Finnish Railways intends to sell its shares in Russia-related joint ventures

2022/05/03 at 3:53 PM

In around a month after the final decision to terminate rail freight to Russia, VR Group, the Finnish state-owned railway holding, has decided to completely discontinue cooperation with the Russian companies. To this end, the Finnish group is planning to divest its shares in several joint ventures, which were established in partnership with the Russian companies, mainly for serving cross-border freight traffic.

“VR Group has commenced negotiations on the sale or downsizing of its stakes in its Finnish associated companies ContainerTrans Scandinavia (CTS) and Freight One Scandinavia (FOS). In addition, VR Group has commenced negotiations on the sale of its Russian subsidiary Finnlog,” the Finnish state-owned railway holding reported on Tuesday, 3 May.

The first two companies were established in the late 2000s together with the Russian partners. ContainerTrans Scandinavia, which provides container transport and forwarding services between Finland and Russia, was incorporated in 2007. Freight One Scandinavia, which was established in 2009, is focused on rail shipments between Finland, Russia and the CIS countries. Both entities were established on the basis of equal stakes: VR Group owns 50 per cent and its Russian partners, TransContainer for CTS and Freight One for FOS, hold the other 50 per cent.

Freight train in Finland, source: Juho Kuva / VR Group

In contrast to ContainerTrans Scandinavia and Freight One Scandinavia, Finnlog, the Russia-based subsidiary of VR Group, is fully owned by the Finnish state-owned holding. It was established only in 2019 for leasing wagons to the key Finnish customers of VR Transpoint, the freight company of VR Group, and operating them in cross-border timber traffic between Russia and Finland. Last year, VR Group also sold to a private freight forwarder its business unit, which was engaged in cross-border road haulage operations between Finland and Russia.

It is worth reminding that VR Group twice tried to stop rail freight traffic to Russia. First, it was suspended for three days in late March. Then, on 6 April, the company’s Board of Directors decided to gradually cancel freight trains to the eastern neighbour by the year’s end. “We estimate that traffic will decrease to about one-third of the original level by the end of the summer. Some customers want to continue traffic until the end of the notice period but we will continue negotiations to stop it faster,” said Topi Simola, CEO of VR Group.

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