icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm
30 Dec, 2008 07:43

Russian Railways puts brave face on expansion plans despite crisis

Russia's largest rail cargo operator has put aggressive foreign expansion plans back on track after claiming the worst is over in the global trade slump. But experts warn such optimism will backfire on companies.

Kazakhstan Railways train driver, Simbay Shakmenov, has driven cargo through Asia to Europe for 30 years. He says it's never been as bad as this.

“I used to drive vast trains across the continent – grains, metal, oil. Now, I park mostly empty carriages in the station. Let's hope our bosses do something.”

Rail operators have met in Kazakhstan, the crossroads of Eurasia. Salman Babeav CEO of the First Freight Company, Russia's top cargo transporter, for one predicts they'll get rapidly back on track.

“Volumes in November fell eight per cent on September's peak. But this month we'll bounce back. We still plan to raise our stock from 200,000 to 300,000 wagons by 2012, moving into Finland, Ukraine and Central Asia.”

But Elena Sakhnova, Transport analyst at VTB, warns that optimism could be misguided, and is likely to involve a long wait.

“December will be more difficult and then first quarter will be very very very difficult. From the second half of next year we may see some relief, some very slight relief, but I'm not optimistic at all.”

Russian metals firms were praised for slashing production and costs as soon as the crisis hit. They're now expected to ride the storm without major casualties. Rusting wagons and idle workers at the main station in Kazakhstan's capital suggest the transport industry should also ditch its old growth models.

Empty containers, an ever more familiar sight in the global trade slump. With most economists predicting the worst is yet to come, freighters banking on an early return to profits may find their plans derailed.