About this report
The 2023 Annual Report of Joint Stock Company UTLC ERA (hereinafter also referred to as JSC "UTLC ERA", UTLC ERA, the Company) is based on the information available as of the date of its preparation and discloses data on UTLC ERA’s activities from 2021 to 2023.
This Annual Report complies with relevant legislation and is intended for a broad audience of stakeholders.
All financial metrics included in the report are based on Russian Accounting Standards (RAS) and the Company’s accounting policies that were in effect in the respective reporting periods, as verified by an auditor’s report.
It is recommended that this Annual Report be read in its entirety, taking into account all of its sections along with the attached notes and explanations.
Forward-looking statements
This Annual Report contains forward-looking statements that reflect UTLC ERA management’s expectations with regard to future performance and financial position. These statements are subject to uncertainties and may depend on circumstances that might or might not transpire in the future. UTLC ERA does not guarantee that the forecasts will align with its actual operational results. UTLC ERA disclaims any responsibility for losses that might result from decisions based on such forward-looking statements.
Limitation of liability
Alongside official information on UTLC ERA’s activities, the Annual Report can feature data sourced from third parties. Although such information may be incomplete or abbreviated, UTLC ERA does not guarantee its accuracy. Unless explicitly mandated by law, UTLC ERA is under no obligation to release updates or revisions to forward-looking statements reflecting changes in expectations or new information, subsequent events, conditions or circumstances.
This Annual Report was reviewed by the Audit Committee of UTLC ERA Board of Directors (Minutes No. 35 of May 13, 2024).
The report was preliminarily approved by UTLC ERA Board of Directors (Minutes No. 80 of May 24, 2024).
The report was approved by the Annual General Meeting of Shareholders of UTLC ERA (AGMS Minutes No. 25 of June 28, 2024).
The accuracy of the information contained in the Annual Report was confirmed by UTLC ERA Audit Commission (the extract from the Audit Commission’s opinion).
UTLC ERA today
UTLC ERA stands as the pioneering, one-of-a-kind integration project in the logistics field within the Eurasian Economic Union (EAEU), uniting the resources and capabilities of three nations: the Russian Federation, the Republic of Kazakhstan, and the Republic of Belarus.
Established in 2018 as an operator of transit container services, the Company has delivered efficient logistics solutions for freight forwarders, cargo owners and their logistics partners, thus ensuring the development of the Eurasian Economic Space.
55.5 RUB bln
revenue
674 011 TEUs
total volume of transportation across all services
TOP 400
in the list of Russia’s largest companies according to Expert RA
-
UTLC ERA’s mission
is to become a driving force for the development of the Eurasian Economic Space by crafting and implementing effective logistics solutions.
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UTLC ERA’s key objective
is to develop the transport and logistics market and bolster the EAEU’s standing in Eurasia, particularly by enhancing railway container transportation in the 1,520 mm gauge area. We are dedicated to achieving an annual transit traffic volume of 1 million TEUs.
Areas of operation
UTLC ERA specializes in rail transportation of containerized cargo along the East—West International Transport Corridor (along the New Silk Road) between China—Kazakhstan and EAEU—Europe borders, in addition to inter-EAEU locations.
In 2023, the average daily size of the UTLC ERA fleet reached 9,151 railcars.
With extensive geographical coverage, we have crafted over 740 routes connecting more than 250 locations across Europe, China, and the EAEU.
Our transportation services encompass the following routes
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transit
- China
- Europe
- China
-
import
- China
- Russia/Belarus
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export
- Russia/Belarus
- China
The authorized capital of JSC "UTLC ERA" amounts to 98,127,000 rubles and is divided into 98,127 ordinary registered uncertified shares, each with a par value of 1,000 (one thousand) rubles.
The authorized capital of JSC "UTLC ERA"
98,127,000 RUB
-
32,709 shares
Joint Stock Company "Russian Railways" (JSCo "RZD")
-
32,709 shares
Joint Stock Company "National Company "Kazakhstan Temir Zholy" (JSC "NC "KTZ")
-
32,709 shares
Belarusian Railway State Association (Belarusian Railway)
Key results and achievements
-
674 THOUSAND TEUs
total volume of transportation across all services
-
99.997 %
cargo security index
-
55.5 RUB bln
revenue
-
6.5 RUB bln
EBITDA
-
3.2 RUB bln
net profit
-
> 35.2 USD bln
total value of goods transported
-
95.8 %
is UTLC ERA’s share in transportation on the China—Europe—China transit route
-
Top 400
in the list of Russia’s largest companies according to Expert RA
-
351 RUB mln
worth of charitable aid granted in Russia, Kazakhstan and Belarus, including the implementation of various social and environmental initiatives
-
5 diplomas
of international award Tagline Awards and 2 diplomas of "Runet Rating" were received
Significant changes in the transportation structure that UTLC ERA faced in 2023, enabled the Company to sustain the overall transportation volume indicators at 674,011 TEUs. The Company not only successfully navigated the external challenges but also solidified its dominant position in the trans-Eurasian transit market.
Export transportation from Belarus and Russia to China, as well as the import transportation from China to Russia and Belarus, saw significant development. In the reporting year, UTLC ERA accounted for over 95% of transportation along the China—Europe—China transit route in the East—West ITC.
By the end of 2023, UTLC ERA services had transported cargo worth approximately $35.2 billion. Transportation of various types of cargo from the central and eastern regions of Russia to China was efficiently arranged and became regular. Notably, there was a substantial increase in the shipment of containerized mineral fertilizers to China through overland border crossings in Kazakhstan.
In monetary terms, mechanical equipment and technology, computers, electrical devices and communication equipment, automotive equipment and parts, optics, instruments, medical equipment, as well as knitwear and apparel held leading positions among the goods transported by UTLC ERA services in 2023. Producers of lumber, metals, cellulose, cardboard, chemical products, and others found new opportunities for growth and expanded their product sales geography.
UTLC ERA remains committed to implementing social and environmental initiatives aimed at fostering sustainable development for both the Company and its partner firms, as well as the countries in which it operates.
-
Import
>50 %
overall growth in import traffic
-
Export
+92.6 %
overall growth in export and other transportation
Message from the General Director
Dear fellow shareholders, clients and partners!
I am pleased to share with you UTLC ERA’s 2023 Annual Report.
The past year was exceptional, marked by a multitude of external factors that influenced the railroad industry at large and specifically impacted the operations of UTLC ERA.
In the face of a changing external landscape, our primary objective was to uphold the highest level of integration with our shareholders, partners and clients.
The final reported figures vividly highlight our collective efforts: in 2023, we successfully sustained our performance at the levels achieved during the remarkable years of 2021 and 2022, both in terms of transportation volumes and financial accomplishments.
The year 2023 saw a plethora of challenges that necessitated swift collective decisions to shift transportation directions and traffic types. Timely technological solutions were, inter alia, instrumental in making up for delays in freight train speeds caused by infrastructural constraints related to ongoing construction work or the laying of additional tracks.
The preceding year also witnessed the extension of our company’s transportation footprint, with the addition of 84 new routes to
UTLC ERA’s operational map.The underlying principles of our Company’s ethos, namely integration, competence, responsibility, and reputation, remained steadfast. These business beacons have consistently underpinned our success and sustainable development.
There is no reason to doubt that the UTLC ERA team has grown even more cohesive and proficient! Throughout the year, we welcomed onboard new top industry experts who are already contributing to bringing our growth strategy to fruition.
As we look forward to 2024, we anticipate numerous compelling challenges ahead, with the primary focus on advancing Eurasian rail transit.
I would like to thank all those who actively contributed to our collaborative endeavors in 2023 and helped us achieve our goals. It is a privilege to work alongside each of you. Let us continue our work in the same spirit of cooperation and partnership.
Event Calendar
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February
Presentation at the joint ETI and CCTT conference: "Reliable, Safe and Efficient Transportation As a Key Element of Regional Development".
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March
Speech by the Director General of UTLC ERA at the Integration Forum of Russian Business Weeks (Moscow, Russia) and at the conference "Railway Logistics: Current Development Challenges" (Minsk, Belarus)
Participation in the round table at the International Economic Forum of CIS Member States (Moscow, Russia).
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April
Participation in the TransRussia 2023 exhibition in Moscow, Russia.
Conclusion of a leasing agreement for 200 platforms.
To address capacity constraints on the Dostyk—Moyinty section, implementation of technology using gondola cars to transport containers with subsequent transloading onto fitting platforms at the container terminal at the Sorokovaya station.
Hosting the III International Hockey Tournament UTLC ICE CUP 2023 in Astana.
UTLC ERA speakers’ presentations at the joint conference of RUT (MIIT) and CCTT on "Human Capital Development" and at the Sino-Russian Forum for Trade, Economic, and Investment Cooperation in Moscow, Russia.
Participation of UTLC ERA employees in an urban land improvement event at the N.A. Semashko Moscow Clinical Hospital of JSC "RZD-Medicine."
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May
A presentation by an UTLC ERA speaker at the Transport Solutions Forum "From Point 2023 to Point 2030" in Moscow, Russia.
Launch of the new UTLC ERA website: https://www.utlc.com/en/
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June
Participation of UTLC ERA in the Eurasia Rail exhibition in Istanbul, Turkey.
UTLC ERA speakers’ presentations:
- at the conference CIPR-2023 (Digital Industry of Industrial Russia) in Nizhny Novgorod, Russia;
- at the XIII Annual International Conference "Trilogy" in St. Petersburg, Russia;
- at the China Overseas Investment Fair (COFAIR) conference in Beijing, China.
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July
Introduction of a system of internships for students and graduates of specialized universities (RUT (MIIT), etc.).
Launch of a project to send trains on an integrated schedule on the Chengdu—Lodz—Chengdu route, which ensures predictable delivery timelines, with four Chinese provinces joining the initiative.
Participation of UTLC ERA experts as mentors and jury members in the Professional Championship (WorldSkills) hosted by JSCo "RZD".
Participation in the 5th West China International Supply Chain & Logistics Expo in Chengdu, China.
Hosting a client event in China (Chongqing).
UTLC ERA speakers’ presentations at the The 1st Trans-Eurasian Cooperation Development Summit Forum of Supply Chain in International New Land—Sea Corridor & Freight Forwarding Fair in Chongqing, China.
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August
Hosting the V International Football Tournament UTLC CUP in Moscow.
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September
Launch of the Master’s program "International Trade Ecosystem" created with the support of UTLC ERA in Moscow, MGIMO.
Participation in the China International Logistics and Supply Chain Fair (CILF) in Shenzhen, China.
UTLC ERA speakers’ presentations at the conferences: "Operator Business: A Quarter of a Century on the Russian Railways Network" in Moscow, Russia, and the 3rd Conference of Liaison Officers of the China-CEEC Logistics Cooperation Secretariat in Beijing, China.
Approval of a new incentive plan for the Director General and members of the Management Board (by a decision of UTLC ERA Board of Directors).
Training of employees in the program "First Aid to Victims."
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October
The 100th train traveled on an integrated schedule.
Participation in the 26th Kazakhstan International Exhibition TransLogistica Kazakhstan 2023 in Astana, Kazakhstan.
UTLC ERA speakers’ presentations:
- at the I International Logistics Congress "Supply Chain Transformation 2023" in Moscow, Russia;
- at the international conference "Transport and Logistics Market" in Astana, Kazakhstan;
- at the New Silk Way conference in Astana, Kazakhstan;
- at the XXXII Plenary Meeting of the International Coordinating Council on Trans-Eurasian Transportation (CCTT) with the support of UTLC ERA in Moscow, Russia.
Updating the Code of Corporate Ethics.
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November
Issuance of electronic waybills for empty railcars traveling between Russian Railways stations and KTZ stations in the UTLC ERA services (jointly with JSCo "RZD" and JSC "NC "KTZ").
The 100th train carrying European premium brand automobiles traveled in the U-EAST (Europe—China) direction.
UTLC ERA is the winner of the "Best result of a transportation BPM project" nomination with the project for the interconnection of container trains using optimal schemes in the 1,520 mm gauge area in the China—Europe—China traffic.
Participation in the China International Import Expo (CIIE) in Shanghai, China.
Presentations delivered by UTLC ERA Director General:
- as part of the Russia Exhibition opening at VDNKH in Moscow, Russia
- as part of the business program at the "Transport Week — 2023" event in Moscow, Russia;
- at the Eurasian Business Forum "Integration" in Moscow, Russia;
- at the round table on "Development of logistics infrastructure and services on the routes of Eurasian transport corridors" in Moscow, Russia;
- at the conference High quality development forum of China railway express assembly center in Xi’an, China.
Participation in the II Forum of the Women’s Council of JSCo "RZD" and victory in the "The Most Constructive Concept" nomination in the "Working Conditions and Labor Regime" category.
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December
First pilot shipments using the electronic customs transit procedure on the Dostyk/Altynkol—Brest—Severny routes.
UTLC ERA’s project "Fidelity to Traditions" was awarded a certificate in the "Golden Fund of Transport" nomination of the ‘Magistral’ First National Transport Communications Award in Astana, Kazakhstan.
In a groundbreaking move within the EAEU logistics market, a pioneering project was executed that involved the creation of personalized year-end reports for UTLC ERA’s top 10 clients. Each client now has access to an individual web page, showcasing unique performance indicators regarding their work with UTLC ERA, offering a fresh perspective on their business interactions and performance metrics.
UTLC ERA speakers’ presentations:
- at the joint round table of EEC and CCTT on "Development of logistics infrastructure and services on Eurasian transport corridors" in Moscow, Russia;
- at the China—Europe Railway Express Global Partners Conference in Chengdu, China;
- at the Digital Transportation Forum in Moscow, Russia;
- at the Digital Ecosystems Forum in Moscow, Russia.
Business Model
The business model is structured to maximize transparency of the business operations and it meticulously details each aspect of the container transportation process:
- geographic scope: describes specifically the primary and ancillary routes, with the addition of export and import transportation schemes
- the range of transportation and logistics services
- guidelines for interaction with shareholders’ subsidiaries and affiliates (SSAs)
- pricing protocols and tariff policy
- sales channels, interaction with SSAs
asset-optimum
The new revision of UTLC ERA’s operating model, approved by the Board of Directors in December 2021 (Minutes No. 46 dated December 27, 2021), aims to amplify transit transportation volumes in the 1,520 mm gauge area and fortify the Company’s leading industry position.
This model positions UTLC ERA as a premier container service operator, offering a spectrum of services encompassing the arrangement of rail cargo transportation in containers, documentation handling for shipping, customs, and other essential tasks related to container transit in the asset-optimum format.
UTLC ERA’s priorities for operational enhancement:
- cost minimization;
- crafting a competitive price offer;
- harmonizing transit routes;
- introducing new market logistics services;
- tailoring transit offerings for new shipper demographics;
- accelerating delivery timelines.
UTLC ERA ensures infrastructure capacity utilization and optimal transportation parameters bolstered by technological advancements and cost efficiency.
The Company upholds an open tariff policy, facilitating equal access and transparent service provision for all potential customers.
In 2023, the customer was the Company’s primary focus in building and updating its business processes. Prioritizing customer interests entailed not only introducing new services and technological innovations but also establishing an interaction model where customers are central to all changes.
Creating value
for stakeholders
Stakeholders
Stable return on invested capital
Authorities
- Largest company in Russia (top 400)
- Regular tax contributions to the budget
- Expert data provider for the industry
Clients
- Uninterrupted and timely deliveries
- Average transit speed — 729 km/day
- Transit time — 7.5 days
- 99.997% — cargo security
- Introduction of new services and technological innovations
Employees
- 178 staff employed at UTLC ERA at the end of 2023
- Opportunities for professional development and career growth
- Competitive salary and social package
Suppliers and business partners
- 9,151 units — average daily fleet of railcars under management
- Long-term and mutually beneficial relationships
Local communities
RUB 351 mln. allocated to charity in Russia, Kazakhstan and Belarus, including the implementation of various social and environmental initiatives
UTLC ERA places a strong emphasis on corporate responsibility, enhancing operational efficiency and cost control, which enables us to create value for a diverse range of stakeholders.
Geography
of operations
UTLC ERA’s operations benefit from its strategically advantageous geographical position and well-established network of routes, enabling the seamless, timely, and efficient transportation of cargo along the China—Europe—China route across Russia, Kazakhstan, and Belarus.
Total coverage
252 locations
+14 locations compared to 2022
> 740 routes
+84 routes compared to 2022
Growth by quarters in 2023
| Locations | Routes | |
|---|---|---|
| QI | 3 | 27 |
| QII | 8 | 36 |
| QIII | 1 | 7 |
| QIV | 2 | 14 |
| Total | 14 | 84 |