The Ministry of Transport may ease the ban on extending the service life of old cars

Railway operators plan to ask the government to lift the ban on extending the service life of carriages, introduced in 2016. The reason is a reduction in the production of cars and a sharp rise in prices for them. The Ministry of Transport is ready to consider relaxations – to expand the list of types of cars that can have their service life extended with modernization or even without it, provided that they are in good technical condition. Analysts consider the idea to be partly justified, but dangerous for the railcar industry, since it could lead to a massive refusal of contracts for new railcars and saturation of the market with old railcars from neighboring countries, where they were once sold.

Delo Group of Companies and its member TransContainer intend to raise the issue of reviewing the government’s decision to ban the extension of the service life of rolling stock, introduced in 2015. This was announced by the President of TransContainer Vitaly Evdokimenko. He talks about a shortage of rolling stock for the transportation of containers, since “the capacity of railcar-building enterprises is limited and limited” and they prefer to build higher-margin types – gondola cars, hoppers, tanks. According to him, the production volume of platforms this year is 6-7 thousand against 12-14 thousand several years ago, and in 2024 – about 4 thousand. He cites the example of the RM Rail plant, which “next year plans to produce fitting platforms at the level of 1 thousand platforms, and only if we agree on a price, but in the old days it produced 4 thousand platforms.”

Mr. Evdokimenko notes that for Transcontainer alone, the volume of write-offs is 1–1.2 thousand platforms per year.

At the same time, prices for rolling stock have increased sharply: prices for gondola cars, mineral carriers, and grain carriers are approaching 6–6.5 million rubles.

“A year ago, a fitting platform cost 3.2–3.5 million rubles, and now it already costs 5 million rubles. without VAT,” he says. “And you can’t buy it, because production volume has been sharply reduced.”

Extending the service life of cars through modernization has been prohibited since 2016 at the request of the then head of Uralvagonzavod Oleg Sienko in order to stimulate demand for rolling stock (see “Kommersant” dated January 10, 2016). An exception was made for a narrow list – tanks for a number of food and chemical cargo, refrigerator cars, thermos cars, ice cars, platforms for transporting tracked and wheeled equipment. After the ban was introduced, 260 thousand cars were written off, and some were sold to neighboring countries with the Russian gauge, where extended operation through modernization is not prohibited.

“Now we have come to the point where we probably need to reconsider the decision and allow an extension of the service life,” sums up Vitaly Evdokimenko. He noted that the idea has not yet been presented to regulators.

At the same time, the Ministry of Transport is already considering easing the write-off regime. As Deputy Head of the Ministry of Transport Valentin Ivanov explained on the sidelines of the EEF, the procedure for extending the designated service life of rolling stock is being worked out. “We sent such an initiative from the Ministry of Transport for approval,” he said. An extension may be allowed through modernization, he explained, but the Ministry of Transport wants to “introduce the possibility of certification and testing in order to confirm, without the modernization itself, that this product can be used for a certain additional period.” Mr. Ivanov also said that the ministry is expanding the list of those types of rolling stock, as well as materials and equipment, the service life of which can be extended through modernization. Russian Railways did not comment.

The head of Infoline-Analytics, Mikhail Burmistrov, says that the history of extending service life is ambiguous. On the one hand, lifting the ban on certain types of rolling stock – for example, grain carriers, LPG tanks, which are currently not available for purchase – may be justified.

On the other hand, Mr. Burmistrov recalls, the extension was prohibited for two reasons: for the sake of stimulating carriage building and because some carriage repair enterprises, under pressure from their client-owners, carried out the work formally. There is a danger of a “paper” extension of deadlines, which creates large-scale risks for the transportation process and has an extremely negative impact on bona fide market participants, the expert says.

Now the capacity of the car-building plants is loaded until the fall of 2024, but basically the contracts were concluded at prices in 2022 and early 2023. An increase in the Central Bank’s key rate sharply cools the demand for the purchase of railcars on lease: if, as is likely, the rate rises, some railcar manufacturers’ contracts for the second half of 2024 will not be implemented due to customer refusals. If the extension ban is lifted for most types of cars, then old cars may flood into the Russian Federation from abroad, where Russian operators previously sold their decommissioned fleet. This will collapse the market for new cars, lead to a reorientation of operator investments and create unprecedented risks for the car industry and the transportation process, notes Mikhail Burmistrov.

Natalya Skorlygina