Eugene Kormyshov: "I want to warn our colleagues about unscrupulous customers"

The problem of non-payments by customers is becoming more and more important for the Russian river shipping companies, receiving revenues only during the short shipping season. In a recent interview with PortNews Evgeny Kormyshov General Director of LLC MezhRegionFlot (MC of Ob-Irtysh River Shipping) shared his story and experience in dealing with dishonest clients.

- Mr. Kormyshov, please tell us about the results of the previous shipping season. Did shallow water affect somehow the Company’s performance in 2012?

- The fleet of Ob-Irtysh River Shipping Company transported in the 2012 shipping season 1,173,300 tonnes of cargo. This figure is nearly 60% up from 2011. Traffic growth was in the segment of bulk construction cargos: transportation of crushed stone soared by 80%, of sand – by 5.6 times. However, there was a slump in metals and concrete products volume.

However, the growth in freight volumes was not comparable with that of profits. At the end of 2012 the shipping company revenues climbed only 13.7% as compared to 2011 to RUB 1.3 billion, VAT included.
Despite the low level of river waters in the last year’s navigational period, we have performed almost all obligations to shippers for cargo delivery. But this was achieved primarily by reducing the efficiency of transport due to incomplete loading of ships and additional transshipments.

- What are your company’s plans for this year shipping season?

- The Company plans for the 2013 season to transport freight as much as in 2012, with a possible gain 6% to 10%.

- How big is your fleet today, what is the ships average age?

- Currently, Ob-Irtysh River Shipping Company operates a fleet of 149 self-propelled vessels with the average age of 27 years. Those are basically tugboats with power ranging 300 hp to 2400 hp. The average age of non-self-propelled fleet, which includes 315 units, is 29 years.

- Some media have reported on significant nonpayments from your Company’s counterparties. Please tell us about your experiences in resolving disputes with dishonest customers.

- There are quite a lot of challenges facing the river shipping companies: the seasonal work, insufficient cargo base, the galloping fuel cost, tightening of requirements by the controlling bodies and dozens of other circumstances that make the river shipping business not so profitable. Another problem is the high risk associated with payment for shipping services. As we are hungry for cargos, we make a deal with almost all organizations. Unfortunately, it turns out that not all of the cargo owners are honest payers.

Another problem is that there are some well established organizations having financial resources, but choosing not to pay for the services provided. Unfair clients resort to different tactics behavior. Such companies as, for example, LLC Ugra Cement Company based in Khanty-Mansiysk (General Director Mr. A. Kanev) are accumulating debts, then sue, lose in the courts, and when court bailiffs arrive, they find empty bank accounts, a desk and a PC as the only property. After the company liquidation its founders create a brand new one. And the scheme works again.

LLC Temkryukmortrans managers fall back upon more sophisticated shemes. In 2010, the society, as a general forwarder of Gazprom for delivery of goods by water transport, signed with JSC Ob-Irtysh River Shipping the contract for transportation of cargo for a compressor station and the pipeline in Yamal-based Bovanenkovo village.

Ob-Irtysh River Shipping honored its commitments in the 2010 shipping season but there have been no payment so far. TemryukMorTrans’ general director Mr. Snegirev failing to provide any arguments in the court hearings, as our Company had presented in the court all documents for the cargo delivered, he took the ‘I’m in the clear’ stance. Firstly, he claimed he had no authority to sign the contract as he was deputy general director in 2010 so the contract should be considered null and void. All the documents, acceptance certificates, etc. he signed later, when we had delivered the cargo, should be also considered ineffective, ignoring the fact that he had been general director at the time.

At the next stage, TemryukMorTrans stated that our shipping company never ever delivered cargo for them!
We are curious, what Mr. Snegirev expects to get, as our lawyers presented a 1000-page file of evidences. Actually, we do no understand the court of appeals decision as it’s just dragging out the case while TemryukMorTrans for the third year has been enjoying the money of Ob-Irtysh River Shipping Company.

Yet it appears not to be just one case in TemryukMorTrans career. We examined the web site of the Supreme Arbitration Court of Appeal. There were several cases involving this company. And Mr. Snegirev, according to the web site info had refused to return the multimillion loans or pay for services to LLC SGM, LLC Yughim, and other aggrieved parties.

I want to warn my colleagues to stay away from this company and I have suggested that our shipping community should post and update a blacklist of dishonest companies that cause damages not only to the individual carriers, but to the entire shipping industry.

- Now, at the end of winter season is it possible to sum up the fleet renovation? What volume of work has been accomplished and by what companies?

- Our fleet repair is being performed by our subsidiaries: LLC Ship Repair Yard Sumkino and LLC Ship Repair Yard Tyumen. Usually, we carry out overhaul of ships, including a partial or complete replacement of hull plates and maintenance, replacement of main engines, as well as other mechanisms.

It’s far too soon to summarize performance this winter in Siberia. So I'll give figures for mid-navigational period of a year before. Between November 2011 and May 2012 our shipyards repaired 46 ships and 104 units of non-self-propelled vessels. The work cost is estimated at RUB 185 million.

- How do you solve the HR issue? Do you have joint program with the industry educational institutions for students training. Do the graduates come to you?

- Training of seafarers in accordance with accepted standards is one of the priorities at JSC Ob-Irtysh River Shipping.

The Company is actively working to sign agreements on training for students, both with maritime sector educational institutions of our region and those of Omsk, Novosibirsk, Arkhangelsk and St. Petersburg. The students will be trained for navigation of ‘river-sea’ vessels.

In Q4, 2012, we signed agreements on social partnership with a number of educational institutions such as: Tyumensky College of Water Transport, Tobolsky Fishing College, the Arkhangelsk Arctic Sea Institute named after V. Voronin (branch of the State University of Sea and River Fleet of Adm. S. Makarov), Novosibirsk State Academy of Water Transport, Ufa branch of the Federal State Institution of Higher Professional Education, Moscow State Academy of Water Transport.

To obtain the necessary navigational skills and experience in onshore specialties Ob-Irtysh River Shipping invites graduates and trainees from schools across the country to undergo training as crew members on our ships.

For the purpose of training in 2012 Ob-Irtysh River Shipping employed 39 students of Tyumensky College of Water Transport and about 40 young people will be undergoing training on our ships. Besides, in 2012 we employed more than 50 students of the Arctic Sea Institute. In the 2013 shipping season we plan to continue partnership with the educational institution.

We are pleased that many alumni have decided to join Ob-Irtysh River Shipping Company after completion of their practical training.

About Ob-Irtysh River Shipping

JSC Ob-Irtysh River Shipping Company provides services for transportation of cargo and building materials delivery for enterprises of the Yamal-Nenets Autonomous District (YNAD), Khanty-Mansiysk Autonomous Okrug (KMAO), southern districts of the Tyumen region, the Far North and the Caspian Sea basin.