OREANDA-NEWS. In May 2013 the decline continued in rail freight traffic (-3.4% or down 3.7 mln tonnes) and turnover (-1.2%) compared to May 2012. In addition to previous drivers (oil products and grain), construction cargoes contributed to the decline. Oil cargo traffic fell 2.4% (-0.5 mln tonnes) versus May 2012. Despite a 1.7% increase in domestic traffic, export traffic fell 6.4%. The reason for this contraction was a sharp decline in the shipment of crude oil to China (-0.7 mln tonnes). However, shipments of gas, both domestic and export, rose by a quarter compared to May 2012 (to 1.6 mln tonnes each). As in April grain traffic again fell by half compared to last year: in May grain traffic fell by 0.7 mln tonnes compared to May 2012. Domestic traffic fell by 0.3 mln tonnes, while export was down by 0.4 mln tonnes. A decline in the flow of construction materials by 2% (-0.3 mln tonnes) was due to lower domestic traffic for this type of cargo. The main drivers for the weaker performance in this segment were crushed stone and cement. Domestic cement traffic fell 6% (-0.2 mln tonnes), while export volumes remained stable. A similar dynamic was seen for crushed stone transportation. This was due to the end of construction material deliveries for Sochi Olympic projects as well as a general decline in the rate of construction within Russia as a whole. Together with lower volumes for construction materials, a decline was also seen in cargoes such as ferrous metals, iron ore and timber. Iron ore traffic fell slightly (-0.1 mln tonnes) due to weaker domestic and export flows. A decline in prices for aluminum and other non-ferrous metals saw traffic for these cargoes fall 10% (-0.2 mln tonnes). Timber traffic fell 20% (-0.2 mln tonnes), however, timber for export was up 7%. Coking coal traffic fell by a quarter in May (-0.3 mln tonnes), mainly due to lower domestic traffic. Despite the general trend of weaker freight traffic in May 2013, coal traffic grew 2% (up 0.5 mln tonnes) compared to May 2012. This was due to a three-fold increase in exports to China and deliveries to Great Britain were up by a quarter.

In May 2013 there was a gradual recovery in railcar production: 7,874 units versus 7,648 in April 2013. However, it is still too early to talk of a full recovery, as railcar production still lags output for May 2012 by a quarter. In May the price for all types of rolling stock fell by ca. USD 1,000 on average compared to April 2013. Gondola production in the CIS grew to 3,338 units. But there is still a clear trend of a decline in prices (with a range of USD 51,600 - USD 60,000). Production of oil tank cars was in line with May 2012 (1,360 units in May 2013), however, it fell by a third (600 units) compared to April 2013. Prices fall in the range of USD 60,000 to USD 62,000. Production of box cars was 720 units (up 47% from May 2012). Prices for this type of rolling stock range from USD 70,000 to USD 75,000 (down 13% from May 2012). In May 690 cement hoppers were built, which is almost triple the figure for May 2012. The average price range for this type of railcar fell to USD 58,000 - USD 63,000 (down 21% from May 2012). Since the end of last year grain hopper production remains very high. In May 2013 620 units were produced versus 50 units in May 2012. This May grain hoppers could be purchased for USD 61,300 - USD 73,000. Production of container platforms was in line with May 2012 at 400 units. It should also be noted that there was a five-fold increase in the production of this type of railcar compared to April 2013. The average price for container platforms fell 11% (from May 2012), with a price range of USD 55,700 - USD 66,000. Production of gas tank cars totaled 250 units (-23% from May 2012). Their price range was USD 80,000 - USD 85,000.

Russian market for railcar operating leasing

This May the rates on specialized rolling stock fell slightly (from April 2013), while the rate for gondolas rose. Compared to May 2012 daily rates on universal flat cars and box cars fell to USD 31 and USD 34, respectively. However, the rates for high-capacity box cars remained at USD 50. The rate for mineral transport hoppers fell to USD 32, while the rate for tank cars fell to USD 34-USD 39 (due to a decline in oil product traffic). The rate for new gas tank cars fell slightly to USD 50. The rate for gondolas grew slightly to USD 21.

Russia's rolling stock fleet

In May 2013 the surplus rolling stock increased by 20,000 railcars (compared to April) and totaled 70,000 units, while the empty run ratio was close to the high seen in January 2013. The average speed(1) of railcars continued to decline. Idle rolling stock recommenced growth in May and exceeded 200,000 railcars, while the surplus reached 70,000 units. This was mainly due to specialized rolling stock. The average empty run ratio for the fleet continued to grow and totaled 77%. Such a high level was primarily due to gondolas (whose empty run ratio grew from 67% to 72%). This increase was due to a simultaneous decrease in domestic traffic and a growth in export traffic. This dynamic led to a growth in empty runs from ports and borders to freight depots, particularly on the Far East railway. In May 2013 we estimate the rate of movement on the network grew compared to May 2012 by 50 km/day and totaled around 400 km/day.