market, which affects the company’s reputation. In order to solve these problems many companies increase the quality of engineering works, using new computational models. 

Interviewed by Elena Ushkova
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– Mr Zubikhin, what are the most current developments in the field of engineering?



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– What do we need to do in particular?



– I would like to set out several goals and directions. The first one concerns training of new staff. Unfortunately, educational programs in many universities are now based on outdated educational standards that have not been renewed since Soviet times. These standards should be changed. Besides during the education students study software which cannot be used in practical work. As a result, young engineers coming to modern engineering centers have to be retrained. They start to work at a lower level than they should and long after they are still draftsmen.  At the same time through our experience the actual period of formation of a good engineer is at least seven years. But if the educational process incorporated better teaching techniques, graduates could get the status of top-ranked specialists several years earlier.

The second problem concerns retention of key personnel at the engineering research facilities. One way to achieve this goal could be solution of young specialists housing problems. For example, some companies subside mortgage interest rates. The amendments to the Tax Code of Russian Federation facilitating the process came into force on January 1, 2012. The expenses are taken from the costs rather than profits. However this mechanism is used rarely, because the planning time-frame for small and medium-sized business is only one year, for big business it is 3-5 years and mortgage loans start from 10 years and more. But at least this form of personnel retention is becoming more and more popular.



– What about knowledge and experience sharing in the field of engineering, specifically at interindustry level?



– This is a third focus area. Today we can already talk about engineering as a new knowledge branch. Engineering companies are becoming more and more diversified. Earlier there were separate planning and design offices in every industry, but now many companies offer an outsourced engineering service.  For example, the Airbus company designs different modules for the automotive industry. Now it also offers services in the field of transport engineering. It is essential for us to share knowledge and to ensure the adoption of best practices. 

Another sphere which is growing rapidly is related to computer simulation and modeling. If simulation of all processes is made at the initial stage of product development it allows companies to solve many problems that usually appear while making an actual test sample. Today there are many software suites on the market that in particular allow optimising different types of constructions in terms of integrity, security and consumer-oriented characteristics. Still there remains a lot to do to ensure compatibility of design documentation. Nowadays many companies design new types of equipment in such a way that they hand over the design documentation of each unit for manufacturing separately. It results in units and assemblies that are incompatible because their designs were made at different times; their alignment is made at the final phase of engineering design. Eventually companies run a risk of financial and reputational losses and lost time while making test samples and introducing the product to the market.

The practice that ensures 100% quality is based on a famous relation of costs: they increase tenfold with each stage of product progress - from design to manufacturing, installation of equipment and then to its operation. For example, if fault prevention and correction at the design stage costs 1 thousand roubles, at the stage of manufacturing it costs RUB 10 thousand, on the assemblage and fettling stage at the customer – RUB 100 thousand and during the operational – RUB 1million if it is possible at all. In the latter case a product is recalled from the market, which affects the company’s reputation. In order to solve these problems many companies increase the quality of engineering works, using new computational models. 

Interviewed by Elena Ushkova
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Standard of Quality



IRIS is a globally recognised standard unique to the railway sector and contributing to a constant increase in the efficiency of quality control systems. One of the initiators of IRIS is Bombardier. It is one of the first companies, which began to certify its divisions. Today, over 50% of suppliers to Bombardier are certified for compliance with IRIS standards. This allows confidence in the high quality of the company’s final products. The IRIS standard is now considered as a guarantee of quality, and companies in 26 countries on five continents are certified for the compliance with it.  

The first Russian company, which got an IRIS certificate (in April 2010), was Izhevsk Radio Plant OJSC. Then, the following companies were certified: MTZ Transmash, Bombardier Transportation (Signal), Kamensk-Uralsky Metallurgical Works, SKF-Tver, Vyksa Steel Works,  

Novocherkassk Electric Locomotive Plant, and Rostov Electric Locomotive Repair Plant, Tikhvin Freight Railcar Building Plant, Novokuznetsk Railcar Building Plant, Faktoria LC, Tvema, Yaroslavl Railcar Repair Plant “Remputmash,” etc.

Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards.

“The implementation of the IRIS standard at Tikhvin Freight Railcar Building Plant (TVSZ) confirms the competitiveness of our products,” notes Oleg Menshikov, Executing Director at TVSZ. “From the very beginning we counted on the quality and reliability of products matching the high requirements of the market.” As a reminder, TVSZ has one of the largest state-of-the-art transport machine building plants built in Europe in the recent years. It was put into operation in early 2012, and it is to reach the design capacity in 2014.

“The work to obtain the IRIS standard is an important step in the current conditions, requiring understanding and an expansion of the whole life cycle of railway products,” believes Yury Serbikov, Project Manager of the Directorate for Marketing at United Metallurgical Company (OMK). OMK got the IRIS certificate for its railway-wheel production at Vyksa Steel Works, and today the company is ready to offer the market a new wheel combining a longer lifespan, low-tensioned design, an optimised profile of for the tread surface, and latest developments in the sphere of metal structure.



Independent Estimation



A lot of work aimed at improving the efficiency of the standard and increasing its role in the development of international cooperation between producers of railway equipment is currently being carried out by the IRIS Management Center. “We aspire to be able to guarantee the quality, reliability and security of products manufactured by companies certified for compliance with the IRIS standard, said Bernard Kaufmann, General Manager of the Center.

At the first stage of the introduction of IRIS to the Russian railway engineering companies in the period from 2009 to 2012, seven training seminars were held, where experts from the IRIS Management Centre participated. As part of this training, more than 130 specialists got the qualification of coaches for the further multi-staged implementation of the requirements of the IRIS standard in Russia. Currently, different conferences and seminars are organised at Russian and foreign companies in order to exchange experience.

A range of measures for training and certification of Russian enterprises for compliance with the IRIS standard is carried out by Non-Profit Partnership Union of Industries of Railway Equipment” (NP UIRE). UIRE has exclusive rights for the distribution in Russia and the CIS of the Russian-language version of the IRIS European standard.

The job of coordinator for the implementation of the IRIS standard for this sector in Russia was entrusted to the Bureau of Quality “Technotest” LLC. “It was created to support railway engineering companies in improving their efficiency, quality and business management systems, as well as to ensure continuous improvement of the quality of manufactured products.

The need for greater competitiveness in machine building products made by Russian companies arose from private railway operators’ complaints about the quality of some rolling stock. It was operators who demanded that the quality of supply chains should improve. In their turn, producers of railway rolling stock components felt discontent with the number of different requirements and audits from system integrators of rolling stock, so they asked for optimisation. The IRIS standard fulfilled all these requirements. 

The introduction of IRIS at machine building plants brings benefits to all players in the railway market. For example, operators get advantages because of enhancements in the entire supply chain – from components to rolling stock systems.

IRIS certification is an obligatory part of management systems of participants. This guarantees an increase in the quality of products, simplifies the process of evaluation and approval of suppliers, and excludes the necessity to perform their own audits. Moreover, all interested parties get access to precise and trustworthy information via one common IRIS network database. Manufacturers of components can put in and refresh the information about them on the IRIS platform. At the same time, the information about successful certification can be available for all system integrators and potential clients. 

The whole railway sector benefits from the reduction of the volume of works and expenses, full information about organisations in the railway sector, and impartial evaluation of the quality of products by independent certification bodies. It is very important that the structure of the IRIS standard requirements allows the identification of trouble spots in the complicated mechanism of providing a high quality of railway products, and taking corrective actions to remove the cause of such spots. 

Experts agree that the introduction of the IRIS requirements into the Russian industry can be a driver for development of the sector and take the national economy to a new level, because IRIS is an integrated system, and the application of its requirements will allow the solution of a number of crucial problems with the quality of products of the railway machine building sector.

By Elena Nikolaeva 
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Standard of Quality



IRIS is a globally recognised standard unique to the railway sector and contributing to a constant increase in the efficiency of quality control systems. One of the initiators of IRIS is Bombardier. It is one of the first companies, which began to certify its divisions. Today, over 50% of suppliers to Bombardier are certified for compliance with IRIS standards. This allows confidence in the high quality of the company’s final products. The IRIS standard is now considered as a guarantee of quality, and companies in 26 countries on five continents are certified for the compliance with it.  

The first Russian company, which got an IRIS certificate (in April 2010), was Izhevsk Radio Plant OJSC. Then, the following companies were certified: MTZ Transmash, Bombardier Transportation (Signal), Kamensk-Uralsky Metallurgical Works, SKF-Tver, Vyksa Steel Works,  

Novocherkassk Electric Locomotive Plant, and Rostov Electric Locomotive Repair Plant, Tikhvin Freight Railcar Building Plant, Novokuznetsk Railcar Building Plant, Faktoria LC, Tvema, Yaroslavl Railcar Repair Plant “Remputmash,” etc.

Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards.

“The implementation of the IRIS standard at Tikhvin Freight Railcar Building Plant (TVSZ) confirms the competitiveness of our products,” notes Oleg Menshikov, Executing Director at TVSZ. “From the very beginning we counted on the quality and reliability of products matching the high requirements of the market.” As a reminder, TVSZ has one of the largest state-of-the-art transport machine building plants built in Europe in the recent years. It was put into operation in early 2012, and it is to reach the design capacity in 2014.

“The work to obtain the IRIS standard is an important step in the current conditions, requiring understanding and an expansion of the whole life cycle of railway products,” believes Yury Serbikov, Project Manager of the Directorate for Marketing at United Metallurgical Company (OMK). OMK got the IRIS certificate for its railway-wheel production at Vyksa Steel Works, and today the company is ready to offer the market a new wheel combining a longer lifespan, low-tensioned design, an optimised profile of for the tread surface, and latest developments in the sphere of metal structure.



Independent Estimation



A lot of work aimed at improving the efficiency of the standard and increasing its role in the development of international cooperation between producers of railway equipment is currently being carried out by the IRIS Management Center. “We aspire to be able to guarantee the quality, reliability and security of products manufactured by companies certified for compliance with the IRIS standard, said Bernard Kaufmann, General Manager of the Center.

At the first stage of the introduction of IRIS to the Russian railway engineering companies in the period from 2009 to 2012, seven training seminars were held, where experts from the IRIS Management Centre participated. As part of this training, more than 130 specialists got the qualification of coaches for the further multi-staged implementation of the requirements of the IRIS standard in Russia. Currently, different conferences and seminars are organised at Russian and foreign companies in order to exchange experience.

A range of measures for training and certification of Russian enterprises for compliance with the IRIS standard is carried out by Non-Profit Partnership Union of Industries of Railway Equipment” (NP UIRE). UIRE has exclusive rights for the distribution in Russia and the CIS of the Russian-language version of the IRIS European standard.

The job of coordinator for the implementation of the IRIS standard for this sector in Russia was entrusted to the Bureau of Quality “Technotest” LLC. “It was created to support railway engineering companies in improving their efficiency, quality and business management systems, as well as to ensure continuous improvement of the quality of manufactured products.

The need for greater competitiveness in machine building products made by Russian companies arose from private railway operators’ complaints about the quality of some rolling stock. It was operators who demanded that the quality of supply chains should improve. In their turn, producers of railway rolling stock components felt discontent with the number of different requirements and audits from system integrators of rolling stock, so they asked for optimisation. The IRIS standard fulfilled all these requirements. 

The introduction of IRIS at machine building plants brings benefits to all players in the railway market. For example, operators get advantages because of enhancements in the entire supply chain – from components to rolling stock systems.

IRIS certification is an obligatory part of management systems of participants. This guarantees an increase in the quality of products, simplifies the process of evaluation and approval of suppliers, and excludes the necessity to perform their own audits. Moreover, all interested parties get access to precise and trustworthy information via one common IRIS network database. Manufacturers of components can put in and refresh the information about them on the IRIS platform. At the same time, the information about successful certification can be available for all system integrators and potential clients. 

The whole railway sector benefits from the reduction of the volume of works and expenses, full information about organisations in the railway sector, and impartial evaluation of the quality of products by independent certification bodies. It is very important that the structure of the IRIS standard requirements allows the identification of trouble spots in the complicated mechanism of providing a high quality of railway products, and taking corrective actions to remove the cause of such spots. 

Experts agree that the introduction of the IRIS requirements into the Russian industry can be a driver for development of the sector and take the national economy to a new level, because IRIS is an integrated system, and the application of its requirements will allow the solution of a number of crucial problems with the quality of products of the railway machine building sector.

By Elena Nikolaeva 
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    [DETAIL_TEXT] => 
Standard of Quality



IRIS is a globally recognised standard unique to the railway sector and contributing to a constant increase in the efficiency of quality control systems. One of the initiators of IRIS is Bombardier. It is one of the first companies, which began to certify its divisions. Today, over 50% of suppliers to Bombardier are certified for compliance with IRIS standards. This allows confidence in the high quality of the company’s final products. The IRIS standard is now considered as a guarantee of quality, and companies in 26 countries on five continents are certified for the compliance with it.  

The first Russian company, which got an IRIS certificate (in April 2010), was Izhevsk Radio Plant OJSC. Then, the following companies were certified: MTZ Transmash, Bombardier Transportation (Signal), Kamensk-Uralsky Metallurgical Works, SKF-Tver, Vyksa Steel Works,  

Novocherkassk Electric Locomotive Plant, and Rostov Electric Locomotive Repair Plant, Tikhvin Freight Railcar Building Plant, Novokuznetsk Railcar Building Plant, Faktoria LC, Tvema, Yaroslavl Railcar Repair Plant “Remputmash,” etc.

Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards.

“The implementation of the IRIS standard at Tikhvin Freight Railcar Building Plant (TVSZ) confirms the competitiveness of our products,” notes Oleg Menshikov, Executing Director at TVSZ. “From the very beginning we counted on the quality and reliability of products matching the high requirements of the market.” As a reminder, TVSZ has one of the largest state-of-the-art transport machine building plants built in Europe in the recent years. It was put into operation in early 2012, and it is to reach the design capacity in 2014.

“The work to obtain the IRIS standard is an important step in the current conditions, requiring understanding and an expansion of the whole life cycle of railway products,” believes Yury Serbikov, Project Manager of the Directorate for Marketing at United Metallurgical Company (OMK). OMK got the IRIS certificate for its railway-wheel production at Vyksa Steel Works, and today the company is ready to offer the market a new wheel combining a longer lifespan, low-tensioned design, an optimised profile of for the tread surface, and latest developments in the sphere of metal structure.



Independent Estimation



A lot of work aimed at improving the efficiency of the standard and increasing its role in the development of international cooperation between producers of railway equipment is currently being carried out by the IRIS Management Center. “We aspire to be able to guarantee the quality, reliability and security of products manufactured by companies certified for compliance with the IRIS standard, said Bernard Kaufmann, General Manager of the Center.

At the first stage of the introduction of IRIS to the Russian railway engineering companies in the period from 2009 to 2012, seven training seminars were held, where experts from the IRIS Management Centre participated. As part of this training, more than 130 specialists got the qualification of coaches for the further multi-staged implementation of the requirements of the IRIS standard in Russia. Currently, different conferences and seminars are organised at Russian and foreign companies in order to exchange experience.

A range of measures for training and certification of Russian enterprises for compliance with the IRIS standard is carried out by Non-Profit Partnership Union of Industries of Railway Equipment” (NP UIRE). UIRE has exclusive rights for the distribution in Russia and the CIS of the Russian-language version of the IRIS European standard.

The job of coordinator for the implementation of the IRIS standard for this sector in Russia was entrusted to the Bureau of Quality “Technotest” LLC. “It was created to support railway engineering companies in improving their efficiency, quality and business management systems, as well as to ensure continuous improvement of the quality of manufactured products.

The need for greater competitiveness in machine building products made by Russian companies arose from private railway operators’ complaints about the quality of some rolling stock. It was operators who demanded that the quality of supply chains should improve. In their turn, producers of railway rolling stock components felt discontent with the number of different requirements and audits from system integrators of rolling stock, so they asked for optimisation. The IRIS standard fulfilled all these requirements. 

The introduction of IRIS at machine building plants brings benefits to all players in the railway market. For example, operators get advantages because of enhancements in the entire supply chain – from components to rolling stock systems.

IRIS certification is an obligatory part of management systems of participants. This guarantees an increase in the quality of products, simplifies the process of evaluation and approval of suppliers, and excludes the necessity to perform their own audits. Moreover, all interested parties get access to precise and trustworthy information via one common IRIS network database. Manufacturers of components can put in and refresh the information about them on the IRIS platform. At the same time, the information about successful certification can be available for all system integrators and potential clients. 

The whole railway sector benefits from the reduction of the volume of works and expenses, full information about organisations in the railway sector, and impartial evaluation of the quality of products by independent certification bodies. It is very important that the structure of the IRIS standard requirements allows the identification of trouble spots in the complicated mechanism of providing a high quality of railway products, and taking corrective actions to remove the cause of such spots. 

Experts agree that the introduction of the IRIS requirements into the Russian industry can be a driver for development of the sector and take the national economy to a new level, because IRIS is an integrated system, and the application of its requirements will allow the solution of a number of crucial problems with the quality of products of the railway machine building sector.

By Elena Nikolaeva 
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Standard of Quality



IRIS is a globally recognised standard unique to the railway sector and contributing to a constant increase in the efficiency of quality control systems. One of the initiators of IRIS is Bombardier. It is one of the first companies, which began to certify its divisions. Today, over 50% of suppliers to Bombardier are certified for compliance with IRIS standards. This allows confidence in the high quality of the company’s final products. The IRIS standard is now considered as a guarantee of quality, and companies in 26 countries on five continents are certified for the compliance with it.  

The first Russian company, which got an IRIS certificate (in April 2010), was Izhevsk Radio Plant OJSC. Then, the following companies were certified: MTZ Transmash, Bombardier Transportation (Signal), Kamensk-Uralsky Metallurgical Works, SKF-Tver, Vyksa Steel Works,  

Novocherkassk Electric Locomotive Plant, and Rostov Electric Locomotive Repair Plant, Tikhvin Freight Railcar Building Plant, Novokuznetsk Railcar Building Plant, Faktoria LC, Tvema, Yaroslavl Railcar Repair Plant “Remputmash,” etc.

Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards.

“The implementation of the IRIS standard at Tikhvin Freight Railcar Building Plant (TVSZ) confirms the competitiveness of our products,” notes Oleg Menshikov, Executing Director at TVSZ. “From the very beginning we counted on the quality and reliability of products matching the high requirements of the market.” As a reminder, TVSZ has one of the largest state-of-the-art transport machine building plants built in Europe in the recent years. It was put into operation in early 2012, and it is to reach the design capacity in 2014.

“The work to obtain the IRIS standard is an important step in the current conditions, requiring understanding and an expansion of the whole life cycle of railway products,” believes Yury Serbikov, Project Manager of the Directorate for Marketing at United Metallurgical Company (OMK). OMK got the IRIS certificate for its railway-wheel production at Vyksa Steel Works, and today the company is ready to offer the market a new wheel combining a longer lifespan, low-tensioned design, an optimised profile of for the tread surface, and latest developments in the sphere of metal structure.



Independent Estimation



A lot of work aimed at improving the efficiency of the standard and increasing its role in the development of international cooperation between producers of railway equipment is currently being carried out by the IRIS Management Center. “We aspire to be able to guarantee the quality, reliability and security of products manufactured by companies certified for compliance with the IRIS standard, said Bernard Kaufmann, General Manager of the Center.

At the first stage of the introduction of IRIS to the Russian railway engineering companies in the period from 2009 to 2012, seven training seminars were held, where experts from the IRIS Management Centre participated. As part of this training, more than 130 specialists got the qualification of coaches for the further multi-staged implementation of the requirements of the IRIS standard in Russia. Currently, different conferences and seminars are organised at Russian and foreign companies in order to exchange experience.

A range of measures for training and certification of Russian enterprises for compliance with the IRIS standard is carried out by Non-Profit Partnership Union of Industries of Railway Equipment” (NP UIRE). UIRE has exclusive rights for the distribution in Russia and the CIS of the Russian-language version of the IRIS European standard.

The job of coordinator for the implementation of the IRIS standard for this sector in Russia was entrusted to the Bureau of Quality “Technotest” LLC. “It was created to support railway engineering companies in improving their efficiency, quality and business management systems, as well as to ensure continuous improvement of the quality of manufactured products.

The need for greater competitiveness in machine building products made by Russian companies arose from private railway operators’ complaints about the quality of some rolling stock. It was operators who demanded that the quality of supply chains should improve. In their turn, producers of railway rolling stock components felt discontent with the number of different requirements and audits from system integrators of rolling stock, so they asked for optimisation. The IRIS standard fulfilled all these requirements. 

The introduction of IRIS at machine building plants brings benefits to all players in the railway market. For example, operators get advantages because of enhancements in the entire supply chain – from components to rolling stock systems.

IRIS certification is an obligatory part of management systems of participants. This guarantees an increase in the quality of products, simplifies the process of evaluation and approval of suppliers, and excludes the necessity to perform their own audits. Moreover, all interested parties get access to precise and trustworthy information via one common IRIS network database. Manufacturers of components can put in and refresh the information about them on the IRIS platform. At the same time, the information about successful certification can be available for all system integrators and potential clients. 

The whole railway sector benefits from the reduction of the volume of works and expenses, full information about organisations in the railway sector, and impartial evaluation of the quality of products by independent certification bodies. It is very important that the structure of the IRIS standard requirements allows the identification of trouble spots in the complicated mechanism of providing a high quality of railway products, and taking corrective actions to remove the cause of such spots. 

Experts agree that the introduction of the IRIS requirements into the Russian industry can be a driver for development of the sector and take the national economy to a new level, because IRIS is an integrated system, and the application of its requirements will allow the solution of a number of crucial problems with the quality of products of the railway machine building sector.

By Elena Nikolaeva 
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Demand for Quality



Localisation has a number of advantages. In particular, it provides the development of the region, employment, additional tax revenue, attraction of foreign capital to the country, and forming the image of a country worth investing in, creation of capacities matching the best-practice standards. Simultaneously, there is no need for expenditure on the development of already existing technologies, training specialists, etc. For the transfer of modern technologies, the localisation of foreign partners’ knowledge is very important. For that, joint engineering centres are launched in Russia. It is a reciprocal relationship. In such engineering centres (EC) Russian specialists learn experience and about new technologies, and representatives of foreign companies get information about the specifics of work of Russian railways, and the requirements for the produced machinery.

Experts in this sector think that research and production assets of producers of 1520 and 1435 mm space should be united for the production of next-generation rolling stock. Also, there are a lot of interesting technical solutions in Europe, which can be transferred to the 1520 space. An important trend is providing access to the countries with broad gauge to foreign companies with leading world brands and gradual adaptation of their know-how to the 1520 space. An obligatory condition is mutual economic benefit from such cooperation.     

For example, Siemens carried out a three-stage process for the localisation programme. “Firstly, we attract Russian suppliers, which must meet our requirements for technologies, quality, reliability, and anti-corruption. Secondly, we expect that a number of international suppliers will follow the example of Siemens and localise production of components in Russia. Thirdly, we localise the production of key nodes by ourselves,” notes Dietrich Moeller, Siemens President for Russia and Central Asia. 

The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production. This project is carried out by Ural Locomotives LLC (a part of Sinara group of companies). 

It is possible to say that this was the first time that a joint venture for the production of state-of-the-art multiple-unit rolling stock matching world standards has been carried out. The contract envisages stage-by-stage increases in the level of localisation of the “Lastochka” electric train. At the first stage, the localisation must reach 20% of the cost of the electric train. In the first instance, the production of electric train components must be carried out in Russia, particularly, such important parts as the traction frequency/current converter and auxiliary converter, and facilities for the final assembly and starting-up and adjustment of electric trains are being developed.

By the end of 2013, a final decision will be made about production of components in the long-term, and to reach 55% localisation in Russia. The company plans to make the first six electric trains next year, certify them, and start supplies to RZD in 2015. By the end of 2017, the level of localisation must be not less than 80% of the cost of the electric train. In total, 1,200 railcars are to be supplied. Personnel from Ural Locomotives are trained at the Siemens plant in Krefeld (Germany). A department of design development and research was created in the company, which is engaged in the development of multiple-unit rolling stock and state-of-the-art locomotives.

An electric locomotive of 2ES10 model with an asynchronous traction motor was also developed by Ural Locomotives in cooperation with Siemens. The locomotive is created to haul cargo trains on railways with DC 3kV voltage. Technical solutions used in its production show improved technical and economic results and organising transportation of heavy trains on compound sections without train uncoupling or shunting engines. According to its characteristics (especially the traction force), “Granite” has no equivalents in Russia and in the whole “1520 space”. 60% of engineering solutions in it were never used in Russian machine building earlier.



Efficient Alliances



In cooperation with its foreign partners, one of the largest Russian machine-building corporations, Transmashholding (TMH), is carrying out more than a dozen different projects relating to the development of new samples of rolling stock, innovative design of engines and other technological solutions. Several joint ventures were launched in cooperation with Alstom. For example, TRTrans is engaged in the development of new models of rolling stock for Russian railways. Its affiliate in Novocherkassk specialises in constructing state-of-the-art electric locomotives. The company plans to launch other subsidiaries for the development of samples of other types of rolling stock – city rail transport, metro, etc.

The first projects carried out by TRTrans are the electric locomotives of EP20 and 2ES5 models. EP20 is the first Russian dual-system passenger electric locomotive operating at a speed up to 200 kph. Electric locomotives of this type were not produced in Russia until now. The locomotive is notable for its high technical and economic performance. “In accordance with the contract, six electric locomotives of EP20 model were supplied to the customer in 2012. 30 more such locomotives will be put in operation before the end of 2013. In total, 200 units of this rolling stock are to be produced by 2020 according to the contract with RZD,” says Vladimir Schneidmueller, Technical Director of TMH.

EP20 became the basis for the development of Russian next-generation innovative electric locomotives. The electric locomotive is equipped with a radio controlled system for using it as a pushing locomotive and a radio-based system for the control of several hauling locomotives distributed along several coupled trains. Representatives of neighbouring countries have shown interest in this locomotive, which gives an opportunity to increase exports of high-tech products.

Another project of TRTrans is the locomotive of 2ES5 model. It is the first Russian two-unit mainline freight AC locomotive with fifth generation asynchronous driving motors. Two pilot samples were made in 2012, and preliminary (plant) testing begun. The contract envisages that all tests are to be completed, the compliance certificate is to be received, and two electric locomotives of 2ES5 model are to be supplied and put in operation before the end of 2013, with five more such locomotives are to be put in operation in 2014. 200 such electric locomotives will be delivered to the customer till 2020.

The second joint venture between Transmashholding and Alstom is RailComp. It was launched to produce the main components for traction rolling stock. Additionally, TMH and Alstom have a foreign project – a new electric locomotive building plant in Astana (Kazakhstan). At the first stage, it will fulfill the order of NC Kazakhstan Temir Zholy. 

Another foreign partner of Transmashholding is Tognum AG (Germany). A two-unit freight diesel locomotive 2TE25AM was developed in cooperation with them. Now TMH plans to develop technological solutions to provide the Russian industry with state-of-the-art diesel engines, which can be upgraded in the future. An agreement about launching a JV in Russia for the development and the production of modern diesel drivers was signed in 2011. Currently, the project documentation for the plant construction is being developed.

In addition to it, TMH agreed with a leading world producer of diesel motors and marine equipment Wärtsilä (Finland) about creating a new company to produce motors. It is already being launched on the basis of Penzadieselmash. The plant will specialise in manufacturing and testing multi-purpose medium-speed diesel motors for railways, ships, and stationary usage, as well as in producing major components. The capacity of the plant will be 300-350 diesel motors and diesel-electric sets per annum. Production there will start in autumn 2013. Transmashholding and Wärtsilä are developing a new shunter locomotive with a diesel motor made by the Finnish company. A locomotive of TEM18V model, featuring a W6L20LA diesel engine (882kW at 1,000rpm) produced by Wärtsilä, was developed on the basis of a popular shunter diesel locomotive of TEM18DM model. In 2013, 30 such diesel locomotives are to be supplied to RZD. TMH is currently carrying out other projects in cooperation with foreign partners, i.e. with Siemens (meeting Russian and European infrastructure standards RIC-size railcars for international transportation), Stadler (a new prototype of diesel trains), General Electric (2TE116UD diesel locomotive with a diesel-electric set based on GEVO V12 diesel engine), Caterpillar (a shunter gas diesel locomotive).

In the opinion of most experts, the cooperation between Russian producers and their largest foreign colleagues is efficient. Such alliances reduce the time needed for R&D and allow producing needed machinery meeting world requirements.

By Elena Ushkova
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Demand for Quality



Localisation has a number of advantages. In particular, it provides the development of the region, employment, additional tax revenue, attraction of foreign capital to the country, and forming the image of a country worth investing in, creation of capacities matching the best-practice standards. Simultaneously, there is no need for expenditure on the development of already existing technologies, training specialists, etc. For the transfer of modern technologies, the localisation of foreign partners’ knowledge is very important. For that, joint engineering centres are launched in Russia. It is a reciprocal relationship. In such engineering centres (EC) Russian specialists learn experience and about new technologies, and representatives of foreign companies get information about the specifics of work of Russian railways, and the requirements for the produced machinery.

Experts in this sector think that research and production assets of producers of 1520 and 1435 mm space should be united for the production of next-generation rolling stock. Also, there are a lot of interesting technical solutions in Europe, which can be transferred to the 1520 space. An important trend is providing access to the countries with broad gauge to foreign companies with leading world brands and gradual adaptation of their know-how to the 1520 space. An obligatory condition is mutual economic benefit from such cooperation.     

For example, Siemens carried out a three-stage process for the localisation programme. “Firstly, we attract Russian suppliers, which must meet our requirements for technologies, quality, reliability, and anti-corruption. Secondly, we expect that a number of international suppliers will follow the example of Siemens and localise production of components in Russia. Thirdly, we localise the production of key nodes by ourselves,” notes Dietrich Moeller, Siemens President for Russia and Central Asia. 

The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production. This project is carried out by Ural Locomotives LLC (a part of Sinara group of companies). 

It is possible to say that this was the first time that a joint venture for the production of state-of-the-art multiple-unit rolling stock matching world standards has been carried out. The contract envisages stage-by-stage increases in the level of localisation of the “Lastochka” electric train. At the first stage, the localisation must reach 20% of the cost of the electric train. In the first instance, the production of electric train components must be carried out in Russia, particularly, such important parts as the traction frequency/current converter and auxiliary converter, and facilities for the final assembly and starting-up and adjustment of electric trains are being developed.

By the end of 2013, a final decision will be made about production of components in the long-term, and to reach 55% localisation in Russia. The company plans to make the first six electric trains next year, certify them, and start supplies to RZD in 2015. By the end of 2017, the level of localisation must be not less than 80% of the cost of the electric train. In total, 1,200 railcars are to be supplied. Personnel from Ural Locomotives are trained at the Siemens plant in Krefeld (Germany). A department of design development and research was created in the company, which is engaged in the development of multiple-unit rolling stock and state-of-the-art locomotives.

An electric locomotive of 2ES10 model with an asynchronous traction motor was also developed by Ural Locomotives in cooperation with Siemens. The locomotive is created to haul cargo trains on railways with DC 3kV voltage. Technical solutions used in its production show improved technical and economic results and organising transportation of heavy trains on compound sections without train uncoupling or shunting engines. According to its characteristics (especially the traction force), “Granite” has no equivalents in Russia and in the whole “1520 space”. 60% of engineering solutions in it were never used in Russian machine building earlier.



Efficient Alliances



In cooperation with its foreign partners, one of the largest Russian machine-building corporations, Transmashholding (TMH), is carrying out more than a dozen different projects relating to the development of new samples of rolling stock, innovative design of engines and other technological solutions. Several joint ventures were launched in cooperation with Alstom. For example, TRTrans is engaged in the development of new models of rolling stock for Russian railways. Its affiliate in Novocherkassk specialises in constructing state-of-the-art electric locomotives. The company plans to launch other subsidiaries for the development of samples of other types of rolling stock – city rail transport, metro, etc.

The first projects carried out by TRTrans are the electric locomotives of EP20 and 2ES5 models. EP20 is the first Russian dual-system passenger electric locomotive operating at a speed up to 200 kph. Electric locomotives of this type were not produced in Russia until now. The locomotive is notable for its high technical and economic performance. “In accordance with the contract, six electric locomotives of EP20 model were supplied to the customer in 2012. 30 more such locomotives will be put in operation before the end of 2013. In total, 200 units of this rolling stock are to be produced by 2020 according to the contract with RZD,” says Vladimir Schneidmueller, Technical Director of TMH.

EP20 became the basis for the development of Russian next-generation innovative electric locomotives. The electric locomotive is equipped with a radio controlled system for using it as a pushing locomotive and a radio-based system for the control of several hauling locomotives distributed along several coupled trains. Representatives of neighbouring countries have shown interest in this locomotive, which gives an opportunity to increase exports of high-tech products.

Another project of TRTrans is the locomotive of 2ES5 model. It is the first Russian two-unit mainline freight AC locomotive with fifth generation asynchronous driving motors. Two pilot samples were made in 2012, and preliminary (plant) testing begun. The contract envisages that all tests are to be completed, the compliance certificate is to be received, and two electric locomotives of 2ES5 model are to be supplied and put in operation before the end of 2013, with five more such locomotives are to be put in operation in 2014. 200 such electric locomotives will be delivered to the customer till 2020.

The second joint venture between Transmashholding and Alstom is RailComp. It was launched to produce the main components for traction rolling stock. Additionally, TMH and Alstom have a foreign project – a new electric locomotive building plant in Astana (Kazakhstan). At the first stage, it will fulfill the order of NC Kazakhstan Temir Zholy. 

Another foreign partner of Transmashholding is Tognum AG (Germany). A two-unit freight diesel locomotive 2TE25AM was developed in cooperation with them. Now TMH plans to develop technological solutions to provide the Russian industry with state-of-the-art diesel engines, which can be upgraded in the future. An agreement about launching a JV in Russia for the development and the production of modern diesel drivers was signed in 2011. Currently, the project documentation for the plant construction is being developed.

In addition to it, TMH agreed with a leading world producer of diesel motors and marine equipment Wärtsilä (Finland) about creating a new company to produce motors. It is already being launched on the basis of Penzadieselmash. The plant will specialise in manufacturing and testing multi-purpose medium-speed diesel motors for railways, ships, and stationary usage, as well as in producing major components. The capacity of the plant will be 300-350 diesel motors and diesel-electric sets per annum. Production there will start in autumn 2013. Transmashholding and Wärtsilä are developing a new shunter locomotive with a diesel motor made by the Finnish company. A locomotive of TEM18V model, featuring a W6L20LA diesel engine (882kW at 1,000rpm) produced by Wärtsilä, was developed on the basis of a popular shunter diesel locomotive of TEM18DM model. In 2013, 30 such diesel locomotives are to be supplied to RZD. TMH is currently carrying out other projects in cooperation with foreign partners, i.e. with Siemens (meeting Russian and European infrastructure standards RIC-size railcars for international transportation), Stadler (a new prototype of diesel trains), General Electric (2TE116UD diesel locomotive with a diesel-electric set based on GEVO V12 diesel engine), Caterpillar (a shunter gas diesel locomotive).

In the opinion of most experts, the cooperation between Russian producers and their largest foreign colleagues is efficient. Such alliances reduce the time needed for R&D and allow producing needed machinery meeting world requirements.

By Elena Ushkova
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Nowadays, international holding companies participate more and more often in joint ventures and consortiums in Russia. According to experts, the trend will continue for the foreseeable future. RZD’s requirement that foreign suppliers must localise production in Russia is of crucial importance. 

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Demand for Quality



Localisation has a number of advantages. In particular, it provides the development of the region, employment, additional tax revenue, attraction of foreign capital to the country, and forming the image of a country worth investing in, creation of capacities matching the best-practice standards. Simultaneously, there is no need for expenditure on the development of already existing technologies, training specialists, etc. For the transfer of modern technologies, the localisation of foreign partners’ knowledge is very important. For that, joint engineering centres are launched in Russia. It is a reciprocal relationship. In such engineering centres (EC) Russian specialists learn experience and about new technologies, and representatives of foreign companies get information about the specifics of work of Russian railways, and the requirements for the produced machinery.

Experts in this sector think that research and production assets of producers of 1520 and 1435 mm space should be united for the production of next-generation rolling stock. Also, there are a lot of interesting technical solutions in Europe, which can be transferred to the 1520 space. An important trend is providing access to the countries with broad gauge to foreign companies with leading world brands and gradual adaptation of their know-how to the 1520 space. An obligatory condition is mutual economic benefit from such cooperation.     

For example, Siemens carried out a three-stage process for the localisation programme. “Firstly, we attract Russian suppliers, which must meet our requirements for technologies, quality, reliability, and anti-corruption. Secondly, we expect that a number of international suppliers will follow the example of Siemens and localise production of components in Russia. Thirdly, we localise the production of key nodes by ourselves,” notes Dietrich Moeller, Siemens President for Russia and Central Asia. 

The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production. This project is carried out by Ural Locomotives LLC (a part of Sinara group of companies). 

It is possible to say that this was the first time that a joint venture for the production of state-of-the-art multiple-unit rolling stock matching world standards has been carried out. The contract envisages stage-by-stage increases in the level of localisation of the “Lastochka” electric train. At the first stage, the localisation must reach 20% of the cost of the electric train. In the first instance, the production of electric train components must be carried out in Russia, particularly, such important parts as the traction frequency/current converter and auxiliary converter, and facilities for the final assembly and starting-up and adjustment of electric trains are being developed.

By the end of 2013, a final decision will be made about production of components in the long-term, and to reach 55% localisation in Russia. The company plans to make the first six electric trains next year, certify them, and start supplies to RZD in 2015. By the end of 2017, the level of localisation must be not less than 80% of the cost of the electric train. In total, 1,200 railcars are to be supplied. Personnel from Ural Locomotives are trained at the Siemens plant in Krefeld (Germany). A department of design development and research was created in the company, which is engaged in the development of multiple-unit rolling stock and state-of-the-art locomotives.

An electric locomotive of 2ES10 model with an asynchronous traction motor was also developed by Ural Locomotives in cooperation with Siemens. The locomotive is created to haul cargo trains on railways with DC 3kV voltage. Technical solutions used in its production show improved technical and economic results and organising transportation of heavy trains on compound sections without train uncoupling or shunting engines. According to its characteristics (especially the traction force), “Granite” has no equivalents in Russia and in the whole “1520 space”. 60% of engineering solutions in it were never used in Russian machine building earlier.



Efficient Alliances



In cooperation with its foreign partners, one of the largest Russian machine-building corporations, Transmashholding (TMH), is carrying out more than a dozen different projects relating to the development of new samples of rolling stock, innovative design of engines and other technological solutions. Several joint ventures were launched in cooperation with Alstom. For example, TRTrans is engaged in the development of new models of rolling stock for Russian railways. Its affiliate in Novocherkassk specialises in constructing state-of-the-art electric locomotives. The company plans to launch other subsidiaries for the development of samples of other types of rolling stock – city rail transport, metro, etc.

The first projects carried out by TRTrans are the electric locomotives of EP20 and 2ES5 models. EP20 is the first Russian dual-system passenger electric locomotive operating at a speed up to 200 kph. Electric locomotives of this type were not produced in Russia until now. The locomotive is notable for its high technical and economic performance. “In accordance with the contract, six electric locomotives of EP20 model were supplied to the customer in 2012. 30 more such locomotives will be put in operation before the end of 2013. In total, 200 units of this rolling stock are to be produced by 2020 according to the contract with RZD,” says Vladimir Schneidmueller, Technical Director of TMH.

EP20 became the basis for the development of Russian next-generation innovative electric locomotives. The electric locomotive is equipped with a radio controlled system for using it as a pushing locomotive and a radio-based system for the control of several hauling locomotives distributed along several coupled trains. Representatives of neighbouring countries have shown interest in this locomotive, which gives an opportunity to increase exports of high-tech products.

Another project of TRTrans is the locomotive of 2ES5 model. It is the first Russian two-unit mainline freight AC locomotive with fifth generation asynchronous driving motors. Two pilot samples were made in 2012, and preliminary (plant) testing begun. The contract envisages that all tests are to be completed, the compliance certificate is to be received, and two electric locomotives of 2ES5 model are to be supplied and put in operation before the end of 2013, with five more such locomotives are to be put in operation in 2014. 200 such electric locomotives will be delivered to the customer till 2020.

The second joint venture between Transmashholding and Alstom is RailComp. It was launched to produce the main components for traction rolling stock. Additionally, TMH and Alstom have a foreign project – a new electric locomotive building plant in Astana (Kazakhstan). At the first stage, it will fulfill the order of NC Kazakhstan Temir Zholy. 

Another foreign partner of Transmashholding is Tognum AG (Germany). A two-unit freight diesel locomotive 2TE25AM was developed in cooperation with them. Now TMH plans to develop technological solutions to provide the Russian industry with state-of-the-art diesel engines, which can be upgraded in the future. An agreement about launching a JV in Russia for the development and the production of modern diesel drivers was signed in 2011. Currently, the project documentation for the plant construction is being developed.

In addition to it, TMH agreed with a leading world producer of diesel motors and marine equipment Wärtsilä (Finland) about creating a new company to produce motors. It is already being launched on the basis of Penzadieselmash. The plant will specialise in manufacturing and testing multi-purpose medium-speed diesel motors for railways, ships, and stationary usage, as well as in producing major components. The capacity of the plant will be 300-350 diesel motors and diesel-electric sets per annum. Production there will start in autumn 2013. Transmashholding and Wärtsilä are developing a new shunter locomotive with a diesel motor made by the Finnish company. A locomotive of TEM18V model, featuring a W6L20LA diesel engine (882kW at 1,000rpm) produced by Wärtsilä, was developed on the basis of a popular shunter diesel locomotive of TEM18DM model. In 2013, 30 such diesel locomotives are to be supplied to RZD. TMH is currently carrying out other projects in cooperation with foreign partners, i.e. with Siemens (meeting Russian and European infrastructure standards RIC-size railcars for international transportation), Stadler (a new prototype of diesel trains), General Electric (2TE116UD diesel locomotive with a diesel-electric set based on GEVO V12 diesel engine), Caterpillar (a shunter gas diesel locomotive).

In the opinion of most experts, the cooperation between Russian producers and their largest foreign colleagues is efficient. Such alliances reduce the time needed for R&D and allow producing needed machinery meeting world requirements.

By Elena Ushkova
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Demand for Quality



Localisation has a number of advantages. In particular, it provides the development of the region, employment, additional tax revenue, attraction of foreign capital to the country, and forming the image of a country worth investing in, creation of capacities matching the best-practice standards. Simultaneously, there is no need for expenditure on the development of already existing technologies, training specialists, etc. For the transfer of modern technologies, the localisation of foreign partners’ knowledge is very important. For that, joint engineering centres are launched in Russia. It is a reciprocal relationship. In such engineering centres (EC) Russian specialists learn experience and about new technologies, and representatives of foreign companies get information about the specifics of work of Russian railways, and the requirements for the produced machinery.

Experts in this sector think that research and production assets of producers of 1520 and 1435 mm space should be united for the production of next-generation rolling stock. Also, there are a lot of interesting technical solutions in Europe, which can be transferred to the 1520 space. An important trend is providing access to the countries with broad gauge to foreign companies with leading world brands and gradual adaptation of their know-how to the 1520 space. An obligatory condition is mutual economic benefit from such cooperation.     

For example, Siemens carried out a three-stage process for the localisation programme. “Firstly, we attract Russian suppliers, which must meet our requirements for technologies, quality, reliability, and anti-corruption. Secondly, we expect that a number of international suppliers will follow the example of Siemens and localise production of components in Russia. Thirdly, we localise the production of key nodes by ourselves,” notes Dietrich Moeller, Siemens President for Russia and Central Asia. 

The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production. This project is carried out by Ural Locomotives LLC (a part of Sinara group of companies). 

It is possible to say that this was the first time that a joint venture for the production of state-of-the-art multiple-unit rolling stock matching world standards has been carried out. The contract envisages stage-by-stage increases in the level of localisation of the “Lastochka” electric train. At the first stage, the localisation must reach 20% of the cost of the electric train. In the first instance, the production of electric train components must be carried out in Russia, particularly, such important parts as the traction frequency/current converter and auxiliary converter, and facilities for the final assembly and starting-up and adjustment of electric trains are being developed.

By the end of 2013, a final decision will be made about production of components in the long-term, and to reach 55% localisation in Russia. The company plans to make the first six electric trains next year, certify them, and start supplies to RZD in 2015. By the end of 2017, the level of localisation must be not less than 80% of the cost of the electric train. In total, 1,200 railcars are to be supplied. Personnel from Ural Locomotives are trained at the Siemens plant in Krefeld (Germany). A department of design development and research was created in the company, which is engaged in the development of multiple-unit rolling stock and state-of-the-art locomotives.

An electric locomotive of 2ES10 model with an asynchronous traction motor was also developed by Ural Locomotives in cooperation with Siemens. The locomotive is created to haul cargo trains on railways with DC 3kV voltage. Technical solutions used in its production show improved technical and economic results and organising transportation of heavy trains on compound sections without train uncoupling or shunting engines. According to its characteristics (especially the traction force), “Granite” has no equivalents in Russia and in the whole “1520 space”. 60% of engineering solutions in it were never used in Russian machine building earlier.



Efficient Alliances



In cooperation with its foreign partners, one of the largest Russian machine-building corporations, Transmashholding (TMH), is carrying out more than a dozen different projects relating to the development of new samples of rolling stock, innovative design of engines and other technological solutions. Several joint ventures were launched in cooperation with Alstom. For example, TRTrans is engaged in the development of new models of rolling stock for Russian railways. Its affiliate in Novocherkassk specialises in constructing state-of-the-art electric locomotives. The company plans to launch other subsidiaries for the development of samples of other types of rolling stock – city rail transport, metro, etc.

The first projects carried out by TRTrans are the electric locomotives of EP20 and 2ES5 models. EP20 is the first Russian dual-system passenger electric locomotive operating at a speed up to 200 kph. Electric locomotives of this type were not produced in Russia until now. The locomotive is notable for its high technical and economic performance. “In accordance with the contract, six electric locomotives of EP20 model were supplied to the customer in 2012. 30 more such locomotives will be put in operation before the end of 2013. In total, 200 units of this rolling stock are to be produced by 2020 according to the contract with RZD,” says Vladimir Schneidmueller, Technical Director of TMH.

EP20 became the basis for the development of Russian next-generation innovative electric locomotives. The electric locomotive is equipped with a radio controlled system for using it as a pushing locomotive and a radio-based system for the control of several hauling locomotives distributed along several coupled trains. Representatives of neighbouring countries have shown interest in this locomotive, which gives an opportunity to increase exports of high-tech products.

Another project of TRTrans is the locomotive of 2ES5 model. It is the first Russian two-unit mainline freight AC locomotive with fifth generation asynchronous driving motors. Two pilot samples were made in 2012, and preliminary (plant) testing begun. The contract envisages that all tests are to be completed, the compliance certificate is to be received, and two electric locomotives of 2ES5 model are to be supplied and put in operation before the end of 2013, with five more such locomotives are to be put in operation in 2014. 200 such electric locomotives will be delivered to the customer till 2020.

The second joint venture between Transmashholding and Alstom is RailComp. It was launched to produce the main components for traction rolling stock. Additionally, TMH and Alstom have a foreign project – a new electric locomotive building plant in Astana (Kazakhstan). At the first stage, it will fulfill the order of NC Kazakhstan Temir Zholy. 

Another foreign partner of Transmashholding is Tognum AG (Germany). A two-unit freight diesel locomotive 2TE25AM was developed in cooperation with them. Now TMH plans to develop technological solutions to provide the Russian industry with state-of-the-art diesel engines, which can be upgraded in the future. An agreement about launching a JV in Russia for the development and the production of modern diesel drivers was signed in 2011. Currently, the project documentation for the plant construction is being developed.

In addition to it, TMH agreed with a leading world producer of diesel motors and marine equipment Wärtsilä (Finland) about creating a new company to produce motors. It is already being launched on the basis of Penzadieselmash. The plant will specialise in manufacturing and testing multi-purpose medium-speed diesel motors for railways, ships, and stationary usage, as well as in producing major components. The capacity of the plant will be 300-350 diesel motors and diesel-electric sets per annum. Production there will start in autumn 2013. Transmashholding and Wärtsilä are developing a new shunter locomotive with a diesel motor made by the Finnish company. A locomotive of TEM18V model, featuring a W6L20LA diesel engine (882kW at 1,000rpm) produced by Wärtsilä, was developed on the basis of a popular shunter diesel locomotive of TEM18DM model. In 2013, 30 such diesel locomotives are to be supplied to RZD. TMH is currently carrying out other projects in cooperation with foreign partners, i.e. with Siemens (meeting Russian and European infrastructure standards RIC-size railcars for international transportation), Stadler (a new prototype of diesel trains), General Electric (2TE116UD diesel locomotive with a diesel-electric set based on GEVO V12 diesel engine), Caterpillar (a shunter gas diesel locomotive).

In the opinion of most experts, the cooperation between Russian producers and their largest foreign colleagues is efficient. Such alliances reduce the time needed for R&D and allow producing needed machinery meeting world requirements.

By Elena Ushkova
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    [DETAIL_TEXT] => 
Vladimir Putin Gives the Go-Ahead to New Port Projects in the South

In August, Russian President Vladimir Putin said the government would support the development of ports and terminals in the Azov and Black sea with massive investments into infrastructure to help handle increased traffic. The key factor here is railways which should be greatly expanded.

Though the impact of weak industrial demand continued to be felt in the freight business, some directions are systemically being overloaded. Last year, Russian ports handled 565 million tonnes of cargo which is a 25% increase on the Soviet-era record in 1984. In 2012, RZD transported to the Azov and Black sea ports 62.4 million tonnes, +11% on 2011. In 2020, volumes add 69.9 million making it double the current figures. 65 million tonnes of these volumes will presumably be handled at the new port of Taman, whose construction will be backed by 7 billion roubles funded by the federal budget. Such investments are needed because experts estimate that by 2030 shipment of dry goods in the ports of the south of Russia will reach 150 million tonnes, which is more than double current capacity.

As Vladimir Putin said, a substantial chunk of the cargoes goes through the ports in the Baltic countries like Latvia and Estonia, which results in a loss of revenues for Russia. Out of 660 million metric tonnes of Russian exports, the foreign Baltic ports accounts for 100 million tonnes, or 15 percent. 

The project for construction of the port of Taman is being supported by some investors who want ensure they can export enough volumes to recoup their investments through production. As the RF Minister of Transport Maxim Sokolov stated, a consortium of Russian and Dutch design companies developed a concept for the port of Taman last year, and the State evaluation agency is examining its feasibility. Taman is Russia’s most expensive port project on the Black Sea, according to Sokolov. Federal spending will amount to 76 billion roubles ($2.3 billion), while private investors are expected to contribute the remaining 152 billion rubles. When the port reaches its full capacity in 2025, it will handle 94 million metric tons of dry cargo per year, Sokolov said.

Vladimir Putin said that government bodies “need clear guidelines for the future, linked with the plans of our major companies, and, of course, with developing other forms of transportation, namely pipeline, rail and road”.



Northern Sea Route Deliveries to Soar 400% in 2013 

The number of ships that will have passed via the Northern Sea Route (NSR) in 2013 will increase five-fold year-on-year. In January-July the number accounted to 204 with only 46 in 2012 and just 4 in 2011. That’s a good reason to think that the passage will be in high demand in the long term.

The NSR is a sea route from the Atlantic Ocean to the Pacific Ocean along the Arctic Russian coast. In recent years the Russian authorities made some decisions targeted at transforming the route into a transport corridor able to compete with the trans-ocean route via the Suez canal. The current global market offers good prospects for Russia’s Arctic since price volatility for commodities makes producers seek cheap logistics. Transportation though the icy and cold seas promises to reduce costs for delivering gas, coal, fertilizers, woods from Northern Europe to the emerging markets of Asia, primarily, China. For example, travel time from Rotterdam to Japan is 23 days via the NSR against 33 days via Suez. The time reduction is being easily converted in money savings due to lower fuel consumption and crew salary.

In April this year, French Total said it would export Russia’s Yamal liquefied natural gas to Great Britain and northwestern Europe via the NSR. Exports from an LNG plant under construction in Yamal reportedly would begin in 2016. Gas is supposed to be delivered to the European market only in winter, when the NSR to Asia along Russia’s northern coast becomes impassible.

Another basis for growth is the industrial development of Russian regions in the Urals and Siberia. Some heavy-lifting equipment for mining and power companies was delivered by ships through the NSR to the port of Dudinka and then transported by river or by road to the plants. 

Some experts say the route may get 25% of all traffic between Asia and Europe by 2030.  Such comments seem to be too optimistic, but anyway the NSR will inevitably create a shift from the Suez to the Arctic. The size of this shift is hard to predict in the mid-term let alone in 2030.What one can say now is the fact that there is much work to be done by shipbuilders, government bodies, financiers and shipping companies to translate the potential and interest into caravans of tankers and bulkers. 



From Rail and Road to River 

RF Ministry of Transport recently published a draft of the River Transportation Development Strategy till 2030 on its website. The government would like to create a shift from rail and road to river and is ready to spend 1.9 trillion roubles (app. $60 billion) to reach this goal. 

Russia has a lot of waterways with two main ones – Volgo-Balt and Volgo-Don connecting the Baltic sea with the Azov and Black sea basin. They provide their facilities for river carriers for transportation of metal, ore, timber, oil and oil products, most of which are being delivered to consumers in Europe. The internal waterways handle less than 2% of goods traffic in Russia. 

The Ministry said that some problems should be resolved to ensure the aim of the strategy is achieved. There is a need for modernization of the Soviet-era obsolete fleet which has an average age of 32 years, clearing of bottlenecks in infrastructure, building new ports, as well as training personnel and introduction of innovative technologies into operation. For instance to demonstrate the size of the infrastructure logistical gap: the share of waterways with depths less than 4 meters is 25% of the whole length. That results in much lower efficiency in terms of productivity and profitability than possible.

With investments into routes increasing, building vessels, ports, logistics complexes and stimulating the carriers to put money into their assets the Ministry envisages the reduction of the length of waterways with bottlenecks, decreasing the average age of the fleet to 22 years and enhancing the cumulative tonnage from the current 8.13 million tonnes (2012) to 13.3 million in 2030.

Industry experts say they have been lobbying for all these measures for long time, but did not get much response from the government for years. In the meantime as head of the National Shipping Chamber Alexey Klyavin said over the last 30 years the turnover of river transport has declined by 78% to 142 million tonnes transported last year. 



Railway Tariffs for Five Years 

The Federal Tariffs Service (FTS) has announced that it plans to change its approach to dealing with railway tariffs. Instead of the current practice of setting rates for transportation every year the government body proposes to set them for 5 years with intermediate corrections depending on the macroeconomic situation. 

The Russian railway tariff system consists of two components, the infrastructure and wagon ones. The infrastructure one encompasses the services delivered by RZD, including providing track, locomotives, shunting etc. The wagon one is up to the owner of a wagon, i. e. an operator. The rates for RZD’s services are being regulated by FTS, which sets them at the end of each year, taking effect from January 1. The wagon component is wholly up to an operator who can offer any price to its customer. 

In early August, FTS published a draft of changes to the government order regulating the process of setting tariffs for the railways, i. e. RZD. The most important change is the offer to set rates for 5 years with the possibility of correct them in case economic conditions go beyond predicted ranges, for example, if there is a rapid growth in inflation. 

The new approach is based on a regulatory asset basement methodology (RAB). This methodology will help ensure the incomes of RZD make it possible to duly maintain tracks, stations and locomotives and develop infrastructure where growth is occurring. At the same time the RAB-approach minimizes the risks of excessive rates growth which can make it impossible for shippers to use railways.

As a consequence of the implementation of the measures offered by the FTS the industrial producers will be able plan their investments for the long-term which will result in an easier access to bank loans, investments, and bonds. Many producers have been complaining for years that they are not confident in their prospects for building a plant or excavating out mines since they cannot know what the railway tariffs will be like by the time a project is completed. 
    [~DETAIL_TEXT] => 
Vladimir Putin Gives the Go-Ahead to New Port Projects in the South

In August, Russian President Vladimir Putin said the government would support the development of ports and terminals in the Azov and Black sea with massive investments into infrastructure to help handle increased traffic. The key factor here is railways which should be greatly expanded.

Though the impact of weak industrial demand continued to be felt in the freight business, some directions are systemically being overloaded. Last year, Russian ports handled 565 million tonnes of cargo which is a 25% increase on the Soviet-era record in 1984. In 2012, RZD transported to the Azov and Black sea ports 62.4 million tonnes, +11% on 2011. In 2020, volumes add 69.9 million making it double the current figures. 65 million tonnes of these volumes will presumably be handled at the new port of Taman, whose construction will be backed by 7 billion roubles funded by the federal budget. Such investments are needed because experts estimate that by 2030 shipment of dry goods in the ports of the south of Russia will reach 150 million tonnes, which is more than double current capacity.

As Vladimir Putin said, a substantial chunk of the cargoes goes through the ports in the Baltic countries like Latvia and Estonia, which results in a loss of revenues for Russia. Out of 660 million metric tonnes of Russian exports, the foreign Baltic ports accounts for 100 million tonnes, or 15 percent. 

The project for construction of the port of Taman is being supported by some investors who want ensure they can export enough volumes to recoup their investments through production. As the RF Minister of Transport Maxim Sokolov stated, a consortium of Russian and Dutch design companies developed a concept for the port of Taman last year, and the State evaluation agency is examining its feasibility. Taman is Russia’s most expensive port project on the Black Sea, according to Sokolov. Federal spending will amount to 76 billion roubles ($2.3 billion), while private investors are expected to contribute the remaining 152 billion rubles. When the port reaches its full capacity in 2025, it will handle 94 million metric tons of dry cargo per year, Sokolov said.

Vladimir Putin said that government bodies “need clear guidelines for the future, linked with the plans of our major companies, and, of course, with developing other forms of transportation, namely pipeline, rail and road”.



Northern Sea Route Deliveries to Soar 400% in 2013 

The number of ships that will have passed via the Northern Sea Route (NSR) in 2013 will increase five-fold year-on-year. In January-July the number accounted to 204 with only 46 in 2012 and just 4 in 2011. That’s a good reason to think that the passage will be in high demand in the long term.

The NSR is a sea route from the Atlantic Ocean to the Pacific Ocean along the Arctic Russian coast. In recent years the Russian authorities made some decisions targeted at transforming the route into a transport corridor able to compete with the trans-ocean route via the Suez canal. The current global market offers good prospects for Russia’s Arctic since price volatility for commodities makes producers seek cheap logistics. Transportation though the icy and cold seas promises to reduce costs for delivering gas, coal, fertilizers, woods from Northern Europe to the emerging markets of Asia, primarily, China. For example, travel time from Rotterdam to Japan is 23 days via the NSR against 33 days via Suez. The time reduction is being easily converted in money savings due to lower fuel consumption and crew salary.

In April this year, French Total said it would export Russia’s Yamal liquefied natural gas to Great Britain and northwestern Europe via the NSR. Exports from an LNG plant under construction in Yamal reportedly would begin in 2016. Gas is supposed to be delivered to the European market only in winter, when the NSR to Asia along Russia’s northern coast becomes impassible.

Another basis for growth is the industrial development of Russian regions in the Urals and Siberia. Some heavy-lifting equipment for mining and power companies was delivered by ships through the NSR to the port of Dudinka and then transported by river or by road to the plants. 

Some experts say the route may get 25% of all traffic between Asia and Europe by 2030.  Such comments seem to be too optimistic, but anyway the NSR will inevitably create a shift from the Suez to the Arctic. The size of this shift is hard to predict in the mid-term let alone in 2030.What one can say now is the fact that there is much work to be done by shipbuilders, government bodies, financiers and shipping companies to translate the potential and interest into caravans of tankers and bulkers. 



From Rail and Road to River 

RF Ministry of Transport recently published a draft of the River Transportation Development Strategy till 2030 on its website. The government would like to create a shift from rail and road to river and is ready to spend 1.9 trillion roubles (app. $60 billion) to reach this goal. 

Russia has a lot of waterways with two main ones – Volgo-Balt and Volgo-Don connecting the Baltic sea with the Azov and Black sea basin. They provide their facilities for river carriers for transportation of metal, ore, timber, oil and oil products, most of which are being delivered to consumers in Europe. The internal waterways handle less than 2% of goods traffic in Russia. 

The Ministry said that some problems should be resolved to ensure the aim of the strategy is achieved. There is a need for modernization of the Soviet-era obsolete fleet which has an average age of 32 years, clearing of bottlenecks in infrastructure, building new ports, as well as training personnel and introduction of innovative technologies into operation. For instance to demonstrate the size of the infrastructure logistical gap: the share of waterways with depths less than 4 meters is 25% of the whole length. That results in much lower efficiency in terms of productivity and profitability than possible.

With investments into routes increasing, building vessels, ports, logistics complexes and stimulating the carriers to put money into their assets the Ministry envisages the reduction of the length of waterways with bottlenecks, decreasing the average age of the fleet to 22 years and enhancing the cumulative tonnage from the current 8.13 million tonnes (2012) to 13.3 million in 2030.

Industry experts say they have been lobbying for all these measures for long time, but did not get much response from the government for years. In the meantime as head of the National Shipping Chamber Alexey Klyavin said over the last 30 years the turnover of river transport has declined by 78% to 142 million tonnes transported last year. 



Railway Tariffs for Five Years 

The Federal Tariffs Service (FTS) has announced that it plans to change its approach to dealing with railway tariffs. Instead of the current practice of setting rates for transportation every year the government body proposes to set them for 5 years with intermediate corrections depending on the macroeconomic situation. 

The Russian railway tariff system consists of two components, the infrastructure and wagon ones. The infrastructure one encompasses the services delivered by RZD, including providing track, locomotives, shunting etc. The wagon one is up to the owner of a wagon, i. e. an operator. The rates for RZD’s services are being regulated by FTS, which sets them at the end of each year, taking effect from January 1. The wagon component is wholly up to an operator who can offer any price to its customer. 

In early August, FTS published a draft of changes to the government order regulating the process of setting tariffs for the railways, i. e. RZD. The most important change is the offer to set rates for 5 years with the possibility of correct them in case economic conditions go beyond predicted ranges, for example, if there is a rapid growth in inflation. 

The new approach is based on a regulatory asset basement methodology (RAB). This methodology will help ensure the incomes of RZD make it possible to duly maintain tracks, stations and locomotives and develop infrastructure where growth is occurring. At the same time the RAB-approach minimizes the risks of excessive rates growth which can make it impossible for shippers to use railways.

As a consequence of the implementation of the measures offered by the FTS the industrial producers will be able plan their investments for the long-term which will result in an easier access to bank loans, investments, and bonds. Many producers have been complaining for years that they are not confident in their prospects for building a plant or excavating out mines since they cannot know what the railway tariffs will be like by the time a project is completed. 
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    [DETAIL_TEXT] => 
Vladimir Putin Gives the Go-Ahead to New Port Projects in the South

In August, Russian President Vladimir Putin said the government would support the development of ports and terminals in the Azov and Black sea with massive investments into infrastructure to help handle increased traffic. The key factor here is railways which should be greatly expanded.

Though the impact of weak industrial demand continued to be felt in the freight business, some directions are systemically being overloaded. Last year, Russian ports handled 565 million tonnes of cargo which is a 25% increase on the Soviet-era record in 1984. In 2012, RZD transported to the Azov and Black sea ports 62.4 million tonnes, +11% on 2011. In 2020, volumes add 69.9 million making it double the current figures. 65 million tonnes of these volumes will presumably be handled at the new port of Taman, whose construction will be backed by 7 billion roubles funded by the federal budget. Such investments are needed because experts estimate that by 2030 shipment of dry goods in the ports of the south of Russia will reach 150 million tonnes, which is more than double current capacity.

As Vladimir Putin said, a substantial chunk of the cargoes goes through the ports in the Baltic countries like Latvia and Estonia, which results in a loss of revenues for Russia. Out of 660 million metric tonnes of Russian exports, the foreign Baltic ports accounts for 100 million tonnes, or 15 percent. 

The project for construction of the port of Taman is being supported by some investors who want ensure they can export enough volumes to recoup their investments through production. As the RF Minister of Transport Maxim Sokolov stated, a consortium of Russian and Dutch design companies developed a concept for the port of Taman last year, and the State evaluation agency is examining its feasibility. Taman is Russia’s most expensive port project on the Black Sea, according to Sokolov. Federal spending will amount to 76 billion roubles ($2.3 billion), while private investors are expected to contribute the remaining 152 billion rubles. When the port reaches its full capacity in 2025, it will handle 94 million metric tons of dry cargo per year, Sokolov said.

Vladimir Putin said that government bodies “need clear guidelines for the future, linked with the plans of our major companies, and, of course, with developing other forms of transportation, namely pipeline, rail and road”.



Northern Sea Route Deliveries to Soar 400% in 2013 

The number of ships that will have passed via the Northern Sea Route (NSR) in 2013 will increase five-fold year-on-year. In January-July the number accounted to 204 with only 46 in 2012 and just 4 in 2011. That’s a good reason to think that the passage will be in high demand in the long term.

The NSR is a sea route from the Atlantic Ocean to the Pacific Ocean along the Arctic Russian coast. In recent years the Russian authorities made some decisions targeted at transforming the route into a transport corridor able to compete with the trans-ocean route via the Suez canal. The current global market offers good prospects for Russia’s Arctic since price volatility for commodities makes producers seek cheap logistics. Transportation though the icy and cold seas promises to reduce costs for delivering gas, coal, fertilizers, woods from Northern Europe to the emerging markets of Asia, primarily, China. For example, travel time from Rotterdam to Japan is 23 days via the NSR against 33 days via Suez. The time reduction is being easily converted in money savings due to lower fuel consumption and crew salary.

In April this year, French Total said it would export Russia’s Yamal liquefied natural gas to Great Britain and northwestern Europe via the NSR. Exports from an LNG plant under construction in Yamal reportedly would begin in 2016. Gas is supposed to be delivered to the European market only in winter, when the NSR to Asia along Russia’s northern coast becomes impassible.

Another basis for growth is the industrial development of Russian regions in the Urals and Siberia. Some heavy-lifting equipment for mining and power companies was delivered by ships through the NSR to the port of Dudinka and then transported by river or by road to the plants. 

Some experts say the route may get 25% of all traffic between Asia and Europe by 2030.  Such comments seem to be too optimistic, but anyway the NSR will inevitably create a shift from the Suez to the Arctic. The size of this shift is hard to predict in the mid-term let alone in 2030.What one can say now is the fact that there is much work to be done by shipbuilders, government bodies, financiers and shipping companies to translate the potential and interest into caravans of tankers and bulkers. 



From Rail and Road to River 

RF Ministry of Transport recently published a draft of the River Transportation Development Strategy till 2030 on its website. The government would like to create a shift from rail and road to river and is ready to spend 1.9 trillion roubles (app. $60 billion) to reach this goal. 

Russia has a lot of waterways with two main ones – Volgo-Balt and Volgo-Don connecting the Baltic sea with the Azov and Black sea basin. They provide their facilities for river carriers for transportation of metal, ore, timber, oil and oil products, most of which are being delivered to consumers in Europe. The internal waterways handle less than 2% of goods traffic in Russia. 

The Ministry said that some problems should be resolved to ensure the aim of the strategy is achieved. There is a need for modernization of the Soviet-era obsolete fleet which has an average age of 32 years, clearing of bottlenecks in infrastructure, building new ports, as well as training personnel and introduction of innovative technologies into operation. For instance to demonstrate the size of the infrastructure logistical gap: the share of waterways with depths less than 4 meters is 25% of the whole length. That results in much lower efficiency in terms of productivity and profitability than possible.

With investments into routes increasing, building vessels, ports, logistics complexes and stimulating the carriers to put money into their assets the Ministry envisages the reduction of the length of waterways with bottlenecks, decreasing the average age of the fleet to 22 years and enhancing the cumulative tonnage from the current 8.13 million tonnes (2012) to 13.3 million in 2030.

Industry experts say they have been lobbying for all these measures for long time, but did not get much response from the government for years. In the meantime as head of the National Shipping Chamber Alexey Klyavin said over the last 30 years the turnover of river transport has declined by 78% to 142 million tonnes transported last year. 



Railway Tariffs for Five Years 

The Federal Tariffs Service (FTS) has announced that it plans to change its approach to dealing with railway tariffs. Instead of the current practice of setting rates for transportation every year the government body proposes to set them for 5 years with intermediate corrections depending on the macroeconomic situation. 

The Russian railway tariff system consists of two components, the infrastructure and wagon ones. The infrastructure one encompasses the services delivered by RZD, including providing track, locomotives, shunting etc. The wagon one is up to the owner of a wagon, i. e. an operator. The rates for RZD’s services are being regulated by FTS, which sets them at the end of each year, taking effect from January 1. The wagon component is wholly up to an operator who can offer any price to its customer. 

In early August, FTS published a draft of changes to the government order regulating the process of setting tariffs for the railways, i. e. RZD. The most important change is the offer to set rates for 5 years with the possibility of correct them in case economic conditions go beyond predicted ranges, for example, if there is a rapid growth in inflation. 

The new approach is based on a regulatory asset basement methodology (RAB). This methodology will help ensure the incomes of RZD make it possible to duly maintain tracks, stations and locomotives and develop infrastructure where growth is occurring. At the same time the RAB-approach minimizes the risks of excessive rates growth which can make it impossible for shippers to use railways.

As a consequence of the implementation of the measures offered by the FTS the industrial producers will be able plan their investments for the long-term which will result in an easier access to bank loans, investments, and bonds. Many producers have been complaining for years that they are not confident in their prospects for building a plant or excavating out mines since they cannot know what the railway tariffs will be like by the time a project is completed. 
    [~DETAIL_TEXT] => 
Vladimir Putin Gives the Go-Ahead to New Port Projects in the South

In August, Russian President Vladimir Putin said the government would support the development of ports and terminals in the Azov and Black sea with massive investments into infrastructure to help handle increased traffic. The key factor here is railways which should be greatly expanded.

Though the impact of weak industrial demand continued to be felt in the freight business, some directions are systemically being overloaded. Last year, Russian ports handled 565 million tonnes of cargo which is a 25% increase on the Soviet-era record in 1984. In 2012, RZD transported to the Azov and Black sea ports 62.4 million tonnes, +11% on 2011. In 2020, volumes add 69.9 million making it double the current figures. 65 million tonnes of these volumes will presumably be handled at the new port of Taman, whose construction will be backed by 7 billion roubles funded by the federal budget. Such investments are needed because experts estimate that by 2030 shipment of dry goods in the ports of the south of Russia will reach 150 million tonnes, which is more than double current capacity.

As Vladimir Putin said, a substantial chunk of the cargoes goes through the ports in the Baltic countries like Latvia and Estonia, which results in a loss of revenues for Russia. Out of 660 million metric tonnes of Russian exports, the foreign Baltic ports accounts for 100 million tonnes, or 15 percent. 

The project for construction of the port of Taman is being supported by some investors who want ensure they can export enough volumes to recoup their investments through production. As the RF Minister of Transport Maxim Sokolov stated, a consortium of Russian and Dutch design companies developed a concept for the port of Taman last year, and the State evaluation agency is examining its feasibility. Taman is Russia’s most expensive port project on the Black Sea, according to Sokolov. Federal spending will amount to 76 billion roubles ($2.3 billion), while private investors are expected to contribute the remaining 152 billion rubles. When the port reaches its full capacity in 2025, it will handle 94 million metric tons of dry cargo per year, Sokolov said.

Vladimir Putin said that government bodies “need clear guidelines for the future, linked with the plans of our major companies, and, of course, with developing other forms of transportation, namely pipeline, rail and road”.



Northern Sea Route Deliveries to Soar 400% in 2013 

The number of ships that will have passed via the Northern Sea Route (NSR) in 2013 will increase five-fold year-on-year. In January-July the number accounted to 204 with only 46 in 2012 and just 4 in 2011. That’s a good reason to think that the passage will be in high demand in the long term.

The NSR is a sea route from the Atlantic Ocean to the Pacific Ocean along the Arctic Russian coast. In recent years the Russian authorities made some decisions targeted at transforming the route into a transport corridor able to compete with the trans-ocean route via the Suez canal. The current global market offers good prospects for Russia’s Arctic since price volatility for commodities makes producers seek cheap logistics. Transportation though the icy and cold seas promises to reduce costs for delivering gas, coal, fertilizers, woods from Northern Europe to the emerging markets of Asia, primarily, China. For example, travel time from Rotterdam to Japan is 23 days via the NSR against 33 days via Suez. The time reduction is being easily converted in money savings due to lower fuel consumption and crew salary.

In April this year, French Total said it would export Russia’s Yamal liquefied natural gas to Great Britain and northwestern Europe via the NSR. Exports from an LNG plant under construction in Yamal reportedly would begin in 2016. Gas is supposed to be delivered to the European market only in winter, when the NSR to Asia along Russia’s northern coast becomes impassible.

Another basis for growth is the industrial development of Russian regions in the Urals and Siberia. Some heavy-lifting equipment for mining and power companies was delivered by ships through the NSR to the port of Dudinka and then transported by river or by road to the plants. 

Some experts say the route may get 25% of all traffic between Asia and Europe by 2030.  Such comments seem to be too optimistic, but anyway the NSR will inevitably create a shift from the Suez to the Arctic. The size of this shift is hard to predict in the mid-term let alone in 2030.What one can say now is the fact that there is much work to be done by shipbuilders, government bodies, financiers and shipping companies to translate the potential and interest into caravans of tankers and bulkers. 



From Rail and Road to River 

RF Ministry of Transport recently published a draft of the River Transportation Development Strategy till 2030 on its website. The government would like to create a shift from rail and road to river and is ready to spend 1.9 trillion roubles (app. $60 billion) to reach this goal. 

Russia has a lot of waterways with two main ones – Volgo-Balt and Volgo-Don connecting the Baltic sea with the Azov and Black sea basin. They provide their facilities for river carriers for transportation of metal, ore, timber, oil and oil products, most of which are being delivered to consumers in Europe. The internal waterways handle less than 2% of goods traffic in Russia. 

The Ministry said that some problems should be resolved to ensure the aim of the strategy is achieved. There is a need for modernization of the Soviet-era obsolete fleet which has an average age of 32 years, clearing of bottlenecks in infrastructure, building new ports, as well as training personnel and introduction of innovative technologies into operation. For instance to demonstrate the size of the infrastructure logistical gap: the share of waterways with depths less than 4 meters is 25% of the whole length. That results in much lower efficiency in terms of productivity and profitability than possible.

With investments into routes increasing, building vessels, ports, logistics complexes and stimulating the carriers to put money into their assets the Ministry envisages the reduction of the length of waterways with bottlenecks, decreasing the average age of the fleet to 22 years and enhancing the cumulative tonnage from the current 8.13 million tonnes (2012) to 13.3 million in 2030.

Industry experts say they have been lobbying for all these measures for long time, but did not get much response from the government for years. In the meantime as head of the National Shipping Chamber Alexey Klyavin said over the last 30 years the turnover of river transport has declined by 78% to 142 million tonnes transported last year. 



Railway Tariffs for Five Years 

The Federal Tariffs Service (FTS) has announced that it plans to change its approach to dealing with railway tariffs. Instead of the current practice of setting rates for transportation every year the government body proposes to set them for 5 years with intermediate corrections depending on the macroeconomic situation. 

The Russian railway tariff system consists of two components, the infrastructure and wagon ones. The infrastructure one encompasses the services delivered by RZD, including providing track, locomotives, shunting etc. The wagon one is up to the owner of a wagon, i. e. an operator. The rates for RZD’s services are being regulated by FTS, which sets them at the end of each year, taking effect from January 1. The wagon component is wholly up to an operator who can offer any price to its customer. 

In early August, FTS published a draft of changes to the government order regulating the process of setting tariffs for the railways, i. e. RZD. The most important change is the offer to set rates for 5 years with the possibility of correct them in case economic conditions go beyond predicted ranges, for example, if there is a rapid growth in inflation. 

The new approach is based on a regulatory asset basement methodology (RAB). This methodology will help ensure the incomes of RZD make it possible to duly maintain tracks, stations and locomotives and develop infrastructure where growth is occurring. At the same time the RAB-approach minimizes the risks of excessive rates growth which can make it impossible for shippers to use railways.

As a consequence of the implementation of the measures offered by the FTS the industrial producers will be able plan their investments for the long-term which will result in an easier access to bank loans, investments, and bonds. Many producers have been complaining for years that they are not confident in their prospects for building a plant or excavating out mines since they cannot know what the railway tariffs will be like by the time a project is completed. 
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Makhalino – Hunchun connecting the Primorsky region on the Russian side with the Jilin province on the Chinese side which was closed nine years ago due to controversies among its owner, a private entity firm called The Golden Chain, RZD and government bodies. Surprisingly, despite the fact that transport infrastructure in Russia is being managed by the state, this border crossing was handed over to a private investor who relied on money from delivering logistics services. But The Golden Chain failed to provide sufficient equipment needed for customs and border control over exports and imports which resulted in attempts by RZD to get the crossing back by filing a suit. That was the only way to keep the facilities running since government bodies refused to work there because of the investor’s incapability to secure enough technological support.

On August, 2 30 cars loaded with coal went from Russia to China with a hearty welcome from the Jilin authorities promising strong backing for the new transport route. As Senior Vice President of RZD Anatoly Kransnoschek said it was expected that volumes of coal transported to China would amount to 8 mln tonnes annualy, including 4.5 million tonnes of Russian exports and 3.5 million tonnes of Chinese imports. 

The first 30 coal cars were for Mechel, one the leading mining and metal Russian companies. “Until now, Mechel made major coal deliveries to Chinese customers only through sea ports. The opening of this railroad route will enable Mechel to diversify its logistics and make better time on deliveries to China, which is the world’s largest consumer of this type of fuel,” Mechel Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted.

The interest of China is obvious. The country, despite a slight slowdown in rates of economic growth, remains the world’s factory which is converted into strong demand for commodities. The Eastern part of Russia abounds in mines, first of all, of coal, so there is a great need for new transport corridors connecting both countries. Now there are two railways on Russia-China border crossings, Zabaykalsk in the Zabaykalsky region and Grodekovo in the Primorsky region. But what matters is not only the quantity, but first and foremost the location, and Makhalino-Hunchun fills the existing gap in logistics providing the shortest route for some shippers. 

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The opening of the new border checkpoint is another step by RZD in developing railway infrastructure in the Far East of Russia. In August, it was announced that construction of the 1.239 km Amur-Yakut railway is near completion. The line links the distant cities in the Republic of Sakha to the mainlines of RZD, Baikal-Amur (BAM) and the Transsib. After the railway is put into operation, it will be possible to transport freight from many deposits located close to railtracks, and to provide all-season delivery of cargoes to the Republic, as well as passenger transportation.

Steps by RZD for the extension of the infrastructure are coupled with measures to bring improvements to the existing lines. This year, RZD plans to increase the speed of cargo trains on five sections of the Transsib and four sections of the BAM. After the tracks reconstruction, the speed of cargo trains will increase from 60 to 70 kph at the Chyornaya – Sredneilimskaya, the Galachinsky – Padunskie Porogi, and the Toreya – Ognevka sections of the BAM; from 80 to 90 kph at Shuba – Tulyushka section (the Transsib) and Parchum – Raz’ezd №9 section (the BAM). All  this will help better meet the customer’s need, representatives of RZD say, and provide sufficient infrastructure where growth is occurring.  


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On August, 2 30 cars loaded with coal went from Russia to China with a hearty welcome from the Jilin authorities promising strong backing for the new transport route. As Senior Vice President of RZD Anatoly Kransnoschek said it was expected that volumes of coal transported to China would amount to 8 mln tonnes annualy, including 4.5 million tonnes of Russian exports and 3.5 million tonnes of Chinese imports. 

The first 30 coal cars were for Mechel, one the leading mining and metal Russian companies. “Until now, Mechel made major coal deliveries to Chinese customers only through sea ports. The opening of this railroad route will enable Mechel to diversify its logistics and make better time on deliveries to China, which is the world’s largest consumer of this type of fuel,” Mechel Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted.

The interest of China is obvious. The country, despite a slight slowdown in rates of economic growth, remains the world’s factory which is converted into strong demand for commodities. The Eastern part of Russia abounds in mines, first of all, of coal, so there is a great need for new transport corridors connecting both countries. Now there are two railways on Russia-China border crossings, Zabaykalsk in the Zabaykalsky region and Grodekovo in the Primorsky region. But what matters is not only the quantity, but first and foremost the location, and Makhalino-Hunchun fills the existing gap in logistics providing the shortest route for some shippers. 

Another interesting theme is the use of Makhalino-Hunchun for transportation of Chinese goods from the northern provinces of China to the southern ones. Currently the infrastructure of the country is creating a bottleneck restraining free freight flows from north to the south, and it appears that a transit route from Russia via the ports in Zarubino with sea transportation from Zarubino to Chinese southern ports is much easier, cheaper and faster than directly from Jilin to Shanghai or Guangzhou. 

The opening of the new border checkpoint is another step by RZD in developing railway infrastructure in the Far East of Russia. In August, it was announced that construction of the 1.239 km Amur-Yakut railway is near completion. The line links the distant cities in the Republic of Sakha to the mainlines of RZD, Baikal-Amur (BAM) and the Transsib. After the railway is put into operation, it will be possible to transport freight from many deposits located close to railtracks, and to provide all-season delivery of cargoes to the Republic, as well as passenger transportation.

Steps by RZD for the extension of the infrastructure are coupled with measures to bring improvements to the existing lines. This year, RZD plans to increase the speed of cargo trains on five sections of the Transsib and four sections of the BAM. After the tracks reconstruction, the speed of cargo trains will increase from 60 to 70 kph at the Chyornaya – Sredneilimskaya, the Galachinsky – Padunskie Porogi, and the Toreya – Ognevka sections of the BAM; from 80 to 90 kph at Shuba – Tulyushka section (the Transsib) and Parchum – Raz’ezd №9 section (the BAM). All  this will help better meet the customer’s need, representatives of RZD say, and provide sufficient infrastructure where growth is occurring.  


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On August, 2 30 cars loaded with coal went from Russia to China with a hearty welcome from the Jilin authorities promising strong backing for the new transport route. As Senior Vice President of RZD Anatoly Kransnoschek said it was expected that volumes of coal transported to China would amount to 8 mln tonnes annualy, including 4.5 million tonnes of Russian exports and 3.5 million tonnes of Chinese imports. 

The first 30 coal cars were for Mechel, one the leading mining and metal Russian companies. “Until now, Mechel made major coal deliveries to Chinese customers only through sea ports. The opening of this railroad route will enable Mechel to diversify its logistics and make better time on deliveries to China, which is the world’s largest consumer of this type of fuel,” Mechel Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted.

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The opening of the new border checkpoint is another step by RZD in developing railway infrastructure in the Far East of Russia. In August, it was announced that construction of the 1.239 km Amur-Yakut railway is near completion. The line links the distant cities in the Republic of Sakha to the mainlines of RZD, Baikal-Amur (BAM) and the Transsib. After the railway is put into operation, it will be possible to transport freight from many deposits located close to railtracks, and to provide all-season delivery of cargoes to the Republic, as well as passenger transportation.

Steps by RZD for the extension of the infrastructure are coupled with measures to bring improvements to the existing lines. This year, RZD plans to increase the speed of cargo trains on five sections of the Transsib and four sections of the BAM. After the tracks reconstruction, the speed of cargo trains will increase from 60 to 70 kph at the Chyornaya – Sredneilimskaya, the Galachinsky – Padunskie Porogi, and the Toreya – Ognevka sections of the BAM; from 80 to 90 kph at Shuba – Tulyushka section (the Transsib) and Parchum – Raz’ezd №9 section (the BAM). All  this will help better meet the customer’s need, representatives of RZD say, and provide sufficient infrastructure where growth is occurring.  


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Makhalino – Hunchun connecting the Primorsky region on the Russian side with the Jilin province on the Chinese side which was closed nine years ago due to controversies among its owner, a private entity firm called The Golden Chain, RZD and government bodies. Surprisingly, despite the fact that transport infrastructure in Russia is being managed by the state, this border crossing was handed over to a private investor who relied on money from delivering logistics services. But The Golden Chain failed to provide sufficient equipment needed for customs and border control over exports and imports which resulted in attempts by RZD to get the crossing back by filing a suit. That was the only way to keep the facilities running since government bodies refused to work there because of the investor’s incapability to secure enough technological support.

On August, 2 30 cars loaded with coal went from Russia to China with a hearty welcome from the Jilin authorities promising strong backing for the new transport route. As Senior Vice President of RZD Anatoly Kransnoschek said it was expected that volumes of coal transported to China would amount to 8 mln tonnes annualy, including 4.5 million tonnes of Russian exports and 3.5 million tonnes of Chinese imports. 

The first 30 coal cars were for Mechel, one the leading mining and metal Russian companies. “Until now, Mechel made major coal deliveries to Chinese customers only through sea ports. The opening of this railroad route will enable Mechel to diversify its logistics and make better time on deliveries to China, which is the world’s largest consumer of this type of fuel,” Mechel Mining Management Company OOO’s Chief Executive Officer Pavel Shtark noted.

The interest of China is obvious. The country, despite a slight slowdown in rates of economic growth, remains the world’s factory which is converted into strong demand for commodities. The Eastern part of Russia abounds in mines, first of all, of coal, so there is a great need for new transport corridors connecting both countries. Now there are two railways on Russia-China border crossings, Zabaykalsk in the Zabaykalsky region and Grodekovo in the Primorsky region. But what matters is not only the quantity, but first and foremost the location, and Makhalino-Hunchun fills the existing gap in logistics providing the shortest route for some shippers. 

Another interesting theme is the use of Makhalino-Hunchun for transportation of Chinese goods from the northern provinces of China to the southern ones. Currently the infrastructure of the country is creating a bottleneck restraining free freight flows from north to the south, and it appears that a transit route from Russia via the ports in Zarubino with sea transportation from Zarubino to Chinese southern ports is much easier, cheaper and faster than directly from Jilin to Shanghai or Guangzhou. 

The opening of the new border checkpoint is another step by RZD in developing railway infrastructure in the Far East of Russia. In August, it was announced that construction of the 1.239 km Amur-Yakut railway is near completion. The line links the distant cities in the Republic of Sakha to the mainlines of RZD, Baikal-Amur (BAM) and the Transsib. After the railway is put into operation, it will be possible to transport freight from many deposits located close to railtracks, and to provide all-season delivery of cargoes to the Republic, as well as passenger transportation.

Steps by RZD for the extension of the infrastructure are coupled with measures to bring improvements to the existing lines. This year, RZD plans to increase the speed of cargo trains on five sections of the Transsib and four sections of the BAM. After the tracks reconstruction, the speed of cargo trains will increase from 60 to 70 kph at the Chyornaya – Sredneilimskaya, the Galachinsky – Padunskie Porogi, and the Toreya – Ognevka sections of the BAM; from 80 to 90 kph at Shuba – Tulyushka section (the Transsib) and Parchum – Raz’ezd №9 section (the BAM). All  this will help better meet the customer’s need, representatives of RZD say, and provide sufficient infrastructure where growth is occurring.  


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Still Lagging Behind, but Equal in Quality



– Mr Gapanovich, are products of Russian railway machine building sector able to compete at the global market? 



– We are still behind the leaders of the global market, but we are narrowing the gap. On the whole, Russian producers are able to fulfill the domestic demand and have prospects for the development.

Lately, our enterprises – either alone or in cooperation with foreign producers – have been actively developing new machinery, no worse than the best foreign samples according to their characteristics. In the sector of locomotives production, we can cite the mainline electric locomotives EP20 “Olymp”, 2ES5, and 2ES10 “Granite”, and mainline diesel locomotive 2TE25A. Also, manufacturers are preparing for industrial production of unique mainline locomotives using liquefied natural gas as fuel.

There is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

One of the latest innovations was the container-piggyback flat wagon made in accordance with the order of RZD last year. Its distinguishing feature is the universality: the flat wagon can be used for transportation of road machinery as well as standard containers, thus this rolling stock is more efficient.

Naturally, it is too early to be complacent. According to several characteristics, Russian-made rails are still inferior to foreign products; we are still behind in the power electric machinery and some other markets. Still, I’ll say it again: the Russian machine building sector is narrowing the gap.



– How has that been achieved?



– Firstly, we are developing cooperation with foreign manufacturers of railway machinery, not at the level of complete knock down (CKD), but through the consolidation of manufacturing and intellectual resources. For example, Ural Locomotives LLC is carrying out a very interesting and important project for RZD envisaging localisation of the production of “Lastochka” (Desiro RUS) electric trains, developed by Siemens on the order of Russian Railways. An engineering centre was launched for this project. It provides a transfer of technologies and a support to the process of organising the production of components for the electric train at Russian plants.

In fact, a joint venture for the production of state-of-the-art multiple-unit rolling stock is currently being launched in Russia, and it meets world standards. The contract, according to which 1,200 railcars will be supplied, envisages a gradual increase in the level of the electric train localisation. Therefore, the localisation must be 20% in the first phase, when the production of components is to be organised. By 2015, the localisation level will reach 55%. It is very important, because the company plans to produce the first six electric trains and certify them in 2014, and to start supplies to RZD in 2015. By the end of 2017, the localisation level of “Lastochka” trains is to be at least 80%. 

For our plants to be equal to the leading foreign companies, finding a solution to the personnel problem is of primary importance. To expand railway machinery production, we need engineers and qualified workers competent enough to operate state-of-the-art machinery. The attractiveness of workers’ trades should increase, however, it depends not only on RZD and railway machinery producers, but on the whole of society.



Innovations for Mass Production



– What is your evaluation of the sector’s innovative potential? How does RZD contribute to development in this direction?



– First of all, our company forms the demand for innovative products. Last year, RZD bought 500 locomotives, most of which are of a new type. Thanks to the company’s orders, the rates of growth in railway machinery production volume are higher than average in this sector.   

Also, we are currently carrying out research-and-development works. Over RUB 7 billion was allocated for it in 2012. In the future, by 2015, we are going to allocate approximately 1% of the planned revenue for R&D activities. 

The company’s activity in the sector of development and introduction of innovative products covers both R&D and the transfer of state-of-the-art technologies. Joint developments made by RZD and its foreign and Russian partners contribute to the production of new models of rolling stock with operational characteristics meeting world standards.

RZD initiated the creation of a technological concept “High-Speed Intelligent Railway Transport”, which was put into the list approved by the governmental commission for high technologies and innovations. In this concept, the company allocated about RUB 180 million for research works. Works are being carried out by railway universities and colleges, and institutions of the Russian Academy of Sciences. The role of small and medium enterprises is also significant. 

In other words, the Russian machine building sector is rather open to innovations. I think that relevant organisational measures are needed in the sector to enhance the system of innovation project management, especially if such projects relate to large intersectoral problems. Besides, these issues should be solved at the governmental level.



– Are Russian plants running at full capacity today? What measures will contribute to an increase in the investment in the sector?



– Currently, RZD is actively renewing its fleet of traction rolling stock, therefore national locomotive building plants have enough orders for several years.

The situation with cargo wagons is not that simple. There is a surplus of universal cargo railcars on the network, which makes the railway infrastructure overloaded. Moreover, experience shows that a large number of cargo railcars produced in recent years are potentially unsafe in operation, because of the poor quality of a number of important components in them. The situation can improve, if there was a mass replacement of wagons by next-generation rolling stock with better characteristics and a higher quality of components, especially large-size steel casting products used in railcars. A complex approach is needed for it, in particular, measures for the economic stimulation of putting into operation new types of cargo railcars.

In the sector of passenger rolling stock, the situation is different. The insufficient amount of orders makes it unattractive for manufacturers. The problem is that the current system of compensation for transporters’ lost revenue (Federal Passenger Company and companies engaged in suburban passenger transportation) does not provide sufficient funding for purchasing new wagons and electric trains.

Therefore, there is no universal solution for making the sector more attractive for investors. RZD does everything possible, fulfilling its investment programme. However, the efforts of one company are not enough. The state must adjust the system of compensation for transporters’ lost revenue and solve the problem of correcting the quality issues of the current railcar fleet.



Stimulus to Innovations



– You have already mentioned the stimulation of the demand for innovative railcars. What mechanisms do you plan to use to reach this goal?



– A way to stimulate demand for modern machinery purchase, in our opinion, could be preferential tariff regulation. RZD has prepared offers regarding tariff mechanisms stimulating rolling stock owners and railway operators to buy next-generation cargo railcars and containers. (Editor’s note: On May 5, 2013, the order of the Federal Tariff Service of the Russian Federation came into force. According to it, owners of innovative railcars get discounts on wagons supply for loading. For gondola cars the discount is 15% on average, and for hoppers it is 6%.)

Protocol №16 dated October 18-19, 2012, of the conference of the NP UIRE committee for coordination of producers of cargo railcars and components for them updates requirements for modern railcars characteristics. Their list includes: extended distance run between repairs, extended axle load of railcar bogies in line with a smaller impact on tracks; higher speed of empty and loaded railcars in large- and medium-radius curves (650 metres and more), etc.

At the point of mass production, next-generation railcars, which have a number of innovative design features, must be economically efficient for RZD due to the reduction of resources needed for wagon maintenance and smaller negative impact on tracks.

At the same time, the tariff stimulation of the purchase of modern railcars will be efficient only with their mass deployment on the railway network. If there are just several such railcars in a train, it will not be enough. Tariff preferences will be given to, for example, block trains formed of new railcars only.



– What urgent objectives does the sector have now? 



– Reliability of rolling stock is of primary importance for RZD. Railcar producers must provide high quality products. In its turn, the government must solve the issue of increasing rolling stock owner’s liability for the good mechanical condition of railcars. 

In my opinion, a priority for the development of Russian railway machine building is mastering mass production of modern cargo railcars, which will have a smaller negative impact on the infrastructure. A large project was carried out by NP Union of Industries of Railway Equipment in cooperation with RZD to give a comparative evaluation of interaction of the infrastructure and bogies of railcars with maximally worn friction units. Among tests, there were trial rides in complicated winter conditions on the Barnaul – Nakhodka line. Data processing is almost completed, and relevant offers are being prepared for wagon builders, rolling stock owners, and railcar repair companies. ®

Interviewed by Olga Gorbunova   
    [~DETAIL_TEXT] => 
Still Lagging Behind, but Equal in Quality



– Mr Gapanovich, are products of Russian railway machine building sector able to compete at the global market? 



– We are still behind the leaders of the global market, but we are narrowing the gap. On the whole, Russian producers are able to fulfill the domestic demand and have prospects for the development.

Lately, our enterprises – either alone or in cooperation with foreign producers – have been actively developing new machinery, no worse than the best foreign samples according to their characteristics. In the sector of locomotives production, we can cite the mainline electric locomotives EP20 “Olymp”, 2ES5, and 2ES10 “Granite”, and mainline diesel locomotive 2TE25A. Also, manufacturers are preparing for industrial production of unique mainline locomotives using liquefied natural gas as fuel.

There is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

One of the latest innovations was the container-piggyback flat wagon made in accordance with the order of RZD last year. Its distinguishing feature is the universality: the flat wagon can be used for transportation of road machinery as well as standard containers, thus this rolling stock is more efficient.

Naturally, it is too early to be complacent. According to several characteristics, Russian-made rails are still inferior to foreign products; we are still behind in the power electric machinery and some other markets. Still, I’ll say it again: the Russian machine building sector is narrowing the gap.



– How has that been achieved?



– Firstly, we are developing cooperation with foreign manufacturers of railway machinery, not at the level of complete knock down (CKD), but through the consolidation of manufacturing and intellectual resources. For example, Ural Locomotives LLC is carrying out a very interesting and important project for RZD envisaging localisation of the production of “Lastochka” (Desiro RUS) electric trains, developed by Siemens on the order of Russian Railways. An engineering centre was launched for this project. It provides a transfer of technologies and a support to the process of organising the production of components for the electric train at Russian plants.

In fact, a joint venture for the production of state-of-the-art multiple-unit rolling stock is currently being launched in Russia, and it meets world standards. The contract, according to which 1,200 railcars will be supplied, envisages a gradual increase in the level of the electric train localisation. Therefore, the localisation must be 20% in the first phase, when the production of components is to be organised. By 2015, the localisation level will reach 55%. It is very important, because the company plans to produce the first six electric trains and certify them in 2014, and to start supplies to RZD in 2015. By the end of 2017, the localisation level of “Lastochka” trains is to be at least 80%. 

For our plants to be equal to the leading foreign companies, finding a solution to the personnel problem is of primary importance. To expand railway machinery production, we need engineers and qualified workers competent enough to operate state-of-the-art machinery. The attractiveness of workers’ trades should increase, however, it depends not only on RZD and railway machinery producers, but on the whole of society.



Innovations for Mass Production



– What is your evaluation of the sector’s innovative potential? How does RZD contribute to development in this direction?



– First of all, our company forms the demand for innovative products. Last year, RZD bought 500 locomotives, most of which are of a new type. Thanks to the company’s orders, the rates of growth in railway machinery production volume are higher than average in this sector.   

Also, we are currently carrying out research-and-development works. Over RUB 7 billion was allocated for it in 2012. In the future, by 2015, we are going to allocate approximately 1% of the planned revenue for R&D activities. 

The company’s activity in the sector of development and introduction of innovative products covers both R&D and the transfer of state-of-the-art technologies. Joint developments made by RZD and its foreign and Russian partners contribute to the production of new models of rolling stock with operational characteristics meeting world standards.

RZD initiated the creation of a technological concept “High-Speed Intelligent Railway Transport”, which was put into the list approved by the governmental commission for high technologies and innovations. In this concept, the company allocated about RUB 180 million for research works. Works are being carried out by railway universities and colleges, and institutions of the Russian Academy of Sciences. The role of small and medium enterprises is also significant. 

In other words, the Russian machine building sector is rather open to innovations. I think that relevant organisational measures are needed in the sector to enhance the system of innovation project management, especially if such projects relate to large intersectoral problems. Besides, these issues should be solved at the governmental level.



– Are Russian plants running at full capacity today? What measures will contribute to an increase in the investment in the sector?



– Currently, RZD is actively renewing its fleet of traction rolling stock, therefore national locomotive building plants have enough orders for several years.

The situation with cargo wagons is not that simple. There is a surplus of universal cargo railcars on the network, which makes the railway infrastructure overloaded. Moreover, experience shows that a large number of cargo railcars produced in recent years are potentially unsafe in operation, because of the poor quality of a number of important components in them. The situation can improve, if there was a mass replacement of wagons by next-generation rolling stock with better characteristics and a higher quality of components, especially large-size steel casting products used in railcars. A complex approach is needed for it, in particular, measures for the economic stimulation of putting into operation new types of cargo railcars.

In the sector of passenger rolling stock, the situation is different. The insufficient amount of orders makes it unattractive for manufacturers. The problem is that the current system of compensation for transporters’ lost revenue (Federal Passenger Company and companies engaged in suburban passenger transportation) does not provide sufficient funding for purchasing new wagons and electric trains.

Therefore, there is no universal solution for making the sector more attractive for investors. RZD does everything possible, fulfilling its investment programme. However, the efforts of one company are not enough. The state must adjust the system of compensation for transporters’ lost revenue and solve the problem of correcting the quality issues of the current railcar fleet.



Stimulus to Innovations



– You have already mentioned the stimulation of the demand for innovative railcars. What mechanisms do you plan to use to reach this goal?



– A way to stimulate demand for modern machinery purchase, in our opinion, could be preferential tariff regulation. RZD has prepared offers regarding tariff mechanisms stimulating rolling stock owners and railway operators to buy next-generation cargo railcars and containers. (Editor’s note: On May 5, 2013, the order of the Federal Tariff Service of the Russian Federation came into force. According to it, owners of innovative railcars get discounts on wagons supply for loading. For gondola cars the discount is 15% on average, and for hoppers it is 6%.)

Protocol №16 dated October 18-19, 2012, of the conference of the NP UIRE committee for coordination of producers of cargo railcars and components for them updates requirements for modern railcars characteristics. Their list includes: extended distance run between repairs, extended axle load of railcar bogies in line with a smaller impact on tracks; higher speed of empty and loaded railcars in large- and medium-radius curves (650 metres and more), etc.

At the point of mass production, next-generation railcars, which have a number of innovative design features, must be economically efficient for RZD due to the reduction of resources needed for wagon maintenance and smaller negative impact on tracks.

At the same time, the tariff stimulation of the purchase of modern railcars will be efficient only with their mass deployment on the railway network. If there are just several such railcars in a train, it will not be enough. Tariff preferences will be given to, for example, block trains formed of new railcars only.



– What urgent objectives does the sector have now? 



– Reliability of rolling stock is of primary importance for RZD. Railcar producers must provide high quality products. In its turn, the government must solve the issue of increasing rolling stock owner’s liability for the good mechanical condition of railcars. 

In my opinion, a priority for the development of Russian railway machine building is mastering mass production of modern cargo railcars, which will have a smaller negative impact on the infrastructure. A large project was carried out by NP Union of Industries of Railway Equipment in cooperation with RZD to give a comparative evaluation of interaction of the infrastructure and bogies of railcars with maximally worn friction units. Among tests, there were trial rides in complicated winter conditions on the Barnaul – Nakhodka line. Data processing is almost completed, and relevant offers are being prepared for wagon builders, rolling stock owners, and railcar repair companies. ®

Interviewed by Olga Gorbunova   
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Still Lagging Behind, but Equal in Quality



– Mr Gapanovich, are products of Russian railway machine building sector able to compete at the global market? 



– We are still behind the leaders of the global market, but we are narrowing the gap. On the whole, Russian producers are able to fulfill the domestic demand and have prospects for the development.

Lately, our enterprises – either alone or in cooperation with foreign producers – have been actively developing new machinery, no worse than the best foreign samples according to their characteristics. In the sector of locomotives production, we can cite the mainline electric locomotives EP20 “Olymp”, 2ES5, and 2ES10 “Granite”, and mainline diesel locomotive 2TE25A. Also, manufacturers are preparing for industrial production of unique mainline locomotives using liquefied natural gas as fuel.

There is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

One of the latest innovations was the container-piggyback flat wagon made in accordance with the order of RZD last year. Its distinguishing feature is the universality: the flat wagon can be used for transportation of road machinery as well as standard containers, thus this rolling stock is more efficient.

Naturally, it is too early to be complacent. According to several characteristics, Russian-made rails are still inferior to foreign products; we are still behind in the power electric machinery and some other markets. Still, I’ll say it again: the Russian machine building sector is narrowing the gap.



– How has that been achieved?



– Firstly, we are developing cooperation with foreign manufacturers of railway machinery, not at the level of complete knock down (CKD), but through the consolidation of manufacturing and intellectual resources. For example, Ural Locomotives LLC is carrying out a very interesting and important project for RZD envisaging localisation of the production of “Lastochka” (Desiro RUS) electric trains, developed by Siemens on the order of Russian Railways. An engineering centre was launched for this project. It provides a transfer of technologies and a support to the process of organising the production of components for the electric train at Russian plants.

In fact, a joint venture for the production of state-of-the-art multiple-unit rolling stock is currently being launched in Russia, and it meets world standards. The contract, according to which 1,200 railcars will be supplied, envisages a gradual increase in the level of the electric train localisation. Therefore, the localisation must be 20% in the first phase, when the production of components is to be organised. By 2015, the localisation level will reach 55%. It is very important, because the company plans to produce the first six electric trains and certify them in 2014, and to start supplies to RZD in 2015. By the end of 2017, the localisation level of “Lastochka” trains is to be at least 80%. 

For our plants to be equal to the leading foreign companies, finding a solution to the personnel problem is of primary importance. To expand railway machinery production, we need engineers and qualified workers competent enough to operate state-of-the-art machinery. The attractiveness of workers’ trades should increase, however, it depends not only on RZD and railway machinery producers, but on the whole of society.



Innovations for Mass Production



– What is your evaluation of the sector’s innovative potential? How does RZD contribute to development in this direction?



– First of all, our company forms the demand for innovative products. Last year, RZD bought 500 locomotives, most of which are of a new type. Thanks to the company’s orders, the rates of growth in railway machinery production volume are higher than average in this sector.   

Also, we are currently carrying out research-and-development works. Over RUB 7 billion was allocated for it in 2012. In the future, by 2015, we are going to allocate approximately 1% of the planned revenue for R&D activities. 

The company’s activity in the sector of development and introduction of innovative products covers both R&D and the transfer of state-of-the-art technologies. Joint developments made by RZD and its foreign and Russian partners contribute to the production of new models of rolling stock with operational characteristics meeting world standards.

RZD initiated the creation of a technological concept “High-Speed Intelligent Railway Transport”, which was put into the list approved by the governmental commission for high technologies and innovations. In this concept, the company allocated about RUB 180 million for research works. Works are being carried out by railway universities and colleges, and institutions of the Russian Academy of Sciences. The role of small and medium enterprises is also significant. 

In other words, the Russian machine building sector is rather open to innovations. I think that relevant organisational measures are needed in the sector to enhance the system of innovation project management, especially if such projects relate to large intersectoral problems. Besides, these issues should be solved at the governmental level.



– Are Russian plants running at full capacity today? What measures will contribute to an increase in the investment in the sector?



– Currently, RZD is actively renewing its fleet of traction rolling stock, therefore national locomotive building plants have enough orders for several years.

The situation with cargo wagons is not that simple. There is a surplus of universal cargo railcars on the network, which makes the railway infrastructure overloaded. Moreover, experience shows that a large number of cargo railcars produced in recent years are potentially unsafe in operation, because of the poor quality of a number of important components in them. The situation can improve, if there was a mass replacement of wagons by next-generation rolling stock with better characteristics and a higher quality of components, especially large-size steel casting products used in railcars. A complex approach is needed for it, in particular, measures for the economic stimulation of putting into operation new types of cargo railcars.

In the sector of passenger rolling stock, the situation is different. The insufficient amount of orders makes it unattractive for manufacturers. The problem is that the current system of compensation for transporters’ lost revenue (Federal Passenger Company and companies engaged in suburban passenger transportation) does not provide sufficient funding for purchasing new wagons and electric trains.

Therefore, there is no universal solution for making the sector more attractive for investors. RZD does everything possible, fulfilling its investment programme. However, the efforts of one company are not enough. The state must adjust the system of compensation for transporters’ lost revenue and solve the problem of correcting the quality issues of the current railcar fleet.



Stimulus to Innovations



– You have already mentioned the stimulation of the demand for innovative railcars. What mechanisms do you plan to use to reach this goal?



– A way to stimulate demand for modern machinery purchase, in our opinion, could be preferential tariff regulation. RZD has prepared offers regarding tariff mechanisms stimulating rolling stock owners and railway operators to buy next-generation cargo railcars and containers. (Editor’s note: On May 5, 2013, the order of the Federal Tariff Service of the Russian Federation came into force. According to it, owners of innovative railcars get discounts on wagons supply for loading. For gondola cars the discount is 15% on average, and for hoppers it is 6%.)

Protocol №16 dated October 18-19, 2012, of the conference of the NP UIRE committee for coordination of producers of cargo railcars and components for them updates requirements for modern railcars characteristics. Their list includes: extended distance run between repairs, extended axle load of railcar bogies in line with a smaller impact on tracks; higher speed of empty and loaded railcars in large- and medium-radius curves (650 metres and more), etc.

At the point of mass production, next-generation railcars, which have a number of innovative design features, must be economically efficient for RZD due to the reduction of resources needed for wagon maintenance and smaller negative impact on tracks.

At the same time, the tariff stimulation of the purchase of modern railcars will be efficient only with their mass deployment on the railway network. If there are just several such railcars in a train, it will not be enough. Tariff preferences will be given to, for example, block trains formed of new railcars only.



– What urgent objectives does the sector have now? 



– Reliability of rolling stock is of primary importance for RZD. Railcar producers must provide high quality products. In its turn, the government must solve the issue of increasing rolling stock owner’s liability for the good mechanical condition of railcars. 

In my opinion, a priority for the development of Russian railway machine building is mastering mass production of modern cargo railcars, which will have a smaller negative impact on the infrastructure. A large project was carried out by NP Union of Industries of Railway Equipment in cooperation with RZD to give a comparative evaluation of interaction of the infrastructure and bogies of railcars with maximally worn friction units. Among tests, there were trial rides in complicated winter conditions on the Barnaul – Nakhodka line. Data processing is almost completed, and relevant offers are being prepared for wagon builders, rolling stock owners, and railcar repair companies. ®

Interviewed by Olga Gorbunova   
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Still Lagging Behind, but Equal in Quality



– Mr Gapanovich, are products of Russian railway machine building sector able to compete at the global market? 



– We are still behind the leaders of the global market, but we are narrowing the gap. On the whole, Russian producers are able to fulfill the domestic demand and have prospects for the development.

Lately, our enterprises – either alone or in cooperation with foreign producers – have been actively developing new machinery, no worse than the best foreign samples according to their characteristics. In the sector of locomotives production, we can cite the mainline electric locomotives EP20 “Olymp”, 2ES5, and 2ES10 “Granite”, and mainline diesel locomotive 2TE25A. Also, manufacturers are preparing for industrial production of unique mainline locomotives using liquefied natural gas as fuel.

There is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

One of the latest innovations was the container-piggyback flat wagon made in accordance with the order of RZD last year. Its distinguishing feature is the universality: the flat wagon can be used for transportation of road machinery as well as standard containers, thus this rolling stock is more efficient.

Naturally, it is too early to be complacent. According to several characteristics, Russian-made rails are still inferior to foreign products; we are still behind in the power electric machinery and some other markets. Still, I’ll say it again: the Russian machine building sector is narrowing the gap.



– How has that been achieved?



– Firstly, we are developing cooperation with foreign manufacturers of railway machinery, not at the level of complete knock down (CKD), but through the consolidation of manufacturing and intellectual resources. For example, Ural Locomotives LLC is carrying out a very interesting and important project for RZD envisaging localisation of the production of “Lastochka” (Desiro RUS) electric trains, developed by Siemens on the order of Russian Railways. An engineering centre was launched for this project. It provides a transfer of technologies and a support to the process of organising the production of components for the electric train at Russian plants.

In fact, a joint venture for the production of state-of-the-art multiple-unit rolling stock is currently being launched in Russia, and it meets world standards. The contract, according to which 1,200 railcars will be supplied, envisages a gradual increase in the level of the electric train localisation. Therefore, the localisation must be 20% in the first phase, when the production of components is to be organised. By 2015, the localisation level will reach 55%. It is very important, because the company plans to produce the first six electric trains and certify them in 2014, and to start supplies to RZD in 2015. By the end of 2017, the localisation level of “Lastochka” trains is to be at least 80%. 

For our plants to be equal to the leading foreign companies, finding a solution to the personnel problem is of primary importance. To expand railway machinery production, we need engineers and qualified workers competent enough to operate state-of-the-art machinery. The attractiveness of workers’ trades should increase, however, it depends not only on RZD and railway machinery producers, but on the whole of society.



Innovations for Mass Production



– What is your evaluation of the sector’s innovative potential? How does RZD contribute to development in this direction?



– First of all, our company forms the demand for innovative products. Last year, RZD bought 500 locomotives, most of which are of a new type. Thanks to the company’s orders, the rates of growth in railway machinery production volume are higher than average in this sector.   

Also, we are currently carrying out research-and-development works. Over RUB 7 billion was allocated for it in 2012. In the future, by 2015, we are going to allocate approximately 1% of the planned revenue for R&D activities. 

The company’s activity in the sector of development and introduction of innovative products covers both R&D and the transfer of state-of-the-art technologies. Joint developments made by RZD and its foreign and Russian partners contribute to the production of new models of rolling stock with operational characteristics meeting world standards.

RZD initiated the creation of a technological concept “High-Speed Intelligent Railway Transport”, which was put into the list approved by the governmental commission for high technologies and innovations. In this concept, the company allocated about RUB 180 million for research works. Works are being carried out by railway universities and colleges, and institutions of the Russian Academy of Sciences. The role of small and medium enterprises is also significant. 

In other words, the Russian machine building sector is rather open to innovations. I think that relevant organisational measures are needed in the sector to enhance the system of innovation project management, especially if such projects relate to large intersectoral problems. Besides, these issues should be solved at the governmental level.



– Are Russian plants running at full capacity today? What measures will contribute to an increase in the investment in the sector?



– Currently, RZD is actively renewing its fleet of traction rolling stock, therefore national locomotive building plants have enough orders for several years.

The situation with cargo wagons is not that simple. There is a surplus of universal cargo railcars on the network, which makes the railway infrastructure overloaded. Moreover, experience shows that a large number of cargo railcars produced in recent years are potentially unsafe in operation, because of the poor quality of a number of important components in them. The situation can improve, if there was a mass replacement of wagons by next-generation rolling stock with better characteristics and a higher quality of components, especially large-size steel casting products used in railcars. A complex approach is needed for it, in particular, measures for the economic stimulation of putting into operation new types of cargo railcars.

In the sector of passenger rolling stock, the situation is different. The insufficient amount of orders makes it unattractive for manufacturers. The problem is that the current system of compensation for transporters’ lost revenue (Federal Passenger Company and companies engaged in suburban passenger transportation) does not provide sufficient funding for purchasing new wagons and electric trains.

Therefore, there is no universal solution for making the sector more attractive for investors. RZD does everything possible, fulfilling its investment programme. However, the efforts of one company are not enough. The state must adjust the system of compensation for transporters’ lost revenue and solve the problem of correcting the quality issues of the current railcar fleet.



Stimulus to Innovations



– You have already mentioned the stimulation of the demand for innovative railcars. What mechanisms do you plan to use to reach this goal?



– A way to stimulate demand for modern machinery purchase, in our opinion, could be preferential tariff regulation. RZD has prepared offers regarding tariff mechanisms stimulating rolling stock owners and railway operators to buy next-generation cargo railcars and containers. (Editor’s note: On May 5, 2013, the order of the Federal Tariff Service of the Russian Federation came into force. According to it, owners of innovative railcars get discounts on wagons supply for loading. For gondola cars the discount is 15% on average, and for hoppers it is 6%.)

Protocol №16 dated October 18-19, 2012, of the conference of the NP UIRE committee for coordination of producers of cargo railcars and components for them updates requirements for modern railcars characteristics. Their list includes: extended distance run between repairs, extended axle load of railcar bogies in line with a smaller impact on tracks; higher speed of empty and loaded railcars in large- and medium-radius curves (650 metres and more), etc.

At the point of mass production, next-generation railcars, which have a number of innovative design features, must be economically efficient for RZD due to the reduction of resources needed for wagon maintenance and smaller negative impact on tracks.

At the same time, the tariff stimulation of the purchase of modern railcars will be efficient only with their mass deployment on the railway network. If there are just several such railcars in a train, it will not be enough. Tariff preferences will be given to, for example, block trains formed of new railcars only.



– What urgent objectives does the sector have now? 



– Reliability of rolling stock is of primary importance for RZD. Railcar producers must provide high quality products. In its turn, the government must solve the issue of increasing rolling stock owner’s liability for the good mechanical condition of railcars. 

In my opinion, a priority for the development of Russian railway machine building is mastering mass production of modern cargo railcars, which will have a smaller negative impact on the infrastructure. A large project was carried out by NP Union of Industries of Railway Equipment in cooperation with RZD to give a comparative evaluation of interaction of the infrastructure and bogies of railcars with maximally worn friction units. Among tests, there were trial rides in complicated winter conditions on the Barnaul – Nakhodka line. Data processing is almost completed, and relevant offers are being prepared for wagon builders, rolling stock owners, and railcar repair companies. ®

Interviewed by Olga Gorbunova   
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The leading railway manufacturers of Europe and Asia traditionally meet at The International Rail Salon of Engineering and Technologies EXPO 1520 held in Shcherbinka, Moscow, in September every other year. This year the topic to discuss is not only interesting projects and much promising ideas, but the steps to closer cooperation. 

International holding companies participate more and more often in joint ventures and consortiums in Russia. According to experts, the trend will continue for the foreseeable future. For example, Siemens carried out a three-stage process for the localisation programme. The producer attracted Russian suppliers, expects that a number of international suppliers will follow this example and localise production of components in Russia and, finally, Siemens will localise the production of key nodes by itself (pp. 14-16). The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production.

As Valentin Gapanovich, Senior Vice President of RZD, notes there is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

One of the latest innovations was the container-piggyback flat wagon made in accordance with the order of RZD last year. Its distinguishing feature is the universality: the flat wagon can be used for transportation of road machinery as well as standard containers, thus this rolling stock is more efficient (pp. 6-8).

But there is much to be done to narrow the gap between the producers of the 1520 network and the global leaders. The implementation of IRIS will undoubtedly help achieve this goal. A priority for making RZD’s work more efficient is the strategic control of the quality of its services. It is based on harmonisation of the development strategies for the transport machine building sector and the railway transport sector. The introduction of the IRIS standard at plants plays an important role in this process. Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards (pp. 18-19).

Not only technological innovation is a theme to discuss in Shcherbinka and at other forums and conferences. The process of integration into the Eurasian transport space is gathering pace. Therefore, a priority of RZD’s international activity is the work targeted at creating the railway infrastructure for a North – South international transport corridor and attracting transit freight to the East – West transcontinental lines of transport. The North – South international transport corridor is an important route necessary for organising transit traffic between the European countries and the states of the Transcaucasia, the Persian Gulf, and Asia. Creation of this route will be completed in the next several years. This will allow creation for the first time in history of a 4,500 km long railway link between St Petersburg and the Bandar Abbas port on the Persian Gulf. 

The cooperation with international intergovernmental and non-governmental organisations has reached a new high. In 2007, RZD recommenced its membership of the International Union of Railways (the UIC), and since then the company has been strengthening its position within this organisation gradually. On December 12, 2012, President of RZD Vladimir Yakunin was unanimously elected as the Chairman of the UIC for 2013-2014 with an option for a two-year extension.

RZD developed the Programme of Activity for the UIC in 2013-2014. Special attention was paid to standardisation and legal harmonisation, the expansion of the UIC’s participation in forming global transport policy and cooperation in the traffic safety sphere (pp. 32-35).

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International holding companies participate more and more often in joint ventures and consortiums in Russia. According to experts, the trend will continue for the foreseeable future. For example, Siemens carried out a three-stage process for the localisation programme. The producer attracted Russian suppliers, expects that a number of international suppliers will follow this example and localise production of components in Russia and, finally, Siemens will localise the production of key nodes by itself (pp. 14-16). The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production.

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International holding companies participate more and more often in joint ventures and consortiums in Russia. According to experts, the trend will continue for the foreseeable future. For example, Siemens carried out a three-stage process for the localisation programme. The producer attracted Russian suppliers, expects that a number of international suppliers will follow this example and localise production of components in Russia and, finally, Siemens will localise the production of key nodes by itself (pp. 14-16). The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production.

As Valentin Gapanovich, Senior Vice President of RZD, notes there is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

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But there is much to be done to narrow the gap between the producers of the 1520 network and the global leaders. The implementation of IRIS will undoubtedly help achieve this goal. A priority for making RZD’s work more efficient is the strategic control of the quality of its services. It is based on harmonisation of the development strategies for the transport machine building sector and the railway transport sector. The introduction of the IRIS standard at plants plays an important role in this process. Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards (pp. 18-19).

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The cooperation with international intergovernmental and non-governmental organisations has reached a new high. In 2007, RZD recommenced its membership of the International Union of Railways (the UIC), and since then the company has been strengthening its position within this organisation gradually. On December 12, 2012, President of RZD Vladimir Yakunin was unanimously elected as the Chairman of the UIC for 2013-2014 with an option for a two-year extension.

RZD developed the Programme of Activity for the UIC in 2013-2014. Special attention was paid to standardisation and legal harmonisation, the expansion of the UIC’s participation in forming global transport policy and cooperation in the traffic safety sphere (pp. 32-35).

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International holding companies participate more and more often in joint ventures and consortiums in Russia. According to experts, the trend will continue for the foreseeable future. For example, Siemens carried out a three-stage process for the localisation programme. The producer attracted Russian suppliers, expects that a number of international suppliers will follow this example and localise production of components in Russia and, finally, Siemens will localise the production of key nodes by itself (pp. 14-16). The most successful projects of localisation of foreign technologies in Russia are the “Lastochka” electric train (Desiro Rus) and mainline electric locomotives EP20 (“Olymp”), 2ES5 and 2ES10 (“Granite”). Particularly, “Lastochka” is the largest example of the transfer of foreign technologies to Russia with deep localisation of the production.

As Valentin Gapanovich, Senior Vice President of RZD, notes there is progress in the wagon building sector too. For example, the Tikhvin Railcar Building Plant, which was put into operation last year, now produces four types of cargo railcars with a new design. Other companies also produce railcars of new types, including those with extended axle loads.

One of the latest innovations was the container-piggyback flat wagon made in accordance with the order of RZD last year. Its distinguishing feature is the universality: the flat wagon can be used for transportation of road machinery as well as standard containers, thus this rolling stock is more efficient (pp. 6-8).

But there is much to be done to narrow the gap between the producers of the 1520 network and the global leaders. The implementation of IRIS will undoubtedly help achieve this goal. A priority for making RZD’s work more efficient is the strategic control of the quality of its services. It is based on harmonisation of the development strategies for the transport machine building sector and the railway transport sector. The introduction of the IRIS standard at plants plays an important role in this process. Currently, works to implement this standard are being carried out at more than 70 Russian companies. 20 companies are going to undergo certification procedures in 2013, 25 companies – in 2014, and it is planned to certify numerous sub-suppliers in 2015. In accordance with adopted regulating documents, RZD will buy products mainly from certified suppliers from 2015 onwards (pp. 18-19).

Not only technological innovation is a theme to discuss in Shcherbinka and at other forums and conferences. The process of integration into the Eurasian transport space is gathering pace. Therefore, a priority of RZD’s international activity is the work targeted at creating the railway infrastructure for a North – South international transport corridor and attracting transit freight to the East – West transcontinental lines of transport. The North – South international transport corridor is an important route necessary for organising transit traffic between the European countries and the states of the Transcaucasia, the Persian Gulf, and Asia. Creation of this route will be completed in the next several years. This will allow creation for the first time in history of a 4,500 km long railway link between St Petersburg and the Bandar Abbas port on the Persian Gulf. 

The cooperation with international intergovernmental and non-governmental organisations has reached a new high. In 2007, RZD recommenced its membership of the International Union of Railways (the UIC), and since then the company has been strengthening its position within this organisation gradually. On December 12, 2012, President of RZD Vladimir Yakunin was unanimously elected as the Chairman of the UIC for 2013-2014 with an option for a two-year extension.

RZD developed the Programme of Activity for the UIC in 2013-2014. Special attention was paid to standardisation and legal harmonisation, the expansion of the UIC’s participation in forming global transport policy and cooperation in the traffic safety sphere (pp. 32-35).

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