PRESS: Delo Group not in talks to buy FESCO – CEO

MOSCOW, Nov 30 (PRIME) -- Russia’s largest transport and logistics holding Delo Group is not in negotiations to buy Far-Eastern Shipping Company (FESCO), CEO and core owner of Delo Sergei Shishkaryov said in an interview to Kommersant business daily published on Monday.

“I’ve said time and time again, and I will not deny my words now: FESCO is a very interesting asset for the group, which is obvious even for a man who doesn’t have a clue about the container transportation business. But the group is not in any negotiations on the matter as of today,” he said, as quoted by Kommersant.

“Besides that, there are many other interesting assets for us in the stevedore business and in 3PL transportation.”

He also said that transport operator Ruscon, a subsidiary of Delo Group, would transfer all its functions of a railroad operator to TransContainer. “These actions are reasonable from the point of view of elimination of internal competition between the holding companies and from the point of view of improving the synergy effect,” he said.

Ruscon will remain an independent holding in Delo Group that will focus on project logistics and shipping and will try to work as a 3PL operator. Delo is also working on options to reorient one of the multipurpose terminals of Global Ports into a more narrow specialization together with Maersk APM Terminals, he said.

Delo is concerned with the plans or Russian Railways to create a competitor for TransContainer, in which Delo bought 50% plus two shares from Russian Railways in 2019 and raised the stake to 100% after that.

When asked whether Russian Railways could create a competitor for TransContainer, Shishkaryov said, “I suppose that the time has already answered this question, as JSC RZD Biznes Aktiv (Business Asset) was registered in November 2020. Judging by the announced goals of its creation, this is a direct competitor of TransContainer. The Russian Railways group believes it is a strategic partner and it values long-term partnerships … this is why we were very concerned with creation of a new player.”

This isn’t just about a potential loss of a market share and profit. This move violates the spirit of the agreements discussed during preparation of the TransContainer privatization --  inalterability of the container transportation market in the mid-term. Moreover, this could create a negative signal for the market, including foreign investors who would like to participate in privatization of properties secured by government guarantee because “in our case, these guarantees faded,” he said.

Creation of a full-fledged container operator by Russian Railways will inevitably lead to monopolization of the container transportation market taking into account the market shares of Russian Railways’ subsidiaries UTLC ERA and Federal Freight, and will squeeze out small and medium-sized firms. Moreover, media reported that the new operator may get preferences for maintenance and priority passage from Russian Railways, which violates the principle of competitive pricing, Shishkaryov said.

He said that the container transportation market is competitive, and the role of Russian Railways is more important in the spheres where participation of the state is of vital importance.

He also said that Delo is not involved in management of Commercial Port of Vladivostok, because FESCO previously signed an agreement with state nuclear power corporation Rosatom. “And even though Rosatom owns 30% of shares of Delo Group’s parent company Delo, it doesn’t mean that all decisions of Rosatom’s management are automatically projected onto us,” he said.

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