RCA goes one better in its strategic medium-term planning
06-Jul-2010
Tariff amendments in national unaccompanied combined transport – unprofitable transports cannot be justified from a business management point of view
Rail Cargo Austria (RCA) has gained ground during the economic crisis compared to national and international competitors. While rail freight transport in Austria decreased by a total of 19 %, RCA suffered a loss of about 16 %. This means that RCA was able to gain market shares in Austria in 2009. In a European comparison of the key business indicators - decline in business in an annual comparison, compensation of revenue loss with adjustment measures and resulting loss in percentage of revenue (11 %) – RCA is the freight railway to have best weathered the crisis year 2009. Today, RCA is Europe’s second strongest freight railway and number 1 in Central and South-Eastern Europe.
Medium-term planning
In 2011, RCA intends to be in the black in the national and international part of the business; RCA subsidiary Rail Cargo Hungaria is also to be cash-positive in 2012. Starting from 2013, RCA strives to achieve an adequate profit margin and a corresponding return on equity. This medium-term plan is based on measures with a return volume of more than 200m Euro. These are innovations in RCA’s business activities, process innovations in production and the continued synergies from the convergence of Rail Cargo Austria with Rail Cargo Hungaria - aims that have been consistently worked on since 2009. Furthermore, those transports involving the heaviest losses in national unaccompanied combined transport (national UCT), making up about 4 % of the 200m Euro package of measures, will be reorganised.
Tariff amendment of national UCTs
It has always been the case that national unaccompanied combined transport (national UCT) can only be operated cost-effectively to a limited extent due to the high costs for the area-wide network. So far, it has been possible to in some degree compensate this lack of cost recovery with the positive returns of international connections. The liberalisation and the even more intense competition during the economic crisis, however, also reduced the returns in the international business. The non-cost-effective transports in national UCT have to be brought up to a level that is acceptable from a business management point of view with a tariff amendment of 9 to 14 % effective 1 August 2010. The tariff amendment concerns about 1 % of Rail Cargo Austria's total transport volume. “Combined transport is a strategic element of our planning and contributes to the fact that we transport about 30 % of all goods in Austria on the railway. But we are also in a tough competition with the road at all times and have to act economically: the tariff amendment as of 1 August for the non-cost-effective part of national unaccompanied combined transport is a necessary step. We can no longer afford to handle transports that leave a hole in our balance sheet,” explains Friedrich Macher, Spokesman of Rail Cargo Austria’s Board of Management. Macher does not accept the accusations that the tariff amendment could result in the shifting of transports from the railway to the road. “It is at the sole discretion of every customer to decide whether to have his transports carried out by the environmentally friendly railway or on the road. Rail Cargo Austria leaves no stone unturned to ensure that transports are shifted onto the railway, but we also have to think in terms of profitability. We can no longer operate unprofitable transports, just so that someone else can benefit from the image of a “green hero” at our expense. Industry, politicians and stakeholders must engage in joined-up thinking and collaborate so that the railway is pushed as means of transport.”
It was the intention to introduce a long overdue tariff amendment in national
UCT already for early 2009. This price amendment was abandoned and postponed by
six months to July 2009 to support the loading industry – quasi as “crisis
contribution”. Furthermore, Rail Cargo Austria did not increase the tariffs to
the extent required from an economic point of view. With this second tariff
increase for hitherto unprofitable transports in national UCT, the price in this
segment comes closer to being economically acceptable. In addition, there are
positive discussions with the Federal Ministry for Transport, Innovation and
Technology (BMVIT) about a possible shifting of existing transport subsidies to
UCT.
The concerned customers in purely national UCT have already been informed about
the tariff increases – collection and delivery connections to international
transports are only marginal, the Highway on Wheels is not affected at all.
Currently, the total volume of RCA’s unaccompanied combined transport comprises
about 800,000 load units (containers, etc.); of this, about 60,000 load units
are transported in the concerned segment.
Combined Transport
One business unit of Rail Cargo Austria is the combined transport, i.e. the sensible chain-linking of different carriers (mainly the railway and the road) into one transport. All goods can be transported in containers or swap bodies.