Your own carriage is better than the new two

At the end of the first half of the year, the two largest railway operators in the Russian Federation – Federal and First Freight Companies – became equal in scale, sharing the first lines of the operator rating. Overall, the market is growing and remains highly consolidated. In conditions of high incomes, high prices for rolling stock and increased leasing rates, operators are striving to buy cars from lease and secure the opportunity to purchase them from the factory at old prices.

Two giants of the market for operating railway rolling stock – the First Freight Company (FGC) of Vladimir Lisin and the Federal Freight Company (FGK, controlled by JSC Russian Railways) – shared first and second places in the rating of INFOLine Rail Russia Top operators based on the results of the first half of the year. Based on the results of disclosure of revenue and profit data, FGC took first place in the operator rating for the first time in several years, overtaking the long-time leader Freight One for both 2022 and the first quarter of 2023. However, later “Infoline-Analytics” revised the rating for 2022, and now FGK shares first place in it with Freight One.

The head of Infoline-Analytics, Mikhail Burmistrov, explains that the rating for 2022 was clarified after receiving data on the revenue of Freight One, which at the end of last year in terms of financial indicators was second only to captive operators NTK and Ugol-Trans, whose revenue includes operations with attracted park, as well as Transoil, which has not disclosed financial indicators for two years. At the end of the first half of the year, Freight One and Freight One showed the same indicators in terms of the sum of criteria, with Freight One being the leader in terms of fleet ownership and management, actively increasing purchases of cars (in 2023 it is planned to purchase up to 2 thousand covered cars and up to 5 thousand universal platforms). At the same time, Freight One, due to the higher efficiency of the fleet, is a leader in transportation volumes and cargo turnover. Freight One assured Kommersant that they “strive to confirm in action the company’s leadership position in the market” and that the company will continue to focus on improving customer focus, business efficiency and expanding its volumes. The FGK declined to comment.

The market maintains a high degree of consolidation: the top 30 operators accounted for about 75% of the fleet and 84.3% of cargo turnover in the first half of the year. At the same time, the share of the top 10 and top 3 operators in all indicators is falling: for the fleet under management, it decreased by 1.2 percentage points (p.p.), to 51%, and by 0.6 p.p., to 21.1%, respectively, for the park owned – by 0.5 percentage points, to 44.9%, and by 1 percentage point, to 19.8%. The share of the ten and three largest operators in transportation volumes fell in both cases by 0.4 percentage points, to 58.7%, and to 25.5%, in cargo turnover – by 1.1 percentage points, to 62. 9%, and by 0.6 percentage points, to 25.9%. At the same time, according to Deputy General Director of Russian Railways OJSC Alexei Shilo, the pool of operators is being replenished with new players, despite the overall stability of the market: in 2022 their number increased by 5%.

As Mr. Burmistrov explained, several important trends emerged in 2023. Firstly, in the context of deteriorating fleet turnover indicators on the network due to unprecedented volumes of construction and repair work, purchases of new cars from factories in the Russian Federation and used fleet from the Baltic countries have increased. Secondly, a number of operators, taking into account changing market conditions, have revised their views on their strategic development in a number of segments of the rolling stock market. Thirdly, many operators, who received record high profits in 2022, used funds to buy out leased fleets, since leasing rates increased significantly: for example, only the increase in the key rate of the Central Bank this year from 7.5% to 13% resulted in increase in leasing payments by at least 500 rubles. excluding VAT per car per day. Fourthly, buyers of rolling stock, prices for which increased by 30–40% in 2023, began to resell both places in factory queues and the fleet itself, ordered in 2022 at significantly lower prices. Fifthly, the gap between rental and operating rates on the spot market and long-term service contracts (for example, in the segment of oil and gasoline tanks) has noticeably increased, which creates risks for a number of operators, especially with a high share of the fleet in leasing.

Natalya Skorlygina