Freight rail transportation or operation of rolling stock is the key revenue driver of the Group. Operation of rolling stock means railway delivery of cargo using rolling stock owned or leased by the Group with corresponding infrastructure and locomotive traction services outsourced from OAO Russian Railways. In the case when cargoes are transported in block trains*, subsidiaries of Globaltrans can use own locomotives.

Operation of general-purpose gondola (open top) cars

General-purpose gondola (open top) cars are used to transport a variety of cargo, including ferrous metals, coal and construction materials. Efficient management of gondola (open top) cars is a cornerstone of the Group’s business model and drives the Group’s profitability and competitive advantage. At the end of each trip, after the customers’ cargo has been transported to its destination, the empty railcar needs to be routed to the next destination for new loading. On such empty journeys, the tariff for usage of railway infrastructure and locomotive traction becomes a direct cost for the Group. To reduce the number of empty journeys, the Group manages its cargo destinations and routes so as to match a customer order for rail shipment of cargo to a particular destination with another cargo shipment order from that destination to the point of origin, or to another destination where yet another customer shipment would originate, and so on until the rolling stock returns to its point of origin. The matching of routes and destinations creates efficient ‘‘route loops’’, in which the Group’s rolling stock carries cargo on each leg of the journey, thus enhancing the commercial utilisation of the Group’s rolling stock fleet and driving revenue and margin.

The ‘‘looping’’ of routes is made possible by the presence of members of large industrial groups and their raw material suppliers among the Group’s key customers, with production facilities, origins of supply and cargo destinations in multiple locations.

Operation of rail tank cars

Destination management and route optimisation as described above is primarily applicable to general-purpose rolling stock. In the case of specialized rolling stock, such as rail tank cars, optimisation opportunities are limited by the specific nature of rail tank car logistic patterns (fewer points of cargo origination and destination).

Use of owned locomotives and block trains*

Another important element in the Group’s freight rail transportation business is the use of block trains*’. Consisting only of the Group’s rolling stock bound for the same destination, these trains, in contrast to trains consisting of rolling stock operated by various parties and/or heading to various destinations, do not require the time-consuming attachment and detachment of rolling stock at stations, thus improving delivery time and increasing railcar utilisation and overall efficiency.

On some routes, the Group uses its own locomotives for the ‘block trains*, which allow it to provide a more competitive service to clients by offering better delivery times and turnover of railcars and greater reliability in terms of providing railcars for on-time dispatching.

_{*Block train means a train comprising of only rolling stock operated by a single company which is bound for the same destination.}