SEVERAL Swedish rail freight operators have been badly hit by the bankruptcy of First Row Shipping & Logistics in October after the company was unable to pay its bills.
“The bankruptcy has hit us hard,” BLS Rail’s CEO Mr Tomas Medezech told the Swedish railway new website Järnvägar. “The suspension of payments came as a surprise, but First Row had started becoming tardy with the invoices from us, so perhaps we should have suspected trouble.”
First Row Shipping & Logistics declared bankruptcy on October 13, despite reporting good results during previous years, even during the pandemic. Its focus was on intermodal transport between the raw material-rich north of Sweden and the port of Gothenburg, and became very successful, even to the point of contributing to a general shift from sea to rail for all freight transport along those routes.
While the exact reasons for First Row’s collapse remain unclear - the CEO Mr Nikolas Rowland has declined to elaborate - the Swedish economy has been in dire straits in recent months, with high interest rates and costs and sharply declining public purchasing power. This, in turn, means that First Row’s bankruptcy adds to an already long list of woes for its customers due to uncertainty over the immediate future of rail freight services.
BLS Rail’s contracts with First Row, for example, were worth between SKr 4-6m ($US 380 000-570 000), or 4-7% of BLS Rail’s annual turnover. “That’s a lot of money for a relatively small company as ours,” Medezech says.
“Now we’re trying to figure out how to straighten out our finances and move on,” Medezech says.
Another company, Väte Rail, says it has been able to continue running trains between Malmö and Ånge via Gothenburg and Sundsvall, “in spite of some obstacles and suspicion,” as the CEO Mr Jan G Forslund puts it. Nevertheless, Väte Rail has also been hit hard, not least since the operator of the intermodal terminal in Sundsvall, Sandahlsbolagen, suddenly refused to handle Väte Rail’s hazardous goods wagons unless Väte Rail could put up a SKr 2m bank guarantee.
“That was a very strange requirement,” Forslund says. “I’ve never experienced anything similar. We were forced to unload and load in Gävle and drive the tank containers by lorry, which became expensive and time-consuming.”
Väte Rail has since been able to raise a bank guarantee, but Forslund is disappointed with having to face such a requirement in the first place, arguing that larger competitors would be unlikely to be treated in the same way. Sandahlsbolagen has declined to comment.
A third company which had First Row as a client, Hector Rail, is playing down the financial consequences, and has also been able to take over one of the routes.
As for the other routes, there is no indication whether over operators will step in.
These disruptions spell bad news for the port of Gothenburg, which has already been hit by sharply declining imports due to the falling value of the Krona.
“We’ve built our success on a very large share of goods by rail, and it would be sad if the rail services that have now been stopped after the bankruptcy of First Row cannot resume,” Mr Jacob Minnhagen, senior manager of market development at Port of Gothenburg, tells Järnvägar. “To us at Port of Gothenburg, it’s important that the logistics arrangements remain, no matter who runs the trains.”
