Vladislav Lembievskij, member of the board, RTSB talked with New Silkroad Discovery about the company’s actions in Russia and his views on congestion, freight subsidies, market development and digitalization.
New Silkroad Discovery: Can you share something about your decision of entering the Russian market, from branch office to subsidiary? How do you prospect the traffic development in coming years in the market ( to / through Russia )?
Vladislav Lembievskij: Russia has been a key market for our company since the foundation, due to the background and structure of RTSB. Our portfolio consisted mainly of transport services between Europe and Russia/ Central Asia. We established our branch office in Moscow back in 2011, when we got our own freight payer codes in Russia for import, export, and transit. This was a huge achievement as a German company.
With the growing demand for rail transportation, it was only logical, to extend our team in Russia. Almost every transport along the Eurasian Corridor runs through Russia and by implementing train connections between Russia and China/ Russia and the EU we can optimize the use of our assets, like vessels, wagons and containers. At the same time, we are well positioned to use all transport corridors and borders crossings in order to provide more flexibility to our customers.
New Silkroad Discovery: What do you think of RTSB ’s mission in Russia and its participating the operation of China-Russia freight train? From the perspective of the supply chain management of Eurasian rail transportation?
Vladislav Lembievskij: Our mission and role are to connect the Eurasian Corridor. Participating in operations in Russia we focus on the implementation of our web-based IT-system allowing us to unify documentation processes and use wagon sets more efficiently.
Russia is a key market to contribute more eastbound volumes and thus to keep freight rates stable. This is going to be an integral part for freight traffic between Russia and China and open the gateway to Europe.
New Silkroad Discovery: What do you want to share with us by reviewing the past year 2021? How much volumes ( TEUs ) RTSB has achieved on the Eurasian rail transportation? What about the development on new routes and corridors?
Vladislav Lembievskij: 2021 was a successful year for our group. We were able to underline our market position as a leading operator along the New Silk Road. To us, numbers are less important, we strive to make service a priority. New gateways and transport solutions have been a key success factor for us and RTSB has been pioneering in offering services along new routes and corridors. This year we added a new route via Chop and Batievo in Ukraine as well as via Slawkow and Skandawa, Poland, which we are servicing with our carrier ERC. Our own vessel fleet on the Baltic Sea offers great flexibility and we are adding new ports such as Baltijsk in the Kaliningrad region, Kotka and St. Petersburg to our portfolio.
New Silkroad Discovery: Congestion has been once again an important topic of our industry. Except on the traditional route, the route through Kaliningrad faces this problem. And on the China-Kasachstan border crossing, backlogs and congestion are threatening the transportation from/to Mid-Asia as well. Many customers are complaining. What do you think of this problem and what is your suggestion to the whole industry?
Vladislav Lembievskij: We have to ask ourselves what the actual reason for the congestions in Kaliningrad was: The actual volumes run through Kaliningrad differed immensely from what was planned. During the closures of main ports in China, caused by the Corona pandemic, everyone switched to rail freight and then to the Kaliningrad route because all other corridors were already at capacity. Since there is no common planning system, all trains were accepted with no real understanding of the actual capacities available.
Therefore, my suggestion would be the establishment of a common planning system of the use of railway infrastructure for a more realistic assessment of capacities and the number of trains that can be handled on 1520, in ports and at terminals in Europe.
We now operate 5 vessels on the Baltic Sea, new loading procedures are implemented and the number of trains running through the port is controlled. We are back on track with all congestion cleared up and it’s safe to say that Kaliningrad is and will remain an excellent possibility to absorb more volumes between China and Europe.
New Silkroad Discovery: How do you predict the performance of the global supply chain next year? The situation of pandemic seems getting worse by the new variant Omicron. Will the ocean shipping industry still face difficulties as in the past 2 years? What could we imagine for our rail transportation?
Vladislav Lembievskij: Since it’s hard to predict what difficulties the pandemic has yet to bring, we have to adapt to the situation and learn to live with the virus. Now that vaccines are available almost everywhere and large parts of the population are vaccinated, I assume borders will remain open and closures of factories and production sites are unlikely to be necessary, again, even with the new Omikron variant on the rise.
Thus, the demand for transportation is expected to stay at current levels, especially in the rail sector. Rail freight has been and will remain a sustainable and reliable part of global supply chains.
New Silkroad Discovery: According to the plan, the Chinese governments have reduced and will fully cancel subsidies for the China-Europe freight train in year 2022. But the appearance of many new platform companies in China is also the fact. What do you think of the development of the rail transport industry in the post-subsidies era?
Vladislav Lembievskij: There was a substantial raise in the price level in the freight forwarding marketduring the past year which was caused by an increased demand and volumes supplied by platform companies, yet production costs on the railway side stayed relatively stable. At this level, subsidies are no longer necessary, at least for westbound traffic. However, due to the persistant imbalance between eastbound and westbound traffic, subsidies are important for eastbound rates in order to promote the attractiveness of our market and support the ongoing efforts made, to convince new customers of the numerous advantages of our products.
New Silkroad Discovery: Every ambitious company should not forget investing in new technology. Could you introduce the investment of RTSB in new technology? And RTSB ’s efforts in digitalization?
Vladislav Lembievskij: Today, digitalization is a key success factor for any logistics service provider. With our IT-System myTransoffice we are very well positioned, what obviously doesn’t mean we don’t invest in new technology. We are constantly improving our system e.g., by exploring new functionality like AI and process automation to boost functionality and customer experience. Another project we are working on is the digitalization of border customs procedures with digital encryption, which bears enormous potential to cut transit times, further.
Our aim is to include all participants (customers and partners) along the Eurasian Corridor into our IT infrastructure to provide transparent information to everyone involved in our logistics chains, in real time.
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