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Time is Money



– Mr Werner, according to some experts, only 2% of containers from Europe are being transported to Asia via Russia. What is your opinion of the potential of the Eurasian corridor?



– According to analysts in Western Europe, the volume is even less – about 1%. The main reason for this is the cost of transporting containers. For example, westbound transportation of a 20-foot container by sea costs two thousand USD, by land four thousand USD. Prices are increasing all the time. But the main advantage of rail freight transportation is speed. It takes about 40 days to deliver a container by sea, by land it can be delivered within 20–25 days. This is especially important for expensive goods, for example electronics. The transportation time of these goods (i.e. the time they are not on sale) is more expensive than the cost of rail transportation. Rail transportation can also be made more effective, provided improvements are made at border stations and customs clearance.



– What can be done to make customs clearance more effective? Would it make sense to reduce the cost of transportation or develop the infrastructure?



– Fast customs clearance is one of the most important factors that influence the attractiveness of the Eurasian corridor.  Unfortunately, CIM/SMGS consignment notes in both directions are only used in 26–27% of cases.  However, their use reduces the standing time of rolling stock at borders from three days to 1.5 hours. This considerably increases the competitiveness of rail freight transportation.

Although the paperwork now requires less time, there is one more problem. Sometimes you have to wait for rolling stock at the border, because there are no cars available at the right time. The reason for this is that the maximum permissible length of a train is about one kilometer in Russia and the CIS, but only 600 meters in Poland. As a result, the train needs to be separated after crossing the border into Europe. We are currently trying to find a solution to this problem. One possibility we suggest is that special permissions be granted for such trains so that they can enter EU territory without having to be separated.



– In what Eurasian transportation projects are you involved?



– First of all, I think it is a good idea to create the United Transport and Logistics Company (UTLC) with Russian, Belarusian and Kazakhstan railways. It will help the development of the corridor. This company will not only combine resources, but also terminals and loading hubs. This will increase the frequency of transportation through these countries. However, when we compare this with sea transportation, we have to admit that shipping services between the countries offer a more regular connection. The situation for land transportation is different. Increasing the frequency of transportation by land would mean an additional competitive advantage.

We have a joint venture with RZD JSC and TransContainer JSC – the Trans Eurasia Logistics company (TEL). We would also like to work with UTLC. TEL and UTLC to plan and organize transportation along the corridors of China, Kazakhstan, Russia, Belarus and our company– on the territories of Western European countries.



– Does the infrastructure of the countries of the Customs Union allow increased train frequency?



– If competitive services offered to clients are in demand, the increase will have to be made possible. It is similar to the German question: What came first, the chicken or egg?



– Trains from China pass through several countries: China, Kazakhstan, Russia, Belarus, Poland and Germany. Kazakhstan, Russia and Belarus are interested in rail transportation. Is there a need to develop rail transportation in China, Germany and Poland?



– Even today, the automotive industry delivers goods to China by rail. The problem, however, is that the trains are unequally loaded depending on the direction. Containers that are full on their way from Germany to China are normally empty when they come back. It is important that we find a way to return the containers full. Some suggestions have already been made. One possibility would be to transport the containers to a place in China where they can be loaded and then returned to Europe, but this would expensive. 



– Have clients recently changed their opinion about this corridor? What are their main fears and doubts? 



– The fact that the regular connection between Europe and China has been adjusted in both directions is an indication of the increased interest in this corridor. Clients want to use this route, but not all of them are willing to pay. We must convince them and highlight the advantages of transportation by land. The main advantage is speed. We recommend to clients that they should calculate: If you take out a loan for two million euros, what would the total percentage be for the additional days of the credit? Usually the client agrees with our arguments. Besides, land transportation is safe. Guards accompany trains and the goods are insured.



Future Plans



– Green logistics is becoming increasingly popular in Europe. Market participants in Russia are also talking about it. China, having faced a number of ecological disasters, must also become actively involved. Will this trend help to expand the Eurasian corridor? Is this aspect important to your clients?



– For the automotive industry, it is one of the most important topics of discussion. In Germany, for example, many manufacturers have started producing environmentally friendly cars.  We have also recognized the increased demand for environmentally friendly transportation among our own customers. Even as we speak, our locomotives are running on renewable energy, e.g. energy generated from wind power.



– There are strategic systemic risks with the Eurasian transport corridor. One example is the import of new-generation containers with greater capacity. What other technical and legal difficulties exist?



– One of the biggest challenges is winter. How can we transport equipment through Kazakhstan, Mongolia and Russia during this period? It is clear that laptops suffer damage at such low temperatures. There have been attempts to transport electronic equipment in the winter in heated containers, but technical problems still exist and we are working hard to find a solution.

– Is it profitable to develop transportation on alternative routes, for example, on the Northern Sea Route?



– Each consignment has its own individual route. For example, freight can be sent to Europe from Turkey through four corridors:  by ship to Southern Italy and then over the Alps or across the Black Sea, and then through Romania, and on rail through Serbia or Bulgaria and Romania. If a route does not have its own client and product, it will not be sustainable. Corridors that were created together with RZD JSC are in demand today, despite that fact that they are only two years old. 



– What do you think of the cooperation between RZD JSC and its subsidiaries?



– There are three levels of cooperation. The first is between our railroads. The next is at the level of forwarding. The third level is between operators. At all these levels, we cooperate very well. I think that partnership is built on human relations not companies. For years, our cooperation has been based on trust and understanding and we try to satisfy all the sides.



– You said that your project is two years old. What do you think the situation will be in eight years time? What are your main goals?



– Actually, the rail transportation project between Europe and China is about five years old, but only for the last two years has it been actively pursued. Personally, I would like to see two-kilometer long double-decker trains, but it is impossible now. However, I believe that in eight years time there will be three daily departures in both directions. Clients will then be able to dispatch goods in the morning, afternoon or evening toward either the East or Europe. If the trains operate at the same frequency as the Moscow subway, we would be competitive. The cost of regular transportation will decrease. What is more, in eight years air transportation will not be able to compete with rail transportation because fuel prices will be very high. I feel confident about the future and we will do everything to ensure that rail freight transportation will take a leading role by 2020. 

By Tatyana Simonova


    [~DETAIL_TEXT] => 
Time is Money



– Mr Werner, according to some experts, only 2% of containers from Europe are being transported to Asia via Russia. What is your opinion of the potential of the Eurasian corridor?



– According to analysts in Western Europe, the volume is even less – about 1%. The main reason for this is the cost of transporting containers. For example, westbound transportation of a 20-foot container by sea costs two thousand USD, by land four thousand USD. Prices are increasing all the time. But the main advantage of rail freight transportation is speed. It takes about 40 days to deliver a container by sea, by land it can be delivered within 20–25 days. This is especially important for expensive goods, for example electronics. The transportation time of these goods (i.e. the time they are not on sale) is more expensive than the cost of rail transportation. Rail transportation can also be made more effective, provided improvements are made at border stations and customs clearance.



– What can be done to make customs clearance more effective? Would it make sense to reduce the cost of transportation or develop the infrastructure?



– Fast customs clearance is one of the most important factors that influence the attractiveness of the Eurasian corridor.  Unfortunately, CIM/SMGS consignment notes in both directions are only used in 26–27% of cases.  However, their use reduces the standing time of rolling stock at borders from three days to 1.5 hours. This considerably increases the competitiveness of rail freight transportation.

Although the paperwork now requires less time, there is one more problem. Sometimes you have to wait for rolling stock at the border, because there are no cars available at the right time. The reason for this is that the maximum permissible length of a train is about one kilometer in Russia and the CIS, but only 600 meters in Poland. As a result, the train needs to be separated after crossing the border into Europe. We are currently trying to find a solution to this problem. One possibility we suggest is that special permissions be granted for such trains so that they can enter EU territory without having to be separated.



– In what Eurasian transportation projects are you involved?



– First of all, I think it is a good idea to create the United Transport and Logistics Company (UTLC) with Russian, Belarusian and Kazakhstan railways. It will help the development of the corridor. This company will not only combine resources, but also terminals and loading hubs. This will increase the frequency of transportation through these countries. However, when we compare this with sea transportation, we have to admit that shipping services between the countries offer a more regular connection. The situation for land transportation is different. Increasing the frequency of transportation by land would mean an additional competitive advantage.

We have a joint venture with RZD JSC and TransContainer JSC – the Trans Eurasia Logistics company (TEL). We would also like to work with UTLC. TEL and UTLC to plan and organize transportation along the corridors of China, Kazakhstan, Russia, Belarus and our company– on the territories of Western European countries.



– Does the infrastructure of the countries of the Customs Union allow increased train frequency?



– If competitive services offered to clients are in demand, the increase will have to be made possible. It is similar to the German question: What came first, the chicken or egg?



– Trains from China pass through several countries: China, Kazakhstan, Russia, Belarus, Poland and Germany. Kazakhstan, Russia and Belarus are interested in rail transportation. Is there a need to develop rail transportation in China, Germany and Poland?



– Even today, the automotive industry delivers goods to China by rail. The problem, however, is that the trains are unequally loaded depending on the direction. Containers that are full on their way from Germany to China are normally empty when they come back. It is important that we find a way to return the containers full. Some suggestions have already been made. One possibility would be to transport the containers to a place in China where they can be loaded and then returned to Europe, but this would expensive. 



– Have clients recently changed their opinion about this corridor? What are their main fears and doubts? 



– The fact that the regular connection between Europe and China has been adjusted in both directions is an indication of the increased interest in this corridor. Clients want to use this route, but not all of them are willing to pay. We must convince them and highlight the advantages of transportation by land. The main advantage is speed. We recommend to clients that they should calculate: If you take out a loan for two million euros, what would the total percentage be for the additional days of the credit? Usually the client agrees with our arguments. Besides, land transportation is safe. Guards accompany trains and the goods are insured.



Future Plans



– Green logistics is becoming increasingly popular in Europe. Market participants in Russia are also talking about it. China, having faced a number of ecological disasters, must also become actively involved. Will this trend help to expand the Eurasian corridor? Is this aspect important to your clients?



– For the automotive industry, it is one of the most important topics of discussion. In Germany, for example, many manufacturers have started producing environmentally friendly cars.  We have also recognized the increased demand for environmentally friendly transportation among our own customers. Even as we speak, our locomotives are running on renewable energy, e.g. energy generated from wind power.



– There are strategic systemic risks with the Eurasian transport corridor. One example is the import of new-generation containers with greater capacity. What other technical and legal difficulties exist?



– One of the biggest challenges is winter. How can we transport equipment through Kazakhstan, Mongolia and Russia during this period? It is clear that laptops suffer damage at such low temperatures. There have been attempts to transport electronic equipment in the winter in heated containers, but technical problems still exist and we are working hard to find a solution.

– Is it profitable to develop transportation on alternative routes, for example, on the Northern Sea Route?



– Each consignment has its own individual route. For example, freight can be sent to Europe from Turkey through four corridors:  by ship to Southern Italy and then over the Alps or across the Black Sea, and then through Romania, and on rail through Serbia or Bulgaria and Romania. If a route does not have its own client and product, it will not be sustainable. Corridors that were created together with RZD JSC are in demand today, despite that fact that they are only two years old. 



– What do you think of the cooperation between RZD JSC and its subsidiaries?



– There are three levels of cooperation. The first is between our railroads. The next is at the level of forwarding. The third level is between operators. At all these levels, we cooperate very well. I think that partnership is built on human relations not companies. For years, our cooperation has been based on trust and understanding and we try to satisfy all the sides.



– You said that your project is two years old. What do you think the situation will be in eight years time? What are your main goals?



– Actually, the rail transportation project between Europe and China is about five years old, but only for the last two years has it been actively pursued. Personally, I would like to see two-kilometer long double-decker trains, but it is impossible now. However, I believe that in eight years time there will be three daily departures in both directions. Clients will then be able to dispatch goods in the morning, afternoon or evening toward either the East or Europe. If the trains operate at the same frequency as the Moscow subway, we would be competitive. The cost of regular transportation will decrease. What is more, in eight years air transportation will not be able to compete with rail transportation because fuel prices will be very high. I feel confident about the future and we will do everything to ensure that rail freight transportation will take a leading role by 2020. 

By Tatyana Simonova


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Time is Money



– Mr Werner, according to some experts, only 2% of containers from Europe are being transported to Asia via Russia. What is your opinion of the potential of the Eurasian corridor?



– According to analysts in Western Europe, the volume is even less – about 1%. The main reason for this is the cost of transporting containers. For example, westbound transportation of a 20-foot container by sea costs two thousand USD, by land four thousand USD. Prices are increasing all the time. But the main advantage of rail freight transportation is speed. It takes about 40 days to deliver a container by sea, by land it can be delivered within 20–25 days. This is especially important for expensive goods, for example electronics. The transportation time of these goods (i.e. the time they are not on sale) is more expensive than the cost of rail transportation. Rail transportation can also be made more effective, provided improvements are made at border stations and customs clearance.



– What can be done to make customs clearance more effective? Would it make sense to reduce the cost of transportation or develop the infrastructure?



– Fast customs clearance is one of the most important factors that influence the attractiveness of the Eurasian corridor.  Unfortunately, CIM/SMGS consignment notes in both directions are only used in 26–27% of cases.  However, their use reduces the standing time of rolling stock at borders from three days to 1.5 hours. This considerably increases the competitiveness of rail freight transportation.

Although the paperwork now requires less time, there is one more problem. Sometimes you have to wait for rolling stock at the border, because there are no cars available at the right time. The reason for this is that the maximum permissible length of a train is about one kilometer in Russia and the CIS, but only 600 meters in Poland. As a result, the train needs to be separated after crossing the border into Europe. We are currently trying to find a solution to this problem. One possibility we suggest is that special permissions be granted for such trains so that they can enter EU territory without having to be separated.



– In what Eurasian transportation projects are you involved?



– First of all, I think it is a good idea to create the United Transport and Logistics Company (UTLC) with Russian, Belarusian and Kazakhstan railways. It will help the development of the corridor. This company will not only combine resources, but also terminals and loading hubs. This will increase the frequency of transportation through these countries. However, when we compare this with sea transportation, we have to admit that shipping services between the countries offer a more regular connection. The situation for land transportation is different. Increasing the frequency of transportation by land would mean an additional competitive advantage.

We have a joint venture with RZD JSC and TransContainer JSC – the Trans Eurasia Logistics company (TEL). We would also like to work with UTLC. TEL and UTLC to plan and organize transportation along the corridors of China, Kazakhstan, Russia, Belarus and our company– on the territories of Western European countries.



– Does the infrastructure of the countries of the Customs Union allow increased train frequency?



– If competitive services offered to clients are in demand, the increase will have to be made possible. It is similar to the German question: What came first, the chicken or egg?



– Trains from China pass through several countries: China, Kazakhstan, Russia, Belarus, Poland and Germany. Kazakhstan, Russia and Belarus are interested in rail transportation. Is there a need to develop rail transportation in China, Germany and Poland?



– Even today, the automotive industry delivers goods to China by rail. The problem, however, is that the trains are unequally loaded depending on the direction. Containers that are full on their way from Germany to China are normally empty when they come back. It is important that we find a way to return the containers full. Some suggestions have already been made. One possibility would be to transport the containers to a place in China where they can be loaded and then returned to Europe, but this would expensive. 



– Have clients recently changed their opinion about this corridor? What are their main fears and doubts? 



– The fact that the regular connection between Europe and China has been adjusted in both directions is an indication of the increased interest in this corridor. Clients want to use this route, but not all of them are willing to pay. We must convince them and highlight the advantages of transportation by land. The main advantage is speed. We recommend to clients that they should calculate: If you take out a loan for two million euros, what would the total percentage be for the additional days of the credit? Usually the client agrees with our arguments. Besides, land transportation is safe. Guards accompany trains and the goods are insured.



Future Plans



– Green logistics is becoming increasingly popular in Europe. Market participants in Russia are also talking about it. China, having faced a number of ecological disasters, must also become actively involved. Will this trend help to expand the Eurasian corridor? Is this aspect important to your clients?



– For the automotive industry, it is one of the most important topics of discussion. In Germany, for example, many manufacturers have started producing environmentally friendly cars.  We have also recognized the increased demand for environmentally friendly transportation among our own customers. Even as we speak, our locomotives are running on renewable energy, e.g. energy generated from wind power.



– There are strategic systemic risks with the Eurasian transport corridor. One example is the import of new-generation containers with greater capacity. What other technical and legal difficulties exist?



– One of the biggest challenges is winter. How can we transport equipment through Kazakhstan, Mongolia and Russia during this period? It is clear that laptops suffer damage at such low temperatures. There have been attempts to transport electronic equipment in the winter in heated containers, but technical problems still exist and we are working hard to find a solution.

– Is it profitable to develop transportation on alternative routes, for example, on the Northern Sea Route?



– Each consignment has its own individual route. For example, freight can be sent to Europe from Turkey through four corridors:  by ship to Southern Italy and then over the Alps or across the Black Sea, and then through Romania, and on rail through Serbia or Bulgaria and Romania. If a route does not have its own client and product, it will not be sustainable. Corridors that were created together with RZD JSC are in demand today, despite that fact that they are only two years old. 



– What do you think of the cooperation between RZD JSC and its subsidiaries?



– There are three levels of cooperation. The first is between our railroads. The next is at the level of forwarding. The third level is between operators. At all these levels, we cooperate very well. I think that partnership is built on human relations not companies. For years, our cooperation has been based on trust and understanding and we try to satisfy all the sides.



– You said that your project is two years old. What do you think the situation will be in eight years time? What are your main goals?



– Actually, the rail transportation project between Europe and China is about five years old, but only for the last two years has it been actively pursued. Personally, I would like to see two-kilometer long double-decker trains, but it is impossible now. However, I believe that in eight years time there will be three daily departures in both directions. Clients will then be able to dispatch goods in the morning, afternoon or evening toward either the East or Europe. If the trains operate at the same frequency as the Moscow subway, we would be competitive. The cost of regular transportation will decrease. What is more, in eight years air transportation will not be able to compete with rail transportation because fuel prices will be very high. I feel confident about the future and we will do everything to ensure that rail freight transportation will take a leading role by 2020. 

By Tatyana Simonova


    [~DETAIL_TEXT] => 
Time is Money



– Mr Werner, according to some experts, only 2% of containers from Europe are being transported to Asia via Russia. What is your opinion of the potential of the Eurasian corridor?



– According to analysts in Western Europe, the volume is even less – about 1%. The main reason for this is the cost of transporting containers. For example, westbound transportation of a 20-foot container by sea costs two thousand USD, by land four thousand USD. Prices are increasing all the time. But the main advantage of rail freight transportation is speed. It takes about 40 days to deliver a container by sea, by land it can be delivered within 20–25 days. This is especially important for expensive goods, for example electronics. The transportation time of these goods (i.e. the time they are not on sale) is more expensive than the cost of rail transportation. Rail transportation can also be made more effective, provided improvements are made at border stations and customs clearance.



– What can be done to make customs clearance more effective? Would it make sense to reduce the cost of transportation or develop the infrastructure?



– Fast customs clearance is one of the most important factors that influence the attractiveness of the Eurasian corridor.  Unfortunately, CIM/SMGS consignment notes in both directions are only used in 26–27% of cases.  However, their use reduces the standing time of rolling stock at borders from three days to 1.5 hours. This considerably increases the competitiveness of rail freight transportation.

Although the paperwork now requires less time, there is one more problem. Sometimes you have to wait for rolling stock at the border, because there are no cars available at the right time. The reason for this is that the maximum permissible length of a train is about one kilometer in Russia and the CIS, but only 600 meters in Poland. As a result, the train needs to be separated after crossing the border into Europe. We are currently trying to find a solution to this problem. One possibility we suggest is that special permissions be granted for such trains so that they can enter EU territory without having to be separated.



– In what Eurasian transportation projects are you involved?



– First of all, I think it is a good idea to create the United Transport and Logistics Company (UTLC) with Russian, Belarusian and Kazakhstan railways. It will help the development of the corridor. This company will not only combine resources, but also terminals and loading hubs. This will increase the frequency of transportation through these countries. However, when we compare this with sea transportation, we have to admit that shipping services between the countries offer a more regular connection. The situation for land transportation is different. Increasing the frequency of transportation by land would mean an additional competitive advantage.

We have a joint venture with RZD JSC and TransContainer JSC – the Trans Eurasia Logistics company (TEL). We would also like to work with UTLC. TEL and UTLC to plan and organize transportation along the corridors of China, Kazakhstan, Russia, Belarus and our company– on the territories of Western European countries.



– Does the infrastructure of the countries of the Customs Union allow increased train frequency?



– If competitive services offered to clients are in demand, the increase will have to be made possible. It is similar to the German question: What came first, the chicken or egg?



– Trains from China pass through several countries: China, Kazakhstan, Russia, Belarus, Poland and Germany. Kazakhstan, Russia and Belarus are interested in rail transportation. Is there a need to develop rail transportation in China, Germany and Poland?



– Even today, the automotive industry delivers goods to China by rail. The problem, however, is that the trains are unequally loaded depending on the direction. Containers that are full on their way from Germany to China are normally empty when they come back. It is important that we find a way to return the containers full. Some suggestions have already been made. One possibility would be to transport the containers to a place in China where they can be loaded and then returned to Europe, but this would expensive. 



– Have clients recently changed their opinion about this corridor? What are their main fears and doubts? 



– The fact that the regular connection between Europe and China has been adjusted in both directions is an indication of the increased interest in this corridor. Clients want to use this route, but not all of them are willing to pay. We must convince them and highlight the advantages of transportation by land. The main advantage is speed. We recommend to clients that they should calculate: If you take out a loan for two million euros, what would the total percentage be for the additional days of the credit? Usually the client agrees with our arguments. Besides, land transportation is safe. Guards accompany trains and the goods are insured.



Future Plans



– Green logistics is becoming increasingly popular in Europe. Market participants in Russia are also talking about it. China, having faced a number of ecological disasters, must also become actively involved. Will this trend help to expand the Eurasian corridor? Is this aspect important to your clients?



– For the automotive industry, it is one of the most important topics of discussion. In Germany, for example, many manufacturers have started producing environmentally friendly cars.  We have also recognized the increased demand for environmentally friendly transportation among our own customers. Even as we speak, our locomotives are running on renewable energy, e.g. energy generated from wind power.



– There are strategic systemic risks with the Eurasian transport corridor. One example is the import of new-generation containers with greater capacity. What other technical and legal difficulties exist?



– One of the biggest challenges is winter. How can we transport equipment through Kazakhstan, Mongolia and Russia during this period? It is clear that laptops suffer damage at such low temperatures. There have been attempts to transport electronic equipment in the winter in heated containers, but technical problems still exist and we are working hard to find a solution.

– Is it profitable to develop transportation on alternative routes, for example, on the Northern Sea Route?



– Each consignment has its own individual route. For example, freight can be sent to Europe from Turkey through four corridors:  by ship to Southern Italy and then over the Alps or across the Black Sea, and then through Romania, and on rail through Serbia or Bulgaria and Romania. If a route does not have its own client and product, it will not be sustainable. Corridors that were created together with RZD JSC are in demand today, despite that fact that they are only two years old. 



– What do you think of the cooperation between RZD JSC and its subsidiaries?



– There are three levels of cooperation. The first is between our railroads. The next is at the level of forwarding. The third level is between operators. At all these levels, we cooperate very well. I think that partnership is built on human relations not companies. For years, our cooperation has been based on trust and understanding and we try to satisfy all the sides.



– You said that your project is two years old. What do you think the situation will be in eight years time? What are your main goals?



– Actually, the rail transportation project between Europe and China is about five years old, but only for the last two years has it been actively pursued. Personally, I would like to see two-kilometer long double-decker trains, but it is impossible now. However, I believe that in eight years time there will be three daily departures in both directions. Clients will then be able to dispatch goods in the morning, afternoon or evening toward either the East or Europe. If the trains operate at the same frequency as the Moscow subway, we would be competitive. The cost of regular transportation will decrease. What is more, in eight years air transportation will not be able to compete with rail transportation because fuel prices will be very high. I feel confident about the future and we will do everything to ensure that rail freight transportation will take a leading role by 2020. 

By Tatyana Simonova


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Top-10



Cathay Pacific Airways has been named the World’s Best Airline in the 2014 World Airline Awards. This is the result of a poll made by British marketing company Skytrax of 18 million passengers from more than a hundred countries. Note that Cathay Pacific Airways was only sixth in the previous year. Qatar Airways and Singapore Airlines take the second and the third positions for the second year running. Emirates, the leader of 2013, moved down to fourth place in the ranking. Turkish Airlines (ninth place in the rating last year), ANA All Nippon Airways (fourth place), Garuda Indonesia (eighth place), Asiana Airlines (fifth place), Etihad Airways (seventh place). On the whole, the list of top-10 companies remained practically the same except Lufthansa (Germany), which drove Qantas Airways (Australia) down to 11th position.

Oneworld was named the best airline alliance in 2014 as well as in the previous year. Turkish Airlines is recognised as the best in Europe for the fourth year running. The leader in North America did not change in comparison to last year – Air Canada. Meanwhile, Cathay Pacific Airways rose to the top spot in Asia, moving last year’s leader Singapore Airlines into second place. 

S7 was in fourth place among ten best European regional carriers this year against a third in the previous year. Aegean Airlines and Air Nostrum (Iberia Regional) took the first and the second positions in this category as well as in 2013 and 2012. 

Malaysian AirAsia remained at the top of the world low-cost airlines rating, and Norwegian was the leader in Europe again.

    

The Best



EasyJet is the most popular European low-cost airline. It can be even considered a symbol of the sector and has a lot of relevant awards. It services a lot of popular destinations and it is not bound by flights with London and Geneva, where it bases. In addition to 134 directions, EasyJet has already reached Morocco, Egypt, and Israel. The price includes neither baggage, nor insurance, etc. However, buying a ticket on the website, one can choose additional services. For example, one can buy the right to enter into the lounge first to take the most convenient place. 

Air Berlin, the second largest German airline, refers to the low-cost companies nominally. It is considered a low-cost airline because of its low-cost price forming policy. In fact, the carrier still has most of the advantages of traditional airlines: individual seat reservation, free food, and sometimes even drinks. And passengers arrive at main airports.

Perhaps the cheapest option for travel is to choose Ryanair (Ireland). Low cost is achieved by an extra-minimalistic attitude to comfort (often one can check-in for a flight only on the Internet) and use of remote airports. For Paris, it is located in the neighboring department of Beauvais, to Frankfurt – in Frankfurt-Hahn (120 km away from the city), for Dusseldorf – in Wietze. All in all, this low-cost airline services 178 destinations. 

Wizzair (Hungary) provides flights linking the east and west of Europe, being a kind of Eastern European response to EasyJet and Ryanair. Just as these two low-cost airlines, the Hungarian company is not bound by flights to a specific country. In addition to the standard low-cost set, Wizzair provides a nice opportunity to change the ticket date and the direction (and there are about 100 of them), paying an extra charge just for the difference in price.

After merging with Clickair, Vueling (Spain) began to dominate in the sector of low-cost flights to Spain – it services over 100 routes. Norwegian is the fourth-largest European low-cost airline, which services about 120 routes. Initially, the Norwegian company operated only in the domestic market, where aircraft are the most popular transport mode because of the terrain. Recently, they decided to increase their area of operation and now provide flights to Denmark and Sweden, thus becoming the major low-cost airline in Scandinavia.   



Why Is It so Cheap? 



It is because their basic principle is minimum service and comfort for minimum payment. As a rule, low-cost airlines have only one class. The cost of a ticket for a flight on an ordinary airline covers meal and drinks onboard, as well as carry-on and 20 kg luggage, meanwhile, buying a ticket for a low-cost flight, one pays for these services if he is going to use them. There is no business class in low-cost aircraft, all passengers travel in one cabin. Most low-cost airlines place seating as close as possible to each other.

During registration, the number of the seat is not specified in a discount ticket, therefore boarding is reminiscent of a warzone. Such carriers save on staff too: usually they have only one or two check-in desks, and most of them encourage passengers to check-in online. If you do not have time to check in online, then you will have to pay for this service in the airport. 

According to analysts, an aircraft of an ordinary airline spends 6-8 hours in the air a day, that of a low-cost company – twice as much. Also, low-cost airlines choose the most unpopular times at the airport, for example, at night or early in the morning, when the cost of the service is lower. Additionally, low-cost companies try to use secondary airports, where the service is much cheaper. For example, low-cost airlines use the transport hub in the adjacent town of Bergamo instead of Malpensa and Linate airports in Milan. 

Carriers find other ways to save money. For example, a company buys aircraft of only one model in order to save on staff training and maintenance of the machinery. Aircraft spend the maximum amount of time in the air (8 flights on average) and the minimum (refueling and landing occur almost simultaneously) – on the ground. 



Choosing Aircraft





Strange as it may seem, but low-cost companies have a fleet of new aircraft. The average age of planes is 3-5 years. For a long time Boeing was a monopoly in the civil aircraft industry. French, English and Russian producers tried to increase the speed of their aircraft. Americans focused on increasing capacity and won. Consumers gave more than 60% of orders to Boeing since the middle of the 1940s and over the next three decades. However, the situation radically changed when manufacturers from Germany, France, UK and Spain united and created Airbus in the 1970s. It was the first twin-engine wide-body airliner in the world (with three rows of arm chairs). The novelty was a success. 20 years ago the market share of Airbus was less than 19% of deliveries, and Boeing had 62%, and now it is 50% to 50%. British EasyJet used to have a warm relationship with both producers. For example, according to Chris Essex, Head of Fleet and Central Procurement at EasyJet, the company refused to use American planes in favor of European. He notes that the decision to choose Airbus aircraft was the result of a thorough analysis carried out back in 2002. “The first thing we paid attention to when choosing was fuel consumption and the number of passengers that can be carried on each route. The second was the economy of aircraft maintenance: how much to spend on spare parts, the crew, etc. And the third was the cost of an airliner. Not only its price, but also insurance and maintenance costs,” explained representatives of the company. Today, EasyJet has a fleet of more than 200 Airbus aircraft and dictates to the producer the conditions for cabin layout.

Other low-cost air companies also try to form their fleet from airplanes made by one producer. Anatoly Khodorkovsky, Deputy CEO at Region investment company, explains that it’s the only way to reduce the cost of transportation to the minimum. It is curious that companies, which chose Boeing, explain their choice using the same arguments as their colleagues, who prefer aircraft made in Europe. Thus, Flydubai (UAE) operates 31 Boeing 737-800 and is going to add another three aircraft to its fleet, and 50 by the end of 2016. The company considers this model as one of the most commercially successful. “It is unrivalled in terms of reliability, safety, and fuel efficiency”, specialists at Flydubai are convinced. “Its capacity is 12 passengers greater and it consumes 8% less fuel per passenger than its European equivalent.”

In order to let customers save even more, manufacturers are constantly improving production technologies. Today, for example, state-of-the-art materials and devices are being actively developed to reduce the weight and fuel consumption of an airliner, because carriers spend up to 40% of their budget on jet fuel.



New Players and New Routes



The French-Dutch cluster of Air France-KLM is going to launch a low-cost subsidiary Transavia, which will become the largest company of this type in Europe. At least 1 billion euros will be invested in this project. The airline plans to increase the number of aircraft of Transavia and to expand its destinations network. Now the carrier has 37 Boeing 737-700/800, but by 2020 their number is planned to exceed a hundred. However, these plans may be frustrated because of the labor dispute with French pilots that began at the end of the summer: the strike costs 20 million euros a day. Alexandre de Juniac, Executive CEO of the company, said that the project may be closed or suspended until the end of the year. 

Aeroflot, a Russian airline, began the business season with the registration of a new subsidiary – Low-Cost Carrier LLC, which will be engaged in low-cost transportation instead of Dobrolet, which had to stop its work because of the EU sanctions on Russia. 

Low-cost airline Ryanair presented its calendar for 2015, and 10 new flights from Madrid and Barcelona. The company also unveiled its plans to increase the frequency of flights on 22 existing routes next year. New directions serviced by the low-cost airline will link Madrid and Berlin, Bratislava, Bremen, Cologne, Eindhoven, Vilnius, Warsaw, and Fes. The only new flight from Barcelona will link the main city of Catalonia with Cologne. According to forecasts, the total number of Ryanair customers will exceed 5.1 million people. 

Low-cost airlines constantly work to reduce costs, invent new ways to save funds, and due to that they offer passengers the most competitive prices, and receive full aircraft in return.

By Tatyana Simonova
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Top-10



Cathay Pacific Airways has been named the World’s Best Airline in the 2014 World Airline Awards. This is the result of a poll made by British marketing company Skytrax of 18 million passengers from more than a hundred countries. Note that Cathay Pacific Airways was only sixth in the previous year. Qatar Airways and Singapore Airlines take the second and the third positions for the second year running. Emirates, the leader of 2013, moved down to fourth place in the ranking. Turkish Airlines (ninth place in the rating last year), ANA All Nippon Airways (fourth place), Garuda Indonesia (eighth place), Asiana Airlines (fifth place), Etihad Airways (seventh place). On the whole, the list of top-10 companies remained practically the same except Lufthansa (Germany), which drove Qantas Airways (Australia) down to 11th position.

Oneworld was named the best airline alliance in 2014 as well as in the previous year. Turkish Airlines is recognised as the best in Europe for the fourth year running. The leader in North America did not change in comparison to last year – Air Canada. Meanwhile, Cathay Pacific Airways rose to the top spot in Asia, moving last year’s leader Singapore Airlines into second place. 

S7 was in fourth place among ten best European regional carriers this year against a third in the previous year. Aegean Airlines and Air Nostrum (Iberia Regional) took the first and the second positions in this category as well as in 2013 and 2012. 

Malaysian AirAsia remained at the top of the world low-cost airlines rating, and Norwegian was the leader in Europe again.

    

The Best



EasyJet is the most popular European low-cost airline. It can be even considered a symbol of the sector and has a lot of relevant awards. It services a lot of popular destinations and it is not bound by flights with London and Geneva, where it bases. In addition to 134 directions, EasyJet has already reached Morocco, Egypt, and Israel. The price includes neither baggage, nor insurance, etc. However, buying a ticket on the website, one can choose additional services. For example, one can buy the right to enter into the lounge first to take the most convenient place. 

Air Berlin, the second largest German airline, refers to the low-cost companies nominally. It is considered a low-cost airline because of its low-cost price forming policy. In fact, the carrier still has most of the advantages of traditional airlines: individual seat reservation, free food, and sometimes even drinks. And passengers arrive at main airports.

Perhaps the cheapest option for travel is to choose Ryanair (Ireland). Low cost is achieved by an extra-minimalistic attitude to comfort (often one can check-in for a flight only on the Internet) and use of remote airports. For Paris, it is located in the neighboring department of Beauvais, to Frankfurt – in Frankfurt-Hahn (120 km away from the city), for Dusseldorf – in Wietze. All in all, this low-cost airline services 178 destinations. 

Wizzair (Hungary) provides flights linking the east and west of Europe, being a kind of Eastern European response to EasyJet and Ryanair. Just as these two low-cost airlines, the Hungarian company is not bound by flights to a specific country. In addition to the standard low-cost set, Wizzair provides a nice opportunity to change the ticket date and the direction (and there are about 100 of them), paying an extra charge just for the difference in price.

After merging with Clickair, Vueling (Spain) began to dominate in the sector of low-cost flights to Spain – it services over 100 routes. Norwegian is the fourth-largest European low-cost airline, which services about 120 routes. Initially, the Norwegian company operated only in the domestic market, where aircraft are the most popular transport mode because of the terrain. Recently, they decided to increase their area of operation and now provide flights to Denmark and Sweden, thus becoming the major low-cost airline in Scandinavia.   



Why Is It so Cheap? 



It is because their basic principle is minimum service and comfort for minimum payment. As a rule, low-cost airlines have only one class. The cost of a ticket for a flight on an ordinary airline covers meal and drinks onboard, as well as carry-on and 20 kg luggage, meanwhile, buying a ticket for a low-cost flight, one pays for these services if he is going to use them. There is no business class in low-cost aircraft, all passengers travel in one cabin. Most low-cost airlines place seating as close as possible to each other.

During registration, the number of the seat is not specified in a discount ticket, therefore boarding is reminiscent of a warzone. Such carriers save on staff too: usually they have only one or two check-in desks, and most of them encourage passengers to check-in online. If you do not have time to check in online, then you will have to pay for this service in the airport. 

According to analysts, an aircraft of an ordinary airline spends 6-8 hours in the air a day, that of a low-cost company – twice as much. Also, low-cost airlines choose the most unpopular times at the airport, for example, at night or early in the morning, when the cost of the service is lower. Additionally, low-cost companies try to use secondary airports, where the service is much cheaper. For example, low-cost airlines use the transport hub in the adjacent town of Bergamo instead of Malpensa and Linate airports in Milan. 

Carriers find other ways to save money. For example, a company buys aircraft of only one model in order to save on staff training and maintenance of the machinery. Aircraft spend the maximum amount of time in the air (8 flights on average) and the minimum (refueling and landing occur almost simultaneously) – on the ground. 



Choosing Aircraft





Strange as it may seem, but low-cost companies have a fleet of new aircraft. The average age of planes is 3-5 years. For a long time Boeing was a monopoly in the civil aircraft industry. French, English and Russian producers tried to increase the speed of their aircraft. Americans focused on increasing capacity and won. Consumers gave more than 60% of orders to Boeing since the middle of the 1940s and over the next three decades. However, the situation radically changed when manufacturers from Germany, France, UK and Spain united and created Airbus in the 1970s. It was the first twin-engine wide-body airliner in the world (with three rows of arm chairs). The novelty was a success. 20 years ago the market share of Airbus was less than 19% of deliveries, and Boeing had 62%, and now it is 50% to 50%. British EasyJet used to have a warm relationship with both producers. For example, according to Chris Essex, Head of Fleet and Central Procurement at EasyJet, the company refused to use American planes in favor of European. He notes that the decision to choose Airbus aircraft was the result of a thorough analysis carried out back in 2002. “The first thing we paid attention to when choosing was fuel consumption and the number of passengers that can be carried on each route. The second was the economy of aircraft maintenance: how much to spend on spare parts, the crew, etc. And the third was the cost of an airliner. Not only its price, but also insurance and maintenance costs,” explained representatives of the company. Today, EasyJet has a fleet of more than 200 Airbus aircraft and dictates to the producer the conditions for cabin layout.

Other low-cost air companies also try to form their fleet from airplanes made by one producer. Anatoly Khodorkovsky, Deputy CEO at Region investment company, explains that it’s the only way to reduce the cost of transportation to the minimum. It is curious that companies, which chose Boeing, explain their choice using the same arguments as their colleagues, who prefer aircraft made in Europe. Thus, Flydubai (UAE) operates 31 Boeing 737-800 and is going to add another three aircraft to its fleet, and 50 by the end of 2016. The company considers this model as one of the most commercially successful. “It is unrivalled in terms of reliability, safety, and fuel efficiency”, specialists at Flydubai are convinced. “Its capacity is 12 passengers greater and it consumes 8% less fuel per passenger than its European equivalent.”

In order to let customers save even more, manufacturers are constantly improving production technologies. Today, for example, state-of-the-art materials and devices are being actively developed to reduce the weight and fuel consumption of an airliner, because carriers spend up to 40% of their budget on jet fuel.



New Players and New Routes



The French-Dutch cluster of Air France-KLM is going to launch a low-cost subsidiary Transavia, which will become the largest company of this type in Europe. At least 1 billion euros will be invested in this project. The airline plans to increase the number of aircraft of Transavia and to expand its destinations network. Now the carrier has 37 Boeing 737-700/800, but by 2020 their number is planned to exceed a hundred. However, these plans may be frustrated because of the labor dispute with French pilots that began at the end of the summer: the strike costs 20 million euros a day. Alexandre de Juniac, Executive CEO of the company, said that the project may be closed or suspended until the end of the year. 

Aeroflot, a Russian airline, began the business season with the registration of a new subsidiary – Low-Cost Carrier LLC, which will be engaged in low-cost transportation instead of Dobrolet, which had to stop its work because of the EU sanctions on Russia. 

Low-cost airline Ryanair presented its calendar for 2015, and 10 new flights from Madrid and Barcelona. The company also unveiled its plans to increase the frequency of flights on 22 existing routes next year. New directions serviced by the low-cost airline will link Madrid and Berlin, Bratislava, Bremen, Cologne, Eindhoven, Vilnius, Warsaw, and Fes. The only new flight from Barcelona will link the main city of Catalonia with Cologne. According to forecasts, the total number of Ryanair customers will exceed 5.1 million people. 

Low-cost airlines constantly work to reduce costs, invent new ways to save funds, and due to that they offer passengers the most competitive prices, and receive full aircraft in return.

By Tatyana Simonova
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Top-10



Cathay Pacific Airways has been named the World’s Best Airline in the 2014 World Airline Awards. This is the result of a poll made by British marketing company Skytrax of 18 million passengers from more than a hundred countries. Note that Cathay Pacific Airways was only sixth in the previous year. Qatar Airways and Singapore Airlines take the second and the third positions for the second year running. Emirates, the leader of 2013, moved down to fourth place in the ranking. Turkish Airlines (ninth place in the rating last year), ANA All Nippon Airways (fourth place), Garuda Indonesia (eighth place), Asiana Airlines (fifth place), Etihad Airways (seventh place). On the whole, the list of top-10 companies remained practically the same except Lufthansa (Germany), which drove Qantas Airways (Australia) down to 11th position.

Oneworld was named the best airline alliance in 2014 as well as in the previous year. Turkish Airlines is recognised as the best in Europe for the fourth year running. The leader in North America did not change in comparison to last year – Air Canada. Meanwhile, Cathay Pacific Airways rose to the top spot in Asia, moving last year’s leader Singapore Airlines into second place. 

S7 was in fourth place among ten best European regional carriers this year against a third in the previous year. Aegean Airlines and Air Nostrum (Iberia Regional) took the first and the second positions in this category as well as in 2013 and 2012. 

Malaysian AirAsia remained at the top of the world low-cost airlines rating, and Norwegian was the leader in Europe again.

    

The Best



EasyJet is the most popular European low-cost airline. It can be even considered a symbol of the sector and has a lot of relevant awards. It services a lot of popular destinations and it is not bound by flights with London and Geneva, where it bases. In addition to 134 directions, EasyJet has already reached Morocco, Egypt, and Israel. The price includes neither baggage, nor insurance, etc. However, buying a ticket on the website, one can choose additional services. For example, one can buy the right to enter into the lounge first to take the most convenient place. 

Air Berlin, the second largest German airline, refers to the low-cost companies nominally. It is considered a low-cost airline because of its low-cost price forming policy. In fact, the carrier still has most of the advantages of traditional airlines: individual seat reservation, free food, and sometimes even drinks. And passengers arrive at main airports.

Perhaps the cheapest option for travel is to choose Ryanair (Ireland). Low cost is achieved by an extra-minimalistic attitude to comfort (often one can check-in for a flight only on the Internet) and use of remote airports. For Paris, it is located in the neighboring department of Beauvais, to Frankfurt – in Frankfurt-Hahn (120 km away from the city), for Dusseldorf – in Wietze. All in all, this low-cost airline services 178 destinations. 

Wizzair (Hungary) provides flights linking the east and west of Europe, being a kind of Eastern European response to EasyJet and Ryanair. Just as these two low-cost airlines, the Hungarian company is not bound by flights to a specific country. In addition to the standard low-cost set, Wizzair provides a nice opportunity to change the ticket date and the direction (and there are about 100 of them), paying an extra charge just for the difference in price.

After merging with Clickair, Vueling (Spain) began to dominate in the sector of low-cost flights to Spain – it services over 100 routes. Norwegian is the fourth-largest European low-cost airline, which services about 120 routes. Initially, the Norwegian company operated only in the domestic market, where aircraft are the most popular transport mode because of the terrain. Recently, they decided to increase their area of operation and now provide flights to Denmark and Sweden, thus becoming the major low-cost airline in Scandinavia.   



Why Is It so Cheap? 



It is because their basic principle is minimum service and comfort for minimum payment. As a rule, low-cost airlines have only one class. The cost of a ticket for a flight on an ordinary airline covers meal and drinks onboard, as well as carry-on and 20 kg luggage, meanwhile, buying a ticket for a low-cost flight, one pays for these services if he is going to use them. There is no business class in low-cost aircraft, all passengers travel in one cabin. Most low-cost airlines place seating as close as possible to each other.

During registration, the number of the seat is not specified in a discount ticket, therefore boarding is reminiscent of a warzone. Such carriers save on staff too: usually they have only one or two check-in desks, and most of them encourage passengers to check-in online. If you do not have time to check in online, then you will have to pay for this service in the airport. 

According to analysts, an aircraft of an ordinary airline spends 6-8 hours in the air a day, that of a low-cost company – twice as much. Also, low-cost airlines choose the most unpopular times at the airport, for example, at night or early in the morning, when the cost of the service is lower. Additionally, low-cost companies try to use secondary airports, where the service is much cheaper. For example, low-cost airlines use the transport hub in the adjacent town of Bergamo instead of Malpensa and Linate airports in Milan. 

Carriers find other ways to save money. For example, a company buys aircraft of only one model in order to save on staff training and maintenance of the machinery. Aircraft spend the maximum amount of time in the air (8 flights on average) and the minimum (refueling and landing occur almost simultaneously) – on the ground. 



Choosing Aircraft





Strange as it may seem, but low-cost companies have a fleet of new aircraft. The average age of planes is 3-5 years. For a long time Boeing was a monopoly in the civil aircraft industry. French, English and Russian producers tried to increase the speed of their aircraft. Americans focused on increasing capacity and won. Consumers gave more than 60% of orders to Boeing since the middle of the 1940s and over the next three decades. However, the situation radically changed when manufacturers from Germany, France, UK and Spain united and created Airbus in the 1970s. It was the first twin-engine wide-body airliner in the world (with three rows of arm chairs). The novelty was a success. 20 years ago the market share of Airbus was less than 19% of deliveries, and Boeing had 62%, and now it is 50% to 50%. British EasyJet used to have a warm relationship with both producers. For example, according to Chris Essex, Head of Fleet and Central Procurement at EasyJet, the company refused to use American planes in favor of European. He notes that the decision to choose Airbus aircraft was the result of a thorough analysis carried out back in 2002. “The first thing we paid attention to when choosing was fuel consumption and the number of passengers that can be carried on each route. The second was the economy of aircraft maintenance: how much to spend on spare parts, the crew, etc. And the third was the cost of an airliner. Not only its price, but also insurance and maintenance costs,” explained representatives of the company. Today, EasyJet has a fleet of more than 200 Airbus aircraft and dictates to the producer the conditions for cabin layout.

Other low-cost air companies also try to form their fleet from airplanes made by one producer. Anatoly Khodorkovsky, Deputy CEO at Region investment company, explains that it’s the only way to reduce the cost of transportation to the minimum. It is curious that companies, which chose Boeing, explain their choice using the same arguments as their colleagues, who prefer aircraft made in Europe. Thus, Flydubai (UAE) operates 31 Boeing 737-800 and is going to add another three aircraft to its fleet, and 50 by the end of 2016. The company considers this model as one of the most commercially successful. “It is unrivalled in terms of reliability, safety, and fuel efficiency”, specialists at Flydubai are convinced. “Its capacity is 12 passengers greater and it consumes 8% less fuel per passenger than its European equivalent.”

In order to let customers save even more, manufacturers are constantly improving production technologies. Today, for example, state-of-the-art materials and devices are being actively developed to reduce the weight and fuel consumption of an airliner, because carriers spend up to 40% of their budget on jet fuel.



New Players and New Routes



The French-Dutch cluster of Air France-KLM is going to launch a low-cost subsidiary Transavia, which will become the largest company of this type in Europe. At least 1 billion euros will be invested in this project. The airline plans to increase the number of aircraft of Transavia and to expand its destinations network. Now the carrier has 37 Boeing 737-700/800, but by 2020 their number is planned to exceed a hundred. However, these plans may be frustrated because of the labor dispute with French pilots that began at the end of the summer: the strike costs 20 million euros a day. Alexandre de Juniac, Executive CEO of the company, said that the project may be closed or suspended until the end of the year. 

Aeroflot, a Russian airline, began the business season with the registration of a new subsidiary – Low-Cost Carrier LLC, which will be engaged in low-cost transportation instead of Dobrolet, which had to stop its work because of the EU sanctions on Russia. 

Low-cost airline Ryanair presented its calendar for 2015, and 10 new flights from Madrid and Barcelona. The company also unveiled its plans to increase the frequency of flights on 22 existing routes next year. New directions serviced by the low-cost airline will link Madrid and Berlin, Bratislava, Bremen, Cologne, Eindhoven, Vilnius, Warsaw, and Fes. The only new flight from Barcelona will link the main city of Catalonia with Cologne. According to forecasts, the total number of Ryanair customers will exceed 5.1 million people. 

Low-cost airlines constantly work to reduce costs, invent new ways to save funds, and due to that they offer passengers the most competitive prices, and receive full aircraft in return.

By Tatyana Simonova
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Top-10



Cathay Pacific Airways has been named the World’s Best Airline in the 2014 World Airline Awards. This is the result of a poll made by British marketing company Skytrax of 18 million passengers from more than a hundred countries. Note that Cathay Pacific Airways was only sixth in the previous year. Qatar Airways and Singapore Airlines take the second and the third positions for the second year running. Emirates, the leader of 2013, moved down to fourth place in the ranking. Turkish Airlines (ninth place in the rating last year), ANA All Nippon Airways (fourth place), Garuda Indonesia (eighth place), Asiana Airlines (fifth place), Etihad Airways (seventh place). On the whole, the list of top-10 companies remained practically the same except Lufthansa (Germany), which drove Qantas Airways (Australia) down to 11th position.

Oneworld was named the best airline alliance in 2014 as well as in the previous year. Turkish Airlines is recognised as the best in Europe for the fourth year running. The leader in North America did not change in comparison to last year – Air Canada. Meanwhile, Cathay Pacific Airways rose to the top spot in Asia, moving last year’s leader Singapore Airlines into second place. 

S7 was in fourth place among ten best European regional carriers this year against a third in the previous year. Aegean Airlines and Air Nostrum (Iberia Regional) took the first and the second positions in this category as well as in 2013 and 2012. 

Malaysian AirAsia remained at the top of the world low-cost airlines rating, and Norwegian was the leader in Europe again.

    

The Best



EasyJet is the most popular European low-cost airline. It can be even considered a symbol of the sector and has a lot of relevant awards. It services a lot of popular destinations and it is not bound by flights with London and Geneva, where it bases. In addition to 134 directions, EasyJet has already reached Morocco, Egypt, and Israel. The price includes neither baggage, nor insurance, etc. However, buying a ticket on the website, one can choose additional services. For example, one can buy the right to enter into the lounge first to take the most convenient place. 

Air Berlin, the second largest German airline, refers to the low-cost companies nominally. It is considered a low-cost airline because of its low-cost price forming policy. In fact, the carrier still has most of the advantages of traditional airlines: individual seat reservation, free food, and sometimes even drinks. And passengers arrive at main airports.

Perhaps the cheapest option for travel is to choose Ryanair (Ireland). Low cost is achieved by an extra-minimalistic attitude to comfort (often one can check-in for a flight only on the Internet) and use of remote airports. For Paris, it is located in the neighboring department of Beauvais, to Frankfurt – in Frankfurt-Hahn (120 km away from the city), for Dusseldorf – in Wietze. All in all, this low-cost airline services 178 destinations. 

Wizzair (Hungary) provides flights linking the east and west of Europe, being a kind of Eastern European response to EasyJet and Ryanair. Just as these two low-cost airlines, the Hungarian company is not bound by flights to a specific country. In addition to the standard low-cost set, Wizzair provides a nice opportunity to change the ticket date and the direction (and there are about 100 of them), paying an extra charge just for the difference in price.

After merging with Clickair, Vueling (Spain) began to dominate in the sector of low-cost flights to Spain – it services over 100 routes. Norwegian is the fourth-largest European low-cost airline, which services about 120 routes. Initially, the Norwegian company operated only in the domestic market, where aircraft are the most popular transport mode because of the terrain. Recently, they decided to increase their area of operation and now provide flights to Denmark and Sweden, thus becoming the major low-cost airline in Scandinavia.   



Why Is It so Cheap? 



It is because their basic principle is minimum service and comfort for minimum payment. As a rule, low-cost airlines have only one class. The cost of a ticket for a flight on an ordinary airline covers meal and drinks onboard, as well as carry-on and 20 kg luggage, meanwhile, buying a ticket for a low-cost flight, one pays for these services if he is going to use them. There is no business class in low-cost aircraft, all passengers travel in one cabin. Most low-cost airlines place seating as close as possible to each other.

During registration, the number of the seat is not specified in a discount ticket, therefore boarding is reminiscent of a warzone. Such carriers save on staff too: usually they have only one or two check-in desks, and most of them encourage passengers to check-in online. If you do not have time to check in online, then you will have to pay for this service in the airport. 

According to analysts, an aircraft of an ordinary airline spends 6-8 hours in the air a day, that of a low-cost company – twice as much. Also, low-cost airlines choose the most unpopular times at the airport, for example, at night or early in the morning, when the cost of the service is lower. Additionally, low-cost companies try to use secondary airports, where the service is much cheaper. For example, low-cost airlines use the transport hub in the adjacent town of Bergamo instead of Malpensa and Linate airports in Milan. 

Carriers find other ways to save money. For example, a company buys aircraft of only one model in order to save on staff training and maintenance of the machinery. Aircraft spend the maximum amount of time in the air (8 flights on average) and the minimum (refueling and landing occur almost simultaneously) – on the ground. 



Choosing Aircraft





Strange as it may seem, but low-cost companies have a fleet of new aircraft. The average age of planes is 3-5 years. For a long time Boeing was a monopoly in the civil aircraft industry. French, English and Russian producers tried to increase the speed of their aircraft. Americans focused on increasing capacity and won. Consumers gave more than 60% of orders to Boeing since the middle of the 1940s and over the next three decades. However, the situation radically changed when manufacturers from Germany, France, UK and Spain united and created Airbus in the 1970s. It was the first twin-engine wide-body airliner in the world (with three rows of arm chairs). The novelty was a success. 20 years ago the market share of Airbus was less than 19% of deliveries, and Boeing had 62%, and now it is 50% to 50%. British EasyJet used to have a warm relationship with both producers. For example, according to Chris Essex, Head of Fleet and Central Procurement at EasyJet, the company refused to use American planes in favor of European. He notes that the decision to choose Airbus aircraft was the result of a thorough analysis carried out back in 2002. “The first thing we paid attention to when choosing was fuel consumption and the number of passengers that can be carried on each route. The second was the economy of aircraft maintenance: how much to spend on spare parts, the crew, etc. And the third was the cost of an airliner. Not only its price, but also insurance and maintenance costs,” explained representatives of the company. Today, EasyJet has a fleet of more than 200 Airbus aircraft and dictates to the producer the conditions for cabin layout.

Other low-cost air companies also try to form their fleet from airplanes made by one producer. Anatoly Khodorkovsky, Deputy CEO at Region investment company, explains that it’s the only way to reduce the cost of transportation to the minimum. It is curious that companies, which chose Boeing, explain their choice using the same arguments as their colleagues, who prefer aircraft made in Europe. Thus, Flydubai (UAE) operates 31 Boeing 737-800 and is going to add another three aircraft to its fleet, and 50 by the end of 2016. The company considers this model as one of the most commercially successful. “It is unrivalled in terms of reliability, safety, and fuel efficiency”, specialists at Flydubai are convinced. “Its capacity is 12 passengers greater and it consumes 8% less fuel per passenger than its European equivalent.”

In order to let customers save even more, manufacturers are constantly improving production technologies. Today, for example, state-of-the-art materials and devices are being actively developed to reduce the weight and fuel consumption of an airliner, because carriers spend up to 40% of their budget on jet fuel.



New Players and New Routes



The French-Dutch cluster of Air France-KLM is going to launch a low-cost subsidiary Transavia, which will become the largest company of this type in Europe. At least 1 billion euros will be invested in this project. The airline plans to increase the number of aircraft of Transavia and to expand its destinations network. Now the carrier has 37 Boeing 737-700/800, but by 2020 their number is planned to exceed a hundred. However, these plans may be frustrated because of the labor dispute with French pilots that began at the end of the summer: the strike costs 20 million euros a day. Alexandre de Juniac, Executive CEO of the company, said that the project may be closed or suspended until the end of the year. 

Aeroflot, a Russian airline, began the business season with the registration of a new subsidiary – Low-Cost Carrier LLC, which will be engaged in low-cost transportation instead of Dobrolet, which had to stop its work because of the EU sanctions on Russia. 

Low-cost airline Ryanair presented its calendar for 2015, and 10 new flights from Madrid and Barcelona. The company also unveiled its plans to increase the frequency of flights on 22 existing routes next year. New directions serviced by the low-cost airline will link Madrid and Berlin, Bratislava, Bremen, Cologne, Eindhoven, Vilnius, Warsaw, and Fes. The only new flight from Barcelona will link the main city of Catalonia with Cologne. According to forecasts, the total number of Ryanair customers will exceed 5.1 million people. 

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By Tatyana Simonova
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Declaring Bankruptcy



Crisis in the tour operator market in Russia appeared after one of the largest domestic tour operators – the company Neva – had suspended its activities in July. The reason for the bankruptcy was the impossibility of meeting its obligations to customers. Some years ago, Neva validated its insurance policy for RUB 454 million with the insurance company Vozrozhdenie. Now the top-management of this insurance company are wanted. According to various sources, 23000-27000 tourists (6,000-7,000 were at that time abroad, 17,000-20,000 were going abroad) suffered losses. Over the next two months, a half dozen large Russian tour operators declared bankruptcy. It became clear that the market was in meltdown.

Sales of tours to foreign countries had decreased considerably due to the devaluation of the ruble, as prices of tours had significantly increased. In order not to lose market share in the highly competitive market, many travel agencies have begun to dump, hoping to close the gap in their economy profits earned during the high season. In addition, in May, the market lost about 10% of potential customers due to sanctions.

Prime Minister of the Russian Federation Dmitry Medvedev has compared the structure of the Russian tourist business with a pyramid scheme. The tour operator buys hotels and airline tickets in advance, hoping to cover the costs and make a profit on the back of future sales. If the firm dumps, selling tours below market price, it means that the lack of funds is covered by loans. This model worked well in a post-crisis market that showed a steady growth. 

This year, many Russian travel agencies, as well as airlines, were taking loans from foreign banks, because it is hard to get loans in local banks. Since the beginning of the spring, borrowers faced unannounced, but quite real sanctions. They had no chance to refinance. Moreover, many insurers, assessing their risks, refused to provide services to the Russian tour operators. Companies began to apply to the small and little-known insurance firms. It happened with travel agency Neva, who had to change its solid insurer SOGAS to Vozrozhdenie, but the burden was unsustainable for the insurer, and soon after the suspension of the activities of the Neva, Vozrozhdenie lost its license. A series of bankruptcies, which shocked the market this summer, has a completely unbiased origin - falling demand, expensive funding and poor risk management.



Planes or Trains?



Russian tour operators are burdened with the conditions of cooperation with air carriers, which are regulated by law. Airlines have the right to fine travel agencies for failing to share planned flights at a rate of 60% of its value, and the flight plan is approved in advance. During 2013, tour operators have already negotiated with the airlines about the number of tours in summer 2014. However, the number of tourists fell, and the operators tried to sell vouchers for low prices, in order not to pay the fine. As a result, air carriers and tour operators have lost their customers. 

However, this year was good to aviators. After two years of lobbying a bill on non-return tickets that are 35-40% cheaper than normal, was finally signed. Air companies took up to 21 billion in direct losses because of tickets returned every year. It is also important that the air market is subsidized by the State.

For example, in April 2014, Aeroflot introduced a common fare for economy class tickets for Moscow-Simferopol. Now the trip to Simferopol and back costs 7,500 rubles including taxes and charges. Last summer, the flight was worth 10,000 and more.

The Russian Ministry of Transport has already formulated an amendment to the Charter of railway transport that will reduce the cost of tickets at the expense of their non-return policy. The reserved seat ticket, subsidized from the federal budget, will not be included in the category of non-returnable. It is not yet clear what the benefits of changes to railway workers and tourists will be, as reserved seat tickets are the most popular category. About 70% passengers in Russia travel in the reserved seats.

The State partially compensates the income losses for the railways. In 2014, RUB 23.6 billion was allocated from the budget for these purposes. However, due to the indexation of tariffs, the State should subsidize RUB 29.3 billion. Thus, by the end of the year, a deficit of RUB 5.7 billion will be forthcoming. If you compare the amount of State subsidies for the airline and railway, the figures would be oppressive. In 2013, subsidies for flights to the Far East in the European part of the country and back (33 routes, 22 airports) amounted to RUB 3.55 billion. Railroad transportation was subsidized by RUB 13.6 billion, but the number of routes (and passengers, respectively) is dozens of times greater here (800 routes and 1000 stations).

Rail transport is unprofitable, and in most countries, the State supports rail companies. “When comparing the levels of public funding for this segment, Russia loses out to many developed countries, - says the head of the Research Department of the Transport Institute of problems of natural monopolies (IPEM) Vladimir Savchuk. – Today about RUB 30 billion is allocated for the support of passenger rail transport in Russia. It means 0.4 rubles for 1 km. For comparison, the rate in the USA is 5 rubles for 1 km, in the countries of the European Union and Argentina – 2 rubles per passenger-km.”



Inner Space



According to the official statistics, about 13.2 million people spent their holidays in Russia; more than 75% of the total tourist flow was Russian. In the same period 18.3 million Russian citizens visited foreign countries. It is very likely that this ratio will be changed in 2014. Will it be accompanied by a growing interest in domestic tourism? It is possible, but high prices and the low quality of service are failing to attract customers, and also created a stereotype that holidays in Russia are uncomfortable and expensive. According to the statistics, you needed RUB 29,000 to spend your holidays in Russia in 2013, while a tour to the Mediterranean resorts costs about RUB 21,800. 

Currently, changes in the political environment and the inhibition of the Russian economy, accompanied by the depreciation of the ruble, and the active promotion of domestic resorts are the drivers for internal tourism. “Prices for overseas tours grew, – said the General Director of Russian online tour operator WikiPlanet Sergey Marevskij. -Russian tourist, who used to travel to Turkey for seven days for a thousand euros, now has to pay RUB 50,000.” 

“Demand for Russian tours will grow because of the devaluation of the ruble and the popularity of Sochi after the Olympics,” said the General Director of the tour operator Coral Travel Joshkun Yurt. His company has announced the sales of tours to the resorts of the Krasnodar region. “The region has a unique chance for development, - said J.Yurt – There are excellent hotels. Most of them are well-known brands.”

On the one hand, the development of domestic tourism seems to be promising. With its monuments and huge spaces, Russia has impressive capabilities in this area. According to experts at the World Economic Forum (WEF), the country is ranked fifth in the world for the presence of natural tourism resources and ninth on the list of countries with objects of cultural heritage. On the other hand, Russia took 63rd position in a ranking of 140 countries for the competitiveness of the tourist market in 2013. However, the situation may change. Two years ago, the Government of the Russian Federation approved a federal target program for the development of domestic and inbound tourism in the 2011-2018 period. “This is the first program of its kind that is implemented at State level, – explains Vice President of the Russian Union of travel industry Yuriy Barzykin. – Its main target is the creation and promotion of a competitive tourist product, the development of tourism infrastructure and the creation of additional jobs.” More than RUB 4.6 billion will be spent on this in 2014. 

Depending on the circumstances, transportation can speed up the development of local tourism. “Of course, most tourists visit places located close to the center of the country, – explains Sales Manager of Wiki Planet Leonid Ozolin. – It happens not only because of price, but also because of the time spent on the road”. “If the cost of train tickets to Irkutsk is attractive, demand to visit the Lake will grow, - he says. - The tourists will have already experienced the different quality of travel, thanks to new, more comfortable rail cars. The railway service is being developed, we are improving this product.”

Railway tourism is becoming more and more popular. The RZD-Tour Company (a subsidiary of Federal passenger company, Russian Railways) arranges rail tours in vintage trains to the Tula, Kolomna, Sergiyev Posad, Borodino, Ryazan. The interest for trips on the Trans-Siberian Railway in comfortable luxury trains is growing. In August this year, the company launched a new train “Imperial Russia” on the routes Moscow-Beijing and St Petersburg-Moscow.

Despite all the difficulties, the quality of tourism in Russia is being improved. The best solution would be the creation of routes with competitive prices and levels of service. In this case, the tourists will choose to travel across Russia not only because of the economy, but also due to the interest in the native nature, history and culture.

By Marina Ermolenko
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Declaring Bankruptcy



Crisis in the tour operator market in Russia appeared after one of the largest domestic tour operators – the company Neva – had suspended its activities in July. The reason for the bankruptcy was the impossibility of meeting its obligations to customers. Some years ago, Neva validated its insurance policy for RUB 454 million with the insurance company Vozrozhdenie. Now the top-management of this insurance company are wanted. According to various sources, 23000-27000 tourists (6,000-7,000 were at that time abroad, 17,000-20,000 were going abroad) suffered losses. Over the next two months, a half dozen large Russian tour operators declared bankruptcy. It became clear that the market was in meltdown.

Sales of tours to foreign countries had decreased considerably due to the devaluation of the ruble, as prices of tours had significantly increased. In order not to lose market share in the highly competitive market, many travel agencies have begun to dump, hoping to close the gap in their economy profits earned during the high season. In addition, in May, the market lost about 10% of potential customers due to sanctions.

Prime Minister of the Russian Federation Dmitry Medvedev has compared the structure of the Russian tourist business with a pyramid scheme. The tour operator buys hotels and airline tickets in advance, hoping to cover the costs and make a profit on the back of future sales. If the firm dumps, selling tours below market price, it means that the lack of funds is covered by loans. This model worked well in a post-crisis market that showed a steady growth. 

This year, many Russian travel agencies, as well as airlines, were taking loans from foreign banks, because it is hard to get loans in local banks. Since the beginning of the spring, borrowers faced unannounced, but quite real sanctions. They had no chance to refinance. Moreover, many insurers, assessing their risks, refused to provide services to the Russian tour operators. Companies began to apply to the small and little-known insurance firms. It happened with travel agency Neva, who had to change its solid insurer SOGAS to Vozrozhdenie, but the burden was unsustainable for the insurer, and soon after the suspension of the activities of the Neva, Vozrozhdenie lost its license. A series of bankruptcies, which shocked the market this summer, has a completely unbiased origin - falling demand, expensive funding and poor risk management.



Planes or Trains?



Russian tour operators are burdened with the conditions of cooperation with air carriers, which are regulated by law. Airlines have the right to fine travel agencies for failing to share planned flights at a rate of 60% of its value, and the flight plan is approved in advance. During 2013, tour operators have already negotiated with the airlines about the number of tours in summer 2014. However, the number of tourists fell, and the operators tried to sell vouchers for low prices, in order not to pay the fine. As a result, air carriers and tour operators have lost their customers. 

However, this year was good to aviators. After two years of lobbying a bill on non-return tickets that are 35-40% cheaper than normal, was finally signed. Air companies took up to 21 billion in direct losses because of tickets returned every year. It is also important that the air market is subsidized by the State.

For example, in April 2014, Aeroflot introduced a common fare for economy class tickets for Moscow-Simferopol. Now the trip to Simferopol and back costs 7,500 rubles including taxes and charges. Last summer, the flight was worth 10,000 and more.

The Russian Ministry of Transport has already formulated an amendment to the Charter of railway transport that will reduce the cost of tickets at the expense of their non-return policy. The reserved seat ticket, subsidized from the federal budget, will not be included in the category of non-returnable. It is not yet clear what the benefits of changes to railway workers and tourists will be, as reserved seat tickets are the most popular category. About 70% passengers in Russia travel in the reserved seats.

The State partially compensates the income losses for the railways. In 2014, RUB 23.6 billion was allocated from the budget for these purposes. However, due to the indexation of tariffs, the State should subsidize RUB 29.3 billion. Thus, by the end of the year, a deficit of RUB 5.7 billion will be forthcoming. If you compare the amount of State subsidies for the airline and railway, the figures would be oppressive. In 2013, subsidies for flights to the Far East in the European part of the country and back (33 routes, 22 airports) amounted to RUB 3.55 billion. Railroad transportation was subsidized by RUB 13.6 billion, but the number of routes (and passengers, respectively) is dozens of times greater here (800 routes and 1000 stations).

Rail transport is unprofitable, and in most countries, the State supports rail companies. “When comparing the levels of public funding for this segment, Russia loses out to many developed countries, - says the head of the Research Department of the Transport Institute of problems of natural monopolies (IPEM) Vladimir Savchuk. – Today about RUB 30 billion is allocated for the support of passenger rail transport in Russia. It means 0.4 rubles for 1 km. For comparison, the rate in the USA is 5 rubles for 1 km, in the countries of the European Union and Argentina – 2 rubles per passenger-km.”



Inner Space



According to the official statistics, about 13.2 million people spent their holidays in Russia; more than 75% of the total tourist flow was Russian. In the same period 18.3 million Russian citizens visited foreign countries. It is very likely that this ratio will be changed in 2014. Will it be accompanied by a growing interest in domestic tourism? It is possible, but high prices and the low quality of service are failing to attract customers, and also created a stereotype that holidays in Russia are uncomfortable and expensive. According to the statistics, you needed RUB 29,000 to spend your holidays in Russia in 2013, while a tour to the Mediterranean resorts costs about RUB 21,800. 

Currently, changes in the political environment and the inhibition of the Russian economy, accompanied by the depreciation of the ruble, and the active promotion of domestic resorts are the drivers for internal tourism. “Prices for overseas tours grew, – said the General Director of Russian online tour operator WikiPlanet Sergey Marevskij. -Russian tourist, who used to travel to Turkey for seven days for a thousand euros, now has to pay RUB 50,000.” 

“Demand for Russian tours will grow because of the devaluation of the ruble and the popularity of Sochi after the Olympics,” said the General Director of the tour operator Coral Travel Joshkun Yurt. His company has announced the sales of tours to the resorts of the Krasnodar region. “The region has a unique chance for development, - said J.Yurt – There are excellent hotels. Most of them are well-known brands.”

On the one hand, the development of domestic tourism seems to be promising. With its monuments and huge spaces, Russia has impressive capabilities in this area. According to experts at the World Economic Forum (WEF), the country is ranked fifth in the world for the presence of natural tourism resources and ninth on the list of countries with objects of cultural heritage. On the other hand, Russia took 63rd position in a ranking of 140 countries for the competitiveness of the tourist market in 2013. However, the situation may change. Two years ago, the Government of the Russian Federation approved a federal target program for the development of domestic and inbound tourism in the 2011-2018 period. “This is the first program of its kind that is implemented at State level, – explains Vice President of the Russian Union of travel industry Yuriy Barzykin. – Its main target is the creation and promotion of a competitive tourist product, the development of tourism infrastructure and the creation of additional jobs.” More than RUB 4.6 billion will be spent on this in 2014. 

Depending on the circumstances, transportation can speed up the development of local tourism. “Of course, most tourists visit places located close to the center of the country, – explains Sales Manager of Wiki Planet Leonid Ozolin. – It happens not only because of price, but also because of the time spent on the road”. “If the cost of train tickets to Irkutsk is attractive, demand to visit the Lake will grow, - he says. - The tourists will have already experienced the different quality of travel, thanks to new, more comfortable rail cars. The railway service is being developed, we are improving this product.”

Railway tourism is becoming more and more popular. The RZD-Tour Company (a subsidiary of Federal passenger company, Russian Railways) arranges rail tours in vintage trains to the Tula, Kolomna, Sergiyev Posad, Borodino, Ryazan. The interest for trips on the Trans-Siberian Railway in comfortable luxury trains is growing. In August this year, the company launched a new train “Imperial Russia” on the routes Moscow-Beijing and St Petersburg-Moscow.

Despite all the difficulties, the quality of tourism in Russia is being improved. The best solution would be the creation of routes with competitive prices and levels of service. In this case, the tourists will choose to travel across Russia not only because of the economy, but also due to the interest in the native nature, history and culture.

By Marina Ermolenko
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Declaring Bankruptcy



Crisis in the tour operator market in Russia appeared after one of the largest domestic tour operators – the company Neva – had suspended its activities in July. The reason for the bankruptcy was the impossibility of meeting its obligations to customers. Some years ago, Neva validated its insurance policy for RUB 454 million with the insurance company Vozrozhdenie. Now the top-management of this insurance company are wanted. According to various sources, 23000-27000 tourists (6,000-7,000 were at that time abroad, 17,000-20,000 were going abroad) suffered losses. Over the next two months, a half dozen large Russian tour operators declared bankruptcy. It became clear that the market was in meltdown.

Sales of tours to foreign countries had decreased considerably due to the devaluation of the ruble, as prices of tours had significantly increased. In order not to lose market share in the highly competitive market, many travel agencies have begun to dump, hoping to close the gap in their economy profits earned during the high season. In addition, in May, the market lost about 10% of potential customers due to sanctions.

Prime Minister of the Russian Federation Dmitry Medvedev has compared the structure of the Russian tourist business with a pyramid scheme. The tour operator buys hotels and airline tickets in advance, hoping to cover the costs and make a profit on the back of future sales. If the firm dumps, selling tours below market price, it means that the lack of funds is covered by loans. This model worked well in a post-crisis market that showed a steady growth. 

This year, many Russian travel agencies, as well as airlines, were taking loans from foreign banks, because it is hard to get loans in local banks. Since the beginning of the spring, borrowers faced unannounced, but quite real sanctions. They had no chance to refinance. Moreover, many insurers, assessing their risks, refused to provide services to the Russian tour operators. Companies began to apply to the small and little-known insurance firms. It happened with travel agency Neva, who had to change its solid insurer SOGAS to Vozrozhdenie, but the burden was unsustainable for the insurer, and soon after the suspension of the activities of the Neva, Vozrozhdenie lost its license. A series of bankruptcies, which shocked the market this summer, has a completely unbiased origin - falling demand, expensive funding and poor risk management.



Planes or Trains?



Russian tour operators are burdened with the conditions of cooperation with air carriers, which are regulated by law. Airlines have the right to fine travel agencies for failing to share planned flights at a rate of 60% of its value, and the flight plan is approved in advance. During 2013, tour operators have already negotiated with the airlines about the number of tours in summer 2014. However, the number of tourists fell, and the operators tried to sell vouchers for low prices, in order not to pay the fine. As a result, air carriers and tour operators have lost their customers. 

However, this year was good to aviators. After two years of lobbying a bill on non-return tickets that are 35-40% cheaper than normal, was finally signed. Air companies took up to 21 billion in direct losses because of tickets returned every year. It is also important that the air market is subsidized by the State.

For example, in April 2014, Aeroflot introduced a common fare for economy class tickets for Moscow-Simferopol. Now the trip to Simferopol and back costs 7,500 rubles including taxes and charges. Last summer, the flight was worth 10,000 and more.

The Russian Ministry of Transport has already formulated an amendment to the Charter of railway transport that will reduce the cost of tickets at the expense of their non-return policy. The reserved seat ticket, subsidized from the federal budget, will not be included in the category of non-returnable. It is not yet clear what the benefits of changes to railway workers and tourists will be, as reserved seat tickets are the most popular category. About 70% passengers in Russia travel in the reserved seats.

The State partially compensates the income losses for the railways. In 2014, RUB 23.6 billion was allocated from the budget for these purposes. However, due to the indexation of tariffs, the State should subsidize RUB 29.3 billion. Thus, by the end of the year, a deficit of RUB 5.7 billion will be forthcoming. If you compare the amount of State subsidies for the airline and railway, the figures would be oppressive. In 2013, subsidies for flights to the Far East in the European part of the country and back (33 routes, 22 airports) amounted to RUB 3.55 billion. Railroad transportation was subsidized by RUB 13.6 billion, but the number of routes (and passengers, respectively) is dozens of times greater here (800 routes and 1000 stations).

Rail transport is unprofitable, and in most countries, the State supports rail companies. “When comparing the levels of public funding for this segment, Russia loses out to many developed countries, - says the head of the Research Department of the Transport Institute of problems of natural monopolies (IPEM) Vladimir Savchuk. – Today about RUB 30 billion is allocated for the support of passenger rail transport in Russia. It means 0.4 rubles for 1 km. For comparison, the rate in the USA is 5 rubles for 1 km, in the countries of the European Union and Argentina – 2 rubles per passenger-km.”



Inner Space



According to the official statistics, about 13.2 million people spent their holidays in Russia; more than 75% of the total tourist flow was Russian. In the same period 18.3 million Russian citizens visited foreign countries. It is very likely that this ratio will be changed in 2014. Will it be accompanied by a growing interest in domestic tourism? It is possible, but high prices and the low quality of service are failing to attract customers, and also created a stereotype that holidays in Russia are uncomfortable and expensive. According to the statistics, you needed RUB 29,000 to spend your holidays in Russia in 2013, while a tour to the Mediterranean resorts costs about RUB 21,800. 

Currently, changes in the political environment and the inhibition of the Russian economy, accompanied by the depreciation of the ruble, and the active promotion of domestic resorts are the drivers for internal tourism. “Prices for overseas tours grew, – said the General Director of Russian online tour operator WikiPlanet Sergey Marevskij. -Russian tourist, who used to travel to Turkey for seven days for a thousand euros, now has to pay RUB 50,000.” 

“Demand for Russian tours will grow because of the devaluation of the ruble and the popularity of Sochi after the Olympics,” said the General Director of the tour operator Coral Travel Joshkun Yurt. His company has announced the sales of tours to the resorts of the Krasnodar region. “The region has a unique chance for development, - said J.Yurt – There are excellent hotels. Most of them are well-known brands.”

On the one hand, the development of domestic tourism seems to be promising. With its monuments and huge spaces, Russia has impressive capabilities in this area. According to experts at the World Economic Forum (WEF), the country is ranked fifth in the world for the presence of natural tourism resources and ninth on the list of countries with objects of cultural heritage. On the other hand, Russia took 63rd position in a ranking of 140 countries for the competitiveness of the tourist market in 2013. However, the situation may change. Two years ago, the Government of the Russian Federation approved a federal target program for the development of domestic and inbound tourism in the 2011-2018 period. “This is the first program of its kind that is implemented at State level, – explains Vice President of the Russian Union of travel industry Yuriy Barzykin. – Its main target is the creation and promotion of a competitive tourist product, the development of tourism infrastructure and the creation of additional jobs.” More than RUB 4.6 billion will be spent on this in 2014. 

Depending on the circumstances, transportation can speed up the development of local tourism. “Of course, most tourists visit places located close to the center of the country, – explains Sales Manager of Wiki Planet Leonid Ozolin. – It happens not only because of price, but also because of the time spent on the road”. “If the cost of train tickets to Irkutsk is attractive, demand to visit the Lake will grow, - he says. - The tourists will have already experienced the different quality of travel, thanks to new, more comfortable rail cars. The railway service is being developed, we are improving this product.”

Railway tourism is becoming more and more popular. The RZD-Tour Company (a subsidiary of Federal passenger company, Russian Railways) arranges rail tours in vintage trains to the Tula, Kolomna, Sergiyev Posad, Borodino, Ryazan. The interest for trips on the Trans-Siberian Railway in comfortable luxury trains is growing. In August this year, the company launched a new train “Imperial Russia” on the routes Moscow-Beijing and St Petersburg-Moscow.

Despite all the difficulties, the quality of tourism in Russia is being improved. The best solution would be the creation of routes with competitive prices and levels of service. In this case, the tourists will choose to travel across Russia not only because of the economy, but also due to the interest in the native nature, history and culture.

By Marina Ermolenko
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Declaring Bankruptcy



Crisis in the tour operator market in Russia appeared after one of the largest domestic tour operators – the company Neva – had suspended its activities in July. The reason for the bankruptcy was the impossibility of meeting its obligations to customers. Some years ago, Neva validated its insurance policy for RUB 454 million with the insurance company Vozrozhdenie. Now the top-management of this insurance company are wanted. According to various sources, 23000-27000 tourists (6,000-7,000 were at that time abroad, 17,000-20,000 were going abroad) suffered losses. Over the next two months, a half dozen large Russian tour operators declared bankruptcy. It became clear that the market was in meltdown.

Sales of tours to foreign countries had decreased considerably due to the devaluation of the ruble, as prices of tours had significantly increased. In order not to lose market share in the highly competitive market, many travel agencies have begun to dump, hoping to close the gap in their economy profits earned during the high season. In addition, in May, the market lost about 10% of potential customers due to sanctions.

Prime Minister of the Russian Federation Dmitry Medvedev has compared the structure of the Russian tourist business with a pyramid scheme. The tour operator buys hotels and airline tickets in advance, hoping to cover the costs and make a profit on the back of future sales. If the firm dumps, selling tours below market price, it means that the lack of funds is covered by loans. This model worked well in a post-crisis market that showed a steady growth. 

This year, many Russian travel agencies, as well as airlines, were taking loans from foreign banks, because it is hard to get loans in local banks. Since the beginning of the spring, borrowers faced unannounced, but quite real sanctions. They had no chance to refinance. Moreover, many insurers, assessing their risks, refused to provide services to the Russian tour operators. Companies began to apply to the small and little-known insurance firms. It happened with travel agency Neva, who had to change its solid insurer SOGAS to Vozrozhdenie, but the burden was unsustainable for the insurer, and soon after the suspension of the activities of the Neva, Vozrozhdenie lost its license. A series of bankruptcies, which shocked the market this summer, has a completely unbiased origin - falling demand, expensive funding and poor risk management.



Planes or Trains?



Russian tour operators are burdened with the conditions of cooperation with air carriers, which are regulated by law. Airlines have the right to fine travel agencies for failing to share planned flights at a rate of 60% of its value, and the flight plan is approved in advance. During 2013, tour operators have already negotiated with the airlines about the number of tours in summer 2014. However, the number of tourists fell, and the operators tried to sell vouchers for low prices, in order not to pay the fine. As a result, air carriers and tour operators have lost their customers. 

However, this year was good to aviators. After two years of lobbying a bill on non-return tickets that are 35-40% cheaper than normal, was finally signed. Air companies took up to 21 billion in direct losses because of tickets returned every year. It is also important that the air market is subsidized by the State.

For example, in April 2014, Aeroflot introduced a common fare for economy class tickets for Moscow-Simferopol. Now the trip to Simferopol and back costs 7,500 rubles including taxes and charges. Last summer, the flight was worth 10,000 and more.

The Russian Ministry of Transport has already formulated an amendment to the Charter of railway transport that will reduce the cost of tickets at the expense of their non-return policy. The reserved seat ticket, subsidized from the federal budget, will not be included in the category of non-returnable. It is not yet clear what the benefits of changes to railway workers and tourists will be, as reserved seat tickets are the most popular category. About 70% passengers in Russia travel in the reserved seats.

The State partially compensates the income losses for the railways. In 2014, RUB 23.6 billion was allocated from the budget for these purposes. However, due to the indexation of tariffs, the State should subsidize RUB 29.3 billion. Thus, by the end of the year, a deficit of RUB 5.7 billion will be forthcoming. If you compare the amount of State subsidies for the airline and railway, the figures would be oppressive. In 2013, subsidies for flights to the Far East in the European part of the country and back (33 routes, 22 airports) amounted to RUB 3.55 billion. Railroad transportation was subsidized by RUB 13.6 billion, but the number of routes (and passengers, respectively) is dozens of times greater here (800 routes and 1000 stations).

Rail transport is unprofitable, and in most countries, the State supports rail companies. “When comparing the levels of public funding for this segment, Russia loses out to many developed countries, - says the head of the Research Department of the Transport Institute of problems of natural monopolies (IPEM) Vladimir Savchuk. – Today about RUB 30 billion is allocated for the support of passenger rail transport in Russia. It means 0.4 rubles for 1 km. For comparison, the rate in the USA is 5 rubles for 1 km, in the countries of the European Union and Argentina – 2 rubles per passenger-km.”



Inner Space



According to the official statistics, about 13.2 million people spent their holidays in Russia; more than 75% of the total tourist flow was Russian. In the same period 18.3 million Russian citizens visited foreign countries. It is very likely that this ratio will be changed in 2014. Will it be accompanied by a growing interest in domestic tourism? It is possible, but high prices and the low quality of service are failing to attract customers, and also created a stereotype that holidays in Russia are uncomfortable and expensive. According to the statistics, you needed RUB 29,000 to spend your holidays in Russia in 2013, while a tour to the Mediterranean resorts costs about RUB 21,800. 

Currently, changes in the political environment and the inhibition of the Russian economy, accompanied by the depreciation of the ruble, and the active promotion of domestic resorts are the drivers for internal tourism. “Prices for overseas tours grew, – said the General Director of Russian online tour operator WikiPlanet Sergey Marevskij. -Russian tourist, who used to travel to Turkey for seven days for a thousand euros, now has to pay RUB 50,000.” 

“Demand for Russian tours will grow because of the devaluation of the ruble and the popularity of Sochi after the Olympics,” said the General Director of the tour operator Coral Travel Joshkun Yurt. His company has announced the sales of tours to the resorts of the Krasnodar region. “The region has a unique chance for development, - said J.Yurt – There are excellent hotels. Most of them are well-known brands.”

On the one hand, the development of domestic tourism seems to be promising. With its monuments and huge spaces, Russia has impressive capabilities in this area. According to experts at the World Economic Forum (WEF), the country is ranked fifth in the world for the presence of natural tourism resources and ninth on the list of countries with objects of cultural heritage. On the other hand, Russia took 63rd position in a ranking of 140 countries for the competitiveness of the tourist market in 2013. However, the situation may change. Two years ago, the Government of the Russian Federation approved a federal target program for the development of domestic and inbound tourism in the 2011-2018 period. “This is the first program of its kind that is implemented at State level, – explains Vice President of the Russian Union of travel industry Yuriy Barzykin. – Its main target is the creation and promotion of a competitive tourist product, the development of tourism infrastructure and the creation of additional jobs.” More than RUB 4.6 billion will be spent on this in 2014. 

Depending on the circumstances, transportation can speed up the development of local tourism. “Of course, most tourists visit places located close to the center of the country, – explains Sales Manager of Wiki Planet Leonid Ozolin. – It happens not only because of price, but also because of the time spent on the road”. “If the cost of train tickets to Irkutsk is attractive, demand to visit the Lake will grow, - he says. - The tourists will have already experienced the different quality of travel, thanks to new, more comfortable rail cars. The railway service is being developed, we are improving this product.”

Railway tourism is becoming more and more popular. The RZD-Tour Company (a subsidiary of Federal passenger company, Russian Railways) arranges rail tours in vintage trains to the Tula, Kolomna, Sergiyev Posad, Borodino, Ryazan. The interest for trips on the Trans-Siberian Railway in comfortable luxury trains is growing. In August this year, the company launched a new train “Imperial Russia” on the routes Moscow-Beijing and St Petersburg-Moscow.

Despite all the difficulties, the quality of tourism in Russia is being improved. The best solution would be the creation of routes with competitive prices and levels of service. In this case, the tourists will choose to travel across Russia not only because of the economy, but also due to the interest in the native nature, history and culture.

By Marina Ermolenko
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Moving to the Second Level



The first double-deck train began operation in Russia on the route linking Moscow and Adler in 2013. For this, the Federal Passenger Company bought from Tver Wagon Building Plant (TVZ, the owner is Transmashholding) 50 double-deck wagons. The agreement was signed back in 2010. Such trains are planned to be launched on the routes to St Petersburg, Nizhny Novgorod, Kazan, Ryazan, Samara, Tambov, Saratov, Voronezh, Rostov-on-Don, Adler, Anapa, and Novorossiysk. Also, they can be put into operation to link Rostov with Kislovodsk and St Petersburg with Vologda, Kirov, and Yekaterinburg. The trains will ease the load on some of the most popular routes. Railcars will carry twice as many passengers per trip as compared to ordinary rolling stock. Meanwhile, the cost of a ticket in double-deckers is 22% less than in single-deck trains. 

Depending on class, they are equipped with compartments for two or four passengers. Coaches are equipped with environmentally-friendly toilets, two air conditioning and heating units, allowing maintenance of a comfortable microclimate, and LED lighting, which is important for energy efficiency. 

“Today, design is not just being trendy, but a competitive advantage,” says Vladislav Mironov, Head of Passenger Railcars Department at Transmashholding CJSC. According to him, when designing coaches, a developer must fulfill multiple, and sometimes conflicting requirements. 

“All elements of a railcar and its interior must withstand a five-fold overload. It would be profitable to make them from steel, but it would be inappropriate for passengers. Therefore, super strength plastic with aesthetic and the mandatory fire-safety qualities are used,” explains the expert. Another important requirement is economy. For example, a railcar must be not too expensive, otherwise it will never payback. It must have a long lifetime, be repairable and vandal-resistant, etc. Also, the interior colours should not annoy people travelling in it. Finally, the railcar must be convenient and safe for passengers and railwaymen.       

V. Mironov emphasises that a Russian passenger spends more time on a trip than a European because of the longer distances. That’s where the differences come in. 

“Designers at TVZ pay a lot of attention to passive safety, including elements of the interior, and mechanical durability of car bodies, on which the exterior appearance of a train depends. Due to constant attention to these issues, human lives are saved in accidents,” he added.



Interregional Route



In 2015, the Federal Passenger Company is going to buy another 15 double-deckers with sitting arm chairs for the first, business, and economy classes. The new rolling stock has a unique Italian design – the project was developed by Giugiaro Design (Turin, Italy) in close cooperation with TVZ specialists. Economy class layout implies a 2+2 seats arrangement. Window seat cloth coverings will be orange and aisle seats will have a grey colour. Baggage shelves will be aluminum. Each car will have two vending machines on the lower level for distribution of coffee and light snacks.

Business class has a 2+1 seating layout, the chair covering will be cherry coloured natural leather. Business class chairs will be rotating, so that all passengers have an opportunity to sit in the direction of travel. Baggage shelves in the business class car are designed from toughened tinted glass. The ceiling will integrate low power light-emitting-diode lamps producing the starry arch effect.

Even more comfortable travelling conditions will be maintained in VIP compartments, where a two-seated cozy lounge, folding tables and a large TV screen of a multi-media system are installed.

Such trains have an area for passengers with children and places for disabled people. Trains with new coaches will be used for interregional communication in day time. 

“We choose routes for such rolling stock to move between different regions, to link such regional centres as Tula, Kursk, Orel, and Belgorod with the help of express trains travelling 700 kilometres in 6 hours,” emphasized Mikhail Akulov, CEO of the Federal Passenger Company.

In the Tradition 

of the 19th Century 

Finally, a novelty from the past. Now, new modern trains with conditions equivalent to a hotel will run between Moscow and European cities. Whilst onboard such train-hotels, one can use the Internet, read a book from a free electronic library, and watch a movie in the Wi-Fi cinema. The train is equipped with an “audio guide” system through which passengers get information about attractions en route on the radio and in three languages - Russian, Finnish and English. New railcars produced by Tver Wagon Building Plant and Siemens will be more comfortable than the standard ones: spacious compartments are equipped with large beds with high-quality linens. Railcars have one vestibule less: there are two toilets and a shower unit instead. Design of the dining railcar in the “Leo Tolstoy” train is made in the spirit of the late 19th century, and the menu was expanded by dishes prepared according to old recipes. 

The first train of the new type ran from Moscow to Helsinki, and by autumn it will be possible to travel to Prague, Berlin, Warsaw, Paris, Nice, and Cannes.

By Tatiana Simonova


    [~DETAIL_TEXT] => 
Moving to the Second Level



The first double-deck train began operation in Russia on the route linking Moscow and Adler in 2013. For this, the Federal Passenger Company bought from Tver Wagon Building Plant (TVZ, the owner is Transmashholding) 50 double-deck wagons. The agreement was signed back in 2010. Such trains are planned to be launched on the routes to St Petersburg, Nizhny Novgorod, Kazan, Ryazan, Samara, Tambov, Saratov, Voronezh, Rostov-on-Don, Adler, Anapa, and Novorossiysk. Also, they can be put into operation to link Rostov with Kislovodsk and St Petersburg with Vologda, Kirov, and Yekaterinburg. The trains will ease the load on some of the most popular routes. Railcars will carry twice as many passengers per trip as compared to ordinary rolling stock. Meanwhile, the cost of a ticket in double-deckers is 22% less than in single-deck trains. 

Depending on class, they are equipped with compartments for two or four passengers. Coaches are equipped with environmentally-friendly toilets, two air conditioning and heating units, allowing maintenance of a comfortable microclimate, and LED lighting, which is important for energy efficiency. 

“Today, design is not just being trendy, but a competitive advantage,” says Vladislav Mironov, Head of Passenger Railcars Department at Transmashholding CJSC. According to him, when designing coaches, a developer must fulfill multiple, and sometimes conflicting requirements. 

“All elements of a railcar and its interior must withstand a five-fold overload. It would be profitable to make them from steel, but it would be inappropriate for passengers. Therefore, super strength plastic with aesthetic and the mandatory fire-safety qualities are used,” explains the expert. Another important requirement is economy. For example, a railcar must be not too expensive, otherwise it will never payback. It must have a long lifetime, be repairable and vandal-resistant, etc. Also, the interior colours should not annoy people travelling in it. Finally, the railcar must be convenient and safe for passengers and railwaymen.       

V. Mironov emphasises that a Russian passenger spends more time on a trip than a European because of the longer distances. That’s where the differences come in. 

“Designers at TVZ pay a lot of attention to passive safety, including elements of the interior, and mechanical durability of car bodies, on which the exterior appearance of a train depends. Due to constant attention to these issues, human lives are saved in accidents,” he added.



Interregional Route



In 2015, the Federal Passenger Company is going to buy another 15 double-deckers with sitting arm chairs for the first, business, and economy classes. The new rolling stock has a unique Italian design – the project was developed by Giugiaro Design (Turin, Italy) in close cooperation with TVZ specialists. Economy class layout implies a 2+2 seats arrangement. Window seat cloth coverings will be orange and aisle seats will have a grey colour. Baggage shelves will be aluminum. Each car will have two vending machines on the lower level for distribution of coffee and light snacks.

Business class has a 2+1 seating layout, the chair covering will be cherry coloured natural leather. Business class chairs will be rotating, so that all passengers have an opportunity to sit in the direction of travel. Baggage shelves in the business class car are designed from toughened tinted glass. The ceiling will integrate low power light-emitting-diode lamps producing the starry arch effect.

Even more comfortable travelling conditions will be maintained in VIP compartments, where a two-seated cozy lounge, folding tables and a large TV screen of a multi-media system are installed.

Such trains have an area for passengers with children and places for disabled people. Trains with new coaches will be used for interregional communication in day time. 

“We choose routes for such rolling stock to move between different regions, to link such regional centres as Tula, Kursk, Orel, and Belgorod with the help of express trains travelling 700 kilometres in 6 hours,” emphasized Mikhail Akulov, CEO of the Federal Passenger Company.

In the Tradition 

of the 19th Century 

Finally, a novelty from the past. Now, new modern trains with conditions equivalent to a hotel will run between Moscow and European cities. Whilst onboard such train-hotels, one can use the Internet, read a book from a free electronic library, and watch a movie in the Wi-Fi cinema. The train is equipped with an “audio guide” system through which passengers get information about attractions en route on the radio and in three languages - Russian, Finnish and English. New railcars produced by Tver Wagon Building Plant and Siemens will be more comfortable than the standard ones: spacious compartments are equipped with large beds with high-quality linens. Railcars have one vestibule less: there are two toilets and a shower unit instead. Design of the dining railcar in the “Leo Tolstoy” train is made in the spirit of the late 19th century, and the menu was expanded by dishes prepared according to old recipes. 

The first train of the new type ran from Moscow to Helsinki, and by autumn it will be possible to travel to Prague, Berlin, Warsaw, Paris, Nice, and Cannes.

By Tatiana Simonova


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Moving to the Second Level



The first double-deck train began operation in Russia on the route linking Moscow and Adler in 2013. For this, the Federal Passenger Company bought from Tver Wagon Building Plant (TVZ, the owner is Transmashholding) 50 double-deck wagons. The agreement was signed back in 2010. Such trains are planned to be launched on the routes to St Petersburg, Nizhny Novgorod, Kazan, Ryazan, Samara, Tambov, Saratov, Voronezh, Rostov-on-Don, Adler, Anapa, and Novorossiysk. Also, they can be put into operation to link Rostov with Kislovodsk and St Petersburg with Vologda, Kirov, and Yekaterinburg. The trains will ease the load on some of the most popular routes. Railcars will carry twice as many passengers per trip as compared to ordinary rolling stock. Meanwhile, the cost of a ticket in double-deckers is 22% less than in single-deck trains. 

Depending on class, they are equipped with compartments for two or four passengers. Coaches are equipped with environmentally-friendly toilets, two air conditioning and heating units, allowing maintenance of a comfortable microclimate, and LED lighting, which is important for energy efficiency. 

“Today, design is not just being trendy, but a competitive advantage,” says Vladislav Mironov, Head of Passenger Railcars Department at Transmashholding CJSC. According to him, when designing coaches, a developer must fulfill multiple, and sometimes conflicting requirements. 

“All elements of a railcar and its interior must withstand a five-fold overload. It would be profitable to make them from steel, but it would be inappropriate for passengers. Therefore, super strength plastic with aesthetic and the mandatory fire-safety qualities are used,” explains the expert. Another important requirement is economy. For example, a railcar must be not too expensive, otherwise it will never payback. It must have a long lifetime, be repairable and vandal-resistant, etc. Also, the interior colours should not annoy people travelling in it. Finally, the railcar must be convenient and safe for passengers and railwaymen.       

V. Mironov emphasises that a Russian passenger spends more time on a trip than a European because of the longer distances. That’s where the differences come in. 

“Designers at TVZ pay a lot of attention to passive safety, including elements of the interior, and mechanical durability of car bodies, on which the exterior appearance of a train depends. Due to constant attention to these issues, human lives are saved in accidents,” he added.



Interregional Route



In 2015, the Federal Passenger Company is going to buy another 15 double-deckers with sitting arm chairs for the first, business, and economy classes. The new rolling stock has a unique Italian design – the project was developed by Giugiaro Design (Turin, Italy) in close cooperation with TVZ specialists. Economy class layout implies a 2+2 seats arrangement. Window seat cloth coverings will be orange and aisle seats will have a grey colour. Baggage shelves will be aluminum. Each car will have two vending machines on the lower level for distribution of coffee and light snacks.

Business class has a 2+1 seating layout, the chair covering will be cherry coloured natural leather. Business class chairs will be rotating, so that all passengers have an opportunity to sit in the direction of travel. Baggage shelves in the business class car are designed from toughened tinted glass. The ceiling will integrate low power light-emitting-diode lamps producing the starry arch effect.

Even more comfortable travelling conditions will be maintained in VIP compartments, where a two-seated cozy lounge, folding tables and a large TV screen of a multi-media system are installed.

Such trains have an area for passengers with children and places for disabled people. Trains with new coaches will be used for interregional communication in day time. 

“We choose routes for such rolling stock to move between different regions, to link such regional centres as Tula, Kursk, Orel, and Belgorod with the help of express trains travelling 700 kilometres in 6 hours,” emphasized Mikhail Akulov, CEO of the Federal Passenger Company.

In the Tradition 

of the 19th Century 

Finally, a novelty from the past. Now, new modern trains with conditions equivalent to a hotel will run between Moscow and European cities. Whilst onboard such train-hotels, one can use the Internet, read a book from a free electronic library, and watch a movie in the Wi-Fi cinema. The train is equipped with an “audio guide” system through which passengers get information about attractions en route on the radio and in three languages - Russian, Finnish and English. New railcars produced by Tver Wagon Building Plant and Siemens will be more comfortable than the standard ones: spacious compartments are equipped with large beds with high-quality linens. Railcars have one vestibule less: there are two toilets and a shower unit instead. Design of the dining railcar in the “Leo Tolstoy” train is made in the spirit of the late 19th century, and the menu was expanded by dishes prepared according to old recipes. 

The first train of the new type ran from Moscow to Helsinki, and by autumn it will be possible to travel to Prague, Berlin, Warsaw, Paris, Nice, and Cannes.

By Tatiana Simonova


    [~DETAIL_TEXT] => 
Moving to the Second Level



The first double-deck train began operation in Russia on the route linking Moscow and Adler in 2013. For this, the Federal Passenger Company bought from Tver Wagon Building Plant (TVZ, the owner is Transmashholding) 50 double-deck wagons. The agreement was signed back in 2010. Such trains are planned to be launched on the routes to St Petersburg, Nizhny Novgorod, Kazan, Ryazan, Samara, Tambov, Saratov, Voronezh, Rostov-on-Don, Adler, Anapa, and Novorossiysk. Also, they can be put into operation to link Rostov with Kislovodsk and St Petersburg with Vologda, Kirov, and Yekaterinburg. The trains will ease the load on some of the most popular routes. Railcars will carry twice as many passengers per trip as compared to ordinary rolling stock. Meanwhile, the cost of a ticket in double-deckers is 22% less than in single-deck trains. 

Depending on class, they are equipped with compartments for two or four passengers. Coaches are equipped with environmentally-friendly toilets, two air conditioning and heating units, allowing maintenance of a comfortable microclimate, and LED lighting, which is important for energy efficiency. 

“Today, design is not just being trendy, but a competitive advantage,” says Vladislav Mironov, Head of Passenger Railcars Department at Transmashholding CJSC. According to him, when designing coaches, a developer must fulfill multiple, and sometimes conflicting requirements. 

“All elements of a railcar and its interior must withstand a five-fold overload. It would be profitable to make them from steel, but it would be inappropriate for passengers. Therefore, super strength plastic with aesthetic and the mandatory fire-safety qualities are used,” explains the expert. Another important requirement is economy. For example, a railcar must be not too expensive, otherwise it will never payback. It must have a long lifetime, be repairable and vandal-resistant, etc. Also, the interior colours should not annoy people travelling in it. Finally, the railcar must be convenient and safe for passengers and railwaymen.       

V. Mironov emphasises that a Russian passenger spends more time on a trip than a European because of the longer distances. That’s where the differences come in. 

“Designers at TVZ pay a lot of attention to passive safety, including elements of the interior, and mechanical durability of car bodies, on which the exterior appearance of a train depends. Due to constant attention to these issues, human lives are saved in accidents,” he added.



Interregional Route



In 2015, the Federal Passenger Company is going to buy another 15 double-deckers with sitting arm chairs for the first, business, and economy classes. The new rolling stock has a unique Italian design – the project was developed by Giugiaro Design (Turin, Italy) in close cooperation with TVZ specialists. Economy class layout implies a 2+2 seats arrangement. Window seat cloth coverings will be orange and aisle seats will have a grey colour. Baggage shelves will be aluminum. Each car will have two vending machines on the lower level for distribution of coffee and light snacks.

Business class has a 2+1 seating layout, the chair covering will be cherry coloured natural leather. Business class chairs will be rotating, so that all passengers have an opportunity to sit in the direction of travel. Baggage shelves in the business class car are designed from toughened tinted glass. The ceiling will integrate low power light-emitting-diode lamps producing the starry arch effect.

Even more comfortable travelling conditions will be maintained in VIP compartments, where a two-seated cozy lounge, folding tables and a large TV screen of a multi-media system are installed.

Such trains have an area for passengers with children and places for disabled people. Trains with new coaches will be used for interregional communication in day time. 

“We choose routes for such rolling stock to move between different regions, to link such regional centres as Tula, Kursk, Orel, and Belgorod with the help of express trains travelling 700 kilometres in 6 hours,” emphasized Mikhail Akulov, CEO of the Federal Passenger Company.

In the Tradition 

of the 19th Century 

Finally, a novelty from the past. Now, new modern trains with conditions equivalent to a hotel will run between Moscow and European cities. Whilst onboard such train-hotels, one can use the Internet, read a book from a free electronic library, and watch a movie in the Wi-Fi cinema. The train is equipped with an “audio guide” system through which passengers get information about attractions en route on the radio and in three languages - Russian, Finnish and English. New railcars produced by Tver Wagon Building Plant and Siemens will be more comfortable than the standard ones: spacious compartments are equipped with large beds with high-quality linens. Railcars have one vestibule less: there are two toilets and a shower unit instead. Design of the dining railcar in the “Leo Tolstoy” train is made in the spirit of the late 19th century, and the menu was expanded by dishes prepared according to old recipes. 

The first train of the new type ran from Moscow to Helsinki, and by autumn it will be possible to travel to Prague, Berlin, Warsaw, Paris, Nice, and Cannes.

By Tatiana Simonova


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The State Promised to Support the Far East



Investment during the first phase of the reconstruction of the Trans-Siberian and Baikal-Amur Mainlines (the Transsib and the BAM) was supposed to exceed RUB 580 billion, of which RUB 260.2 billion – was public investment, and the rest – investment by RZD. The cost of the works is estimated at RUB 1.6 trillion up to 2020. Work is under way already to modernise 564 infrastructure facilities on the East-Siberian, Zabaikal, and Far Eastern Railways.

Experts consider the modernisation of the Transsib and the BAM as a new step in the development of the entire Russian railway network. According to Vladimir Yakunin, President of RZD, they must significantly expand the carrying capacity of RZD for the export of raw materials to the Asia-Pacific markets as well as for Eurasian transit. The potential volume of containerised cargo carried in Eurasian trade that can be attracted to the East-West international transport corridor by 2020 may reach 1 million TEU. The Trans-Siberian Railway is a part of that corridor, which is an alternative to the sea route from Asia to Europe. 

Statistics show how popular these two mainlines are. In the 1970s the share of the Eastern part of the railway network was 11.5% of the total cargo turnover of Russian railways, and in 2013 it reached 24.4%. In other words, this figure more than doubled in this period of time. In the future, that growth could accelerate. Sergey Aristov, Deputy Minister of Transport of the Russian Federation, suggests that the transportation volume on the BAM destined for Far Eastern ports could increase by 40-45% by 2020. In this case, the overall share of the Eastern part of the network (taking into account the dynamics of the Trans-Siberian Railway) will increase by 10%-140% by 2020 as compared to 2013. The figure was calculated in accordance with development scenarios, which will be determined primarily by the implementation of plans for the development of mineral deposits in the Far East and Siberian federal districts of Russia.

For Russia, the development of the BAM and the Transsib are considered to be not only transport projects. Figuratively speaking, the modernisation of the two mainlines in Siberia creates the prerequisites for the creation of a national transport and technological hub, where enormous resources will be accumulated and distributed. 

You could say it is the creation of a kind of settlement-industrial band near the modernised railway infrastructure. If it is formed as separate units integrated with each other, then the investment will be distributed on separate projects at first, and then they can be consolidated into a single strategic programme. In this case, the comprehensive development of the railway infrastructure in the Far East of Russia can be considered as a tool for the strategic planning of regional development. 

“Russia is ready to implement such megaprojects. The efficiency of the megaproject approach at this stage of national development was recently demonstrated at the Olympic Games in Sochi, where the infrastructure of the whole city and a complex of world-class sports facilities were created practically from scratch. And it took just seven years,” says Vladimir Yakunin, President of RZD.

The idea of a harmonised development of the transport and industrial infrastructure in the Far East was called the Trans-Eurasian Corridor “Razvitie” (TEPR). This megaproject allows a number of major objectives to be met. For example, to contribute to reducing modern Russia’s economic reliance on a raw material export economy and encouraging a re-industrialisation model. 

Traditionally, infrastructure development was considered as a support mechanism for the implementation of industrial policy and business. On the contrary, in this case, due to the rapid development of the infrastructure, an ambitious goal has been set: to attract new technologies to the regions. Therefore, V. Yakunin concludes, TEPR is not just a project to develop transit railways or areas where raw material deposits are developed, but also a project for creating next-generation infrastructure.



It is Difficult to Overcome Inertia



Recently, a similar approach to the development of the Eastern part of RZD caused debates. An attempt was made to return to traditional patterns of development and to reallocate public investment accordingly. Alexander Galushka, Minister for the Development of the Far East, offered at a meeting in Yakutsk to develop industrial infrastructure first and to give a lower priority to the transport infrastructure.

For that, according to the Minister for the Development of the Far East, priority investment projects were created as well as projects in the so-called advanced development areas in the region, which were supposed to be supported at the expense of switching funds from the reconstruction projects on the BAM and the Transsib in 2015-2017 in favor of such programmes. An alternative scheme of financing from the state budget was proposed. According to it, additional funds for the development of transport systems were to be allocated in 2017. 

The RF Ministry of Transport spoke out against this idea. A representative of the Ministry said that the Ministry for the Development of the Far East proposed to develop cargo-generating zones first, and then – the mainline infrastructure. This approach, however, did not take into account that the BAM and the Transsib would not be able to service the volume of cargo, which would appear as a result of a number of projects. 

V. Yakunin, President of RZD, also confirmed that this additional 55.3 million ton capacity on the railway, which would be created after the modernisation of the BAM and the Transsib is targeted at servicing freight flows primarily from the Far Eastern Federal District. In addition, it will be impossible to carry out projects for increasing the capacity of Russian Far Eastern ports without the development of the Eastern part of the network. Finally, plans for the modernisation of the Transsib and the BAM are based on applications from consignors, according to a conservative scenario for the development of plants. This is the minimum level of carrying capacity to be added.

“The investment project, which has already been approved, is a balanced financial model. It cannot be cut,” says V. Yakunin. “Otherwise, RZD will never be able to reach goals set for the company. The synergetic effect, envisaged by the project of the modernisation of the Transsib and the BAM, will also decrease.”

“I would like to emphasise that investment projects by cargo owners, whose freight is planned to be transported on the BAM and the Transsib, were indirectly audited as well. Among them, there are companies from the Far East,” says V. Savchuk. All of them were interested in the rapid modernisation of the Eastern part of the railway network. This means if the modernisation is delayed, Russia will face significant strategic infrastructure limitations for Russian exports to the Asia-Pacific region in the near future.

“Therefore, it seems appropriate to carry out the existing project for the BAM and Transsib modernisation in its planned scope and quickly, and to begin designing the next phase of the project, envisaging an assessment of the additional cargo base, design and investment decisions,” notes V. Savchuk. 

Thus, experts considered it inappropriate from both economic and social viewpoints to delay the project of the BAM and the Transsib modernisation. In accordance with the approved programme, the construction of the second branch line of the BAM has commenced. ®

By Alexander Solntsev



viewpoint

Vladimir Yakunin,

President of Russian Railways JSC

– Russia’s economic development, like that of any other country, should always be related to not only the dynamics of its gross domestic product, but also to the benefits to its whole society and to specific social groups. The project is very important for Russia because it is important for the country to develop cargo transportation to/from the European states and the countries of Asia-Pacific. Therefore, in our work jointly with Gennady Osipov, Director of the Institute for Socio-Political Research at the Russian Academy of Sciences (RAS), and Viktor Sadovnichy, Rector of the Moscow State University, we proposed the concept of such a transformation of the existing transport corridor, which would not just modernise the railway, but would allow the creation of a new integrated strategic base for the future development of Russia.



Fyodor Pekhterev,

CEO of the Institute of Economy and Transport Development (IEDT)

– As for the synergetic effect from the railway project, the payback period on the public investment in the projects of the BAM and the Transsib reconstruction is estimated at 20 years. During this time RZD will return to the state the money from the National Welfare Fund (RUB 150 billion) and compensate for the direct public investment (RUB 110.2 billion). Additionally, the Fund will continue to receive dividends on preferred shares in RZD and after this period the annual dividend according to the approved 2.98% rate of return will be RUB 4.47 billion annually. As follows from the research made by IEDT, the full reconstruction of BAM and the Transsib will add RUB 486 billion to the budget of the Russian Federation over 30 years. 


    [~DETAIL_TEXT] => 
The State Promised to Support the Far East



Investment during the first phase of the reconstruction of the Trans-Siberian and Baikal-Amur Mainlines (the Transsib and the BAM) was supposed to exceed RUB 580 billion, of which RUB 260.2 billion – was public investment, and the rest – investment by RZD. The cost of the works is estimated at RUB 1.6 trillion up to 2020. Work is under way already to modernise 564 infrastructure facilities on the East-Siberian, Zabaikal, and Far Eastern Railways.

Experts consider the modernisation of the Transsib and the BAM as a new step in the development of the entire Russian railway network. According to Vladimir Yakunin, President of RZD, they must significantly expand the carrying capacity of RZD for the export of raw materials to the Asia-Pacific markets as well as for Eurasian transit. The potential volume of containerised cargo carried in Eurasian trade that can be attracted to the East-West international transport corridor by 2020 may reach 1 million TEU. The Trans-Siberian Railway is a part of that corridor, which is an alternative to the sea route from Asia to Europe. 

Statistics show how popular these two mainlines are. In the 1970s the share of the Eastern part of the railway network was 11.5% of the total cargo turnover of Russian railways, and in 2013 it reached 24.4%. In other words, this figure more than doubled in this period of time. In the future, that growth could accelerate. Sergey Aristov, Deputy Minister of Transport of the Russian Federation, suggests that the transportation volume on the BAM destined for Far Eastern ports could increase by 40-45% by 2020. In this case, the overall share of the Eastern part of the network (taking into account the dynamics of the Trans-Siberian Railway) will increase by 10%-140% by 2020 as compared to 2013. The figure was calculated in accordance with development scenarios, which will be determined primarily by the implementation of plans for the development of mineral deposits in the Far East and Siberian federal districts of Russia.

For Russia, the development of the BAM and the Transsib are considered to be not only transport projects. Figuratively speaking, the modernisation of the two mainlines in Siberia creates the prerequisites for the creation of a national transport and technological hub, where enormous resources will be accumulated and distributed. 

You could say it is the creation of a kind of settlement-industrial band near the modernised railway infrastructure. If it is formed as separate units integrated with each other, then the investment will be distributed on separate projects at first, and then they can be consolidated into a single strategic programme. In this case, the comprehensive development of the railway infrastructure in the Far East of Russia can be considered as a tool for the strategic planning of regional development. 

“Russia is ready to implement such megaprojects. The efficiency of the megaproject approach at this stage of national development was recently demonstrated at the Olympic Games in Sochi, where the infrastructure of the whole city and a complex of world-class sports facilities were created practically from scratch. And it took just seven years,” says Vladimir Yakunin, President of RZD.

The idea of a harmonised development of the transport and industrial infrastructure in the Far East was called the Trans-Eurasian Corridor “Razvitie” (TEPR). This megaproject allows a number of major objectives to be met. For example, to contribute to reducing modern Russia’s economic reliance on a raw material export economy and encouraging a re-industrialisation model. 

Traditionally, infrastructure development was considered as a support mechanism for the implementation of industrial policy and business. On the contrary, in this case, due to the rapid development of the infrastructure, an ambitious goal has been set: to attract new technologies to the regions. Therefore, V. Yakunin concludes, TEPR is not just a project to develop transit railways or areas where raw material deposits are developed, but also a project for creating next-generation infrastructure.



It is Difficult to Overcome Inertia



Recently, a similar approach to the development of the Eastern part of RZD caused debates. An attempt was made to return to traditional patterns of development and to reallocate public investment accordingly. Alexander Galushka, Minister for the Development of the Far East, offered at a meeting in Yakutsk to develop industrial infrastructure first and to give a lower priority to the transport infrastructure.

For that, according to the Minister for the Development of the Far East, priority investment projects were created as well as projects in the so-called advanced development areas in the region, which were supposed to be supported at the expense of switching funds from the reconstruction projects on the BAM and the Transsib in 2015-2017 in favor of such programmes. An alternative scheme of financing from the state budget was proposed. According to it, additional funds for the development of transport systems were to be allocated in 2017. 

The RF Ministry of Transport spoke out against this idea. A representative of the Ministry said that the Ministry for the Development of the Far East proposed to develop cargo-generating zones first, and then – the mainline infrastructure. This approach, however, did not take into account that the BAM and the Transsib would not be able to service the volume of cargo, which would appear as a result of a number of projects. 

V. Yakunin, President of RZD, also confirmed that this additional 55.3 million ton capacity on the railway, which would be created after the modernisation of the BAM and the Transsib is targeted at servicing freight flows primarily from the Far Eastern Federal District. In addition, it will be impossible to carry out projects for increasing the capacity of Russian Far Eastern ports without the development of the Eastern part of the network. Finally, plans for the modernisation of the Transsib and the BAM are based on applications from consignors, according to a conservative scenario for the development of plants. This is the minimum level of carrying capacity to be added.

“The investment project, which has already been approved, is a balanced financial model. It cannot be cut,” says V. Yakunin. “Otherwise, RZD will never be able to reach goals set for the company. The synergetic effect, envisaged by the project of the modernisation of the Transsib and the BAM, will also decrease.”

“I would like to emphasise that investment projects by cargo owners, whose freight is planned to be transported on the BAM and the Transsib, were indirectly audited as well. Among them, there are companies from the Far East,” says V. Savchuk. All of them were interested in the rapid modernisation of the Eastern part of the railway network. This means if the modernisation is delayed, Russia will face significant strategic infrastructure limitations for Russian exports to the Asia-Pacific region in the near future.

“Therefore, it seems appropriate to carry out the existing project for the BAM and Transsib modernisation in its planned scope and quickly, and to begin designing the next phase of the project, envisaging an assessment of the additional cargo base, design and investment decisions,” notes V. Savchuk. 

Thus, experts considered it inappropriate from both economic and social viewpoints to delay the project of the BAM and the Transsib modernisation. In accordance with the approved programme, the construction of the second branch line of the BAM has commenced. ®

By Alexander Solntsev



viewpoint

Vladimir Yakunin,

President of Russian Railways JSC

– Russia’s economic development, like that of any other country, should always be related to not only the dynamics of its gross domestic product, but also to the benefits to its whole society and to specific social groups. The project is very important for Russia because it is important for the country to develop cargo transportation to/from the European states and the countries of Asia-Pacific. Therefore, in our work jointly with Gennady Osipov, Director of the Institute for Socio-Political Research at the Russian Academy of Sciences (RAS), and Viktor Sadovnichy, Rector of the Moscow State University, we proposed the concept of such a transformation of the existing transport corridor, which would not just modernise the railway, but would allow the creation of a new integrated strategic base for the future development of Russia.



Fyodor Pekhterev,

CEO of the Institute of Economy and Transport Development (IEDT)

– As for the synergetic effect from the railway project, the payback period on the public investment in the projects of the BAM and the Transsib reconstruction is estimated at 20 years. During this time RZD will return to the state the money from the National Welfare Fund (RUB 150 billion) and compensate for the direct public investment (RUB 110.2 billion). Additionally, the Fund will continue to receive dividends on preferred shares in RZD and after this period the annual dividend according to the approved 2.98% rate of return will be RUB 4.47 billion annually. As follows from the research made by IEDT, the full reconstruction of BAM and the Transsib will add RUB 486 billion to the budget of the Russian Federation over 30 years. 


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A set of measures has been developed to provide transportation of significant cargo volumes through the Baikal-Amur and Trans-Siberian Mainlines. 

On the one hand, it must remove the limitations of the carrying capacity of these railways; on the other hand, it must create conditions for the further social and economic development of the Far East. 

Will Russia be able to implement such a megaproject?
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On the one hand, it must remove the limitations of the carrying capacity of these railways; on the other hand, it must create conditions for the further social and economic development of the Far East. 

Will Russia be able to implement such a megaproject?
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The State Promised to Support the Far East



Investment during the first phase of the reconstruction of the Trans-Siberian and Baikal-Amur Mainlines (the Transsib and the BAM) was supposed to exceed RUB 580 billion, of which RUB 260.2 billion – was public investment, and the rest – investment by RZD. The cost of the works is estimated at RUB 1.6 trillion up to 2020. Work is under way already to modernise 564 infrastructure facilities on the East-Siberian, Zabaikal, and Far Eastern Railways.

Experts consider the modernisation of the Transsib and the BAM as a new step in the development of the entire Russian railway network. According to Vladimir Yakunin, President of RZD, they must significantly expand the carrying capacity of RZD for the export of raw materials to the Asia-Pacific markets as well as for Eurasian transit. The potential volume of containerised cargo carried in Eurasian trade that can be attracted to the East-West international transport corridor by 2020 may reach 1 million TEU. The Trans-Siberian Railway is a part of that corridor, which is an alternative to the sea route from Asia to Europe. 

Statistics show how popular these two mainlines are. In the 1970s the share of the Eastern part of the railway network was 11.5% of the total cargo turnover of Russian railways, and in 2013 it reached 24.4%. In other words, this figure more than doubled in this period of time. In the future, that growth could accelerate. Sergey Aristov, Deputy Minister of Transport of the Russian Federation, suggests that the transportation volume on the BAM destined for Far Eastern ports could increase by 40-45% by 2020. In this case, the overall share of the Eastern part of the network (taking into account the dynamics of the Trans-Siberian Railway) will increase by 10%-140% by 2020 as compared to 2013. The figure was calculated in accordance with development scenarios, which will be determined primarily by the implementation of plans for the development of mineral deposits in the Far East and Siberian federal districts of Russia.

For Russia, the development of the BAM and the Transsib are considered to be not only transport projects. Figuratively speaking, the modernisation of the two mainlines in Siberia creates the prerequisites for the creation of a national transport and technological hub, where enormous resources will be accumulated and distributed. 

You could say it is the creation of a kind of settlement-industrial band near the modernised railway infrastructure. If it is formed as separate units integrated with each other, then the investment will be distributed on separate projects at first, and then they can be consolidated into a single strategic programme. In this case, the comprehensive development of the railway infrastructure in the Far East of Russia can be considered as a tool for the strategic planning of regional development. 

“Russia is ready to implement such megaprojects. The efficiency of the megaproject approach at this stage of national development was recently demonstrated at the Olympic Games in Sochi, where the infrastructure of the whole city and a complex of world-class sports facilities were created practically from scratch. And it took just seven years,” says Vladimir Yakunin, President of RZD.

The idea of a harmonised development of the transport and industrial infrastructure in the Far East was called the Trans-Eurasian Corridor “Razvitie” (TEPR). This megaproject allows a number of major objectives to be met. For example, to contribute to reducing modern Russia’s economic reliance on a raw material export economy and encouraging a re-industrialisation model. 

Traditionally, infrastructure development was considered as a support mechanism for the implementation of industrial policy and business. On the contrary, in this case, due to the rapid development of the infrastructure, an ambitious goal has been set: to attract new technologies to the regions. Therefore, V. Yakunin concludes, TEPR is not just a project to develop transit railways or areas where raw material deposits are developed, but also a project for creating next-generation infrastructure.



It is Difficult to Overcome Inertia



Recently, a similar approach to the development of the Eastern part of RZD caused debates. An attempt was made to return to traditional patterns of development and to reallocate public investment accordingly. Alexander Galushka, Minister for the Development of the Far East, offered at a meeting in Yakutsk to develop industrial infrastructure first and to give a lower priority to the transport infrastructure.

For that, according to the Minister for the Development of the Far East, priority investment projects were created as well as projects in the so-called advanced development areas in the region, which were supposed to be supported at the expense of switching funds from the reconstruction projects on the BAM and the Transsib in 2015-2017 in favor of such programmes. An alternative scheme of financing from the state budget was proposed. According to it, additional funds for the development of transport systems were to be allocated in 2017. 

The RF Ministry of Transport spoke out against this idea. A representative of the Ministry said that the Ministry for the Development of the Far East proposed to develop cargo-generating zones first, and then – the mainline infrastructure. This approach, however, did not take into account that the BAM and the Transsib would not be able to service the volume of cargo, which would appear as a result of a number of projects. 

V. Yakunin, President of RZD, also confirmed that this additional 55.3 million ton capacity on the railway, which would be created after the modernisation of the BAM and the Transsib is targeted at servicing freight flows primarily from the Far Eastern Federal District. In addition, it will be impossible to carry out projects for increasing the capacity of Russian Far Eastern ports without the development of the Eastern part of the network. Finally, plans for the modernisation of the Transsib and the BAM are based on applications from consignors, according to a conservative scenario for the development of plants. This is the minimum level of carrying capacity to be added.

“The investment project, which has already been approved, is a balanced financial model. It cannot be cut,” says V. Yakunin. “Otherwise, RZD will never be able to reach goals set for the company. The synergetic effect, envisaged by the project of the modernisation of the Transsib and the BAM, will also decrease.”

“I would like to emphasise that investment projects by cargo owners, whose freight is planned to be transported on the BAM and the Transsib, were indirectly audited as well. Among them, there are companies from the Far East,” says V. Savchuk. All of them were interested in the rapid modernisation of the Eastern part of the railway network. This means if the modernisation is delayed, Russia will face significant strategic infrastructure limitations for Russian exports to the Asia-Pacific region in the near future.

“Therefore, it seems appropriate to carry out the existing project for the BAM and Transsib modernisation in its planned scope and quickly, and to begin designing the next phase of the project, envisaging an assessment of the additional cargo base, design and investment decisions,” notes V. Savchuk. 

Thus, experts considered it inappropriate from both economic and social viewpoints to delay the project of the BAM and the Transsib modernisation. In accordance with the approved programme, the construction of the second branch line of the BAM has commenced. ®

By Alexander Solntsev



viewpoint

Vladimir Yakunin,

President of Russian Railways JSC

– Russia’s economic development, like that of any other country, should always be related to not only the dynamics of its gross domestic product, but also to the benefits to its whole society and to specific social groups. The project is very important for Russia because it is important for the country to develop cargo transportation to/from the European states and the countries of Asia-Pacific. Therefore, in our work jointly with Gennady Osipov, Director of the Institute for Socio-Political Research at the Russian Academy of Sciences (RAS), and Viktor Sadovnichy, Rector of the Moscow State University, we proposed the concept of such a transformation of the existing transport corridor, which would not just modernise the railway, but would allow the creation of a new integrated strategic base for the future development of Russia.



Fyodor Pekhterev,

CEO of the Institute of Economy and Transport Development (IEDT)

– As for the synergetic effect from the railway project, the payback period on the public investment in the projects of the BAM and the Transsib reconstruction is estimated at 20 years. During this time RZD will return to the state the money from the National Welfare Fund (RUB 150 billion) and compensate for the direct public investment (RUB 110.2 billion). Additionally, the Fund will continue to receive dividends on preferred shares in RZD and after this period the annual dividend according to the approved 2.98% rate of return will be RUB 4.47 billion annually. As follows from the research made by IEDT, the full reconstruction of BAM and the Transsib will add RUB 486 billion to the budget of the Russian Federation over 30 years. 


    [~DETAIL_TEXT] => 
The State Promised to Support the Far East



Investment during the first phase of the reconstruction of the Trans-Siberian and Baikal-Amur Mainlines (the Transsib and the BAM) was supposed to exceed RUB 580 billion, of which RUB 260.2 billion – was public investment, and the rest – investment by RZD. The cost of the works is estimated at RUB 1.6 trillion up to 2020. Work is under way already to modernise 564 infrastructure facilities on the East-Siberian, Zabaikal, and Far Eastern Railways.

Experts consider the modernisation of the Transsib and the BAM as a new step in the development of the entire Russian railway network. According to Vladimir Yakunin, President of RZD, they must significantly expand the carrying capacity of RZD for the export of raw materials to the Asia-Pacific markets as well as for Eurasian transit. The potential volume of containerised cargo carried in Eurasian trade that can be attracted to the East-West international transport corridor by 2020 may reach 1 million TEU. The Trans-Siberian Railway is a part of that corridor, which is an alternative to the sea route from Asia to Europe. 

Statistics show how popular these two mainlines are. In the 1970s the share of the Eastern part of the railway network was 11.5% of the total cargo turnover of Russian railways, and in 2013 it reached 24.4%. In other words, this figure more than doubled in this period of time. In the future, that growth could accelerate. Sergey Aristov, Deputy Minister of Transport of the Russian Federation, suggests that the transportation volume on the BAM destined for Far Eastern ports could increase by 40-45% by 2020. In this case, the overall share of the Eastern part of the network (taking into account the dynamics of the Trans-Siberian Railway) will increase by 10%-140% by 2020 as compared to 2013. The figure was calculated in accordance with development scenarios, which will be determined primarily by the implementation of plans for the development of mineral deposits in the Far East and Siberian federal districts of Russia.

For Russia, the development of the BAM and the Transsib are considered to be not only transport projects. Figuratively speaking, the modernisation of the two mainlines in Siberia creates the prerequisites for the creation of a national transport and technological hub, where enormous resources will be accumulated and distributed. 

You could say it is the creation of a kind of settlement-industrial band near the modernised railway infrastructure. If it is formed as separate units integrated with each other, then the investment will be distributed on separate projects at first, and then they can be consolidated into a single strategic programme. In this case, the comprehensive development of the railway infrastructure in the Far East of Russia can be considered as a tool for the strategic planning of regional development. 

“Russia is ready to implement such megaprojects. The efficiency of the megaproject approach at this stage of national development was recently demonstrated at the Olympic Games in Sochi, where the infrastructure of the whole city and a complex of world-class sports facilities were created practically from scratch. And it took just seven years,” says Vladimir Yakunin, President of RZD.

The idea of a harmonised development of the transport and industrial infrastructure in the Far East was called the Trans-Eurasian Corridor “Razvitie” (TEPR). This megaproject allows a number of major objectives to be met. For example, to contribute to reducing modern Russia’s economic reliance on a raw material export economy and encouraging a re-industrialisation model. 

Traditionally, infrastructure development was considered as a support mechanism for the implementation of industrial policy and business. On the contrary, in this case, due to the rapid development of the infrastructure, an ambitious goal has been set: to attract new technologies to the regions. Therefore, V. Yakunin concludes, TEPR is not just a project to develop transit railways or areas where raw material deposits are developed, but also a project for creating next-generation infrastructure.



It is Difficult to Overcome Inertia



Recently, a similar approach to the development of the Eastern part of RZD caused debates. An attempt was made to return to traditional patterns of development and to reallocate public investment accordingly. Alexander Galushka, Minister for the Development of the Far East, offered at a meeting in Yakutsk to develop industrial infrastructure first and to give a lower priority to the transport infrastructure.

For that, according to the Minister for the Development of the Far East, priority investment projects were created as well as projects in the so-called advanced development areas in the region, which were supposed to be supported at the expense of switching funds from the reconstruction projects on the BAM and the Transsib in 2015-2017 in favor of such programmes. An alternative scheme of financing from the state budget was proposed. According to it, additional funds for the development of transport systems were to be allocated in 2017. 

The RF Ministry of Transport spoke out against this idea. A representative of the Ministry said that the Ministry for the Development of the Far East proposed to develop cargo-generating zones first, and then – the mainline infrastructure. This approach, however, did not take into account that the BAM and the Transsib would not be able to service the volume of cargo, which would appear as a result of a number of projects. 

V. Yakunin, President of RZD, also confirmed that this additional 55.3 million ton capacity on the railway, which would be created after the modernisation of the BAM and the Transsib is targeted at servicing freight flows primarily from the Far Eastern Federal District. In addition, it will be impossible to carry out projects for increasing the capacity of Russian Far Eastern ports without the development of the Eastern part of the network. Finally, plans for the modernisation of the Transsib and the BAM are based on applications from consignors, according to a conservative scenario for the development of plants. This is the minimum level of carrying capacity to be added.

“The investment project, which has already been approved, is a balanced financial model. It cannot be cut,” says V. Yakunin. “Otherwise, RZD will never be able to reach goals set for the company. The synergetic effect, envisaged by the project of the modernisation of the Transsib and the BAM, will also decrease.”

“I would like to emphasise that investment projects by cargo owners, whose freight is planned to be transported on the BAM and the Transsib, were indirectly audited as well. Among them, there are companies from the Far East,” says V. Savchuk. All of them were interested in the rapid modernisation of the Eastern part of the railway network. This means if the modernisation is delayed, Russia will face significant strategic infrastructure limitations for Russian exports to the Asia-Pacific region in the near future.

“Therefore, it seems appropriate to carry out the existing project for the BAM and Transsib modernisation in its planned scope and quickly, and to begin designing the next phase of the project, envisaging an assessment of the additional cargo base, design and investment decisions,” notes V. Savchuk. 

Thus, experts considered it inappropriate from both economic and social viewpoints to delay the project of the BAM and the Transsib modernisation. In accordance with the approved programme, the construction of the second branch line of the BAM has commenced. ®

By Alexander Solntsev



viewpoint

Vladimir Yakunin,

President of Russian Railways JSC

– Russia’s economic development, like that of any other country, should always be related to not only the dynamics of its gross domestic product, but also to the benefits to its whole society and to specific social groups. The project is very important for Russia because it is important for the country to develop cargo transportation to/from the European states and the countries of Asia-Pacific. Therefore, in our work jointly with Gennady Osipov, Director of the Institute for Socio-Political Research at the Russian Academy of Sciences (RAS), and Viktor Sadovnichy, Rector of the Moscow State University, we proposed the concept of such a transformation of the existing transport corridor, which would not just modernise the railway, but would allow the creation of a new integrated strategic base for the future development of Russia.



Fyodor Pekhterev,

CEO of the Institute of Economy and Transport Development (IEDT)

– As for the synergetic effect from the railway project, the payback period on the public investment in the projects of the BAM and the Transsib reconstruction is estimated at 20 years. During this time RZD will return to the state the money from the National Welfare Fund (RUB 150 billion) and compensate for the direct public investment (RUB 110.2 billion). Additionally, the Fund will continue to receive dividends on preferred shares in RZD and after this period the annual dividend according to the approved 2.98% rate of return will be RUB 4.47 billion annually. As follows from the research made by IEDT, the full reconstruction of BAM and the Transsib will add RUB 486 billion to the budget of the Russian Federation over 30 years. 


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Conveniently Packed Cargoes



According to the Council for Railway Transport of CIS Member States, container transportation in 2014 showed mainly a positive trend on the 1520 space. In particular, transportation of goods in containers in the first quarter of 2014 amounted to 7.2 million tons, 20% more than in the same period of 2013. In the second quarter, according to preliminary data, this growth slowed, but the level remained still high – about 18%. 

Such a positive trend was created by expanding the range of goods transported in containers. Consignors dispatched such cargoes as chemicals and soda, paper, metalware, sawn wood, and automobiles in containers. These cargoes are more suitable for containerisation. In 2014, a variety of packaged goods, components, and products in big bags and soft inserts - in particular, grain and liquid non-hazardous cargo – were added to this list.

The turnover of a large-capacity container amounted to 19.3 days, 0.6 days less than in 2013. As a reminder, container turnover reduced by 0.7 days in 2013 in comparison with 2012. So, the result is good.

On the whole, the railway network has operated with a surplus of rolling stock in recent years, which has a negative effect on the management and performance of freight wagons. Accordingly containers on trains, dispatched in readiness, could be carried on the railway network of the 1520 space longer than usual. Nevertheless, the total container turnover remained positive for the second year. This was due to the increased volume of cargo carried by container trains. In this regard, the Council for Railway Transport of CIS Member States pay great attention to developments in this sector of the market. 

According to Vladimir Yakunin, President of RZD, railways on the 1520 space aim at attracting additional volumes of cargo for transportation by container trains and enhancing the route network. Additionally, it is planned to continue to implement a number of measures to remove administrative barriers in their way. For that, operational and information technologies should be developed.

In 2014, in the opinion of V. Yakunin, a major step forward was taken in this direction due to the development of the Information and Computing Centre of Railway Administrations (ITC RA) of the Council for Railway Transport of CIS Member States. A database created at interstate level allowed the solution of a number of problems associated with international transportation and operation of rolling stock. In particular, a consolidated number list for the wagon fleet of railway administrations was implemented; the system for calculating payments for the use of freight railcars and containers of other states was improved. In addition, the control over fulfillment of the requirements of the regime for urgent return of freight cars and the control of the quality of scheduled repair of railcars were automated, which actually helped accelerate the turnover of containers. 

“The success of ITC RA is shared by all railway administrations, which provided full assistance and support at all stages of creation and development,” said V. Yakunin.



More Services



More than 15 million tons of cargo was loaded into containers on the Russian railway network in 9 months in 2014, 11% more in comparison with the previous year. In TEU, however, the increase was about 7%. Nevertheless, the matters were better than in 2013, when containerised cargo transportation by railway increased by only 3% to 2.1 million TEU. 

The growth in 2014 was achieved thanks to an increase in Russian exports (+ 12.2%). Also, the volume of domestic transportation (+ 11.1%) and transit (+ 8.5%) increased. Due to the specifics of tariff formation on the RZD network, transportation of containers was most profitable if the transportation distance was more than 1,500 km.

According to Alexander Slobodyanik, Leading Expert Analyst at the Cargo Transportation Research Department at the Institute of Natural Monopolies (IPEM), the positive trend in the sector of container transportation in Russia is caused not only by additional volumes of cargo carried by container trains, but by better qualitative indicators of operations on Russian Railways. 

Container volumes were significantly affected by US and EU sanctions imposed against the Russian Federation, and retaliatory measures. It was noticeable in the summer of 2014: the rate of increase in transportation significantly reduced. There was a 12.8% increase in loading volumes in the first half of 2014 in comparison with the same period of the previous year, but the figure in January-September was 11.5%. In other words, the rate of transportation growth fell by 1.3 percentage points. This was mainly due to a decline in imports. First of all, it caused a decrease in imports of containerised foodstuffs, which had an especially negative impact on transportation in refrigerated containers. Imports of equipment and industrial products from the EU reduced too.

In addition, according to analysts at Sanna, the Russian market turned out to be over-saturated with durable goods in 2014. Therefore, growth in demand for such goods is not expected even by the end of the year. Many industrial enterprises slowed down their investment programs and, accordingly, the purchase of equipment; and retailers reduced the volume of purchases of consumer goods. So, the growth of container transportation in Russia is unlikely to recover. Indeed, it may continue to decline. 

Especially if one takes into account that logistics companies’ and freight forwarders’ financial risks associated with non-payment of services have increased. In 2007, for example, 90% of customers paid within 1-5 days upon receipt of the invoice, and the share of such payments reduced to 70% in 2010, and now their share is about 50%. 

According to Fitch, the weak situation in the Russian market and the decline in revenues of companies can negatively impact the financial stability of a number of Russian railway operators by the end of 2014. It is not surprising that they are now looking for ways to optimise their costs. Possible solutions in this sector are the development of related services and improvement of the logistics of cargo consignments in container trains.

In particular, one of the largest market players, TransContainer JSC expanded its online service, using which, a customer can place an order, calculate its price, and trace the progress of cargo transportation in container trains from Moscow to a number of stations. In addition, TransContainer launched 14 new container trains in the first half of 2014. In July and August, container trains made their pilot trips from St Petersburg to Khabarovsk and Nakhodka, and reached their destination stations in 10 and 9 days respectively. 

The “Transsib in 7 Days” project develops actively. In the first half of 2014, 234 fast trains or more than 10,000 loaded wagons were sent from stations on the Far Eastern Railway only. The route speed of such trains exceeds 1,100 km/day. (for the sake of comparison, the speed of ordinary trains on the same route in no more than 850 km/day).

The number of container trains dispatched from the terminal of Vostochnaya Stevedoring Company (a part of Global Ports) increased by 20% – 361 trains were sent from it in six months, of which 142 were destined for the CIS and Europe (+31%). Also, the company expanded the amount of dispatches from Moscow to Novosibirsk and Yekaterinburg (+13%) thanks to an increase in the number of ring routes and double operations. Transportation to Kazakhstan, Uzbekistan, and European countries has developed. In particular, in 2014, the Vostochnaya Stevedoring Company began to dispatch trains destined for Zhety-Su (Kazakhstan) and Nukus, Pitnyak, and Kangrad stations (Uzbekistan).

Therefore, the development of transportation by container trains in the Russian Federation can stimulate an additional increase in transportation volumes in the neighboring countries of the 1520 space. In particular, recently RZD and the Ministry of Transport of Mongolia signed an agreement on using the high-speed container train from Europe to China via Russia and Mongolia. The travel time on the Berlin - Brest - Mongolia route is significantly shorter than on the sea route through the Suez Canal: the delivery time to Europe by water transport is 60 days, while a container train via Brest can run to the destination point in 15-20 days. The service will be launched at the end of 2014.

Services related to the transportation of containers in the Asian direction are expected to actively develop. As suggested by Sergei Maximov, President of the Union of Transporters, Freight Forwarders and Logisticians of Siberia, demand for such services, which, on the one hand, are an alternative to traditional sea routes, and on the other hand, help to switch a part of Russian cargo flows into the Asian direction, contributes to this. 

This process, however, stumbled over conditions of transportation. In particular, high tariffs were one of the reasons for the 11.4% decline in container traffic from Asia in 2013 via the Zabaikal Railway. Therefore, RZD is considering the possibility of reducing tariffs on container transportation from China to Moscow via the Zabaikalsk station (located on the border with China) by 12.8%. Giving tariff discounts, RZD expects to increase both export and transit container transportation from China. Another reason for the implementation of discounts is the intention to strengthen the position of the operator of the Customs Union – Joint Transport and Logistics Company (OTLK), which plans to transport 4.2 million TEU and take a 61% share of the container transportation market on the China - Europe route by 2020. 

Russia plans to give shareholdings in TransContainer and Russian Railways Logistics to OTLK and Belarus to transfer container assets from Belintertrans, and Kazakhstan - the assets of Kedentransservice and Kaztransservice. According to RZD, this will ensure control over the key entry points to the 1520 space – Dostyk, Altynkol, and Brest. 

Therefore, container transportation has turned to be the most stable market sector for many operators and it has substantial potential for development even in those countries. ®

By Alexander Solntsev
    [~DETAIL_TEXT] => 
Conveniently Packed Cargoes



According to the Council for Railway Transport of CIS Member States, container transportation in 2014 showed mainly a positive trend on the 1520 space. In particular, transportation of goods in containers in the first quarter of 2014 amounted to 7.2 million tons, 20% more than in the same period of 2013. In the second quarter, according to preliminary data, this growth slowed, but the level remained still high – about 18%. 

Such a positive trend was created by expanding the range of goods transported in containers. Consignors dispatched such cargoes as chemicals and soda, paper, metalware, sawn wood, and automobiles in containers. These cargoes are more suitable for containerisation. In 2014, a variety of packaged goods, components, and products in big bags and soft inserts - in particular, grain and liquid non-hazardous cargo – were added to this list.

The turnover of a large-capacity container amounted to 19.3 days, 0.6 days less than in 2013. As a reminder, container turnover reduced by 0.7 days in 2013 in comparison with 2012. So, the result is good.

On the whole, the railway network has operated with a surplus of rolling stock in recent years, which has a negative effect on the management and performance of freight wagons. Accordingly containers on trains, dispatched in readiness, could be carried on the railway network of the 1520 space longer than usual. Nevertheless, the total container turnover remained positive for the second year. This was due to the increased volume of cargo carried by container trains. In this regard, the Council for Railway Transport of CIS Member States pay great attention to developments in this sector of the market. 

According to Vladimir Yakunin, President of RZD, railways on the 1520 space aim at attracting additional volumes of cargo for transportation by container trains and enhancing the route network. Additionally, it is planned to continue to implement a number of measures to remove administrative barriers in their way. For that, operational and information technologies should be developed.

In 2014, in the opinion of V. Yakunin, a major step forward was taken in this direction due to the development of the Information and Computing Centre of Railway Administrations (ITC RA) of the Council for Railway Transport of CIS Member States. A database created at interstate level allowed the solution of a number of problems associated with international transportation and operation of rolling stock. In particular, a consolidated number list for the wagon fleet of railway administrations was implemented; the system for calculating payments for the use of freight railcars and containers of other states was improved. In addition, the control over fulfillment of the requirements of the regime for urgent return of freight cars and the control of the quality of scheduled repair of railcars were automated, which actually helped accelerate the turnover of containers. 

“The success of ITC RA is shared by all railway administrations, which provided full assistance and support at all stages of creation and development,” said V. Yakunin.



More Services



More than 15 million tons of cargo was loaded into containers on the Russian railway network in 9 months in 2014, 11% more in comparison with the previous year. In TEU, however, the increase was about 7%. Nevertheless, the matters were better than in 2013, when containerised cargo transportation by railway increased by only 3% to 2.1 million TEU. 

The growth in 2014 was achieved thanks to an increase in Russian exports (+ 12.2%). Also, the volume of domestic transportation (+ 11.1%) and transit (+ 8.5%) increased. Due to the specifics of tariff formation on the RZD network, transportation of containers was most profitable if the transportation distance was more than 1,500 km.

According to Alexander Slobodyanik, Leading Expert Analyst at the Cargo Transportation Research Department at the Institute of Natural Monopolies (IPEM), the positive trend in the sector of container transportation in Russia is caused not only by additional volumes of cargo carried by container trains, but by better qualitative indicators of operations on Russian Railways. 

Container volumes were significantly affected by US and EU sanctions imposed against the Russian Federation, and retaliatory measures. It was noticeable in the summer of 2014: the rate of increase in transportation significantly reduced. There was a 12.8% increase in loading volumes in the first half of 2014 in comparison with the same period of the previous year, but the figure in January-September was 11.5%. In other words, the rate of transportation growth fell by 1.3 percentage points. This was mainly due to a decline in imports. First of all, it caused a decrease in imports of containerised foodstuffs, which had an especially negative impact on transportation in refrigerated containers. Imports of equipment and industrial products from the EU reduced too.

In addition, according to analysts at Sanna, the Russian market turned out to be over-saturated with durable goods in 2014. Therefore, growth in demand for such goods is not expected even by the end of the year. Many industrial enterprises slowed down their investment programs and, accordingly, the purchase of equipment; and retailers reduced the volume of purchases of consumer goods. So, the growth of container transportation in Russia is unlikely to recover. Indeed, it may continue to decline. 

Especially if one takes into account that logistics companies’ and freight forwarders’ financial risks associated with non-payment of services have increased. In 2007, for example, 90% of customers paid within 1-5 days upon receipt of the invoice, and the share of such payments reduced to 70% in 2010, and now their share is about 50%. 

According to Fitch, the weak situation in the Russian market and the decline in revenues of companies can negatively impact the financial stability of a number of Russian railway operators by the end of 2014. It is not surprising that they are now looking for ways to optimise their costs. Possible solutions in this sector are the development of related services and improvement of the logistics of cargo consignments in container trains.

In particular, one of the largest market players, TransContainer JSC expanded its online service, using which, a customer can place an order, calculate its price, and trace the progress of cargo transportation in container trains from Moscow to a number of stations. In addition, TransContainer launched 14 new container trains in the first half of 2014. In July and August, container trains made their pilot trips from St Petersburg to Khabarovsk and Nakhodka, and reached their destination stations in 10 and 9 days respectively. 

The “Transsib in 7 Days” project develops actively. In the first half of 2014, 234 fast trains or more than 10,000 loaded wagons were sent from stations on the Far Eastern Railway only. The route speed of such trains exceeds 1,100 km/day. (for the sake of comparison, the speed of ordinary trains on the same route in no more than 850 km/day).

The number of container trains dispatched from the terminal of Vostochnaya Stevedoring Company (a part of Global Ports) increased by 20% – 361 trains were sent from it in six months, of which 142 were destined for the CIS and Europe (+31%). Also, the company expanded the amount of dispatches from Moscow to Novosibirsk and Yekaterinburg (+13%) thanks to an increase in the number of ring routes and double operations. Transportation to Kazakhstan, Uzbekistan, and European countries has developed. In particular, in 2014, the Vostochnaya Stevedoring Company began to dispatch trains destined for Zhety-Su (Kazakhstan) and Nukus, Pitnyak, and Kangrad stations (Uzbekistan).

Therefore, the development of transportation by container trains in the Russian Federation can stimulate an additional increase in transportation volumes in the neighboring countries of the 1520 space. In particular, recently RZD and the Ministry of Transport of Mongolia signed an agreement on using the high-speed container train from Europe to China via Russia and Mongolia. The travel time on the Berlin - Brest - Mongolia route is significantly shorter than on the sea route through the Suez Canal: the delivery time to Europe by water transport is 60 days, while a container train via Brest can run to the destination point in 15-20 days. The service will be launched at the end of 2014.

Services related to the transportation of containers in the Asian direction are expected to actively develop. As suggested by Sergei Maximov, President of the Union of Transporters, Freight Forwarders and Logisticians of Siberia, demand for such services, which, on the one hand, are an alternative to traditional sea routes, and on the other hand, help to switch a part of Russian cargo flows into the Asian direction, contributes to this. 

This process, however, stumbled over conditions of transportation. In particular, high tariffs were one of the reasons for the 11.4% decline in container traffic from Asia in 2013 via the Zabaikal Railway. Therefore, RZD is considering the possibility of reducing tariffs on container transportation from China to Moscow via the Zabaikalsk station (located on the border with China) by 12.8%. Giving tariff discounts, RZD expects to increase both export and transit container transportation from China. Another reason for the implementation of discounts is the intention to strengthen the position of the operator of the Customs Union – Joint Transport and Logistics Company (OTLK), which plans to transport 4.2 million TEU and take a 61% share of the container transportation market on the China - Europe route by 2020. 

Russia plans to give shareholdings in TransContainer and Russian Railways Logistics to OTLK and Belarus to transfer container assets from Belintertrans, and Kazakhstan - the assets of Kedentransservice and Kaztransservice. According to RZD, this will ensure control over the key entry points to the 1520 space – Dostyk, Altynkol, and Brest. 

Therefore, container transportation has turned to be the most stable market sector for many operators and it has substantial potential for development even in those countries. ®

By Alexander Solntsev
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Conveniently Packed Cargoes



According to the Council for Railway Transport of CIS Member States, container transportation in 2014 showed mainly a positive trend on the 1520 space. In particular, transportation of goods in containers in the first quarter of 2014 amounted to 7.2 million tons, 20% more than in the same period of 2013. In the second quarter, according to preliminary data, this growth slowed, but the level remained still high – about 18%. 

Such a positive trend was created by expanding the range of goods transported in containers. Consignors dispatched such cargoes as chemicals and soda, paper, metalware, sawn wood, and automobiles in containers. These cargoes are more suitable for containerisation. In 2014, a variety of packaged goods, components, and products in big bags and soft inserts - in particular, grain and liquid non-hazardous cargo – were added to this list.

The turnover of a large-capacity container amounted to 19.3 days, 0.6 days less than in 2013. As a reminder, container turnover reduced by 0.7 days in 2013 in comparison with 2012. So, the result is good.

On the whole, the railway network has operated with a surplus of rolling stock in recent years, which has a negative effect on the management and performance of freight wagons. Accordingly containers on trains, dispatched in readiness, could be carried on the railway network of the 1520 space longer than usual. Nevertheless, the total container turnover remained positive for the second year. This was due to the increased volume of cargo carried by container trains. In this regard, the Council for Railway Transport of CIS Member States pay great attention to developments in this sector of the market. 

According to Vladimir Yakunin, President of RZD, railways on the 1520 space aim at attracting additional volumes of cargo for transportation by container trains and enhancing the route network. Additionally, it is planned to continue to implement a number of measures to remove administrative barriers in their way. For that, operational and information technologies should be developed.

In 2014, in the opinion of V. Yakunin, a major step forward was taken in this direction due to the development of the Information and Computing Centre of Railway Administrations (ITC RA) of the Council for Railway Transport of CIS Member States. A database created at interstate level allowed the solution of a number of problems associated with international transportation and operation of rolling stock. In particular, a consolidated number list for the wagon fleet of railway administrations was implemented; the system for calculating payments for the use of freight railcars and containers of other states was improved. In addition, the control over fulfillment of the requirements of the regime for urgent return of freight cars and the control of the quality of scheduled repair of railcars were automated, which actually helped accelerate the turnover of containers. 

“The success of ITC RA is shared by all railway administrations, which provided full assistance and support at all stages of creation and development,” said V. Yakunin.



More Services



More than 15 million tons of cargo was loaded into containers on the Russian railway network in 9 months in 2014, 11% more in comparison with the previous year. In TEU, however, the increase was about 7%. Nevertheless, the matters were better than in 2013, when containerised cargo transportation by railway increased by only 3% to 2.1 million TEU. 

The growth in 2014 was achieved thanks to an increase in Russian exports (+ 12.2%). Also, the volume of domestic transportation (+ 11.1%) and transit (+ 8.5%) increased. Due to the specifics of tariff formation on the RZD network, transportation of containers was most profitable if the transportation distance was more than 1,500 km.

According to Alexander Slobodyanik, Leading Expert Analyst at the Cargo Transportation Research Department at the Institute of Natural Monopolies (IPEM), the positive trend in the sector of container transportation in Russia is caused not only by additional volumes of cargo carried by container trains, but by better qualitative indicators of operations on Russian Railways. 

Container volumes were significantly affected by US and EU sanctions imposed against the Russian Federation, and retaliatory measures. It was noticeable in the summer of 2014: the rate of increase in transportation significantly reduced. There was a 12.8% increase in loading volumes in the first half of 2014 in comparison with the same period of the previous year, but the figure in January-September was 11.5%. In other words, the rate of transportation growth fell by 1.3 percentage points. This was mainly due to a decline in imports. First of all, it caused a decrease in imports of containerised foodstuffs, which had an especially negative impact on transportation in refrigerated containers. Imports of equipment and industrial products from the EU reduced too.

In addition, according to analysts at Sanna, the Russian market turned out to be over-saturated with durable goods in 2014. Therefore, growth in demand for such goods is not expected even by the end of the year. Many industrial enterprises slowed down their investment programs and, accordingly, the purchase of equipment; and retailers reduced the volume of purchases of consumer goods. So, the growth of container transportation in Russia is unlikely to recover. Indeed, it may continue to decline. 

Especially if one takes into account that logistics companies’ and freight forwarders’ financial risks associated with non-payment of services have increased. In 2007, for example, 90% of customers paid within 1-5 days upon receipt of the invoice, and the share of such payments reduced to 70% in 2010, and now their share is about 50%. 

According to Fitch, the weak situation in the Russian market and the decline in revenues of companies can negatively impact the financial stability of a number of Russian railway operators by the end of 2014. It is not surprising that they are now looking for ways to optimise their costs. Possible solutions in this sector are the development of related services and improvement of the logistics of cargo consignments in container trains.

In particular, one of the largest market players, TransContainer JSC expanded its online service, using which, a customer can place an order, calculate its price, and trace the progress of cargo transportation in container trains from Moscow to a number of stations. In addition, TransContainer launched 14 new container trains in the first half of 2014. In July and August, container trains made their pilot trips from St Petersburg to Khabarovsk and Nakhodka, and reached their destination stations in 10 and 9 days respectively. 

The “Transsib in 7 Days” project develops actively. In the first half of 2014, 234 fast trains or more than 10,000 loaded wagons were sent from stations on the Far Eastern Railway only. The route speed of such trains exceeds 1,100 km/day. (for the sake of comparison, the speed of ordinary trains on the same route in no more than 850 km/day).

The number of container trains dispatched from the terminal of Vostochnaya Stevedoring Company (a part of Global Ports) increased by 20% – 361 trains were sent from it in six months, of which 142 were destined for the CIS and Europe (+31%). Also, the company expanded the amount of dispatches from Moscow to Novosibirsk and Yekaterinburg (+13%) thanks to an increase in the number of ring routes and double operations. Transportation to Kazakhstan, Uzbekistan, and European countries has developed. In particular, in 2014, the Vostochnaya Stevedoring Company began to dispatch trains destined for Zhety-Su (Kazakhstan) and Nukus, Pitnyak, and Kangrad stations (Uzbekistan).

Therefore, the development of transportation by container trains in the Russian Federation can stimulate an additional increase in transportation volumes in the neighboring countries of the 1520 space. In particular, recently RZD and the Ministry of Transport of Mongolia signed an agreement on using the high-speed container train from Europe to China via Russia and Mongolia. The travel time on the Berlin - Brest - Mongolia route is significantly shorter than on the sea route through the Suez Canal: the delivery time to Europe by water transport is 60 days, while a container train via Brest can run to the destination point in 15-20 days. The service will be launched at the end of 2014.

Services related to the transportation of containers in the Asian direction are expected to actively develop. As suggested by Sergei Maximov, President of the Union of Transporters, Freight Forwarders and Logisticians of Siberia, demand for such services, which, on the one hand, are an alternative to traditional sea routes, and on the other hand, help to switch a part of Russian cargo flows into the Asian direction, contributes to this. 

This process, however, stumbled over conditions of transportation. In particular, high tariffs were one of the reasons for the 11.4% decline in container traffic from Asia in 2013 via the Zabaikal Railway. Therefore, RZD is considering the possibility of reducing tariffs on container transportation from China to Moscow via the Zabaikalsk station (located on the border with China) by 12.8%. Giving tariff discounts, RZD expects to increase both export and transit container transportation from China. Another reason for the implementation of discounts is the intention to strengthen the position of the operator of the Customs Union – Joint Transport and Logistics Company (OTLK), which plans to transport 4.2 million TEU and take a 61% share of the container transportation market on the China - Europe route by 2020. 

Russia plans to give shareholdings in TransContainer and Russian Railways Logistics to OTLK and Belarus to transfer container assets from Belintertrans, and Kazakhstan - the assets of Kedentransservice and Kaztransservice. According to RZD, this will ensure control over the key entry points to the 1520 space – Dostyk, Altynkol, and Brest. 

Therefore, container transportation has turned to be the most stable market sector for many operators and it has substantial potential for development even in those countries. ®

By Alexander Solntsev
    [~DETAIL_TEXT] => 
Conveniently Packed Cargoes



According to the Council for Railway Transport of CIS Member States, container transportation in 2014 showed mainly a positive trend on the 1520 space. In particular, transportation of goods in containers in the first quarter of 2014 amounted to 7.2 million tons, 20% more than in the same period of 2013. In the second quarter, according to preliminary data, this growth slowed, but the level remained still high – about 18%. 

Such a positive trend was created by expanding the range of goods transported in containers. Consignors dispatched such cargoes as chemicals and soda, paper, metalware, sawn wood, and automobiles in containers. These cargoes are more suitable for containerisation. In 2014, a variety of packaged goods, components, and products in big bags and soft inserts - in particular, grain and liquid non-hazardous cargo – were added to this list.

The turnover of a large-capacity container amounted to 19.3 days, 0.6 days less than in 2013. As a reminder, container turnover reduced by 0.7 days in 2013 in comparison with 2012. So, the result is good.

On the whole, the railway network has operated with a surplus of rolling stock in recent years, which has a negative effect on the management and performance of freight wagons. Accordingly containers on trains, dispatched in readiness, could be carried on the railway network of the 1520 space longer than usual. Nevertheless, the total container turnover remained positive for the second year. This was due to the increased volume of cargo carried by container trains. In this regard, the Council for Railway Transport of CIS Member States pay great attention to developments in this sector of the market. 

According to Vladimir Yakunin, President of RZD, railways on the 1520 space aim at attracting additional volumes of cargo for transportation by container trains and enhancing the route network. Additionally, it is planned to continue to implement a number of measures to remove administrative barriers in their way. For that, operational and information technologies should be developed.

In 2014, in the opinion of V. Yakunin, a major step forward was taken in this direction due to the development of the Information and Computing Centre of Railway Administrations (ITC RA) of the Council for Railway Transport of CIS Member States. A database created at interstate level allowed the solution of a number of problems associated with international transportation and operation of rolling stock. In particular, a consolidated number list for the wagon fleet of railway administrations was implemented; the system for calculating payments for the use of freight railcars and containers of other states was improved. In addition, the control over fulfillment of the requirements of the regime for urgent return of freight cars and the control of the quality of scheduled repair of railcars were automated, which actually helped accelerate the turnover of containers. 

“The success of ITC RA is shared by all railway administrations, which provided full assistance and support at all stages of creation and development,” said V. Yakunin.



More Services



More than 15 million tons of cargo was loaded into containers on the Russian railway network in 9 months in 2014, 11% more in comparison with the previous year. In TEU, however, the increase was about 7%. Nevertheless, the matters were better than in 2013, when containerised cargo transportation by railway increased by only 3% to 2.1 million TEU. 

The growth in 2014 was achieved thanks to an increase in Russian exports (+ 12.2%). Also, the volume of domestic transportation (+ 11.1%) and transit (+ 8.5%) increased. Due to the specifics of tariff formation on the RZD network, transportation of containers was most profitable if the transportation distance was more than 1,500 km.

According to Alexander Slobodyanik, Leading Expert Analyst at the Cargo Transportation Research Department at the Institute of Natural Monopolies (IPEM), the positive trend in the sector of container transportation in Russia is caused not only by additional volumes of cargo carried by container trains, but by better qualitative indicators of operations on Russian Railways. 

Container volumes were significantly affected by US and EU sanctions imposed against the Russian Federation, and retaliatory measures. It was noticeable in the summer of 2014: the rate of increase in transportation significantly reduced. There was a 12.8% increase in loading volumes in the first half of 2014 in comparison with the same period of the previous year, but the figure in January-September was 11.5%. In other words, the rate of transportation growth fell by 1.3 percentage points. This was mainly due to a decline in imports. First of all, it caused a decrease in imports of containerised foodstuffs, which had an especially negative impact on transportation in refrigerated containers. Imports of equipment and industrial products from the EU reduced too.

In addition, according to analysts at Sanna, the Russian market turned out to be over-saturated with durable goods in 2014. Therefore, growth in demand for such goods is not expected even by the end of the year. Many industrial enterprises slowed down their investment programs and, accordingly, the purchase of equipment; and retailers reduced the volume of purchases of consumer goods. So, the growth of container transportation in Russia is unlikely to recover. Indeed, it may continue to decline. 

Especially if one takes into account that logistics companies’ and freight forwarders’ financial risks associated with non-payment of services have increased. In 2007, for example, 90% of customers paid within 1-5 days upon receipt of the invoice, and the share of such payments reduced to 70% in 2010, and now their share is about 50%. 

According to Fitch, the weak situation in the Russian market and the decline in revenues of companies can negatively impact the financial stability of a number of Russian railway operators by the end of 2014. It is not surprising that they are now looking for ways to optimise their costs. Possible solutions in this sector are the development of related services and improvement of the logistics of cargo consignments in container trains.

In particular, one of the largest market players, TransContainer JSC expanded its online service, using which, a customer can place an order, calculate its price, and trace the progress of cargo transportation in container trains from Moscow to a number of stations. In addition, TransContainer launched 14 new container trains in the first half of 2014. In July and August, container trains made their pilot trips from St Petersburg to Khabarovsk and Nakhodka, and reached their destination stations in 10 and 9 days respectively. 

The “Transsib in 7 Days” project develops actively. In the first half of 2014, 234 fast trains or more than 10,000 loaded wagons were sent from stations on the Far Eastern Railway only. The route speed of such trains exceeds 1,100 km/day. (for the sake of comparison, the speed of ordinary trains on the same route in no more than 850 km/day).

The number of container trains dispatched from the terminal of Vostochnaya Stevedoring Company (a part of Global Ports) increased by 20% – 361 trains were sent from it in six months, of which 142 were destined for the CIS and Europe (+31%). Also, the company expanded the amount of dispatches from Moscow to Novosibirsk and Yekaterinburg (+13%) thanks to an increase in the number of ring routes and double operations. Transportation to Kazakhstan, Uzbekistan, and European countries has developed. In particular, in 2014, the Vostochnaya Stevedoring Company began to dispatch trains destined for Zhety-Su (Kazakhstan) and Nukus, Pitnyak, and Kangrad stations (Uzbekistan).

Therefore, the development of transportation by container trains in the Russian Federation can stimulate an additional increase in transportation volumes in the neighboring countries of the 1520 space. In particular, recently RZD and the Ministry of Transport of Mongolia signed an agreement on using the high-speed container train from Europe to China via Russia and Mongolia. The travel time on the Berlin - Brest - Mongolia route is significantly shorter than on the sea route through the Suez Canal: the delivery time to Europe by water transport is 60 days, while a container train via Brest can run to the destination point in 15-20 days. The service will be launched at the end of 2014.

Services related to the transportation of containers in the Asian direction are expected to actively develop. As suggested by Sergei Maximov, President of the Union of Transporters, Freight Forwarders and Logisticians of Siberia, demand for such services, which, on the one hand, are an alternative to traditional sea routes, and on the other hand, help to switch a part of Russian cargo flows into the Asian direction, contributes to this. 

This process, however, stumbled over conditions of transportation. In particular, high tariffs were one of the reasons for the 11.4% decline in container traffic from Asia in 2013 via the Zabaikal Railway. Therefore, RZD is considering the possibility of reducing tariffs on container transportation from China to Moscow via the Zabaikalsk station (located on the border with China) by 12.8%. Giving tariff discounts, RZD expects to increase both export and transit container transportation from China. Another reason for the implementation of discounts is the intention to strengthen the position of the operator of the Customs Union – Joint Transport and Logistics Company (OTLK), which plans to transport 4.2 million TEU and take a 61% share of the container transportation market on the China - Europe route by 2020. 

Russia plans to give shareholdings in TransContainer and Russian Railways Logistics to OTLK and Belarus to transfer container assets from Belintertrans, and Kazakhstan - the assets of Kedentransservice and Kaztransservice. According to RZD, this will ensure control over the key entry points to the 1520 space – Dostyk, Altynkol, and Brest. 

Therefore, container transportation has turned to be the most stable market sector for many operators and it has substantial potential for development even in those countries. ®

By Alexander Solntsev
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New Machinery, the Same Risks



RZD has to take into account risks arising due to sanctions which are or can be implemented by western countries against Russia and impact the transport machine building sector. 

According to comments received from RZD, import substitution in the company is linked in one set of issues with the new policy focused on the use of state-of-the-art technologies, and Russian Railways have already carried out a work targeted at import substitution for several years. The goal is to avoid any global risks faced by the company during the modernisation of the railway transport system. 

The easiest was the replacement of foreign products by Russian ones in the sector of products for infrastructure. For example, the Evraz group of companies began mass production of 100-metre head hardened rails needed for high-speed railways. Earlier, such rails for the Moscow – St Petersburg and St Petersburg – Helsinki railways were supplied from abroad, particularly from Japan. Ilya Shirokobrod, Vice President of Evraz, Head of the Railway Products Division, said last summer that metallurgical workshops were going to produce rails for tracks for a mixed traffic of high-speed trains and freight trains. Thanks to such state-of-the-art production facilities appearing in Russia, RZD can now do without purchasing rails abroad.

The situation with the development of import substitution in the machine building sector is more complicated. In this regard, however, RZD reminded us that they have experience in solving such problems. For example, after the collapse of the Soviet Union, there were problems with the supply of products made by the Riga Wagon Building Plant. Then, the production of DC electric trains was launched quickly at the Demikhovsky Machine Building Plant OJSC. 

Risks of this type were taken into account later. Accordingly, the production of components for rolling stock was put into operation in Russia: traction equipment – at Privod LLC (the Perm region), rectifiers – at Elektrovypryamitel OJSC (Saransk), low-voltage equipment – at Electric Machine OJSC (Chelyabinsk) and Penza Precision Instruments Plant, and traction electric engines – at Tatelektromash Holding Company (Naberezhnye Chelny). 

Today, the creation of power semiconductor converters, including their components and microprocessor control systems, has been brought to the forefront. These questions were put back in the previous years. Now the work on the projects must continue.

According to Igor Skok, Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM), the production of modern high-tech components for rolling stock is currently the most vulnerable Russian industry to sanctions. Therefore, additional solutions are needed for it. 

“The fact is that Russia lacks the production facilities for a number of components essential for the creation of a fleet of state-of-the-art machinery on the Russian railway network,” notes I. Skok. In particular, there is no mass production of functional electronics for the next-generation intelligenet systems for navigation, control, and onboard diagnostics in Russia. There are no reliable domestic next-generation diesel engines meeting the long-term requirements for emissions, fuel and oil consumption, and other operational characteristics, and components for such engines, as well as a number of other engineering products. In particular, wheel-set tires for traction rolling stock with a lifespan of at least one million km. 

Taking into account the project for heavy traffic development on the RZD network, the risk of implementing sanctions on parts for powerful locomotives may be the most sensitive. After all, the ability of domestic enterprises to meet the RZD’s need for traction modernisation depends on it.



Russia Masters Production of High-Tech Products



Unlike experts, machine builders are rather optimistic about the future. They believe that they are able to fulfill the needs of the holding company as well as the needs of industrial enterprises for traction, because they have everything necessary for the production of modern locomotives, including those for heavy traffic. 

According to Transmashholding, its TRTrans engineering center specialises in the development of new models of rolling stock. Investment has been allocated for it. For example, investment in production amounted to RUB 5.9 billion in 2013. 

Today, Transmashholding is already carrying out plans to substitute imports. In particular, one of the leading plants in the railway industry, Novocherkassk Electric Locomotive Plant (NEVZ) found alternative suppliers to install Russian-made products at the plant. Almost all components for the electric locomotives are made in Russia.

The situation with next-generation electric locomotives with an asynchronous traction drive is more difficult: the share of imported parts is about 65%. Measures are being taken to reduce it. For example, products were supplied by Alstom in 2013 as parts of the traction system for EP20 passenger electric locomotive, are already produced by the joint venture between the holding company and Alstom - RailComp in Novocherkassk. Imported pantographs for the EP20 will be replaced by domestic ones that will be produced by NEVZ. The design documentation is already developed and prototypes are being made. 

Additionally, NEVZ plans to produce different types of traction motors this year. Their design is improved to fix issues which came to light during the use of similar products previously delivered from Ukraine. Transmashholding specialists say that state-of-the-art equipment was bought to make this product at the plant, production is being actively reorganised. 

The plant began the development of design documentation and the business plan of the investment project for the production of generators and power units for modern mainline freight and passenger locomotives. Phased development of this type of products is planned for the next few years. In the future, electric machinery for diesel locomotives will be produced.

The Sinara group of companies has their own development plans for import substitution. Alexander Saltaev, CEO of Ural Locomotives, talked about them at the Innoprom 2014 exhibition. First of all, they relate to the production of the “Granite” freight locomotive and “Lastochka” high-speed electric trains. 

The plant has been implementing a programme to shift from localisation to import substitution of high-tech products for the last four years already. When creating “Granite” locomotive with asynchronous traction drive (2ES10 series), a thorough localisation of components for the traction equipment was carried out - it reached 90%. For example, a complex control system of electric locomotive was fully made in Russia. 

A similar scheme is used for the production of “Lastochka” electric trains. Moreover, the localisation of the components is ahead of schedule envisaged by the contract with Russian Railways JSC: the depth of localisation is now 62%, although it was previously planned to reach 55% localisation by 2015. Today, they are going to reach 80% by 2017. For that, a cluster, consisting of more than a hundred Russian suppliers of parts and components, is formed. Its members are, for example, the NPO SAUT (produces a train safety system), Siemens Elektroprivod LLC (produces electric drives for “Lastochka” and “Granite”), Vyksa Steel Works (mastered the production of wheelsets for high-speed trains).

In the future, Ural Locomotives are going to expand the number of partners by 50%. Moreover, suppliers are selected with an eye to the company’s future plans for the production of inter-regional electric trains, noted A. Saltaev. 

According to Sergey Tsyb, Deputy Minister of Industry and Trade of the Russian Federation, such projects should be encouraged. For this purpose, the RF Ministry of Industry and Trade developed a draft Strategy for the Development of Transport Engineering of Russia until 2030, in which a set of measures to develop the market of high-tech components was proposed. In particular, it is about encouraging a gradual localisation of advanced transport engineering technologies in Russia, subsidising interest on loans to organisations engaged in production of high-tech products.

RZD developed measures to reduce dependence on imported components in the sectors of IT and automation and control systems, and, in fact, to become independent from imports. According to NIIAS JSC, almost all major components that provide electricity, automatic interlocking, and dispatching control can be produced by Russian companies. 

Oleg Dunayev, Chairman of the Committee for Logistics at the Chamber of Commerce of the Russian Federation, believes that the updated strategy for the development of transport engineering in Russia must cover both issues – import substitution and continuation of a deep international cooperation. It is a complex multi-level problem. Practice of Russian companies shows, however, that it can be solved. ®

By Alexander Solntsev



viewpoint

Alexey Illarionov,

Vice President of RZD

– Senior managers at RZD always focus their attention on independence from imports as an important element of stability of business. In particular, the company traditionally provided IT-support to most critical business-functions by its own efforts or using national developers. Taking recent events into account, this approach will be used for a larger circle of IT-functions and supplements.

For example, because of the current situation and in the framework of measures for increasing the efficiency of business, our interest to software with open code is high. If licence conditions are suitable for us, such products can become the basis for IT-components for the production activity of RZD.



Igor Skok, 

Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM)

– A lot of joint ventures with foreign companies were established in Russia. Together with them, a technical and technological base needed for the development of import substitution is created. As a rule, in the framework of localisation projects, intellectual property is transferred to Russian enterprises, their staff are trained directly at the sites of foreign companies.
    [~DETAIL_TEXT] => 
New Machinery, the Same Risks



RZD has to take into account risks arising due to sanctions which are or can be implemented by western countries against Russia and impact the transport machine building sector. 

According to comments received from RZD, import substitution in the company is linked in one set of issues with the new policy focused on the use of state-of-the-art technologies, and Russian Railways have already carried out a work targeted at import substitution for several years. The goal is to avoid any global risks faced by the company during the modernisation of the railway transport system. 

The easiest was the replacement of foreign products by Russian ones in the sector of products for infrastructure. For example, the Evraz group of companies began mass production of 100-metre head hardened rails needed for high-speed railways. Earlier, such rails for the Moscow – St Petersburg and St Petersburg – Helsinki railways were supplied from abroad, particularly from Japan. Ilya Shirokobrod, Vice President of Evraz, Head of the Railway Products Division, said last summer that metallurgical workshops were going to produce rails for tracks for a mixed traffic of high-speed trains and freight trains. Thanks to such state-of-the-art production facilities appearing in Russia, RZD can now do without purchasing rails abroad.

The situation with the development of import substitution in the machine building sector is more complicated. In this regard, however, RZD reminded us that they have experience in solving such problems. For example, after the collapse of the Soviet Union, there were problems with the supply of products made by the Riga Wagon Building Plant. Then, the production of DC electric trains was launched quickly at the Demikhovsky Machine Building Plant OJSC. 

Risks of this type were taken into account later. Accordingly, the production of components for rolling stock was put into operation in Russia: traction equipment – at Privod LLC (the Perm region), rectifiers – at Elektrovypryamitel OJSC (Saransk), low-voltage equipment – at Electric Machine OJSC (Chelyabinsk) and Penza Precision Instruments Plant, and traction electric engines – at Tatelektromash Holding Company (Naberezhnye Chelny). 

Today, the creation of power semiconductor converters, including their components and microprocessor control systems, has been brought to the forefront. These questions were put back in the previous years. Now the work on the projects must continue.

According to Igor Skok, Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM), the production of modern high-tech components for rolling stock is currently the most vulnerable Russian industry to sanctions. Therefore, additional solutions are needed for it. 

“The fact is that Russia lacks the production facilities for a number of components essential for the creation of a fleet of state-of-the-art machinery on the Russian railway network,” notes I. Skok. In particular, there is no mass production of functional electronics for the next-generation intelligenet systems for navigation, control, and onboard diagnostics in Russia. There are no reliable domestic next-generation diesel engines meeting the long-term requirements for emissions, fuel and oil consumption, and other operational characteristics, and components for such engines, as well as a number of other engineering products. In particular, wheel-set tires for traction rolling stock with a lifespan of at least one million km. 

Taking into account the project for heavy traffic development on the RZD network, the risk of implementing sanctions on parts for powerful locomotives may be the most sensitive. After all, the ability of domestic enterprises to meet the RZD’s need for traction modernisation depends on it.



Russia Masters Production of High-Tech Products



Unlike experts, machine builders are rather optimistic about the future. They believe that they are able to fulfill the needs of the holding company as well as the needs of industrial enterprises for traction, because they have everything necessary for the production of modern locomotives, including those for heavy traffic. 

According to Transmashholding, its TRTrans engineering center specialises in the development of new models of rolling stock. Investment has been allocated for it. For example, investment in production amounted to RUB 5.9 billion in 2013. 

Today, Transmashholding is already carrying out plans to substitute imports. In particular, one of the leading plants in the railway industry, Novocherkassk Electric Locomotive Plant (NEVZ) found alternative suppliers to install Russian-made products at the plant. Almost all components for the electric locomotives are made in Russia.

The situation with next-generation electric locomotives with an asynchronous traction drive is more difficult: the share of imported parts is about 65%. Measures are being taken to reduce it. For example, products were supplied by Alstom in 2013 as parts of the traction system for EP20 passenger electric locomotive, are already produced by the joint venture between the holding company and Alstom - RailComp in Novocherkassk. Imported pantographs for the EP20 will be replaced by domestic ones that will be produced by NEVZ. The design documentation is already developed and prototypes are being made. 

Additionally, NEVZ plans to produce different types of traction motors this year. Their design is improved to fix issues which came to light during the use of similar products previously delivered from Ukraine. Transmashholding specialists say that state-of-the-art equipment was bought to make this product at the plant, production is being actively reorganised. 

The plant began the development of design documentation and the business plan of the investment project for the production of generators and power units for modern mainline freight and passenger locomotives. Phased development of this type of products is planned for the next few years. In the future, electric machinery for diesel locomotives will be produced.

The Sinara group of companies has their own development plans for import substitution. Alexander Saltaev, CEO of Ural Locomotives, talked about them at the Innoprom 2014 exhibition. First of all, they relate to the production of the “Granite” freight locomotive and “Lastochka” high-speed electric trains. 

The plant has been implementing a programme to shift from localisation to import substitution of high-tech products for the last four years already. When creating “Granite” locomotive with asynchronous traction drive (2ES10 series), a thorough localisation of components for the traction equipment was carried out - it reached 90%. For example, a complex control system of electric locomotive was fully made in Russia. 

A similar scheme is used for the production of “Lastochka” electric trains. Moreover, the localisation of the components is ahead of schedule envisaged by the contract with Russian Railways JSC: the depth of localisation is now 62%, although it was previously planned to reach 55% localisation by 2015. Today, they are going to reach 80% by 2017. For that, a cluster, consisting of more than a hundred Russian suppliers of parts and components, is formed. Its members are, for example, the NPO SAUT (produces a train safety system), Siemens Elektroprivod LLC (produces electric drives for “Lastochka” and “Granite”), Vyksa Steel Works (mastered the production of wheelsets for high-speed trains).

In the future, Ural Locomotives are going to expand the number of partners by 50%. Moreover, suppliers are selected with an eye to the company’s future plans for the production of inter-regional electric trains, noted A. Saltaev. 

According to Sergey Tsyb, Deputy Minister of Industry and Trade of the Russian Federation, such projects should be encouraged. For this purpose, the RF Ministry of Industry and Trade developed a draft Strategy for the Development of Transport Engineering of Russia until 2030, in which a set of measures to develop the market of high-tech components was proposed. In particular, it is about encouraging a gradual localisation of advanced transport engineering technologies in Russia, subsidising interest on loans to organisations engaged in production of high-tech products.

RZD developed measures to reduce dependence on imported components in the sectors of IT and automation and control systems, and, in fact, to become independent from imports. According to NIIAS JSC, almost all major components that provide electricity, automatic interlocking, and dispatching control can be produced by Russian companies. 

Oleg Dunayev, Chairman of the Committee for Logistics at the Chamber of Commerce of the Russian Federation, believes that the updated strategy for the development of transport engineering in Russia must cover both issues – import substitution and continuation of a deep international cooperation. It is a complex multi-level problem. Practice of Russian companies shows, however, that it can be solved. ®

By Alexander Solntsev



viewpoint

Alexey Illarionov,

Vice President of RZD

– Senior managers at RZD always focus their attention on independence from imports as an important element of stability of business. In particular, the company traditionally provided IT-support to most critical business-functions by its own efforts or using national developers. Taking recent events into account, this approach will be used for a larger circle of IT-functions and supplements.

For example, because of the current situation and in the framework of measures for increasing the efficiency of business, our interest to software with open code is high. If licence conditions are suitable for us, such products can become the basis for IT-components for the production activity of RZD.



Igor Skok, 

Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM)

– A lot of joint ventures with foreign companies were established in Russia. Together with them, a technical and technological base needed for the development of import substitution is created. As a rule, in the framework of localisation projects, intellectual property is transferred to Russian enterprises, their staff are trained directly at the sites of foreign companies.
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New Machinery, the Same Risks



RZD has to take into account risks arising due to sanctions which are or can be implemented by western countries against Russia and impact the transport machine building sector. 

According to comments received from RZD, import substitution in the company is linked in one set of issues with the new policy focused on the use of state-of-the-art technologies, and Russian Railways have already carried out a work targeted at import substitution for several years. The goal is to avoid any global risks faced by the company during the modernisation of the railway transport system. 

The easiest was the replacement of foreign products by Russian ones in the sector of products for infrastructure. For example, the Evraz group of companies began mass production of 100-metre head hardened rails needed for high-speed railways. Earlier, such rails for the Moscow – St Petersburg and St Petersburg – Helsinki railways were supplied from abroad, particularly from Japan. Ilya Shirokobrod, Vice President of Evraz, Head of the Railway Products Division, said last summer that metallurgical workshops were going to produce rails for tracks for a mixed traffic of high-speed trains and freight trains. Thanks to such state-of-the-art production facilities appearing in Russia, RZD can now do without purchasing rails abroad.

The situation with the development of import substitution in the machine building sector is more complicated. In this regard, however, RZD reminded us that they have experience in solving such problems. For example, after the collapse of the Soviet Union, there were problems with the supply of products made by the Riga Wagon Building Plant. Then, the production of DC electric trains was launched quickly at the Demikhovsky Machine Building Plant OJSC. 

Risks of this type were taken into account later. Accordingly, the production of components for rolling stock was put into operation in Russia: traction equipment – at Privod LLC (the Perm region), rectifiers – at Elektrovypryamitel OJSC (Saransk), low-voltage equipment – at Electric Machine OJSC (Chelyabinsk) and Penza Precision Instruments Plant, and traction electric engines – at Tatelektromash Holding Company (Naberezhnye Chelny). 

Today, the creation of power semiconductor converters, including their components and microprocessor control systems, has been brought to the forefront. These questions were put back in the previous years. Now the work on the projects must continue.

According to Igor Skok, Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM), the production of modern high-tech components for rolling stock is currently the most vulnerable Russian industry to sanctions. Therefore, additional solutions are needed for it. 

“The fact is that Russia lacks the production facilities for a number of components essential for the creation of a fleet of state-of-the-art machinery on the Russian railway network,” notes I. Skok. In particular, there is no mass production of functional electronics for the next-generation intelligenet systems for navigation, control, and onboard diagnostics in Russia. There are no reliable domestic next-generation diesel engines meeting the long-term requirements for emissions, fuel and oil consumption, and other operational characteristics, and components for such engines, as well as a number of other engineering products. In particular, wheel-set tires for traction rolling stock with a lifespan of at least one million km. 

Taking into account the project for heavy traffic development on the RZD network, the risk of implementing sanctions on parts for powerful locomotives may be the most sensitive. After all, the ability of domestic enterprises to meet the RZD’s need for traction modernisation depends on it.



Russia Masters Production of High-Tech Products



Unlike experts, machine builders are rather optimistic about the future. They believe that they are able to fulfill the needs of the holding company as well as the needs of industrial enterprises for traction, because they have everything necessary for the production of modern locomotives, including those for heavy traffic. 

According to Transmashholding, its TRTrans engineering center specialises in the development of new models of rolling stock. Investment has been allocated for it. For example, investment in production amounted to RUB 5.9 billion in 2013. 

Today, Transmashholding is already carrying out plans to substitute imports. In particular, one of the leading plants in the railway industry, Novocherkassk Electric Locomotive Plant (NEVZ) found alternative suppliers to install Russian-made products at the plant. Almost all components for the electric locomotives are made in Russia.

The situation with next-generation electric locomotives with an asynchronous traction drive is more difficult: the share of imported parts is about 65%. Measures are being taken to reduce it. For example, products were supplied by Alstom in 2013 as parts of the traction system for EP20 passenger electric locomotive, are already produced by the joint venture between the holding company and Alstom - RailComp in Novocherkassk. Imported pantographs for the EP20 will be replaced by domestic ones that will be produced by NEVZ. The design documentation is already developed and prototypes are being made. 

Additionally, NEVZ plans to produce different types of traction motors this year. Their design is improved to fix issues which came to light during the use of similar products previously delivered from Ukraine. Transmashholding specialists say that state-of-the-art equipment was bought to make this product at the plant, production is being actively reorganised. 

The plant began the development of design documentation and the business plan of the investment project for the production of generators and power units for modern mainline freight and passenger locomotives. Phased development of this type of products is planned for the next few years. In the future, electric machinery for diesel locomotives will be produced.

The Sinara group of companies has their own development plans for import substitution. Alexander Saltaev, CEO of Ural Locomotives, talked about them at the Innoprom 2014 exhibition. First of all, they relate to the production of the “Granite” freight locomotive and “Lastochka” high-speed electric trains. 

The plant has been implementing a programme to shift from localisation to import substitution of high-tech products for the last four years already. When creating “Granite” locomotive with asynchronous traction drive (2ES10 series), a thorough localisation of components for the traction equipment was carried out - it reached 90%. For example, a complex control system of electric locomotive was fully made in Russia. 

A similar scheme is used for the production of “Lastochka” electric trains. Moreover, the localisation of the components is ahead of schedule envisaged by the contract with Russian Railways JSC: the depth of localisation is now 62%, although it was previously planned to reach 55% localisation by 2015. Today, they are going to reach 80% by 2017. For that, a cluster, consisting of more than a hundred Russian suppliers of parts and components, is formed. Its members are, for example, the NPO SAUT (produces a train safety system), Siemens Elektroprivod LLC (produces electric drives for “Lastochka” and “Granite”), Vyksa Steel Works (mastered the production of wheelsets for high-speed trains).

In the future, Ural Locomotives are going to expand the number of partners by 50%. Moreover, suppliers are selected with an eye to the company’s future plans for the production of inter-regional electric trains, noted A. Saltaev. 

According to Sergey Tsyb, Deputy Minister of Industry and Trade of the Russian Federation, such projects should be encouraged. For this purpose, the RF Ministry of Industry and Trade developed a draft Strategy for the Development of Transport Engineering of Russia until 2030, in which a set of measures to develop the market of high-tech components was proposed. In particular, it is about encouraging a gradual localisation of advanced transport engineering technologies in Russia, subsidising interest on loans to organisations engaged in production of high-tech products.

RZD developed measures to reduce dependence on imported components in the sectors of IT and automation and control systems, and, in fact, to become independent from imports. According to NIIAS JSC, almost all major components that provide electricity, automatic interlocking, and dispatching control can be produced by Russian companies. 

Oleg Dunayev, Chairman of the Committee for Logistics at the Chamber of Commerce of the Russian Federation, believes that the updated strategy for the development of transport engineering in Russia must cover both issues – import substitution and continuation of a deep international cooperation. It is a complex multi-level problem. Practice of Russian companies shows, however, that it can be solved. ®

By Alexander Solntsev



viewpoint

Alexey Illarionov,

Vice President of RZD

– Senior managers at RZD always focus their attention on independence from imports as an important element of stability of business. In particular, the company traditionally provided IT-support to most critical business-functions by its own efforts or using national developers. Taking recent events into account, this approach will be used for a larger circle of IT-functions and supplements.

For example, because of the current situation and in the framework of measures for increasing the efficiency of business, our interest to software with open code is high. If licence conditions are suitable for us, such products can become the basis for IT-components for the production activity of RZD.



Igor Skok, 

Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM)

– A lot of joint ventures with foreign companies were established in Russia. Together with them, a technical and technological base needed for the development of import substitution is created. As a rule, in the framework of localisation projects, intellectual property is transferred to Russian enterprises, their staff are trained directly at the sites of foreign companies.
    [~DETAIL_TEXT] => 
New Machinery, the Same Risks



RZD has to take into account risks arising due to sanctions which are or can be implemented by western countries against Russia and impact the transport machine building sector. 

According to comments received from RZD, import substitution in the company is linked in one set of issues with the new policy focused on the use of state-of-the-art technologies, and Russian Railways have already carried out a work targeted at import substitution for several years. The goal is to avoid any global risks faced by the company during the modernisation of the railway transport system. 

The easiest was the replacement of foreign products by Russian ones in the sector of products for infrastructure. For example, the Evraz group of companies began mass production of 100-metre head hardened rails needed for high-speed railways. Earlier, such rails for the Moscow – St Petersburg and St Petersburg – Helsinki railways were supplied from abroad, particularly from Japan. Ilya Shirokobrod, Vice President of Evraz, Head of the Railway Products Division, said last summer that metallurgical workshops were going to produce rails for tracks for a mixed traffic of high-speed trains and freight trains. Thanks to such state-of-the-art production facilities appearing in Russia, RZD can now do without purchasing rails abroad.

The situation with the development of import substitution in the machine building sector is more complicated. In this regard, however, RZD reminded us that they have experience in solving such problems. For example, after the collapse of the Soviet Union, there were problems with the supply of products made by the Riga Wagon Building Plant. Then, the production of DC electric trains was launched quickly at the Demikhovsky Machine Building Plant OJSC. 

Risks of this type were taken into account later. Accordingly, the production of components for rolling stock was put into operation in Russia: traction equipment – at Privod LLC (the Perm region), rectifiers – at Elektrovypryamitel OJSC (Saransk), low-voltage equipment – at Electric Machine OJSC (Chelyabinsk) and Penza Precision Instruments Plant, and traction electric engines – at Tatelektromash Holding Company (Naberezhnye Chelny). 

Today, the creation of power semiconductor converters, including their components and microprocessor control systems, has been brought to the forefront. These questions were put back in the previous years. Now the work on the projects must continue.

According to Igor Skok, Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM), the production of modern high-tech components for rolling stock is currently the most vulnerable Russian industry to sanctions. Therefore, additional solutions are needed for it. 

“The fact is that Russia lacks the production facilities for a number of components essential for the creation of a fleet of state-of-the-art machinery on the Russian railway network,” notes I. Skok. In particular, there is no mass production of functional electronics for the next-generation intelligenet systems for navigation, control, and onboard diagnostics in Russia. There are no reliable domestic next-generation diesel engines meeting the long-term requirements for emissions, fuel and oil consumption, and other operational characteristics, and components for such engines, as well as a number of other engineering products. In particular, wheel-set tires for traction rolling stock with a lifespan of at least one million km. 

Taking into account the project for heavy traffic development on the RZD network, the risk of implementing sanctions on parts for powerful locomotives may be the most sensitive. After all, the ability of domestic enterprises to meet the RZD’s need for traction modernisation depends on it.



Russia Masters Production of High-Tech Products



Unlike experts, machine builders are rather optimistic about the future. They believe that they are able to fulfill the needs of the holding company as well as the needs of industrial enterprises for traction, because they have everything necessary for the production of modern locomotives, including those for heavy traffic. 

According to Transmashholding, its TRTrans engineering center specialises in the development of new models of rolling stock. Investment has been allocated for it. For example, investment in production amounted to RUB 5.9 billion in 2013. 

Today, Transmashholding is already carrying out plans to substitute imports. In particular, one of the leading plants in the railway industry, Novocherkassk Electric Locomotive Plant (NEVZ) found alternative suppliers to install Russian-made products at the plant. Almost all components for the electric locomotives are made in Russia.

The situation with next-generation electric locomotives with an asynchronous traction drive is more difficult: the share of imported parts is about 65%. Measures are being taken to reduce it. For example, products were supplied by Alstom in 2013 as parts of the traction system for EP20 passenger electric locomotive, are already produced by the joint venture between the holding company and Alstom - RailComp in Novocherkassk. Imported pantographs for the EP20 will be replaced by domestic ones that will be produced by NEVZ. The design documentation is already developed and prototypes are being made. 

Additionally, NEVZ plans to produce different types of traction motors this year. Their design is improved to fix issues which came to light during the use of similar products previously delivered from Ukraine. Transmashholding specialists say that state-of-the-art equipment was bought to make this product at the plant, production is being actively reorganised. 

The plant began the development of design documentation and the business plan of the investment project for the production of generators and power units for modern mainline freight and passenger locomotives. Phased development of this type of products is planned for the next few years. In the future, electric machinery for diesel locomotives will be produced.

The Sinara group of companies has their own development plans for import substitution. Alexander Saltaev, CEO of Ural Locomotives, talked about them at the Innoprom 2014 exhibition. First of all, they relate to the production of the “Granite” freight locomotive and “Lastochka” high-speed electric trains. 

The plant has been implementing a programme to shift from localisation to import substitution of high-tech products for the last four years already. When creating “Granite” locomotive with asynchronous traction drive (2ES10 series), a thorough localisation of components for the traction equipment was carried out - it reached 90%. For example, a complex control system of electric locomotive was fully made in Russia. 

A similar scheme is used for the production of “Lastochka” electric trains. Moreover, the localisation of the components is ahead of schedule envisaged by the contract with Russian Railways JSC: the depth of localisation is now 62%, although it was previously planned to reach 55% localisation by 2015. Today, they are going to reach 80% by 2017. For that, a cluster, consisting of more than a hundred Russian suppliers of parts and components, is formed. Its members are, for example, the NPO SAUT (produces a train safety system), Siemens Elektroprivod LLC (produces electric drives for “Lastochka” and “Granite”), Vyksa Steel Works (mastered the production of wheelsets for high-speed trains).

In the future, Ural Locomotives are going to expand the number of partners by 50%. Moreover, suppliers are selected with an eye to the company’s future plans for the production of inter-regional electric trains, noted A. Saltaev. 

According to Sergey Tsyb, Deputy Minister of Industry and Trade of the Russian Federation, such projects should be encouraged. For this purpose, the RF Ministry of Industry and Trade developed a draft Strategy for the Development of Transport Engineering of Russia until 2030, in which a set of measures to develop the market of high-tech components was proposed. In particular, it is about encouraging a gradual localisation of advanced transport engineering technologies in Russia, subsidising interest on loans to organisations engaged in production of high-tech products.

RZD developed measures to reduce dependence on imported components in the sectors of IT and automation and control systems, and, in fact, to become independent from imports. According to NIIAS JSC, almost all major components that provide electricity, automatic interlocking, and dispatching control can be produced by Russian companies. 

Oleg Dunayev, Chairman of the Committee for Logistics at the Chamber of Commerce of the Russian Federation, believes that the updated strategy for the development of transport engineering in Russia must cover both issues – import substitution and continuation of a deep international cooperation. It is a complex multi-level problem. Practice of Russian companies shows, however, that it can be solved. ®

By Alexander Solntsev



viewpoint

Alexey Illarionov,

Vice President of RZD

– Senior managers at RZD always focus their attention on independence from imports as an important element of stability of business. In particular, the company traditionally provided IT-support to most critical business-functions by its own efforts or using national developers. Taking recent events into account, this approach will be used for a larger circle of IT-functions and supplements.

For example, because of the current situation and in the framework of measures for increasing the efficiency of business, our interest to software with open code is high. If licence conditions are suitable for us, such products can become the basis for IT-components for the production activity of RZD.



Igor Skok, 

Leading Expert-Analyst at Transport Engineering Department of the Institute for Natural Monopolies (IPEM)

– A lot of joint ventures with foreign companies were established in Russia. Together with them, a technical and technological base needed for the development of import substitution is created. As a rule, in the framework of localisation projects, intellectual property is transferred to Russian enterprises, their staff are trained directly at the sites of foreign companies.
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Need for 3PL Services



Recently, RZD became more customer-friendly as it offered cargo owners additional services based on the technologies of shipment on separate train paths. In the words of Vladimir Khoroshilov, Deputy CEO – Director for Business Development at Brunswick Rail, such services meet the needs of specific groups of consignors, whose business processes can be adapted to their usage. These are plants carrying large volumes of freight on fixed routes. In this case, a cargo owner takes upon himself a part of the functions of the railway transporter, forming a route and purchasing the train paths he needs. Not all companies can afford it, although many customers recognise that this practice improves figures of wagon usage and, consequently, the competitiveness in this sector of railway transportation, especially for shipments to sea ports. 

If it is difficult for consignors to plan routes and transportation volume, the delivery time for them can be expanded in the future, because available infrastructure and traction will be more and more often used for servicing cargoes carried on a timetable. Some companies, which cannot form a route themselves, can build their supply chains into existing routes, believes Stanislav Banderov, Analyst at WCA. He talks about a new service on the RZD network – provision of wagon-places in shuttle trains. According to statistics, the volume of such transportation is increasing, and, in the expert’s opinion, wagon-places in shuttle trains with wagon loads have great potential. 

A representative from a transport and logistics company notes that the cargo flow between St Petersburg and Yaroslavl is stable, but not always regular according to time of dispatch. When the service is needed, one has to use the services of road hauliers, and often to pay extra charges for urgent deliveries. In this case, it is clear, however, when the freight arrives at the destination point. In the opinion of the customer, the time of delivery by railway is not clear. Meanwhile, if there was a shuttle train to Yaroslavl (at least once a week), this service could be sold successfully.

When studying the transport market, similar niches can be found in other directions. This shows that the Russian market has entered a new phase when the level of basic 2PL services is not always enough for a customer. He is ready to transfer to a company-integrator making integrated solutions for the development of a supply chain. This is confirmed by the results of research carried out by Federal Freight JSC: 31% of polled customers are ready to buy additional services, 6% of them are interested in the services of a qualified personal manager. 

Taking customers’ responses into account, we can suggest that a small, but quite stable range of companies that are willing to outsource logistics associated with railway transportation has been formed in the market. This conclusion is confirmed by the statistics obtained in the framework of Global Integrator project initiated by RZD. It stated that the market of transport and logistics services in Russia increased by 46% in value terms in 2008-2012. Additionally, in comparison with 2008, there was a rise in such sectors as warehousing business (+80%), freight forwarding services (+60%), and administrative logistics (+ 40%). 

By 2030, the share of outsourced logistics will grow from its current 12% to 20% of the total market of services related to cargo transportation. The share of contract and integrated logistics in the total volume of services is estimated at 3% today, i.e. about RUB 74 billion. According to forecasts, it will reach approximately RUB 680 billion by 2030. In other words, it can increase more than ninefold – mainly due to the consolidation of the 3PL services market in Russia.

Consequently, services, which will take the weight of some functions of freight transportation off customers’ shoulders, will be popular in the market. Therefore, becoming a provider of such services, RZD holding company will be able to achieve four goals: to retain customers who are ready to begin using other transport modes, to provide additional demand for basic transportation services, to increase the efficiency of railway services, and to increase the turnover of specialised subsidiaries and affiliates. 

For the development of logistics, however, an operating model consolidating services provided by all business units of RZD should be put into operation. Today, they operate separately in the market, and a customer has to conclude a separate agreement for every service. Sometimes, there are dozens of such agreements, and in some cases – even more. Meanwhile, the development of 3PL services assumes that at the linear level a customer applies on all matters to one window, instead of running around offices for various approvals.



Step by Step



Who should service this one window needed for the development of railway logistics? Several variants were offered. Agents at the System of Corporate Transport Service or heads of stations can be engaged in the integration of services at the linear level. It can be done by specialists at Russian Railways Logistics JSC or by GEFCO in case of foreign trade transportation. At the initial stage, however, the problem was not to separate powers but to organise the technology of providing services. In the words of Vladimir Korostelev, Single Window Project Director at Sea Express group of companies, such projects assume not just the company in charge of provision of an integrated service, but to standardise formats of all its parts. Otherwise, the company responsible for the operation of one window will stick in procedures. 

All this comes out of international recommendations issued by UNECE (№18 and 33-35). The supplement to recommendation №33 gives examples of existing single windows, mentioning mainly EU sea ports. One should take two general trends into account: firstly, there was a common informational system in all cases; secondly, this system expanded the scope of documents given to one window step by step. 

There is one more nuance in Russia – the legislative one: the Transport Ministry has not developed the principles of operation of one window at the transport market. There were attempts to make a start-up in the framework of Interdepartmental Integrated Automated Informational System, but a governmental programme for one window never appeared. There was an idea to launch a pilot project with the participation of the Customs Union Commission and RZD in the Ust-Luga port, but this initiative was delayed. 

RZD took a new step in this direction – the company was offered the Global Integrator project in the summer of 2014. According to Roman Groisman, Head of the Directorate for Terminal and Warehousing Facilities at the Oktyabrskaya Railway, there was a proposal to implement a new CRM-system to manage interaction with customers. Thanks to it, RZD can benefit from a synergetic effect from the consolidation of the intangible assets of the holding company’s subdivisions and sales networks of its subsidiaries. In this case, the project must cover the customer services of Federal Freight JSC, TransContainer, RailTransAuto, Refservice, Russian Railways Logistics, GEFCO A.S., Bely Rast Transport and Logistics Centre, Trans-Eurasia Logistics GmbH, Russkaya Troyka, TLC (the Ust-Luga port) and Port Ust-Luga Transport Company. Later, the circle of participants could expand, especially due to attracted operators, - to increase through services. Additionally, the technology must help to unify services provided to customers in all subdivisions of RZD, so that the integrator could make its transport products out of existing variants.



From X-Matrix to CRM-System   





When the question was put that way, it became clear: it is necessary to create a single window as a technology at first, and then the exact way of how to use it will be found. And, according to experts at the Oktyabrskaya Railway, launching a separate company for this purpose is inappropriate. It would be enough to adjust the existing sales network so that it would operate on a single approved customer service standard and match all involved subdivisions and subsidiaries of the holding company. Since the effect from the integration is formed at the level of the holding company, a competitive transport and logistics product cannot be created without methods of accounting and compensation for the lost revenue of those subsidiaries and affiliates, which will provide services in the framework of one window with a low or negative profitability. 

Finally, the one window technology envisages a simplification of procedures for cargo acceptance for railway transportation by means of mapping processes and removing duplicate functions. A strategic initiatives project (X-matrix) must be developed in the near future. As for the information system supporting sales of transportation services, it will be created on the order of the Department for Transport and Logistics Business Unit Management. Such a system is expected to arise in early 2015. ®

By Alexander Solntsev


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Need for 3PL Services



Recently, RZD became more customer-friendly as it offered cargo owners additional services based on the technologies of shipment on separate train paths. In the words of Vladimir Khoroshilov, Deputy CEO – Director for Business Development at Brunswick Rail, such services meet the needs of specific groups of consignors, whose business processes can be adapted to their usage. These are plants carrying large volumes of freight on fixed routes. In this case, a cargo owner takes upon himself a part of the functions of the railway transporter, forming a route and purchasing the train paths he needs. Not all companies can afford it, although many customers recognise that this practice improves figures of wagon usage and, consequently, the competitiveness in this sector of railway transportation, especially for shipments to sea ports. 

If it is difficult for consignors to plan routes and transportation volume, the delivery time for them can be expanded in the future, because available infrastructure and traction will be more and more often used for servicing cargoes carried on a timetable. Some companies, which cannot form a route themselves, can build their supply chains into existing routes, believes Stanislav Banderov, Analyst at WCA. He talks about a new service on the RZD network – provision of wagon-places in shuttle trains. According to statistics, the volume of such transportation is increasing, and, in the expert’s opinion, wagon-places in shuttle trains with wagon loads have great potential. 

A representative from a transport and logistics company notes that the cargo flow between St Petersburg and Yaroslavl is stable, but not always regular according to time of dispatch. When the service is needed, one has to use the services of road hauliers, and often to pay extra charges for urgent deliveries. In this case, it is clear, however, when the freight arrives at the destination point. In the opinion of the customer, the time of delivery by railway is not clear. Meanwhile, if there was a shuttle train to Yaroslavl (at least once a week), this service could be sold successfully.

When studying the transport market, similar niches can be found in other directions. This shows that the Russian market has entered a new phase when the level of basic 2PL services is not always enough for a customer. He is ready to transfer to a company-integrator making integrated solutions for the development of a supply chain. This is confirmed by the results of research carried out by Federal Freight JSC: 31% of polled customers are ready to buy additional services, 6% of them are interested in the services of a qualified personal manager. 

Taking customers’ responses into account, we can suggest that a small, but quite stable range of companies that are willing to outsource logistics associated with railway transportation has been formed in the market. This conclusion is confirmed by the statistics obtained in the framework of Global Integrator project initiated by RZD. It stated that the market of transport and logistics services in Russia increased by 46% in value terms in 2008-2012. Additionally, in comparison with 2008, there was a rise in such sectors as warehousing business (+80%), freight forwarding services (+60%), and administrative logistics (+ 40%). 

By 2030, the share of outsourced logistics will grow from its current 12% to 20% of the total market of services related to cargo transportation. The share of contract and integrated logistics in the total volume of services is estimated at 3% today, i.e. about RUB 74 billion. According to forecasts, it will reach approximately RUB 680 billion by 2030. In other words, it can increase more than ninefold – mainly due to the consolidation of the 3PL services market in Russia.

Consequently, services, which will take the weight of some functions of freight transportation off customers’ shoulders, will be popular in the market. Therefore, becoming a provider of such services, RZD holding company will be able to achieve four goals: to retain customers who are ready to begin using other transport modes, to provide additional demand for basic transportation services, to increase the efficiency of railway services, and to increase the turnover of specialised subsidiaries and affiliates. 

For the development of logistics, however, an operating model consolidating services provided by all business units of RZD should be put into operation. Today, they operate separately in the market, and a customer has to conclude a separate agreement for every service. Sometimes, there are dozens of such agreements, and in some cases – even more. Meanwhile, the development of 3PL services assumes that at the linear level a customer applies on all matters to one window, instead of running around offices for various approvals.



Step by Step



Who should service this one window needed for the development of railway logistics? Several variants were offered. Agents at the System of Corporate Transport Service or heads of stations can be engaged in the integration of services at the linear level. It can be done by specialists at Russian Railways Logistics JSC or by GEFCO in case of foreign trade transportation. At the initial stage, however, the problem was not to separate powers but to organise the technology of providing services. In the words of Vladimir Korostelev, Single Window Project Director at Sea Express group of companies, such projects assume not just the company in charge of provision of an integrated service, but to standardise formats of all its parts. Otherwise, the company responsible for the operation of one window will stick in procedures. 

All this comes out of international recommendations issued by UNECE (№18 and 33-35). The supplement to recommendation №33 gives examples of existing single windows, mentioning mainly EU sea ports. One should take two general trends into account: firstly, there was a common informational system in all cases; secondly, this system expanded the scope of documents given to one window step by step. 

There is one more nuance in Russia – the legislative one: the Transport Ministry has not developed the principles of operation of one window at the transport market. There were attempts to make a start-up in the framework of Interdepartmental Integrated Automated Informational System, but a governmental programme for one window never appeared. There was an idea to launch a pilot project with the participation of the Customs Union Commission and RZD in the Ust-Luga port, but this initiative was delayed. 

RZD took a new step in this direction – the company was offered the Global Integrator project in the summer of 2014. According to Roman Groisman, Head of the Directorate for Terminal and Warehousing Facilities at the Oktyabrskaya Railway, there was a proposal to implement a new CRM-system to manage interaction with customers. Thanks to it, RZD can benefit from a synergetic effect from the consolidation of the intangible assets of the holding company’s subdivisions and sales networks of its subsidiaries. In this case, the project must cover the customer services of Federal Freight JSC, TransContainer, RailTransAuto, Refservice, Russian Railways Logistics, GEFCO A.S., Bely Rast Transport and Logistics Centre, Trans-Eurasia Logistics GmbH, Russkaya Troyka, TLC (the Ust-Luga port) and Port Ust-Luga Transport Company. Later, the circle of participants could expand, especially due to attracted operators, - to increase through services. Additionally, the technology must help to unify services provided to customers in all subdivisions of RZD, so that the integrator could make its transport products out of existing variants.



From X-Matrix to CRM-System   





When the question was put that way, it became clear: it is necessary to create a single window as a technology at first, and then the exact way of how to use it will be found. And, according to experts at the Oktyabrskaya Railway, launching a separate company for this purpose is inappropriate. It would be enough to adjust the existing sales network so that it would operate on a single approved customer service standard and match all involved subdivisions and subsidiaries of the holding company. Since the effect from the integration is formed at the level of the holding company, a competitive transport and logistics product cannot be created without methods of accounting and compensation for the lost revenue of those subsidiaries and affiliates, which will provide services in the framework of one window with a low or negative profitability. 

Finally, the one window technology envisages a simplification of procedures for cargo acceptance for railway transportation by means of mapping processes and removing duplicate functions. A strategic initiatives project (X-matrix) must be developed in the near future. As for the information system supporting sales of transportation services, it will be created on the order of the Department for Transport and Logistics Business Unit Management. Such a system is expected to arise in early 2015. ®

By Alexander Solntsev


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Need for 3PL Services



Recently, RZD became more customer-friendly as it offered cargo owners additional services based on the technologies of shipment on separate train paths. In the words of Vladimir Khoroshilov, Deputy CEO – Director for Business Development at Brunswick Rail, such services meet the needs of specific groups of consignors, whose business processes can be adapted to their usage. These are plants carrying large volumes of freight on fixed routes. In this case, a cargo owner takes upon himself a part of the functions of the railway transporter, forming a route and purchasing the train paths he needs. Not all companies can afford it, although many customers recognise that this practice improves figures of wagon usage and, consequently, the competitiveness in this sector of railway transportation, especially for shipments to sea ports. 

If it is difficult for consignors to plan routes and transportation volume, the delivery time for them can be expanded in the future, because available infrastructure and traction will be more and more often used for servicing cargoes carried on a timetable. Some companies, which cannot form a route themselves, can build their supply chains into existing routes, believes Stanislav Banderov, Analyst at WCA. He talks about a new service on the RZD network – provision of wagon-places in shuttle trains. According to statistics, the volume of such transportation is increasing, and, in the expert’s opinion, wagon-places in shuttle trains with wagon loads have great potential. 

A representative from a transport and logistics company notes that the cargo flow between St Petersburg and Yaroslavl is stable, but not always regular according to time of dispatch. When the service is needed, one has to use the services of road hauliers, and often to pay extra charges for urgent deliveries. In this case, it is clear, however, when the freight arrives at the destination point. In the opinion of the customer, the time of delivery by railway is not clear. Meanwhile, if there was a shuttle train to Yaroslavl (at least once a week), this service could be sold successfully.

When studying the transport market, similar niches can be found in other directions. This shows that the Russian market has entered a new phase when the level of basic 2PL services is not always enough for a customer. He is ready to transfer to a company-integrator making integrated solutions for the development of a supply chain. This is confirmed by the results of research carried out by Federal Freight JSC: 31% of polled customers are ready to buy additional services, 6% of them are interested in the services of a qualified personal manager. 

Taking customers’ responses into account, we can suggest that a small, but quite stable range of companies that are willing to outsource logistics associated with railway transportation has been formed in the market. This conclusion is confirmed by the statistics obtained in the framework of Global Integrator project initiated by RZD. It stated that the market of transport and logistics services in Russia increased by 46% in value terms in 2008-2012. Additionally, in comparison with 2008, there was a rise in such sectors as warehousing business (+80%), freight forwarding services (+60%), and administrative logistics (+ 40%). 

By 2030, the share of outsourced logistics will grow from its current 12% to 20% of the total market of services related to cargo transportation. The share of contract and integrated logistics in the total volume of services is estimated at 3% today, i.e. about RUB 74 billion. According to forecasts, it will reach approximately RUB 680 billion by 2030. In other words, it can increase more than ninefold – mainly due to the consolidation of the 3PL services market in Russia.

Consequently, services, which will take the weight of some functions of freight transportation off customers’ shoulders, will be popular in the market. Therefore, becoming a provider of such services, RZD holding company will be able to achieve four goals: to retain customers who are ready to begin using other transport modes, to provide additional demand for basic transportation services, to increase the efficiency of railway services, and to increase the turnover of specialised subsidiaries and affiliates. 

For the development of logistics, however, an operating model consolidating services provided by all business units of RZD should be put into operation. Today, they operate separately in the market, and a customer has to conclude a separate agreement for every service. Sometimes, there are dozens of such agreements, and in some cases – even more. Meanwhile, the development of 3PL services assumes that at the linear level a customer applies on all matters to one window, instead of running around offices for various approvals.



Step by Step



Who should service this one window needed for the development of railway logistics? Several variants were offered. Agents at the System of Corporate Transport Service or heads of stations can be engaged in the integration of services at the linear level. It can be done by specialists at Russian Railways Logistics JSC or by GEFCO in case of foreign trade transportation. At the initial stage, however, the problem was not to separate powers but to organise the technology of providing services. In the words of Vladimir Korostelev, Single Window Project Director at Sea Express group of companies, such projects assume not just the company in charge of provision of an integrated service, but to standardise formats of all its parts. Otherwise, the company responsible for the operation of one window will stick in procedures. 

All this comes out of international recommendations issued by UNECE (№18 and 33-35). The supplement to recommendation №33 gives examples of existing single windows, mentioning mainly EU sea ports. One should take two general trends into account: firstly, there was a common informational system in all cases; secondly, this system expanded the scope of documents given to one window step by step. 

There is one more nuance in Russia – the legislative one: the Transport Ministry has not developed the principles of operation of one window at the transport market. There were attempts to make a start-up in the framework of Interdepartmental Integrated Automated Informational System, but a governmental programme for one window never appeared. There was an idea to launch a pilot project with the participation of the Customs Union Commission and RZD in the Ust-Luga port, but this initiative was delayed. 

RZD took a new step in this direction – the company was offered the Global Integrator project in the summer of 2014. According to Roman Groisman, Head of the Directorate for Terminal and Warehousing Facilities at the Oktyabrskaya Railway, there was a proposal to implement a new CRM-system to manage interaction with customers. Thanks to it, RZD can benefit from a synergetic effect from the consolidation of the intangible assets of the holding company’s subdivisions and sales networks of its subsidiaries. In this case, the project must cover the customer services of Federal Freight JSC, TransContainer, RailTransAuto, Refservice, Russian Railways Logistics, GEFCO A.S., Bely Rast Transport and Logistics Centre, Trans-Eurasia Logistics GmbH, Russkaya Troyka, TLC (the Ust-Luga port) and Port Ust-Luga Transport Company. Later, the circle of participants could expand, especially due to attracted operators, - to increase through services. Additionally, the technology must help to unify services provided to customers in all subdivisions of RZD, so that the integrator could make its transport products out of existing variants.



From X-Matrix to CRM-System   





When the question was put that way, it became clear: it is necessary to create a single window as a technology at first, and then the exact way of how to use it will be found. And, according to experts at the Oktyabrskaya Railway, launching a separate company for this purpose is inappropriate. It would be enough to adjust the existing sales network so that it would operate on a single approved customer service standard and match all involved subdivisions and subsidiaries of the holding company. Since the effect from the integration is formed at the level of the holding company, a competitive transport and logistics product cannot be created without methods of accounting and compensation for the lost revenue of those subsidiaries and affiliates, which will provide services in the framework of one window with a low or negative profitability. 

Finally, the one window technology envisages a simplification of procedures for cargo acceptance for railway transportation by means of mapping processes and removing duplicate functions. A strategic initiatives project (X-matrix) must be developed in the near future. As for the information system supporting sales of transportation services, it will be created on the order of the Department for Transport and Logistics Business Unit Management. Such a system is expected to arise in early 2015. ®

By Alexander Solntsev


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Need for 3PL Services



Recently, RZD became more customer-friendly as it offered cargo owners additional services based on the technologies of shipment on separate train paths. In the words of Vladimir Khoroshilov, Deputy CEO – Director for Business Development at Brunswick Rail, such services meet the needs of specific groups of consignors, whose business processes can be adapted to their usage. These are plants carrying large volumes of freight on fixed routes. In this case, a cargo owner takes upon himself a part of the functions of the railway transporter, forming a route and purchasing the train paths he needs. Not all companies can afford it, although many customers recognise that this practice improves figures of wagon usage and, consequently, the competitiveness in this sector of railway transportation, especially for shipments to sea ports. 

If it is difficult for consignors to plan routes and transportation volume, the delivery time for them can be expanded in the future, because available infrastructure and traction will be more and more often used for servicing cargoes carried on a timetable. Some companies, which cannot form a route themselves, can build their supply chains into existing routes, believes Stanislav Banderov, Analyst at WCA. He talks about a new service on the RZD network – provision of wagon-places in shuttle trains. According to statistics, the volume of such transportation is increasing, and, in the expert’s opinion, wagon-places in shuttle trains with wagon loads have great potential. 

A representative from a transport and logistics company notes that the cargo flow between St Petersburg and Yaroslavl is stable, but not always regular according to time of dispatch. When the service is needed, one has to use the services of road hauliers, and often to pay extra charges for urgent deliveries. In this case, it is clear, however, when the freight arrives at the destination point. In the opinion of the customer, the time of delivery by railway is not clear. Meanwhile, if there was a shuttle train to Yaroslavl (at least once a week), this service could be sold successfully.

When studying the transport market, similar niches can be found in other directions. This shows that the Russian market has entered a new phase when the level of basic 2PL services is not always enough for a customer. He is ready to transfer to a company-integrator making integrated solutions for the development of a supply chain. This is confirmed by the results of research carried out by Federal Freight JSC: 31% of polled customers are ready to buy additional services, 6% of them are interested in the services of a qualified personal manager. 

Taking customers’ responses into account, we can suggest that a small, but quite stable range of companies that are willing to outsource logistics associated with railway transportation has been formed in the market. This conclusion is confirmed by the statistics obtained in the framework of Global Integrator project initiated by RZD. It stated that the market of transport and logistics services in Russia increased by 46% in value terms in 2008-2012. Additionally, in comparison with 2008, there was a rise in such sectors as warehousing business (+80%), freight forwarding services (+60%), and administrative logistics (+ 40%). 

By 2030, the share of outsourced logistics will grow from its current 12% to 20% of the total market of services related to cargo transportation. The share of contract and integrated logistics in the total volume of services is estimated at 3% today, i.e. about RUB 74 billion. According to forecasts, it will reach approximately RUB 680 billion by 2030. In other words, it can increase more than ninefold – mainly due to the consolidation of the 3PL services market in Russia.

Consequently, services, which will take the weight of some functions of freight transportation off customers’ shoulders, will be popular in the market. Therefore, becoming a provider of such services, RZD holding company will be able to achieve four goals: to retain customers who are ready to begin using other transport modes, to provide additional demand for basic transportation services, to increase the efficiency of railway services, and to increase the turnover of specialised subsidiaries and affiliates. 

For the development of logistics, however, an operating model consolidating services provided by all business units of RZD should be put into operation. Today, they operate separately in the market, and a customer has to conclude a separate agreement for every service. Sometimes, there are dozens of such agreements, and in some cases – even more. Meanwhile, the development of 3PL services assumes that at the linear level a customer applies on all matters to one window, instead of running around offices for various approvals.



Step by Step



Who should service this one window needed for the development of railway logistics? Several variants were offered. Agents at the System of Corporate Transport Service or heads of stations can be engaged in the integration of services at the linear level. It can be done by specialists at Russian Railways Logistics JSC or by GEFCO in case of foreign trade transportation. At the initial stage, however, the problem was not to separate powers but to organise the technology of providing services. In the words of Vladimir Korostelev, Single Window Project Director at Sea Express group of companies, such projects assume not just the company in charge of provision of an integrated service, but to standardise formats of all its parts. Otherwise, the company responsible for the operation of one window will stick in procedures. 

All this comes out of international recommendations issued by UNECE (№18 and 33-35). The supplement to recommendation №33 gives examples of existing single windows, mentioning mainly EU sea ports. One should take two general trends into account: firstly, there was a common informational system in all cases; secondly, this system expanded the scope of documents given to one window step by step. 

There is one more nuance in Russia – the legislative one: the Transport Ministry has not developed the principles of operation of one window at the transport market. There were attempts to make a start-up in the framework of Interdepartmental Integrated Automated Informational System, but a governmental programme for one window never appeared. There was an idea to launch a pilot project with the participation of the Customs Union Commission and RZD in the Ust-Luga port, but this initiative was delayed. 

RZD took a new step in this direction – the company was offered the Global Integrator project in the summer of 2014. According to Roman Groisman, Head of the Directorate for Terminal and Warehousing Facilities at the Oktyabrskaya Railway, there was a proposal to implement a new CRM-system to manage interaction with customers. Thanks to it, RZD can benefit from a synergetic effect from the consolidation of the intangible assets of the holding company’s subdivisions and sales networks of its subsidiaries. In this case, the project must cover the customer services of Federal Freight JSC, TransContainer, RailTransAuto, Refservice, Russian Railways Logistics, GEFCO A.S., Bely Rast Transport and Logistics Centre, Trans-Eurasia Logistics GmbH, Russkaya Troyka, TLC (the Ust-Luga port) and Port Ust-Luga Transport Company. Later, the circle of participants could expand, especially due to attracted operators, - to increase through services. Additionally, the technology must help to unify services provided to customers in all subdivisions of RZD, so that the integrator could make its transport products out of existing variants.



From X-Matrix to CRM-System   





When the question was put that way, it became clear: it is necessary to create a single window as a technology at first, and then the exact way of how to use it will be found. And, according to experts at the Oktyabrskaya Railway, launching a separate company for this purpose is inappropriate. It would be enough to adjust the existing sales network so that it would operate on a single approved customer service standard and match all involved subdivisions and subsidiaries of the holding company. Since the effect from the integration is formed at the level of the holding company, a competitive transport and logistics product cannot be created without methods of accounting and compensation for the lost revenue of those subsidiaries and affiliates, which will provide services in the framework of one window with a low or negative profitability. 

Finally, the one window technology envisages a simplification of procedures for cargo acceptance for railway transportation by means of mapping processes and removing duplicate functions. A strategic initiatives project (X-matrix) must be developed in the near future. As for the information system supporting sales of transportation services, it will be created on the order of the Department for Transport and Logistics Business Unit Management. Such a system is expected to arise in early 2015. ®

By Alexander Solntsev


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The Future of Purchases Lies with Certified Companies



Today, the main principles of purchases are transparency, target and efficient use of monetary resources, equality, fairness, a lack of discrimination and unjustified limitation of competition among participants, and unlimited access to participation by means of setting unchangeable requirements. Additionally, according to amendments to the Regulations on the Purchase of Goods, Works, and Services for Needs of RZD JSC, the purchase plan is formed for one year, and the purchase plan for separate types of goods, works, or services – for 5-7 years. It is based on investment, repair, production, and other programmes. It contains information about the name of the customer, the subject of an agreement, minimum essential requirements to participants, the information about the amount of goods, works, and services, the region, information about the starting (maximum) price, the term for fulfilling the agreement, and the purchasing method.   

RZD’s volume of purchased goods and services was RUB 835 billion in 2013, and according to the plan, this sum will reach RUB 940 billion this year. Naturally, there are plenty of companies wishing to supply goods and services to RZD, especially taking into account that the legislation has made conditions more favourable for market players. In 2013, Federal Law №44 “On the Contract System in the Purchase of Goods, Works and Services in the Field of State and Municipal Needs” was added to the basic regulatory document Federal Law №223 “On Purchases of Goods, Works, Services by Separate Types of Juridical Persons”. And in early 2014, railwaymen developed a new draft Statement on Purchase of Goods, Works, and Services for the Needs of RZD JSC, which took into account RZD’s recommendation to its suppliers to get IRIS certification to increase quality and control over the life cycle of products, because today a consumer wants to know the price of machinery and equipment, as well as its maintenance cost. State-of-the-art equipment and systems are needed to provide the rapid growth of railways, to cut costs, and increase the efficiency of processes in the railway industry, and IRIS is a powerful instrument for achieving these goals.  



Intellect Brings Profit



IRIS cuts costs during the whole life cycle of products and enhances the competitiveness of national producers of goods, to make business and production more efficient, to increase the quality and reliability of railway products, to change the current system of inspection and acceptance control, and multi-level audits. 

According to Andrey Veprintsev, Head at the Centre for Technical Audit of RZD, the company creates a single informational space, which covers all stages – from planning purchases to fulfilling obligations. Therefore, IRIS certified companies will be highly rated according to RZD’s assessment of the quality management system. 

“Top managers of plants, which gained IRIS certificates in 2012, noted an increase in the quality of products and services,” he emphasised. In his words, the sales volume of these plants grew by 8%, and labour efficiency – by 10%. Moreover, the amount of foreign tenders won by them increased by 30% on average. Additionally, the amount of new projects and types of products at such companies increased. 

One can say that IRIS certification gives any company in the railway sector an opportunity to be recognised for the high quality of their products or maintenance and repair activity, and an opportunity to enter the international railway market. A.Veprintsev explained that the IRIS standard was developed to enhance the business management system, which places special emphasis on reducing the number of defects in the supply chain.



Single Informational Space



According to A. Veprintsev, today there are a number of offers to develop the IRIS standard, in particular, the expansion of areas of certification to infrastructure elements and track structure, the development of national languages, including Russian, and issuing of certificates in those languages. It should be noted that since 2009, 58 plants in Russia and four in the CIS countries have been certified according to this standard. 105 Russian companies are registered on the IRIS website. Another 20 Russian companies, according to the expert, will receive a certificate this year.

It is expected that 75 companies will be IRIS-certified by 2015. According to forecasts, about 200 companies in the country are to be inspected, of which only 50 are large. 

In future, the quality management principles laid down in the IRIS standard will be adapted by almost all companies in the sector and can be the basis for developing a modern national quality standard. ®

By Tatyana Simonova


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The Future of Purchases Lies with Certified Companies



Today, the main principles of purchases are transparency, target and efficient use of monetary resources, equality, fairness, a lack of discrimination and unjustified limitation of competition among participants, and unlimited access to participation by means of setting unchangeable requirements. Additionally, according to amendments to the Regulations on the Purchase of Goods, Works, and Services for Needs of RZD JSC, the purchase plan is formed for one year, and the purchase plan for separate types of goods, works, or services – for 5-7 years. It is based on investment, repair, production, and other programmes. It contains information about the name of the customer, the subject of an agreement, minimum essential requirements to participants, the information about the amount of goods, works, and services, the region, information about the starting (maximum) price, the term for fulfilling the agreement, and the purchasing method.   

RZD’s volume of purchased goods and services was RUB 835 billion in 2013, and according to the plan, this sum will reach RUB 940 billion this year. Naturally, there are plenty of companies wishing to supply goods and services to RZD, especially taking into account that the legislation has made conditions more favourable for market players. In 2013, Federal Law №44 “On the Contract System in the Purchase of Goods, Works and Services in the Field of State and Municipal Needs” was added to the basic regulatory document Federal Law №223 “On Purchases of Goods, Works, Services by Separate Types of Juridical Persons”. And in early 2014, railwaymen developed a new draft Statement on Purchase of Goods, Works, and Services for the Needs of RZD JSC, which took into account RZD’s recommendation to its suppliers to get IRIS certification to increase quality and control over the life cycle of products, because today a consumer wants to know the price of machinery and equipment, as well as its maintenance cost. State-of-the-art equipment and systems are needed to provide the rapid growth of railways, to cut costs, and increase the efficiency of processes in the railway industry, and IRIS is a powerful instrument for achieving these goals.  



Intellect Brings Profit



IRIS cuts costs during the whole life cycle of products and enhances the competitiveness of national producers of goods, to make business and production more efficient, to increase the quality and reliability of railway products, to change the current system of inspection and acceptance control, and multi-level audits. 

According to Andrey Veprintsev, Head at the Centre for Technical Audit of RZD, the company creates a single informational space, which covers all stages – from planning purchases to fulfilling obligations. Therefore, IRIS certified companies will be highly rated according to RZD’s assessment of the quality management system. 

“Top managers of plants, which gained IRIS certificates in 2012, noted an increase in the quality of products and services,” he emphasised. In his words, the sales volume of these plants grew by 8%, and labour efficiency – by 10%. Moreover, the amount of foreign tenders won by them increased by 30% on average. Additionally, the amount of new projects and types of products at such companies increased. 

One can say that IRIS certification gives any company in the railway sector an opportunity to be recognised for the high quality of their products or maintenance and repair activity, and an opportunity to enter the international railway market. A.Veprintsev explained that the IRIS standard was developed to enhance the business management system, which places special emphasis on reducing the number of defects in the supply chain.



Single Informational Space



According to A. Veprintsev, today there are a number of offers to develop the IRIS standard, in particular, the expansion of areas of certification to infrastructure elements and track structure, the development of national languages, including Russian, and issuing of certificates in those languages. It should be noted that since 2009, 58 plants in Russia and four in the CIS countries have been certified according to this standard. 105 Russian companies are registered on the IRIS website. Another 20 Russian companies, according to the expert, will receive a certificate this year.

It is expected that 75 companies will be IRIS-certified by 2015. According to forecasts, about 200 companies in the country are to be inspected, of which only 50 are large. 

In future, the quality management principles laid down in the IRIS standard will be adapted by almost all companies in the sector and can be the basis for developing a modern national quality standard. ®

By Tatyana Simonova


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    [DETAIL_TEXT] => 
The Future of Purchases Lies with Certified Companies



Today, the main principles of purchases are transparency, target and efficient use of monetary resources, equality, fairness, a lack of discrimination and unjustified limitation of competition among participants, and unlimited access to participation by means of setting unchangeable requirements. Additionally, according to amendments to the Regulations on the Purchase of Goods, Works, and Services for Needs of RZD JSC, the purchase plan is formed for one year, and the purchase plan for separate types of goods, works, or services – for 5-7 years. It is based on investment, repair, production, and other programmes. It contains information about the name of the customer, the subject of an agreement, minimum essential requirements to participants, the information about the amount of goods, works, and services, the region, information about the starting (maximum) price, the term for fulfilling the agreement, and the purchasing method.   

RZD’s volume of purchased goods and services was RUB 835 billion in 2013, and according to the plan, this sum will reach RUB 940 billion this year. Naturally, there are plenty of companies wishing to supply goods and services to RZD, especially taking into account that the legislation has made conditions more favourable for market players. In 2013, Federal Law №44 “On the Contract System in the Purchase of Goods, Works and Services in the Field of State and Municipal Needs” was added to the basic regulatory document Federal Law №223 “On Purchases of Goods, Works, Services by Separate Types of Juridical Persons”. And in early 2014, railwaymen developed a new draft Statement on Purchase of Goods, Works, and Services for the Needs of RZD JSC, which took into account RZD’s recommendation to its suppliers to get IRIS certification to increase quality and control over the life cycle of products, because today a consumer wants to know the price of machinery and equipment, as well as its maintenance cost. State-of-the-art equipment and systems are needed to provide the rapid growth of railways, to cut costs, and increase the efficiency of processes in the railway industry, and IRIS is a powerful instrument for achieving these goals.  



Intellect Brings Profit



IRIS cuts costs during the whole life cycle of products and enhances the competitiveness of national producers of goods, to make business and production more efficient, to increase the quality and reliability of railway products, to change the current system of inspection and acceptance control, and multi-level audits. 

According to Andrey Veprintsev, Head at the Centre for Technical Audit of RZD, the company creates a single informational space, which covers all stages – from planning purchases to fulfilling obligations. Therefore, IRIS certified companies will be highly rated according to RZD’s assessment of the quality management system. 

“Top managers of plants, which gained IRIS certificates in 2012, noted an increase in the quality of products and services,” he emphasised. In his words, the sales volume of these plants grew by 8%, and labour efficiency – by 10%. Moreover, the amount of foreign tenders won by them increased by 30% on average. Additionally, the amount of new projects and types of products at such companies increased. 

One can say that IRIS certification gives any company in the railway sector an opportunity to be recognised for the high quality of their products or maintenance and repair activity, and an opportunity to enter the international railway market. A.Veprintsev explained that the IRIS standard was developed to enhance the business management system, which places special emphasis on reducing the number of defects in the supply chain.



Single Informational Space



According to A. Veprintsev, today there are a number of offers to develop the IRIS standard, in particular, the expansion of areas of certification to infrastructure elements and track structure, the development of national languages, including Russian, and issuing of certificates in those languages. It should be noted that since 2009, 58 plants in Russia and four in the CIS countries have been certified according to this standard. 105 Russian companies are registered on the IRIS website. Another 20 Russian companies, according to the expert, will receive a certificate this year.

It is expected that 75 companies will be IRIS-certified by 2015. According to forecasts, about 200 companies in the country are to be inspected, of which only 50 are large. 

In future, the quality management principles laid down in the IRIS standard will be adapted by almost all companies in the sector and can be the basis for developing a modern national quality standard. ®

By Tatyana Simonova


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The Future of Purchases Lies with Certified Companies



Today, the main principles of purchases are transparency, target and efficient use of monetary resources, equality, fairness, a lack of discrimination and unjustified limitation of competition among participants, and unlimited access to participation by means of setting unchangeable requirements. Additionally, according to amendments to the Regulations on the Purchase of Goods, Works, and Services for Needs of RZD JSC, the purchase plan is formed for one year, and the purchase plan for separate types of goods, works, or services – for 5-7 years. It is based on investment, repair, production, and other programmes. It contains information about the name of the customer, the subject of an agreement, minimum essential requirements to participants, the information about the amount of goods, works, and services, the region, information about the starting (maximum) price, the term for fulfilling the agreement, and the purchasing method.   

RZD’s volume of purchased goods and services was RUB 835 billion in 2013, and according to the plan, this sum will reach RUB 940 billion this year. Naturally, there are plenty of companies wishing to supply goods and services to RZD, especially taking into account that the legislation has made conditions more favourable for market players. In 2013, Federal Law №44 “On the Contract System in the Purchase of Goods, Works and Services in the Field of State and Municipal Needs” was added to the basic regulatory document Federal Law №223 “On Purchases of Goods, Works, Services by Separate Types of Juridical Persons”. And in early 2014, railwaymen developed a new draft Statement on Purchase of Goods, Works, and Services for the Needs of RZD JSC, which took into account RZD’s recommendation to its suppliers to get IRIS certification to increase quality and control over the life cycle of products, because today a consumer wants to know the price of machinery and equipment, as well as its maintenance cost. State-of-the-art equipment and systems are needed to provide the rapid growth of railways, to cut costs, and increase the efficiency of processes in the railway industry, and IRIS is a powerful instrument for achieving these goals.  



Intellect Brings Profit



IRIS cuts costs during the whole life cycle of products and enhances the competitiveness of national producers of goods, to make business and production more efficient, to increase the quality and reliability of railway products, to change the current system of inspection and acceptance control, and multi-level audits. 

According to Andrey Veprintsev, Head at the Centre for Technical Audit of RZD, the company creates a single informational space, which covers all stages – from planning purchases to fulfilling obligations. Therefore, IRIS certified companies will be highly rated according to RZD’s assessment of the quality management system. 

“Top managers of plants, which gained IRIS certificates in 2012, noted an increase in the quality of products and services,” he emphasised. In his words, the sales volume of these plants grew by 8%, and labour efficiency – by 10%. Moreover, the amount of foreign tenders won by them increased by 30% on average. Additionally, the amount of new projects and types of products at such companies increased. 

One can say that IRIS certification gives any company in the railway sector an opportunity to be recognised for the high quality of their products or maintenance and repair activity, and an opportunity to enter the international railway market. A.Veprintsev explained that the IRIS standard was developed to enhance the business management system, which places special emphasis on reducing the number of defects in the supply chain.



Single Informational Space



According to A. Veprintsev, today there are a number of offers to develop the IRIS standard, in particular, the expansion of areas of certification to infrastructure elements and track structure, the development of national languages, including Russian, and issuing of certificates in those languages. It should be noted that since 2009, 58 plants in Russia and four in the CIS countries have been certified according to this standard. 105 Russian companies are registered on the IRIS website. Another 20 Russian companies, according to the expert, will receive a certificate this year.

It is expected that 75 companies will be IRIS-certified by 2015. According to forecasts, about 200 companies in the country are to be inspected, of which only 50 are large. 

In future, the quality management principles laid down in the IRIS standard will be adapted by almost all companies in the sector and can be the basis for developing a modern national quality standard. ®

By Tatyana Simonova


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Management Maxima



According to the Development Strategy of the Railway Transport of the Russian Federation till 2030, modernisation programmes should cover four main directions: the purchase of state-of-the-art railway machinery, the development of advanced technologies, the enhancement of management processes, which contribute to the increased efficiency of Russian railways, and the creation of new transport products. 

The company is successfully following the chosen course. For example, in 2013 it was sixth in the rating “Top 50 Innovative Companies of Russia.” This rating also included such science-intensive state corporations as Rostec Corporation and Rosatom. Among the evaluation criteria for such companies were the number of patents and the increase in the value of the company’s intangible assets resulting from the implementation of state-of-the-art technologies. In addition, subsidiaries of RZD got a number of awards too. In particular, Federal Freight JSC and TransContainer JSC became winners in the competition “The Best Russian Enterprises. Dynamics, Efficiency, Responsibility,” where the level of innovative development was a priority for evaluation.

In the words of Arkady Dvorkovich, Deputy Prime Minister of Russia, RZD has to improve management processes, because it has to increase investment in the Eastern part of the network. The company uses borrowed funds, in particular, from the National Welfare Fund. “These resources are returnable, which means that the company must achieve maximum efficiency at all stages,” noted A. Dvorkovich. 

Funds allocated to RZD are significant: the modernisation of the Trans-Siberian and Baikal-Amur Mainlines is one of the largest investment projects in the Russian Federation. RZD has to use innovative tools to manage the financial resources the company has attracted. Moreover, the RF Government is going to use this project to work out mechanisms for financial and technological auditing, banking and construction supervision, which will later be applied in other sectors to implement large investment projects, for which public investment will be used. 

RZD has already tried a number of such tools when carrying out some programmes. The new approach was also applied to the recently updated General Scheme of Russian Railway Network Development till 2020: in particular, it was the first time that the methodology of intersectoral balance was used. Specialists at the Institute of Economy and Transport Development (IETD) explained that this allows balancing intersectoral and interregional cargo flows for the calculation of the social and economic efficiency of major infrastructure projects. Such tools were also used when adjustments to long-term prospects were made and the scenario outlook for the volume of cargo transportation by railway till 2030 was developed. They will be improved in the future. It is worth adding that the leading consulting companies participated in the development of the corporate management system of RZD, and the best global practices were taken into account.



State-of-the-Art Machinery



Maxim Sokolov, Transport Minister of Russia, emphasises that some initiatives from RZD are targeted at technological upgrades of railway facilities, which contributes to the development of heavy train traffic. In particular, this was achieved through a variety of innovative solutions, such as electro-pneumatic brakes, extra strong couplers, new systems for operating several locomotives from one cab. Transportation by trains weighing 12,000 tons would have been impossible without all these innovations.  Recently, pilot trains weighing 18,000 tons ran on the South-Ural Railway, thus setting a new standard for the improvement of railway machinery. 

As reported by the Ministry of Transport, the issue of the replacement of old rolling stock by new state-of-the-art machines is a strategic short-term priority for RZD. Such railcars have a 20-30% longer mileage between repairs, and trains consisting of such wagons can be shorter but carry the same amount of cargo. In this regard, the ministry highly appreciated the work of Tikhvin Freight Car Building Plant (TVSZ).  Projects with improvements in the production of large castings for rolling stock for 1520 mm gauge, including the production of Barber bogies, gained governmental support. UVZ has its own know-how in this sector.

According to Alexey Sokolov, Deputy Director General of VNIIZhT, modern Russian railcars can compete with their foreign equivalents, for example, with railcars on the Chinese ZK1 bogie, which now operate in Kazakhstan. Further innovations are to improve specifications of rolling stock. In the future, innovations should contribute to putting into operation railcars of greater carrying capacity and with a larger wagon body. 

It especially concerns the sector of container transportation. For example, TransContainer railway operator began to order new flat wagons that can run at 160 kph. This fleet of railcars is aimed at launching express shuttle container trains, which will run between railway hubs. 

RZD’s cooperation with Siemens, Alstom, Plasser & Theurer, Knorr-Bremze, and Tatravagonka has contributed to implementation of advanced technologies in the production of new rolling stock.

RZD plans to purchase new locomotives with better productivity and energy efficiency. 

Work is under way on natural gas vehicle (NGV) projects. Pilot prototype models of a GT1h hybrid gas turbine locomotives and TEM19 shunting gas diesel locomotive, which have no equivalents in the world, were produced. 

It is also planned to renew the fleet of track machines with more efficient ones and undertake automation of the repair. It is planned to purchase hybrid machines. It was such machinery that helped to increase the efficiency of track repair in 2013. Thanks to it, 2,035 kilometers were repaired at 291 track section during a long-term closure. Over 1,000 kilometre-long tracks were repaired according to “winter laying” technology in 2014. Thanks to it, the carrying capacity of railways increased, and the quality of planning and using “windows” improved. An example of it is the RPB-01 machine for track repair made by STM, which became one of the winners of the competition among railway machinery producers held by RZD.

Advanced Technologies

According to Valentin Gapanovich, Senior Vice President of RZD, the company is implementing a long-term concept of the development of train traffic management systems of various levels on the basis of railway automatics and communication (till 2020). In particular, it envisages the development of modern automatic technological process control systems, GLONASS-based monitoring of infrastructure facilities and traffic management, and an intelligent system for management and automation of producing processes in railway transportation (ISUZHT). ISUZHT has been put into trial operation on the Eastern part of the network and on the St Petersburg-Buslovskaya and St Petersburg-Moscow routes. Thanks to this innovation, the traffic on the existing tracks has increased through the development of unified operating technologies on the routes. 

In the future, it is planned to create a system that will allow evaluating the formation of wagon flows on the network on the basis of certain technical standards, transportation plans, places of origin and destinations of cargo flows, types of freight in accordance with existing limitations. As a result, it will be possible to automate the calculation of the cheapest transportation options or other parameters specified in agreements. This will contribute to the optimisation of traffic, and to an increase in the accuracy of calculations of investments for the development of routes. A prototype of such calculations is, for example, variant schemes of regular shipments from Western Siberia to the port of Ust-Luga on the coast of the Gulf of Finland.

In 2013, the system for management of resources, risks and dependability of railway facilities at lifecycle stages or URRAN moved to a new level. According to RZD, this methodology was used for planning the repair of more than 3,800 km of tracks in 2014 at 16 railways. In the future, URRAN must be applied on the whole network.

A strategic objective for increasing the efficiency of locomotives is the transfer to managing locomotives in accordance with their operating areas and a unification of locomotive fleet on operating areas, for which AS CUTR (a system for the automation of the work of traction management centres on railways) will be developed. According to Alexey Illarionov, Vice President of RZD, the work on other important new projects will be continued, for example, ASU I (for the automation of infrastructure management), and the system for electronic interaction between the Federal Customs Service and rolling stock owners.

Together with leading industrial companies, RZD continues to develop innovative technical solutions for the infrastructure. One of the largest projects in this sector is the production of 100-meter long rails by Evraz and Mechel at new production lines, investments into which were made under long-term agreements with RZD. This is another step forward in the development of continuous welded technology on the network. 

Technological innovations are developed under the auspices of a number of institutes, of which IETD specialises mainly in economic issues in the railway sector, VNIIZhT and Roszheldorproject – in infrastructure projects, and NIIAS – in automation and software for traffic management and safety systems. However, a number of other companies are attracted to innovative programs in many sectors, for example, the Volga Department of the Russian Engineering Academy (VD REA; focuses on quality management), Orgprom Group (lean production), Alt Invest (project feasibility study). 

According to Anatoly Krasnoschek, Senior Vice President of RZD, key figures of the company’s business block are calculated till 2030 taking into account the whole complex of technological initiatives. Thus, a higher level of efficiency and quality of transportation is to be reached in comparison with 2013. In particular, the speed of cargo delivery is to increase by 58%, and labor efficiency – by 67%. 

 

New Services



Innovation in the sector of development of new transport products relates to RZD’s transfer to a new business model (that of an international transport and logistics company), which will increase the efficiency of the railway business. 

In 2014, in the framework of this model, scheduled train traffic has been organised on 79 routes, transport and forwarding services (including long-term agreements) and complex services (transportation + rolling stock, including railway ferry services) are provided to customers. Scheduled trains, so called “Cargo Express” trains have been launched. The number of express container trains has increased. The list of such products is to expand in the future, particularly, by means of transportation in tank containers and refrigerated containers. RZD-Express service was implemented for transportation of small consignments. It is planned to offer a range of 3PL and 4PL innovative services, in particular, with the involvement of Russian Railways Logistics and GEFCO. Innovative products will be put into operation to ensure the integration of the transportation and logistics business of railways in the Common Economic Space and in the framework of international transport corridors that cross the Russian Federation. 

Therefore, RZD holding company is focusing on improving the quality of services and creating conditions for optimisation of transport expenses. ®

By Alexander Solntsev



viewpoint

Arkady Dvorkovich, 

Deputy Prime Minister of the Russian Federation

–  In 2014, RZD continued to make efforts to increase its efficiency. We pay a lot of attention to modernisation. All big companies must do this. In this regard, RZD reached a big success in comparison with other large monopolies.



Maxim Sokolov,

Minister of Transport of the Russian Federation

– Recently, the Ministry of Transport of the Russian Federation together with other executive power bodies in Russia, as well as RZD, were committed to submit proposals for the technological modernisation of railway infrastructure facilities in accordance with modern scientific developments. In our opinion, the development of heavy train traffic using innovative rolling stock, implementation of modern technological process management automated systems, and the use of GLONASS technologies to improve infrastructure monitoring systems and traffic control should be taken into account, when preparing such proposals.



Valentin Gapanovich,

Senior Vice President of RZD

– Positive statistics indicate the success of the innovation activity of RZD: the number of patents has increased almost fourfold over the past five years. In 2013, another 2,500 copyright protection documents were added to the patent portfolio of the holding company. Intangible assets increased as well: according to scientific and technical developments they were estimated at RUB 11 billion. Innovations help increase energy efficiency. Due to orders made by RZD, the pace of railway engineering development is more rapid than the corresponding figure in the machine building industry as a whole. Engineering centers, launched by the company together with the world's leading producers, make a significant contribution to the development of state-of-the-art machinery. Enhancement of locomotive management systems has a significant effect too. Strategic management of the quality of consumed products contributes to the development of the technical base. In particular, RZD plans to begin to purchase industrial products only from companies, which have passed the IRIS certification procedure. Increasing the safety of transportation and competitiveness of Russian railways also greatly depends on successful implementation of innovations. 


    [~DETAIL_TEXT] => 
Management Maxima



According to the Development Strategy of the Railway Transport of the Russian Federation till 2030, modernisation programmes should cover four main directions: the purchase of state-of-the-art railway machinery, the development of advanced technologies, the enhancement of management processes, which contribute to the increased efficiency of Russian railways, and the creation of new transport products. 

The company is successfully following the chosen course. For example, in 2013 it was sixth in the rating “Top 50 Innovative Companies of Russia.” This rating also included such science-intensive state corporations as Rostec Corporation and Rosatom. Among the evaluation criteria for such companies were the number of patents and the increase in the value of the company’s intangible assets resulting from the implementation of state-of-the-art technologies. In addition, subsidiaries of RZD got a number of awards too. In particular, Federal Freight JSC and TransContainer JSC became winners in the competition “The Best Russian Enterprises. Dynamics, Efficiency, Responsibility,” where the level of innovative development was a priority for evaluation.

In the words of Arkady Dvorkovich, Deputy Prime Minister of Russia, RZD has to improve management processes, because it has to increase investment in the Eastern part of the network. The company uses borrowed funds, in particular, from the National Welfare Fund. “These resources are returnable, which means that the company must achieve maximum efficiency at all stages,” noted A. Dvorkovich. 

Funds allocated to RZD are significant: the modernisation of the Trans-Siberian and Baikal-Amur Mainlines is one of the largest investment projects in the Russian Federation. RZD has to use innovative tools to manage the financial resources the company has attracted. Moreover, the RF Government is going to use this project to work out mechanisms for financial and technological auditing, banking and construction supervision, which will later be applied in other sectors to implement large investment projects, for which public investment will be used. 

RZD has already tried a number of such tools when carrying out some programmes. The new approach was also applied to the recently updated General Scheme of Russian Railway Network Development till 2020: in particular, it was the first time that the methodology of intersectoral balance was used. Specialists at the Institute of Economy and Transport Development (IETD) explained that this allows balancing intersectoral and interregional cargo flows for the calculation of the social and economic efficiency of major infrastructure projects. Such tools were also used when adjustments to long-term prospects were made and the scenario outlook for the volume of cargo transportation by railway till 2030 was developed. They will be improved in the future. It is worth adding that the leading consulting companies participated in the development of the corporate management system of RZD, and the best global practices were taken into account.



State-of-the-Art Machinery



Maxim Sokolov, Transport Minister of Russia, emphasises that some initiatives from RZD are targeted at technological upgrades of railway facilities, which contributes to the development of heavy train traffic. In particular, this was achieved through a variety of innovative solutions, such as electro-pneumatic brakes, extra strong couplers, new systems for operating several locomotives from one cab. Transportation by trains weighing 12,000 tons would have been impossible without all these innovations.  Recently, pilot trains weighing 18,000 tons ran on the South-Ural Railway, thus setting a new standard for the improvement of railway machinery. 

As reported by the Ministry of Transport, the issue of the replacement of old rolling stock by new state-of-the-art machines is a strategic short-term priority for RZD. Such railcars have a 20-30% longer mileage between repairs, and trains consisting of such wagons can be shorter but carry the same amount of cargo. In this regard, the ministry highly appreciated the work of Tikhvin Freight Car Building Plant (TVSZ).  Projects with improvements in the production of large castings for rolling stock for 1520 mm gauge, including the production of Barber bogies, gained governmental support. UVZ has its own know-how in this sector.

According to Alexey Sokolov, Deputy Director General of VNIIZhT, modern Russian railcars can compete with their foreign equivalents, for example, with railcars on the Chinese ZK1 bogie, which now operate in Kazakhstan. Further innovations are to improve specifications of rolling stock. In the future, innovations should contribute to putting into operation railcars of greater carrying capacity and with a larger wagon body. 

It especially concerns the sector of container transportation. For example, TransContainer railway operator began to order new flat wagons that can run at 160 kph. This fleet of railcars is aimed at launching express shuttle container trains, which will run between railway hubs. 

RZD’s cooperation with Siemens, Alstom, Plasser & Theurer, Knorr-Bremze, and Tatravagonka has contributed to implementation of advanced technologies in the production of new rolling stock.

RZD plans to purchase new locomotives with better productivity and energy efficiency. 

Work is under way on natural gas vehicle (NGV) projects. Pilot prototype models of a GT1h hybrid gas turbine locomotives and TEM19 shunting gas diesel locomotive, which have no equivalents in the world, were produced. 

It is also planned to renew the fleet of track machines with more efficient ones and undertake automation of the repair. It is planned to purchase hybrid machines. It was such machinery that helped to increase the efficiency of track repair in 2013. Thanks to it, 2,035 kilometers were repaired at 291 track section during a long-term closure. Over 1,000 kilometre-long tracks were repaired according to “winter laying” technology in 2014. Thanks to it, the carrying capacity of railways increased, and the quality of planning and using “windows” improved. An example of it is the RPB-01 machine for track repair made by STM, which became one of the winners of the competition among railway machinery producers held by RZD.

Advanced Technologies

According to Valentin Gapanovich, Senior Vice President of RZD, the company is implementing a long-term concept of the development of train traffic management systems of various levels on the basis of railway automatics and communication (till 2020). In particular, it envisages the development of modern automatic technological process control systems, GLONASS-based monitoring of infrastructure facilities and traffic management, and an intelligent system for management and automation of producing processes in railway transportation (ISUZHT). ISUZHT has been put into trial operation on the Eastern part of the network and on the St Petersburg-Buslovskaya and St Petersburg-Moscow routes. Thanks to this innovation, the traffic on the existing tracks has increased through the development of unified operating technologies on the routes. 

In the future, it is planned to create a system that will allow evaluating the formation of wagon flows on the network on the basis of certain technical standards, transportation plans, places of origin and destinations of cargo flows, types of freight in accordance with existing limitations. As a result, it will be possible to automate the calculation of the cheapest transportation options or other parameters specified in agreements. This will contribute to the optimisation of traffic, and to an increase in the accuracy of calculations of investments for the development of routes. A prototype of such calculations is, for example, variant schemes of regular shipments from Western Siberia to the port of Ust-Luga on the coast of the Gulf of Finland.

In 2013, the system for management of resources, risks and dependability of railway facilities at lifecycle stages or URRAN moved to a new level. According to RZD, this methodology was used for planning the repair of more than 3,800 km of tracks in 2014 at 16 railways. In the future, URRAN must be applied on the whole network.

A strategic objective for increasing the efficiency of locomotives is the transfer to managing locomotives in accordance with their operating areas and a unification of locomotive fleet on operating areas, for which AS CUTR (a system for the automation of the work of traction management centres on railways) will be developed. According to Alexey Illarionov, Vice President of RZD, the work on other important new projects will be continued, for example, ASU I (for the automation of infrastructure management), and the system for electronic interaction between the Federal Customs Service and rolling stock owners.

Together with leading industrial companies, RZD continues to develop innovative technical solutions for the infrastructure. One of the largest projects in this sector is the production of 100-meter long rails by Evraz and Mechel at new production lines, investments into which were made under long-term agreements with RZD. This is another step forward in the development of continuous welded technology on the network. 

Technological innovations are developed under the auspices of a number of institutes, of which IETD specialises mainly in economic issues in the railway sector, VNIIZhT and Roszheldorproject – in infrastructure projects, and NIIAS – in automation and software for traffic management and safety systems. However, a number of other companies are attracted to innovative programs in many sectors, for example, the Volga Department of the Russian Engineering Academy (VD REA; focuses on quality management), Orgprom Group (lean production), Alt Invest (project feasibility study). 

According to Anatoly Krasnoschek, Senior Vice President of RZD, key figures of the company’s business block are calculated till 2030 taking into account the whole complex of technological initiatives. Thus, a higher level of efficiency and quality of transportation is to be reached in comparison with 2013. In particular, the speed of cargo delivery is to increase by 58%, and labor efficiency – by 67%. 

 

New Services



Innovation in the sector of development of new transport products relates to RZD’s transfer to a new business model (that of an international transport and logistics company), which will increase the efficiency of the railway business. 

In 2014, in the framework of this model, scheduled train traffic has been organised on 79 routes, transport and forwarding services (including long-term agreements) and complex services (transportation + rolling stock, including railway ferry services) are provided to customers. Scheduled trains, so called “Cargo Express” trains have been launched. The number of express container trains has increased. The list of such products is to expand in the future, particularly, by means of transportation in tank containers and refrigerated containers. RZD-Express service was implemented for transportation of small consignments. It is planned to offer a range of 3PL and 4PL innovative services, in particular, with the involvement of Russian Railways Logistics and GEFCO. Innovative products will be put into operation to ensure the integration of the transportation and logistics business of railways in the Common Economic Space and in the framework of international transport corridors that cross the Russian Federation. 

Therefore, RZD holding company is focusing on improving the quality of services and creating conditions for optimisation of transport expenses. ®

By Alexander Solntsev



viewpoint

Arkady Dvorkovich, 

Deputy Prime Minister of the Russian Federation

–  In 2014, RZD continued to make efforts to increase its efficiency. We pay a lot of attention to modernisation. All big companies must do this. In this regard, RZD reached a big success in comparison with other large monopolies.



Maxim Sokolov,

Minister of Transport of the Russian Federation

– Recently, the Ministry of Transport of the Russian Federation together with other executive power bodies in Russia, as well as RZD, were committed to submit proposals for the technological modernisation of railway infrastructure facilities in accordance with modern scientific developments. In our opinion, the development of heavy train traffic using innovative rolling stock, implementation of modern technological process management automated systems, and the use of GLONASS technologies to improve infrastructure monitoring systems and traffic control should be taken into account, when preparing such proposals.



Valentin Gapanovich,

Senior Vice President of RZD

– Positive statistics indicate the success of the innovation activity of RZD: the number of patents has increased almost fourfold over the past five years. In 2013, another 2,500 copyright protection documents were added to the patent portfolio of the holding company. Intangible assets increased as well: according to scientific and technical developments they were estimated at RUB 11 billion. Innovations help increase energy efficiency. Due to orders made by RZD, the pace of railway engineering development is more rapid than the corresponding figure in the machine building industry as a whole. Engineering centers, launched by the company together with the world's leading producers, make a significant contribution to the development of state-of-the-art machinery. Enhancement of locomotive management systems has a significant effect too. Strategic management of the quality of consumed products contributes to the development of the technical base. In particular, RZD plans to begin to purchase industrial products only from companies, which have passed the IRIS certification procedure. Increasing the safety of transportation and competitiveness of Russian railways also greatly depends on successful implementation of innovations. 


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Management Maxima



According to the Development Strategy of the Railway Transport of the Russian Federation till 2030, modernisation programmes should cover four main directions: the purchase of state-of-the-art railway machinery, the development of advanced technologies, the enhancement of management processes, which contribute to the increased efficiency of Russian railways, and the creation of new transport products. 

The company is successfully following the chosen course. For example, in 2013 it was sixth in the rating “Top 50 Innovative Companies of Russia.” This rating also included such science-intensive state corporations as Rostec Corporation and Rosatom. Among the evaluation criteria for such companies were the number of patents and the increase in the value of the company’s intangible assets resulting from the implementation of state-of-the-art technologies. In addition, subsidiaries of RZD got a number of awards too. In particular, Federal Freight JSC and TransContainer JSC became winners in the competition “The Best Russian Enterprises. Dynamics, Efficiency, Responsibility,” where the level of innovative development was a priority for evaluation.

In the words of Arkady Dvorkovich, Deputy Prime Minister of Russia, RZD has to improve management processes, because it has to increase investment in the Eastern part of the network. The company uses borrowed funds, in particular, from the National Welfare Fund. “These resources are returnable, which means that the company must achieve maximum efficiency at all stages,” noted A. Dvorkovich. 

Funds allocated to RZD are significant: the modernisation of the Trans-Siberian and Baikal-Amur Mainlines is one of the largest investment projects in the Russian Federation. RZD has to use innovative tools to manage the financial resources the company has attracted. Moreover, the RF Government is going to use this project to work out mechanisms for financial and technological auditing, banking and construction supervision, which will later be applied in other sectors to implement large investment projects, for which public investment will be used. 

RZD has already tried a number of such tools when carrying out some programmes. The new approach was also applied to the recently updated General Scheme of Russian Railway Network Development till 2020: in particular, it was the first time that the methodology of intersectoral balance was used. Specialists at the Institute of Economy and Transport Development (IETD) explained that this allows balancing intersectoral and interregional cargo flows for the calculation of the social and economic efficiency of major infrastructure projects. Such tools were also used when adjustments to long-term prospects were made and the scenario outlook for the volume of cargo transportation by railway till 2030 was developed. They will be improved in the future. It is worth adding that the leading consulting companies participated in the development of the corporate management system of RZD, and the best global practices were taken into account.



State-of-the-Art Machinery



Maxim Sokolov, Transport Minister of Russia, emphasises that some initiatives from RZD are targeted at technological upgrades of railway facilities, which contributes to the development of heavy train traffic. In particular, this was achieved through a variety of innovative solutions, such as electro-pneumatic brakes, extra strong couplers, new systems for operating several locomotives from one cab. Transportation by trains weighing 12,000 tons would have been impossible without all these innovations.  Recently, pilot trains weighing 18,000 tons ran on the South-Ural Railway, thus setting a new standard for the improvement of railway machinery. 

As reported by the Ministry of Transport, the issue of the replacement of old rolling stock by new state-of-the-art machines is a strategic short-term priority for RZD. Such railcars have a 20-30% longer mileage between repairs, and trains consisting of such wagons can be shorter but carry the same amount of cargo. In this regard, the ministry highly appreciated the work of Tikhvin Freight Car Building Plant (TVSZ).  Projects with improvements in the production of large castings for rolling stock for 1520 mm gauge, including the production of Barber bogies, gained governmental support. UVZ has its own know-how in this sector.

According to Alexey Sokolov, Deputy Director General of VNIIZhT, modern Russian railcars can compete with their foreign equivalents, for example, with railcars on the Chinese ZK1 bogie, which now operate in Kazakhstan. Further innovations are to improve specifications of rolling stock. In the future, innovations should contribute to putting into operation railcars of greater carrying capacity and with a larger wagon body. 

It especially concerns the sector of container transportation. For example, TransContainer railway operator began to order new flat wagons that can run at 160 kph. This fleet of railcars is aimed at launching express shuttle container trains, which will run between railway hubs. 

RZD’s cooperation with Siemens, Alstom, Plasser & Theurer, Knorr-Bremze, and Tatravagonka has contributed to implementation of advanced technologies in the production of new rolling stock.

RZD plans to purchase new locomotives with better productivity and energy efficiency. 

Work is under way on natural gas vehicle (NGV) projects. Pilot prototype models of a GT1h hybrid gas turbine locomotives and TEM19 shunting gas diesel locomotive, which have no equivalents in the world, were produced. 

It is also planned to renew the fleet of track machines with more efficient ones and undertake automation of the repair. It is planned to purchase hybrid machines. It was such machinery that helped to increase the efficiency of track repair in 2013. Thanks to it, 2,035 kilometers were repaired at 291 track section during a long-term closure. Over 1,000 kilometre-long tracks were repaired according to “winter laying” technology in 2014. Thanks to it, the carrying capacity of railways increased, and the quality of planning and using “windows” improved. An example of it is the RPB-01 machine for track repair made by STM, which became one of the winners of the competition among railway machinery producers held by RZD.

Advanced Technologies

According to Valentin Gapanovich, Senior Vice President of RZD, the company is implementing a long-term concept of the development of train traffic management systems of various levels on the basis of railway automatics and communication (till 2020). In particular, it envisages the development of modern automatic technological process control systems, GLONASS-based monitoring of infrastructure facilities and traffic management, and an intelligent system for management and automation of producing processes in railway transportation (ISUZHT). ISUZHT has been put into trial operation on the Eastern part of the network and on the St Petersburg-Buslovskaya and St Petersburg-Moscow routes. Thanks to this innovation, the traffic on the existing tracks has increased through the development of unified operating technologies on the routes. 

In the future, it is planned to create a system that will allow evaluating the formation of wagon flows on the network on the basis of certain technical standards, transportation plans, places of origin and destinations of cargo flows, types of freight in accordance with existing limitations. As a result, it will be possible to automate the calculation of the cheapest transportation options or other parameters specified in agreements. This will contribute to the optimisation of traffic, and to an increase in the accuracy of calculations of investments for the development of routes. A prototype of such calculations is, for example, variant schemes of regular shipments from Western Siberia to the port of Ust-Luga on the coast of the Gulf of Finland.

In 2013, the system for management of resources, risks and dependability of railway facilities at lifecycle stages or URRAN moved to a new level. According to RZD, this methodology was used for planning the repair of more than 3,800 km of tracks in 2014 at 16 railways. In the future, URRAN must be applied on the whole network.

A strategic objective for increasing the efficiency of locomotives is the transfer to managing locomotives in accordance with their operating areas and a unification of locomotive fleet on operating areas, for which AS CUTR (a system for the automation of the work of traction management centres on railways) will be developed. According to Alexey Illarionov, Vice President of RZD, the work on other important new projects will be continued, for example, ASU I (for the automation of infrastructure management), and the system for electronic interaction between the Federal Customs Service and rolling stock owners.

Together with leading industrial companies, RZD continues to develop innovative technical solutions for the infrastructure. One of the largest projects in this sector is the production of 100-meter long rails by Evraz and Mechel at new production lines, investments into which were made under long-term agreements with RZD. This is another step forward in the development of continuous welded technology on the network. 

Technological innovations are developed under the auspices of a number of institutes, of which IETD specialises mainly in economic issues in the railway sector, VNIIZhT and Roszheldorproject – in infrastructure projects, and NIIAS – in automation and software for traffic management and safety systems. However, a number of other companies are attracted to innovative programs in many sectors, for example, the Volga Department of the Russian Engineering Academy (VD REA; focuses on quality management), Orgprom Group (lean production), Alt Invest (project feasibility study). 

According to Anatoly Krasnoschek, Senior Vice President of RZD, key figures of the company’s business block are calculated till 2030 taking into account the whole complex of technological initiatives. Thus, a higher level of efficiency and quality of transportation is to be reached in comparison with 2013. In particular, the speed of cargo delivery is to increase by 58%, and labor efficiency – by 67%. 

 

New Services



Innovation in the sector of development of new transport products relates to RZD’s transfer to a new business model (that of an international transport and logistics company), which will increase the efficiency of the railway business. 

In 2014, in the framework of this model, scheduled train traffic has been organised on 79 routes, transport and forwarding services (including long-term agreements) and complex services (transportation + rolling stock, including railway ferry services) are provided to customers. Scheduled trains, so called “Cargo Express” trains have been launched. The number of express container trains has increased. The list of such products is to expand in the future, particularly, by means of transportation in tank containers and refrigerated containers. RZD-Express service was implemented for transportation of small consignments. It is planned to offer a range of 3PL and 4PL innovative services, in particular, with the involvement of Russian Railways Logistics and GEFCO. Innovative products will be put into operation to ensure the integration of the transportation and logistics business of railways in the Common Economic Space and in the framework of international transport corridors that cross the Russian Federation. 

Therefore, RZD holding company is focusing on improving the quality of services and creating conditions for optimisation of transport expenses. ®

By Alexander Solntsev



viewpoint

Arkady Dvorkovich, 

Deputy Prime Minister of the Russian Federation

–  In 2014, RZD continued to make efforts to increase its efficiency. We pay a lot of attention to modernisation. All big companies must do this. In this regard, RZD reached a big success in comparison with other large monopolies.



Maxim Sokolov,

Minister of Transport of the Russian Federation

– Recently, the Ministry of Transport of the Russian Federation together with other executive power bodies in Russia, as well as RZD, were committed to submit proposals for the technological modernisation of railway infrastructure facilities in accordance with modern scientific developments. In our opinion, the development of heavy train traffic using innovative rolling stock, implementation of modern technological process management automated systems, and the use of GLONASS technologies to improve infrastructure monitoring systems and traffic control should be taken into account, when preparing such proposals.



Valentin Gapanovich,

Senior Vice President of RZD

– Positive statistics indicate the success of the innovation activity of RZD: the number of patents has increased almost fourfold over the past five years. In 2013, another 2,500 copyright protection documents were added to the patent portfolio of the holding company. Intangible assets increased as well: according to scientific and technical developments they were estimated at RUB 11 billion. Innovations help increase energy efficiency. Due to orders made by RZD, the pace of railway engineering development is more rapid than the corresponding figure in the machine building industry as a whole. Engineering centers, launched by the company together with the world's leading producers, make a significant contribution to the development of state-of-the-art machinery. Enhancement of locomotive management systems has a significant effect too. Strategic management of the quality of consumed products contributes to the development of the technical base. In particular, RZD plans to begin to purchase industrial products only from companies, which have passed the IRIS certification procedure. Increasing the safety of transportation and competitiveness of Russian railways also greatly depends on successful implementation of innovations. 


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Management Maxima



According to the Development Strategy of the Railway Transport of the Russian Federation till 2030, modernisation programmes should cover four main directions: the purchase of state-of-the-art railway machinery, the development of advanced technologies, the enhancement of management processes, which contribute to the increased efficiency of Russian railways, and the creation of new transport products. 

The company is successfully following the chosen course. For example, in 2013 it was sixth in the rating “Top 50 Innovative Companies of Russia.” This rating also included such science-intensive state corporations as Rostec Corporation and Rosatom. Among the evaluation criteria for such companies were the number of patents and the increase in the value of the company’s intangible assets resulting from the implementation of state-of-the-art technologies. In addition, subsidiaries of RZD got a number of awards too. In particular, Federal Freight JSC and TransContainer JSC became winners in the competition “The Best Russian Enterprises. Dynamics, Efficiency, Responsibility,” where the level of innovative development was a priority for evaluation.

In the words of Arkady Dvorkovich, Deputy Prime Minister of Russia, RZD has to improve management processes, because it has to increase investment in the Eastern part of the network. The company uses borrowed funds, in particular, from the National Welfare Fund. “These resources are returnable, which means that the company must achieve maximum efficiency at all stages,” noted A. Dvorkovich. 

Funds allocated to RZD are significant: the modernisation of the Trans-Siberian and Baikal-Amur Mainlines is one of the largest investment projects in the Russian Federation. RZD has to use innovative tools to manage the financial resources the company has attracted. Moreover, the RF Government is going to use this project to work out mechanisms for financial and technological auditing, banking and construction supervision, which will later be applied in other sectors to implement large investment projects, for which public investment will be used. 

RZD has already tried a number of such tools when carrying out some programmes. The new approach was also applied to the recently updated General Scheme of Russian Railway Network Development till 2020: in particular, it was the first time that the methodology of intersectoral balance was used. Specialists at the Institute of Economy and Transport Development (IETD) explained that this allows balancing intersectoral and interregional cargo flows for the calculation of the social and economic efficiency of major infrastructure projects. Such tools were also used when adjustments to long-term prospects were made and the scenario outlook for the volume of cargo transportation by railway till 2030 was developed. They will be improved in the future. It is worth adding that the leading consulting companies participated in the development of the corporate management system of RZD, and the best global practices were taken into account.



State-of-the-Art Machinery



Maxim Sokolov, Transport Minister of Russia, emphasises that some initiatives from RZD are targeted at technological upgrades of railway facilities, which contributes to the development of heavy train traffic. In particular, this was achieved through a variety of innovative solutions, such as electro-pneumatic brakes, extra strong couplers, new systems for operating several locomotives from one cab. Transportation by trains weighing 12,000 tons would have been impossible without all these innovations.  Recently, pilot trains weighing 18,000 tons ran on the South-Ural Railway, thus setting a new standard for the improvement of railway machinery. 

As reported by the Ministry of Transport, the issue of the replacement of old rolling stock by new state-of-the-art machines is a strategic short-term priority for RZD. Such railcars have a 20-30% longer mileage between repairs, and trains consisting of such wagons can be shorter but carry the same amount of cargo. In this regard, the ministry highly appreciated the work of Tikhvin Freight Car Building Plant (TVSZ).  Projects with improvements in the production of large castings for rolling stock for 1520 mm gauge, including the production of Barber bogies, gained governmental support. UVZ has its own know-how in this sector.

According to Alexey Sokolov, Deputy Director General of VNIIZhT, modern Russian railcars can compete with their foreign equivalents, for example, with railcars on the Chinese ZK1 bogie, which now operate in Kazakhstan. Further innovations are to improve specifications of rolling stock. In the future, innovations should contribute to putting into operation railcars of greater carrying capacity and with a larger wagon body. 

It especially concerns the sector of container transportation. For example, TransContainer railway operator began to order new flat wagons that can run at 160 kph. This fleet of railcars is aimed at launching express shuttle container trains, which will run between railway hubs. 

RZD’s cooperation with Siemens, Alstom, Plasser & Theurer, Knorr-Bremze, and Tatravagonka has contributed to implementation of advanced technologies in the production of new rolling stock.

RZD plans to purchase new locomotives with better productivity and energy efficiency. 

Work is under way on natural gas vehicle (NGV) projects. Pilot prototype models of a GT1h hybrid gas turbine locomotives and TEM19 shunting gas diesel locomotive, which have no equivalents in the world, were produced. 

It is also planned to renew the fleet of track machines with more efficient ones and undertake automation of the repair. It is planned to purchase hybrid machines. It was such machinery that helped to increase the efficiency of track repair in 2013. Thanks to it, 2,035 kilometers were repaired at 291 track section during a long-term closure. Over 1,000 kilometre-long tracks were repaired according to “winter laying” technology in 2014. Thanks to it, the carrying capacity of railways increased, and the quality of planning and using “windows” improved. An example of it is the RPB-01 machine for track repair made by STM, which became one of the winners of the competition among railway machinery producers held by RZD.

Advanced Technologies

According to Valentin Gapanovich, Senior Vice President of RZD, the company is implementing a long-term concept of the development of train traffic management systems of various levels on the basis of railway automatics and communication (till 2020). In particular, it envisages the development of modern automatic technological process control systems, GLONASS-based monitoring of infrastructure facilities and traffic management, and an intelligent system for management and automation of producing processes in railway transportation (ISUZHT). ISUZHT has been put into trial operation on the Eastern part of the network and on the St Petersburg-Buslovskaya and St Petersburg-Moscow routes. Thanks to this innovation, the traffic on the existing tracks has increased through the development of unified operating technologies on the routes. 

In the future, it is planned to create a system that will allow evaluating the formation of wagon flows on the network on the basis of certain technical standards, transportation plans, places of origin and destinations of cargo flows, types of freight in accordance with existing limitations. As a result, it will be possible to automate the calculation of the cheapest transportation options or other parameters specified in agreements. This will contribute to the optimisation of traffic, and to an increase in the accuracy of calculations of investments for the development of routes. A prototype of such calculations is, for example, variant schemes of regular shipments from Western Siberia to the port of Ust-Luga on the coast of the Gulf of Finland.

In 2013, the system for management of resources, risks and dependability of railway facilities at lifecycle stages or URRAN moved to a new level. According to RZD, this methodology was used for planning the repair of more than 3,800 km of tracks in 2014 at 16 railways. In the future, URRAN must be applied on the whole network.

A strategic objective for increasing the efficiency of locomotives is the transfer to managing locomotives in accordance with their operating areas and a unification of locomotive fleet on operating areas, for which AS CUTR (a system for the automation of the work of traction management centres on railways) will be developed. According to Alexey Illarionov, Vice President of RZD, the work on other important new projects will be continued, for example, ASU I (for the automation of infrastructure management), and the system for electronic interaction between the Federal Customs Service and rolling stock owners.

Together with leading industrial companies, RZD continues to develop innovative technical solutions for the infrastructure. One of the largest projects in this sector is the production of 100-meter long rails by Evraz and Mechel at new production lines, investments into which were made under long-term agreements with RZD. This is another step forward in the development of continuous welded technology on the network. 

Technological innovations are developed under the auspices of a number of institutes, of which IETD specialises mainly in economic issues in the railway sector, VNIIZhT and Roszheldorproject – in infrastructure projects, and NIIAS – in automation and software for traffic management and safety systems. However, a number of other companies are attracted to innovative programs in many sectors, for example, the Volga Department of the Russian Engineering Academy (VD REA; focuses on quality management), Orgprom Group (lean production), Alt Invest (project feasibility study). 

According to Anatoly Krasnoschek, Senior Vice President of RZD, key figures of the company’s business block are calculated till 2030 taking into account the whole complex of technological initiatives. Thus, a higher level of efficiency and quality of transportation is to be reached in comparison with 2013. In particular, the speed of cargo delivery is to increase by 58%, and labor efficiency – by 67%. 

 

New Services



Innovation in the sector of development of new transport products relates to RZD’s transfer to a new business model (that of an international transport and logistics company), which will increase the efficiency of the railway business. 

In 2014, in the framework of this model, scheduled train traffic has been organised on 79 routes, transport and forwarding services (including long-term agreements) and complex services (transportation + rolling stock, including railway ferry services) are provided to customers. Scheduled trains, so called “Cargo Express” trains have been launched. The number of express container trains has increased. The list of such products is to expand in the future, particularly, by means of transportation in tank containers and refrigerated containers. RZD-Express service was implemented for transportation of small consignments. It is planned to offer a range of 3PL and 4PL innovative services, in particular, with the involvement of Russian Railways Logistics and GEFCO. Innovative products will be put into operation to ensure the integration of the transportation and logistics business of railways in the Common Economic Space and in the framework of international transport corridors that cross the Russian Federation. 

Therefore, RZD holding company is focusing on improving the quality of services and creating conditions for optimisation of transport expenses. ®

By Alexander Solntsev



viewpoint

Arkady Dvorkovich, 

Deputy Prime Minister of the Russian Federation

–  In 2014, RZD continued to make efforts to increase its efficiency. We pay a lot of attention to modernisation. All big companies must do this. In this regard, RZD reached a big success in comparison with other large monopolies.



Maxim Sokolov,

Minister of Transport of the Russian Federation

– Recently, the Ministry of Transport of the Russian Federation together with other executive power bodies in Russia, as well as RZD, were committed to submit proposals for the technological modernisation of railway infrastructure facilities in accordance with modern scientific developments. In our opinion, the development of heavy train traffic using innovative rolling stock, implementation of modern technological process management automated systems, and the use of GLONASS technologies to improve infrastructure monitoring systems and traffic control should be taken into account, when preparing such proposals.



Valentin Gapanovich,

Senior Vice President of RZD

– Positive statistics indicate the success of the innovation activity of RZD: the number of patents has increased almost fourfold over the past five years. In 2013, another 2,500 copyright protection documents were added to the patent portfolio of the holding company. Intangible assets increased as well: according to scientific and technical developments they were estimated at RUB 11 billion. Innovations help increase energy efficiency. Due to orders made by RZD, the pace of railway engineering development is more rapid than the corresponding figure in the machine building industry as a whole. Engineering centers, launched by the company together with the world's leading producers, make a significant contribution to the development of state-of-the-art machinery. Enhancement of locomotive management systems has a significant effect too. Strategic management of the quality of consumed products contributes to the development of the technical base. In particular, RZD plans to begin to purchase industrial products only from companies, which have passed the IRIS certification procedure. Increasing the safety of transportation and competitiveness of Russian railways also greatly depends on successful implementation of innovations. 


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