Lack of rolling stock pinches Russian rail shippers

Lack of rolling stock pinches Russian rail shippers

As Russian rolling stock has aged, rail operators have been slow to upgrade their fleets.

The consequences of Russia's outdated and poorly maintained rolling stock is beginning to take a toll on shippers, as rates for rolling stock have jumped 15 to 20 percent from 3,000 to 3,500 rubles ($52-60) per day to more than 4,000 rubles.

Shippers say that leading Russian railway operators such as First Freight Company, the Federal Freight Company, and the New Freight Company (Globaltrans) have created artificial shortages, and a shipper group, the Russian Union of Industrialists and Entrepreneurs, has lobbied the Federal Anti-Monopoly Service to take action.

The increase in rolling stock rates has led to cost increases of 5 to 7 percent for shippers moving goods from Russia's Volga region to the cities of Moscow and St. Petersburg, according to Sergey Ivanov, deputy director of Ivanovsky Umeltsy, a producer and distributor of textiles.

Rail operators say that rates have risen because many flat wagons and other types of rail cars have reached the end of their service life over the last six months, with 50,000 units taken out of service, which has created a shortage of about 30,000 wagons.

The operators say Russia’s economic crisis has made the situation worse, as they lack the funds needed to invest in new assets and relieve the pressure on capacity. It is estimated that modernizing Russia's rolling stock would cost $350 million.

Shippers are pessimistic that the situation will improve any time soon, particularly as container volumes in the country begin to recover. In the first four months of the year, containerized rail volumes have risen 11 percent year over year to 1.2 million TEU, according to Russia's Ministry of Transport.

Contact Eugene Gerden at gerden.eug@gmail.com.