- “We strive to respond to the expectations of our clients by offering a wide and comprehensive service, which is attended by a team of high-class specialists at every stage of the railway logistics management system. The CTL Group brand is a guarantee of this quality, developed by the company's nearly 30-year presence on the European market. It is a success built by the next generations of our employees - emphasizes proudly the President of CTL Logistics Group, Mr Grzegorz Bogacki.
The current economic situation associated with the coronavirus epidemic in the world redefines the operation method of many industries. How is the CTL Logistics Group currently dealing with this?
President Grzegorz Bogacki: - CTL Logistics is one of the leading Polish freight carriers and a leader among private companies. Every day we transport tens of thousands of tons of goods in Poland and Europe. In the current situation, for us and our clients, the most important is people's safety while maintaining the highest standards of services rendered. Most employees perform their duties in the field, when servicing trains, maintaining track infrastructure, in seaports, on railway sidings, as part of maintenance service, etc. This shows how the broad spectrum of our activities is and what challenge had to be met in order to maintain a business continuity.
To make this possible, it was necessary to reorganize work and implement all necessary procedures to ensure the epidemiological safety of employees, whose presence on site is necessary to maintain the smoothness of operations. CTL Logistics has introduced a number of additional solutions to prevent possible spread of the virus, with maximum precautions. The coordination of all these processes has been controlled by the CTL Group Crisis Management Team since the beginning of the pandemic. The Company's headquarters is in constant contact with regional crisis management teams throughout Poland and the Railway Crisis Management Team in Warsaw in the field of freight train travel and cooperation with government administration. In addition, the situation at the borders is monitored on an ongoing basis, where transport is carried out by Polish drivers and CTL GmbH. Whereas most office workers or support services work temporarily remotely, as part of the so-called home office. During this period, however, we worked very intensively on a complete return to work in offices, maintaining the highest safety standards and on 1st July we defrost the entire CTL Group. However, our priority is still maintaining the level of security and minimizing the risk of virus emergence. We would not want to miss what has allowed the companies of the CTL Group to operate fully smoothly.
Has the epidemic situation affected the Group’s current activities and how?
- The basis and main area of our company's activity is the provision of logistics services using rail transport. And that has not changed.
Although, undoubtedly, it is difficult to prepare in advance for these types of scenarios that we currently observe in the macro scale. The experience shows that any difficulty can be treated as a challenge. The CTL Logistics Group quickly responded to the situation by maintaining continuity of operational processes. We have prepared the guidelines for operating procedures in emergency conditions and equipped employees with appropriate personal protective equipment. Thanks to this, the process of providing services to all CTL Logistics clients is continued without any interruption. In addition, all our clients are kept informed of the situation, which allows us to maintain good relationships and trust that is so important in the current period.
In addition, our clients in daily reports were kept informed about the situation at the crossings, sidings, routes, which gave a certain injunctive relief in a fairly restless time.
UTK published the results for 4 months of 2020 freight transport in Poland, in a day - two May results. What is the current position of CTL Logistics on the market?
Thanks to rail transport it was and is possible to maintain continuity of the supply chain, which is important, secure, and this is a priority in the current situation. The dynamics of changes in the economy is enormous and the situation difficult to predict. However, we do everything so that the current situation does not affect the quality of services provided.
- According to UTK data for January-April 2020, CTL Logistics has a 3.82% market share by mass of goods (3.59% in the same period last year). According to the transport performance, the Group maintains a fifth position with a 4.42% market share (increase by 0.30%). Since the beginning of the year, the dynamics of CTL Group market shares has remained at a similar level, reaching in subsequent periods respectively: January 2020 3.86%, in February this year. 3.85%, and 3.87% in March, and in April 3.67% For several months we have been observing a decrease in volumes transported by rail, which is confirmed by the monthly statistics published by UTK. In addition, we are now observing additional symptoms of the economic slowdown caused by the epidemic. The results for the following months will be a consequence of the widespread blockade and global "lockdown" used by European economies in the first weeks of the spread of the pandemic. Most companies in this period have stopped production or clearly limited it. Currently, moderate optimism prevails. We see very slow returns, but it is difficult to talk about "normality" and restoration to the state before the epidemic. In addition, the situation is complicated by the recurrence risk and the foci intensity of outbreaks in different parts of the country and Europe. Recently, the hardest situation was in the coal mines in Silesia, fortunately it is stabilizing, there are fewer infections and many healers. Unfortunately, these foci of virus in the mines were a reason for their temporary closure, which reflects to other sectors, including freight transport. Thus, hard coal production in Poland in May fell by 39.5% year-on-year and amounted to 3 191 thousand tonnes.
Despite the difficult economic situation caused by the COVID-19 epidemic, we try to do our best. It is possible thanks to the sanitary regime, flexible approach to the changing situation, good management as well as proper management of resources and equipment. The following months, after mitigating the top restrictions, will allow an objective analysis of the impact of the epidemiological situation on the entire freight transport market. However, we have already known today that thanks to rail transport it was and is possible to maintain continuity of the supply chain, which is important, secure, and this is a priority in the current situation. The dynamics of changes in the economy is enormous and the situation difficult to predict. However, we do everything so that the current situation does not affect the quality of services rendered. The results of our work confirm this - I thank my clients for trust and employees for their commitment.
Is the current strategy of the CTL Logistics Group still valid? What are the company's priorities for the coming months?
The beginning of the new year, due to the epidemiological threat, brought unexpected changes to all of us. As an international railway company and one of the five largest private freight carriers in Poland, we feel even greater responsibility for maintaining supplies for our customers, employees, for workplaces. We are one of those entities who passes the exam every day, proving that in all conditions you can rely on us. We focus on providing high-quality comprehensive logistics services, tailored to the each individual client needs, on time and while maintaining an optimal cost structure. The need to adapt to new epidemiological circumstances did not change this strategy. Consequently, the focus of attention has been and will remain our customers' satisfaction.
We hope that the current situation will not slow down progress and that the Polish railway will continue to undergo a dynamic period of modernization. Given the expected slowdown, infrastructure investments on railways can be a stimulus for economic stimulation and the fight against unemployment. For rail carriers, new investments are an opportunity to search for new development opportunities and multifaceted cooperation with many operators.
On the other hand, the new reality has forced us to reduce investment expenditure. We still see development opportunities in the intermodal transport. This type of transport also includes the future in the context of rail transport on the New Silk Road and the North-South direction. The projected rapid development of intermodal transport has slowed down, but we are retrofitting regardless of the situation using other mechanisms to acquire rolling stock. We believe that we have made the right decision, and our equipment and experience in the implementation of international, intermodal transport, e.g. to Hamburg or Bremerhaven, allows us to realistically assess the chances of a steady increase in the share of the intermodal market. The experience of our rail companies from Germany and the Czech Republic as well as the "port" company from Gdynia is not without significance - we certainly have the competence and experience to develop intermodal transport.
Has the pandemic changed the company's other investment plans? What is the Railsoft project, what are its benefits for employees and what are the clients using the company's transport services?
The implementation of Railsoft will introduce us to the 21st century - the system allows you to improve logistics and communication activities, as well as increase work comfort.
The biggest operational and IT challenge we are currently focusing on is the integrated Railsoft IT system. It is a comprehensive rail logistics management system.
The system will cover many channels - from request for quotation, contract finalization to the stage of transport planning, completing traction teams, dispatching, loco drivers, performing brake tests and analyzing transport costs. This system will also inform about necessary periodic and current repairs of active rolling stock.
The implementation of Railsoft will introduce us to the 21st century - a challenge that we will try to meet despite the unpredictable economic situation. And it is worth it, because the system allows you to improve logistics and communication activities, as well as increase the work comfort.
The foundation of any business are its employees. How is such a large company managed?
Currently, CTL Logistics and other companies located in Poland, Germany and the Czech Republic employ over 1,000 employees. It is a company with Polish human capital - about 95% of all people are Polish staff. Managing such a large company, operating on international markets, and the opportunity to cooperate with many experts from the railway industry is an extremely valuable experience. On the one hand, it's personal prestige, but on the other, it's also a great responsibility. I would like to emphasize that I look into the future with great optimism when I see employee involvement and availability in the extraordinary conditions in which we have to function. I have always been convinced of the team's high competences and their skills at individual workplaces. Each person, through their work input, creates a CTL brand reputation at home and abroad. Last weeks have also shown that we can rely on each other, that we are responsible for ourselves, a colleague, to perform our duties safely and with due diligence. Nobody disappointed during the test. According to the sentence "all hands on board", each employee performed the duties entrusted to date, demonstrating understanding of the new operating procedures used. Despite the commitment of the entire company, we were faced with difficult but responsible decisions. Temporary reduction of the remuneration of management board members, managers or middle-level employees was one of them. Thank you to all employees for understanding the situation in which we had to act and for the sacrifices we made and the Trade Union Organization operating in the CTL Group for constructive negotiations and signing the agreement. I believe that a well-coordinated team is a locomotive that will not allow us to stop and thanks to which we will be strengthened follow new development paths.
Many decisions also require anticipating certain trends in the future and constantly searching for development opportunities and perspectives today. We strive to respond to the expectations of our customers by offering a wide and comprehensive service, which is supported by a team of high-class specialists - from the customer contact department to employees serving freight. The CTL Group brand is a guarantee of high quality, developed by almost 30 years of the company's presence on the Polish market. It is a success built by successive generations of our employees.
What challenges and difficulties are facing the company in the coming months? What perspective is ahead of the market?
Our business is part of the logistics chain of our clients - when they get worse, so do we. It mainly concerns the hard coal mining and metallurgy sectors, as well as the distribution of liquid fuels. The situation is very dynamic, so you need to react flexibly, observing the dynamics of the trend and adapting the course of action to it.
- From the beginning of the year, freight transport on the railways in the country and on international routes run in principle smoothly and without major restrictions, although the market is still shrinking and the competition is getting bigger. However, the consequences of the current situation have a strong impact on the industries and clients with whom we work closely. It mainly concerns the hard coal mining and metallurgy sectors, as well as the distribution of liquid fuels. In these branches of the economy, not only on a national, but also global scale, the situation is very dynamic, which is why it is necessary to react flexibly, observing the dynamics of the trend and adapting its directions to it.
Unfortunately, the black scenario we were afraid of fulfilling the temporary shutdown and reduction of hard coal extraction due to the growing number of Covid-19 infected among miners has come true. The situation is made more difficult by the fact that coal production is higher than current sales. Only in March alone, about 600,000 arrived at the piles. tons of coal. In April, they increased by an additional 200 thousand. tons of coal. At the end of April 2020, over 7.7 million tons of this raw material was found on the mine dumps. It should be remembered that our business is part of the logistics chain of our clients - when they get worse, so do we.
The virus has also verified the aggregate transport forecast so far. Due to the limitation of works, contractors were more willing to use the stocks accumulated in construction sites in recent months, which resulted in less demand for building materials (stone, steel, etc.), and thus their transport was shrinking. Steel production in the EU fell by 10% on an annual basis in the first quarter of 2020. In turn, steel production in Poland in May 2020 amounted to 700 thousand tonnes, which means a decrease by 13.2% y / y. Cumulatively, in January-May 2020 steel production amounted to 3.34 million tons, i.e. 19.2% less than a year ago. In addition, a key steel contractor in the automotive industry is struggling with low market demand for the products offered. Only in May 2020, new car registrations in the EU were more than half lower than a year ago. This is the third consecutive month of the European automotive crisis due to the coronavirus pandemic.
The coronavirus also did not save our clients operating in the fuel industry. Fuel prices have seen record declines in recent months. Obviously, in the age of widespread quarantine, decrease in production, reduction of trips and economic slowdown - all these factors translate into reduced demand for fuels and surplus of this raw material on the markets. In recent weeks - as the government lifts recent restrictions - sales results have been gradually improving. The increase in market demand for fuels is crucial for the CTL Logistics Group due to the highly likely launch of additional trains for customers.
On the other hand, the emerging perspective for freight transport is invariably intermodal transport. After stopping the pandemic in China, the economy expects an increase in intermodal transport and we would like to develop this direction further. We are observing increased demand for this type of transport in China-Europe-China directions. This is confirmed by data from the Eastern market, Russian railways argue that transport between China and Europe increased in the first five months of the year by 35%, to 167 thousand TEU.
Rail transport may be competition for road and air transport services. Is the current situation, and in the future also more emphasis on low-carbon transport, an opportunity for railways?
Paradoxically, the current economic situation has shown a number of advantages that distinguish the railway from other freight carriers. Neither heavy traffic at road borders nor temporary closing of factories stopped rail transport.
The freight rail is also a direction that we should follow in order to further reduce CO2 emissions. The carbon footprint of rail transport is 9 times smaller than road transport and 3 times smaller than for inland waterway transport - this advantage should be used.
The modernization of the railway infrastructure, and above all the terminal infrastructure, with the use of EU funds and the opening of new transport routes, also gives a chance for further rapid progress. We hope that the distance between the railways and other means of transport will be reduced, which will further accelerate intermodal container transports, contributing to maintaining good cooperation between rail, road and sea carriers.
I am an optimist by nature, which is why I look forward to the future of rail development in Poland. The logistics services market will grow dynamically regardless of temporary macro-scale turbulences and we would like rail carriers to have a significant share in this. This task is a challenge for the Polish state, investors and entrepreneurs who take an active part in this process. Meanwhile, in a closer perspective, we are mobilizing our activities so that the quality of the services provided, tested by the awareness of the epidemiological threat, remains at the highest level. The guarantee is almost 30 years of experience of the CTL Logistics Group in the industry and the high competence of our staff.