In October 2024, Russian Railways announced a significant increase in freight tariffs. According to the monopoly, this step became necessary to finance large infrastructure projects. The expected indexation may change market dynamics and create new logistical challenges for shippers.
Details of the new increaseRussian Railways is considering two indexing options: a gradual increase of 3.6% from November 1 and a subsequent increase of 13% from January 2025 (totaling 17.2%), or a one-time increase of 22.7% from the beginning of the year. These measures are aimed at attracting 1.1–1.8 trillion rubles for the renewal of the rolling stock and infrastructure development.
Comparison with previous years shows that Russian Railways regularly adjusts tariffs to compensate for inflationary risks. For example, in 2022, indexation occurred twice: first by 6.8% at the beginning of the year, and then by 11% from June, which led to a total increase of 18.6% compared to 2021. In 2023, tariffs increased by 10.75%
Initially, it was expected that the standard formula «inflation minus 0.1%» would be applied in 2024. However, to ensure funding for the investment program, the monopoly proposed a new calculation model, including the cost of fuel, materials and electricity, which should additionally bring the company about 30 billion rubles a year.
The problem of empty containers may worsenExport destinations may be particularly affected by the changes, as benefits on coal exports are planned to be canceled and rates for container transportation increased. Companies are already facing the problem of empty containers that remain in ports due to a lack of export cargo. Returning empty boxes is unprofitable, and rising prices may exacerbate this problem, forcing shippers to look for alternative delivery methods, such as delivery to ports by road. If carriers feel even more of a demand surge, there will be more offers, which in the future may adjust rates downwards.
There is hopeIn any case, railway freight rates will be significantly lower than road rates, so there will be no mass departure of importers to alternative modes of transport. But the outflow may be sufficient to relieve congestion in the network in the Far East by the middle of 2025. It is also worth noting that until the New Year, the season is the busiest, which will spur FEA participants to urgently place orders with manufacturers in China and India to meet the deadline before the adjustment.
Another positive point: if additional fees do lead to the implementation of programs announced by Russian Railways, there is a chance of expanding the BAM. But keep in mind that we are talking about a prospect in 5-10-15 years, not earlier.
ConclusionsWe expect final decisions from the monopoly on the tariff method, plan the supply of goods in advance and export goods to the maximum before the New Year. Over the past 4 years, the market has coped with difficulties, so we adapt, work and recommend carefully selecting counterparties on the Asia-Russia-Asia routes.