FESCO Intermodal Container Group

In September FESCO Transport Group is expected to complete acquisition of 50% stake in “M-Port Ltd.”, managing Commercial Sea Port of Vladivostok. The transaction will enable FESCO to own one of the most challenging port holdings in the Far East.
Interview of our correspondent with Siman Povaryonkin, BOD Chairman of FESCO Transport Group.

— Siman Viktorovich, could you comment what FESCO Transport Group is aiming at, and what the Company is today?

— FESCO Transport Group development strategy is focused on generation the Global transport integrator, offering the clients network solutions. Today we are on the threshold of this. The Company rapidly transformed from a regional shipping and container operator into a global intermodal player. For the recent three years we managed to expand our operations from just liner shipping towards railway transportations, to make significant investments in port and terminal facilities. The acquisitions have resulted in fact that FESCO business activities cover three main branches – ocean shipping, railway transportation and terminal operations. As of 2007, FESCO has become the biggest container operator in Russia, with the total transportation volume of the Group amounting at 1,8 million TEU.

— You have mentioned about the investments. Could you describe the investment program of the Transport Group and what the program is focused on?

— If to talk about the investment program in general, we are on the threshold of the new investments: in port container terminals, in the new high-quality and sound fleet. Containerization development requires serious support and enhancement of the inland network of container terminals, which the country is much lack of today. Russia should be covered with inland container terminals. We need to make a single seamless technique for cargo delivery. It requires financial investments, area, equipment, and staff of skillful employees adaptable to streamlined production methods. In terms of figures, we expand own fitting car stock with the total quantity increasing by 1100 – 1300 unites for the whole Group this year. Next year 3000 fitting cars are scheduled for purchase. There are new shipbuilding contracts, intentions to acquire new port holdings in Russia, in neighbor states or in the countries of the Russian cargo transit. There is also an approved program of “Russkaya Troyka” container terminal construction in Vladivostok. In general, FESCO Transport Group Investment program provides for USD 1 billion invested by 2010 in the rolling stock, vessels, terminal construction and technologies.

— Siman Viktorovich, FESCO Transport Group has acquired assets and holdings in various branches of the transport industry for the recent years. How far the Company is integrated and successful in interaction between the various structures? What kind of management structure the Company will have?

— The question about the structure is always a matter of development. The faster the Company is making progress, the more adaptable and flexible its management structure should become. To meet the challenges it is necessary to have the structure adapted to the market and conditions we have to operate in. We should achieve the new level of client communication, offer and sell the services, integrating a maritime, a railway and a port constituent. Having this in mind, a holding company structure is most likely to be established for management of the specialized business units.

The integration process is underway in the Company, it means that our goal is, on the one hand, to keep the subculture of the best teams operating in the sea, on the railway, and, on the other hand, to find this essential integration source, generating more effective management system and advanced-quality service of the clients. This is a non-stop work. Strategy selection process depends on the Board of Directors resolution first, expected in October. So in October we are scheduled to approve FESCO development strategy for the coming 3-5 years.

Now we are making the team to solve the task. The task in its own is not an easy matter, but I hope, that our team will succeed.

— How, in general, the personnel policy is organized in FESCO, to what extent the Company is open for newcomers? Are there any strict requirements to qualification of the employees? Does the company invite graduates?

— It is a big question. In early 2007 the company restructured its corporate management system and established Organization Development & Personnel Department. The Department is in charge of generating integrated system of the organizational development and personnel management. The system should meet the current and strategic targets of the Transport Group; enhance development and implementation of the personnel policy basing on the contemporary personnel management techniques. I would like to stress that we deliberately avoid the word “human resource”, we prefer the term “motivation and personnel development”.

This year we are launching an optional program for top-management. We would like to make everything arranged in the way that would provide succession and commitment among the employees of FESCO. The program of motivation is focused on this very challenge. The program is expected to have been phased-in for two or three years.

As for engaging graduates and newcomers, I believe that smart employees and specialists come from the youth. There are many young people in FESCO, in all geographical areas of the Group presence. We want to watch these “young stars”, make their promotion and rotation inside of the Group, enrich their experience, so that our colleagues in Vladivostok could have a work in the Ukraine, in Moscow, at the Black sea and vise versa. We are interested in the system-based promotion of the young employees in the Company. We believe that the dynamic concept of business together with commitment to traditions is one of the most important Company challenges.

— Not long ago FESCO participated in the First Pacific Economic Congress held in Vladivostok. In relation to the event I would like to ask a question about the plans and intentions of the Group in the Far East. How do you think about the potential of the region?

— No doubt. Despite the significant expansion of our business geography, covering now the whole Russia and the main sea gates from the Baltic and the Black seas to the Pacific, Far East has always been and still remains the region of the highest priority to us, since it is the unique point, generating the intermodal cargo flow on the East-West route. Today Company headquarters are located in Vladivostok. It is our motherland, our home port: FESCO cargoes are transshipped from ocean-going container ships to the railway via Vostochny port and Vladivostok. I am sure that port of Vostochny and Vladivostok will handle 1,5-1,8 million TEU in 4-5 years.

I believe that those who will not come to Far East during 4-5 years will miss much of the chance. The region is rich in huge resources, possibilities and opportunities, and space potential. I think that irrespective to the distance it would be reasonable to take air tickets and fly to Vladivostok.

Go to Index of # 3(21) 2007


# 3(21), 2007

Siman Povaryonkin, BOD Chairman of FESCO Transport Group

Siman Povaryonkin, BOD Chairman of FESCO Transport Group