SBB Cargo

SBB Cargo is a subsidiary of Swiss Federal Railways (SBB) specialising in railfreight. Swiss Federal Railways is a former state-owned company that was transformed in 1999 into a joint-stock company under special legislation and divided up into three independent divisions: Passenger Traffic, Freight and Infrastructure. The headquarters of Swiss Federal Railways SBB Cargo AG the Freight division's official designation is in Basel. SBB Cargo is managed by CEO Nicolas Perrin and has around 4,400 employees. On behalf of its owner, the Swiss Confederation, SBB Cargo performs the task of operating a nationwide rail network as a profitable, public enterprise and offering high-quality transit freight, thus making a considerable contribution to shifting traffic from road to rail.

SBB Cargo is the Swiss market leader in railfreight and the number two operator on the transalpine North-South corridor that links the North Sea ports and Germany with Italy. By adding Rotterdam to the greatly expanded international network for wagonload and door-to-door freight, services to and from the Netherlands have also been offered since May 2007. In June 2007, SBB Cargo and the French railfreight operator Fret SNCF agreed on joint cross-border production between Mulhouse (France) and Buchs (Canton of St Gallen). This simplifies east-west cross-border freight transport on this route and is intended to increase competitiveness with regard to road transport.

Strategy

Since the liberalisation of Europe's railways, railway undertakings have been entitled to infrastructure access rights across the European network. SBB Cargo pursues an aggressive strategy of growth on the North-South route and is continuously expanding its services. Its declared aim is to be the leading provider of railfreight services on routes between the North Sea ports and northern Italy. This strategy is based on an end-to-end freight handling philosophy. In order to pursue its strategy, SBB Cargo has established subsidiaries in Germany and Italy. These companies operate within their home countries using their own locomotives and staff. SBB Cargo is thus in direct competition with other freight operators in Germany and Italy.

Through this strategic decision, SBB Cargo positioned itself early on the European North-South corridor as a cross-border provider of quality services from a single source, and has succeeded in achieving a substantial increase each year at an international level in volumes transported and sales achieved. Nevertheless, the company’s entry into the German and Italian markets was subject to high investment and expansion costs. Intense competition on the North-South corridor led to high pressure on prices. SBB Cargo did not reach the prices required for the services offered. Furthermore, the loss of lucrative transit freight on the formerly monopolized route through Switzerland occurred quicker than expected, leading to cost blocks that could not be reduced rapidly enough.

In Switzerland, railfreight was liberalized earlier and to a greater extent than anywhere else in Western Europe. As a consequence, SBB Cargo as an ex-monopolist quickly lost market share on the prized North-South corridor through the Gotthard. Revenues generated by domestic services over the short transport distances of the Swiss rail network are not sufficient to allow the company to finance necessary expansion abroad or mid-and long term investments for replacements of sidings and aging rolling stock from ongoing operations. In addition, contributions made by the Confederation for wagonload freight (single wagons and wagon groups) went from around CHF 70 million in 2002 to being cut completely in 2008. By carrying out internal maintenance, SBB Cargo cannot achieve competitive prices for its own rolling stock. In future, SBB Cargo plans to make increasing use of the Passenger Traffic division’s maintenance capacities to maintain SBB Cargo’s vehicle fleet. This will enable additional synergies to be generated in this area.

SBB Cargo’s strategy is continually reviewed and developed. According to a press release dated March 6, 2008, on an international level, single-source cross-border production from SBB Cargo on the North-South axis has proved successful and will be developed further. In the steadily consolidating European railfreight market, SBB Cargo is reliant on bilateral and group partnerships with other rail companies to secure its market position in the long term. It is both necessary and sensible for railfreight companies in Europe to work together closely in the future to strengthen the position of railfreight in competition with other modes of transport. SBB is currently exploring ways to achieve this. Different offers will be judged according to whether they make a significant contribution to the company’s strategic positioning, whether business risks will be shared to a reasonable extent, and whether contributions will be made towards optimizing financial results.

Production system in Switzerland

SBB Cargo’s basic network in Switzerland serves 323 delivery points. It also operates services to 200 customer-specific locations outside its basic network. Freight traffic in Switzerland is routed through the three major marshalling yards at Basel-Muttenz, Zurich-Limmattal und Lausanne-Triage. These marshalling yards are operated by SBB Infrastructure.

The Gotthard line is SBB Cargo's major transit route. The second transalpine axis through the Lötschberg and Simplon tunnels is used primarily by competitor BLS Cargo, but is also traversed by SBB Cargo trains. Rail accounts for 65% of transalpine traffic in Switzerland – the highest market share of any European country.

Production systems in Germany

SBB Cargo Deutschland, the German subsidiary of SBB Cargo, was founded in 2002 and is headquartered in Duisburg. The company, a wholly owned subsidiary of SBB Cargo, plans, schedules and operates freight trains in Germany.

Destinations/departure points for wagon groups or block trains in Germany are Duisburg, Cologne, Aachen, Rheinhausen, Siegen, Saarbrücken, Ludwigshafen/Mannheim, Karlsruhe, Freiburg in Breisgau, Singen, Lübeck, Bremerhaven/Bremen, Hamburg, Kehl, Vohburg/Neustadt, Dortmund/Bochum, Gelsenkirchen, Ingolstadt, Neuss, Gießen/Mainzlar, and Weil am Rhein, while rail-to-road transshipment platforms in Germany are operated in Bremen, Duisburg, Worms, and Weil am Rhein. SBB Cargo Deutschland has been a recognized training organization since October 30, 2007.

Production systems in Italy

SBB Cargo Italia, the Italian subsidiary of SBB Cargo, was founded in 2003 and is headquartered in Gallarate. The company is also a wholly owned subsidiary of SBB Cargo, and plans, schedules and operates freight trains in Italy. It also trains locomotive drivers. Since spring 2008, SBB Cargo also operates journeys to Bologna, thus strengthening collaboration with ERS Railways – 36 container trains per week now run between Rotterdam and Northern Italy.

Destinations/departure points for wagon groups or block trains in Italy are Desio, Lecco, Oggiono, Molteno, Carimate, Gallarate, Novara, Melzo, Brescia, Padua, Trecate, Turin, Verzuolo, Parma and Bologna, while rail-to-road transshipment platforms in Italy are operated in Desio, Lonato, Brescia, Camnago-Lentate and Turin.

Services

Services offered by SBB Cargo are split into the following categories: door-to-door logistics concepts with wagonloads (Cargo Rail and Cargo Express), block trains (Cargo Train), and intermodal traffic (traction services for intermodal trains run by all major operators such as Hupac, ERS, ICF and the company's own Cargo Domino). Both standardized products and individual customer solutions are offered. In September 2007, SBB Cargo concluded a new framework agreement with Hupac for 2008–2010; in the case of existing routes, service frequencies have been stepped up. SBB Cargo has also taken on a new route and increased the frequency of services on existing routes for Intercontainer (ICF).

Rolling stock

By mid-2008, SBB Cargo had about 10,500 freight wagons in operation, more than a quarter of which are low-noise. SBB Cargo has purchased 50 Re 482 dual-voltage freight locomotives for its Switzerland-Germany services, 15 of which can also be operated in Austria. SBB Cargo uses dual-voltage locomotives for its Switzerland-Italy services: 18 Re 484 locomotives and 12 Re 474 locomotives, with an additional three Am 840 diesel locomotives for use on non-electrified lines. SBB Cargo currently has a total of 466 main-line locomotives in service, alongside 215 shunting locomotives and tractors. For freight services in Switzerland and Germany, SBB Cargo also has 45 new diesel shunters with environment-friendly soot particle filters. These locomotives help improve production efficiency and are also equipped with radio remote-control systems.

Key figures

SBB Cargo’s traffic volume in 2007 totalled 13.37 billion net tonne-kilometres – an increase of 8.3% over the previous year. The lion’s share is handled by SBB subsidiaries on transalpine routes through Switzerland. While business in Switzerland declined by 4.8 %, traffic volume in Germany again rose by over 30 % to almost 3.9 billion net tonne-kilometres and by more than 51 % in Italy. This means that over 35% of SBB Cargo’s entire transport volume is handled outside Switzerland. In 2007, SBB’s railfreight division posted a massive operating loss of CHF 87.9 million, compared with a total loss of CHF 37.3 million for the previous year. In connection with the necessary restructuring and repositioning of SBB Cargo, it was necessary to set aside total provisions of CHF 102.5 million for personnel measures, restoration work and exceptional writeoffs. SBB Cargo thus ended the 2007 financial year with a consolidated total loss of CHF 190.4 million.

Investment in subsidiaries

In addition to its wholly owned subsidiaries SBB Cargo Italia Srl and SBB Cargo Deutschland, SBB Cargo also owns the entire share capital of ChemOil Logistics AG in Basel (transport of chemicals and petroleum products) and has minority holdings in RAlpin AG, Berne (30%), Hupac SA, Chiasso (23.85%) and Termini SA, Chiasso (20%).

Source: SBB Cargo Annual Report 2007

External links

• SBB Cargo website
• Video Through the Alps
• Video Southbound Container Train