OREANDA-NEWS. October 24, 2011. Joint-Stock Company Freight One will revise its current thermal-coal transportation rates for the domestic market. The rate adjustment is due to the fact that for two years the cost of Freight One’s thermal-coal transportation services was on average from 17% in 2010 to 9% in 2011 lower than the consignor and consignee aggregate transportation costs (ATC) for equivalent transportation by inventory fleet cars (IF ATC).

Freight One plans to approximate thermal-coal transportation rates to these costs. In this connection, the tariff for coal transportation for the needs of housing and utility services will remain 5—7% lower than IF ATC.

At present, Freight One actually subsidizes thermal-coal transportation for the domestic market at the expense of income from other transportation services. As a socially oriented company, Freight One’s total transportation services include a consideration share of corporate, social, military, and public transportation services that are supervised by relevant ministries and agencies. On the whole, Freight One accounts for up to 40% of transportation of socially significant freights within the RZD system. Specifically, it is forecasted that based on the 2010/2011 results consignors will save more than 6.5 billion roubles owing to Freight One tariffs being lower than those for transportation by inventory fleet cars.

In addition, Freight One, as Russia’s largest railroad operator, is affected by the main market trends related to growing prices of new equipment and increasing car-fleet maintenance costs. From early 2010 to 2Q11, for instance, prices of new gondola cars grew by 78% on average and reached 2.3 million roubles. Given rapidly increasing prices, Freight One did not suspend or revise its investment program for the renewal of its gondola-car fleet: from 2010 to 2012, the Company plans to purchase about 41 thousand gondola cars.

Freight One faced a considerable increase in car fleet maintenance costs. Since 2010, current uncoupling repair costs have grown by 93% and reached 16 thousand roubles, while the cost of miscellaneous steel cast car parts has increased by 50% and reached 82 thousand roubles a car. Given the current situation in the rail transportation market and the need to form price conditions for 2012 in good time, Freight One has prepared new rate offers. The Company plans to set the new rates at the level of actual IF ATC, yet leave the tariff for thermal-coal transportation for at most 500 km, within which distance the bulk of coal is transported for housing and utility services, 5—7% lower than these costs.