The Russian government has tasked the country's Economic Development Ministry with classifying steel mills as continuous production enterprises and developing measures to ensure timely rail deliveries of raw materials and shipping of output, according to information on the website of the prime minister.
In January, the time required to ship ferrous metals by rail from plants to Novorossiisk port increased by 50%, a source at one of the major mining and steel companies told S&P Global Commodity Insights.
The source said the steel industry expects a gradual recovery to normal freighting times this month.
"Metals are not the only cargo affected by the slowdown in rail freight," another industry source familiar with the shipping crunch said. "The issue is not that critical for metals; it is much worse for moving raw materials, such as coal, to the ports."
Russia's exports of ferrous metals are being hampered by the situation at the approaches to ports; in Novorossiisk, in particular, metals are simply not being accepted, Andrey Savelyev, deputy director of the metallurgy department of the industry ministry, said at a meeting with the Federation Council at the end of January.
He cited new rules for the turnover of empty freight cars introduced this year on the Russian Railways network as the main reason for the management issues.
"Also, the rules that regulate access to the railway infrastructure should not put steel mills in last place," he said.
A Russian Railways representative told Commodity Insights: "No new rules have been introduced, and Russian Railways does not restrict the supply of freight cars for ferrous metals cargoes."
Challenges in freight car management
The representative cited a "backlog of abandoned empty freight cars, the owners of which are in no hurry to remove them from tracks near ports and enterprises," which caused congestion on the tracks and an increase in delivery times.
Russian Railways "does not have the right to move them without an application by the owners," the representative said.
There are around 1,500 freight car owners, each with different orders. Some carry raw materials or ore, and if they do not have orders for subsequent transport, they leave their cars on tracks at the approaches to end-user enterprises or at the nearest station after unloading, since making an application to the Russian Railways does not come without cost. As a result, some of the busiest tracks become clogged up, making it impossible to supply cars for products awaiting exports, according to the representative.
In 2023-24, Russian Railways repeatedly urged the Ministry of Transport to amend rules for displacing empty cars that are not claimed for loading, the representative said. This would allow for a more responsive approach to the need for cars and, if necessary, clear the tracks of unclaimed cars. However, the amendments are yet to be approved.
"So far, the accumulation of empty cars remains a problem," the Russian Railways representative acknowledged. "We are working on it, convincing owners to request the removal of cars from tracks where they most disrupt traffic."
Russian Railways' ferrous metals throughput in January fell 9.5% year over year to 4.7 million mt. This figure was also 13% lower than the 5.4 million mt transported by the network operator in December, according to its data.
"The problems facing Russian Railways have become systemic -- stemming from a decline in the quality of traffic control due to personnel shortages, as well as a lack of supervision over the corporation, which now operates as an independent entity funded by the budget," said the industry source, adding that these circumstances have already hurt the operation of the rail network.
