ERMEWA-branded wagons are part of the fabric of the European rail freight network. With a fleet of 45,000 including more than 120 wagon types suitable for carrying all types of freight, the leasing company has progressively become a key partner for the European freight sector since it was founded in 1956.

Yet as president, Mr David Zindo, explains the company is more than a wagon leasing company.

The Inveho maintenance and new-build division operates from five workshops in France and three in Germany, providing maintenance and repairs, wheelset maintenance, wagon refurbishment and manufacturing. Streem is also the number one tank container leasing company in the world. Its Eurotainer business possesses a fleet of around 80,000 tank containers of more than 50 types spanning a global network of industrial customers. Raffles Lease offers tank container leasing for operators and transport companies, while Demi offers maintenance and repair, storage, and testing of tank containers at its depot in Rotterdam and at a future depot in Houston.

Making a clear distinction between all of these different customer-facing brands and the holding company was the reasoning for the company’s decision to rebrand as Streem, which was confirmed in early April.

“This clarifies the fact that Streem is not only Ermewa,” Zindo says. “In the past you could get confused between what is Ermewa Group and Ermewa. Hopefully this will now be clearer. The group is not only wagons, but it is also tank containers.”

What is now Streem was associated with French National Railways (SNCF) for around 30 years, initially through a minority shareholding before SNCF purchased the group outright in 2010. With SNCF seeking to reduce its debt burden, it chose to offload the division, with CDPQ and DWS Group buying the company outright for €3.2bn in October 2021.

“In the past you could get confused between what is Ermewa Group and Ermewa. Hopefully this will now be clearer. The group is not only wagons, but it is also tank containers.”

David Zindo, Streem president

Zindo says the sale prompted the change in company identity. It has also reinvigorated its strategy for growth. Streem is aiming to nearly double revenues to €1bn by 2030 compared with the €560m of revenue reported in 2022. Driving this upward trend is modal shift of freight from road to rail in Europe, specifically intermodal.

“Historically rail freight has been more classic bulk commodities like steel, oil, grain, aggregates,” Zindo says. “Progressively, all freight that is currently on the roads, like palletised products and containers, will increasingly be transported by rail. And this is where you have some space to grow. What we are doing is to renew and slightly grow the traditional fleet of freight wagons while we develop, very fast, the intermodal fleet. That is where the growth is going to come.”

Zindo points out that the average age of the fleet is now around 29 years, down from more than 35 a few years ago but still “too high.” “We have made huge progress but we still need to be below 25 or 23 years, in my opinion, to be in a stronger position,” he says. “We will get there. But it is a question of how quickly we phase out the old part of the fleet and how quickly we buy new wagons. Our fleet has a lot of very old and a lot of very new wagons. There is not a lot in the middle.”

With oil consumption expected to decline in the coming years, Zindo expects the proportion of this wagon type to decline, especially if the EU pushes through a ban on petrol and diesel engines for cars. The bulk fleet is expected to remain stable, while intermodal will increase substantially as demand rises.
“Ermewa has only become involved in the intermodal sector in the last four or five years, so we have to build up our fleet over time,” Zindo says.

Inveho is expected to cover one-third of Ermewa’s need for new wagons, according to Zindo, who adds that the company faces a strategic question of whether it expands internal production or relies more on external supply in the future. Streem also finances these assets, working alongside private finance institutions, which have become increasingly engaged in the leasing business in the past 10 years.

This is also reflective of changing rail freight market dynamics over this period. DB Cargo, SNCF and Rail Cargo Group remain the continent’s three largest operators, and Streem’s largest customers. The company also works directly with industrial companies, such as ArcelorMittal, Total Energies and Inovyn. Yet the market has become increasingly populated with new entrants. The annual Market Monitoring Report from the Independent Regulators’ Group-Rail (IRG-Rail) released in April found that more than 50% of Europe’s rail freight operators are considered “challengers.”

New entrants

The association says that rather than replace existing flows, the new entrants have created new markets for rail freight, notably in intermodal and logistics. Zindo says he does not expect the proportion of new entrants and incumbents to change much further. However, he says their steadily growing presence has instilled a greater spirit of innovation within the market, resulting in improvements in the quality of service by providing leasing companies with the opportunity to reposition their equipment, diversify their customer portfolio and make better use of their assets.

As a result, Streem has undergone a major cultural transformation. Instead of technically and financially focused, Zindo says the emphasis is on developing a service-oriented culture. “Getting modal shift by convincing the shippers that rail freight is an efficient way of moving cargo means that the service question is now a central concern,” Zindo says. “You need to meet the expectations of the customer.”

David Zindo, Streem president.

To achieve this, Ermewa and its competitors are working to improve the visibility of their assets to offer greater reassurance to customers. Work is underway to improve condition monitoring and performance of equipment to better inform maintenance practices. Ermewa has been fitting its wagon fleet with telematics systems or CMUs supplied by Amsted Digital Solutions since 2018 under a project that began in 2016. Zindo says that deployment has been completed on 75% of the total fleet, and he expects the rollout to be finalised within the next 18 months to two years.

Among the latest functionalities confirmed on May 11 is the deployment of Amsted’s Load Status in Motion (LSiM) technology, which leverages machine learning and Artificial Intelligence to determine the load status of a wagon. The technology calculates the cumulative loaded and empty mileage with a high degree of precision and accurately measures the number of cycles that a wagon experiences when empty versus loaded. It is hoped the technology will drive significant improvements in maintenance practices.

In addition, Amsted signed an agreement to supply 7000 IQ Series gateways to Ermewa in January. These are maintenance-free, solar-powered and rechargeable devices that perform real-time onboard health monitoring of key components without the need for wireless sensors. Data collected from the IQ Series device is synthesised into actionable intelligence accessed through Amsted’s software and which helps to optimise maintenance planning, enhance operations, improve shipment planning and identify bottlenecks.

Since the initial Amsted contract was awarded, work has taken place to standardise communication protocols between different hardware providers, providing the opportunity to work with additional suppliers. Ermewa confirmed on May 2 that it had reached an agreement with a second partner, Nexxiot, to install its Asset Intelligence Technology across the entire fleet, in what Zindo describes as the next phase of the company’s digitalisation process “With interoperability between the different technologies, the difference then is the performance of the box,” he says. “How long can it run without running out of battery power? What are the costs? What services in terms of data processing is your supplier offering you?”

Under the agreement with Nexxiot, Ermewa will access its cloud for advanced real-time asset intelligence and detailed performance metrics on wagon location, utilisation mileage, impacts and other significant events that can require maintenance, transport quality and safety. Nexxiot’s existing partnership with Knorr-Bremse, under which the supplier offers live data on the condition of a range of subsystems, was cited as a major factor in the decision by Ermewa to adopt the technology. It is hoped this information will offer improved management of maintenance scheduling and procedures, reducing the time wagons are in the workshop and out of service.

A further partnership with French research institute Railenium is exploring the possibility of introducing predictive maintenance for the fleet, or maintenance 4.0 as Zindo puts it. “Railenium is bringing their scientific knowledge about algorithms and how to cope with data, and we are bringing our experience of operating wagons so we can develop a new maintenance concept,” he says. “That is part of our digitalisation journey.”

Digital Automatic Coupler

A key enabling technology for wider digitalisation is the Digital Automatic Coupler (DAC). Ermewa is heavily involved with testing the technology as part of the DAC4EU consortium. Unsurprisingly, Zindo is a major proponent of DAC, which he says will facilitate the intelligent freight train of the future - a completely connected consist providing real-time data on train condition and location as well as automated train departure. He says there are three main challenges to rolling out DAC: technical, where he feels the consortium partners are making good progress; operational and cultural, due to the changing roles of workers and coupling processes; and financial, due to the vast cost of equipping the European fleet of 483,000 wagons.

“I don’t have any example of an industry where a new technology that risks significant disruption has not been supported by public money.”

David Zindo

Zindo favours a model where public funding picks up the bulk of the cost of rolling out DAC, which is estimated at €10.6bn by the European Commission. He points out that if the private sector is forced to swallow this cost, it will take money away from other capital improvement projects, such as purchasing new wagons, an essential requirement if the industry is to deliver modal shift on the scale required. It could also delay or even prevent the full rollout of DAC.

“I don’t have any example of an industry where a new technology that risks significant disruption has not been supported by public money,” he says.

Zindo says that while significant progress has been made in improving its offer to the market, Streem is continually looking to improve. As well as the name change, he says recent adjustments to management and organisation are intended to help the company “reach the next level.” Among the priorities is improving turnaround times, specifically closing the gap between the time it takes to complete a repair and to return the wagon to a customer. He says there are possible improvements in anticipating the spare parts required and for speeding up mobile maintenance activities.

“The big question is how you apply the concepts to the 45,000 wagons that we have,” he says. “This is the challenge. Technically we are able to cope with any situation, more or less, and quite swiftly. Then the question is how to scale this up to deliver a consistent level of service across all of Europe.”

Streem’s ambition seemingly matches the opportunities on offer. It will be fascinating to see how the company’s journey evolves in the coming years. After all, meeting its ambitions will mean wider success for the European rail freight sector and the quest to secure meaningful and significant modal shift to rail.