OREANDA-NEWS. Freight One, the largest rail freight operator in Russia, and NLMK Group (LSE: NLMK), the largest steelmaker in Russia and one of the most efficient in the world, are to launch a pilot project for outsourcing the internal logistics at NLMK Long Products Division in the Urals region.

Freight One will manage railway transportation operations at the Urals sites of the Division (NSMMZ and NLMK Metalware): it will lease the rolling stock from NLMK Group and manage the railway department shared by the two plants; as well as provide maintenance of track facilities and locomotives.

Outsourcing of transport logistics on the industrial sites to Freight One aims to expand Freight One service portfolio and to optimize the plants' costs of steel products transportation, as well as cut railway transportation expenses by at least 8 percent per year.

"We are sure that Freight One's new service offering and its testing on the sites of the largest Russian metallurgical holding will promote further optimization and improvement in the Group. Further spread of industrial logistics will increase efficiency of our cooperation with key customers and will become a reliable source of growth in cargo base," said Alexander Sapronov, Executive Director of Freight One.

"In line with Strategy 2017, the Group is implementing programmes which improve the efficiency of all production and business processes. One such initiative involves the outsourcing of a number of logistic functions. We have successfully implemented similar projects at the Lipetsk site. For instance, we've outsourced car transport which has reduced costs by 13.8 million rubles per year. The Freight One project is more complex as we are outsourcing railway transportation which is part of the production chain. We are certain that with a partner like Freight One we will achieve the goals we have set and, based on the results of our cooperation, and we will leverage this experience to roll this project out to other NLMK Group sites," said Sergei Likharev, Vice President for Logistics at the NLMK Group.

"Launching a pioneering new project in the railway freight market, we set ourselves a goal to cut transportation costs for our customer, accelerate railcar turnover on the access tracks to the plants, as well as improve Freight One's cooperation with the Russian Railways in industrial goods transportation," commented Vitaly Kushchenko, the Director of the Yekaterinburg Branch of Freight One.