The indicator of JSC Russian Railways decreased due to the export embargo

For the first time in a year, Russian Railways’ loading went into the negative in October, showing a lag of 3.4%. As reasons for the decline, Russian Railways names a ban on the export of petroleum products, the completion of infrastructure projects that stimulate demand for the transportation of construction materials, and the continuation of intensive construction on the railways themselves. However, the monopoly expects loading to quickly return to growth in November, which experts consider justified, especially in anticipation of the increase in railway tariffs from December 1.

For the first time this year, loading on the Russian Railways network went into the red zone. In October, it decreased by 3.4% compared to the same month last year, amounting to 103.3 million tons. In monthly terms, the most massive cargo on the network sank: coal (minus 7.7%) and oil products (minus 7.5%). A decline was also recorded in the segment that in the first months of the year was one of the main drivers of loading growth, but began to decline in June—construction cargo (minus 13%). Negative dynamics are also observed in the transportation segment of iron ore and cement.

Positivity can be seen in grain transportation, which in some summer months exceeded last year’s figures by more than 70% and now maintains good dynamics (plus 28%). Also, high growth rates were shown by transportation of coke, industrial raw materials, ferrous metal scrap, chemicals and soda, as well as other cargo. The same types of cargo remained in the black at the end of ten months.

As explained by Russian Railways, the negative loading figures in October are explained by a number of factors, including restrictions on the export of petroleum products introduced by the government in connection with the situation on the domestic market (see “Kommersant” dated September 21).

There has also been a decrease in the transportation of construction cargo due to the completion of a number of large infrastructure projects in the central part of the country, the closure of a number of shipping enterprises for unscheduled repairs, and large-scale construction work on the network, which did not make it possible to compensate for the lost volumes by attracting other cargo.

Nevertheless, Russian Railways predicts a resumption of positive loading dynamics in the near future. At the end of the year, JSC Russian Railways expects to achieve 1243.8 million tons of loading, which is 0.8% more than a year earlier. At the end of ten months, a weak positive trend remains: loading increased by 0.2%, to 1.03 billion tons.

“We see a combination of effects,” says Mikhail Burmistrov, head of Infoline-Analytics. “This is the exhaustion of the low base effect (the drop in loadings began to slow down in the fall of 2022), stagnation of industrial production due to a shortage of personnel and rising interest rates, problems with loading oil cargo , the effect of the dynamic infrastructure loading model (DILM), which leads to increased downtime of loaded cars on non-public infrastructure, exacerbating the problem of bottlenecks and shortage of shunting locomotives. The worsening conditions in export markets also contribute to the problem, which is causing a decrease in the loading of metal and ore, as well as weakening demand in infrastructure construction.”

Expectations for improved dynamics are justified, the expert notes, at least because the situation with repair windows will improve, but this effect should have already manifested itself in October.

Much depends on JSC Russian Railways: for example, a solution to the problem with personnel in regions where there is an acute shortage of all working specialties is required. He notes that in November, the desire of shippers to ship before the tariff increase, which is planned for December 1, may contribute to the growth of loading.

Natalya Skorlygina