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27 Сентября 2017

RLL Container Report - 27 September 2017

From: John Keir, Ross Learmont Ltd. Email: john.keir@telia.com Date: 27 September 2017

The triangle of profit.

The Russian government’s sale of TransContainer highlights the value of intermodal assets in the context of the vast Eurasian continent. Unlike the populations of western Europe, most people on the Eurasian continent live hundreds, if not thousands, of kilometres away from the great oceans of the world. Here, the railway dominates the transport scene. At the same time, Ilim Pulp’s deal to increase exports to China by half a million tons per annum focuses attention on the expanding cross-border trade from Russia’s main industrial regions in the North, the Urals and Siberia. Other pulp and paper producers will be supplying additional quantities of their products to the rapidly expanding markets in China and S E Asia. Russian exporters located in the lands beyond the Urals will profit from their relative proximity to the main centres of consumption not only in North East Asia but also to consumers as far south as Singapore and Indonesia.

Having secured a long-term trade deal, the exporter has to consider his transport options: primarily conventional rail wagons versus ISO containers. The break of gauge entails a transfer from the Russian broad gauge to China’s standard gauge system. A second consideration should be the weather, for one would not want to have to transfer cargo from one rail wagon to another during a rain storm or in freezing temperatures. Simply lifting off an ISO container from the broad gauge platform on to a standard gauge not only saves time, it also eliminates potential cargo damage or loss.

But there is another far greater benefit over conventional rail wagons: Russian intermodal operators can use the inbound containers to transport Chinese exports back to the large CIS market. Indeed, containers, which normally transport pulp and paper, would be clean and free of pungent odours, making them highly attractive to Chinese exporters of valuable consumer goods. These same exporters are always on the look-out for a reliable source of clean containers that may be used to carry consumer goods ranging from clothing to electronic goods. The majority of these import goods would be destined for the populous cities in the western part of Russia, far away from the pulp and paper main production centres in the North and in Eastern Siberia.

This “dislocation” is, however, to the Russian intermodal operator’s advantage, as he can utilise his transport assets to haul the regular flows of domestic cargoes moving from Moscow and other western cities to the North and to Siberia. Again, the fact that these Russian-owned containers are operating in domestic routes, transporting clean cargoes allows the Russian intermodal operator to “triangulate” his container fleet, resulting in a high utilisation factor of his intermodal assets on all three legs of the journey.

John Keir, Ross Learmont Ltd.
27 September 2017

Copyright ©, 2017, John Keir

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