RF Government approves creation of Integrated Transport and Logistics Company
Governmental Decree of August 30, 2014, no. 1673-p approved the creation of the Integrated Transport and Logistics Company (OTLK), press center of Russian Railways informs.
The document confirms that the government of Russia agrees to give up Russian Railways’ 50% plus 2 shares of JSC TransContainer and 100% minus 1 share of Russian Railways Logistics as a contribution to the charter capital of OTLK.
OTLK was created at the initiative of the railways of Russia, Kazakhstan, and Belarus as part of framework of 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.
By virtue of the existing imbalance of the cargo base, the volume of transit traffic from China to Europe is 2–3 times higher than the potential traffic from Europe to China. Accordingly, the question of empty runs comes up.
Only by combining traffic in transit, domestic, and export–import transportation can the empty-run ratio be lowered.
This will not only economize transit, but also reduce empty runs on export, import, and domestic routes and, as a result, reduce the cost for operators and the cost of transportation services to shippers throughout the CES.
Such work requires uniting everything involved in the transport of assets into a single system, creating a single control technology for rolling stock on the basis of the total IT systems, the harmonization of tariffs, a flexible pricing policy, etc. OTLK was created for these purposes.
The basic condition for achieving this result is to bring together key container assets into a single technology.
This is a key competitive advantage of OTLK, since it allows for the unified management of the park in the whole inter-domain-scale of the CES to optimize empty runs and offer competitive prices, as well as to ensure the cost and quality of transport services along the entire supply chain.
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 our 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.
Russian Railways, together with its Kazakh and Belarusian colleagues, embarked on the creation of OTLK over a year ago. Since then, much has been done; with the participation of international consultants, a detailed business plan has been developed and the economic effects of the target business model and stages of development of OTLK have been calculated. The project has received support from the highest political level of the Customs Union and the Eurasian Economic Commission.
While the Russian state authorities considered the materials for the creation of OTLK, they continued working with the authorities of Belarus and Kazakhstan (including the Eurasian Economic Commission).
Support from the Eurasian Economic Commission is reflected in the basic guideline of macroeconomic policy of state members of the Customs Union and the Common Economic Space for 2013–2014, approved by the decision of the Supreme Eurasian Economic Council on May 29, 2013, and in the decisions of the meeting of the Supreme Council of the Common Economic Space in Astana on May 29, 2014, providing assistance to complete arrangements for the start of economic activities of the OTLK.
