Saturday, February 11, 2012

Rail Freight Figures Up in Russia as RZD President Presses for Development

Overseas Investment Also Needed at Home
Shipping News Feature

RUSSIA - Vladimir Yakunin, President of Russian Railways (RZD), has been speaking out this week about his company’s recent performance and the way he feels the country needs to develop to improve its economy. Yakunin quoted statistics showing freight turnover including empty runs of private and leased wagons, increased by more than 12% compared to January 2011. The average daily shipping volume on the rail network was 3.275 million tonnes, which exceeded the 2006 level for the first time since the economic recovery, around a million tonnes more cargo than predicted.

Yakunin noted that according to a report prepared by the World Economic Forum on the quality of infrastructure in general, Russia was ranked 100 in the world and 130 on the quality of its roads, 105 on air transport infrastructure, 97 in terms of port infrastructure, 84 on electric power and 29 on railway infrastructure saying:

"The most important result in terms of January’ production was the high dynamic in freight traffic, since 2008, the railway sector rose three places in the rankings. This is a good result, and we are doing everything we can to stay ahead. But these resources also have limits, modernising infrastructure requires major financial resources, but at the same time also increases the demand for industrial products. Improving the quality of and access to infrastructure creates the conditions for economic development, increases economic activity among the population and reduces transport costs.”

Figures released by the company at the beginning of the month show freight shipments in 2011 totalling 1.24 billion tonnes, 3% more than in 2010, with coal, oil and metal ores accounting for the vast majority (764 million tonnes) with containerised cargo, although responsible for only 20.3 million tonnes, up 12.5% against the previous year.

There are also reports that a 245 kilometre rail line in Indonesia is to be constructed by RZD at a cost of $2.4 billion initially to carry recovered coal at a rate of 20 million tonnes a year. Finance is expected to be raised privately and through the offices of Russia's state development bank Vnesheconombank. The track will be built on the island of Borneo, home to much of the nation’s mineral resources and with links to the port of Balikpapan in the province of East Kalimantan.

Some observers are puzzled by the Russian’s willingness to become so financially involved in a region where the principal product is coal, something the Great Bear isn’t short of, but with investors from India and the UAE already investing billions of dollars in infrastructure on Borneo and China’s thirst for energy meaning they also are eyeing the region, given the Russian’s acknowledged expertise in track construction and carriage of bulk freight by rail, Indonesia looks as if it may provide a long term return for RZD.

Photo: Balikpapan Port and Oil Terminals