Magazines — RZD-Partner International — 3 (15) August-November 2008
3 (15) August-November 2008
Load Money in WagonsA highly regulated industry with a low level of transparency in a country described in the Western press as a cradle of excessive bureaucracy and corruption. Add to this the ongoing global financial crisis and you will see the reason why a parade of IPOs of Russian rail operators suddenly looks a bit of unlikely. Despite all the problems RZD's subsidiaries and independent companies are going to pull money from stock exchanges and some of them have already handled the task successfully.
Olympic Sochi: Unique Transport Solutions
The transport infrastructure in Sochi will take up a big part of the funds allocated to preparations for the Winter Olympics in 2014. The management of OAO RZD, in turn, plans to spend almost 300 billion roubles for Olympic projects alone, as well as organise high-speed links between Moscow and Adler.
The First Public-Private Road In Russia
The first project in this field started in summer 2008 in Saint Petersburg when the winners of a tender to build the West High-Speed Diameter (WHD) highway. This highway will connect different parts of the city.
Contents
Editorial
EDITORIAL
One day a well-known transport consultant in Russia got a call from London. An investor wanted to know what the holding company Globaltrans Investment Plc was, and whether it was worth buying its shares through a planned IPO on the London Stock Exchange. “I recommend to buy,” said the analyst. Globaltrans raised USD 449.5 million, making it the biggest Russian IPO this year. The successful offering was a milestone in the reform of Russia’s railway sector.To Pull or Not to Pull, That Is the Question
THEME / railway operators in Russia: new challenges
The Ministry of Transport of Russia has suggested legalising the status of private locomotives owners, thus bringing order to access to OAO RZD’s infrastructure for companies interested in transportation by their own trains. But are the companies themselves ready to embark on this “big road”? And the main point is whether they have the economic stimulus to do it.
Railway Reform in Russia: RZD Disputes with the Federal Antimonopoly Service
THEME / railway operators in Russia: new challenges
In early 2008 the Federal Antimonopoly Service of the Russian Federation (FAS) criticised the progress of Russian Railways reform. On May 7, 2008, its regulation concerning the Russian Railways company came into force. In this document it was stated that OAO RZD and OAO The First Cargo Company (a daughter company of Russian Railways) were a group of bodies dominating at the market and that, consequently, their activities must be regulated by antimonopoly legislation. OAO RZD wrote a letter in reply, in which it disputed the opinion of FAS.
Load Money in Wagons
THEME / railway operators in Russia: new challenges
A highly regulated industry with a low level of transparency in a country described in the Western press as a cradle of excessive bureaucracy and corruption. Add to this the ongoing global financial crisis and you will see the reason why a parade of IPOs of Russian rail operators suddenly looks a bit of unlikely. Despite all the problems RZD’s subsidiaries and independent companies are going to pull money from stock exchanges and some of them have already handled the task successfully.
Henry Posner III: “Globaltrans’ Listing Is Well-timed”
INTERVIEW
The recent IPO of the largest private rail operator in Russia, Globaltrans Investment Ltd, has been widely accepted as a successful one. No doubt it will be followed by others who would like to get additional funds from stock markets in London or Moscow. Mr Henry Posner III, Chairman of U.S. – based Railroad Development Corp (www.rrdc.com) and a former owner of Estonian Railways, shares his view on the situation.
Economics. Panorama.
ECONOMICS / Panorama
On August 6 in Pyongyang, OAO RZD signed a 49-year contract for the lease of rail infrastructure on the stretch between Tumangan and Rajin and concluded an agreement to start reconstruction of the railways and the building of a container terminal at the port of Rajin. This followed talks on August 5-6 in Pyongyang between Russian Railways, the Russian-Korean joint venture RasonKonTrans and the Railway Transport Company Tonhe from North Korea’s Ministry of Railways.Russian Transport System in 2010-2015: Priorities Changed
ECONOMICS / state policy
One of the latest, most important, events in the Russian transport sector was the adoption of the Federal Target Programme “Russian Transport System Development in 2010-2015”. It was signed by Vladimir Putin, Russia’s Prime Minister, in May. Its distinguishing features included enormous financing – more than RUR 13 trillion (USD 550 billion) and a new approach to development of such documents. What are the other peculiarities of the new programme?
Satellite Technologies for Railway Traffic Control
ECONOMICS / Projects and Investments
The Russian railway sector is carrying out programs of great national importance. Their targets are formulated in The Strategy of Railway Transport of Russian Federation Development to 2030 (Strategy-2030). Implementation of complex train traffic control systems, infrastructure and dynamic rolling-stock monitoring using satellite technologies is defined as one direction for breakthrough innovations.
Olympic Sochi: Unique Transport Solutions
ECONOMICS / Projects and Investments
The transport infrastructure in Sochi will take up a big part of the funds allocated to preparations for the Winter Olympics in 2014. The management of OAO RZD, in turn, plans to spend almost 300 billion roubles for Olympic projects alone, as well as organise high-speed links between Moscow and Adler. (Adler is an area in Sochi. It will be a base point for Olympics transportation). It is estimated by experts that, as a result of the Sochi Transport Development Program realisation, more than 100 km of new railroad and more than 56 km of secondary routes will be built.
Geometry of Complex Control
ECONOMICS / Projects and Investments
The experience of foreign countries, where all mainline railways are monitored by high-speed diagnostic facilities, shows that control of high-speed railway sections is impossible without complex usage of advanced technologies. Taking into account the plans to develop high-speed railway communication in Russia, improvement of methods and facilities to control the geometric parameters of tracks becomes especially urgent.
Transportation. Panorama.
TRANSPORTATION / Panorama
Freight transportation in Russia, the CIS and the Baltic StatesIt Finally Happened: The First Public-Private Road In Russia
TRANSPORTATION / Auto Transport
About 27% of federal highways in Russia are permanently overloaded. The solution to the problem of traffic jams may lie in development of toll roads. The first project in this field started in summer 2008 in Saint Petersburg when the winners of a tender to build the West High-Speed Diameter (WHD) highway (see map). This highway will connect different parts of the city.
Russian Ports: Invest Fast. But Cautiously
TRANSPORTATION / Port
No doubt the stevedoring business in Russia has been experiencing if not a boom, at least a significant increase. This main factor coupled with a lack of spending on modernisation in the 1990s has brought the industry to the current state which helps maximise returns from investments. Another reason to buy shares in ports or build terminals is an improving legislation. At the same time experts warn a threat for unwary investors who could make a mistake when choosing a segment or a partner.Container Shortage
TRANSPORTATION / Container transportation
Cargo containerisation in Russia is gathering pace. Experts forecast it will continue to develop actively in the next five to seven years. Meanwhile, containers made in Russia do not always meet the requirements of international charter companies. For this reason, Russian operators strive to purchase more boxes produced in China but face some intriguing problems.
Container Mobilisation
TRANSPORTATION / Container transportation
In the next two years container flow via Russian sea ports will double– to 6 million TEU. Sea container terminals can handle about half of the volume today. Experts claim that supply in the sector will keep up with demand: major market players are either constructing new terminals or enlarging the capacity of existing ones.
Panorama. Company
COMPANY / Panorama
The Russian Ministry of Economic Development gave to the Government a draft document on the sale of a 25% shareholding in Refservice (a daughter company of OAO RZD which specialises in transportation of perishables). Before that, the Ministry suggested reviewing the terms of Refservice’s privatisation, defined by the Russian Railways’ Board of Directors at the end of November 2007. According to them, a 25% shareholding of the daughter company of OAO RZD was to be sold at an open auction.Alarming Tendencies
COMPANY / OAO RZD
In the first half of 2008 the volume of cargo transportation along the Russian railway network grew by 2.9% to 677.6 million tons.
Who Is Who In RZD
COMPANY / who is who
Russian Railways is the second largest railway company in the world, with 85,500 km of track and 1.2 million employees. Almost 1.3 billion passengers travel via Russian Railways annually as well as 1.3 billion tons of freight. Russian Railways accounts for over 3.6 % of Russia’s GDP and handles almost 80% of all transportation in Russia.“We Are Very Optimistic”
COMPANY / Doing Business in Russia
Railway transportation via Russia and the CIS seems to be gaining popularity: 12-15 days transit time, the possibility of transportation of heavy containers and other advantages make Russia an attractive transit country. OAO TransContainer (a Russian container operating company which is going to provide door-to-door service) is making enormous efforts to attract EU forwarding companies. One of the joint projects was established by Far East Land Bridge Ltd company (Austria) and OAO TransContainer. Robert Gerendas, Member of the Board of FAR EAST LAND BRIDGE LTD (FELB) comments on the advantages of, and threats to railway container transportation in Russia.
How to Integrate into the Global Market Efficiently?
COMPANY / Doing Business in Russia
As Russian railways are integrated into the global system, the tasks of increasing the level of technical equipment in the sector and making transportation efficient become more and more urgent. In his interview with The RZD-Partner International, Arkady Wolfson, CEO of Communication World, speaks about the problems that international concerns may face as they transfer new technologies to the Russian market.
Toyota: A Logistics Experience in Russia
COMPANY / logistics
As a rule, the transport and logistics structure of a company aims for one of two variants of a scheme: either to store and transport cargo using their own resources or to outsource it. The experience of Japanese car-maker Toyota in the Russian market is interesting because the company combines these variants successfully. Ichiro Chiba, Head of Toyota Motor Corporation’s representative office in Saint Petersburg talks about the logistics problems his company faces and how they are solved.
Customs Go Inland
PRODUCTION AND SERVICES / Customs
Last spring at the meeting of representatives of the Federal Customs Service (FTS), the strategic measures to be taken to improve customs practice in Russia were announced. One such measure will be the ban on customs registration of goods and vehicles in Russian sea ports, because it often takes more than two weeks, meaning port areas turn into warehouses instead.
“Our Expectations of Telecommunication Are High”
SPECIAL PROJECT: / advanced technologies coming to russian market
In April 2008, communication directorates of OAO RZD were separated from railway structures. They became subdivisions of the company’s new branch – Central Communication Station (CCS) which is to become an important consumer of innovation technologies in the short-term outlook. Petr Manevich, Director General of this new structure told The RZD-Partner International magazine about the purposes and perspectives of this decision.
“ÑÒÌ – Sinara Transportation is sure about its future”
SPECIAL PROJECT: / advanced technologies coming to russian market
Nowadays, the Russian economy is developing dynamically, and the requirements in terms of quality, speed and safety of railway transportation are becoming more strict. Innovation technologies and a quality service are very important today. Evgeny Kopeyin, Director General of ÑÒÌ - Sinara Transportation talks about the advanced technologies in the locomotive-building sector.
Depots Come to the Market
SPECIAL PROJECT: / advanced technologies coming to russian market
In the framework of restructuring its business and optimising its structure, OAO RZD held a public sale of 22 wagon repair depots. Thirteen lots out of 22 were sold; the revenue amounted to RUR 3.2 billion. They were bought by private companies, which is sure to spark formation of a market in rolling stock repair services in Russia.
There is the demand. The supply must increase
INTERVIEW
The cost of wagon repair must not depend on realisation of OAO RZD’s plans to sell a part of its repair capacities. This is the opinion of Valery Shpakov, Director General of OAO Novaya Perevozochnaya Kompaniya (incorporated into Globaltrans).He believes that the main factor influencing the increase in wagon repair costs is the rise of prices for metal - which is the raw material for production of nodes and components - as well as salary growth.
Wagon Building Boom
SPECIAL PROJECT: / advanced technologies coming to russian market
The annual shortage of freight wagons is about 15,000-20,000 units. This means the demand for new rolling stock exceeds the supply by manufacturers several times over. The situation has prompted an increase in existing capacities and the launch of a number of new projects aimed at fulfilling the demand.
