People as the Foundation
ANNUAL REPORT FOR 2022
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History
clear history

UTLC ERA. Who are we?

Joint Stock Company UTLC ERA (hereinafter referred to in this report as UTLC ERA) is the largest transit container traffic operator on the China–Europe–China route via Russia, Kazakhstan and Belarus
Despite the 2022 events, we have been actively developing in many areas, expanding our traffic route map, increasing the share of import services, investing in human capital assets and environmental initiatives.
parallax-trains-about-big
import traffic volume growth
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Total export traffic growth
UTLC ERA share in China–Europe–China transit container traffic in 2022

New horizons

UTLC ERA is focused on China–Europe–China transit traffic which is still in high demand. However, new benchmarks were set in 2022: active development of export traffic from Belarus and Russia to China, and import traffic from China to Russia.

Company Profile

Joint Stock Company UTLC ERA is the first and only integrated logistics project in the Eurasian Economic Union (EAEU). This project brings together the resources and capabilities of three countries, specifically Russia, Kazakhstan and Belarus, which helps achieve the synergy of interests and create value for the economy of each country participating in the project.

Established in 2018 as a result of JSC UTLC reorganization, UTLC ERA acts as the transit container service operator and transports cargoes by regular container unit trains on the China–Europe–China route via Russia, Kazakhstan and Belarus.
Three founders hold parity stocks of shares in the authorized capital: Joint Stock Company "Russian Railways" (JSCo "RZD"), Belarusian Railway State Association (Belarusian Railway) and Joint Stock Company “National Company “Kazakhstan Temir Zholy” (JSC “NC “KTZ”).
,
billion
Worth of goods transited in 2022
electrical devices and communication equipment
mechanical equipment and machinery
clothes
motor vehicle equipment and spare parts
,
THOUSANDS TEUs
Transported by UTLC ERA in 2022 in all services
,
Share of the total trade value between China and Europe in 2022

Our mission

Our mission

Develop EAEU transit potential by implementing high-tech logistics services that require an aligned policy to be adopted by railways and regulatory authorities in the 1,520 mm track gauge regions.

Ten achievements in 2022

Rapid development of export and import services
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Exponential growth in export from Belarus
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First contract with payments in Chinese yuans
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Pilot full-length refrigerator trains dispatched on the China–Russia route
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Cooperation agreement with Republican Unitary Enterprise “Digital Development Center” under the Ministry of Communications and Informatization of the Republic of Belarus
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New Silk Road Exhibition in Astana supported by UTLC ERA
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Environmental initiatives implemented with our participation: Kazakhstan — a tugay woodlands restoration project in Ili-Balkhash, Russia — a bison population restoration project in North Ossetia
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A finalist for the Movement Formula Award nominated in the Best Freight Logistics Solution category
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UTLC ERA ranks among top 400 largest Russian companies according to Expert RA
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UTLC ERA General Director is listed among 250 best top managers in Russia (according to Kommersant Publishing House)
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About this Report

The annual report discloses the details of UTLC ERA’s activities.
The report is based on the information available as of its development date. The document contains the overview of our company’s performance for 2022, as well as:
Performance profiles in 2020 to 2022. The financial performance has been calculated on the basis of the Russian accounting standards and the company’s accounting policy effective in the corresponding reporting periods and is confirmed by the auditor’s opinion.
The forecast statements, which reflect UTLC ERA management’s expectations regarding its future performance and financial standing. These statements depend on the circumstances, which may or may not occur in the future, and are highly uncertain. The company does not guarantee that the forecasts will correspond to the actual performance. UTLC ERA is not liable for any potential losses related to the decisions that rely on these forecast statements.
An important note: apart from the formal information to describe UTLC ERA’s operations, the Annual Report may contain the data obtained from third parties. Sources of these data are indicated in the report. Unless otherwise expressly stipulated in the laws, UTLC ERA does not undertake to distribute or publish any updates or amendments to the forecast statements to incorporate any changes in the expectations or any new information and subsequent events, conditions or circumstances.
The Annual Report was reviewed by the Audit Committee under UTLC ERA Board of Directors (Minutes No. 24 dated 15.05.2023)
The report is provisionally approved by UTLC ERA Board of Directors
(Minutes No. 64 dated 25.05.2023)
The report is approved by UTLC ERA Annual General Meeting of Shareholders
(Minutes No. 22 dated 30.06.2023)
The authenticity of the information contained in the Annual Report is confirmed by UTLC ERA Audit Commission

Message from the General Director

Alexey Grom
General director
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appeal-grom-mobile
Alexey Grom
General director
Alexey Grom
General director
Dear shareholders, customers and partners,
I am glad to present to you the Annual Report of UTLC ERA for 2022.
The global trends and the recent events have significantly influenced our company’s production and commercial processes. As a large player in the Eurasian traffic service market, we are constantly seeking the best logistics solutions for our customers, partners and shareholders. 2022 was no exception.
The final performance indicators shown in our annual report clearly demonstrate that UTLC ERA has successfully addressed the new challenges in the past year and, in spite of multiple pressures and uncertainties, has almost reached the record high indicators of 2021, both in terms of traffic volumes and financial performance.
A significant achievement was also the development of the new routes within the EAEU, which helped completely make up for the declining China–EU–China transit volumes in 2022.
I would like to highlight that our baseline model has not changed, and UTLC ERA remains focused on promoting its services on the China–EU and EU–China routes. To this end, we coordinate with our shareholders to improve the technological aspects of our services and to develop infrastructure for future growth.
We have a lot of exciting and relevant tasks for 2023. We have no time to take a break. We keep creating favorable conditions to strengthen our railway transit bridge that connects many countries, a vast number of companies and millions of people on the Eurasian continent.
I would like to thank everyone for their successful efforts in 2022 and wish all of us, prosperity and success in 2023!
On behalf of UTLC ERA team, Respectfully yours,
Alexey Grom

Event Calendar for 2022

January

  • Participation in the development of the new customs clearance procedures for transit via Kaliningrad Region

March

  • Participation in the international economic forum of CIS member states

  • Development and approval of the “containerization” technology to be supplied to China

  • Finalization of agreements with Chinese container fleet owners on loading of empty containers arriving from EU in Belarus and Russia “without restrictions”

In Q1, the company’s geography was expanded by:

+4

locations

+44

routes

April

  • Execution of the first contract for the company’s services to be paid in Chinese yuans

  • Participation in the exhibition and business program at TransRussia 2022

  • Dispatch of the first full-length refrigerator train from China to Russia

May

  • Meeting of CCTT China–Europe–China Task Force chaired by A. Grom, Company’s General Director

June

  • Execution of the contract for supply of 1,000 rail cars

  • Participation in St. Petersburg Economic Forum

  • Participation in the pilot dispatch of a container train via the Eastern branch of the North-South International Transport Corridor as a 2PL freight operator

  • Opening of The New Silk Road: #time, #space and #existence exhibition (with the support of UTLC ERA) in Nur-Sultan

  • Initiation of the tugay wooldland restoration project in Ili-Balkhash state natural reserve, Kazakhstan (with the support of UTLC ERA)

In Q2, the company’s geography was expanded by:

+12

locations

+60

routes

July

  • Discussion of the transportation industry and transit situation at the meeting of Prime Ministers of Russia and Kazakhstan in Yekaterinburg

  • Renewal of cars traffic from the Netherlands to China

September

  • UTLC ERA General Director ranked among Kommersant’s 250 Best Top Managers in Russia

  • Participation in TransLogistica Kazakhstan exhibition and business program

  • Presentation during the business program of The 2nd "Belt and Road" Land-Sea Intermodal Transport Corridor Cooperation Forum and China-Europe Railway Express and Multimodal Transport Summit (China)

In Q3, the company’s geography was expanded by:

+6

locations

+51

routes

October

  • Participation in Integration Business Forum and in Made in Russia Forum

  • UTLC ERA confirmed its status as one of the largest Russian companies (according to EXPERT RA) and rose to the 305th position in the rating (in 2021, the company was rated 323rd)

November

  • Participation in the business program at Transport Week 2022

  • Nomination of the joint project of UTLC ERA and a partner for the Movement Formula Award in the Best Freight Logistics Solution category (the project was included in the short list of nominees)

December

  • The geography of cargo origination/termination locations expanded due to cargoes from Vietnam, Malaysia, Indonesia and other Asian countries

  • The range of transported cargoes expanded due to supply of new goods under the environmental agenda: a full-length train of 50 and 40 feet containers loaded with electric vehicles was dispatched on the Chengdu–Malaszewicze route for the first time in the company’s service

  • Participation in the business program at TRANSTEC 2022

  • Participation in the meeting of the Transport Business Dialog of the Commonwealth of Independent States

  • Participation in the closed-door round table meeting entitled PRO//Motion. 1520 – 2022 RESULTS held by Gudok Publishing House

In Q4, the company’s geography was expanded by:

+10

locations

+78

routes

Key Performance Indicators

UTLC ERA's share in China–EU–China transit container traffic

trains

Number of container unit trains

Total export traffic growth

TEUs

Traffic volume

TEUs

Export traffic volume of potassium fertilizers (a new cargo for UTLC ERA)

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fold

Total import traffic growth

Operating fleet as of the end of 2022 (average daily as of December)

billion

Value of cargoes transported in UTLC ERA’s services

km/day

Average speed

-

days

Time in transit

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Cargo security

2020-2022 financial performance
Business Model
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Our operating model is aimed at increasing the transit traffic volumes in the 1,520 mm track gauge area with the help of such key processes as:

  • Minimizing the costs

  • Developing a competitive quotation

  • Balancing the transit routes

  • Launching new logistics services

  • Customizing transit services for new consignor groups

  • Increasing the transportation speed

Selyutin

Mikhail

Business Development and Risk Analysis Director

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The Company’s Board of Directors approved the new revision of the operating model on December 27, 2021 (Minutes No. 46). It contains the following container traffic segmentation elements:

  • Traffic geography (with the specific basic and additional routes indicated and the export and import traffic routes added)

  • Scope of transportation and logistics services provided by the company

  • Pricing procedure and tariff policy

  • Shareholder subsidiaries and affiliates cooperation procedure

  • Sales channels, interfaces with subsidiaries and affiliates.

UTLC ERA provides for full utilization of the available throughput capacities and the best traffic parameters due to its technological and price advantage. Our company offers its services based on an open tariff policy applicable to all our customers, thereby ensuring a non-discriminatory approach and transparent service for any potential user.

Our operating model supports the activities of the company as a “container service operator” based on the assets-optimum.

UTLC ERA has solidified its position as an integrator of the transit transportation and logistics service components. This has enabled our smooth transition to such new segments as export and import against the general decline in such transit in 2022.

The new market realities have caused exporters to increasingly focus on our Eastern customers and consignees, to whom we offered our available rail car fleet (the so-called “broken transit”, when containers arrive from Europe to be loaded in Belarus or Russia and then dispatched to China).

Examples of routes:

  • Arrangements to ensure traffic of various cargo classes from central and eastern regions of Russia (Tobolsk, Formachyovo, Kyshtym Stations, etc.).

Operating geography

Today, company is transporting on 660 routes between more than 230 locations in Europe, China and the EAEU.

Total number of routes at the end of 2022

+233for 2022:

+223U-West,10U-East

geography-bg-EN

Total number of locations as of the end of 2022

+32for 2022

Incremental Growth by Quarter in 2022

Locations Routes
Q1 4 44
Q2 12 60
Q3 6 51
Q4 10 78
TOTAL 32 233
Anti-Corruption Activities
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UTLC ERA has absolutely zero tolerance to any types and forms of corruption.

  • This policy applies not only to the company’s employees, but also to its contractors that have business and informal relations with our company.

  • The company’s current day-to-day business operations comply with the new revision of UTLC ERA’s Anti-Corruption Policy approved by the Board of Directors on January 25, 2021.

Klimochkin

Alexandr

Security Director

klimochkin

The objectives of the Anti-Corruption Policy are as follows:

  • To clarify UTLC ERA management’s position to personnel regarding zero tolerance to any types and forms of corruption

  • To advise the company's managers and employees on the requirements of the Russian laws and the documents adopted by the shareholders regarding anti-corruption activities and liability for corruption offenses

  • To summarize and clarify the anti-corruption actions taken by UTLC ERA

  • To shape the anti-corruption mindset among the company’s managers and employees

  • To minimize the corruption risks associated with the company's operation.

Our managers and personnel are obliged to manage their work in strict compliance with the principles and goals specified in the Anti-Corruption Policy. In case of incidents with any signs of corruption (e.g. failure to fulfill the job duties or abuse of authority by employees and contractors), everyone shall report them to the operating anti-corruption hot line.

Security Philosophy

To avoid any damage to property, the company takes timely actions to prevent crimes and offenses along UTLC ERA’s railway routes by cooperating with the local law enforcement authorities.

One of UTLC ERA’s top priorities is to ensure security of cargoes in transit and to build the information security system.

In 2021, the company conducted an integrated audit to search for any IT infrastructure vulnerabilities. In 2022, we took a number of critical actions to build the information security system and to close out IB-risks:

  • We developed UTLC ERA’s Information Security Policy

  • We implemented the DLP system

  • We enhanced the information security efforts under the Checkpoint program

  • We adopted the system to monitor password compliance

  • We introduced the risk management system

All adopted programs are developed by local companies. The action plan and the established information security system comply with the requirements of the Federal Service for Technical and Export Control and the Federal Security Service.

Contractor Review System

In order to efficiently monitor the contractor operations and mitigate the economic risks, UTLC ERA has adopted the integrated contractor review system. This system includes an initial review of a contractor using publicly available and special data bases before awarding the contract and a periodic review in case of long-term contractual relations.

In both cases, a set of the contractor’s key business indicators is subject to review along with the judicial and administrative practices. The company carries out repeated reviews before extending contracts or entering into supplementary agreements.

Approved in 2022 using the contractor review system

legal entities

individual entrepreneurs

individuals

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Strategic Report

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