Cargo slowed down at old prices

Loading on the Russian Railways network in November decreased for the second month in a row, despite the fact that shippers traditionally strive to increase loading in the month preceding the increase in Russian Railways tariffs—they are indexed this year from December 1. The decline in transportation of coal and petroleum products continued, with gains for grain, fertilizers and metallurgical cargo. Nevertheless, Russian Railways has not yet changed its loading forecast for the year, which assumes a slight (0.8%) increase.

Loading on the Russian Railways network has been falling for the second month. In November it amounted to 101.5 million tons, which is 1.9% lower than a year earlier. Thanks to the inertia gained in the first months of the year, it did not show a decline over 11 months, remaining at the level of last year (1.13 billion tons). Throughout the year, monthly loading gradually, but slightly increased compared to last year (the maximum growth did not exceed 3%), but in October it fell for the first time – by 3.4% against the backdrop of a decrease in transportation of the most massive cargo on the network – coal and oil products (see “Kommersant” dated November 1).

The same positions are in the red in November. Loading of coal decreased by 6.3%, to 29.5 million tons, petroleum products – by 3.8%, to 17.7 million tons. At the end of October, all metallurgical cargoes were in the black, except for iron ore, the loading of which dropped by 9.4%: transportation of scrap showed the largest share increase (by 40%), reports JSC Russian Railways, loading of coke increased by 25.5%, non-ferrous ores metals – by 9.2%, ferrous metals – by 5.1%.

The main driver of growth in transportation this year remains in stable positive territory – grain, the loading of which increased by 19.8% in November, and by 38.6% over the 11 months of the year, to 29.5 million tons. The volume of fertilizer transportation also increased – by 6.8% in November and by 4.8%, to 58 million tons, in January-November. The transportation of industrial cargo increased (by 21.6% in November), but other cargo, including container cargo, which grew steadily throughout the year, showed neither growth nor decline this month. However, based on the results of 11 months, the transportation of these cargoes is still in the black (an increase of 5%, to 108.6 million tons).

The change in dynamics at the end of the year, however, has not yet affected the loading forecasts of Russian Railways for the year.

The monopoly explained to Kommersant that they still adhere to the guideline of 1243.8 million tons for January-December with an increase of 0.8% compared to the 2022 level.

It is significant that this year the indexation of Russian Railways tariffs for the transportation of goods occurs from December 1, and not from January 1, as usual. They will increase by 10.75%: 7.6% of basic indexation, 2% – allowance for major repairs and 1% – for transport security (see “Kommersant” dated September 25). Typically, clients of Russian Railways try to “ship” additional volumes in the month preceding the tariff increase, explains Vladimir Savchuk, deputy general director of IPEM. “Even without this “additive,” the demand for transportation in November exceeded the capabilities of Russian Railways,” he notes.

One of the reasons for the decrease in loading by 1.9% in November is infrastructure restrictions associated with special transportation, which has a higher priority compared to civilian cargo, says Mr. Savchuk. The most affected cargo is coal (minus 2 million tons by November 2022). The decrease in transportation of oil and petroleum products (minus 0.7 million tons), he believes, “is partly caused by the consequences of regulating the petroleum products market in Russia to saturate the domestic market.”

The reduction in shipments of construction cargo by 0.6 million tons is due to a reduction in demand due to the completion of the implementation of the largest infrastructure projects in terms of road construction and the transfer of financing for a number of construction projects to 2024.

The growth in loading of fertilizers is associated with an increase in the capacity of port terminals and diversification of the technology for sending fertilizers for export – shipments of fertilizers in containers are actively increasing in the direction of underutilized terminals in the northwest. “The growth in loading of ferrous metals is facilitated by increased consumption in the domestic market,” notes Mr. Savchuk. “In particular, the construction industry is already consuming metal not only for industrial and commercial buildings, but also for housing.” In addition, the expert adds, the restoration and growth of metal-intensive industries in Russian industries has a positive effect.

Natalya Skorlygina