CARGO BUSINESS 1-10.indd - ZSSK Cargo

After stabilization in 2008, ZSSK CARGO was struggling with
the impacts of global financial and economic crisis throughout
2009. The crisis resulted in a dramatic reduction in demand for
transportations from the strategic customers. Especially the first
half-year was the worst in the entire post-war era of railways in
Slovakia.
In the second half-year, we observed a slight recovery of
transportations, mostly in the key sector of metallurgy. The company
experienced the consequences of the crisis to a greater extent
than the other rail carriers in Slovakia, since these have a much
lower share of transportations for the metallurgical industry. As in
neighbouring countries, rail operators observed considerable fall.
(Table: Decline in transportations in selected European railways)
Prices sensitively adapted to the crisis
In current unfavourable situation, it is impossible to generally
assess all transportations. It is necessary to deal with each contract
individually with respect to its parameters and to adapt specific
prices for transportation thereto. We consider several factors, such
as volume and stability of transportation, prospect for the following
period, used wagons for transportation, load in return run, current
cooperation, financial and payment discipline. In order to ensure
stability, we offer our customers the option of long-term contracts,
allowing them to clearly and effectively define and plan their
transport costs.
ZSSK CARGO also prepared some interesting pricing tools to support
the transportations in direction north - south and back, as well as
a common global price of ZSSK CARGO/ČD Cargo in direction east -
west from the border crossings with the Ukraine to the Czech/German
crossings. One must also mention the promotion of transportations
to Romania via Čierna nad Tisou in standard gauge. The company
has also prepared price support for transportation of foodstuffs,
building materials as well as wood in domestic transport. These tools
are completed by discount rates for transportations carried out via
Slovak river ports.
Quality of services
Decrease in demand for transportations resulted in excess loading
space in general. At the same time, there were situations, when
we were not able to meet permanent or seasonal requirements of
customers for certain series of wagons fully and on time. These
series included, in particular, the wagons Snps and Sps to carry
wood, as well as wagons Ta to transport cereals and high-sided
wagons for transportation of bulk substrates. On the contrary, new
special covered wagons (Habbillns) that we purchased on the basis
of continuing requirements from our customers were used only
to a limited extent due to the crisis in 2009. In this case, it was,
however, only a temporary decline in interest in this series of wagons.
Strategy and plans for 2010
The aim of company ZSSK CARGO in 2010 is to maintain its stability
and achieve a positive operating economic result. For this purpose,
it is necessary to ensure maximum revenues from transportations.
We expect about 10-percent inter-annual increase in volumes
and revenues. The company must use every opportunity offered
in the transportation market, whether in domestic or international
transport. We have to adapt our trade policy thereto and make effort,
not only in Slovakia but also abroad.
Road versus railroad
Although the electronic toll was introduced in the Slovak Republic on
1.January 2010, it is only the first step towards the harmonization
of business conditions for all modes of transport, creating new
opportunities for ZSSK CARGO. Charging the roads, together with
active trade and pricing policies, have shown first successful signs in
terms of newly-acquired transportations, from road to rail. Examples
include transportations of wood for requirements of strategic
customers from paper industry where we observed approximately 70-
percent increase in January 2010 compared to January 2009 as well
as 2008. However the fee for use of rail transport routes in Slovakia
is still among the highest in Europe, which significantly affects the
competitiveness of ZSSK CARGO both against the road transport as
well as against foreign rail transit. This year, it is expected that the
new system of charges, valid for rail transport route, will be prepared.
The new regulatory framework should ensure transparency in price
terms as well as transparency of their allocation to rail carriers.
Price adjustment (decrease) relevant to rail transport routes for
freight transport aims at harmonization of conditions between road
and rail transport. National Council of the Slovak Republic passed
a new Act on railways (published in the Collection on 10.December
2009), which also addresses these issues, i.e. reduction in charges
for use of rail infrastructure with an expected date of 1.January
2011. Current ineffective model of rail transport route charges can
also be proven by disproportion between the decrease in volume of
transportations and decrease in payments for use of rail transport
route in 2009. Despite that, ZSSK CARGO is making efforts to
prepare for the acquisition of new transportations, where we
succeeded in particular in the field of intermodal transport.
Strengthening technical - technological capacities
Despite the unfavourable situation, in 2009 company ZSSK
CARGO completed several ongoing projects and activities that have
enhanced performance of transportation and transport processes
and expanded portfolio of services provided. This year, the operation
of rotary tippler for transhipment of bulk substrates shall commence.
It is owned by a subsidiary of ZSSK CARGO with logistics - forwarding
partner. We assume that by operating this top-quality facility, we will
be able to increase bulk substrates transhipment capacity in Eastern
Slovak Transhipment Yards by about 50%. It should be mentioned
that a new thawing plant of iron ores has been in operation within
the above-mentioned subsidiary for almost a year. In the area of
transhipment yards in Čierna nad Tisou, company ZSSK CARGO
has completed a complete reconstruction of re-pumping facility for
chemical and oil products.
Major investments include new series of wagons Sggmrss for
transportations of 90-foot containers and swap bodies, which have
been expected by the company in its rolling stocks for a long time.
Despite a temporary reduction in demand, it is expected that there
will be higher demand for transportation of 40 and 45-foot containers
again in the near future. The rolling stocks were completed by Falns
wagon series, which is of great interest especially for transportations
of coal, slag, limestone, gravel, sand, etc. The company has also
completed an investment in Eamos wagon series, which enable
transhipment of bulk substrates from one wagon of gauge 1 520 mm
to one wagon of gauge 1 435 mm.
In intermodal transport, besides use of new wagons, the
cooperation with Russian national operator of combined transport
TransContainer, renting the Combined Transport Terminal in Dobrá in
the long term, is becoming more intense. Based on this cooperation,
we expect the opening of transport route for transportation of
containers in direction to the Russian Federation.
Performance and expectations
The year 2010 is supposed to be a year of gradual increase in
demand for transport by rail. We are expecting that a demand growth
to the level of the pre-crisis period will be slow and gradual with
a horizon of next 5 to 7 years. However, we are convinced that ZSSK
CARGO will continue to play an important role in rail freight traffic
in Central Europe and particularly in transportations carried in both
gauges – 1435 and 1520 mm.
Ján SIMČO
Member of the Board of Directors and Head of Trade Division of ZSSK
CARGO