Uralvagonzavod (UVZ) is preparing its market maneuvers
30.05.2012 — Analysis
The reform of the Russian rail industry significantly slowed the modernization of shunting locomotives in Russia. The major customer (the Ministry of Rail Traffic) is now gone, and the disparate group of industrial firms that are left are unable to agree on the parameters of the locomotive of the future. As this columnist for RusBusinessNews has determined, the market needs locomotives that are inexpensive to buy and operate. Because these can't be found, a number of engineering firms in the Urals have begun manufacturing traction engines that are able to carry out shunting operations. Experts say that these will deprive locomotive producers of some of their market share.
The Russian market for shunting locomotives is fairly complicated. Despite the significant percentage of aging locomotives (up to 85% by some estimates) that are used by industrial rail-transportation companies, very few new units are being manufactured. According to data from the Institute of Natural Monopolies Research (IPEM), in 2008, the best year before the economic crisis, 267 shunting locomotives were built in Russia. In 2009, production was reduced by 50%, and orders from manufacturers fell to almost zero.
Today the market is trying to return to where it used to be, but it's not going well. Most owners of rail-transportation companies prefer to extend the service life of their old locomotives. Nor is Russian Railways, OJSC placing significant orders. In 2012 the company plans to buy 45 locomotives, some of which are a model that dates back to the Soviet era. According to IPEM's estimations, more than half of the shunting locomotives used in Russia are obsolete, but factories have been slow to produce new ones. This phenomenon is explained by the fact that before the railway reforms, the only customer for shunting locomotives was the Ministry of Rail Traffic, and now many rail-transportation companies are completely unable to issue consistent technical specifications for a new unit.
Artem Ledenev, the director of the Transmashholding's external communications department, claims that there is a demand for shunting locomotives, but it is not uniform. Each customer has a different job for which a locomotive has to be made.
Мanufacturers say that a new locomotive costs at least 45 million rubles, and it's 20 million to overhaul an old one. This is a lot of money for most industrial firms. In addition, there is no reason for many of them to buy a shunting locomotive. Experts have determined that for businesses that do not transport much freight, using an 800-1,200 hp locomotive results in high transportation expenses. An expensive unit that moves 5 to even 20 rail cars per day is a completely unjustified expense, because the majority of its time (up to 85%), it is simply sitting idle.
These calculations from experts have prompted manufacturers to seek other solutions. Industry is now looking at road locomotives that have 160-200 hp engines and are capable of hauling ten loaded cars. The market now offers several varieties of these units, which, as a rule, are designed on the basis of automobile technology. The Uralvagonzavod research and production company, OJSC has built its own traction engine (the TMV-1 shunting vehicle) based on the design of a tractor.
Experts say that the costs of maintaining traction rail fleets is 1.5 to 2 times less if at least 500,000 tons of cargo are transported per year (25-30 cars per day). Andrei Shlensky, the deputy general director of Uralvagonzavod, claims that using four TMV-1 shunting vehicles allowed the company to avoid purchasing two locomotives and to send one locomotive in for an overhaul.
But a number of problems have been identified with the use of road locomotives. According to Aleksandr Davydov, the head of one of Uralvagonzavod's projects, units that are designed on the basis of a tractor or automobile, are quite unstable transversely and are insufficiently maneuverable when installed on the track. This is precisely why they decided not to release the road locomotive based on a tractor design, instead, at the recommendation of Russian Railways, OJSC, creating the TMV-2 with a rigid frame and two coupling mechanisms, making it resemble a shunting locomotive not only in function, but also in appearance.
Leonid Zelepukhin, the director of the TMV-2 project, claims that under ideal circumstances, the engines are able to pull more than 15 cars. In addition to shunting, they could be used to resolve problems on the railroad tracks or for specialized or emergency repair operations, etc. The manager suggests that this versatility will allow the engine to become an effective alternative to a shunting locomotive.
Anton Ledenev of Transmashholding notes that road locomotives will not be able to replace locomotives completely, but they might take some market share and find a niche in the shunting market. Uralvagonzavod's clients might be metallurgical, refining, or food-processing companies, which have their own access roads but move a very small amount of cargo, making it pointless for them to devote resources to railroad repair work.
Experts still find it difficult to say what percentage of orders Uralvagonzavod might try to claim. But judging by the state of locomotive construction in Russia, that niche might be quite large. The comments on the specialized Parovoz.com forum suggest that the shunting locomotives made by the country's leading locomotive factories are of very low quality. But the biggest problem is something else entirely. New locomotives consume significantly more fuel and cost far more to repair and maintain than did their predecessors that were designed 40 years ago. Of course these new products are more expensive. The prices in the transportation engineering industry continue to rise due to regular increases in the cost of metal and component parts.
It's clear that if UVZ offers the TMV-2 at an affordable price, the company will be able to gain a solid foothold in the market for railway shunting vehicles.
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