July 08, 2014

Rationalisation plan pays off for Slovenian Railways

Written by  Marco Chiandoni
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Slovenian Railways' (SZ) freight business was badly affected by the recession, its network suffered damage from winter storms in February, and its international passenger business is in decline. SZ's general manager, Mr Dusan Mes (pictured), explained to Marco Chiandoni how the railway is responding to these challenges.

WHILE Slovenia may only have a population of 2 million, it is an important transit country as it borders Italy, Austria, Hungary and Croatia. Its rail network lies on two of Europe's designated railfreight corridors, which includes the rail link to Slovenia's Adriatic port of Koper.

"The biggest losses were recorded in freight transport, which consists mostly of cross-border services. Moreover, industries which were affected most by the drop in production during the past recession years were typically frequent users of rail transport."

To counter the negative effects of the recession, SZ rationalised the business - employee numbers have been reduced by more than 2000 during the last five years - and improved cost efficiency by implementing user-tailored rail services.

The strategy has paid off. For the first 10 months of 2013, Ebit was €11m, Ebitda €42m, and net profit reached €12.3m, which is a massive improvement compared with the same period in 2012, when SZ was recording losses of over €700,000. SZ expects Ebit to reach €16m for the full year with a net profit of €13m. Total operating revenues are forecast to reach almost €1bn, a 10-fold improvement on 2012.

In the first 10 months of 2013, SZ carried over 14 million tonnes of freight, which was 5.3% higher than planned and 5.7% more than in the first 10 months of 2012, while passenger traffic during the same period increased by 8.4% to almost 14 million journeys.Dusan-Mes

An unprecedented ice storm in February had severe consequences for both freight and passenger services. A thick coating of ice destroyed almost the entire catenary between Borovnica and Pivka on the main line from Ljubljana to Italy, Koper and Croatia, while causing significant damage elsewhere. The line to Koper had to be closed for an entire week before both tracks could be returned to operation using diesel traction. "Despite the certain limitations of diesel traction, rail services to the Port of Koper are largely back to normal and even hitting record high volumes with as much as 1.7 million tonnes of freight carried in March," Mes says.

Unfortunately, using diesel locomotives is adding an extra €1.5-2m per month to total freight expenses. "For this reason, we hope the state, as the owner of the rail infrastructure, will allocate the funds necessary for a full renewal of the network as soon as possible," Mes says.

Several major investment projects are currently underway. This includes reopening the line between Ljubljana and Kocevje, which closed more than 40 years ago, and reconstruction and electrification of the 109km section between Pragersko and Hodoš - the only non-electrified section of TEN-T Corridor 5 - which will increase the maximum speed to 160km/h. The entire network will be equipped with GSM-R, while ETCS will be installed on the Slovenian section of TEN-T Corridor 6 by next year.

The line to Koper carries around 60% of total SZ railfreight. It can handle up to 35 freight trains per direction per day to Koper. Work is underway to construct new substations and reconstruct Koper and several other freight stations, which will help boost capacity to between 72 and 82 trains per direction per day. "However the only real solution in the long run is to double the track on the section between Koper and Divaca, which is currently a major bottleneck," Mes says.

In addition, many other bottlenecks need to be dealt with, such as the Zidani Most - Maribor line. In the long term, Mes says SZ needs to increase the capacity of the Maribor - Šentilj and Ljubljana - Jesenice lines through track-doubling and provide a rail link to Ljubljana airport.

Most of SZ passenger traffic is domestic. As far as international passenger services are concerned, SZ is struggling against stiff competition from low-cost airlines and highly-flexible long-distance bus operators, a situation which Mes says is common elsewhere in Europe. With ridership dwindling during recent years, the number of connections to Croatia has been cut while Italian State Railways (FS) decided to discontinue the through service between Slovenia and Italy altogether. However, SZ has succeeded in reintroducing two daily trains from Ljubljana to Villa Opicina in Italy together with a bus connection for the final leg to Trieste. But, as Mes reveals, SZ is continuing its efforts to re-open the through service to Italy.

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