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InterRail Newsflash September 2020

Dear Readers

At the beginning of 2020, nobody could have expected the world wide crisis that we are experiencing now. Over the past months, we have learned a lot about ourselves, and some may also have significantly changed their point of view or even their way of life.

Even though everyone deals with the situation in their individual way, one thing seems to be true for all of us: we want to be or stay healthy and be able to socialize again without panic, without distancing regulations.

InterRail, management and employees alike, are still taking the COVID-19 situation very seriously. In those countries where InterRail operates, the necessary measures defined by the local governments to protect the population were applied immediately. Owing to the flexibility of our local managing directors as well as the loyalty of our staffs, we were nevertheless able to respond to the enquiries and requirements of our customers as usual.

How have InterRail teams experienced the situation, and how are our activities developing at this time? This Newsflash offers answers to these questions.

Enjoy reading, and, most important of all, be safe, stay healthy!

From our countries

The outbreak of the COVID-19 pandemic had a huge impact on the whole world. We have asked our colleagues for their assessment of the development in the InterRail countries in terms of social life as well as business environment.

Narayan_photo.jpg
Vijay Narayan, Managing Director of InterRail India Pvt.

INDIA | Vijay Narayan, Managing Director of InterRail India Pvt.

Close to about 2.7 million people have been affected by COVID-19 in India; we are the third most affected country. Yet, since our country has a younger population, our recovery rates are high at 70% and mortality is low at 2%.

Business has mushroomed back, but will take time to reach full capacity. Currently, business in India is operating at 50 to 60% capacity. Social life is normal in many parts of India, but big cities such as Mumbai and Delhi, Kolkata & Chennai and the Metro cities are still opening up slowly, and only 20 to 30% of life is back to normal, with most people still confined to their homes. We hope that by September / October normalcy will return back.

The initial impact on our business was heavy for three months, then some slight development set in, and currently business is picking up again. There might be a few changes in the approach to business, but business should pick up and be back to normal soon.

70% of our staff are still working from home, and 30% attend office on a rotational basis. Keeping them motivated is a big task. We have enrolled for online courses. Some employees, we have enrolled for Yoga classes. We arrange webinars on various topics regularly, related to health, wellness and such, so that we all are in touch and nobody feels left out. We are also going to have regular Yoga sessions for all. But in India we have one advantage: once a person is with their family, they are automatically motivated, and most of them love working from home and spending maximum time with families and extended families, so our task is only half as big.

KAZAKHSTAN | Tatiana Roschupkina, Managing Director of InterRail Kazakhstan LLP

Certainly, the COVID-19 pandemic has had a strong impact on Kazakhstan in all aspects of life. Currently, the situation has stabilized, and since August 17, the quarantine measures have been eased in Kazakhstan, companies are gradually returning to work in compliance with sanitary and epidemiological requirements (with the exception of some areas of entertainment, mass and sports services, which remain prohibited). As before, most of the employees of state-owned enterprises and the banking sector work remotely.

The pandemic has had a negative impact on our business as some of our clients had to put a halt to their operations during the lockdown. Now the situation is stabilizing, and we expect our customers will resume work.

In October 2020, Kazakhstan expects a second wave of COVID-19, but projections are more promising than at the beginning of the pandemic. We hope that we will learn to live and work in a new reality, which will help us develop our business in the future!

All InterRail Kazakhstan employees work at the office as before. What helps us to move forward despite all difficulties is our team spirit, the sense of belonging, and a common understanding that we are in this all together, and we need to find our way through the new challenges we are facing right now.

KAZAKHSTAN | Tatiana Roschupkina, Managing Director of InterRail Kazakhstan LLP
KAZAKHSTAN | Tatiana Roschupkina, Managing Director of InterRail Kazakhstan LLP
POLAND | Maciej Mastalerski, Managing Director of InterRail-Polcont Sp. z o.o.
POLAND | Maciej Mastalerski, Managing Director of InterRail-Polcont Sp. z o.o.

POLAND | Maciej Mastalerski, Managing Director of InterRail-Polcont Sp. z o.o.

The situation with the pandemic improved over the summer. At present, unfortunately, the infection rate in Poland is increasing and restrictions related to the coronavirus are being partially introduced again. Social life and business life are recovering, but Poland is in a recession, that’s a fact.

First, there was a big slowdown in activities, then improvement and growth (catching up on transports). As sea transport decreased, there was an increase in rail transport via Malaszewicze and there is a lot of work. In this situation, I can see the stabilization of business and even its growth, provided the pandemic does not get worse.

I only work partially from home. The same applies to some employees (deputy, manager in Malaszewicze, accountant, IT specialist - if possible). The rest work in shifts. We try to keep the prescribed distance to others as much as possible. Our motivation is to maintain jobs and carry out tasks in such a difficult period.

UKRAINE | Anna Barulenkova, Business Development Manager, TransRail Ukraine

In Ukraine, at present, the situation remains tense due to the high incidence of COVID-19 with over 2,000 new infections per day. Adaptive quarantine has been extended until 31 October 2020. Moreover, in some cities and regions, additional restrictions may be introduced, depending on the level of epidemic danger.

In operation are the transportation sector, catering establishments, most offices, utilities and government organizations – subject to anti-epidemic measures (masks, distance, regular disinfection). Theaters, cinemas do not work, concert activities have been suspended, and public events have also been restricted (although this does not apply to political events); flights to certain destinations are periodically canceled, the sale of railway tickets to destinations in red zones / or stops at such points has been canceled. Schools are going to open. On the whole, the situation is stable. In the streets, other than people in masks, there are no other obvious signs of a special regime.

As for the business environment, many industries in Ukraine have been significantly affected by the lockdown. The Ministry of Economic Development, Trade and Agriculture has revised its forecast on the drop in Ukraine's GDP in 2020 up to 6%. Investments are expected to decline by 20.3%. The situation on the labor market remains difficult: the unemployment rate at the end of this year will be 10% (National Bank of Ukraine) and the trend will extend at least until 2024. Due to the reduction in domestic and external demand, the volume of imports and exports decreased by 13% and 7% respectively from January to July.

The lockdown also impacted the transport sector: from January to July 2020, among all modes of transport, the road sector suffered the most – the volume decreased by 23.5% against the same period in 2019. The volume of railway traffic declined by 7.5%. During July 2020, cargo turnover at UZ (Ukrainian railway) increased as compared to June and May. The bottom of the trough was reached in May.

In 2020, UZ plans to transport 291 million tons of cargo, which is 6.9% less than in 2019. The negative trends in transit traffic that developed in 2019 will continue in 2020. The main transit flows are generated in the Russian Federation, which carries certain risks. The forecast assumes a drop of 14.9% in import railway traffic in 2020 as compared to 2019, and 3.1% in exports. At the same time, we are seeing an increase in the volume of container traffic in the total volume of cargo turnover as compared to 2019. This trend is due to an increase in the number of import and transit container trains traveling through Ukraine. Ukraine is becoming an attractive transit country for the delivery of goods by block train from China to consignees in Europe. So, at the European Summit on the Silk Road in Amsterdam on November 10/11, this topic will be discussed ("Ukraine: a gateway to Central and Eastern Europe, Panel discussion about the latest developments in Ukraine as a transit country on the New Silk Road. Discussed are the connections to Europe on the one hand, and the links with the Far East on the other hand "). From January to July 2020, Ukrainian seaports handled 92 million tons of cargo, which is 7% more than in the same period in 2019. Transshipment of export cargo increased by 6.1%, import by 7.7%, transit by 14%, container handling by 10.6%.

In Q2 2020, TransRail experienced a slight drop in LPG transit traffic (our key cargo) due to falling demand in Europe. At the beginning of this year, we were actively working on several projects, but due to the introduction of quarantine, these projects were not implemented. The company's business model, structure, as well as the number of staff remain the same at the moment. It is too early to talk about any growth. In the context of the pandemic and the reform of UZ as a monopolist and our main supplier, our minimum task is to keep business at the same level and improve profitability. Also, our efforts are now aimed at participating in the new railway freight traffic on the basis of China-Europe bock trains. Overall, we look to the future with cautious optimism.

A few employees attend office daily, but most of the personnel are rotating between office and remote work depending on their tasks. We have a group chat, where we not only communicate on business issues, but also encourage each other and support our team spirit.

UKRAINE | Anna Barulenkova, Business Development Manager, TransRail Ukraine
UKRAINE | Anna Barulenkova, Business Development Manager, TransRail Ukraine
RUSSIA | Yuri Kulakin, Managing Director, InterRail Service LLC
RUSSIA | Yuri Kulakin, Managing Director, InterRail Service LLC

RUSSIA | Yuri Kulakin, Managing Director, InterRail Service LLC

COVID-19 mostly affected the service sector; people whose work was related to the service sector suffered the most. Since most of these companies are small enterprises, they were forced to cut staff or completely cease activities. The catering business also suffered. Only those who quickly refocused their business model and brought it online were able to continue. In general, there is an atmosphere of noticeable tension in society. It is caused by the fact that people are not sure how events will develop in the future. They don't feel safe. Everything is affected by the negative news background associated with the pandemic.

In general, the age category at our company is middle age, i.e. our employees learn new technologies easily and use them effectively in their work. Business was influenced not by internal factors, but by external factors. As the pandemic severely affected the economies of most countries, due to the closure of borders and the suspension of production, our clients also went into a different stage of activity. At the same time, the pandemic gave a boost to the implementation of technologies, and in some of areas, rail become one of the functioning and safe methods of transport, thus we also saw an increase in rail transportation in some areas.

Today we have a mix. Some of the employees work remotely. Some go to the office, but sometimes work from home. The main thing is that employees do not feel isolated, as if they were working in a separate system. We have an effective practice of holding remote meetings, and we try to include all the staff members and involve them remotely into one joint company activity. We are online, we try to communicate by speech, by correspondence in instant messengers, and by mail. On top, we have tried various initiatives how to support each other, like joint online morning exercises, searching and offering trainings and knowledge update courses at designated online-only times.

Now at part office time, we try to keep best practices, but combining office and remote work remains a challenge for all of us, thus in order to support the corporate spirit we organized outdoor rafting in August where we were able to meet all together outdoors and go sailing together for a couple of hours. Our motto for the 2020 event was “InterRail Team 2020”. These are very challenging times for the world, and we have decided that team spirit may be one of elements which really depends on us.

ERAI – a web portal with news on the Eurasian railway corridor

Since it was started in 2017, Transit Rail Index ERAI (https://index1520.com/en/) has established itself as a source of indicative costs of transit container traffic in the Eurasian railway area on the trade route between China and Europe. In the meantime, the web portal has been complemented by additional features. It now offers regular information and analyses on topics concerning the Eurasian railway corridor as well as on alternative routes and the development perspectives of the China - Europe connection. Among others, the web portal offers statistical data on rail transit, a freight rate calculator, and a CO2 tracker.

An article recently published on the portal mentions an interesting study done by Coface on how the COVID-19 pandemic has affected the transportation sector, and what the long-term impact of COVID-19 will be on global traffic. According to the study, the impact of COVID-19 on global trade transport has been all the more dramatic as economy had slowed down already before the crisis. All in all, Coface assumes that the sector will not reach the level of Q4, 2019, before 2022. The paper can be downloaded via this link: https://index1520.com/upload/medialibrary/32d/COFACE_PANORAMA_TRANSPORTS_MEL.pdf