MARKETS Companies involved in the shipment of dangerous goods by rail are targeting new markets and expanding networks, prompted by upbeat market projections
Traditionally operating very much within national borders, the railfreight sector is at last becoming more international in nature. A number of recent deals have taken operators outside their historic boundaries in cooperative efforts in response to demand from users for more flexible services.
Germany-headquartered rail logistics provider VTG is entering the North American rail-freight market with the acquisition of US-based Texas Railcar Leasing Company (TRLX). VTG has signed a purchase agreement with the owner of TRLX; the terms of the sale have not been disclosed. TRLX generated revenues of more than $4m in fiscal 2006, and has a wagon fleet of more than 1,000 rail cars, consisting mainly of covered and open rail-freight cars as well as rail tank cars, says VTG.
"The acquisition of Texas Railcar is a key strategic milestone for VTG in extending our core competence in the field of leasing beyond Europe's borders," says VTG. "Our aim is to establish a foothold in the expanding US market and record constant growth by acquiring additional rail freight cars. TRLX has a broad customer base that is geared to long-term relationships. TRLX has a solid customer structure, which has lead to a capacity utilisation exceeding 95 per cent, and the company's earnings situation is positive on a sustained basis. North America is the world's largest rail logistics market and has good long-term prospects for growth."
VTG cites data indicating that railfreight business in the US is forecast to rise by 3.4 per cent annually through to 2011. The company says that projection is based, in part, on expectations that costs of other forms of freight transport in the US, such as road transport, will increase more significantly than costs associated with rail transport. "VTG's many years of experience in the European rail car hiring business will be beneficial to VTG's strategic entry into the US market," says the company. "In Europe, VTG is already the market leader with the largest private fleet of wagons."
The announcement of the TRLX acquisition came at the end of a busy year for VTG. In June of 2007, the company went public and listed its shares on the Frankfurt Stock Exchange, making it the first European rail logistics company to be so listed. Additionally, earlier in the year, VTG acquired full ownership of VOTG Tanktainer, VTG's tank container operating subsidiary, from VOTG's former co-owner Royal Vopak. And in November of 2007, VTG announced that it agreed to acquire UK-based tank container lessor Tankspan Leasing. VTG reported positive results throughout 2007, and in its most recent financial statement, VTG raised its forecast for fiscal 2007.
"VTG has continued its solid growth in the first nine months of 2007, with significant year-on-year improvement in both revenues and earnings," says the company. "Revenues for the first three quarters of 2007 were up 4.2 per cent. Third-quarter performance was especially encouraging, equating to 6.2 per cent year-on-year growth. VTG has raised its forecast for fiscal 2007 and now projects higher full-year revenues of between n537m and n542m, a year-on-year increase of approximately 3.5 to 4.5 per cent. (The original forecast was 1 to 2 per cent.) The first nine months of 2007 show that VTG Group's consistent focus on growing markets is also bearing fruit on the operating side. Strategic acquisitions, sustained, organic growth and continuous improvements in the operating business have resulted in a positive performance."
Another company expanding its footprint in the North American market is Canadian National Railway (CN). The company announced that it will acquire Athabasca Northern Railway (ANY), a 202-mile system in Canada that connects with CN at Boyle, Alberta. CN says that the C$25m purchase is aimed at preserving a critical rail link to the oil sands region of northern Alberta. The rail line faced abandonment without further investment, according to CN. The acquisition, as well as a plan for CN to invest C$135m in rail-line upgrades for the system over three years, is premised on long-term traffic volume guarantees that CN has negotiated with shippers Suncor Energy, OPTI Canada and Nexen.
"While ANY's current traffic volumes are too low to keep it going as a stand-alone operation, we and our shipper partners see the ANY playing a critical role in one of the world's largest construction projects," says CN. "The oil sands reserves in northern Alberta are second only to Saudi Arabia's, and industry is expected to invest more than C$100bn over the next decade in oil sands development, construction and infrastructure upgrading."
ANY marks CN's third short-line transaction in northern Alberta in the past two years. In January 2006, CN purchased the Mackenzie Northern (MKNR) Railway and Lakeland & Waterways Railway for C$26m, and in December of that year it acquired the Savage Alberta Railway (SAR) for C$25m. In 2006 and 2007, CN spent C$58m to upgrade the rail infrastructure of the former MKNR and SAR and is planning C$22m in further improvements in 2008.
Also in North America, US rail tank lessor GATX has signed a railcar purchase agreement to acquire 2,000 newl tank cars from Trinity Industries over a two-year period, beginning early this year. Under the arrangement, GATX has an option to purchase an additional 1,000 tank cars. "GATX expects the Trinity order, together with other existing orders, to provide significant opportunity to enhance market share, meet customer demand and replace retired equipment with high quality tank cars, manufactured and configured according to strict GATX specifications," says GATX.
GATX was also recently certified into the Responsible Care Partnership Programme, the voluntary health, safety, security and environmental standards assessment scheme sponsored by the American Chemistry Council (ACC). "As a Responsible Care Partner, GATX's Operational Excellence Program was audited and found to have met the approximately 30 technical standards of the Responsible Care Management System," explains GATX. "GATX has long focused on maintaining the highest standards regarding environmental protection, health, safety and security, and is committed to the safety of the communities in which it operates. With the Responsible Care certification, GATX will continue to manage operations consistent with the guiding principles of Responsible Care, with a high priority on safety and protection of the environment, employees and the public."
Meanwhile, on the other side of the Atlantic, GATX has teamed up with European rail logistics providers Rail4chem and RTChem to launch a joint block-train service for logistics giant DHL. The service will transport aviation kerosene from Bramsche, Germany, to Germany's Leipzig Airport, which, according to Rail4chem, DHL is making its major European intercontinental hub. GATX has provided 22 new "jumbo rail cars" (95 m3, 66-tonne payload) for the service, which are decked-out with DHL's trademark bright yellow livery, says Rail4chem. The companies have planned to run one to two block trains per week, each carrying approximately 1,300 tonnes of aviation kerosene. However, the companies say the number of trains run may vary based on DHL's demands.
"The number of block trains depends on the customer's requirements, which will be based on DHL's fuel consumption at the airport," explains Rail4chem. "By the second quarter of 2008, at the latest, we'll have expanded this service to a minimum of three trains per week with 22 rail cars, each transporting about 1,400 tonnes of kerosene. Further growth in traffic and fuel consumption at Leipzig Airport could mean that transport volume will surge in the future. This is a tailor-made service for our customer where all partners collaborate with each other from the start to make the project a success."
Also in Europe, Ralion, the rail freight arm of German national rail operator Deutsche Bahn, and Swedish state-owned rail freight company Green Cargo have formed a joint venture called Ralion Scandinavia, based in Denmark. The companies say the aim of the joint venture is to streamline rail freight services between Scandinavia and central Europe and to make services more efficient by providing seamless cross-border services utilising a joint locomotive fleet.
"Railion Scandinavia will operate single wagon transport services with high frequencies between the hubs of Malmö and Hamburg-Maschen," says Green Cargo. "The joint venture will also provide wagonload and intermodal transport services on behalf of the owners with direct services between marshalling yards and terminals in Germany and Sweden. Railion Scandinavia will also have operational responsibility for rail freight services to, from and within Denmark."
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[post_title] => Reaching further by rail [post_excerpt] =>
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