Thursday, May 12

Russian Railways Expands East and Develops the Trans Asian Railroad

RZD Russian Railways, Kazakhstan Railways and Belarusian Railways are to create a joint rail based container transport and logistics company.

Vladimir Yakunin, President of Russian Railways made the announcement during the recent meeting of the governments of the Russian Federation, the Republic of Belarus and the Republic of Kazakhstan.

RZD Logistics, the wholly owned subsidiary of Russian Railways provides the base for the new combined transport and Logistics Company. To ensure the new company has the requisite asset base and the three shareholders enjoy a parity of one third each, there will be an additional shares issue. Russian Railways will add shares of TransContainer, Kazakhstan Railway will add shares from Kaztranservice and Kedentransservice whilst Belarusian Railways, continuing the policy of offloading the state silverware during its current financial woes, gives the Brest train and container terminals and the assets of Belintrans.

Yakunin said the joint transport and logistics company enjoys existing and working equipment so the shareholders will avoid excessive start-up costs or cash injections.

“The new business will be self-financing and profitable. Taking into account the dynamic development of western and central provinces of China, this project’s implementation will provide background for attracting additional cargo traffic in the amount of up to 1m TUE till 2020 – only in container transportation. This is about 2% of anticipated container flows between Europe and Asia” said Vladimir Yakunin.

During the 7th International Business Forum “Strategic Partnership 1520” in Sochi, Russian Railways, Kazakh Railways and Belarusian Railway signed the agreement on development of transport and logistics network for the new Eurasian Economic Union. Cyber security Training Course in Dubai

The three parties agreed to coordinate their efforts and strengthen their cooperation developing a combined transport and logistics system in Russia, Kazakhstan and Belarus. This new company will focused on the provision of high-quality services for the EEU within the broad-gauge “1520” rail network – the region named after the width of the track in the former Soviet Union.

The objective is the development of a stable pricing system by means of agreed “through” fares’ and the agreement of common standards for services. The partners intend to establish a new International transport and logistics Association which will regulate and improve current systems within the “1520” area.

The announcement and the signings in Sochi heralded more deals in the offing:
Yakunin’s announced that RZD would be interested in participating in the privatisation of Polish Railways, causing consternation with the Deutsche Bahn CEO RĂ¼diger Grube sat at his side.

Given current relations between Poland and Russia, the ongoing dozvol crisis and all the recent history, it will be interesting to see how this one plays out. Polish Rail is a loss maker and Yakunin announced he was ready to invest $5 trillion in Russian Railways and its infrastructure.

“Have cash, will buy”.

However, in Russia politics takes the lead, rather than socio- economic or business reasons as rationalised in the West, which appears to behind the announcement of RZD’s new 400 km 1520mm-gauge line to Vienna. The new direct link from China to the heart of Europe is scheduled to be operational by 2024..

Logic behind this expensive infrastructure is questionable, given Polish – asset availability on the Belarus border.

I have a great interest in Russia and enjoy sharing 25 years in business, 10 spent in Russia.

Russia needs to be viewed holistically as business is opaque and pitfalls many.

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