Financial and Economic Performance of the Russian Railways in the Context of Reform

Abstract

The performance of companies in the real sector of the economy is highly relevant for the economic development of the country. The Joint Stock Company “Russian Railways” (the JSCo “RZD”) occupies a special place in the Russian economy, since it does 45% of the total cargo turnover and more than 25% of passenger traffic in the country. The aim of the article is to identify trends in key financial and economic indicators of the Russian railways in the context of the structural reform of the industry. The objective of the study is to develop a methodology for the long-term management of the financial and economic performance of the railways, as well as recommendations for its sustainable growth. The authors analyzed the financial and economic performance of the JSCo “RZD” for 15 years. They used the analysis of time series, logical and analytical method, as well as benchmarking — comparative analysis based on reference indicators. It is shown that with a low but positive profitability, the company’s financial and economic situation can be improved. The authors reviewed the dynamics of the operating costs ratio, whose value has an excessively high level in the JSCo “RZD”. To identify ways to achieve the optimum level of operating costs ratio, an analysis of financial and economic indicators of the US railway companies was conducted. The factors contributing to the systematic improvement of the operating costs ratio were revealed. Among them are: increase in the JSCo “RZD” market opportunities and their competent use based on flexible adaptation to market conditions and changing customer needs; attraction of private and private-state investments. On this basis, the following actions are proposed for improving the financial and economic indicators of the JSCo “RZD”: monitoring of the operating costs ratio; developing a scenario program to improve the long-term competitiveness and effectiveness of the Russian Railways for the period of 2025–2035. The materials of the article are of practical importance and can be used by public authorities, transport companies, as well as for the educational purposes.

Keywords

• railway transport
• economic and social development
• financial and economic sustainability
• long-term dynamics of profitability
• investment in transport infrastructure
• macroeconomic trends
• operating costs ratio
• state economic policy
• structural reform in railway