Metrans: why there are too few freight trains in the Czech Republic 27/02/23

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Photo: HN – Václav Vašků

There are too many passenger trains, says the head of Metrans. He would like to see more space for containers on the tracks

The cranes at the largest terminal in the Czech Republic oscillate, lifting tin containers from trains and moving them across its surface to the most hidden corners and gaps. The freight terminal of the Metrans company in Prague's Uhříněvsa is so full of goods containers that you can't see the end of it. But it is filled only for the eyes of those who are on it first, not for Martin Hořínek. "So it's not great, after all, there are four vacant dormitories," the company's operations director tames the enthusiasm of the HN editors when they arrive in the company's meeting room. Through the window, you can see the containers, thanks to which, for example, goods from China reach Czech customers.
At the time of the interview, roughly ten thousand containers are stored at the station, about half of what the largest seagoing ships carry. At the same time, almost all of her cargo could fit in Uhříněvsi. However, according to Hořínek, better times, when the terminal will be full, are not yet in sight. In an interview for HN, he says that this year's drop in shipping is the biggest in many years, and at least the first two quarters will not be good for shippers. At the same time, Metrans is the largest container carrier in Central and Eastern Europe, which, in addition to Czech terminals, also has transshipment points in Hungary, Poland and Slovakia. The company sends out 700 trains per week that transport tens of thousands of containers.

How is Metrans doing?

As you could see, the terminal is not completely full. Container transport is always weaker in January and February because the market is full of Christmas goods. This year, however, the decline is greater, and for many years. We are only a month and a half into the new year, but I estimate that the drop in cargo can easily be as much as a quarter. That's why I don't see this year entirely rosy. At least the first and second quarter will not be good. This can be seen on all indicators. I hope that at least in the second half of this year it will turn around.

What makes you such a pessimist?

Prices for shipping a container on shipping lines have returned to pre-covid times. It no longer costs 15 thousand dollars, but only two to three thousand. Nevertheless, ships from China leave half-empty or are withdrawn from rotations so that the remaining ships leave full. Europe is not ordering goods
because it is stocked and has full warehouses. There is no more demand on the market and large importers have nothing to order. He waits. The goods are even less in real terms, because companies in China did not produce at full capacity in January due to covid.

How many trains does Metrans send from Uhříněvsi now?

In the case of a full season, there are 28 trains per day, i.e. 14 pairs. In recent weeks we have been carrying 11 to 12 pairs. It can be even worse, because we have a terminal still full of empty containers that have been put away and we deliver them according to the wishes of the shippers who own them. The turn of February and March will be decisive, when the goods shipped after the end of the Chinese New Year reach Europe. Then it will be clearer how bad it will be. So far, it looks like we will have to park a quarter of our 3,300 wagons. We also have over 80 locomotives, 60 of which are our own. We rent the rest. If worse times come, we will return them to the leasing companies this year. Fortunately, we have good contracts, so they can be returned quite quickly.

Was the drop in container shipping already visible in 2022?

Last year, we managed to increase the volume of transported containers by about five percent year-on-year. It is for the entire Metrans group, it is not just about shipments between the Czech Republic and ports. However, the increase in profit did not match the volume of transported goods, because our costs were increasing. Only traction energy in the Czech Republic has increased by half, and by 100 percent in the last two years. It was at the expense of our margin because the big international freight forwarders and shippers, who are our main customers, refused to accept the sharp increase in prices when inflation was not as high in the Eurozone as here. From the point of view of profit, last year will not be so good.

Are you thinking about adding other commodities to your container business?

We were transporting some Ukrainian grain, but it was not worth putting it in containers. We stand on the containers and that will not change. For now, we mostly transport sea containers. We see a great future in continental rail freight transport. We already have such a line from Prague to Duisburg in Germany or to Turkey. On the line to the port of Rotterdam, we already have 90 percent of the goods in continental transport from England or Benelux. Only less than a tenth of the containers on this line go to sea. We want to strengthen this trend.

Every Czech minister of transport talks about the increase in the share of rail transport. For each of them, on the contrary, its volume will decrease. Will there be a turnaround in the coming years?

I wish I could say something positive, but I can't. Under Minister Kupka, the share increased, but only due to increased coal transportation. Nothing else grew on the railroad. On the contrary, road transport grew rapidly. Trucks can offer lower prices compared to rail. If, for ecological reasons, the goal is to transport goods by rail, the conditions must therefore be created. The railway itself cannot be cheaper because we have unavoidable costs.

You are implying that you need either regulation or subsidy.

A bigger problem for cargo is the mandatory investments that we have to make in order to be able to drive at all. For example, the ETCS security system, which must be on locomotives for greater safety. Earlier promises that up to 85 percent of the costs would be reimbursed to carriers from European subsidies or national resources have not been fulfilled. When it was invented, subsidies were capped at 6.75 million crowns, apparently due to ignorance of market price developments for one locomotive. However, the real price of one installation is now 13 to 14 million crowns.

How much have Metrans' investments in ETCS, which will be mandatory on Czech railways in 2025, cost so far?

We still don't have ETCS on 27 locomotives because we had a problem finding a supplier. Because of this, we also lost some subsidies that we could not use. Now we have finally signed the contract. In addition to ETCS, there are additional costs that cannot be reflected in the transport price. Investments in quiet cars (compulsory replacement of metal brakes with composite brakes to make freight trains running at night less noisy - editor's note) cost us 100,000 crowns per wagon, of which we have over three thousand. But the support for replacing the brakes is only 11,000. Well, and probably the worst is the intention to introduce digital automatic couplings in the future, which must be on every locomotive and wagon.

Why are you against it?

For economic reasons. Germany and Switzerland came up with it, justifying it by reducing labor costs. Perhaps it makes sense for a state carrier at a large station in Maschen (the largest marshalling yard in the EU near
Hamburg under Germany's Deutsche Bahn - ed. note). But we only have a few shifters. We operate differently and the train arrives and departs as a whole at the terminal in Uhříněvsi. Nevertheless, we would have to spend an estimated 35,000 euros per car. This is a cost of more than 100 million euros, which will not be recouped even in 30 years. Germany is trying to quickly convince the European Commission to implement it. At the same time, there is no verified economic analysis of advantages and disadvantages. We don't see much sense in that. If it is to be introduced, let it be on a voluntary basis.

Minister of Transport Martin Kupka in HN recently said in an interview that without new lines, more cargo will not reach the railways. And that, according to him, is a matter of 20 to 30 years. Do you see it the same way?

I believe that a concession way for passenger transport for main lines can help this. It is difficult for cargo to reach the main corridors during the day, as passenger traffic is congested due to the competition of passenger carriers for passengers. People who come to the station in Česká Třebová or Pardubice do not even have to check when their train to Prague is going. Trains are also ordered by regions and the Ministry of Transport. The result is passenger trains that run on the main corridor several times an hour, some with only a few cars. For example, on the connection between Pardubice and Prague, express trains of several carriers run six times an hour, and that's not counting the local ones.

But this will be met with resistance from both Czech Railways and RegioJet and Leo Express.

In Germany, on the connection between Berlin and Hamburg, where there are many more passengers, a long connected set of ICE train runs only twice an hour. However, every passenger knows exactly when the train is leaving and is sure that they will be able to sit on it. Everything works like clockwork and with capacity for freight transport. At the same time, we do not get the times we would like in the Czech Republic. Although there are magicians at the Railway Administration and they somehow manage to put it together, in case of any problem on the track, traffic restriction, delay or fault, everything is managed operationally and passenger traffic has priority. However, I do not share the opinion that the goods can wait for several long hours before the end of the passenger traffic peak. Our customers are then dissatisfied. The trucks will arrive earlier, even though they are stuck in a traffic jam on the D1 highway for maybe two hours.

How often do you need to drive?

We operate 700 regular trains across Europe per week. On average, there are 100 containers on one train. One train thus replaces about 60 trucks on the road. We need to send a train from Uhříněvsi approximately every two hours. If we only travel at night, we won't make it to the ports, because we have a window of two and a half days to hand over the container to the ship. Even a container terminal cannot operate without a regular outflow of cargo and the supply of new trains if you have to transfer 28 complete trains a day. Airlines have their planes in the air all the time. Today, the locomotive costs four million euros. Running it for ten hours overnight and leaving it standing for the rest of the day at such a price is simply not possible.

Minister Kupka wants to improve the situation in freight transport by having the state support the construction of new railway transshipment points, where goods from trucks can be transferred to trains. Do you think it's a good road like the one at the terminal in Mošnov?

The construction of transfer stations alone will not help combined transport. In addition, it is in an area where there are already two terminals (in Ostrava and Havířov - editor's note). In my opinion, this is not the right investment with a subsidy from public funds. The price, quality and reliability offered will help the transfer of goods from road to rail. This will not be achieved if someone builds an intermodal terminal on a green field with half the support of the state or EU subsidies, and also has a track brought there for taxpayers' money. We often talk with Minister Kupka, unfortunately he doesn't want to hear about direct support for freight transport, because he says it distorts the market. But then he cannot want to transfer the goods to rails, because without support the price will not be competitive compared to the road, as it is in Germany or Austria. Without these interventions, the roads will be constantly overcrowded.

Next year, Metrans will open a new large terminal in Zalaegerszeg, Hungary. Will it have an impact on logistics in the Czech Republic?

Yes, it will have a significant impact. Zalaegerszeg is located near Croatia, Slovenia and Serbia. Through it, we want to offer a new and fast connection from the Adriatic ports of Trieste in Italy, Koper in Slovenia and Rijeka in Croatia. The advantage of the Hungarian transshipment center will be that all containers from the Adriatic ports will be collected and sorted there. Everything that arrives at these ports is collected, regardless of which direction the cargo is headed - whether to the Czech Republic, Poland or Slovakia. Nobody wants to drive
half-empty trains, and thanks to this terminal, this risk will disappear, and the new terminal will be the starting point for the combined transport network.

How much can the flow of goods from Adriatic ports to the Czech Republic increase?

This is difficult to estimate, it depends on how the shippers react. Chinese shipping companies have already started going to these ports, especially when they have already established themselves in the Greek port of Piraeus (since 2016 it belongs to the Chinese shipping company Cosco - note ed.). The share of containers from this area is rising and we expect it to continue to rise. The capacity problem in northern European ports contributes to this. Last year, in the event of fluctuations, it proved to be insufficient. The problem appears mainly when a huge ship with a capacity of 20,000 containers or more does not arrive (the shipowners have several dozen such ships - editor's note). But the goods for this ship must be in the port two days in advance, and if the ship does not arrive, they accumulate there. Sometimes even two ships are delayed. The terminal will be crowded and our trains will stop on the way, because the railway infrastructure operators will not let trains pass through Děčín. They don't even leave from Uhříněvsi, which is full of loaded trains that cannot leave, and they are waiting for Hamburg, Rotterdam or Bremerhaven to say they can come. It then takes a long time to straighten out the delay, because if 14 trains full of containers do not leave in the direction of northern Europe one day, 14 more trains cannot go the next day. There is no infrastructure capacity, technology or personnel for that.

Which port in the Adriatic Sea do you give the best chances?

Koper was the biggest until now, but it has a problem with the railway connection. Rijeka has more potential, it will be an interesting option in the future.

You have already described the problem with the overcrowding of the ports in Hamburg and Bremerhaven. Are there alternatives in the north?

This could be Germany's Wilhelmshaven, which has been operating since 2008. Some lines were already redirected there last year. We also started going there regularly because customers are interested in it. Not all of the alternative ports have good rail and truck connections. This is the advantage of Metrans, that we can get the goods from any port to one of our terminal hubs. If it already reaches our network, then it is won, because the container will reach any place in our network from the south to the north of Europe within 24 hours.

What about Polish ports in the Baltic Sea? Will there be any cargo left for them?

There will always be plenty of it. That is why we extended new lines there and have terminals in Poland that we serve with regular connections. For example, a train from the port of Gdańsk can unload goods at our Dąbrowa Górnicza terminal for the Polish market. Then the train continues to the Czech Republic, where it ends at the terminal in Havířov, and can continue to Česká Třebová or Dunajská Streda. If the demand is high, a transfer point can be created directly in Dąbrowa Górniczi, where the goods would be distributed and the trains would go separately to Slovakia, Hungary or the Czech Republic.

You completed your investment in Poland shortly before Russia invaded Ukraine. You also bought the Europort terminal there on the border with Belarus. How did the war affect business on this route, which is important for transporting goods from China?

The Silk Road from China via the most common Kazakhstan-Russia-Belarus route was the exclusive route for these shipments until the beginning of the conflict and operated without problems. The biggest problems were with clearance at the Polish border, where trains could get stuck for two days. Crossing there is only possible via a single-track bridge, which does not have sufficient capacity. Moreover, the customs officers there are in no hurry. After the start of the conflict, everything stopped because customers were scared and did not know what would happen to their shipments in transit through Russia and Belarus. Back then, planes were seized and customers
were afraid of losing their containers. Gradually, however, things calmed down and now trains are once again transiting through Russia without any problems.

Have more people switched to other routes that bypass Russia and Belarus?

The southern journey through Turkey and Georgia is at least ten days longer. It was complicated, so the goods started returning to the original route. By the end of 2022, the volume of goods returned to the same numbers we were used to before the conflict broke out. At the end of the year, we handled at least one train a day, always alternating in the direction of Hamburg, Duisburg and the Czech Republic.

Does the Central Asian corridor, which is another route from China, have a better chance? Isn't it only supported by Chinese subsidies?

It certainly makes sense. It is a better alternative for transporting goods from Chinese provinces that are three thousand kilometers away from seaports. It was still necessary to take the cargo by train to the ports and then wait for the ship. In addition, one worker infected with covid in the port was enough for the authorities to close the entire port. It was difficult to sail to Europe, where the capacity of the ports collapsed again. This is how you go straight to the center of Europe by train. Complete trains from inland provinces of China that are not stuck to the sea make sense even without subsidies.

Is there a decline from China in addition to the ports also on the railway line?

Yes, it's going down here too. It's just not as fast as shipping by sea. However, only a fraction of the volumes are transported by rail. That is why the decline in shipping by sea is more visible. Customers who ship goods from China by rail do not yet want to switch, even as capacity on ships is freed up. But I can't predict what will happen next. I don't think China will close the ports again. They know they can no longer isolate themselves like this.

Martin Hořínek (58)

Metransu, which is a company with sales of over nine billion crowns, has been operating since 1993.
He is the director of operations and a member of the board of directors, who is in charge of the operation of the terminal in Uhříněvs, as well as railway and road deliveries.
At the same time, he is the managing director of Metrans Rail, which is a wholly owned subsidiary with a 10 percent share of the domestic freight rail transport market.
Since 2017, he has been at the head of the branch organization Žesnad (Association of Railway Freight Carriers).
The company Metrans was founded in 1991 by Jiří Samek. The brand already existed during socialist Czechoslovakia, when it was used by the then state-owned enterprise Čechofracht, under which maritime transport belonged.
Now Metrans belongs to the German logistics group Hamburger Hafen und Logistik.