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Industry Overview

Rail plays an integral part in the movement of freight in Russia

Russia stretches over a vast territory from the North Pacific to the Baltic Sea and extending to the Arctic Ocean. It covers 17 million square kilometers, which is more than 10% of the Earth’s land mass.

Rail transportation is therefore a vital component of the Russian economy. With over 86 thousand kilometers of track spanning Russia, about 87% of the country’s overall freight turnover, excluding pipeline traffic, travels by rail. That equates to almost 1.2 billion tonnes of cargo a year.

Reform of Russian rail freight transportation market

Market reforms started in 2001 as the Russian government moved to bring private investment and competition into the market. The reform was aimed at modernising rail transportation services in Russia while improving efficiency and profitability. The ongoing programme remains a significant factor in both the recent development and the future prospects of the Russian freight rail industry.

While State owned railway company.
OAO Russian Railways
(RZD) retains a monopoly in the provision of rail infrastructure and is by far the largest provider of Locomotive is a railway vehicle that provides the motive power for a train.

locomotive
traction services, the regulatory framework provides third-party operators with a legal right to access such infrastructure on a non-discriminatory basis alongside RZD and its subsidiaries. The competitive landscape has changed significantly since 2001, with private operators expanding their fleets. They represented almost 83% of all Russian railcars in 2016, up from about 30% at the end of 2005.

Russian fleet overview

The fleet of rolling stock in Russia consists of general-purpose rolling stock such as Gondola is an open-top type of rolling stock that is used for carrying loose bulk materials.

gondola (open top) cars
and specialised rolling stock for an overall fleet of 1.1 million units at the end of 2016.

The most common type of railcar in Russia is the Gondola is an open-top type of rolling stock that is used for carrying loose bulk materials.

gondola car
, which represented about 44% of the total railcar fleet at the end of 2016. Gondola is an open-top type of rolling stock that is used for carrying loose bulk materials.

Gondola cars
are used to carry a wide variety of cargoes, including ferrous metals, scrap metals, ores, crushed stone, coal, timber and even containers. Rail tank car is a type of rolling stock designed to transport liquid and gaseous commodities.

Rail tank cars
, the second most common type of railcar in Russia accounting for about 24% of the total railcars at the end of 2016, are designed to transport liquid and gaseous commodities and are used mostly for the transportation of oil products and oil.

Pricing in the Russian railcar sector

Pricing for railcar services in Russia is unregulated except for services provided by RZD. While previously the regulated railcar tariff charged by RZD was an effective benchmark for the market, with the majority of the Russian commercial railcar fleet no longer owned by RZD, its significance as a benchmark has greatly reduced.

Freight rail transportation volumes

Russia has historically witnessed high levels of correlation between growth in GDP, industrial production and Freight Rail Turnover is a measure of freight carriage activity over a particular period calculated as the sum of tonnage of each loaded trip multiplied by the distance of each loaded trip, expressed in tonnes-km. It includes volumes transported by Engaged Fleet and excludes performance of the petrochemical tank container segment, unless otherwise stated.
Freight Rail Turnover
. Freight rail volumes in Russia are largely comprised of commodities such as coal, oil products and oil, metals and ores, and construction materials.

Coal (thermal and coking) is the largest segment of the industry, representing 28% of Russia’s overall transportation volumes in 2016. Rail is primarily used for the transportation of various oil products, while crude is transported mostly by pipelines. Rail shipments of oil products and oil contributed 19% of industry volumes in 2016. The transportation of metallurgical cargoes (including ferrous metals, scrap metal and ores) is the third largest segment accounting for 18% of industry volumes in 2016, followed by construction materials (including cement) at 14%. 

For recent freight rail market statistics, please click here.

Last updated: 13.12.2017