FESCO: Whole Pack of Services under One Contract
22.05.2008 (16:36)
Consolidation of railway operators is going on the Russian transport service market. Two operators, members of the transport group FESCO, Transsiberian Intermodal Service (TIS) and FESCO Lines Vladivostok, established new company – “FESCO Integrated Transport” (FIT).
Management of the company announced about the plans to become a global transport integrator, able to provide its clients with network solutions. Merger of Transsiberian Intermodal Service and FESCO Lines Vladivostok is an important stage for realization of this strategy.
Establishment of united logistic operator will allow to render clients unique service: they will get the whole pack of services under one contract. It will be strong competitive advantage. The project will allow to extend access to clients of the whole group.
Tatyana Kondrashenko, Head of logistics center of Sectoral Implementation Centre CJSC considers that establishment of joint logistic structure within FESCO is interesting for OAO RZD. Its activity will make for attraction of additional cargoes to Russian Railways network. “Both TIS and FESCO Lines Vladivostok are qualified in segments of transport service market. Joining their possibilities creates better conditions for the client. He can get services from one operator instead of several ones. It makes network of OAO RZD more attractive for a consignor”, T.Kondrashenko explained.
“FESCO realizes that it is necessary to provide clients with a pack of services including port, sea and railway components, to hold leading position”, says Anastasia Marinina analyst of InvestFunds.
“Thus, any integration means large costs and problems. It concerns not only "technical"changes of different subdivisions, but also "cultural" reorganization. It is necessary to remember about financing questions, which are included into the investment program of the company.
The director of Institute of Transport Problems of the Russian Academy of Science Oleg Bely is assured, that establishment of FIT means occurrence of the largest forwarding company in Russia. “Now the international transport market knows that we understand forwarding principles and we are able to work according to them”, he notes.
FIT’s activity should attract new cargoes to the Russian transport network. The company can improve transport services provided in the Kaliningrad region, reducing costs on cargo delivery there.
According to the Deputy General Director of Morinvest Ltd Victor Tshovrebov, establishment of the incorporated logistical operator can’t influence the Group’s business development now, but in future such companies as FIT will become important means to improve competitiveness.
Marina Irkli, analyst on mechanical engineering and transport of the company “VELES Capital” is assured, that FIT establishment is the forward-looking decision. However, she considers that this step will not have an affect on cost of FESCO business. “Trans-Siberian Intermodal Service is the largest private container multimodal operator on the Trans-Siberian Railway. However the company’s turnover isn’t large in comparison with FESCO - about 80 thousand TEU, while the sea transportation of the Far East Company amounts to over 300 thousand TEU”, M.Irkli specifies. “Besides, Transgarant (a part of FESCO) transports by railway about 18 million tons of cargoes a year”.
Besides, the quantity of cargoes transported on the Trans-Siberian Railway is not large because of high railway tariffs. Though there are advantages concerning distance: the distance covered by cargoes carried on the Trans-Siberian Railway makes 10-12 thousand kilometers while the distance of sea transportation is 20-22 thousand kilometers. “It takes twice less time to deliver along the Trans-Siberian Railway than by sea. Transportation on Trans-Siberian Railway becomes more important due to increasing volumes of the foreign trade operations with Asia-Pacific Region”, M.Irkli says. However, transportation by sea is cheaper than by other modes and it is used more often despite its shortcomings.
So, FESCO has ambitious plans to become the largest intermodal company in Russia, which can give client the most convenient thing – door-to-door cargo delivery.
by Stanislav Russkov