Rail Freight servicesRail Freight servicesfrom the European perspectivefrom the European perspective

Joint ESCAP – UIC SeminarBangkok, 9-11 December 2015

Jakab László, rail freight sales manager, Hungary

Sharing experiences in:Sharing experiences in:

- How to fix the price of the railway services and products, especially in the Freight Traffic?

- How to get the required margins for the maintenance and the renewal of the assets, the infrastructure and the rolling-stock?

- How to include certain benefits for the company?

LIBERALIZATION

91/440 EC directive of railway development from 29.07.1991.

•SEPARATION of infrastructure and railway operation

• FREE ACCESS of railway infrastructure to new railway undertakings

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PRIOR TO THE LIBERALISATION

Railway infrastructure border

Railway company „A”

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Railway company „B”

AFTER THE LIBERALISATION1. Separation of rail services and infrastructure

2. Opening the railway infrastructures for international railway undertakings

3. New railway undertakings appear on the market

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Rail freight sector in Europe after Rail freight sector in Europe after liberalisation (simplified model)liberalisation (simplified model)

Railwayundertaking (incumbent or private)

- Connections on the market (producers, forwarders, operators, etc.

- Wagon fleet (not necessarily)

- Locomotives (not necessarily)

Traction

- Locomotive owner and/or lessor

Infrastructure Manager

- Railway infrastructure

- Signalling- Catenary

Customer (producer, trader, operator, forwarder, etc.)

How to fix the price of railway services?How to fix the price of railway services?

OUR COMPANY (RU)

Railway competitors Other modes of transport

Infrastructure usage charges

Traction Wagon fleet

Overhead costs

Cost calculation modelCost calculation model

Origin: Hungary (Budapest)Destination: Germany (Port of Hamburg)Quantity: 2 trains/week/directionTransport time: 4 days/roundtrip

Train parameters (per train):-20 railway owned wagons-500 meters-1.600 gross tons-1 electrified locomotive

Cost calculation modelCost calculation model

Cost calculation model round trip Cost calculation model round trip (in USD)(in USD)

Cost element Hungary Austria Germany

Time per country (days): 1,5 0,8 1,7

Distance in km (per direction): 195,5 361,5 1.058,2

Infrastructure usage charges1: 1.006 3.032 9.947

Stationary costs1: 1.052 0 956

Electricity costs1: 1.046 2.904 8.502

Shunting (terminals)2: 1.650 0 2.200

Wagons3: 825 440 930

Locomotive incl. Driver4: 1.980 1.060 2.250

Total production costs5: 7.559 7.436 24.785

SourcesSources

Cost calculation model round trip Cost calculation model round trip sourcessources

1: Source: 1: Source: Network statements of VPE (Network statements of VPE (https://www2.vpe.hu/en/networkhttps://www2.vpe.hu/en/network--statementstatement))ÖÖBB Infrastruktur BB Infrastruktur ((http://www.oebb.at/infrastruktur/en/_p_Network_Access/NetworkStahttp://www.oebb.at/infrastruktur/en/_p_Network_Access/NetworkStatement/tement/) ) DB Netz DB Netz http://fahrweg.dbnetze.com/fahrweghttp://fahrweg.dbnetze.com/fahrweg--en/network_access/network_statementen/network_access/network_statement2: 2: based on expertsbased on experts’’ estimationestimation3:3: based on expebased on experrtsts’’ estimation, incl. deductionestimation, incl. deduction4: Source: 4: Source: EisenbahnEisenbahn--Kurier 1/2011 Kurier 1/2011 –– Page 53; Page 53; http://www.focus.de/finanzen/news/bahn/lokfuehrerhttp://www.focus.de/finanzen/news/bahn/lokfuehrer--ihrihr--einkommeneinkommen--ihreihre--zulagenzulagen--ihreihre--arbeitszeiten_aid_607209.htmlarbeitszeiten_aid_607209.html5: excl. overhead costs5: excl. overhead costs

BackBack

Sharing experiences in:Sharing experiences in:

- How to fix the price of the railway services and products, especially in the Freight Traffic?

- How to get the required margins for the maintenance and the renewal of the assets, the infrastructure and the rolling-stock?

- How to include certain benefits for the company?

Influencing factors on price fixing Influencing factors on price fixing (competitive environment)(competitive environment)

Total production costs: 39.780,- $Overhead costs: ???? $Extra (non-calculated) costs: ???? $Profit: ???? $

Competitors’ offers: ???? $

Other transport modes’ offers: ???? $

Customer (producer, trader,operator, forwarder, etc.)

Sharing experiences in:Sharing experiences in:

- How to fix the price of the railway services and products, especially in the Freight Traffic?

- How to get the required margins for the maintenance and the renewal of the assets, the infrastructure and the rolling-stock?

- How to include certain benefits for the company?

Benefits Benefits on//foron//for the marketthe market

Rail freight service is not only transporting between A and B!!!

Value added services to be offered (e.g.: terminal services, door-to-door services, customs formalities)

Tailor-made solutions – common understanding by learning about the partners’ needs

ConclusionConclusion

- Global transport model is much more complicated

- Cost based calculations - Market knowledge- Optimization (know-how)- The closer to the producers, the better chance for

higher profit- Skilled employees

- Global transport model is much more complicated

- Cost based calculations - Market knowledge- Optimization (know-how)- The closer to the producers, the better chance for

higher profit- Skilled employees

Thank you for your kind Thank you for your kind attention!attention!