Content:Container Transportation by Rail
This entails providing flatcars, at the time and place requested by a customer, for loading and transporting rail containers to the requested destination.
Once we load containers onto our flatcars and make the necessary freight forwarding arrangements to initiate the shipment, Russian Railways, acting as the infrastructure services provider, implements movement of our flatcars through its rail infrastructure using its freight trains.
When the destination is reached and the rail container is offloaded, we either load the flatcar at that location or arrange transportation of the empty flatcar (and/or container) to a location where another train container shipment would originate.
We provide rail container transportation both as a standalone service and also as part of an integrated logistics solution, typically combined with last mile delivery, terminal handling and freight forwarding services.
Flatcars with containers may be transported either in mixed-cargo trains or in block-trains. Mixed-cargo trains typically stop at many transshipment stations along the route for attachment and detachment of railcars, which significantly increases delivery time. In contrast, container block-trains are run on a predetermined schedule.
Our large fleet of flatcars generates a high volume of rail container traffic, which allows us to capture a significant market share of the container transportation business in Russia and ensure availability of containers and flatcars at any point of the wide-gauge railway system, resulting in high quality and reliable services.
We have the largest fleet of specialised container flatcars in Russia, which represents approximately 59 percent of all specialised container flatcar fleets in Russian. We have developed a unique system to manage our large flatcar fleet enabling us to efficiently service over 300,000 routes throughout Russia and abroad.
Our IT system is connected to the informational infrastructure of Russian Railways, helping address day-to-day operational issues and improve the efficiency of containertransportation, including identifying and avoiding route bottlenecks, delays or other operational problems.
As the market leader in railway container transportation in Russia, we are subject to certain restrictions. Specifically, we are required by law to provide our flatcars for transportation of containers on a first-come, first-served basis, subject only to a customer’s ability to pay for our services.
However, there are no regulatory restrictions to our pricing policy which is based only on free market principles. As any other rail operator in Russia, we are also subject to the industry regulation.
The efficient operation of our flatcar and container fleet is essential to the success of our business. We measure the efficiency of our railway container transportation operations by turnover and an empty run ratio, both are measured separately for flatcars and containers. We are focused on continuously improving our operational efficiency metrics.
Turnover is the average time in days between two consecutive loaded trips of a flatcar or container. The use of block-trains improves turnover as rail containers reach their destination faster than they do on mixed-cargo trains. Russian Railways, as a provider of the railway infrastructure and locomotive service, controls the speed with which a train runs.
Turnover also depends on our efficiency in managing empty runs and downtime of our flatcars and containers at terminals. To reduce downtime, we invest in increasing the throughput capacity at our busiest terminals.
We also reduce downtime of our flatcars and containers by developing our IT systems by better synchronising our terminal handling and transportation services.
An empty run for a flatcar is the interval it runs without carrying a container, and for a container, when it runs empty.
Starting from 30 September 2017, the Company has changed the manner it presents the empty run ratio for flatcars and containers. The new formula is based on average container*kilometers rather than average kilometers. This approach provides for more accurate metrics reflecting both distances and volumes relevant to empty transportation.
The comparison of the new metrics with the old ones is shown below:
|Empty run ratio||2014||2015||2016||1Q 16||2Q 16||3Q 16||4Q 16||1Q 17||2Q 17||3Q 17||4Q 17|
Empty runs reduce our profit margins because we pay for infrastructure, locomotive traction and other services provided by third parties (such as Russian Railways.) We optimise our empty runs of our flatcar and rail container fleet by matching customer orders for a particular destination with shipment orders from (or close to) that destination.
This matching of routes and destinations is facilitated by our information systems and simplified by having a large fleet of flatcars and containers, a nationwide network of sales outlets and a large and diverse customer base.
We focus our marketing efforts on finding container cargo in the direction of our empty runs, and offer price incentives to customers to attract greater freight volumes in those directions.