Getting more goods to go by rail in Poland

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1 Getting more goods to go by rail in Poland Konstantin Skorik President of the Board Freightliner PL Managing Director Freightliner DE 27 November 2013, Warsaw

2 Freightliner Poland as an opportunity Major issues How to get more goods to go by rail 1

3 Freightliner Group History + Overview Operational unit inside British Rail since 1965 Privatised from British Rail in 1996 Moves containers and heavy goods across the UK Heavy investment in new rolling stock Recognised for the quality and reliability of its service and value proposition by customers Expansion into Poland, Australia, Germany from 2005 Acquisition of ERS (pan-european intermodal operator) in 2013 FGL in numbers (globally) Tonnage pa Net tonne-km pa TEU pa > 50 mln t > 10 billion > 2 mln Rolling stock (259 locomotives, more than 6000 wagons) FPL+FDE 15% ERS 14% FLI 31% Staff 2250 FL Australia 17% FHH 23% 2 2

4 Poland and Germany - Growth from start up Entered the market in 2007 Positioned as premium high quality service operator Trademark for efficient and reliable transport service Modern, purpose built equipment Locomotives equipped to run in PL and DE Now trading in coal, aggregates, construction materials and traction provision for other operators Highly experienced, hand picked employees Engineering capability developed with Freightliner Maintenance skills transfer from the UK Regular cross-border trains between PL and DE Locomotive stays with the train stopping at border station Ø 12 min. FPL + FDE Statistics No. Volume per annum > 7 mln tonnes Locomotives (diesels & electrics) 26 Wagons (bulk) > 1000 Employees 200 Trains per week up to

5 Freightliner Poland as an opportunity Major issues How to get more goods to go by rail 4

6 Transport market development in Poland ( ) 250 Total freight transport (bln tonne-km) +106% 50% GDP growth (cumulated) % % road % 50 rail -6% 10% GDP % 5

7 Case study: cross-border transport of goods Substantial potential of international freight transport Yet, majority of goods in cross-border relations are transported by road Transport between Poland and: Road transport (mln tonne-kilometres) Rail transport (mln tonne-kilometres) Czech Republic Russia Germany Modal share of rail freight in transit is lower than in domestic transportation! 6

8 European target 30% of road freight over 300 km should shift to other modes such as rail or waterborne transport by 2030 Source: Transport White Book, European Commission,

9 Potential of Poland as a transport market Most important development factors Robust economic growth Major infrastructure investment projects - both road and rail (PLN 100 bln up to 2020) Strategic position on two rail freight corridors (North-South and East West) Potential to become European gateway for rail container traffic from China Transport policy support by EU (White Book) 8

10 Freightliner Poland as an opportunity Major issues How to get more goods to go by rail 9

11 Bottlenecks on Polish railway network (ZNPK survey 2012) Survey covered 12 operators: 9 freight (95% market share) 3 passenger (92% market share) Reported 459 cases of bottlenecks (affecting 61% of total PLK network by km) Five categories of bottlenecks low speed limited axle load lack of capacity limited length of train lack of electrification Bottlenecks affected all regions, all categories of lines, including international corridors Categories of reported bottlenecks: Limited length of train Limited axle load Lack of capacity 11% 36% 5% 2% Lack of electrification 46% Low speed 10

12 Infrastructure in perspective requirements of freight operators Appropriate balance in investment expenditure: Between road and rail infrastructure Between freight and passenger-dedicated investments Elimination of bottlenecks (especially Upper Silesia and Lower Silesia regions) Construction of new lines that complement the whole network True consultations with operators (they know final customers` need!) ZNPK bottleneck study offers a good base for PLK to sense-check current investment plans 11

13 High access charges Rail access charges in Poland are much higher than European average Rail charges were increased each year from 2007 Reduction of rail access charges by 20-25% from 2014 introduced under pressure from EU is not sufficient The rail market needs further reductions to increase rail competitiveness The access charges for rail are some 40% higher than for road Rail freight supports the National Road Fund through a fuel surcharge build into diesel price Infrastructure costs for transport container 40 'over a distance of 100 km Fuel fee PLK/VIATOL Rail (electric) Rail (diesel) Lorry 12

14 Blockage of Eastern cross border transportation by PKP Cargo Transshipment in Poland (traditional model, blocked by PKP Cargo) Destination in Poland/Germany 1435 mm gauge line ] Border terminal in Poland ] Border terminal in Russia/Belarus/Ukraine 1520 mm gauge line Transshipment in Ukraine, Belarus or Russia (alternative model) Destination in Poland/Germany 1435 mm gauge line [ Border terminal in Poland ] Border terminal in Russia/Belarus/Ukraine 1520 mm gauge line 13

15 Forecast of loco drivers labor supply in Poland Supply of loco drivers (hours/week) Assumptions: By 2014: max. 48 hrs/week From 2015: max. 43 hrs/week Variant without extended training The entry into force of the Working Time of Loco Drivers Act rapid decrease in labor supply by 11% Variant with extended training 0 year rok

16 Freightliner Poland as an opportunity Major issues How to get more goods to go by rail 15

17 How to get more goods on rail in Poland Access charges: Further reductions to allow competitivness with road transport Infrastructure: Elimination of bottlenecks Effective investments in lines important for freight More goods on rail in Poland East border: Transfer of terminals to PKP PLK Open access at equal conditions to public infrastructure for all operators Law and administrative issues: Simplification of loco drivers training 16