Russian Railways reminded that BAM and Transsib are not made of rubber

Russian Railways calls on customers and partners to “show more responsibility” when organizing freight traffic on the limiting (busiest) directions. The company announced this on March 22, 2023 in its Telegram channel.

A representative of RZD told Vedomosti that the company could carry more cargo, but for this, other participants in the transportation “should plan their work more carefully.”

In particular, Russian Railways complains in a release about the “inconsistency of a number of coal companies”, which began to increase coal transportation within the country instead of the previously announced export volumes. Thus, coal miners from Khakassia, Russian Railways notes, won tenders for the supply of fuel for enterprises in Buryatia. “According to the rules, such cargo upon acceptance for transportation [по железной дороге] has a higher priority,” the state-owned company notes. Because of this, the export of coal from Khakassia to the east is declining. “But the Buryat coal, where it was born, was not useful there and massively goes abroad, using the free capacities of the Trans-Siberian Railway east of Ulan-Ude,” Russian Railways emphasizes.

Operational data from Russian Railways confirms the change in coal logistics. In February, coal exports from Buryatia increased by 13% compared to February 2022 and reached 744,000 tons, while Khakassia increased coal loading to Russian consumers by almost 21% to 739,000 tons.

Coal mining in Khakassia is carried out SUEK, “Russian Coal” and UK “Razrez Stepnoy”. Vedomosti sent inquiries to these companies.

In 2022, Russian coal exports fell by 7%, Deputy Prime Minister Alexander Novak said in January 2023 during a meeting between President Vladimir Putin and the government. In February 2023, according to Russian Railways’ latest data, coal exports grew by 5% year-on-year and amounted to 16 million tons. In total, 29 million tons of coal were shipped through the Russian Railways network (+2%). Total loading in February 2023 showed an increase of 0.2% compared to the same month in 2022 to 97.2 million tons.

Russian Railways in its message also recalls the problems with unloading wagons in the ports of the Far East and the South of Russia (Vedomosti wrote about problems with the export of goods from the Far Eastern ports as early as August 23, 2022). In order to give the ports the opportunity to cope with the arriving wagons and “not to clog all the access roads to the eyeballs”, Russian Railways introduced restrictions on the shipment of goods. According to a company representative, restrictions on loading in the direction of ports are mainly related to the problems of unloading coal, oil products, and ferrous metals. Russian Railways has estimated the total “underload” in the ports at more than 400,000 tons since the beginning of March this year. Of these, 221,000 tons were “lost in loading” in the Far East, 193,000 tons in the south.

Vedomosti sent inquiries to the largest stevedores.

Another problem, according to Russian Railways, is the impossibility “to fully use the carrying capacity of the BAM”. According to the state-owned company, the mainline locomotives are idle for too long in the depot at private service companies, which leads to “unfortunate delivery failures.”

“The Eastern polygon (BAM and Transsib. – Vedomosti) is not made of rubber. With the current rush demand in transportation and a shortage of capacities, it will be almost impossible to replenish everything that is not loaded now, ”the Russian Railways summed up.

Pavel Ivankin, President of the National Research Center “Transportation and Infrastructure”, points to the “ambiguous” situation on the Russian Railways network. “Cargo owners duplicate their applications in the hope of shipping at least something, railway workers, in the face of a shortage of infrastructure, are forced to quote these applications,” he continues. In addition, according to Ivankin, Russian Railways is still carrying out construction work at the Eastern training ground. “Against this background, it is difficult to conduct a dialogue without mutual reproaches,” the expert believes.

“Coal exporters can find better deals on certain grades at any time,” adds Head of Securities Analytics Alfa Bank Boris Krasnozhenov. According to him, usually for domestic consumption, coal is purchased from producers with a minimum transport distance.

Leading expert of Finam Management Management Company Dmitry Baranov notes that in the event of a change in the direction of cargo delivery, “an additional financial burden on the carrier” is created. The expert suggests that the statement by Russian Railways regarding the loading of coal indicates that the situation is “close to critical” and may affect the transportation of other goods. Ivankin fears that against the backdrop of a shortage of carrying capacity of the railway infrastructure, not all of the export volume of coal will be able to be exported. “State intervention may be required to resolve the situation,” concludes Baranov.

Problems with the export of goods through the Eastern range escalated after the start of the NWO in Ukraine and the anti-Russian sanctions imposed because of it. In particular, they limited the list of goods that were delivered to Europe and practically deprived Russian ships of the opportunity to enter European ports. The reorientation of deliveries of the main raw materials to the east of the Russian Federation has led to increased competition on the part of shippers for the capacity of the railway and ports.

In December 2022, the head of Russian Railways, Oleg Belozerov, and the governor of Kuzbass, Sergei Tsivilev, signed an agreement on the export of at least 53.1 million tons of coal from the region in 2023 in an easterly direction. And in December 2021, Putin agreed with the proposal to “secure as a priority” for 2022 the export of 18 million tons of coal to the East from Khakassia and Buryatia (9 million tons from each republic, Khakassia’s quota includes 0.4 million tons of supplies coal from Tuva).

Since March 2022, temporary rules for the priority of cargo transportation have been in force, which have been adopted to replace the non-discriminatory access rules (NAP). The goal is to unload the Eastern landfill from low-margin cargoes, primarily coal, which, under the terms of the IPA, had priority over goods that were more marginal for Russian Railways (metals, oil products, containers, etc.).

At the same time, railwaymen’s claims to the timing and quality of repair of locomotives by service companies, according to Ivankin, have been put forward “for more than a year.” “Given that these companies carry out repairs at facilities that were once transferred from Russian Railways, it is advisable to discuss the return of this service back to the railway workers,” he sums up.

Nadezhda Sintsova and Vasily Milkin participated in the preparation of the article