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MARIA LEENEN, VIENNA/HAMBURG, 18.02.2016
OUTLOOK EUROPEAN RAILWAYS – MORE THREATS THAN OPPORTUNITIES?
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
PROFESSIONAL CONSULTANCY FROM SCI VERKEHR
• Independent consultancy company since 1994
• Focused on strategic advice to the railway and logistics industry
• Clients and network all over the world
• Unique database with assets and projects in the global railway industry
• Based in Hamburg, Berlin, Cologne
• Shareholder: Maria Leenen
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0
NAVIGATOR
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• Strategy development
• Portfolio assessments
• Merger and acquisitions (M&A)
• Asset value assessments
• Market and competition analyses
• Operational excellence - process optimisation
WORLDWIDE CUSTOMERS ASK FOR SCI’S EXPERTISE
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0
CUSTOMERS
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• AAE Ahaus Alstätter Eisenbahn AG • ABB Schweiz Ltd. • AEG SVS Power Sypply Systems • Alcan Composite Structures • Allco Leasing GmbH • Alstom Transportation • Amtrak Office of Inspector General• Angel Trains Cargo • Ansaldo Signal N.V. • AnsaldoBreda spa • Arriva International UK • Auctus Management GmbH & Co. KG • Axtone GmbH • Babcock Brown London • BAE Systems Ltd. • Balfour Beatty Rail GmbH • Bank of America • Bayer Material Science AG • Bayerische Landesbank • Bearing Point SAS • Behr Industry GmbH & Co. KG • Bochumer Verein Verkehrstechnik GmbH • Bombardier Transportation • Bonatrans a.s. • Calyon • Cargocare AG • China South Locomotives & Rolling Stock Corp. Ltd. • CKD Vagonka a.s. • Connex • Cummins • Dellner Kupplungen GmbH • Deuta-Werke GmbH • Deutsche Bahn AG • Deutsche Beteiligungs AG • Deutsche Binnenschiffreederei • Deutsche Messe AG • Deutscher Gewerkschaftsbund • Dimetronic S.A. • DuPont Performance Coatings GmbH & Co. KG • Durtrack AG • ELIN EBG traction GmbH • ESW GmbH • EWS Railway LTD • Extel Systems Wedel • Fahrleitungsbau GmbH • Faiveley Transport • Ferrostaal AG • Fooke GmbH • Furrer+Frey AG • GE Transportation Systems • Greenbrier Equity Group LLC • Group Ermewa SA • Gutehoffnungshütte Radsatz GmbH • Hanning & Kahl GmbH • Hans Böckler Stiftung • Heitkamp Rail GmbH • Hitachi Europe Ltd. • HSH Nordbank AG • Hübner GmbH • I.T.I. Finanziaria S.P.A. • ING Bank N.V. • Interpipe • INVEST Financial Corporation • KfW IPEX-Bank GmbH • Knorr-Bremse • Korea Railroad Research Institut • Lavoisier SAS • Lease Valuation International Inc. • Leonhard Moll Betonwerke • Liebherr Transportation Systems GmbH • LLOYDS TSB Bank PLC • MAN • Marubeni Corporation • Microelectrica Scientifica Spa • Mitron OY • Mitsui & Co. • Molinari Consulting AG • MTU Friedrichshafen • Nahverkehr Rheinland GmbH • National Australia Bank • NedTrain Consulting • Nexans • Odenwald & Compagnie • ÖBB • One Equity Partners Europe GmbH • Ox-traction N.V. • Oxford Analytica Ltd. • Paribus-SK-Rail Management • Parsons Brinkerhoff Pte Ltd • Patentes Talgo S.A. • Pfleiderer Infrastrukturtechnik GmbH & Co. KG • Phoenix Dichtungstechnik GmbH • Pintsch Bamag GmbH • Plasser & Theurer Export von Bahnbaumaschinen GmbH • Prover Technology AB • Prysmian Spa • Rail Cargo Austria • Rail Interiors S.p.A. • Rail One GmbH • Rexwal Services SA • Rexxon Services SA • Rotem Company • Royal Bank of Scotland • Sabler Consult GmbH Wien • SAFOP SAP • Saft‘s Industrial Battery Group • SBB Cargo AG • Schalker Eisenhütte GmbH • Schaltbau AG • Scheidt & Bachmann GmbH • Schreck-Mieves GmbH • Schweizer Elektronic AG • Secheron SA • Serco-NedRailways • SGL Carbon SE • Siemens AG • Sika Schweiz AG • SIRTI S.p.A. • SKF Group • Skoda Transportation s.r.o. • Société Générale Group • Solaris Bus & Coach S.A. • Stadler Rail AG • Steer Davies Gleave • Stemmann-Technik GmbH • Stinnes AG • Stratorg S.A. • Strukton Systems • SüdLeasing GmbH • Sumitomo Mitsui Banking Corp. Europe Ltd. • Syndex • Synosys Inc. • Tatravagonka a.s. • Terra Firma Investments 2 Ltd. • Telenor Sverige AB • TFK Transportforschung GmbH • Thermo King Deutschland • Thyssen Krupp GfT Gleistechnik GmbH • Tiefenbach GmbH • Toyo Engineering Corporation • Traktionssysteme Austria GmBH • Tram S.A. • Transpetro GmbH • Transtechnik GmbH & Co. KG • Transwerk South Africa • Trinity Rail GmbH • TÜV Rheinland • U.S. Government • Universal de Productos Electricos S.A. • VAE GmbH • Valspar Industries GmbH • Veolia Transport • Verband der Bahnindustrie Germany • Verkehrs Industrie Systeme GmbH • Verkehrsbetriebe Zürich • Voestalpine Bahnsysteme GmbH • Voith Turbo • VolkerRail • Vossloh AG • Vossloh Kiepe GmbH • VR Leasing AG • VTG AG • Wagony Swidnica S.A. • Walter Bau AG • Wacosa AG • Weilburg Coatings GmbH • WestLB AG • Wincanton GmbH • Wirtschaftsministerium Baden-Württemberg • ZAO Transmashholding • ZF Sachs AG • Zuken GmbH
RAILWAY MARKETS, ASSETS AND PROCESSES ARE CONSTANTLY IN OUR FOCUS
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
MARKETS & PROCESSES
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• Demand Prognoses
• Budgets
• Projects
• Players
• Fitting of products and services
Markets
• Railway fleets
• Maintenance
• Infrastructure
• M&A
Assets
• Operational Excellence
• Change management
• Process and tendering support
• Implemantaion of new developments and IT
Processes
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
TITLE
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….. VARIOUS ISSUES ARE CHALLENGING RAILWAYS‘ CURRENT AND FUTURE POSITION….
…. BUT THE LARGE PRODUCTIVITY RESERVES
AND THE ONGOING CHANGES IN OTHER SEGMENTS OPEN A WINDOW TO BRING THE
RAIL INDUSTRY ON THE RIGHT TRACK!
“OUTLOOK EUROPEAN RAILWAYS – MORE THREATS THAN OPPORTUNITIES?”
Source: Eurostat, SCI Verkehr
DESPITE LARGE INVESTMENTS AND OVERALL GROWTH, RAIL COULD NOT INCREASE ITS MODAL SHARE IN FREIGHT TRANSPORT
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
RAIL FREIGHT
Transport performance (b tkm) vs modal split in the EU-28 in freight transport (tkm)
7
300
400
500
2001 2003 2005 2007 2009 2011 2013
1 2 3
1 Rail performance increases
2 Rail hit hard in crisis years
3 Rail recovers partly
Rail experienced a slight growth
There has been no significant shift in the modal split from
2001 to 2014.
75% 75%
19% 18%
6% 7%
. 2001 .. 2014 ….
Road
Rail
Water
FOR YEARS, RAIL FREIGHT OPERATORS HAVE HAD DIFFICULTIES REACHING SATISFYING OR EVEN POSITIVE MARGINS
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
RAIL FREIGHT
0
0,02
0,04
0,06
0,08
0,1
-600 -500 -400 -300 -200 -100 0 100 200
0
0,01
0,02
0,03
0,04
0,05
0,06
-150 -100 -50 0 50 100 150
Development of railway operators in Europe [2014]
DB SR
RCG
Fret SNCF
Turnover/tkm, EUR
EBIT, EUR million
TCDD
DB SR
PKP Cargo
Trenitalia Cargo
CD Cargo
SBB Cargo
Green Cargo
Renfe Mercancias
EBIT, EUR million
LDz
CFR Marfa
ZSSK Cargo
SNCB Logistics
Turnover/tkm, EUR
LDz
8
Source: investing.com; analysed by SCI Verkehr; picture: BMVI
OIL PRICES AT A HISTORICALLY LOW LEVEL – PRIVATE TRANSPORT AND (MEGA-) TRUCKS TAKING ADVANTAGE
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
COMPETITION
0
20
40
60
80
100
120
140
Weekly price per barrel Brent oil [2010-15, in USD]
2010 2011 2012 2013 2014 2015
EuroCombi / Gigaliner on European highways
• Concept of longer road vehicles has been tested in many European countries
• In addition to the reduction of conventional trucks on highways, it is also expected that a large-scale introduction will affect rail transport volumes negatively
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Picture: Pixabay
GERMAN LONG-DISTANCE BUSSES ARE WINNING IMPORTANT MARKET SHARES FROM RAILWAYS
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
COMPETITION
2013 2014
2015
8.2 m riders
in 2013 3.0 m riders
in 2012
16 m riders
in 2014
10
The German bus market after liberalisation:
• Very high growth rates
• Destructive competition ("cut-throat")
• Market shakeout expected to continue
1st Jan 2013 Liberalisation of long-distance bus market
Around 40 operators offer services
10th Aug 2015 Bill passed on
liberalisation in France
THE RAIL SYSTEM IS TRAPPED IN THEIR STRUCTURES
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
CHALLENGES FOR RAIL
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Infrastructure bottlenecks lead to delays
Digitalisation in rail takes decades
Margins drop due to volatility of
transport demand and old fashioned
processes
Existing regulatory framework limits innovation
Pictures: Uber, Drive Now, Scania, Amazon, IAV
FUNDAMENTAL CHANGES IN MOBILITY
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
CHANGES IN TRANSPORTATION
Electrified roadways
"undermine" one major advantage
of railways
New logistic concepts allow for drastic reduction of delivery times
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Digitalisation changes the
overall approach of industries and
transportation Car-sharing
services change (urban) mobility
patterns
Driver assistance progresses on the road
Is the rail industry outdated in the long run?
Picture: Pixabay
MANY HISTORICAL BARRIERS FOR A FAST AND EASY CATCH-UP – BUT ALSO BIG-POINT ADVANTAGES FOR RAILWAY FUTURE
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
CHANGES IN THE RAIL INDUSTRY
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• Mostly former state railways (high public interest)
• Assets with very long life time and amortization periods
• Highly specific know-how due to complexity of rail system: “we are different – we are (railway) family”
• Megatrends like
metropolisation,
– environmental problems and
– globalisation
… force railway solutions due to it’s high capacities and automatisation opportunities
UNSURPRISINGLY, MOST EUROPEAN RAILWAYS HAVE ALREADY INITIATED ACTION PLANS AND OPTIMISATION MEASURES
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0 / February 2016
NECESSARY ADJUSTMENTS
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List taken from SCI's new MultiClient study European Rail Freight Transport Market 2016
Keywords from plans
• Organisational restructuring
• Optimisation of processes and asset management
• Digitalisation
• Energy efficiency
• New business models
MANAGEMENT OF PRODUCTIVITY AND QUALITY MUST BECOME CORE ELEMENT OF RAILWAY COMPANIES
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0 / February 2016
NECESSARY ADJUSTMENTS
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Investment and innovation for customer orientation, productivity and quality
• Strengthening of financial results remains major task of railway operators
• Investments in innovative and competitive assets, organisations and processes become urgent
• Logistical solutions are necessary:
– reliable and efficient processes and structures
– customer orientation as well as custom-fit and flexible asset use
Business model innovation
Technical innovation Organisation and process innovation
Marketing and sales innovation
Picture: Pixabay
DIGITAL INNOVATION BOOSTS DEMAND FOR PROCEDURAL AND STRUCTURAL CHANGE
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0 / February 2016
NECESSARY ADJUSTMENTS
16
• Analysis of current transport flows
• Analysis of assets
• Improved prognoses
Identification of bottle necks
Fewer breakdowns through predictive maintenance
of rail technology
Improved disposition
Improved trouble-shooting
…
Understanding and changing processes
OPERATORS NEED TO STRENGTHEN PROFITABILITY BY EFFICIENT PROCESSES AND ORGANISATION
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0 / February 2016
NECESSARY ADJUSTMENTS
17
Opportunities for productivity improvements exist at all links of the value chain
Improvements of order to cash processes tackle:
• Production processes
• Marketing and sales processes
• Additional services processes
• Quality performance
SCI Verkehr assumes opportunity to strengthen productivity of companies up to 30%
Order to cash process (schematic)
Customer Order Planning Operation Disposition Invoicing Customer
• Capacity management • Freight handling • Rail car management • Shunting process management • Traction management • Staff management • Information management • …
30% productivity
Demand for effective change management :
• Understanding of the railway business
• Understanding of process improvment and methodology
• Know-how of technology, IT, and innovation knowledge
• Understanding of legal and safety requirements
• Process and organisation reliability
• Know-how of stakeholder interests
• Communication skills
EFFECTIVE CHANGE MANAGEMENT NEEDS BOTH: RAILWAY- AND PROCESS EXPERIENCE
SCI Verkehr GmbH / Büro Hamburg / +49 (40) 50 71 97-0 / February 2016
NECESSARY ADJUSTMENTS
Productivity improvement
18
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016 19
VARIOUS ISSUES ARE CHALLENGING RAILWAYS‘ CURRENT AND FUTURE POSITION….
…. BUT THE LARGE PRODUCTIVITY RESERVES AND THE ONGOING CHANGES IN OTHER
SEGMENTS OPEN A WIDE WINDOW TO BRING THE RAIL INDUSTRY ON THE RIGHT TRACK
CONTACT
SCI Verkehr GmbH / Hamburg Office / +49 (40) 50 71 97-0 / 18.02.2016
CONTACT
Maria Leenen,
SCI Verkehr GmbH
Schanzenstraße 117
20357 Hamburg
Germany
fon: +49 (40) 507 197 10
fax: +49 (40) 507 197 20
e-mail: [email protected]
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