NLMK cuts production costs

NLMK Group, a vertically integrated company in Russia and one of the most efficient steel companies in the world, is the first steel company in Russia to receive and process containers with a gross weight of up to 41 tons at the Lipetsk site.

As a result, the company will be able to reduce its transportation costs, optimize logistics operations and improve the quality of its steel supply services to its customers. The plant's products are used in various industries, from construction, including pre-fabricated buildings and structures , to the production of power equipment, flare installations, lighting masts and other metal structures. The modern pace of life dictates the need for the rapid construction of buildings for industrial, public and domestic purposes at an optimal price, and in this a special role is assigned to building metal structures.

The inclusion of large-tonnage containers will provide an expansion of the range of loading and unloading operations and meet the dynamic demand in the machine-building, energy and construction industries, which is consistent with the strategy for the comprehensive development of the domestic container business of Russian Railways. NLMK has the right to carry out operations stipulated in clauses 11N and 12N of the Tariff Guide. Thus, the station expanded its operations with large containers with a gross weight of up to 41 tons.

Sergey Likharev, Vice President of NLMK Group for Logistics, said that the project became possible thanks to serious preparatory work at the key transport hub and container site of NLMK, where the infrastructure has been created that will allow the company to increase the volume of its container traffic. This will increase the commercial efficiency of logistics and improve the level of services offered to customers. Instead of wagons, the transportation of electrical steel in containers will reduce the cost per ton of the finished product by 2,000-3,000 rubles, depending on the destination, while reducing the likelihood of damage to goods during transportation and unloading.

Novolipetsk Steel began implementing a new delivery scheme in 2014, when coils of dynamo and transformer steel are loaded into containers directly on site. Container shipping currently accounts for 44 percent of all electrical steel orders. In 2015, an economic effect of RUB 70 million is expected from the reduction in transportation costs.

NLMK is also implementing other projects aimed at reducing logistics costs. For example, together with Freight One, the largest rail freight operator in Russia, NLMK is implementing a pilot project to outsource internal logistics at NLMK Long in the Urals region.