NLMK Group сuts transportation costs

Expanding the range of cargo handling operations to include large-tonnage containers is in line with the Russian Railways strategy for the comprehensive development of the domestic container business. The project will enable the company to cut its transportation costs; optimise logistics operations; and improve the quality of service offered to customers.

The Novolipetsk railway station (NLMK station) was opened following an order issued by the Ministry of Transport of Russia which granted NLMK the right to execute operations as stipulated in Items 11N and 12N of the Tariff Guide. This means that the station has expanded its large-tonnage container operations from containers with a gross weight of 30 tonnes up to 41 tonnes.

Sergey Likharev, NLMK Group Vice President for Logistics, said: ‘The ministry approval was the result of a serious preparatory effort at NLMK’s key transport hub and container site. We have created an infrastructure that will enable the company to increase the volume of its container shipments, thus boosting the commercial efficiency of its logistics and improving the level of service offered to customers. Instead of using railway cars, transporting electrical steel in containers will cut the cost per tonne of finished product by 2,000-3,000 rubles depending on the destination; whilst decreasing the chances of goods being damaged during the process of transportation and handling.’

Novolipetsk began implementing the new steel product delivery scheme in 2014, with coils being loaded into containers directly on-site. Containers are used to transport dynamo and transformer steel coils; with container deliveries currently accounting for 44% of total electrical steel orders. The expected economic effect in 2015 from the reduction of transportation costs that the new scheme has enabled is 70 million rubles.

NLMK is implementing other projects aimed at reducing logistic costs. For instance, together with Freight One (PGK), the largest rail freight operator in Russia, NLMK is implementing a pilot project for outsourcing the internal logistics at NLMK Long Products Division in the Urals region.