PKP CARGO in Crisis: Mismanagement, Investment Errors, and Questionable Deals Addressed by MPs

The Sejm, Poland's parliament, has begun examining the factors behind the decline in market share of the national rail freight carrier, PKP CARGO. Interpellations have highlighted issues such as mismanagement, flawed investments, and controversial deals. The excessive influence of trade unions was also criticized as detrimental.

RAILTARGET's editorial team investigated the proceedings in the Polish parliament. MPs Marta Wcisło and Dariusz Joński from the Civic Coalition and the Left Party Club addressed the dire financial situation and the loss of market share by PKP CARGO during the Sejm's interpellations. They inquired whether the Government was aware of the reasons behind the significant drop in the company's value and its reduced market share in Poland from 56% to 33%.

Piotr Malepszak, State Secretary (Deputy) for Railways at the Ministry of Infrastructure, responded on behalf of the Government. RT editors present excerpts from his response:

"The rail freight market is highly competitive; it is not monopolistic, and there are over 120 players in Poland. The situation at PKP is the result of a series of management blunders, poor investment choices, ineffective personnel management, and ill-advised business decisions. The interim management appointed by the Supervisory Board has implemented measures to prevent further deterioration of an already poor situation. Its primary task is to curb rising costs and stop the decline in PKP CARGO's performance indicators. We continue to uncover more causes each day. For example, investments have been made in rolling stock that is now exiting the market due to a lack of demand for the types of transport it supports. These misguided investments have significantly impaired the company’s economic performance. I am optimistic that the measures will prove effective, although it must be acknowledged that we are indeed facing a challenging situation," he explained to the MPs, highlighting another significant issue.

He criticized the management approach at PKP CARGO, labeling it a textbook example of mismanagement. "High levels of trade union involvement in company operations are inappropriate. In a competitive market, allowing trade unions to dictate company operations almost invariably leads to failure. We must extricate PKP CARGO from this predicament," he emphasized, adding that a search for a new board of directors is underway, aiming to have the board in place by the end of June to begin restructuring.

"The ongoing audit has revealed significant increases in salaries and headcount, particularly among middle and senior management, in the final months of 2023. This serves as a cautionary tale to other state-owned enterprises on how not to conduct HR policies. The company should employ individuals who understand the market and the sector's conditions. Decisions must align with market demand," he added.

He noted that ill-advised decisions had exacerbated the crisis, leading to the termination of contracts with longstanding coal transport partners. In terms of finance, organization, personnel, and business, PKP CARGO had moved in the opposite direction to market trends. "The freight transport market is also a concern for the Ministry of Infrastructure, and we aim to significantly increase the share of freight transported by rail in the coming years. Our interventions have already started to yield positive results. The market has responded well to the measures we have implemented. We have seen an increase in the company's stock market value. I am confident that CARGO will regain a strong market position and reestablish itself as the market leader in rail freight transport in Poland," he concluded motivationally.