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The new generation choose Russian Railways

The roundtable Business Model for Freight Transportation: Improving Efficiency amid Growing Competition was held as part of the Seventh International Rail Business Forum 1520 Strategic Partnership in Sochi.

Issues discussed at the roundtable included the consolidation of operators to create a target model of the market and tools to optimise leasing operations.

The roundtable moderator, Russian Railway Transport Research and Development Institute General Director Boris Lapidus, stressed that the main objective today is to create a market in which all members have the opportunity to develop harmoniously and attract increasing volumes of freight to the industry.

In an assessment of the interim results of the acquired freight car fleet, Yelena Kunayeva, the general director of the Transport Service Centre – affiliate of Russian Railways, stressed that the fleet operates in the low-cost segment, primarily for short hauls and the least effective areas of business. As a result, the fleet is behind those of other operators technologically.

Equal price conditions need to be established for all members of the transport market before any real competition can be spoken about in the freight transport segment. Kunayeva said a solution must be found as quickly as possible to the issue of the total liberalisation of the train car component, which will create new opportunities to consolidate the fleet. The next step should be a solution to the issue of introducing fees for using infrastructure.

Dmitry Korolev, executive director of the non-profit partnership Participants of the Railway Rolling Stock Operator Market, stated, “At the current stage, one of the most important challenges facing the operator community is the development and introduction of efficient technologies to control the fleet given the numerous operators and lack of an inventory fleet. Since this roundtable is being attended by leaders who largely determine the principles for the industry’s work, we took the liberty of once again drawing attention to the position of the partnership on issues concerning fleet control technology.”

The operators and Russian Railways have a common goal – to ensure the uninterrupted transport of commercial goods. This can be achieved in a variety of ways: operators have managed to establish a sustainable surplus of rolling stock and use the market mechanism to minimise the tariff burden for freight owners. On the other hand, Russian Railways offers a mechanism to consolidate the maximum size of the fleet under its own unified management and achieve maximum productivity for train cars due to the economies of scale.

Such large-scale changes are impossible to implement without building high-quality and multilevel communications between the structural divisions of Russian Railways and operator companies. For their part, the operator companies that are members of the partnership have prepared and shall submit in the coming days a draft version of the unified regulation for interaction among dispatch and logistics divisions of operators that are members of the partnership with the Central Traffic Management Directorate and Transport Service Centre of Russian Railways, Korolev said.

The forum participants also paid quite a bit of attention to the theme of passenger transport at the roundtable Passenger Transportation: Recipes for Better Managment and Increased Profitability. The issues that generated the greatest interest among the discussion participants were the construction of an integrated system of rapid and high-speed transport, tariff and price incentives in the battle for clients, and suburban transport in terms of interaction between the government and the carrier on behalf of the client.

In order to evolve amid competitive pressure from other types of transport, the first and most important recipe is to meet the relatively high standards of passengers, Russian Railways Passenger Transport Department Director Gennady Verkhovykh said. One potential product that could be provided to customers is the use of suburban trains as urban transport along radial routes surrounding major cities.

Speaking about the development of passenger infrastructure, Verkhovykh noted that Russian Railways invested roughly 2.5 billion euro (approximately 100 billion roubles) in the suburban train sector in 2008-2012, an amount that is six times higher than the depreciation over this period. Russian Railways acquired some 4,500 train cars for 75.2 billion roubles and spent 5.2 billion roubles on the modernisation of existing cars in 2008-2012. The company invested 6.5 billion roubles in the construction and reconstruction of suburban train stations over the period and plans to spend another 1.9 billion roubles on these purposes in 2012. The company spent 10.1 billion roubles on the reconstruction of the engine car depot in 2008-2011 and has allocated another 1.1 billion roubles in 2012. Verkhovykh said the current situation has inspired the company to search for external sources of funding.

Generation 2020: New Standards in Staff Policy raised issues related to the training and professional development of personnel as well as career motivation for young professionals, and also provided an assessment of the demand for managers.

By 2010, “Generation Y” (the generation born after 1980) will make up 50% of the personnel at Russian Railways. It will be a unique situation with representatives of five generations working at a single company, Russian Railways Vice President Dmitry Shakhanov.

In this regard, it is already necessary to take measures now to meet the demands of the new generation and ensure intergenerational continuity. In particular, Russian Railways employs a targeted programme called Youth of Russian Railways and introduced a three-tier system of bonuses that relies on employment indicators not only for one person but for the entire workforce. Over the five years of the implementation of the Youth of Russian Railways programme, the number of employees under the age of 30 at the company increased from 19% to 28%.

As per tradition, the key forum partners were Russian Railways, Siemens AG and Deutsche Bahn AG. The forum organiser was Business Dialogue.

Additional information may be obtained at the press centre of the forum organiser Business Dialogue Company at: