During 2013, the Company's efforts were focused on the development of effective measures to provide balanced financial activity in the face of reduced load volumes and the worsening structure of transported goods. The issues of risks and adjustment of investment budget and financial plan of Russian Railways for 2013 were placed for the consideration of the Board of Directors of Russian Railways, where the proposed approaches were completely supported and approved.
The main reason for cost minimisation in 2013 was the decrease in transportation volumes and the resulting loss of revenues. Among the other reasons are:
- A considerable increase in tax burden (the overall increase in types of transportation activities is estimated at RUB 9.7 billion), the repeal of tax benefits on railway transport assets (an increase of RUB 6.8 billion), and the rise of premium rates to the Pension Fund of the Russian Federation (increase of RUB 2.9 billion);
- An increase in prices for diesel oil fuel due to additional forecasts made by the Ministry of Economic Development and Trade of the Russian Federation (increase in expenses of RUB 6.9 billion).
In 2013 the Board of Directors of Russian Railways refined the parameters of the Company’s financial plan twice. As a result, the total amount of cost minimisation on types of transportation activities in comparison with the base plan was RUB 98.8 billion, including the cost of:
- Decreased transportation volumes – RUB 14.3 billion;
- The optimisation of technological processes – RUB 48.8 billion, including:
- Optimisation of work with railcar park ;
- Optimisation of locomotive hauls, improvement of tight-run profile, provision of movement and admission of trains to ports and border-crossing points, introduction of park control technologies at amalgamated grounds, etc.
- The temporary freezing of funds not involved in rail traffic;
- The optimisation of price policy;
- A reduction in expenses due to more rigid specific power requirements of fuel and power resources consumption on haulage operations;
- The placement of freight locomotives and shunting engines into reserve (cost savings due to the reduced working hours of electric and diesel locomotives in operational condition without foot-plate staff, as well as a reduction in the number of technical support staff for locomotives);
- The optimisation of costs for the services of hosting, cleaning and transportation services companies;
- Optimisation of operating modes and traffic routes of automobile transportation;
- A reduction in material and technical resources consumption due to tougher expenses norms;
- The optimisation of costs for staff training due to the introduction of distance learning;
- The optimisation of other costs (consulting and information services, archival and bindery services, office supplies, forms and blanks, programme products, etc).
- Administrative cost minimisation – RUB 32.7 billion, including RUB 26.1 billion of deferred expenses for capital repairs of rail infrastructure objects;
- Reduction in expenses for managerial staff labour compensation funds by RUB 3.4 billion.
In the reporting year, the challenging financial and economic environment led to Russian Railways taking severe measures to economise on all types of costs. For the first time, a part-time work pattern was implemented by Russian Railways as a coercive measure based on the necessity of further cost minimisation due to a continuing decrease of transportation volumes and consequently reduced income.
This measure did not extend to the employees working directly on the railways. The implementation of this measure has mostly affected administrative personnel.
Taking into account social responsibility and the necessity to retain qualified personnel, Russian Railways was lucky to avoid the mass personnel base layoff originally foreseen.
All social obligations of the Company's employees in the current year were implemented on a full scale.