Morning Brief – Russian Railways

Morning Brief – Russian Railways

Wed 20 Oct 2021

Russian Railways


As a result of the snarl ups in Chinese ports that have already been well reported, Chinese exporters are turning their attention to rail transit for their goods. Normally time and cost would preclude such a move, but both have gone out of the window with shipping containers in the wrong places, ships queuing up outside all major ports globally and HGV drivers in short supply. So as a result of shipping costs having increased ten fold on some routes, Chinese manufacturers are sending their goods to Europe by rail across Russia. That move has seen container traffic on Russian railways increasing by 40% in the first 9 months of 2021. The cost incidentally has changed as follows: at the beginning of 2021 it was twice as expensive to send goods to Europe by rail across Russia; and now? It is 3.5 times cheaper! Unfortunately this has now placed a strain and caused bottlenecks on Russian railways with crane drivers, train drivers and railway wagons all in short supply and also often in the wrong places. The Russian transport strategy and also more importantly President Putin have called for Russia’s share of Asia-Europe cargo transportation to increase from 4% to 15% by 2035. At 70.84 the Russian Rouble is at a high for the year versus USD.


Poland and the EU


Yesterday Poland’s temerity in its Constitutional Tribunal ruling that Poland’s constitution is not compatible with parts of EU law was met with a heavy handed response(once again) from EU President Ursula von der Leyen. UDL has promised one of three responses from the EU since Poland has in her words challenged the “very foundations” of the 27 nation bloc and cannot go unpunished: in order of severity the first is so called infringements which as a result of EU legal action would lead to fines payable by Poland; the second called conditionality is for the EU to withhold funds from Poland cutting off grants and cheap loans; the third which is the nuclear option is to apply Article 7 of the EU treaties which suspends Poland’s right to vote on EU decisions. In all this sturm and drang, the EU and in particular UDL have not listened when Poland has stated that it does not wish to leave the EU and has ruled out Polexit. USD/PLN at 3.92 which is a low this year for PLN. For those of you who are chartists out there the PLN is currently at a key support level and the charts suggest that PLN will either weaken further sharply or rally back to 3.65.


Air India


Despite its maharajah mascot, Tata and Sons’ USD2.4 billion purchase of Air India looks brave as it will require an estimated further USD1 billion to upgrade the tired fleet, change its image of poor service and install new leadership. Air India may have landing slots in international airports and 141 planes but it will need to spend approximately USD 300 million on retraining staff and improve operations and service. Ownership of the Taj Hotel Group by Tata may be part of the solution and a major rebranding exercise for Air India is certainly feasible. USD/INR at 75.09 a low for the INR this year.


Herb Alpert


Having larged it in the 1950’s and 1960’s, trumpeter and band leader Herb Alpert surprised by releasing a new album this day in 1979 named Rise. Now 86, jazz, funk, pop, Latin and R&B star, Herb Alpert is still going strong, Here is the song of the same name from Rise:


You coax the blues right out of the horn, Mame
You charm the husk right off of the corn, Mame
You’ve got the banjoes strummin’
And plunkin’ out a tune to beat the band
The whole plantation’s hummin’
Since you brought Dixie back to Dixieland
You make the cotton easy to pick, Mame
You give my old mint julep a kick, Mame
You make the old magnolia tree
Blossom at the mention of your name
You’ve made us feel alive again
You’ve given us the drive again
You make the south revive again, Mame
You’ve brought the cake-walk back into style, Mame
Find more lyrics at ※
You make the weepin’ willow tree smile, Mame
Your skin is Dixie satin
There’s rebel in your manner and your speech
You may be from Manhattan
But Georgia never had a sweeter peach
You make our black-eyed peas and our grits, Mame
Seem like the Sill of Fare at the Ritz, Mame
You came, you saw, you conquered
And absolutely nothing is the same
Your special fascination’ll prove to be inspirational
We think you’re just sensational, Mame




Discussion and Analysis by Humphrey Percy, Chairman and Founder

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