Rail Garant publications

In the modern context, only increasing one’s railcar fleet cannot be a successful strategy in the operator business. According to Ilya Dudinsky, Director General of the Rail Garant Management Company, today the professionalism of managers and the company’s capability to adapt operatively to market changes come to the fore.

When the railway is not only a business

- Ilya Vladimirovich, what tasks have you set for yourself (or were given by shareholders) as top priority for the near and distant future?

- Each company passes certain stages of its development. Rail Garant’s shareholders, on the basis of their knowledge and wide experience, have managed, in a short span of time, to generate a large and successful holding with an operational railcar fleet consisting of 30 thousand freight cars which entered the top-5 largest operators in the Russian railway market in 2011. The task of the following development stage of the group, my task, on the one hand, is to add consistency to the business and, as a consequence, to raise its operational efficiency, while on the other hand it is to specify the further strategy and top-priority development goals. But the ultimate goal is, unconditionally, business development as a whole.

- How do you estimate the potential of the group’s development?

- When I agreed to join the Rail Garant team, one of the primary factors that affected my decision, was speed. The speed at which people are capable of working and developing. That is the speed of decision-taking and implementing these decisions. The group has already shown its abilities to adapt successfully to market changes and to operatively adjust its earlier selected course of action. Rail Garant is a team which is really able to work quickly. And this is very important. This is a thing which I link to the company’s potential.

- What, in your opinion, is the foundation of successful development of companies on the railway market? Is it the intuition of its managers, or the administrative skills of its top managers and commercial departments?

- I think that it consists of several factors together: understanding of how railway transportation works now, and actually experience and knowledge of the history of the railway industry. A mandatory condition is that you have a good team. A team which has been tested already, which is able to solve tasks of any level of complexity in an integrated manner. Furthermore, there must certainly be a feel for marketing and the ability to predict the market. These are, in my opinion, the basic components arranged according to their priority, which make railway companies successful in their development. But as a whole I want to point out that in this market, those people for whom the railway is not only a business, but also a part of their life, are successful, no matter how haughty that sounds.

The more difficult a task is, the more interesting it is to solve

- How comfortable do you feel managing one of the branch leaders? After all, you are in the post of Director General for the first time.

- I have gained wide experience in the field of railway fleet management over 12 years of work in the industry: I worked in MMK-TRANS, participated in the building and management of Novaya Perevozochnaya Kompaniya, and subsidiaries and affiliates of Russian Railways (DZO RZD), where I was responsible for organization of railcar management, as well as for business activities, and an increase of operational efficiency of the business. I came to an already-developed team as well, which, in my opinion, is more difficult than developing business from scratch.

As a rule, transferring from the position of top-manager to the first position occurs inside the company. You know people, you know how everything is arranged, and so you move upwards to another position. Or, for example, the Director General passes to the same position in another company. In this case he/she has experience as the Director General, but there is uncertainty in new staff for him/her.

I hold such a position for the first time and, besides, this staff is new to me. But the more difficult the task is, the more interesting it is to solve it.

- Is it necessary to expect any significant replacements in the structure of the company management? After all, quite often a new head comes with a new team.

- The question is not about coming with a new team, but rather about how much this or that person answers the purposes of the tasks of a specific company, and how comfortable he/she feels in the developed team and whether he/she can show initiative. For example, a new person can come to the team, but she/he will not be in demand and effective, since in spite of the fact that the business is the same, the conditions and tasks can nevertheless differ. Everything depends most of all on whether the person answers the company’s purposes needs or not, and with what tasks he/she will be entrusted.
Some top managers from large transport companies joined our team in the beginning of July, including Igor Tyagunov, Evgeni Prilepin and Mikhail Ageev. I’m sure that their professional competence, stored experience and leadership qualities will promote an increase in operational efficiency of the group, strengthening its competitive advantages, strengthening its leading positions on the market, as well as further effective development.

- How would you assess your management style?

- I think that only those people with whom I work can estimate it objectively. I can say precisely only that I try to create such conditions whereby the initiative comes from below. Though the position of the Director General, unconditionally, means a certain level of imperativeness, since it falls on the lot of the company head to be responsible both before shareholders and before the state regulators after all.

Renewing the railcar fleet cannot be a goal in and of itself

- If we speak about the industry as a whole, how do you estimate today's market supply of rolling stock?

- As a whole, it is absolutely clear that there is a surplus of railcars on the network. That said, the supply of railcars to consignors leaves much to be desired.

- What is that connected to?

- With the features of the work of the whole technology of railway transportation under conditions when a lot of operators act on the network. There is only one solution - integration. Any market passes a consolidation stage sooner or later. If the number of operators is reduced to reasonable limits, then probably the system will work better. But economic incentives shall result in it instead of state regulation measures. Consolidation of market participants must be pragmatic if you want an evolutionary character. Thus I think that administrative intervention in this process is inefficient; the state can create only conditions whereby a privately-owned car, "caring" for its profitableness, also "cares" for the efficiency of the Russian Railways Holding in parallel.

For now the regulatory model in which operators work (legal, economic), is constructed so that not always are normal and clear tasks of raising the economy of the car’s work is connected with an improvement in the technology of operating. I would even say that sometimes in the current conditions, when raising its cost efficiency, a private company produces technological and economic costs for the functioning of railway transportation as a whole.

Accordingly, it is necessary to create such conditions whereby cost efficiency of the operator promotes economic and technological efficiency or, in other words, decreases the level of costs for the carrier and owner of such infrastructure.

- What do you think, is it necessary for market participants to increase their own railcar fleets, or it is necessary to choose other priorities of development?

- Basically, renewing the railcar fleet cannot be a goal in and of itself. The primary goal of the operator is to satisfy the clients’ requirements, considering the possibilities of the infrastructure of Russian Railways, as well as the predicted increase or decrease in cargo turnover. For example, today we see that there is a surplus of semicars on the market, and, probably, some deficit is available or predicted in other kinds of rolling stock. Strategic targets of the operator for increasing railcar fleets should be correlated with the long-term tasks of the client for business or production development.

- How do you see the most advantageous strategy of development of operators now (specialization, or, on the contrary, diversification, concentration on enhancement of management of railcar fleet, expansion of the line of services offered to the clients, etc.)?

- Operators’ development strategy should depend on their strengths and weaknesses. When speaking about some specialized rolling stock, the success of its operation is completely connected to how correct, good and promising was your agreement with the resource-holder. And whether it was possible to make so that thus it was possible to manage the railcar fleet effectively, for example, by means of attracting return loading. There is universal rolling stock where, together with the abovementioned factors, technological capabilities of the company enter the game. After unloading, semicars don’t go back. Rather they go to the nearest point of loading. This is the technology of management of the railcar fleet. Here, on the one hand, it is necessary to agree everything correctly with the resource-holder, and on the other hand, - to plan, predict and perform everything correctly. This is absolutely another level. Therefore, first of all, each company must specify for itself what it is able and wants to do. The third moment is service. Now everybody understands that it is this part of business which helps to work effectively and to make extra income with the help of additional services.

- On the eve of Russia's accession to the World Trade Organization, fears are expressed with increasing frequency that globalization as a whole and accession to WTO in particular can harmfully influence the state of the Russian economy. Do you have the same point of view?

- In the short-term period, probably, we will observe some recession in separate industries. However, if one thinks strategically, the WTO, in my opinion, will create conditions for production modernization, and implementation of innovations in all fields of activities that will allow improving the qualitative level of the goods issued. This will all work, finally, towards the further dynamic development of the Russian economy.

'RZD-Partner', №16