Expert opinion

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4 August 2022

Mikhail Ognev, Director General of NP «IDGCA» gave an interview to «Moskovskaya Gazeta» on August 1, which we publish on our website. We will be glad if visitors of our site express their opinion and agree or disagree with the opinion of the author.

Shortage of containers for rail transport: Does Russia not benefit from its own packaging in this segment?

Russia may face a shortage of containers, the publications «Infotrans», «Vgudok» and «RBC» write. Foreign operators leave the Russian market, Russian-leased containers leave with export abroad and do not return because of reduced imports to Russia. The magazine «RZD-partner» reported in May that there are not enough containers in the Russian transport market. «Moskovskaya Gazeta» discussed the situation with representatives of the industry

In light of the departure of international lines, the Russian market faced the withdrawal from the container fleet, which accounted for about 40% of all equipment used for transportation in/out of and through Russia, told «Moskovskaya Gazeta» in PJSC «Transcontainer».

«The shortage of containers remains one of the key risks for the industry, - noted the management «Transcontainer». - But today the situation has stabilized: the volumes of carriers who have suspended their work are replaced by containers of Chinese and Russian owners who actively buy containers or rent them. The situation is also positively influenced by the measures of the Government of the Russian Federation to stabilize the market, including the elimination of import duty on containers and subsidizing the interest rate on the purchase of containers abroad. These measures encourage Russian residents to replenish their container fleet».

What are the main types of containers used by RZD?/p>

Today, China accounts for about 97% of the world container production, with the cost of this type of packaging in China is twice lower than in Russia, according to the interlocutors of the publication.

«This is due to economies of scale and subsidizing the cost of metal for the production of containers in China», - explained the management of PJSC.

Why in the market of Russian CF transport domestic containers are not in demand?

The capacity of Russian manufacturers is not enough today to meet the existing demand, - said at the enterprise. - In Russia, about 6 thousand containers are produced, while only in the spring «Transcontainer» has replenished its fleet of more than 8.5 thousand. containers. In order to ensure the competitiveness of Russian containers, economies of scale are needed - large production at minimal costs. It is also important to subsidize the cost of metal for container manufacturers, as is done in China».

Today, the largest manufacturers and suppliers of heavy cargo containers, both conventional and specialized, are Chinese enterprises, confirmed «Moskovskaya Gazeta» Director General of the International Dangerous Goods and Containers Association (IDGCA) Michael Ognev. According to him, there are no problems with the purchase of Chinese containers, but there are other difficulties.

Any Russian or foreign company can place an order in China for the manufacture of containers. Another thing is that there may be delays in the execution of the order, the reasons for which may be several. First of all, manufacturing plants in some parts of China were shut down during the pandemic and were unable to meet the orders received before it began. As for the delays of containers in connection with sanctions, it is worth noting that it is unlikely that the containers were delayed - the goods loaded into the containers were delayed, included in the sanctions lists», - the expert explained.

Containers are expensive type of packaging, the expediency of their purchase is largely determined by the presence of a cargo base for containers and the scale of trade, Mikhail Ognev said.

«If the cargo is transported from China, then the container is profitable to buy in China, after which it will be delivered to the Russian consumer, - says the interlocutor «Moskovskaya». - If there is no cargo, there is no need for a container. In contrast to railway wagons, heavy cargo containers are designed for international transport of goods by sea, inland waterways, rail and road; In doing so, containers should comply with the requirements of the International Convention on Safe Containers (CSC), the Customs Convention on Containers (CTC) and applicable standards. Meeting these requirements significantly increases the cost of the container. Furthermore, the head samples (prototypes) of the containers must be tested and each structure manufactured must be inspected before it is put into service. Containers are seldom ordered as their cost is high, making it advisable to order them under specific loads. If the volume of world trade falls, the number of required containers also decreases».

Today, the world fleet of heavy cargo containers totals about 16 million TEU (twenty-foot equivalent, from Eng. twenty-foot equivalent unit - approx. Mikhail Ognev; according to BIC – 26 mln), said the specialist. Mainly IDGCA director added, this park is owned by leasing companies that deliver containers to shippers, carriers or forwarders.

At the same time, often large leasing companies are also operators, - says Mikhail Ognev. - Such large companies (for example, Maersk) have not only their huge container fleet, but also their own ships, vehicles, i.e. they are able to fully provide cargo transportation. There are no such large leasing container companies in Russia. Moreover, foreign large leasing organizations came to Russia in the 90s and practically «subdued» all shipping container lines, leaving to Russian companies only port and warehouse services, as well as transportation in Russia».

JSC «RZD», according to IDGCA, is not a container owner, the expert noted.

«These are PJSC «Transcontainer», JSC «RZD Business Asset», as well as several small companies. Of course, in the world market, Russian companies cannot compete little with Western and Chinese companies. This is explained very simply: cargo in containers in Russia is imported mainly from Europe and China, while Russia, as a supplier of raw materials, sends it in bulk on ships or in wagons and does not use containers. Russian companies do not participate in the global circulation of containers. It is understandable that containers are tied to the cargo, and therefore they should be manufactured in regions where the cargo base is formed. For Russian consumers such a base is formed in Europe and China», - said the IDGCA Director General.

Russian container manufacturers are few, prospects of local production, in tough competition with world manufacturers, not too big, added the collocutor.

In the 90s there were three manufacturers: Ilyichevsk, Abakan plants and the enterprise Baltkonteiner (Saint Petersburg). The Ilyichevsk plant ceased to exist and Baltkonteiner disappeared along with the Baltic shipping company, which was one of its shareholders. This factory was built by the German side, had lines with modern equipment, but all this was not used, as it turned out to be unnecessary and the Baltic shipping company. This may be due to the fact that at that time the container lines were occupied by foreign companies and Baltkontiner’s products were not purchased. The company was established on the basis of the prospective prospects of the Baltic Sea Shipping Company, which owned 60,000 containers and leased about the same amount. And all this, as you know, collapsed», - said Mikhail Ognev.

In his opinion, it makes no sense to restore the production of heavy cargo containers in Russia before forming a cargo base for them.

The only way to develop container transport and revive the construction of new Russian containers is, in our opinion, the creation in Russia of an institute of leasing in the interests of companies that will buy containers for the transportation of goods. There are no companies in Russia that can compete with the West and China. In addressing this issue, it should be remembered that not only containers but also ships need to be built. Competition in the container transport market is very tough», - concluded the expert.