NLMK cuts 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.
About NLMK Group
NLMK Group is the largest steelmaker in Russia and one of the most efficient in the world. NLMK’s metal products are used in various industries, from construction and engineering to the manufacture of power-generating equipment and offshore wind turbines.
NLMK's production assets are located in Russia, Europe, and the United States. The Company’s liquid steel production capacity is over 17 million tonnes per year, of which about 16 million tonnes are produced in Russia.
NLMK has the most competitive cash cost among global manufacturers; and one of the highest profitability levels in the sector. The company generated $4.4 billion in revenue; $1.1 billion in EBITDA; and a net profit of $491 million in H1 2015.
NLMK’s ordinary shares are traded on the Moscow Stock Exchange (ticker symbol: NLMK), and its global depositary shares are traded on the London Stock Exchange (ticker symbol: NLMK:LI). For more information about NLMK Group, please visit www.nlmk.com
About Novolipetsk (NLMK’s main production site in Lipetsk)
Novolipetsk is the main production site of NLMK Group, Russia’s leading manufacturer of steel and high value added rolled products, and one of the most efficient steelmaking companies in the world. Novolipetsk is the nucleus of NLMK Group’s single production chain, with assets in Russia, the EU and the USA. The steel production volume of the Lipetsk site is approximately 18% of all steel produced in Russia, and approximately 80% of all steel products produced by NLMK Group.
Novolipetsk’s high-quality steel products are used in various strategically important industries, from construction and engineering to the manufacture of power-generating equipment and large-diameter pipes. Novolipetsk produced 12.56 million tonnes in 2014. This represents an all-time high over the 80 years of NLMK’s history. This record performance was supported by productivity improvements throughout the value chain of the site. With capacities running at 100%, production grew by 1.3% compared to 2013.
*World Steel Association (Worldsteel) rating