The Company Meets its Customers in the Face of Global Uncertainty
Dmitry Murev, CEO of Russian Railways Logistics, old about work during the pandemic
– Dmitry Iovchovich, how has the nomenclature of transported goods changed during the pandemic?
– During a pandemic, in addition to the traditional one during this period of time, the demand for the transportation of socially significant goods necessary to combat it has sharply increased.
We paid special attention to solve the problem of transporting medical devices to the regions of Russia to combat coronavirus infection. Within the framework of joint work with TransContainer PJSC and the Ministry of Industry and Trade of Russia, delivery routes from Chinese cities to the regions of our country were developed.
The first express container train with medical products was sent on April 19 from Shanghai via Zabaikalsk to Yekaterinburg station, where customs clearance of the cargo was carried out. It included 14 40-foot containers with 85 tons of three-layer masks (20 million pieces). At the end of the first half of the year, thanks to our services, medical institutions in Yekaterinburg, Moscow and Novosibirsk received more than 200 million masks, as well as protective suits, dispensers for antiseptics and other equipment.
The acquired competencies in express delivery of social cargo in containers from China to Europe allowed us to fine-tune the technology of movement on Chinese railways, transshipment of consolidated cargo from 1435 gauge to 1520 mm gauge and organization of delivery across the Russian Federation. In June this year, Russian Railways Logistics, together with the French SNCF Forwardis, the Chinese COSCO Group and UTLC ERA, organized the delivery of medical devices from Nanchang (Jiangxi Province, Eastern China) to Paris. A train of 41 40-foot containers with a cargo of medical supplies (40 million medical masks, gloves, gowns and other personal protective equipment) followed the southern transit route through Kazakhstan.
– What are the key trends in the development of export communications?
– Against the background of a decrease in the share in coal exports to 40% (–4% compared to the level of the first half of 2019), the volume of container traffic on Russian Railway increased, the growth for the half-year was + 15%, and their share in loading reached 5%. Today, after container transit, it is the most dynamically developing segment of rail transportation.
Taking into account the growth in the volume of trade between China and Russia, one of the most promising areas is the export of products of the domestic agro-industrial complex. In cooperation with the Russian Export Center, we offered the Agroexpress service, within which we send regular container trains with products of the Russian agro-industrial complex to China, simplifying their entry to the Chinese market due to the speed of delivery and subsidizing part of the transportation costs. In Q2, Russian Railways Logistics sent frozen chicken meat to China for the first time. We are working on the service development including in terms of expanding the number of border crossings capable of accepting these products from the Chinese side. I am confident that in the future we will be exporting «cold» trains with Russian meat and poultry.
There is a noticeable growing interest in transportation along the ITC Russia – Vietnam from domestic manufacturers of baby food. Baby food is transported by rail from Vorsino station in Kaluga region through Zabaikalsk and the territory of China to Hanoi (Yen Vien station), from where the products are delivered by road to shops in the capital of Vietnam and to other cities of the country.
– Let’s talk about the main trends, in which direction will the logistics services market develop and what are the plans of RZD Logistics in this regard?
– The following trends can be distinguished among the main ones in the development of the logistics services market.
There is an increase in containerization of the domestic market for transport and logistics services, primarily due to the growth in the transportation of products and raw materials between industrial enterprises according to our estimates and in terms of containerization, we are still three to four times behind Germany, the USA and China. The growth in the total share of container traffic is also due to an increase in the volumes of transit and export cargo flows. This is facilitated by opening of new directions, including through Kaliningrad region. Key question: will China continue to subsidize rail transit after 2021? Therefore, RZD Logistics is developing various technological solutions that will optimize the cost of transportation to attract new customers.
In general, there is a general change in the structure of loading. The cargo traffic of chemical and food cargo is growing, and in the transportation of general cargo, such as coal, a negative trend emerged in 2019 and remains in 2020, associated with a general decrease in consumption in this market both in Russia and abroad. The latter circumstance led to the fact that the market for the provision of gondola cars became surplus and transformed into a customer’s market. The car-building industry, which was primarily engaged in the production of gondola cars, will now be able to concentrate on the production of specialized types of rolling stock and container equipment. In particular, the shortage of refrigerated containers is a serious obstacle to the development of transportation of perishable goods. Appropriate government support is needed in organizing domestic production and the subsequent acquisition of such containers by operators. And the significant volumes of tank wagons written off in the coming years will give a new impetus to the development of transport in tank containers and flexi tanks. We plan to actively enter these segments, and in September, pilot shipments of vegetable oil using flexi-tanks will be carried out to China via a new overland route.
In general, the transport and logistics market was significantly influenced by the epidemiological situation and the corresponding quarantine measures in the first half of the year. However, this has led to short-term positive effects for rail transport. Part of the goods produced and accumulated in China, traditionally transported by sea, after the lifting of quarantine measures in order to accelerate delivery to the consumer in Europe, was sent by rail. I think that some customers, having tested the new type of delivery, will decide to continue to make a choice in favor of it. This should have a positive effect on the annual volumes of rail container transit.
In parallel with e-commerce – in the field of personal consumption – online services in the field of logistics services in the B2B segment are also developing, which greatly simplify the procedures for registration, payment and order tracking, which is especially important for transportation of groupage and small consignments. The company plans to launch the online platform «Russian Railways Market» to the market, which allows purchasing goods in the «one window» mode simultaneously with the provision of a wagon and, in fact, delivery by rail.
Following the trend towards an increase in the volume of cargo transportation in communication with China, we are implementing high-speed delivery of groupage cargo in baggage cars as part of passenger trains on the route Beijing – Moscow / Moscow – Beijing in six days. The service is promoted under the RailJet brand.
As the logistics market in Russia matures, industrial enterprises will increasingly demand the service of logistics outsourcing, already now the portfolio of our clients is represented by fifty companies.
In connection with the implementation of large-scale infrastructure projects, primarily the development of the Northern Sea Route, complex solutions for the multimodal delivery of oversized and heavy cargo are already in great demand. The company has all the necessary competencies and experience to carry out such projects.
It is important to note that due to the crisis, which led to a reduction in the cargo base and increased competition between suppliers of logistics solutions, the market will be consolidated. In these conditions, it is extremely important to have a unified strategy for the development of the logistics business within the transport and logistics block of the Russian Railways holding.