CZ/SK verze

PKP Cargo Tackles Declining Container Business with New Terminal Investment

PKP Cargo Tackles Declining Container Business with New Terminal Investment
photo: PKP Cargo, Facebook/PKP Cargo Tackles Declining Container Business with New Terminal Investment
07 / 09 / 2023

PKP Cargo has recently faced challenges in container transport, experiencing significant declines. According to the management of the Polish carrier, investments in terminals could help stimulate market recovery. The opening of a large terminal in Zduńska Wola planned for this year, is expected to be a major turning point.

Dariusz Seliga, CEO of PKP Cargo, says that the group aims to gradually rejuvenate the company's business relations. Intermodal (container) transport is a key focus area for PKP Cargo, where the national carrier has recently seen lackluster performance and lost a considerable market share to competitors. However, the situation is expected to improve in the upcoming quarters. "Our goal is to gradually rebuild the market in the intermodal segment. We are primarily working to enhance the attractiveness of our offer, improve its competitiveness, and elevate the level of customer service," said Dariusz Seliga, CEO of PKP Cargo.

Drastic Drops in Transport

In the first half of 2023, the group transported only 2.6 million tonnes of freight via intermodal means, compared to 4.8 million tonnes in the same period a year earlier. Turnover in terms of so-called "transport work" declined even more dramatically, by more than half. PKP Cargo attributes this to the war in Ukraine, which has reduced rail traffic along the Eurasian route, also known as the New Silk Road. The operation has also been negatively impacted by regional economic slowdown and inflation, resulting in higher intermodal prices and lower freight volumes. Ongoing repairs to the rail infrastructure on the East-West Corridor and its limited capacity—exacerbated by increased traffic between Poland and Ukraine—have also not helped the situation.

Dispersed Operations

Management has high expectations for the group's flagship investment: the construction of a multimodal terminal in Zduńska Wola-Karšnica. The 13-hectare facility, with an annual handling capacity of around 500,000 multimodal units, is set to become operational in the fourth quarter of 2023. The original deadline was the end of October. The investment is valued at over PLN 128 million and is expected to offer more efficient services through features like an automatic system for identifying containers and detecting possible damage. "The terminal will complement the network of multimodal terminals in central Poland and make rail freight transport in the region more appealing. It is strategically located at the intersection of Europe's main east-west rail line and the north-south route connecting the Adriatic, Baltic, and North Seas," says Seliga.

However, little is publicly known about the current status of PKP Cargo Group's terminals. Company reports do not specify their handling capacity or the extent to which this capacity is utilized. It's also unclear whether the terminals have improved operational and financial performance. The terminal operations are spread across several subsidiaries. Some time ago, the company announced that management was contemplating a terminal consolidation program, but not much progress has been made on this front yet.

Dariusz Seliga has served as the CEO of PKP Cargo since 2022. He has been involved with the PKP Group in various capacities since 2016. Before that, he was a member of the Sejm for the currently ruling Law and Justice party for two terms. Under his leadership, PKP Cargo generated revenues of PLN 2,899.5 million in the first half of 2023, marking an 18.3% increase year-on-year. Consolidated EBITDA also saw a significant rise of 64.5% year-on-year during the period, reaching PLN 611.2 million.

PKP Cargo is using European CEF funds and Polish operational programs to modernize and expand its fleet. It's also active at the European level, participating in the DP-RAIL project, which aims to create a digital platform to facilitate data exchange between carriers and operators involved in freight transport across Europe. The project is managed by the International Union of Railways (UIC), and consortium members include PKP Cargo, DB Cargo, CFL Cargo, Rail Cargo Group, Lineas, and RAILDATA (a specialized group within the UIC focused on creating IT services for European freight operators).