Business climate
In order to create a favorable business environment and legal framework conducive to boosting cargo transportation volume, which is the Company’s primary operational objective, UTLC ERA consistently engages with federal executive authorities of the Russian Federation. The Company also actively participates in advisory committees, expert groups of international organizations, and collaborates with business associations in the Russian Federation, the Republic of Kazakhstan, and the Republic of Belarus.
| Federal executive authorities of the Russian Federation | Advisory committees and working (expert) groups of the supranational body of the EAEU — the EEC | Working and advisory bodies of international organizations in the field of transport | Business associations | Strategic Cooperation Joint Working Group (JWG) of JSCo "RZD" and JSC "NC "KTZ" |
|---|---|---|---|---|
| Ministry of Transport of the Russian Federation | Advisory Committee on Transport and Infrastructure (member of the Committee), Subcommittees on Rail Transport and Logistics and Infrastructure (member of subcommittees) | United Nations Economic Commission for Europe (UN ECE) | Russian Union of Industrialists and Entrepreneurs (RUIE) (Union member): Committee on Integration, Trade and Customs Policy and WTO (Committee member), RUIE Integration Council on Cooperation with the EEC (Committee member), Committee on International Cooperation (Committee member, Chairman of the Subcommittee on Transport and Logistics), Expert Group "Export of Goods and Services" (Expert Group member) | |
| Ministry of Finance of the Russian Federation | Advisory Committee on Customs Legislation and Enforcement (member of the Committee), Working Group on Advance Notice | United Nations Economic and Social Commission for Asia and the Pacific (UN ESCAP) | Chamber of Commerce and Industry of the Russian Federation (CCI of Russia) (member of the MCCI): Customs Policy Council (member of the Council) | |
| Ministry of Economic Development of the Russian Federation | Organisation for Cooperation between Railways (OSJD) (in the status of an affiliated enterprise) | Association of National Freight Forwarders of the Republic of Kazakhstan (ANFK) (member of the association) | ||
| Expert and Advisory Council on Customs Policy under the Federal Customs Service of the Russian Federation (FCS of Russia) (Council member) | International union of railways (UIC) | Eurasian Union of Railway Freight Transportation Participants (EUT) (Union member) | ||
| and others | and others | Universal Postal Union (UPU) | Association of Transport and Logistics Market Participants "Digital Transport and Logistics" (DTLA) (member of the Association, head of the expert group "Seamless Freight Logistics") | |
| CCTT (CCTT member, Head of the China—Europe—China Working Group, Head of the Expert Group "Security and Electronic Seals") |
In December 2023, an agreement on cooperation in the field of large platform solutions was signed at the international forum "Digital TRANSPORTation." The forum was organized by the association "Digital Transport and Logistics" with the support of the Ministry of Transport of the Russian Federation. The purpose of the agreement is to facilitate the organization of joint pilot digital projects.
Thanks to cooperation with various bodies and working groups in promoting legal initiatives, the following key projects were implemented (or are in the process of implementation) in the reporting year.
-
Participation in the EEC working and expert groups to prepare amendments to the EEU Customs Code and include a new chapter on "Specifics of the procedure and conditions for the movement of containers across the customs border of the Union."
-
On behalf of the Eurasian Union of Railway Freight Transportation Participants, new amendments to the EEU Customs Code pertaining to Articles 84 and 145 were prepared and sent to the Russian Union of Industrialists and Entrepreneurs (RUIE) for further consideration.
-
New clause 24 (4) was included in the Action Plan (road map) for the implementation of the mechanism for the management of systemic changes in the normative legal regulation of entrepreneurial activity "Transformation of the business climate. Export of goods and services", approved by the order of the Government of the Russian Federation No. 2662-r dated October 15, 2020. This clause focuses on preparation of amendments to Article 165 of the Tax Code of the Russian Federation in order to exclude the request by tax authorities of paper copies of customs declarations and/or transport, shipping and/or other documents with marks of customs authorities, which are necessary to confirm the validity of the application of the 0% VAT rate for the sale of goods or works (services) when importing goods by railroads.
As a result of these efforts, Federal Law No. 92-FZ of April 22, 2024, "On Amending Articles 164 and 165 of Part Two of the Tax Code of the Russian Federation," was enacted.
-
Participation in the working group of IT experts of the CCTT and the Universal Postal Union (UPU) on the implementation of the Mail by Rail project to introduce paperless technologies that take into account the specifics of legal regulations of transportation by rail, as well as the experience of rail carriers in transportation using electronic consignment notes SMGS and CIM/SMGS
-
Participation in the work conducted on the Eurasian Economic Commission (EEC) platform regarding the decision of the Board of the Eurasian Economic Commission No. 73 dated May 30, 2023, "On approving the form of transit declaration and its completion procedures, and on the amendment and annulment of certain decisions by the Customs Union Commission and the Board of the Eurasian Economic Commission", taking into account unique aspects of rail transport for containerized goods.
-
Participation in the preparation of the concept of the national digital transport and logistics platform of the Russian Federation — a digital ecosystem to ensure the development of the transport and logistics complex through the introduction of unified standards and services of electronic interaction and the formation of a single digital space for all participants in the transport and logistics services market, ensuring increased reliability, efficiency, speed and safety of freight transportation by all transport modes.
-
Transportation has commenced on the Dostyk/Altynkol—Brest-Severny routes using electronic customs procedures for customs transit. These procedures are being developed collaboratively by the customs services of the EAEU and the railroads, in accordance with the decision made by the Joint Board of Customs Services of the Customs Union on April 7, 2023 (№ 41/14).
Operating
results
Share of China’s provinces in the transportation structure in 2023, %
Structure of goods transportation between continents in the direction China‑Europe, %
Structure of goods transportation between continents in the direction Europe‑China, %
Increase in export transportation
It should be noted that the share of export volumes in the structure of transportation of UTLC ERA grew in 2023. The total number of shipments for Russian export projects in 2023 reached 48,952 TEUs, marking a 165% increase compared to the previous year. Within UTLC ERA’s export services, a total of 207,767 TEUs were transported, showing a significant 92.6% increase from the previous year.
There were shipments from Vosstaniye, Kopylovo, Biklian, and Tobolsk stations. Transportation of polymer products to China from the Group’s plant in Atyrau, Karabatano station, which started its operations in the Republic of Kazakhstan, was also organized.
The transportation volume for a project involving potassium chloride transportation from Belarus to China, initiated in 2022, amounted to 119,786 TEUs, indicating a significant 129.1% increase from the previous year.
207,767 TEUs
transported in export services in 2023
92.6% more than in 2022
Route speed and train formation
729 km per day
a route speed of transit trains on 1,520 mm gauge track in 2023
Total travel time at the
end of 2023
7.51 days
3.84 days
Joint Stock Company "National Company "Kazakhstan Temir Zholy"
0.69 days
Belarusian Railway State Association
2.97 days
Joint Stock Company "Russian Railways"
A crucial measure of customer service excellence is the predictibility of delivery times. In 2023, 88% of shipments were delivered within 6–8 days, aligning with the typical expectations of UTLC ERA customers.
Average route speed of transit trains in the UTLC ERA service, km/day
| Route | 2021 | 2022 | 2023 |
|---|---|---|---|
| China—Europe—China | 712 | 816 | 729 |
| Europe—China | 693 | 762 | 642 |
| China—Europe | 728 | 865 | 823 |
| By Belarusian Railway | 359 | 687 | 880 |
| Europe—China | 896 | 990 | 943 |
| China—Europe | 239 | 552 | 833 |
| By JSCo "RZD" | 1,054 | 881 | 829 |
| Europe—China | 1,089 | 821 | 778 |
| China—Europe | 1,025 | 936 | 879 |
| By JSC "NC "KTZ" | 715 | 793 | 624 |
| Europe—China | 503 | 671 | 507 |
| China—Europe | 1,077 | 925 | 771 |
Average transit time of container trains in the UTLC ERA service, days
| Route | 2021 | 2022 | 2023 |
|---|---|---|---|
| China—Europe—China | 7.72 | 6.69 | 7.51 |
| Europe—China | 7.93 | 7.15 | 8.55 |
| China—Europe | 7.54 | 6.33 | 6.63 |
| By Belarusian Railway | 1.59 | 0.88 | 0.69 |
| Europe—China | 0.64 | 0.62 | 0.65 |
| China—Europe | 2.38 | 1.10 | 0.73 |
| By JSCo "RZD" | 2.22 | 2.82 | 2.97 |
| Europe—China | 2.21 | 3.03 | 3.21 |
| China—Europe | 2.23 | 2.65 | 2.76 |
| By JSC "NC KTZ" | 3.50 | 2.99 | 3.84 |
| Europe—China | 4.85 | 3.50 | 4.68 |
| China—Europe | 2.37 | 2.58 | 3.14 |
In 2023, the average daily number of trains in transit was 11 trains. The key factor in cost optimization and attracting more freight was the annual average increase in the train load to 123 TEUs.
123 TEUs
the annual average value in the average train load in 2023
11 units
average daily number of trains in transit in 2023
Application of XL‑train technology
UTLC ERA actively employs technology that combines container trains within the 1,520 mm gauge region.
This technology involves sequentially assembling container trains with maximum capacity using large-tonnage containers on 1,520 mm gauge cars, ensuring no empty container spaces on each car. Containers arriving from China to Kazakhstan in three trains on the 1,435 mm track are transferred to two full container trains on the 1,520 mm track using the "3 to 2" scheme.
Similarly, inbound trains from China, consisting of four trains on the 1,435 mm track, are consolidated into three full container trains on the 1,520 mm gauge track using the "4 to 3" scheme.
The XL‑train technology enables carriers to optimize train schedules, utilize railway section capacity more efficiently, and lower operating costs, including traction and locomotive crew expenses. Consequently, the container train organizer can decrease the necessary fleet of cars when implementing this technology. This innovation enhances service quality on the 1,520 mm gauge and attracts additional transportation volumes, thereby alleviating the burden on the infrastructure of key partner railways.
Technology in practice
-
enables carriers to optimize train schedules
-
ensures more efficient use of railway section capacity
-
allows to reduce operating costs, including traction and locomotive crew expenses.
Block diagram of consolidating (compacting) trains as exemplified by the "3 to 2" scheme
Entrance border railway station at the junction "from 1,435 mm gauge to 1,520 mm gauge"
-
Train No. 1
"EU—China—EU" = 50×40’ containers
Оrder No. 1 / 1,435 mm gauge
-
Train No. 2
"EU—China—EU" = 50×40’ containers
Оrder No. 2 / 1,435 mm gauge
-
Train No. 3
"EU—China—EU" = 50×40′ containers
Оrder No. 3 / 1,435 mm gauge
Exit border railway station at the junction "from 1,520 mm gauge to 1,435 mm gauge"
-
Train No. 1
"EU—China—EU" = 69 с. с. = 74×40′ HC containers = 37×80-foot car
(train No. 1 + 1/2 train No. 2) / 1,520 mm gauge
-
Train No. 2
"EU—China—EU" = 71 c. c. = 76×40′ HC containers = 38×80-foot car
(train No. 3 + 1/2 train No. 2) / 1,520 mm gauge
-
Train No. 1
"EU—China—EU" = 50×40′ containers
Order No. 1 / 1,435 mm gauge
-
Train No. 2
"EU—China—EU" = 50×40′ containers
Order No. 2 / 1,435 mm gauge
-
Train No. 3
"EU—China—EU" = 50×40’ containers
Order No. 3 / 1,435 mm gauge
Client portfolio
UTLC ERA is dedicated to continuously enhancing its services and retaining key customers along its primary transit route. Throughout 2023, the Company kept on enhancing its customer service and introducing new communication channels for customers and partners, going beyond its current operational framework.
Share of UTLC ERA’s transportation by routes, %
Specifically, the freight forwarder’s rate, a vital component of the integrated rate, typically encompasses:
- railway tariffs and customs duties applicable to cargo shipments transported through the rail networks of the Republic of Kazakhstan, the Russian Federation, and the Republic of Belarus;
- customs clearance services, including customs duties for the declaration of goods using transit documentation;
- loading and unloading operations;
- container securing on the car;
- provision of fitting platforms for the duration of transportation along the route, including the return of empty fitting platforms;
- charges for escort and security of cargo during transit in Kazakhstan, Russia, and Belarus;
- information services throughout the entire route;
- compensation for coordinating container repairs in case of malfunctions;
- remuneration for the services provided by the freight forwarder;
39 companies
participated in transit container transportation along the China—Europe—China and China—Russia/Belarus routes in 2023
combined volume reaching 466,244 TEUs
211,122 TEUs
was transported on the China—Europe—China route
31.3% of the Company’s overall transportation volume
19 companies
utilized cargo transportation services from China to Belarusian Railway stations
this surge in activity resulted in a 322% year-on-year growth in the volume of freight transported. Companies hailing from China, Russia, Kazakhstan, and Belarus were actively engaged in transportation services in this direction, totaling 59,494 TEUs by the end of the year
+31.7 %
the transportation volume
in 2023, 33 companies from Russia, the Belarus, Kazakhstan, China and Europe were involved in transportation services on the China—Russia route
Customer communications
Throughout the year, UTLC ERA provided key customers with regular updates on its activities, performance, and market trends on a quarterly basis. In alignment with global customer interaction trends, the Company launched its "Interactive Annual Results" project.
Tailored web pages were developed for the top ten customers, displaying various transportation metrics that are not typically monitored by customers but offer valuable insights into the Company’s services, a deeper understanding of the Company’s transportation model, and adjusting their model of interaction with the Company:
- total distance;
- shipment value;
- carbon footprint;
- most unusual shipments.
The Company’s portal invites visitors to evaluate UTLC ERA’s performance in 2023 using a five-point rating scale and to share their personal insights on the year through three specific questions. Customers who participated in the survey were rewarded with supplementary materials, including a checklist and comprehensive answers to common queries. These resources aim to enhance the communication and collaboration between the Company and its customers.
4.94
average quality score for UTLC ERA (96.8%)
Container transportation by mixed rolling stock
The technology of transporting containers using empty gondola cars with subsequent transfer to UTLC ERA’s empty fitting platforms was implemented at the container terminal at Sorokovaya station during construction and repair works in April 2023 on the railway track from Dostyk station to Moynty station, due to a decrease in throughput capacity.
The technology provides for the transfer of containers arriving from China on route to the Moscow railway hub stations at the terminals of Dostyk station into trains composed of 75 gondola cars. Thus, the track section capacity is saved due to optimization of empty runs of gondola cars to be loaded in the north-west of the Republic of Kazakhstan. This solution has enabled the maintenance of an effective average speed of 8.8 days on the route from Dostyk to the Moscow railway hub stations, resulting in a 55% increase in transportation volumes compared to the previous year.
Subsequently, this technology of container transportation by mixed rolling stock (gondola + fitting platform) on the territory of the Republic of Kazakhstan was also applied at Altynkol station.
From the beginning of the project implementation:
- 128 container trains — from Dostyk station;
- 25 container trains — from Altynkol station.
Were dispatched from Dostyk and Altynkol stations to Sorokovaya station.
23,000 TEUs
the total transportation volume under this scheme in the China—Russia direction exceeded in 2023
The share of container transportation in gondola cars reached 60% in peak months.
Establishing a network of terminal and logistics centers
Under the Treaty on the Eurasian Economic Union, the Republic of Kazakhstan, the Russian Federation, and the Republic of Belarus collaborate on a unified transportation policy with the goal of enhancing the transit potential efficiency of the member states. A crucial aspect of railway transportation development is to ensure high-quality infrastructure that can effectively address current challenges.
The transport corridors of Central Asia illustrate a consistent growth in freight traffic volumes and trade activities among partner countries, as well as with China and European nations. Against this backdrop, the implementation of a core network of Terminal and Logistics Centers (TLCs) to streamline freight movements through the territories of Kazakhstan, Russia, and Belarus plays a vital role in UTLC ERA’s strategy. In 2023, JSC "NC "KTZ" and JSCo "RZD", in collaboration with UTLC ERA, advanced this agenda by furthering the development of a railway border crossing project on the Bakhty—Ayagoz line within the working group framework.
Rolling
stock
In 2023, one of the primary objectives for the Company was to provide rolling stock for the transportation process. The main focus was on ensuring operational availability and optimizing the fleet structure amid the increased volatility in the transportation market, both in terms of volumes and transportation routes.
Structure of average daily railcar fleet, units
| 2022 | 2023 | Change 2023/2022 |
||
|---|---|---|---|---|
| Absolute | % | |||
| Overall fleet | ||||
| Leasing | 2,850 | 3,120 | 270 | 9.5 |
| Rent | 2,801 | 3,117 | 316 | 11.3 |
| Sharing | 3,379 | 2,913 | −466 | −13.8 |
| Total | 9,030 | 9,151 | 121 | 1.3 |
| Operating fleet | ||||
| Leasing | 2,769 | 3,014 | 245 | 8.8 |
| Rent | 2,633 | 2,974 | 341 | 13.0 |
| Sharing | 3,293 | 2,846 | −447 | −13.6 |
| Total | 8,695 | 8,834 | 139 | 1.6 |
Throughout 2023, there was a consistent trend of declining transportation volumes in the transit corridors of UTLC ERA, leading to a noticeable shift in transportation routes. This shift impacted existing technology, altered railcar schedules, and influenced railcar turnover. Despite an overall minimal decrease of only 1.1% in the Company’s transportation volume in 2023, transit traffic on the China—Europe—China route plunged by 48.6% compared to 2022.
By the end of 2023, UTLC ERA managed a total average daily fleet of 9,151 railcars, comprising 3,120 leased units, 3,117 rented units, and 2,913 shared units.
The Company saw a 1.3% increase in its average daily fleet size, adding 121 railcars, while the total transportation volume decreased in 2023 by 1.1% compared to the previous year due to a shift in transit transportation share and an uptick in export-import (other) transportation. Providing loads for export-import transportation required changes in the standard technology of operations with "clean" transit, and for this purpose additional trips were organized to dispatch empty railcars and containers from dislocation stations to loading stations. This adjustment led to dispatching a total of 222,084 railcars in 2023, marking a 1% increase over 2022 and contributing to the growth of the overall average daily fleet of UTLC ERA in 2023.
To streamline fleet maintenance costs amid reduced transportation volumes, the Company initiated extra railcar shipments under partner codes from mid-2023 onwards.
9,151 railway carriage
total average daily fleet under UTLC ERA management
by the end of 2023
During 2023, the following technologies were used by the UTLC ERA’s Transportation Directorate to provide rolling stock:
Monthly calculation of the required fleet of railcars,
taking into account the following parameters:
- forecast transportation volume;
- car turnover;
- cargo traffic imbalances between China—Europe and Europe—China;
- share of combined XL‑trains;
- transportation volume on optimization routes.
These calculations are used in managerial decisions on operational commissioning/decommissioning of the fleet, putting it on standby, or reallocating it to auxiliary projects.
Formation of extended container trains (XL‑trains),
which made it possible to optimize up to 1.5 thousand platforms monthly.
Formation at Brest station and dispatch of trains of empty UTLC ERA flat cars with a conventional length of 114 and more conventional cars. In 2023, 49 such trains were formed and dispatched from Brest.
1,543 XL‑trains
were formed and dispatched in 2023
("3-to-2" — 1,459, "4-to-3" — 84)
Reduction of container train downtime, car days
| 2022 | 2023 | Change 2023/ 2022 |
Change 2023/ 2022, % |
|
|---|---|---|---|---|
| First half of the year | 44,010 | 19,708 | −24,302 | −55.2 |
| Second half of the year | 6,902 | 4,019 | −2,883 | −41.8 |
| Total | 50,912 | 23,727 | −27,185 | −53.4 |
Monthly coordination with Moscow hub terminals regarding transportation volumes to each terminal
proved beneficial, as it effectively reduced downtime for container trains traveling to these stations since the latter half of the year.
Optimization of fleet structure
The Company has optimized the railcar fleet structure based on the type of use.
The fleet was expanded by leasing 200 platforms and expanding the rented fleet. The decision to increase the leased fleet was based on the cost of attracting leased fleet resources, which in 2023 totaled USD 10.7 (excluding VAT) per car per day. This cost is 2.7 times lower than the comparable rate for shared rented fleet. It is also 2.6 times lower than the cost of fleet resources shared at standard operating rates.
The 14% year-on-year decrease in the shared fleet indicator is attributed to the ability to promptly attract or return railcars under freight forwarding service agreements (FFS). This is an advantage of this type of sharing of rolling stock, particularly given the substantial fluctuations in transportation volumes throughout the year. It allows the Company to efficiently regulate its fleet.
+200
fitting platforms leased
(3.2 thousand units of leased fleet by the end of 2023)
Possession of railcars through leasing and rent enables the following benefits:
- ensuring timely maintenance of the fleet;
- facilitating transportation that necessitates an OKPO code in the automated data bank of the car fleet system;
- making quick decisions on the usage of rolling stock with no approval of the owner required.
Structure of the total average daily fleet of railcars by type of use
Share in 2023, %
Change 2023/2022, p.p.
Structure of average daily operational fleet under management, units
Operation of rolling stock
Car repair
One of the crucial production indicators in transportation organization is maintaining control over the technical condition of the car fleet, ensuring timely scheduled repairs, and minimizing the number of ongoing uncoupling repairs (TR-2). This is measured by the frequency of uncouplings within a specific time frame.
To minimize scheduled railcar repair expenses, UTLC ERA tracks the repair costs by route and takes measures to optimize expenses. This includes sending railcars to repair facilities that offer the most cost-effective repair services.
In order to reduce the cost of wagon repairs, a decision was made to abandon the scheduled repair of wagons at the JSC "NC "KTZ" test site and, in the event of rejection, send wagons for repairs to the JSCo "RZD" test site.
Repair outages, units
| Repair type | 2021 | 2022 | 2023 | 2022 to 2021 | 2023 to 2022 | ||
|---|---|---|---|---|---|---|---|
| Deviation, absolute | Deviation, % |
Deviation, absolute | Deviation, % |
||||
| Shed repair | 0 | 470 | 1,158 | 470 | 100 | 688 | 146 |
| Current repair | 3,397 | 5,195 | 7,180 | 1,798 | 53 | 1,985 | 38 |
| Total: | 3,397 | 5,665 | 8,338 | 2,268 | 67 | 2,673 | 47 |
Preservation of railcar fleet and reduction of railcar uncouplings
To enhance railcar maintenance efficiency and boost production performance, the following measures were implemented in 2023:
-
A revolving stock of car spare parts was established at Brest-Vostochny station to shorten the average repair time for rejected parts;
-
Disabled railcars from the Brest hub were relocated to other depots for quicker return to operation after uncoupling repair;
-
At Kartaly-1 station, a circulating stock of wheel sets was established, reducing the average time for uncoupling repair of loaded cars to three days;
-
Statistics of car runs after scheduled repairs until the first uncoupling due to the "thin flange" issue were introduced, which allowed a rating of car repair sheds to be formed, determine the average period of flange wear taking into account the specifics of the route; send cars to current repairs based on the actual mileage to reduce the number of uncouplings of loaded cars.
-
Monitoring of the current condition of railcar wheelset flanges was implemented using an automatic wheelset control complex. Based on the monitoring, scheduled preventive uncoupling of railcars and their dispatch for repair with subsequent restoration of the flange thickness to 30 mm on all wheelsets under railcars were performed on the territory of Moscow Railway and Belarusian Railway. After this repair, no railcars were repeatedly repaired because of the "thin flange" issue, which led to a reduction in the number of uncouplings on the territory of the Republic of Kazakhstan and, consequently, to a reduction in the cost of repairs;
The following regulatory documents have been developed to support operational work:
- Regulations on the interaction between UTLC ERA employees and the agent for the organization of loaded car repair at Kartaly-1 station, using the circulating stock of wheel pairs.
- Regulations for the interaction of UTLC ERA employees in organizing container reloading when uncoupling loaded car for current uncoupled repair.
Paperless transportation
Electronic consignment note
Development of transportation using electronic consignment notes in handling international container transportation — pilot export transportation in the Russia/Belarus—China direction.
Currently, UTLC ERA is successfully operating empty fitting platforms using the SMGS electronic consignment note within the EAEU.
In 2023, in collaboration with carriers, UTLC ERA has significantly expanded the number of routes for such transportation services. Ongoing efforts are focused on preparing for pilot shipments of empty containers using the SMGS electronic consignment note, with plans to eventually include loaded containers as well.
Plans include organizing pilot transportation of export cargoes in the direction of Belarus/Russia—China.
Electronic Customs Transit
In late 2023, test shipments were conducted on the Dostyk/Altynkol—Brest-Severny route using electronic customs transit, as per the decision of the Joint Board of Customs Services of the Customs Union of April 7, 2023 (No. 41/14). This initiative aims to streamline the customs transit procedure by eliminating paperwork. UTLC ERA intends to build upon this progress and further advance in this direction.
Digitalization
Digital technologies have emerged as a crucial competitive edge for logistics firms. During the reporting period, several innovative digital solutions were introduced, significantly enhancing the progress of UTLC ERA.
Among these, the digitalization of transit transportation stands out as a key initiative. Leveraging the Company’s collaborative resources, the project paves the way for end-to-end digitalizationof processes across the three countries, allowing for thorough testing of their functionality. This transforms the UTLC ERA project into a "regulatory sandbox".
Enhancing the in-house information system and streamlining internal business processes through automation
In 2023, UTLC ERA further advanced the development of its in-house information system by accomplishing the following:
- finalizing the module for automating mutual settlements and reconciling expenses among transportation participants;
- enhancing the container tracking system, particularly across China;
- automating business processes within the Company’s units, optimizing and refining various system algorithms such as certificate generation, integration with associated systems, application creation, and invoicing procedures, among others.
Development of digital services
In 2023, UTLC ERA introduced a website update featuring enhanced user services, including:
- personal client account providing shipment information;
- chatbot;
- СО2 calculator;
- interactive route map;
- supplier’s/procurement participant’s account.
Chatbot
With the assistance of the chatbot, you can access online consultations, easily locate specific information, check current rates, inquire about transportation regulations, and submit requests to customer or support services.
Interactive route map
The interactive route map enables users to estimate transportation costs for UTLC ERA services based on the container type and size, or submit a request to customer service for personalized consultation.
СО2 calculator
The CO2 calculator allows users to calculate the carbon footprint for different modes of transportation based on the volume of transported cargo measured in TEUs. This calculation is particularly beneficial for companies involved in transit container transportation between China and Europe. Understanding the environmental impact of cargo transportation is crucial for European cargo owners who adhere to ESG principles. With the help of this calculator, freight forwarders collaborating with UTLC ERA can promptly furnish their customers with vital information.
Personal account of a procurement participant
The Procurement section on the UTLC ERA corporate website offers transparent and public access to the list of planned procurement procedures for the current year. All interested companies can participate in these procedures, ensuring transparency and fostering fair competition.
The supplier’s personal account enables participation in the Company’s procurement processes, monitoring the status of bids, seeking clarifications on documentation, and managing submitted bids. This service has optimized the procurement process, making it more accessible and cost-free for potential contractors.
Since the launch of the supplier’s personal account on the UTLC ERA website, 17 procurement procedures have been successfully completed.
Client’s personal account
The new corporate website features a comprehensive client personal account with the ability to:
- track container locations in real-time;
- calculate cargo arrival times;
- monitor order fulfillment;
- audit accounts receivable, along with other functions.
For every customer order, the system provides detailed information on the train:
- train number and index, and container count;
- container numbers;
- current location and status;
- route details;
- remaining distance and estimated date of arrival.
The updated website now includes an interactive map in the personal account section, displaying the location, route, and estimated arrival time of each container. This feature enables more precise planning for container transshipment and movements, accessible online at any time.
Future plans involve expanding the service’s functionality based on client feedback to streamline and expedite the interaction process, providing easier access to the Company’s services.
User feedback on the service update has been positive, with significant improvements seen in key metrics:
-
× 2.5 times
user profiles have grown
-
× 2.4 times
has increased activity
number of logins per period
Data exchange with partners from China
An essential element in the digitalization of international rail container transportation is the ability to exchange legally significant and reliable data and documents with the consignor and carrier in the country of departure.
In 2023, UTLC ERA continued actively seeking data sources, engaging in discussions with partners, and laying the groundwork for electronic data exchange in its services. The Company successfully secured agreements with key partners from China to further advance in this domain.
Financial review
In 2023, the global economy continues to face challenges due to the lasting impacts of events stemming from the COVID-19 pandemic, escalating geopolitical tensions, and the tightening of monetary policies across various countries.
In the reporting year, UTLC ERA managed to sustain its volume indicators at the levels seen in 2021–2022, despite the complex geopolitical and macroeconomic conditions that led to a decline in overall economic activity and freight transportation volumes. Volumes were maintained by expanding the range of routes. Maintaining the customer rate on the base routes at the level of 2022 and measures to attract cargo traffic, as well as to reduce the cost of transportation, allowed the Company to increase its gross profit margin by 1.4%.
In 2023, UTLC ERA’s operations yielded a gross revenue of RUB 55,491 million, which was RUB 86 million lower compared to the previous year, a decrease of 0.2%. The revenue for 2023 is entirely derived from transportation and forwarding services, predominantly in US dollars.
The decrease in revenue is mainly attributed to the shift in volume distribution towards a higher proportion of transportation at a lower rate. This shift is partially mitigated by a 24% increase in the average annual US dollar exchange rate in 2023 compared to 2022 (rising from RUB 68.58 in 2022 to RUB 85.18 in 2023), as the revenue is denominated in dollars.
The cost of sales for UTLC ERA in 2023 totaled RUB 47,541 million, which is RUB 223 million, or 0.5%, lower than the previous year. The cost of sales in 2023 is entirely attributed to expenses for the organization of transportation and forwarding services. The reduction in the cost of sales is mainly a result of cost optimization measures implemented.
Revenue of UTLC ERA for 2021-2023, mln RUB
Cost of sales of UTLC ERA for 2021-2023, mln RUB
Dynamics of key financial indicators for 2021–2023, mln RUB
| Name of indicator | 2021 | 2022 | 2023 | Deviation 2023/2022, absolute |
Deviation 2023/2022, % |
|---|---|---|---|---|---|
| Revenue | 64,851 | 55,577 | 55,491 | −86 | 146 |
| Cost of sales | −56,890 | −47,765 | −47,541 | 53 | 38 |
| Gross profit | 7,962 | 7,812 | 7,949 | 137 | 1.8 |
| Gross profit margin, % | 12.3 | 14.1 | 14.3 | 0.2 | 1.4 |
| Management expenses | −1,168 | −1,351 | −1,499 | −148 | 11.0 |
| Profit on sales | 6,793 | 6,461 | 6,450 | −11 | −0.2 |
| Return on sales, % | 10.5 | 11.6 | 11.6 | 0 | 0 |
| Interest receivable | 96 | 300 | 274 | −26 | −9 |
| Interest payable | 0 | −256 | −362 | −105 | 41 |
| Result of other income and expenses | −1,062 | −408 | −2,116 | −1,708 | 418 |
| Profit before taxation | 5,827 | 6,097 | 4,246 | −1,851 | −30.4 |
| Current income tax, deferred tax movements, other | 1,172 | −1,282 | −1,031 | 250 | −19.5 |
| Net income | 4,655 | 4,815 | 3,215 | −1,600 | −33.2 |
| Net profit margin, % | 7.2 | 8.7 | 5.8 | −2.9 | −33.3 |
| EBITDA | 6,884 | 6,123 | 6,500 | 377 | 6.2 |
Structure of cost of sales in 2023, %
In 2023, payments to infrastructure owners, accounted for 65.6% of the cost of services. The total volume of infrastructure payments in 2023 decreased by 13% compared to 2022, primarily due to an increased focus on joint services with shareholders’ subsidiaries and affiliates to attract additional volumes. These partner services now incorporate infrastructure payments within their costs.
Another significant expense, representing 12.1% of the cost of sales, is attributed to the management of well railcars. This includes expenses for their operation and the depreciation of the right of use asset (platforms under financial lease agreements). The rise in fleet attraction and lease expenses can be attributed to the 24.2% increase in the average annual exchange rate of the US dollar since most contracts are denominated in USD. The growth in operating expenses is linked to planned maintenance of leased railcars and an increase in current repairs.
Gross profit of UTLC ERA for 2021–2023 with profitability, mln RUB
7,949 million RUB
the gross profit by the end of 2023
which represents a RUB 137 million increase, or 2%, compared to the previous year
The rise in gross profit margin for 2023 is attributed to a more significant reduction in the cost of sales, driven by cost optimization measures.
Management expenses
The year-over-year increase in management expenses in 2023 can be primarily attributed to the growth in personnel expenses and advertising and brand promotion expenses.
Personnel expenses accounted for 74.4%. The increase in personnel expenses in 2023, amounting to 6%, was driven by the rise in average headcount, indexation of the labor remuneration fund (LRF), and adjustments in salaries and personnel rotation throughout the year.
The rise in expenses associated with advertising and brand promotion is a result of the reinstated international trade shows and similar events that were canceled in 2022 due to the geopolitical environment and COVID-19 restrictions.
The decrease in consulting costs can be attributed to the reduced need for consultants in 2023 compared to the additional engagement of consultants in 2022.
Structure of management expenses in 2023, %
1,499 million RUB
management expenses for UTLC ERA by the end of 2023
+11%
Structure of cost of sales, mln RUB
| 2021 | 2022 | 2023 | |
|---|---|---|---|
| Indicator | % | % | % |
| Infrastructure payments (railway tariff) | 78.4 | 74.9 | 65.6 |
| Fleet expenses | 9.4 | 9.7 | 12.1 |
| Sharing platforms | 5.1 | 4.8 | 5.2 |
| Railcar rent | 2.6 | 3.8 | 5.1 |
| Lease expenses as part of cost of sales | 1.5 | 0.6 | 0.7 |
| Operating expenses | 0.2 | 0.6 | 1.1 |
| Other expenses | 12.3 | 15.3 | 22.3 |
| Total | 100.0 | 100.0 | 100.0 |
Profit on sales
Profit on sales of UTLC ERA for 2021–2023 with indication of profitability, mln RUB
6,450 million RUB
UTLC ERA’s profit on sales for 2023
RUB 11 million or 0,2% decrease compared to 2022
EBITDA
EBITDA with profitability, mln RUB
6,500 million RUB
UTLC ERA’s EBITDA for 2023
+RUB 377 million or +6.2% compared to the previous year
EBITDA is computed based on Form 2 of RAS financial statements as profit before accounting for depreciation, interest, and foreign exchange variances among other income and expenses.
Net income
Net profit with profitability, mln RUB
3,215 million RUB
UTLC ERA reported a net profit in 2023
RUB 1,600 million or 33% decrease compared to 2022
This decrease in net profit can be attributed mainly to the negative balance of other income and expenses amounting to RUB 2,116 million. The negative balance was primarily influenced by the revaluation of foreign currency liabilities due to the weakening of the ruble exchange rate in 2023.