'New Model' For German - Italian Rail And Intermodal Freight

SWITZERLAND – After deciding in February that measures needed to be taken to realign the business in the face of a fierce freight rate battle, rail operators SBB Cargo, together with Hupac the country’s principal providers on the North – South European access corridor for rail and intermodal freight services respectively, have announced the foundation of a new train operating company. SBB Cargo International, 75% owned by SBB with the balance of shares being Hupac’s, which is scheduled to begin operations in 2011.

By pooling their talents and corporate strengths the two leading Swiss rail companies believe they can resist intense overseas competition from companies like DB Schenker on the vital corridor handling freight between Germany and Italy. The new company will run block and intermodal trains with Hupac being the largest customer but the operators say they will actively and aggressively seek new business and are prepared to negotiate for other companies to become stakeholders in the venture.

SBB Cargo International intends to be a neutral traction company which, by optimising existing resources and halving its corporate structural costs, can pressurise other independent operators who currently own and run their own freight trains on the route. The two owners claim a first in terms of a business model in the sector saying this is only time intermodal operators have had a stake in, and some responsibility for, a train operator. Hans-Jörg Bertschi, Chairman of the Board of Directors of Hupac commented:

“We have gone against the European trend by developing a model in which the railway company does not effectively take away the intermodal operator’s freedom of action by integrating it”

The new company will employ around 480 people, including 237 drivers and 76 operating staff. A further 170 employees will work in planning, scheduling and administration. SBB Cargo International will have its own locomotive crews in Germany and Italy right from the outset. In Switzerland crews will initially be leased from SBB Cargo.

The new company will probably be based in the Basel-Olten-Lucerne area. A search for suitable office premises is in progress. The existing depots on the north-south corridor in Switzerland will be retained, but – in a departure from current practice – drivers will be deployed to a greater extent within the same country. Basel will become the central hub of the Gotthard and Lötschberg corridor production concept.

The number of drivers at SBB Cargo’s depots in Ticino and central Switzerland will remain at around its present level. In Germany, the staff currently based in Offenburg will be transferred to Mannheim in the medium term. The other sites in Germany and Italy will be retained for the time being. The subsidiaries currently responsible for production in Germany and Italy will be integrated into the new company.

The spin-off of international operations into the new company will result in 157 redundancies at SBB Cargo over the next two years. The company say these will be implemented in a socially responsible manner and that SBB will offer alternatives for retraining within the rest of the company claiming they can provide new employment opportunities thanks to growth in other areas. Chemoil, the subsidiary specialising in the transport of petroleum and chemical products, will remain an affiliate of SBB Cargo AG.

SBB Cargo International will initially lease 109 main-line locomotives from SBB Cargo’s existing fleet, 59 of which will be modern multi-voltage locos for cross-border operations. The linchpin of the new company's corporate strategy is increased locomotive and driver productivity. This will be achieved by implementing what they term a ‘clockface’ production system in which locomotives will operate a large number of round trips, with reduced downtimes and a focus on high-volume routes. The aim is for the company to break even by 2013 and become self-financing in the medium term.