L4 Logistics | Transport Shipping and Logistics News

 In particular, he pointed out the following trends:         In the first half of the year, the network average loading has grown 3.8%, the industrial production growth being only 3.4%. This indicates that the corporation provides stable transport support to the national economy demand.    The largest growth of loading has been achieved at North-Caucasian (+14.2%) and East-Siberian Railroads (11.3%). Well ahead of schedule are also Far East, October, Krasnoyarsk, North, and Sverdlovsk Railroad. Thanks to these Railroads, the entire network has performed its task for freight loading. At the same time, there has been a substantial decline in loading comparing to the last year at South-East (93.9%), Kuibyshev (94.3%), and South Ural Railroads (98.7%). There has been a drastic decline in loading at West-Siberian Railroad, which that makes one fifth of the entire network freight loading.         It is for first time in many years that, due to the change in freight flow configuration, the freight turnover growth is not faster than the loading dynamics but, on the contrary, is far behind. Even taking into account paid empty mileage of private carriages, freight turnover has grown only by 3.3%.         The slow growth of freight turnover negatively affects the corporation’s profit, but even worse effect does have the change of the freight structure by destinations and freight types, in particular the trend of export-import traffic to switch from borderline crossings to ports that may cause the corporation to lose at least 17 billion roubles.         In the first half, the income on traffic was lower than 47% of the yearly planned value. The income is only 9.6% higher than the last year level, while it was expected to grow 15% considering the indexed tariffs and planned growth of traffic. The corporation received 10.5 billion roubles less during the first half of the year than was planned by the Director Board!    {mospagebreak}     The loss on traffic is not compensated but even aggravated by the results of other activities. The income on subsidiary activities was only 95.3% of the planned value, which caused the loss of 1.2 billion roubles to the corporation.         The following administrations literally wrecked the plan on income from subsidiary activities: Zheldorremmash (-412.1 million roubles or 25%), Vagonremmash (-64.5 million roubles or 6.3%), and Remput’mash (-145 million roubles or 36.4%).         Vladimir Yakunin pointed out that the effect of negative external factors was aggravated by unfair employees of the corporation itself. There have been numerous facts discovered when freight descriptions in shipment documents are falsified so that the freight is illegally classified to the first tariff class. Such violations have been found at Moscow, North-Caucasian, Sverdlovsk, and other Railroads.         In 108 out of 10,000 carriages examined there were falsifications of freight tariff classification found, 5.6 million roubles of freight income being lost. Taking into account that about 58 thousand carriages are dispatched at the network daily, the loss may reach hundreds of millions of roubles a month!         Vladimir Yakunin said that ‘already this February, after first negative macroeconomic signs of the corporation’s income and spending, system proposals for correcting the plan of the corporation’s operational costs and investment programme were developed. Their fulfilment would provide financial equilibration of Russian Railways’ work.’         However, no proper decisions had been made at that time that aggravated the corporation’s financial position making it necessary to plan more strict measures for reducing costs during the second half year.         Vladimir Yakunin set the task to compensate the external cost pressure on the corporation’s expenditure by realising the measures for reducing the corporation’s spending at all levels.         At the same time, the corporation is unable on its own to compensate the loss of income due to the changing structure of freight turnover. Therefore, the corporation persistently requests the State regulatory authorities to perform this year an additional 4% indexing of freight tariffs.         However, the corporation’s President Vladimir Yakunin said that ‘even if the additional indexing is done we shall not pay less attention to the cost economy. The additional indexing may ensure minimum profitability of the corporation this year only in combination with full-scale internal measures for reducing costs.’   {mospagebreak}      The following tasks for reducing costs have been set:         1. Improve power optimisation of traffic and reduce prices for consumed resources.    During the first half year, the network average growth of tariffs on electric power was 10.2%, whereas at South-East Railroad the tariff grew 12.3%, at Volga Railroad—13.3%, West-Siberian—13.5%, and Far East—14.9%.    At certain power supply systems tariff growth has been beyond any reasonable limit. The growth in particular was: at Novgorodenergo: 24%, Tulaenergo: 19.5%, Ryazanenergo: 19.8%, Kalugaenergo: 20.3%, Arkhenergo: 23%, Sevkavenergo: 40%, Astrakhanenergo: 18%, Tatenergo: 25.5%, Omskenergo: 25.6%, Hakasenergo: 29%, and Khabarovskenergo: 21%.         2. Increase the effectiveness of passenger service.    During the first half year, passenger turnover has grown 2%, while the run of passenger carriages has grown 4.2%. The average occupancy of carriages has consequently reduced that indicates extensive nature of passenger traffic growth. The passenger branch should increase the efficacy of rolling stock, first of all, by optimising train stock. Every train must be assigned on economic grounds only.         3. Increase the productivity, which is one of the most important components of the optimisation of the corporation’s resources, because railway traffic is very labour intensive.    During 6 months, the productivity has grown 5.9%, while the yearly plan is 6.5%.    In order to ensure the growth of net remuneration, a higher task for productivity growth has been set for the second half year: 7.9% for the entire network.         4. Provide efficient organisation of the development and recovery of production capabilities.    This year the corporation’s capital investment programme is being implemented 50% more intensively than last year. This year, already 55% of the yearly purchase and renovation of rolling stock have been financed. The development and renovation of railway transport infrastructure have been actively performed.         At the same time, slow has been the development of borderline crossings at such important transport corridors as North-South, Kuzbass-Azov and Black Sea ports, and those leading to China.    Not active enough are the programmes of resource saving, corporate informatisation, and building double automatic block system.         The realisation of project principle of investment programme is very important; hence the stage of those projects must be brought up to date as soon as possible.         Capital assets are still being utilised unevenly. The corresponding factor in the first half year was slightly higher than 23%, which was the yearly target. This means that major production capacities will be put into operation at the end of the year, which will lead to a significant increase of their cost and a decrease of quality. In addition to that, State registration of property, reimbursement of tax on value added, and payment of tear and wear will be delayed.         The following important objects are to be put into operation by the Railway Worker Day:         At Moscow Railroad: speed service on Moscow-Lyubertsy-Ramenskoe route;         At North Railroad: traffic on Vohtoga-Shushkodom span;         At North-Caucasian Railroad: second track on Vodopadny-Lazarevskaya span that will increase the capacity of Tuapse-Adler line; complete the construction of Bataysk carriage and wheel shop and Derbent borderline crossing;         At West-Siberian Railroad: second track on Terent’evskaya-Krasulino-Erunakovo and Erunakovo-Bardino spans; extend station track at Izhmorskaya and Yashkino stations.         5. Make capital repair activities more systematic.    Capital repair is the second largest in cost investment programme and is the absolute priority for ensuring safety.    At the same time, only 99.5% of intensive capital repairs have been performed (Sverdlovsk (78%) and West-Siberian Railroads (86%) falling far behind the schedule), and 95% of track repair.    It must be pointed out that the quality of rolling stock repair is unacceptable.    Thus, casual repair of electric locomotives has grown 27% since the last year, which cost the corporation additional 100 million roubles.    The quality of repair of diesel locomotives is still low at East-Siberian and North Railroads, and of electric locomotives—at Kuibyshev and Volga Railroads.    The quality of carriage repair is low at North, Sverdlovsk, and Kuibyshev Railroads, where the number of uncoupling accidents is 1.5 times higher than the network average.    The organisation of repair of freight carriages is unsatisfactory at Yaroslavl, Kanash, Tambov, and Svobodny carriage repair works, Vereschagin track repair and mechanical works, and Velikie Luki locomotive works.    The managers of the above enterprises that are part of Russian Railways system will be subject to disciplinary actions, while the outside enterprises will be fined for supplying unsound products to Russian railways, and in the future they will not receive orders on rolling stock repair.    As a result, it is planned to reduce capital repair costs at least by 7 billion roubles, first of all, due to the optimisation of purchasing inventory holdings based on maximum use of available stock. {mospagebreak}        Vladimir Yakunin called ensuring the safety of traffic the priority task of the corporation.         Although the total number of faults has been reduced during the first half year (by 13%, including 28% in special cases, and 15% in passenger trains), the traffic safety is not sufficient yet.         Meeting the train schedule, which is another important factor of the corporation’s reliability, has declined during last two months, which is an unprecedented fact.         In June and May, the schedule was met 0.2% worse than last year (98.7%). Many passengers complain about passenger and suburban trains being late; those facts adversely affect the corporation’s reputation as well as its position on passenger traffic market, disturb the operation of stations and enterprises thus decreasing the safety of train traffic.         There are many complains of service quality in trains and at stations. There have been numerous complains about dirty carriage interior in suburban trains, shut windows in carriages during summer time, lack of light during night, open doors to carriage platforms, and illegal trade in trains and at stations.         The changes in suburban train schedules have not been timely announced. There are also many complains of ticket collectors in suburban trains.         Concluding the teleconference the corporation’s President set the following tasks for the third quarter:         1. Provide freight loading of no less than 324.1 million tons (3.8% growth comparing to the 2004 level);    2. Provide passenger turnover of 49.5 billion passenger-km (5.5% growth comparing to the 2004 level);    3. Provide no less than 9.2% productivity growth comparing to the 2004 level;    4. Perform the planned volume of traffic and capital repair of assets within the preset amount of operational costs: 161.6 billion roubles.    5. Receive at least 168 billion roubles of income by maximising traffic and improving its structure.    {mospagebreak}     Vladimir Yakunin set the following tasks for the second half year:    Task one. Perform the first stage of the optimisation of management structure, which will be the basis of improving the corporation’s business management, increasing the effectiveness of resource management, and creating tools for higher motivation of the administrative staff.    Task two. Modernise budget management technology, eliminate parallel planning of budgets and external accounts, and provide complete agreement of budgets with technological and investment solutions.    Task three. Realise at every enterprise, division, and subsidiary of the corporation a strict resource-saving programme, taking care of all resource components, namely: labour, material, power, and traffic. The corporation’s management will pay special attention to the control and appraisal of these activities.    Task four. Implement all above-mentioned innovations in the system of communication of railways and the corporation in general to consignors and service users. This should be the basis for breaking the trend to decreasing the profitability of freight traffic.    Task five. Resolve all procedural and organisational issues that hinder the foundation of the corporation’s affiliated companies in highly profitable traffic segments, where the corporation’s presence has been declining.    Task six. Review in the near future the lists of suppliers and contractors and conditions of resource supply to the corporation, considering low prices secured by long-term need for resource supply. The corporation will be persistent in breaking relations with those suppliers and contractors who are not flexible or are trying to force monopolistic terms.    Task seven. Develop by the end of the year a functional strategy for quality control, and test its elements at testing grounds. All heads of Railroads and functional subsidiaries should be creative in comprehending the tasks and resources of increasing safety, and they shall present their proposals for the strategy by 1 September.    Task eight. Implement real measures for optimising the structure of assets, which are not used effectively in primary activities and social sphere. Everything that does not improve the corporation’s financial and social situation must be successfully marketed.    Task nine. Create an effective system for retraining, advanced training, and training of prospective management staff; develop the system for advanced professional training.    Task ten. Create a social security system for railway workers based on real contribution of workers to the corporate result. The system must have a transparent mechanism of social security for all categories of railway workers: students who are prospective employees, working men and professionals, managers of all levels, and veterans who deserve honour and respect.(Source: www.rzd.ru)