RUSSIAN Railways (RZD) is lobbying the government to introduce ship-or-pay terms into contracts with freight customers.
Over the past six months, 127.2 million tonnes of contracted freight shipments have not been honoured by RZD customers, resulting in a substantial loss of Roubles 200bn ($US 2.5bn) in revenue. RZD says that the lost income could have funded infrastructure projects, including freight terminals.
In June alone, the total amount of contracted freight not carried on the Russian network totalled 22.4 million tonnes. Although this is a problem for RZD nationwide, it is concentrated on freight flows in the south of the country.
RZD has now issued a public appeal to the federal authorities to introduce ship-or-pay terms into freight transport contracts. These terms, already adopted in other countries, notably the United States and Germany, commit freight customers to moving an agreed volume of cargo. If they fail to do so, they are still liable for the agreed amount.
While RZD has tried several times to introduce such terms, the government has shied away from them, not least because RZD does not guarantee to transport freight on any particular route. In addition, the move is seen as detrimental to the financial health of freight shippers, particularly coal producers, many of which are currently struggling to survive.
According to the Ministry of Energy, around 33 coal mines across the country are clearly approaching insolvency, with production of approximately 170 million tonnes of coal now at risk. Under current contractual agreements with RZD, coal producers have the right not to ship freight when this is expected to result in a financial loss.
