Hupac identifies rail drawbacks

A LONG WAY TO GO

RAIL • COMBINED TRANSPORT OFFERS OBVIOUS ENVIRONMENTAL BENEFITS BUT, AS LEADING OPERATOR HUPAC EXPLAINS, THERE IS A LOT TO BE DONE IF THEY ARE TO BE REALISED

SWITZERLAND-BASED COMBINED transport operator Hupac reports that traffic volumes increased by 21.4 per cent in 2018, helping it increase its sales by 19.4 per cent to SFr 579.7m (€502.1m). Hupac says this growth reflects continued development of its core business of combined transport through Switzerland, the recovery in Rhine corridor traffic after the Rastatt disruption in 2017, and the added contribution of ERS Railways, which was acquired in June 2018.

As a result, Hupac generated a net profit of SFr 7.9m. This was a decline of 29.1 per cent from the 2017 figure but in line with expectations in light of some one-off costs.

The volume of transalpine traffic through Switzerland improved by more than 14 per cent, with 67,000 additional road consignments moved onto the rail. Around half of this volume represented a rebound following the Rastatt disruption in the third quarter of 2017 but there was nevertheless an 8 per cent overall increase in transalpine traffic, led by semitrailers.

While these figures are good, Hupac believes they show the limitations in the current rail industry in Europe. For instance, it says that two years after the opening of the Gotthard base tunnel, the productivity improvements envisaged for transalpine combined transport can only be achieved in part.

On the one hand, the elimination of double traction on mountain routes, allowed by the introduction of gentler gradients, has reduced costs. Further gains are expected with the used of longer trains and the planned opening of Hupac’s Busto Arsizio-Gallarate terminal at the end of 2020. However, Hupac says, “there is a considerable gap compared to the current operating subsidies which expire in 2024”. This will make combined transport more expensive than road transport, endangering the modal shift that has been achieved so far.

OBSTACLES TO SUCCESS Hupac says there are a number of factors that reduce the competitiveness of combined transport on the Rhine-Alpine corridor.

Firstly, connecting routes in Germany limit train lengths to 690 metres, rather than 740 metres. Extension of the Rhine-Alpine corridor into these connecting routes is not expected before 2030.

Secondly, despite work on the Gotthard base tunnel, some routes have gradients that still require double traction: the Domodossola line has a gradient of 26 per cent and Chiasso around 17 per cent, whereas single traction is viable with gradients only up to 12.5 per cent. The upgrade of the Lugano-Chiasso line is not expected before 2050.

Hupac would like to see trains weighing more than 1,600 tonnes used in Italy but power supply issues currently place a limit on train weights. While the Gotthard base tunnel has increased access to transalpine routes, any efficiencies gained are nullified by a lack of synchronisation of the timetables between Switzerland and its neighbours, Hupac says. And ongoing construction work along the Rhine-Alpine corridor means that sub-optimal operating conditions must be expected beyond 2030.

To achieve the modal shift that is desired, both by governments and by industry, Hupac believes that action needs to be taken to support combined transport activities. The company has been preparing itself for the abolition of subsidies in Switzerland at the end of 2023; that means looking for lower costs and greater payload per train. Hupac calculates that it can compensate for half the loss of subsidies through improved train parameters, while lower track access charges coming in in 2021 will also help. However, those track access charges are still high compared to those in force elsewhere in Europe and, as Hans-Jörg Bertschi, president of Hupac, notes, both Germany and the Netherlands are reducing their charges even further.

“In order to continue the positive dynamics of the modal shift, Switzerland’s operating subsidies should be provided at a lower level until around 2030 to bridge the existing deficits,” Bertschi says. By then, Hupac hopes, the upgrading of the Rhine-Alpine corridor will be complete, helping to restore smooth traffic on a disruption-free rail infrastructure. Only then will combined transport be able to take advantage of the full productivity benefits and operate self-sufficiently.

BANKING ON GROWTH Hupac itself continues to invest, both in rolling stock, terminal facilities and digitisation. Last year it increased investment significantly, spending SFr 71.3m. That increased its wagon fleet by 16 per cent, with expansion focused on 48-foot flat wagons and type T3000 pocket wagons to help handle rising demand for megatrailer transport.

Transhipment terminals are crucial to the development of intermodal transport, Hupac says. In order to secure capacity for further growth, Hupac together with partners is pursuing terminal projects at Milano Smistamento, Piacenza and Brescia in Italy, Gateway Basel Nord in Switzerland and Brwinów/Warsaw in Poland, with completion scheduled for 2023. Last year it acquired a stake in the RTC Geleen terminal in the Netherlands and this year has increased its stake in the Novara CIM terminal from 3.5 per cent to 47.5 per cent. In summer 2019, the Italian subsidiary Hupac SpA will start operating the Pordenone terminal in northeastern Italy.

The frequency of numerous services was increased last year, with new connections also added, and that process is continuing this year, especially in the Company Shuttle business and ERS Railways.

Hupac is also riding the digitisation train, as CEO Beni Kunz explains: “By the end of 2019 we will make the ‘Hupac Train Radar’ available to all customers for tracking their shipments.” The system will be able to generate reliable arrival forecasts and make them available to customers. Other initiatives include new terminal gate access systems, reliable capacity management and an integrated booking-to-billing platform.

SLOW START TO 2019 In the first four months of this year, the Hupac Group recorded extraordinary traffic growth of 28 per cent; however, much of this can be attributed to the addition of ERS Railways, which Hupac acquired in June 2018. Traffic development at Hupac Intermodal remained slightly below expectations, with a growth of 3 per cent.

Overall, Hupac expects traffic demand to stabilise in 2019 as a result of the economic slowdown in Europe. “Despite the emerging economic stagnation, we assume that we will achieve traffic growth in a high singledigit percentage range and thus touch the one million mark,” says Kunz.

Challenges are expected in 2019 related to construction sites for the expansion of the access routes to the Gotthard base tunnel. However, these will lessen by the time the 4-metre corridor opens up. Kunz says: “With the start-up of the 4-metre corridor via Gotthard and Ceneri in 2021 we anticipate considerably more efficiency and reliability in favour of a further shift of goods transportation from road to rail.” HCB www.hupac.com

THERE IS CLEARLY AN APPETITE FOR COMBINED