DIRECTOR OF THE OKTYABRSKAYA RAILWAY V. STEPOV: "CLIENT ORIENTATION REMAINS ONE OF THE KEY PRINCIPLES OF WORK OF RZD"

09/01/2014

 

Interfax-Russia (News agency), December 30, 2013

DIRECTOR OF THE OKTYABRSKAYA RAILWAY V. STEPOV: "CLIENT ORIENTATION REMAINS ONE OF THE KEY PRINCIPLES OF WORK OF RZD"

In the last five years, almost 200 managers were trained in the framework of a special educational program of RZD holding in modular format Executive MBA on the basis of Stockholm School of Economics Russia. A new corporate educational program on marketing was opened there this year and the first 40 employees already graduated from it.

Interfax-Russia (News agency), December 30, 2013

 

DIRECTOR OF THE OKTYABRSKAYA RAILWAY V. STEPOV: "CLIENT ORIENTATION REMAINS ONE OF THE KEY PRINCIPLES OF WORK OF RZD"

Year 2013 was the year of 12th anniversary of the beginning of reform of the railway sector in Russia and tenth jubilee of establishment of Russian Railways (RZD) company. The Oktyabrskaya Railway (OZD), a part of the company, is one of the biggest railways in Russia. It serves the northwestern part of the country with population bigger than 25 million people. Railways of OZD pass through the territories of Leningrad, Pskov, Novgorod, Vologda, Murmansk, Tver, Moscow and Yaroslavl regions, as well as republic Karelia and have overall length of 13,323 kilometers. These were the first railway where high-speed trains Sapsan, Lastochka and Allegro started circulating. In 2012, 149.5 million passengers and 247.4 million tons of cargoes were transported in total. Director of OZD Victor Stepov explained how the Oktyabrskaya Railway changed and what would be its prospects in the near future.
- This year, RZD turned ten years old. During this time the railway sector has passed through many changes and it is too early to speak about completion of the reform. Tell us, please, which role does the Oktyabrskaya Railway play in development of the all-Russian campaign?
- Really, a big-scale international reorganization was carried out in the last few years that has to improve efficiency of management and to adjust its quality to the market position of the company. Since October 1 of 2012, all railways of the network are de jure reorganized into the regional corporate governance center. In the new status railways on the regional level are coordinated by structural divisions of the branches, subsidiaries and dependent companies of the holding. Directors of railways received some new functions including those for provision of efficient communications with the business community and state power bodies in the region.
The role of the railway actually changed radically as a result of reforming of the industry and transition to the market conditions of work: whereas formerly we have acted in the role of monopoly to which everyone has come, now we struggle for the client on equal terms with the others. The company came to a need to get reconstructed and to achieve efficiency in a competitive environment and organize its activity taking into account the market laws. That is why client-orientation remains one of the key principles of work of RZD now.
To catch up with the market changes always and to react to them on time, the entire educational system of the holding is arranged in such way as to ensure the necessary level of competence of the employees.
In the last five years, almost 200 managers were trained in the framework of a special educational program of RZD holding in modular format Executive MBA on the basis of Stockholm School of Economics Russia. A new corporate educational program on marketing was opened there this year and the first 40 employees already graduated from it.
For our staff we also organize education in full-time, full-time-in absence form, remote form, we organize lectures, seminars, conferences, courses, Internet schools, business games, business cases etc. Potential of the corporate university of RZD is used more actively and its division is opened in St. Petersburg. We analyze foreign experience and we organize special business trips for this purpose.
Since 2009, we have actively implemented a system of lean production and this brings real financial results. According to results of implementation of lean production technologies in 2013 at the railway we managed to save more than 390 million rubles or almost twofold more than in 2012. Saving of money due to rationalization activity and spreading of improvement of projects of improvement exceeded 1 billion rubles.
If we speak about where we are moving to, first of all, we probably need to speak about individual approach to needs of clients in various segments of the market. In the cargo sector this enabled us to organize targeted work with a client regardless of the volumes of loading. We are getting transformed into a transport logistic holding and we will sell already not a simple service of transportation by railway but a logistic product that includes a package of services and is formed taking into account individual needs of a client. Bearing in mind that such companies as RZD-Logistic and GEFCO appeared within RZD holding, we received a possibility to enter the segments of the market where we had not been represented earlier. Development of this business will enable us not only to increase the volumes of cargo transportation but also to increase profitability of cargo transportation as a whole.
- Tell us, please, in detail about the volumes of cargo and passenger transportation this and next year, what are your forecasts for the middle term and for the long term?
- Speaking about the cargo sector, we need to say that despite the difficult economic situation in the country the Oktyabrskaya Railway managed to achieve the level of 2012 according to loading parameters and even to exceed it a little. The expected volume of cargo loading of the Oktyabrskaya Railway this year will amount to 103.5 million tons, which is 0.8% bigger than the level of 2012. Growth of loading was provided by such kinds of cargoes as iron ore, fertilizers and imported cargoes.
Next year, we also plan not to slow down the speed and to have a positive result. The forecast of the volumes of loading in 2014 amounts to 106.5 million tons, which is 2.8% bigger than expected loading of 2013. Despite the existing risks related to negative economic trend, the possible points of growth in 2014 are timber cargoes on account of growth in export transportation of round timber materials to Finland; fertilizers where the main growth of loading is expected for SZFK (Oleny Ruchey mining enrichment company) because of completion of the period of adjustment of production and loading processes and gradual increase of the volumes of loading. We also expect to see growth in construction cargoes on account of increase of supply of crushed stone to objects of construction of new railway extensions.
Incidentally, speaking about cargo transportation we need to mention the project of "Comprehensive reconstruction of Mga-Gatchina-Veimarn-Ivangorod railway and railway approaches to the ports on the southern coast of the Gulf of Finland." It is planned that in accordance with the general scheme of development railway cargo turnover of Ust-Luga port alone will reach 120 million tons of cargoes by 2020. Development of this project is necessary for increasing of the export potential of Russia and reorientation of the cargo flows that come to the Baltic ports. The project also contributes to development of adjacent territories of Leningrad Region, provides for increasing of employment of the population and develops the energy and the transport infrastructure of the region.
In the segment of passenger transportation we also plan an insignificant growth of parameters in general according to results of 2013. The overall quantity of passengers shipped from stations and railway stations of OZD will amount approximately to 145.8 million. Of this quantity 128.8 million passengers will be in commuter trains and approximately 17 million people will be in long-distance trains.
I would like to dwell on the commuter segment and on each commuter company that works at our railway.
The volume of transportation of Northwestern Commuter Passenger Company (SZPPK) serving a big part of the regions of the railway decreased by 4.8% in comparison to the level of 2012. First of all, this was caused by decrease of the volume of ordering of transport services for the population by the regional administrations, as well as by growth of the tariff set by the subjects of the Russian Federation.
In the medium term the volume of transportation of SZPPK should remain on the current level with insignificant growth by 1-3% per year. For St. Petersburg and Leningrad Region the volume of transportation will grow by 5-10% under condition of approval of the currently developed comprehensive scheme of transport services provision to the population of St. Petersburg and Leningrad Region that makes provisions for cancellation of duplicating routes of automotive transport and organization of transportation of passengers to commuter trains from the nearest populated spots.
For other subjects of the Russian Federation (Pskov, Novgorod and Murmansk regions and republic Karelia) served by SZPPK decrease of the volume of transportation by 5-40% is expected in 2014 depending on the region. This is associated with formation of new conditions of ordering of transport services by the regions. The reason was that in the past a transporter organized transpiration of passengers in the scope necessary for full satisfaction of needs of the population of the regions for transportation regardless of their unprofitable nature and subsidies were allocated by the regions according to residual principle. Now responsibility for organization of transportation services for the population will be equally divided between RZD and administrations of the regions. These are not new rules but the norms of organization of commuter railway communication in our country confirmed by the law. Unfortunately, they were not observed by the regions before. Commuter companies are only contractors of an order for transportation that is formed by a region like the tariff.
Another commuter company that carries out transportation in the borders of the Oktyabrskaya Railway is Moscow-Tver company. More than 40 million passengers were shipped in the Oktyabrskoe direction in the Moscow transport node in 2013. Growth in comparison to the past year exceeded 9%. Medium term prospects of this direction imply implementation of an automated system of payment, control and registration of ride in commuter electric trains (ASOKUPE) at all passenger-forming stations, development of high-speed commuter railway communication. Possibilities of integration with the transport system of Moscow and Moscow Region are considered: development of transport nodes, intercepting parking lots, bus transport that transports people to the railway, work of the small ring of the Moscow Railway, development of the system of unified travel document. In the medium term growth of passenger flow in the Moscow transport node may amount up to 40-60% in several years. Along with this, commuter transportation of the Oktyabrskaya Railway of the central part of Russia outside of it will be developed through optimization of the transportation process. No growth of passenger flows is planned there in the medium term.
- Tell us, please, what do you think are prospects for further development of high-speed communication at OZD? Will any infrastructure changes be necessary?
- Role of the Oktyabrskaya Railway as the key link in the transport system of the country is provided primarily by the geographic location of the route that connects the biggest megalopolises of the country, Moscow and St. Petersburg, as well as Russia with European neighboring countries of Finland, Estonia and Latvia.
Organization of high-speed transportation is the most important aspect not only for the Northwest but also for the entire country. At present, high-speed trains Sapsan between Moscow and St. Petersburg became an indispensable part of social infrastructure for residents of these two cities. Since the beginning of operation, Sapsan trains transported more than 10 million passengers including approximately 8 million passengers at St. Petersburg-Moscow line. An average filling of these high-speed trains amounts approximately to 100% and in some seasons it exceeds this figure. At present, this is the most profitable train in passenger transportation.
Coming to international level became the second main stage of organization of high-speed transportation. Commercial operation of high-speed electric train Allegro in St. Petersburg-Helsinki direction with a speed of movement on the territory of Russia of up to 200 kilometers an hour and on the territory of Finland of up to 220 kilometers an hour was started at the end of 2010. This is embodiment of the resolution of the governments of Russia and Finland on organization of high-speed communication between our neighboring countries. As a result, the time of travel between St. Petersburg and Helsinki was reduced from 5 hours and 20 minutes to 3 hours and 30 minutes. Since the moment of putting into operation, since December of 2010, Allegro trains transported more than 1 million people. The trains are growing increasingly popular. So, as soon as there appeared demand active use of marketing initiatives began there too. For instance, we have implemented a service of electronic registration, there is discount bigger than 50% for the morning train now. Duty-free stores will start working for passengers at the Finland Railway Station and at the railway station of Vyborg soon. There will be bonuses for passengers of Allegro there – it will be possible to place an order beforehand through the Internet and it will be necessary only to receive the ticket before departure of the train.
We also need to speak about electric train Lastochka. Now this is the newest high-speed train that circulates in commuter transportation and that is operated successfully in Sochi, Kazan, at the railway section St. Petersburg-Veliky Novgorod-Bologoe, between Moscow and Nizhny Novgorod. In the peak periods of transportation additional Lastochka trains also circulate between St. Petersburg and Moscow. Since the beginning of operation in Russia, Lastochka trains already transported more than 230,000 passengers. The project does not encounter critique and is very popular among the passengers. There is no doubt that it will have a great future.
Positive experience of use of high-speed trains St. Petersburg-Veliky Novgorod and St. Petersburg-Bologoe, as well as interest of the population in such criteria as beneficial combination of convenience and speed of transportation along with competitive pricing directly point at ways of our further development. Not only commuter companies but also long-distance transportation companies manifest increased interest in running tock of such kind. This is an indicator that shows that the market of passenger transportation is refilled with a new dynamically developing demanded segment. A possibility of refilling of the fleet of high-speed trains Lastochka vacated after the Olympics in Sochi represent preconditions for development of high-speed transportation at the railway. Along with this, it is necessary to take into account expediency of their further commercial operation at the Oktyabrskaya Railway due to a fairly high technical level of infrastructure of the main route (St. Petersburg-Moscow-IF) and some other main routes, as well as the fact that commuter passenger flow of the railway has the second place in the network. The following options of routes for organization of accelerated transportation are planned and are being worked out: St. Petersburg-Petrozavodsk and St. Petersburg-Vyborg. A possibility of other options of use of high-speed running stock will be considered too, for instance, in routes with planned cycle movement. It is necessary to say that fulfillment of these tasks will require significant infrastructure changes.
In contemporary realities of developed competitive struggle for market segments and in conditions of limitation of centralized financing support of such business projects will certainly be associated with attraction of outside investments. That is why the important task of the railway is formation of criteria of balanced offer for attraction of business to development of passenger transportation. On this "site" it is necessary to create a normal commercially attractive business project aimed at improvement of the quality of services for passengers. We need an ideologically new approach to formation of transport commercial passenger centers with stringent observance of requirements of the technology of work of the railway and transport safety.
I can assure you that such work is already being done at the railway in the framework of the railway project offices and working groups. There is support for such initiatives even on the state level: a bill is being already worked out and will be submitted soon.
- The issue of subsidizing of railway transportation by the state in the so-called regulated segment, in the third-class sleepers and in sitting carriages has become pressing lately. What do you think about the latest initiative of the Finance Ministry, namely stopping of subsidizing of railway transportation in the trains that travel at a distance bigger than 1,500 kilometers? How will this influence the railway, passengers and company as a whole?
- In the currently working system of regulation the state undertook obligations for setting of tariffs for passengers in the social segment of transportation below the production costs and 100% compensation for the lost revenues of the transporter. Along with this, already now the state does not participate in determination of the key parameters of transportation and sets the maximal limit of budget liabilities below the actual demand. Because of this, between 2011 and 2013 Federal Passenger Company encountered significant deficit of state subsidies compensating for it at expense of its own revenues. In 2014, the state will allocate 23.6 billion rubles for compensation for losses in the revenues that appear as a result of state regulation of tariffs for transportation of passengers in third-class sleepers and in sitting carriages of long-distance trains. Along with this, taking into account annulling of indexing of the tariffs the need of long-distance passenger transportation sector for subsidies amounts to 29.3 billion rubles. Thus, according to results of the future year deficit will amount to 5.7 billion rubles.
The matter of further reduction of subsidies and including topping of subsidizing of railway transportation at distances bigger than 1,500 kilometers may, on the one hand, lead to growth of travel costs for passengers, which will have serious effect on the socially unprotected categories of citizens and will result in reduction of mobility of the population. On the other hand, this may lead to reduction of the quantity of trains, which will in turn cause growth of discontent and social tension in the impacted regions.
- What are the planned volumes of the investment program of OZD for 2014? Which main objects will be included into it?
- At present, the limit of the investment program for 2014 exceeds 48 billion rubles and the plan of putting of capital assets into operation will exceed 64 billion rubles. Growth in comparison to the initial plan of 2013 will amount to 19%. In general, the volume of investments of the Oktyabrskaya Railway amounts to 12% of the overall volume of investments of RZD and has the first place without taking into account of the Olympic objects developed at the North Caucasian Railway.
Next year, we will continue development of the most important strategic projects including "Comprehensive reconstruction of Mga-Gatchina-Veimarn-Ivangorod railway and railway approaches to the ports on the southern coast of the Gulf of Finland," "Construction of the fourth main line at Moscow-Kryukovo section," "organization of high-speed passenger transportation at St. Petersburg-Buslovskaya section" and associated relocation of cargo transportation to separate route, "Reconstruction of Babaevo station," construction of the second railway lines and electrification of the section Vyborg-Primorsk-Yermilovo. Money will also be spent on renovation of running stock, construction and reconstruction of artificial installations etc.
- At which stage is development of the project for relocation of cargo transportation from the Vyborg line where Allegro train circulates to Losevo-Kamennogorsk line and construction of the second line at Vyborg-Kamennogorsk section? Who are participants of the project and how the zones of responsibility are divided among them? How can you forecast further development of the project, does freezing threaten it?
- Project "organization of high-speed transportation by passenger trains at St. Petersburg-Buslovskaya section of the Oktyabrskaya Railway" makes provisions for reconstruction of St. Petersburg-Buslovskaya line for organization of circulation of high-speed trains and relocation of cargo transportation to Ruchyi-Sosnovo-Losevo-Kamennogorsk-Vyborg line. RZD and Federal Agency of Railway Transport are participants of the project.
In the framework of the project RZD works on reconstruction of Sosnovo-Losevo-1 and Vyborg-Kamennogorsk sections with construction of the second line and the Federal Agency of Railway Transport (Roszheldor) builds new electrified two-line railway Losevo-Kamennogorsk. Work on construction of the second lines and electrification of Sosnovo-Losevo-1 section and construction of Losevo-1 station is completed, the section is put into temporary operation. Reconstruction of Tammisuo station was completed at Vyborg-Kamennogorsk section, as well as reconstruction of Vozrozhdenie and Kamennogorsk stations, construction of electric centralization of stations and 75% of work on construction of passenger platforms was completed. Construction of artificial installations was completed in full scope. Work on reconstruction of railway crossings and construction of contact grid is underway.
We opened circulation of trains along two lines at the section Vyborg-Tammisuo, Gvardeiskoe-Vozrozhdenie. In the near future we plan to start circulation along two lines at Vozrozhdenie-Kamennogorsk section.
The investment program of RZD for 2014 includes a limit of financing for completion of the work on project of "Reconstruction of Vyborg-Kamennogorsk section."
Roszheldor with use of allocations of the Investment Fund of Russia is developing project "Construction of new line Losevo-Kamennogorsk for the purpose of relocation of cargo transportation to ports of the Gulf of Finland to Ruchyi-Petyayarvi-Kamennogorsk-Vyborg direction." The project makes provisions for construction of a two-line electrified railway with length of 62 kilometers with arrangement of electric centralization, construction of Druzhnoe and Ozerskoe stations, three railway substations, nine automotive railway crossing points, five bridges over the railways and five railway bridges.
By now, we completed construction of earth roadbed at Losevo-Druzhnoe section, Druzhnoe station, Druzhnoe-Ozerskoe section and Ozerskoe station almost in full scope. Work is underway on construction of the earth roadbed at Ozerskoe-Kamennogorsk section. Construction of Druzhnoe and Ozerskoe stations was done. Work is underway on mounting of supports of the contact grid and laying of cables of devices of signaling, centralization and blocking and communication. The overall completion of work on construction of three railway substations amounts to 80%. Planning and pad work was completed at the substations, electric power equipment was delivered and mounted.
The Transport Ministry determined the deadline for putting of the object (Losevo-Kamennogorsk line) into operation as July of 2014.
- is the general scheme of development of the transport node of St. Petersburg and the region approved? Which novelties will appear there for sure by 2020 and which of the desired things will not be?
- I can tell you that the main parameters of the general scheme for development of the transport node of St. Petersburg and Leningrad Region worked out by Lengiprotrans have been considered and approved by the Oktyabrskaya Railway, administrations of St. Petersburg, Leningrad Region and adjacent subjects of the Russian Federation. It is planned to put the final approval of the general scheme on agenda of the meeting of the coordinating council for development of the transport system of St. Petersburg and Leningrad Region scheduled for January of 2014.
In my opinion, it is a little too early to speak about 100% completion of certain projects by 2020. Much will depend on support of the investment program in conditions of limited financial resources.
Development of infrastructure including the passenger one (for example, construction of new transport nodes and construction of additional lines including the third main line at the section St. Petersburg-Main-Obukhovo-Kolpino) will be a priority line for the short term with a significant share of assurance.
Speaking about more remote prospects, we can say that as a result of consolidated development of the railway infrastructure and St. Petersburg Subway a system of high-speed rail transport of the St. Petersburg urban agglomeration should appear by 2020. Mass letting of transit cargo flows through the densely populated zones of St. Petersburg should also be excluded. Conditions and technology of commuter and regional transportation will also be improved by 2020 in the Baltic direction, in communications with Vsevolozhsk District, with towns and settlements inclined towards the Kirishi direction.

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