“The state of the private locomotive fleet in Russia is approaching an emergency.” That is how a representative of the Russia-based ROLLINGSTOCK Agency characterises the current situation in the country. There are enormous problems, and despite a push for “technological independence”, some are resorting to the idea of buying Chinese locomotives.
It is clear as day: the Russian locomotive fleet is getting into serious trouble. The levels of wear-and-tear are high. Over 70% of locomotives are more than 30 years old. The fleet is not being renewed at a sufficient rate.
Private companies in Russia own between five and eight thousand locomotives. In total, 20% is owned by industrial railway enterprises. Those are separate companies that provide transport services for mines or manufacturing plants, usually transporting products to nearby RZD stations.
In other words, they are a critical part of Russian logistics and the national economy. But it is exactly those companies that are not able to renew their fleet. “Updating the industrial railway fleet happens rarely, the situation is approaching an emergency”, the ROLLINGSTOCK Agency representative writes. “Soon, industrial railway locomotives will not be able to get access rights to mainline tracks.”
Chinese replacements?
The president of the Russian National Research Centre for Transportation and Infrastructure points out in local media that those industrial railway companies do not have a whole lot of money. “Even with a 50% discount, only a few would be able to acquire locomotives.”
Russian locomotives are too expensive for the industrial railways, and the sky-high central bank interest rate does not help in that regard either. The companies cannot get the necessary funding to keep operations going in the long run.
As a result, some companies are now looking to Russia’s neighbour China. A representative of an association uniting 194 companies visited a Beijing expo to express interest in Chinese locomotives. Companies from China offer locomotives at prices that Russian manufacturers could never hope to match.
“Taking into consideration that we have chosen a course of technological independence over the past three years, the presence of Chinese rolling stock on industrial tracks is, probably, not the most optimal thing”, the research centre president commented on the development.
The situation creates a dilemma for Russian rail companies. Chinese locomotives may be cheap, but setting up long-time maintenance and spare part imports is an additional investment. In the long run, it may not pay off to rely on Chinese rolling stock after all, but “home-made” locomotives are out of reach in the short term.
Russian manufacturers cede ground to China
It is not just the operators that are feeling the heat. Whereas Russian locomotive manufacturers have plenty of production capacity, according to Russian media, they are being out-competed by the Chinese in the broad-gauge world: Kazakhstan, Uzbekistan, Georgia and more.
The Kazakh private rail freight association lists a number of factors putting Russian manufacturers at a disadvantage. On the top of the list is the risk of secondary sanctions, which was the primary reason for Georgian Railways to opt for Chinese rolling stock, rather than Russian locomotives.
In second place comes the high interest rate in Russia, which makes it impossible to acquire funding against competitive rates. And lastly, Chinese companies get considerable state support, allowing them to offer locomotives at very low prices.
For Russian companies, relying on Chinese rolling stock is a long-term risk that is unlikely to get support from the political establishment. To break the deadlock, there needs to be high-level coordination and (financial) state support, say local experts. The question only remains where that money is supposed to come from amid Russia’s tightening budgetary constraints.