Rail Garant News

"Difficult market situations have never frightened true professionals, but for the railways, stability is always better than ups and downs", says one of the most successful businessmen in the Russian railway market, co-owner and CEO of Rail Garant SERGEY GUSHIN.

What is your assessment of the current state of the rail freight market in the main segments?

I think that in the markets we operate in, the most difficult situation is in the coal industry. As a result of the unification of empty mileage tariffs and general indexation, the transport component in the price of coal has increased. But the global coal market has dipped, the demand for coal has fallen and cannot be compared to last year. Although I am not a coal market analyst, we have talked to our customers and understand that without government support, the industry may experience an even greater decline. Today's Russian exports are about 120-150 million tonnes, which is just 1.5% of global coal consumption. Owing to the long decline in world prices, the profitability of mines has decreased and, in the event of a further decline, it may reach zero. According to our data, the coal industry is only surviving thanks to its operational reserve: coal is mined which does not cost a lot and expenses are put off to the future. But this can't go on for long. If the state doesn't think about the coal miners, then we will go back 15 years when the miners were banging helmets in protest on Gorbaty bridge. As one of such measures, our government should look closely at the railway tariff for coal companies to get away from the situation where it is higher than 50% of the final cost of production. This could be done by temporarily freezing tariff increases in the coal industry or by other means. The main point is for it to become possible to react more quickly to significant market changes.

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