„Our owner is undergoing the necessary restructuring and I believe that this will result in a healthy, profitable and flexible company. We are at a different stage, we have undergone restructuring and are dynamically developing and investing,” says Łukasz Grzesło, Chairman of the Board of PKP CARGO INTERNATIONAL.
Is the PKP CARGO INTERNATIONAL Group profitable?
The results of the PKP CARGO INTERNATIONAL Group for Q1 2024 can be considered good, which makes me optimistic about the results in the following months.
What are its strengths?
Firstly, our revenues are diversified. In addition to freight, we offer shunting on railway sidings, reclamation services, construction and maintenance of railway infrastructure, We also own a large intermodal terminal. Our wide range of services allows us to maintain revenue stability, although of course there is no shortage of challenges in each of these business lines. However, I see our real advantage in the strength of the entire PKP CARGO Group. We have at our disposal a fleet of more than 53,000 very diverse wagons, which make it possible to transport basically any type of goods. Our transports are supported by a network of our own terminals, thanks to which we have great flexibility and can respond to the specific needs of each customer. I cannot see another logistics operator on the market today that can offer such a wide range of services across almost the whole of Europe. Therefore, on a ‚team game’ within the whole Group, we intend to grow our business.
Did Advanced World Transport – the protoplast of PKP CARGO INTERNATIONAL – which was acquired by PKP CARGO S.A. in 2015, undergo restructuring before the transaction was finalised? I ask whether it is free from the problems of the parent company today.
PKP CARGO INTERNATIONAL is in a completely different place from PKP CARGO S.A. (which is our owner). The restructuring processes are behind us, which ensures that our structure is efficient and flexible. Currently, the level of our resources is adapted to the scale of the business. We are now focusing on dynamic development, investing in rolling stock and terminals, new routes and developing our offer to our customers.
What is the situation on the Czech rail freight market?
In 2023, the Czech market shrank by around 10 per cent and in the first half of this year by a further 8 per cent. As the Czech Republic is a transit country, I believe these figures are a good indication of the broader picture, i.e. the situation of the entire freight market in the Central European region.
It is important to remember that the Czech Republic is a very advanced country by rail, with excellent infrastructure and fast journey times. There is strong competition here. We are competing with both an efficient Czech national carrier and foreign concerns, which are mostly backed by large capital. In order to compete successfully, we need to move ahead strongly.
A difficult task to accomplish, in the reality of the PKP CARGO Group.
I don’t think so. Our owner not only supports our development activities, but also actively participates in them. If we carry freight on the Baltic-Adriatic corridor, the carrier on the Polish section is PKP CARGO S.A. under restructuring, and on the Czech-Slovak-Hungarian and Slovenian section PKP CARGO INTERNATIONAL. Our development, e.g. the construction of a new intermodal terminal in the Czech Republic, and thus the increase in the number of trains, is therefore also to the benefit of our owner’s business. We play on the same team and cooperate effectively to deliver the best services.
When you think of development, do you also mean abandoning the purchase of coal cars in favour of the purchase of container platforms?
I can assure you that we will keep the stock of coal wagons at a safe level, as history shows the demand for coal wagons always comes back sooner rather than later. But we do indeed want to strengthen our wagon fleet with tankers and specialised wagons – we see a growing demand for such transport.
Will the development also include intermodal transport?
Of course, we are one of the few hauliers who can haul intermodal. What I mean by ‚can’ is, above all, punctuality, which is crucial for terminal entries and therefore the profitability of the haulage. On the proverbial „fingers of one hand” I can point to hauliers who make money from intermodal transport in the long term. This requires a certain reorientation of the entire organisation to this type of transport, but we are able to do this and are doing it effectively.
What is the status of PKP CARGO INTERNATIONAL Group within PKP CARGO Group? Examples of business groups experiencing financial problems point to two recovery schemes: the entity depends more heavily on the parent company to make up the losses or rescues it by becoming the subject of a sale.
I can confidently say that none of this is the case here. Our owner’s approach is one of partnership, with respect for our competence and knowledge of the local market. What is certainly ahead of us is an even stronger strengthening of commercial and operational cooperation within the entire Group. I am thinking in particular of PKP CARGO S.A. in restructuring – PKP CARGO INTERNATIONAL and PKP CARGO CONNECT, i.e. between two carriers and an international freight forwarder. This is where I see the source of our future successes, as none of our competitors has such potential.
Still unchanged, PKP CARGO’s strategy in the restructuring is to be „the Central European leader in rail freight by gaining a dominant position in the Threeseas area and on the New Silk Road”. I understand that PKP ARGO INTERNATIONAL fulfils the functions of the north-south route freight business?
Exactly so, and this route should be understood much more broadly today. Our trains reach Slovenia as well as Italy or Turkey, and new countries will soon follow. What is more, we are also adding comprehensive services at our terminal in Paskov. The changes currently taking place within the PKP CARGO Group do not alter the fact that it is a Central European leader and one of the largest rail freight carriers in the European Union.
You said that the Czech rail cargo market is experiencing difficulties. What are your freight forecasts for the North-South route?
Optimistic, insofar as we look at this corridor holistically and much more broadly than is usual. In our view, in the north it does not end at Polish and German ports, further afield there is, for example, Sweden with its large freight potential and wide range of cargo. We are looking for favourable rail and ferry connections with Scandinavia, here the PKP CARGO Group has specific plans. In the southern direction, on the other hand, we not only have ports on the Adriatic or Black Sea, but also the interior. In the Balkans, major infrastructure investments are underway, for which materials are needed. To a large extent, these are transported by rail. Transport from countries that used to be very distant to us by rail, such as Bulgaria, Serbia and Macedonia, is becoming more active towards Poland. Nowadays, we have regular connections with these countries and really great potential for the development of transport.
What is the potential of the Paskov container terminal?
Paskov is the heart of our intermodal connections. Its great advantage is its location – almost in the middle of the Baltic-Adriatic corridor and not far from Ostrava, which is the industrial centre of the Czech Republic. A motorway runs nearby, which allows it to diversify its activities in terms of logistics services – not only by rail, but also by truck.
Our good experience of Paskov’s operation has led us to include the construction of another terminal in the Czech Republic in the Group’s development plans. This time we want it to be in the western part of the country which will open up the potential for even greater cooperation in the directions of Austria and Germany.
Finally, a question related to your professional career. PKP CARGO is downsizing, some employees are resigning, and you are coming on board?
There needs to be a clear separation between the situation of our owner in Poland and how PKP CARGO INTERNATIONAL operates. As I mentioned, our owner is undergoing the necessary restructuring and I believe that it will result in a healthy, profitable and flexible company. We are at a different stage, we have undergone restructuring and we are dynamically developing and investing.
Let us remember that PKP CARGO Group is still the second largest rail freight carrier in the European Union. I don’t see a company with more potential for a manager on the railway market today. Of course, the challenges are big and complex. But how many times in a career does an opportunity arise to heal such a large international organisation? That is why I believe that, as professional opportunities arise, more experts from the rail market will join the PKP CARGO Group following me.
I have to honestly say a lot of determination in action and perseverance is needed, as well as a real ability to work as a team. Railways is too expensive a business for individual charges and acting alone. It really costs a lot to run a train, so it needs to be carefully planned and executed. So I am inviting those who can „play in a team” and want to build the international position of PKP CARGO INTERNATIONAL together with us.
