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Russian government approves United Transport & Logistics contribution

09 Sep 2014

INTERNATIONAL: The Russian government has formally approved Russian Railways’ planned contribution of assets to the United Transport & Logistics Co intermodal freight joint venture of the national railways of Russia, Kazakhstan and Belarus.

RZD is to contribute its 50% plus two shares stake in TransContainer and 100% minus one share of Russian Railways Logistics to the charter capital of OTLK. It will also provide US$1·7bn of infrastructure funding over seven years. Belarus Railways is to transfer the Belintertrans container business to OTLK, while Kazakhstan will contribute terminal operator Kedentransservice and intermodal business Kaztransservice.

Announcing the government’s decision on September 6, RZD said the OTLK venture agreed by the railways last year is ‘a response to the growing level of competition for the management of global transport corridors’, in particular from the EU and China. OTLK would control key assets in the Common Economic Space which covers Russia, Kazakhstan and Belarus, including the major entry points to the 1 520 mm gauge region at Kazakhstan’s Dostyk and Altynkol border crossings with China and at Brest on the Belarus/Poland border.

The railway believes mutual use of rolling stock, uniform pricing principles and technical standards would enable OTLK ‘to reach a business scale comparable with global industry leaders, ensuring a strong bargaining position in relations with foreign partners and contractors’.

RZD said the volume of transit traffic from China to Europe is two to three times higher than the potential traffic in the opposite direction, and the only way to reduce empty running is to combine transit, domestic and export-import traffic. This would require a ‘uniting everything involved in the transport of assets into a single system’, including IT systems, tariffs and pricing policy.