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Russian steel and raw material exporters face railroad crisis involving higher tariffslonger lead-Forging Exhibition-2025 China(Guangzhou) Int'l Forging Industry Exhibition
2/17/2025 锻造展-forging expo-forging exhibition--forging event |
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Steel and raw materials exporters from Russia have been reporting quite a few challenges, connected with thetransportation of their goods within the territory of the country for shipments to overseas destinations. Theissues involve the extended terms of loading and transportation though the railroad system of Russia, which ismainly due to the country''s current course of shifting trade flows, paticularly import flows, to the east, mainlyChina. In addition, railroad tariffs in Russia have been adjusted upwards for the current year, which adds to thepressure on suppliers, steel and raw materials suppliers especially.
According to Russian media sources, the volume of loading on local railroad systems in 2024 decreased by 4.1percent to 1.818 bilion mt, while in January this year the downturn continued, down by 1.8 percent year on yearThe key reason is said to be the lower carrying capacity of the eastern polygon, which is the busiest sector ofthe system. The excessive amount of the empty carriers, which stand idled on railroads, is among the additionalreasons for the current crises.
Steel market sources link the ongoing troubles with Russia''s re-orientation to eastern trade destinations,indicating that with time the average delivery terms from China to Russia through railroads increased from 1825 days to 35-40 days in the November-January period last year. At the same time, Russia''s imports from Chinaby far exceed exports to the same destination, and so the Chinese side has been facing a deficit of containersand carriers coming from Russia, resulting in shipment delays of around 25 days.
Meanwhile, sources indicate that there is an excessive volume of empty carriers in the railroad system ofRussia, which aggravate the situation with congestion. Particularly, according to the officials, around one third ofthe carriers in the Russian railroad system are currently empty and excessive. "For February, the requiredvolume of carriers for the claimed volumes to be transported is 970,000, and around 400,000 empty carriersremain in the system, in transit or parked on rails and are impacting transportation," one official said. "Thecarriers are spending more time on the road now since it is a longer way than before. Therefore, theaccessibility of the railroads for additional carriers is lower now," a producer mentioned.
In addition, starting from December 1, the industrial transportation tariffs for 2025 were increased by 13.8percent. lt was decided to also cancel the downward coefficients f (0.4 and 0.895) for export shipments of coafrom the end of 2024 for a year. The tariffs for container transportation of industrial cargoes were increased byfive percent for 2025 and 2026, while the tarif for transportation of empty carriers was increased by 10 percent.the official sources state.
In such conditions, steel and raw materials suppliers in Russia have been suffering from additionaltransportation costs and extended lead times, which have been making exports challenging, in addition to thefirmer local currency exchange rate. "We do not see the price increase for billet fon exportsl, but in themeantime exporters costs have been rising due to the stronger rouble. The situation is aggravated by theparalysis of Russian railroads. Transportation to the ports is restricted," a trading source told SteelOrbis.
Steel producers in Russia, aiming to curb or at least partially offset such negative effects, have been intensifyingthe usage of the alterative means of transportation. "We are developing automotive transportation and fromspring to fall we are loading via rivers," a steel mill stated. "The problem is not new, it is a cumulative effect anda complex of reasons - the re-orientation to the east, a lack of locomotives, labor, et.." another source said.Moreover, scrap suppliers in Russia have also been switching more to automotive transportation, SteelOrbishas learned.
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