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Russia's Next Generation Railcars

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Russia's Next Generation Railcars 45-CXP-A153 Russia’s Next Generation Railcars An Interactive Qualifying Project Report Submitted to the Faculty of the WORCESTER POLYTECHNIC INSTITUTE in partial fulfillment of the requirements for the Degree of Bachelor of Science Sponsoring Agency: Brunswick Rail Submitted to: On-Site Liaison: Richard Sultanov, Director of Marketing Project Advisor: R. Creighton Peet, WPI Professor Project Co-advisor: Oleg Pavlov, WPI Professor Submitted by: Brianna Fogal & Corin Rypkema Date of Submission: October 15th, 2015 This report represents the work of two WPI undergraduate students submitted to Worcester Polytechnic Institute as evidence of completion of a degree requirement. WPI routinely publishes these reports on its web site without editorial or peer review. i Abstract Brunswick Rail must replace nearly 8,000 railcars as they reach the end of their service life, with either existing standard railcars or New Generation Railcars (NGRs). Russia’s railcar fleet as a whole faces a similar dilemma. We determined the potential effects of NGRs on railcar leasing by conducting a cost-benefit analysis and through discussions with industry experts. While NGRs could be beneficial to the rail industry, Brunswick Rail will find purchasing these railcars difficult due to the current economic environment. ii Acknowledgements Our team would like to acknowledge the following people and organizations for the support and contributions to this Interactive Qualifying Project: Brunswick Rail for sponsoring this project and providing a productive work environment. Richard Sultanov for his guidance in the direction of our project, connecting us to all interviewees, and his valuable knowledge in the rail industry. Anastasia Ermolova for guiding us during site visits. Aleksei Roev for providing and helping to interpret Brunswick Rail’s databases. Our advisors Dr. R. Creighton Peet and Dr. Oleg Pavlov for their guidance and project advice. Paul Ostling for his outstanding support of our project and the Moscow Project Center in general. Dr. Robert Traver for his environmental analysis guidance. Angelica Berezenkova, Egor Iakovlev and Maria Petrova from the Financial University for translation and assistance through the entirety of our project. Henry Hoffman for his assistance in translation. Rohit Raney for his help in structuring the beginning stages of our proposal. iii Authorship Angelica Berezenkova, Brianna Fogal, Henry Hoffman, Egor Iakovlev, Maria Petrova, and Corin Rypkema have all contributed to the completion of this Interactive Qualifying Project. Specific contributions of each person can be found below. Angelica Berezenkova was present at the interview with John Winner, translated many Russian news reports and articles, and was the primary source of information about France and Brazil. Brianna Fogal was present at all interviews, wrote the appendices and all sections involving objectives one, two, and six, and edited and formatted all sections of the report. Henry Hoffmann was present at the interview with Marcus Montenecourt and was the primary source of information on Germany and Switzerland. Egor Iakovlev translated financial and political documents and was the main contributor to the financial analysis section of this report. Maria Petrova was present at the interview with Lilia Lavrova, translated many Russian articles, and was the primary source of information for Australia and China. Corin Rypkema was present at all interviews, wrote all sections involving objectives three, four, and five, and edited and formatted all sections of the report. iv Table of Contents Abstract ............................................................................................................................ii Acknowledgements ......................................................................................................... iii Authorship .......................................................................................................................iv Table of Contents ............................................................................................................ v Table of Tables ............................................................................................................. viii Table of Figures ..............................................................................................................ix Executive Summary ........................................................................................................ x Chapter 1. Introduction .................................................................................................... 1 Chapter 2. Background ................................................................................................... 3 2.1 The Importance of the Rail Industry ....................................................................... 3 2.2 Players in Rail Freight Transportation .................................................................... 4 2.2.1 Railcar Lessors ................................................................................................... 4 2.2.2 Shippers and Operators ...................................................................................... 5 2.2.3 Railcar Owners ................................................................................................... 6 2.2.4 IT & Maintenance ................................................................................................ 6 2.3 General Overview of Railcars ................................................................................ 7 2.4 Bogies .................................................................................................................... 8 2.5 Policy of Governments in Rail Systems ................................................................. 9 2.6 Rail Industry in Russia ......................................................................................... 10 2.6.1 Russian Railways .............................................................................................. 10 2.6.2 Brunswick Rail .................................................................................................. 11 2.7 Summary .............................................................................................................. 13 Chapter 3. Methodology ................................................................................................ 14 3.1 Definition of NGRs ............................................................................................... 15 3.2 Identify Important Mechanical Factors and Differences Among NGRs ................ 17 3.3 Determine the Environmental Impact of NGRs .................................................... 18 3.4 Financial Analysis ................................................................................................ 19 3.5 Identify Government Policies Related to NGRs ................................................... 19 3.6 Determine differences in railcar leasing business models .................................... 20 3.7 Summary .............................................................................................................. 21 v Chapter 4: Results and Analysis ................................................................................... 22 4.1 Definition of a New Generation Railcar ................................................................ 22 4.2 Importance of Mechanical Factors ....................................................................... 22 4.3 Railcar Replacement Needs in Russia ................................................................. 24 4.4 Environmental Analysis ........................................................................................ 29 4.4.1 Carbon Dioxide Emissions Analysis .................................................................. 29 4.4.2 Fuel Consumption ............................................................................................. 30 4.5 Financial Analysis ................................................................................................ 31 4.5.1 Assumptions ..................................................................................................... 32 4.5.2 Cash Purchase with No Maintenance ............................................................... 33 4.5.3 Maintenance ..................................................................................................... 35 4.5.4 Cash Purchase with Maintenance ..................................................................... 36 4.5.5 Financial Analysis with Repairs and Loans ....................................................... 37 4.6 Policy Affects Development ................................................................................. 42 4.7 Basic Leasing Business Model Structures ........................................................... 44 4.8 Summary .............................................................................................................. 45 Chapter 5: Conclusions & Recommendations ............................................................... 46 5.1 Conclusions ......................................................................................................... 46 5.2 Recommendations for Brunswick Rail ................................................................. 47 5.3 Summary .............................................................................................................. 49 References ...................................................................................................................
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