Russian Railways Board Reviews 2020, Lists 2021 Priorities

At the final meeting of the Russian Railways Board, the direction of the company’s movement was indicated

2020 exam passed |  First persons |  Oleg Belozerov, General Director - Chairman of the Management Board, Russian Railways

photo: Ivan Shapovalov / Russian Railways Press Service

At the final for 2020 meeting of the Russian Railways Board, held on February 19, 2021, the General Director – Chairman of the Board of the Holding Oleg made a presentation on the results of the production and financial activities of Russian Railways for 2020 and the priority targets for 2021. Belozerov. 

Dear Andrey Removich, dear colleagues!

At the end of 2019, ending my speech at the last final board from this rostrum, I emphasized that the work of the company “will be largely determined by macroeconomics, but railroad workers have repeatedly proved that they are not used to depending on circumstances and are able to achieve their goals in the most difficult situations “. Today I can report with confidence that the results of the work of Russian railways, despite all the challenges of 2020, confirm this thesis.

Transportation of passengers and cargo is carried out at a high level of reliability and safety. The accumulated dynamics of innovative development, renewal of infrastructure, management system, equipment and technologies has been preserved. Effective mechanisms have been built to protect the life and health of the holding’s employees, and epidemiological safety of all users of railway transport services has been ensured. The company maintains high financial stability.

Today I want to say a huge thank you to all employees of the Russian railways. Exceptionally you are the reliable foundation of the company’s achievements.

Words of gratitude from the entire team – to the heads of legislative and executive authorities at all levels. We always feel your understanding and support and work together to develop balanced solutions.

I believe that our results are largely the merit of the Russian Railways Board of Directors. For company leaders, the efficiency and balance of your decisions are the standard of management activity and allow you to confidently perform the assigned tasks. 

Of course, a special gratitude goes to passengers and shippers for their trust in rail transport and a high assessment of our work. 

We fully share our achievements with everyone who is present at the final board. I would like to express my gratitude to my colleagues.

For several years now, the company’s management has set itself and the team the task of occupying leading positions in all key areas of activity. We are confidently following this course and have achieved unique results. Russian Railways is strengthening its leadership among the world’s railway companies in terms of safety, energy efficiency, speed and reliability of cargo delivery.

Last year, Russian Railways became the undisputed leader in the implementation of financial innovations. We are the first Russian company to place corporate perpetual bonds, as well as green and social Eurobonds, surpassing all records in terms of rate, maturity and volume of placement.

Russian Railways is a national leader in the development of quantum communications. We are developing this direction on behalf of the President of Russia, who has set an ambitious task – to bring the country to the forefront in quantum technologies. In the shortest possible time, practically within a year and a half, basic scientific and technical solutions were found. In the first quarter, we are already completing and will report on the construction of a test site for testing the innovation line.

JSC “Russian Railways” is firmly among the most desirable places of employment for Russians. In the national rating of the most attractive employers in Russia, compiled by VTsIOM, our company confidently ranks second for the second year in a row.

Students of Russian universities, when assessing their career attractiveness, brought Russian Railways to the first place among the country’s logistics companies.

Russian Railways has consistently maintained its status as a socially responsible employer. All obligations under the collective agreement have been fulfilled, not a single collective labor dispute has been allowed. 

For three years, we have been consistently implementing measures to improve working conditions, rest and social support for our employees. Mechanisms for applying the regime of flexible working hours and teleworking have been created, new health programs have been launched, additional nursery groups have been opened, and the filling of the compensated social package has been expanded.

I want to assure you that the company will continue to address issues of social security and human capital development as a priority.

In the past year, the sectoral health care system showed itself especially brightly. All issues of medical support are resolved at the highest professional level. At the same time, an unprecedented amount of work was carried out to protect the life and health of citizens in the constituent entities of the Russian Federation, including in the largest agglomerations. I would like to sincerely thank the medical staff of the Russian railways for their dedicated work!

Dear colleagues!

For the passenger complex, 2020 was perhaps one of the most difficult years in history. The bottom line is well known and is on the slide.

After a fourfold drop in traffic volumes in the first half of the year, the passenger segment entered the recovery path. The technological process was rebuilt promptly, almost online, and all the established requirements for protecting the health of passengers were met. Services in most cases have been transferred to a contactless service model.

For the fifth year in a row, we have been offering 50% discounts for children from 10 to 17 years old for the summer season. During all this time, over 11.5 million young passengers have been transported. Last year was no exception – about 1 million people were transported. In addition, for schoolchildren, we have provided a new discount for traveling in a compartment of double-decker trains. The ticket price is equal to half the cost of travel in a reserved seat carriage.

Throughout the year, we continued to carry out program activities to create new services and services, renew the rolling stock. I will name just a few of them.

More than a thousand new cars were purchased. The composition of the world famous long-distance train “Russia” Moscow – Vladivostok has been completely renewed. These are more than two hundred new generation cars.

Together with machine builders, a new line of cars was presented. Design solutions with an emphasis on personalizing passenger space have received positive reviews. The target for 2021 is to start using these wagons in transportation to the south.

New routes of high-speed electric trains have been opened from St. Petersburg to Staraya Russa, from Moscow to Kostroma, from Adler to Anapa.

The new website of the company was put into operation. Its functionality has been radically improved and expanded based on the wishes and recommendations of our passengers. 

The company strictly complies with the requirements of the President and the Government of the Russian Federation on the stability of work and maintenance of the route network of suburban traffic.

In 2020, modern rolling stock began to run on the territory of twenty-one subjects. 20 new suburban routes launched.

For several years, together with the constituent entities of the Federation, we have been working on the financial stability of suburban companies, and in 2019 this task was practically completed. The challenges of 2020 bring us back to the issue of commuter compensation. We count on the support of the regions and the Government of the Russian Federation.

In addition, it is necessary to decide on a general model for the functioning of the suburb, the implementation of which will not only ensure the current transportation, but also develop in accordance with the needs of passengers. This is one of the key issues to be addressed in 2021.

Another important step has been taken in building a barrier-free environment. In 2021, we are completing systematic work to provide free escort and assistance services for people with special needs at all passenger terminals and stopping points.

The past year has given a good boost to domestic tourism. New routes to Pereslavl-Zalessky and Ruskeala Park have already become the hallmarks of railway tourism. I think we have all the opportunities for this direction to show the highest development dynamics in 2021.

The first weeks of operation of the passenger complex in the current year instill confidence that there is an active recovery and growth towards the borders of 2019. We are obliged to provide two complementary processes: the highest level of completely new services and basic needs: cleanliness, warmth and affordability.

In the field of transport and logistics activities, I would like to note with satisfaction that the alarming forecasts of the period of the beginning of the epidemic did not come true. For the first time in the past five years, we ended the year with a 2.7% decrease in handling versus the previous period. But in the fourth quarter, we approached the indicators of 2019.

The importance of our developments and solutions for digitalization was especially vivid in the cargo segment. The pandemic forced to speed up the transfer of all cargo and commercial work to communications via digital interfaces. As a result, more than 70% of legally significant procedures are processed on the Freight Transportation electronic trading platform.

Digital services have determined the appearance among our clients of almost three hundred new enterprises, mainly small and medium-sized businesses, which have never used the services of the railway before.

This category of clients is especially important for us. With a share of only 16% in the volume of traffic, their contribution to the income of Russian Railways is 46%. I consider it necessary to place special emphasis on the development of services in this segment. This is one of the key targets for 2021.

In difficult economic conditions, Russian Railways has found the opportunity to provide serious tariff support to our partners. We made about 70 targeted decisions with a total volume of more than 21 billion rubles.

Sustainable growth rates in the container segment are maintained at 16%, and in transit traffic – over 34%. At the end of 2020, the volume of traffic on the China – Europe – China route reached 546 thousand TEU, which is 64% more than in 2019.

The final record number of container traffic in 2020 is 5 million 800 thousand containers. Today, about 520 container trains are constantly in motion on the network, an increase of almost 14% compared to last year.

These results are based on the improvement of the technology for the movement of container train traffic. The average speed in transit is provided at 1074 km / day. Today, the travel time on the Europe – Western China direction in the area of ​​responsibility of Russian railways is no more than two days, on the West – East direction – less than 8 days. All targets achieved are in excess of planned values.

These results are highly appreciated by our foreign partners. In January 2021, a new transit trade flow from Japan to Europe, switched from transcontinental shipping lines, began to move along the Trans-Siberian Railway for the first time.

I would especially like to dwell on the eastern direction.

Last year, almost all historical indicators were exceeded here. Tariff freight turnover increased by 2.5% against the level of 2019 (and has more than doubled since 2003). In 2020, a record number of 4,882 loaded wagons were transferred to the Eastern landfill every day (this is more than 4% plus by 2019).

A record volume of cargo export to the ports of the Far East has been reached – almost 113 million tons with an increase of about 9 million tons. 

In accordance with the agreement with Kuzbass, the company fulfilled its obligations to export 53 million tons of coal eastward. The target parameters of KPMI for the carrying capacity of the Eastern landfill in the amount of 144 million tons were met. 

The results of the commercial block are not just statistical indicators. Behind them is a wide range of new logistics products and services. All of them are targeted in nature and fully take into account the wishes of customers. You can familiarize yourself with this area in detail in the information materials on the digital platform of our meeting.

Undoubtedly, the results of the current year will largely be determined by the development of the epidemiological situation. However, the target is to surpass the 2019 cargo volume.

When it comes to logistics products, it should be a rule to be proactive. We must predict the wishes of our customers and be one step, or better yet, two steps ahead. At the same time, it is necessary to constantly remember that with each new service and service, the client becomes more and more exacting and demanding.

The general economic situation required additional attention to the key issues of the company’s financial and economic activities.

In 2020, the Consolidated Program of Measures to Improve Operational Efficiency and Reduce Costs was expanded. Its implementation made it possible to obtain an effect in the amount of almost 43 billion rubles.

The total cost reduction relative to the initial plan approved by the government amounted to RUB 90 billion.

As I noted, the company has implemented unprecedented financial instruments. As a result, as already mentioned, the financial result of the company’s work is positive.

In general, the work to reduce costs is based on improving technologies and applying innovative solutions.

The culture of the process approach has confidently entered the company’s activities. For key processes – cargo delivery, passenger transportation, investment and construction, procurement and supply, asset management – system tuning was carried out, including taking into account external factors in 2020. It is especially important that this activity is synchronized with the creation of digital tools and the updating of the regulatory framework.

Optimization of management and production processes should become permanent and daily for every manager.

In accordance with the instructions of the board of directors, the company has built a system for assessing management performance through corporate performance indicators. Indicators are decomposed from the top management level to branch managers.

Most recently, on February 12, in accordance with the instructions of the Chairman of the Government, the interagency working group approved proposals for new general corporate key performance indicators for the current year. At the top level, 10 key indicators are identified. All procedures for updating the KPI system should be carried out as soon as possible.

Environmental protection has confidently become one of the most important areas of activity of Russian Railways. This is not only a competitive advantage, but also one of the conditions for the company’s financial stability. Our unique performance in the financial markets is largely driven by our consistent environmental policies and performance.

In accordance with the instructions of the President of the Russian Federation, we have built and launched reference environmental protection processes in the Central Ecological Zone of the Baikal Nature Protection Territory. Their main characteristics are constancy, publicity and interaction with the expert community and the subjects of the Federation. The approach to this issue is simple – after the completion of all work, the environmental situation should be better than before starting.

Considering the importance of environmental issues not only for Russian Railways, but also for the entire country, the company declared 2021 the Year of the Environment. Our motto is “Be green in everything”.

We must talk about the formation of the eco-economy of Russian railways. Among the significant tasks, this work should have the highest priority.
This year, ecological culture should become an integral part of all production processes. 

2020, without exaggeration, can be called the year of investment and construction. The investment program was implemented for over RUB 717 billion. – this is the maximum volume since the creation of the company.

A large-scale program for the renovation of locomotives, multi-unit rolling stock and track equipment has been completed.

Improvement of more than 5 thousand km of railway track was carried out. This made it possible to prevent an increase in the length of the track with excess tonnage in key directions and to increase the speed of trains. 

The construction complex, despite all the restrictions, completed the maximum annual volume of work over the past 5 years, amounting to almost 310 billion rubles. 417 km of new tracks and 170 km of power transmission lines were built.

The challenges of 2020 have had a significant impact on decisions regarding the financial plan and investment program for 2021 and the planning period of 2022 and 2023. I would like to thank the Chairman of the Government Mikhail Vladimirovich Mishustin, you, Andrey Removich, the members of the government for making unique decisions that make it possible to ensure the stable operation of the company and continue development.

The tasks are extremely ambitious. In terms of infrastructure development, especially the Eastern test site, they set the entire company and our partners to work hard for a long period. It is very important that we are able to conclude long-term construction contracts. 

I will separately dwell on the tasks for the Eastern Range in 2021. We have to complete work at all the facilities of the first stage, but also separately concentrate on 31 facilities of the second stage, and we must put them into operation already in 2022.

I would like to emphasize that this is not only the task of the building block, but also of all divisions of production verticals on the roads of the Eastern landfill. All work, as in previous years, will be carried out in conditions of extremely intensive transportation activities. I ask the chiefs of the roads to take special personal control over the implementation of these tasks.

In the past year, together with the Ministry of Transport, a large-scale work on legal regulation was carried out. The regulatory framework is being improved in all key areas: railway operation, construction, and international activities. Measures for the “regulatory guillotine” are being implemented in a planned manner. I would like to thank the Ministry of Transport and the Federal Agency for Railway Transport for this important work.

The company has begun preparing proposals for the legal model of the transportation market, which we will present in the second quarter. In addition, in the first half of 2021, we must complete the formation of a regulatory framework in the field of self-driving.

Our common task is to ensure that the regulatory framework not only does not constrain, but also works proactively, creating the necessary conditions for development.

Dear colleagues!

The 2020 exam passed. We have gained a new invaluable experience that allows us to confidently move forward. I would like to wish all of us health, success and assure that all the tasks set for the Russian railways will be fulfilled.

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