Russia's Federal Fisheries Agency and Russian Railways looking into soft charges for shipping seafood by railway

February 12, 2009 16:17

Russia's Federal Fisheries Agency has urged Russian Railways plc to introduce special transport charges with a 50% discount for seafood shipments from the Russian Far East to the country's European part, reports ( with reference to Gudok.

More specifically, the issue of soft rates is now also studied by the Federal Service on Tariffs and Russia's Ministry of Agriculture. According to the Fisheries Agency, the soft tariffs should be introduced for distant fishing areas, namely both for the Russian Far East and the country's North Fisheries Basin (capital Murmansk).

The Fisheries Agency insists that so far it is not profitable to transport fish from Vladivostok to Moscow with the delivery cost (including landing and storage) amounting to RUB9.00 per 1 kilo of fish, of which RUB6.00 per kilo is paid as railway charges. Together with the transportation costs, final prices of Pacific fish on the markets of European Russia are high enough to make the products less competitive as compared to imported fish and decreased end prices for Pacific herring, for instance, would probably enable the species to compete more actively with Atlantic herring imported from Norway, say Moscow officials.

On its part, the Russian Railways agrees that the railway tariff does account for 76.4% of all the delivery costs including transshipment, storage, etc. However, in absolute figures the delivery cost of 1 kilo of pollock for instance equals RUB4.96 (of which RUB3.78 for railway transportation), while wholesale prices amount to RUB30.00 per kilo at port, RUB54.00 per kilo in Moscow's wholesale markets and RUB88.00 in Moscow's retail network, thus tariff content in the product's end price does not exceed 5%. Besides, introduction of a 50% discount for railway tariffs for fish transportation from the Russian Far East would cause a loss of ca.1.5 billion RUB for Russian Railways.

Some industry insiders agree with the above opinion and think that the reduction of tariffs cannot push the prices greatly down. The measure may lead to a decline of consumer fish prices by RUB3.00-5.00 per kilo and in order to secure a strong decrease of end prices reductions should touch all the logistics costs from vessel to consumer, including those for coldstorage services. Actually, coldstorage services have already been decreased by 25% due to declining demand, according to Alexey Totunov, leader of Moscow-based seafood wholesaler Talex Group owning a network of supermarkets in Moscow and Saint Petersburg.

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