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ITE Transport and Logistics

Rolling forward: Russia’s rolling stock sector

Russia’s economic recession hit its industries hard, with the rolling stock sector taking a particularly bad broadside. Crucially, it looks like those dark days are behind the industry. A wealth of projects, new wagon designs, and more, are powering a greater demand for train units.

Rolling stock in Russia: from contraction to resurgence

In 2015, Russian Prime Minister Dmitry Medvedev didn’t have much positive to say about the nation’s rolling stock industry. He noted that the market had actually contracted 37%, leading to a deficit of some 10,000 rail vehicles.

But Mr Medvedev should be feeling more optimistic in 2017 – mainly thanks to government efforts to prop up this industry, which supports 200,000 Russian workers. A stimulus package of roughly $120 million hit the market in 2016, providing subsidies to rolling stock manufacturers. These measures also banned fleet operators from using outdated, life-expired vehicles and reimbursed them for purchasing new stock.

In April 2017, the government also launched a support programme for industrial rail operators who do not run on the main Russian network to replace aged shunting units and locomotives. In fact, a flat out ban on rolling stock life-extension projects is in place – necessitating investment in new units.

RZD, Russia’s railway monopoly, is spending big in 2017. Planned total investment, across the entire network, is expected to hit $8 billion. For the purchasing of new locomotives, wagons, and train sets, RZD is setting aside $1.1 billion. On the slate are 450 new railway vehicles, including 210 electric and 240 diesel locomotives.

Major manufacturers’ growth signals rolling stock market confidence

Russia regaining its rolling stock strength can be seen in the performance of its biggest manufacturer: Transmashholding (TMH). TMH’s revenues grew 22% in 2016, reaching a total of approximately $2 billion.

The company performed particularly well in passenger travel, where it sold 49% more EMUs. It also recorded positive dynamics in the Russian rail freight sector, where sales of diesel-electric locomotives grew 6%.

While TMH is by someway Russia’s biggest rolling stock manufacturer, it is not the only player. Other firms are seeing more success too, and are starting to develop new prototype locomotives and wagons.

United Wagon Co. was awarded a contract from leasing firm Business Alliance in January 2017 to supply 730 open wagons, for example. The same company also won a contact with Sberbank Leasing to supply 100 grain hopper wagons in July this year too, demonstrating how leasing and rental companies are on the hunt for more train units in Russia.

Many producers are also beginning to experiment, develop, and test new wagon and train models for certification. DMZ, for instance, began testing of its latest EP3D EMU models midway through 2016. A number of new features are included in the EP3d, including new crash systems and powerful auxiliary converters for a smoother, quieter ride.
A new high-capacity wagon model, made by United Wagon Co. subsidiary TikhvinSpetsMash recently acquired certification for use across the Russian network. This latest wagon has a 25-ton axleload, measures 14.62 metres in length, and is capable of carrying 40ft containers with a gross weight of 36 tons. 

This is really only a very limited snapshot of rail development in Russia, but the market is being buoyed up by investment in research and development by significant manufacturers. 

So, apart from bans on out-of-life stock, and government subsidies, what else is powering market recovery?

Imports, large scale infrastructure projects fuel Russian rolling stock demand

Demand for fresh container wagons is very likely to keep growing throughout Russia right now, inspired by higher levels of imports. Inbound trade was already recovering towards the end of 2016. Between January and July 2017, import volumes were 27.4% higher than during the same period in the previous year.

Out in Russia’s Far East, the Primorye transport corridors are being developed, hinting at a great rise in rail traffic between China and its giant neighbour.
High-speed rail is also set to drive up demand for appropriate train sets nationwide. Routes such as the proposed 770 km Moscow-Kazan HSL, need locomotives capable of hitting speeds of over 300 km/h. No available train sets in Russia can currently meet such velocities.
There is also RZD’s 2030 strategy. By this date, Russia’s chief rail operator is aiming at investing approximately $5.1 billion on new rolling stock, including replacing all units whose service life ended prior to 2015.
Included in RZD’s buying plans is:

•    23,300 locomotives ($1.6 billion)
•    996,000 freight cars ($2.1 billion)
•    29,500 passenger cars ($890 million)
•    24,440 wagon vans ($400 million)

That’s a lot of money being spent on a lot of rolling stock.

With such investment programmes, massive infrastructure projects, and big government backing, it looks like Russia’s rolling stock sector has steamed past the worst of its crisis – and is chugging along at a strong pace.

Meet Russia’s rolling stock sector at TransRussia

Whether you are looking to source new rolling stock suppliers, present new technologies, or grow the size of your wagon loads across Russia, you can meet the people that matter at TransRussia.

TransRussia is Russia’s largest transport and logistics services exhibition, bringing together over 14,500 industry professionals from Russia and 59 countries worldwide. Why do they visit? To see the latest solutions, improve cargo loads, discover new transport and logistics partners, and grow their business leads in one of the world’s biggest transportation markets.

Sound good? Contact us now to learn more about how you can take part in TransRussia 2018.


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