Railway to the Monopolistic Future

It was back in 2009 when Oboronsnabsbyt conceived the idea of opening a new container terminal. The yard was built in the vicinity of Ekaterinburg's Koltsovo Airport - at the "residence" of the Doker Retail-Port that combined 20 retail outlets. It was necessary to obtain consent of the Sverdlovsk Railways, the owner of the infrastructure and locomotives, for delivery of container platforms. However, the railroaders did not support the initiative of Oboronsnabsbyt. On the other hand, they did not say "No", having put the final decision into cold storage. 

"At the moment, we can receive only gondola cars and box cars. We have no authorization for reception of containers. We have offered the Sverdlovsk Railways to enter into the agreement, under which they will deliver container platforms from the Ekaterinburg - Sortirovochny terminal to Koltsovo. However, the railway company has not given the go-ahead so far, the Press Service of Oboronsnabsbyt stated. 

The Oboronsnabsbyt Company is sure that the container terminal located within the airport area will help to decrease transport costs substantially. It will be beneficial not only to Oboronsnabsbyt, but also to the neighboring enterprises. At present, they have to transport cargoes from the Sortirovka District all the way through Ekaterinburg. Furthermore, Koltsovo sees its future as a transportation and logistics hub.  

The Oboronsnabsbyt management prefers to be on the safe side, avoiding a showdown with the Sverdlovsk Railways, yet "retaining the hope to settle everything amicably". Ekaterinburg logisticians are more open in their statements. They think that railroaders are protecting their monopoly interests. The new terminal may draw part of the transportation flows serviced by the TransContainer Company. Today, this company is controlling the main container terminal of the region - the Ekaterinburg - Tovarny terminal. There cargoes are handled before they are transported not only to the Middle Urals, but also to the neighboring regions.

"TransContainer provides services to all cargo owners and, in fact, is the only adequate container terminal in the city, Daniil Vorobyov, Commercial Director of the Eurasian Container Service Company, points out.  

According to Mikhail Kopnin, the head of STS Logistics Ekaterinburg, the launch of the alternative terminal will invariably have an adverse impact on the interests of TransContainer. At the same time, the eastward transportation of container cargoes will become cheaper. "How soon will Oboronsnabsbyt be able" to receive the required authorization - is highly questionable. For example, it took at least 5 years for the Uralcontainer Company to receive such permit. Even then, it has only the right to receive its own container platforms. "The Sverdlovsk Railways keep it away from their rolling stock", M.Kopnin points out. 

The experts are unanimous in their opinion: only the terminal with quality service and sound opportunities can turn into an arch-rival to TransContainer. "If the efficient and uninterrupted servicing of transport is provided, part of the freight traffic will switch over to the alternative terminal. However, only an experienced player on the container transportation market is able to get it on the right track. We have already witnessed examples when companies, without adequate experience, tried to set up terminals in the Sortirovka area. However, their attempts died on the vine ", D.Vorobyov remarks.

The management of the Sverdlovsk Railways refused to comment on the situation about Oboronsnabsbyt. However, as "RusBusinessNews" has found it out, the key defensive argument of the monopolist is "inexpedience of another terminal". Today, all the cars arrive at the Ekaterinburg - Sortirovochny terminal, bypassing the small station of Koltsovo with undeveloped infrastructure. The terminal of TransContainer is located close to the key distribution node along the travel way of trains. To reach Koltsovo, a train should go in the reverse direction. If the Sverdlovsk Railways are right, the railroad will also incur extra expenses. Additional personnel and a locomotive will be required. Besides, the Koltsovo transit will have to be formed, placing containers from one platform to another. 

In the meantime, the management of TransContainer makes no secret that the company has its plans for Koltsovo. According to Sergey Vasiliev, the Director of the company division operating at the Sverdlovsk Railways, it will make sense to launch a container terminal there only if warehouse infrastructure and production operations are going to be actively developed. "At present, the costs of setting up and servicing the terminal are very high. Substantial funds are required to reequip the terminal, to build a new yard and to purchase state-of-the-art machinery. There is also a problem with recovery of expenses on car delivery and removal. Most probably, the expenses will have to be paid by customers. Therefore, it is unlikely that many containers will be delivered to Koltsovo. When their number increases to 50-60, then the terminal may become profitable. But everything must be weighted thoroughly", S.Vasiliev noticed. He also added that TransContainer is a market player and has no influence on the decisions of the Sverdlovsk Railways concerning new terminals or feeder lines.

There is one point to be noted: though TransContainer is still not sure about promising future of the Koltsovo terminal, it is making attempts to come into agreement with its owner about cooperation, but with no success so far. The Oboronsnabsbyt managers noticed that TransContainer started pressing forward, after the Regional Department of the Federal Anti-Monopoly Service sided with the market complex. The Press Service of the Department has informed that they received the relevant documents from the Ural territorial administration of the Russian Supervisory Railway Agency. Oboronsnabsbyt applied there with the request about opening a terminal. Having scrutinized all the details, the Department found no reasons for refusal. 

The same conclusion was made by the Anti-Monopoly Service. They think that the Sverdlovsk Railways has violated the Federal Law "Concerning Competition" when it refused to enter into agreement with the company. At the end of June 2010, the Department ordered the railroaders to rectify the violation; however, they have not moved hand or foot. 

In the meantime, the interference of the anti-monopoly service helped to solve the similar situation that took place in Yugorsk (Yugra). Vladimir Pasmalnik, the director of the container terminal, told "RusBusinessNews" that the private terminal had been set up at the Geologicheskaya station 18 years ago. After the Sverdlovsk Railways had upgraded its terminal located in the town of Sovetsky, 12 kilometers away from Yugorsk, the monopolist started ousting its mini-competitor from the market. 

"Every year we had to go through the trials to receive a permit from the Sverdlovsk Railways for delivery and removal of container platforms. In 2009, we prepared the required package of documents, but the local railway department did not even take pains to deliver them to Moscow for making a decision. As a result, during one year we were kept on tenterhooks. When we encountered problems with paying wages to the employees, the Yugorsk administration applied to the transport prosecutor's office that, in its turn, applied to the Ural Department of the Anti-Monopoly Service. It was only in 2010 when we received a permit for container operations ", V.Pasmalnik said. 

However, Pasmalnik's company has not seen its bright days. If previously up to 25 cars a day were unloaded, now the company is lucky to have one car. "During the downtime and numerous arguments we lost our customer", the entrepreneur complains. 
The outcome of the "Koltsovo" affair is not difficult to predict. Most likely, TransContainer will be able to reach agreement with Oboronsnabsbyt. And in the near future, the subsidiary of the Russian Railways intends to take the facilities of Uralcontainer under its "wing". If it happens, any competition on the Ekaterinburg container transportation market (which is, by the way, the key slogan of the reforms in the railway industry) will have to be forgotten for good.