Russian Railways’ Europe-Asia deal with Belarus, Kazakhstan Approved

The press center of Russian Railways advised that Russia’s government has  approved a  joint venture between the state railway companies of Russia, Belarus and Kazakhstan know as the Integrated Transport and Logistics Company (OTLK).

Russian Railways will transfer 50 percent, plus two shares in JSC Transcontainer, Russia’s largest intermodal operator, and 100 percent minus two shares in its Russian Railways Logistics unit, to United Transport and Logistics Company, or UTLC.

OTLK was created as an initiative of the railways of Russia, Kazakhstan, and Belarus to be part of framework  integrating the three countries on the basis of the Common Economic Space and Customs Union.

Currently, OTLK is one of the few real-world business projects of integration processes in the CES, and the only one aimed at consolidating the infrastructure sectors of the Customs Union.

The creation of OTLK was to ensure the development of the transport and logistics infrastructure of the three countries on the basis of uniform principles of pricing policy, the mutual use of rolling stock, the introduction of a single technology and standards of transport and logistics services in the territory of the CES, and the timing of investment in the development of the railway infrastructure of the three countries. This will create a transport platform for other large-scale economic projects.

Also, OTLK is a response to the growing level of competition for the management of global transport corridors, particularly from the EU and China. Control of key transport assets of the CES will allow OTLK to reach a business scale comparable with global industry leaders, ensuring a strong bargaining position in relations with foreign partners and contractors.

Combining transit, domestic and export/import traffic in its members’ national markets will enable UTLC to reduce operational costs, offer lower rates to shippers and cut the number of empty containers resulting from a 3:1 imbalance between westbound and eastbound traffic.

On the Russian side, shares of TransContainer and Russian Railways Logistics will be transferred to OTLK; Belarus will transfer Belintertrans, which consolidates container assets in Belarus. From Kazakhstan, Kedentransservice and Kaztransservice will be transferred to OTLK.

This will make it possible to control key entry points to regions using 1520-mm-gauge rail: Dostyk, Altynkol, and Brest; the network scale and size of the rolling stock; and the required level of basic logistics competencies.

As a result of this project, Russian Railways will provide additional funds of almost $1.7 billion over 7 years for infrastructure alone.

OTLK will also have a positive macroeconomic effect. According to the calculations carried out with the participation of  consultants from Boston Consulting Group, due to the development of transport and additional shipping-related industries (transport engineering, construction, materials, etc.), by 2020, $5 billion will be added to the GDP of Russia and over 17 000 jobs will be created. The project will positively affect the economies of other countries in the Customs Union.

Do you have any questions regarding shipping to Russia or CIS? Please contact RCL Agencies!

 

source: Port News