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Analysis of the ROSCO in the Intermodal Transport Market
Available online at www.sciencedirect.com
ScienceDirect Procedia Engineering 187 (2017) 371 – 377
10th International Scientific Conference Transbaltica 2017: Transportation Science and Technology
Analysis of the ROSCO in the Intermodal Transport Market Mateusz Zajac*, Justyna Swieboda Wroclaw University of Science and Technology, Poland
Abstract Flexible intermodal transport is the most advanced method of material transportation Its special feature is flexibility, reflected in transportation and storing of load units. Intermodal transport is also connected to high expectations of customers, especially within the scope of completion of deliveries in the “just in time” mode, price flexibility and fulfilment of time requirements. One of the specific requirements resulting from those high expectations is implementation of modern forms of business activity. ROSCO entities have become a key part of the intermodal market functioning. Their influence on the intermodal rolling stock market is increasing and their flexibility has a direct impact on the functioning of intermodal service providers. © 2017 2017The TheAuthors. Authors. Published by Elsevier Ltd.is an open access article under the CC BY-NC-ND license © Published by Elsevier Ltd. This Peer-review under responsibility of the organizing committee of the 10th International Scientific Conference Transbaltica 2017: (http://creativecommons.org/licenses/by-nc-nd/4.0/). Transportation and Technology. Peer-review underScience responsibility of the organizing committee of the 10th International Scientific Conference Transbaltica 2017 Keywords: Intermodal transport, ROSCO, intermodal service develompent
1. Introduction All over the world, the model of ownership of railway rolling stock (wagons) is of a dual nature: 55% of goods wagons are owned by railway undertakings, and 45% belong to companies other than railway undertakings– mainly leasing companies, but also operators, forwarders and shippers [9]. Fig. 1 shows the railway wagon ownership structure in various market. If we take into account the most important markets: in the USA there are 1.6 million wagons, including 800 thousand wagons leased by ROSCOs (rolling stock leasing companies), in Russia there are about 1.2 million wagons and almost all of them belong to
* Corresponding author. E-mail address: [email protected]
1877-7058 © 2017 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the organizing committee of the 10th International Scientific Conference Transbaltica 2017
doi:10.1016/j.proeng.2017.04.388
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Mateusz Zajac and Justyna Swieboda / Procedia Engineering 187 (2017) 371 – 377
leasing companies, including ROSCO companies, due to the form of privatisation of the wagon fleet and the tariff system applied in the Russian Railway; while in Europe, there are about 600–700 thousand wagons, including about 220 thousand belonging to ROSCOs. Contrary to other branches of transport, railway transport must face several challenges in order to stay in the intermodal chain: the axle load, availability of modern wagons and infrastructure – from tracks and terminals up to the capacity of railroads [8]. Thus, it competes with road transport by offering very long distance transports. Intermodality plays a significant role in the competitiveness of the railway freight and in the handling pick-ups from European ports and long distance transports in general, and the fleet is a very significant component of this competitiveness [7, 10]. ZK^K
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Fig. 1. The ownership structure of rail wagons in various markets [in millions of items].
At the beginnings of intermodal transport, around the 60s, skeleton wagons were used, which were also used interchangeably with containers transport, for example, wood and steel. The development of intermodal transport led to the development of rail waggons whose only destination was intermodal transportation. Any other possible uses were treated as additional ones, such as in case of 40’ wagons for transportation of heavy steel rolls. The change in the materials transported resulted from technological changes. As the history shows, intermodal transportation fulfilled the requirements of the market in terms of flexibility. The need for flexibility was also present in the transportation process management and the approach to rolling stock ownership [2]. This resulted in the establishment of ROSCO entrepreneurships. The aim of this article is to analyse the effects of functioning of those entities in the field of intermodal transportation and their influence on the development of intermodality. Currently, in Europe, around 50% of intermodal wagons used for combined transport are 60’ wagons, and the remaining ones are 80’, 90’, 104’ and 40’. The choice of wagons is dictated by the length of the train, which is usually 600 metres in Poland, but can reach up to 750 meters; and the weight of one container, which is up to 10 tonnes for light ones and up to 30 tonnes in case of heavy wagons. According to the authors, around 80000 of intermodal wagons were used in Europe in 2016. 2. The method of operation of ROSCO entities ROSCO companies operate in several functional modes: • purely financial (the latest model) – outsourcing all possible activities, for example MRC, ERR • a subsidiary company, whose business is an addition to other activity – DB INTERMODAL SERVICES; • ROSCO PLUS – these are companies which usually do not buy rolling stock at their own risk, but manage private fleet on behalf of private owners, such as VTG, WASCOSA, ERR. Typical ROSCO – a company with its own technical, legal and sales experts, which frequently owns a workshop or workshops, such as GATX, VTG [5].
Mateusz Zajac and Justyna Swieboda / Procedia Engineering 187 (2017) 371 – 377
The boundaries between the functional modes are not clear and the models interpenetrate. An example of such a situation is the J.V. 50/50 wagon company belonging to the Slovak Railways and the AAE company, which combines a typical ROSCO and a subsidiary company managing the rolling stock of its parent company. The main task of ROSCO companies is to supply railway rolling stock as a form of leasing to companies which do not have enough creditworthiness to buy it themselves or which do not want to encumber their balance with a purchase of railway rolling stock. The biggest customers of ROSCO companies in Europe and United States are refineries and fuel companies. The key measure of their success is utilisation of wagons, that is the period for which a fee is charged. It is calculated on an annual basis and usually amounts to from 90 (low) and 95 (medium) up to 99% (high). The aim of each ROSCO company is to achieve 99% utilisation. Another important element is the purchase of new rolling stock. Purchase decisions are quite easy to make if a company has already obtained a customer and a leasing contract for several years – ROSCOs buy 80% of wagons on such a basis. However, up to 20% of purchases of new fleet are wagons bought on a “speculative” manner, without a signed leasing contract and at the ROSCO company’s risk that it will lease them in the nearest future. The economic risk of such orders is very significant as some ROSCO companies have new and modern remaining unleased wagons for several years. The main factors contributing to the growth of ROSCO companies are replacement of old wagons and introduction of technological changes to the railway system. The process of replacing wagons with a load of 20 tonnes/axis in the Western Europe has been almost completed and currently wagons with a load of 22.5 tonne/axis are used almost exclusively. What is important for ROSCO is the wagon’s axis, a possibility of using the wagon to transport many products, technological development as well as lighter bogies and frames which also influence customers’ decisions. Sometimes customers force replacement of fleet, such as BASF, which decided in 2016 that it will not use wagons older than 30-year-old. On the other hand, ROSCO can also lease very niche wagons under long-term contracts in the amount of, for example, 20 items for one customer. Within the scope of intermodal transport, ROSCO companies had an important contribution to the field’s beginnings, which has been already mentioned. Some stakeholders, such as HUPAC, could and wanted to finance their rolling stock business on their own, but the biggest supplier of intermodal wagons in 2000s was the AAE company from Zug, Switzerland [3]. Thanks to courageous decisions and regular purchases of wagons, it was able to provide wagons on a regular basis and quickly. What was also important was also that it offered the latest wagons. Forwarders and operators were able to quickly obtain wagons in a response to requirements of customers thanks to ROSCOs. The decision-making process in “labour intensive” logistics is much shorter than in case of “capital intensive” wagon goods and that is why wagons available “on the spot” are one of the advantages of companies leasing them. What is more, all ROSCO companies operating in all possible modes: • assume some risk related to the wagon purchase – return on investment in a wagon takes usually about 10–15 years, the length of the logistic contract covers this period only to some extent as standard transport contracts are signed for one to three or max. 5 years; • buy more at better prices – they buy large quantities of wagons for their customers in the entire Europe; • are very specialised – they can design, buy and lease a series of 20 wagons for one customer; • adjust and create railway technologies for the needs of their customers, for example a rail tanker of a weight of 22.5 tonnes and a capacity of 86 CBM; or a four axle 80’ intermodal wagon; • set up the European standards of wagon lease – such as GCU or the wagon repair standard – VPI; • invest with a perspective of 30-40 years of using the wagon; • pan-European ROSCOs have an extensive financial background; • one of the strengths of ROSCO companies is also their amortised costs of the rolling stock thanks to which they are able to finance the purchase of a new fleet even with a very long term of return on investment (10–15 years). After the return on investment period is completed, the profitability of leasing of a wagon is very high until the time it is decommissioned, which means another 15–20 years of profits. Currently ROSCO companies put the purchase of new wagons for the contracts concluded in the first place, that means, that, for example, wagons bought are leased for 10 years. This period is simultaneously the period of return on investment in a given wagon,
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while old wagons are treated as the source of profit and of funding the dividend. However, it is only a general approach; companies can also lease wagons with a longer period of return on investment and at a higher risk, especially in case of modern and popular types of wagons, which are treated as a secure investment. Above all, they do not include newly bought wagons in a wagon pool, as for every wagon there is a separate contract signed and each wagon has its own return of investment forecast; • have a high rolling stock utilisation rate and the wagon’s cost is settled at a rate per 24 h per wagon (for example 20 EUR/wagon/24h), which allows for making easy comparisons and is foreseeable for railway undertakings. ROSCO disadvantages: • aiming at returns to scale and consolidation of the ROSCO market can lead to its monopolisation, • investments only in a new rolling stock and the decreasing average age of the fleet will increase market rates, • aiming at universality (wagons leased within the whole Europe) – wagon types are unified regardless of local and justified differences, • investing only in promising types of wagons can cause periodical lack of specific, non-promising types of wagons, • key decisions are made at the headquarters level, which frequently is outside Europe. An appropriately designed and reliably implemented process of maintaining rail vehicles is one of the key factors contributing to the safety of the operation of the rail sector, including ROSCO companies. Requirements within this scope have been adjusted individually by countries for many years. Creation of one, unified European railway area forced harmonisation of the approach to maintaining rail vehicles within the entire European Union. At first, the process covered the rules for maintaining goods wagons, but in the nearest future, it will probably be extended to other types of vehicles. 3. The influence of operation of ROSCO entities on the intermodal transport The influence of ROSCO entities should be considered within the context of the functioning of the entire rail market in Europe, especially within the context of liberalisation of the rail freight market. The main trend is the progressing effectivity and lowering number of wagons used to transport the same amount of goods as before as well as decreasing share in the market of national rails [4]. The aim of some organisations, such as UIP – International Union of Wagon Keepers is to develop mutual solutions with shippers, recipients and carriers. Those solutions will not depend on the decisions and involvement of governments, such as “intermodal freight plan” for Europe [6]. When considering the influence of ROSCO entities, we have to be aware how great is the chain of dependencies in field of intermodal transport. Longer trains and common loads of 22.5 tonnes/axis are a solution for development of intermodal transport itself. Introduction of a unified loading gauge, P400 or UIC GC within the whole rail network would allow for increasing the capacity. Next, implementation of Regulation 913/2010 on Rail Corridors is also an important tool for increasing the share of the rail in the goods transportation. It will allow for more effective transportation and use of rail networks as well as for a problem free transportation in national and international traffic as a result of shifting management of the goods corridor from the national (several countries) to the international level (unit rail transport integrates several stakeholders to increase the share of the rail transport) – the entire European Rail Sector is supposed to coordinate shipments in order to improve the quality of services and make them more attractive, focusing on productiveness, reliability and effectiveness. In order to achieve that, funds are needed and have to be allocated to appropriate actions. Quicker and longer trains and civilizational changes related to the requirements concerning noise emissions and pollutions require new infrastructure and new types of wagons. In Europe, we are slowly aiming at wagons of a load of 25 tonnes/axis, while in Sweden there are already many sections with loads of 30 tonnes/axis. In United States, the increase of the load from 22.5 to 30 tonnes per axis has resulted in savings at the level of several hundreds of millions of dollars per year. Those savings are distributed between wagon owners, rail carriers and operators. This solution allows for a purchase of a unit of capacity and length of a wagon for a lower price, decreasing the traffic on tracks and the costs of traction services calculated per transported goods unit.
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The goods wagon is a key factor for the efficiency of a modern rail transport system. It combines rail transport with logistic services. The provider of a rail wagon responds to the demand by adjusting the technical parameters of a wagon to the market. We have to take into account the structure of the rail market – it is estimated that the transition from the national to private entrepreneurship system increases the effectiveness of the use of rolling stock by 30%, decreases the maintenance costs by 40%, and increases the effectiveness of employees by 15%. In Europe, the number of wagons within the last 10 years decreased by 30% and the volume transported remained at a similar level. The lower number of wagons for handling the same volume means that wagons are newer, of better quality and better adjusted to the goods transported. ϭϮϬ ϭϬϬ
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Fig. 2. Number of intermodal wagons in Europe, source [1].
The diagram presented in Fig. 2 does not covers the trends after 2009. It is assumed that around 600000–700000 intermodal wagons are used in Europe, and that can lead to a conclusion that the trends of liberalisation and effectiveness growth have stopped. If we evaluate the rail companies’ data available, we can see that there are many areas for improvement of effectiveness, especially as national companies do not indicate how many wagons they really use. We can assume that the number of wagons used in Europe will decrease together with optimisation of rail transport, but only for national carriers, while it will increase for ROSCO companies. Trends of private carriers suggest that they are involved in the use of services provided by ROSCO companies in the field of rail transportation. Even though purchases of a locomotive can happen from time to time (for example by Hector Rail AB), purchases of wagons are extremely rare. There are a few sources of information on the number of wagons (such as Eurostat, UIC, National Vehicle Registers), but there is not completely reliable information on the number of rail wagons used (active wagons with a valid P4 review). However, it is still possible to describe the trends on the wagon market (including the intermodal market) quite accurately: • purchases of new wagons are forecasted to be at a very low level within the nearest 5 years as between 2005 and 2008 enough new wagons were bought and there still are unused wagons in Europe, while there is an uncertainty concerning the volume of goods transported from Asia in the upcoming years, • purchases will mainly be made in relation to replacement of old wagons, and not for new markets, • national rails will continue to reduce their fleets as they will lose shares in the market, • the ROSCO market in Europe will grow as the liberalisation of the rail market is increasing. In the European market, we have several companies providing ROSCO services. The biggest of them are presented in Table 1. The market is characterised by an aim to group and take over more and more smaller players, as well as to take over wagons belonging to entities other than ROSCO. Exemplary transactions include: in 2015 VTG took over 30000 wagons of AAE, TOUAX took over 2000 wagons of GE, and CIT took over about 1000 wagons from Eversholt.
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Table 1. ROSCO companies potency in the context of intermodal wagons, own work. Company
Resources
VTG (Germany)
80000 wagons, including 17000 intermodal wagons
ERMEWA (FRANCE)
45000 wagons, including intermodal wagons
GATX (USA)
22000 wagons, without intermodal wagons
TOUAX (SZWITZER.)
11000 wagons, including intermodal wagons
CIT (USA)
10500 wagons, including intermodal wagons
WASCOSA (SZWITZER.)
8000 wagons, including intermodal wagons
ON RAIL (GERMANY)
4000 wagons, including intermodal wagons
ERR (GERMANY)
3000 wagons, including intermodal wagons
ROSCO (ROMANIA)
2000 wagons
OTHERS
30000 wagons
The flexibility of intermodal transport is its great asset. This flexibility is reflected in the unique approach towards the client, which significantly differs from a typical activity of a rail company. The competition between intermodal transport with road transport is possible probably only if the intermodal transport offers quality and price comparable to those proposed by the road transport. One of the methods for increasing the potential of the intermodal transport within this scope is to provide services for entities also offering flexible forms of transportation focused at achieving a high level of customer service (in this case, operators of intermodal transports). ROSCO have entities become a significant part of the intermodal market. When considering the dynamic growth of ROSCO in the market of intermodal transportation, we should suspect that the trend will continue. In addition, without fundamental changes in the mentality of national carriers, they will start to lose their share in the market to the benefit of ROSCO. 4. Summary In the end, those changes (for the better) will be also experienced by the client. Other issues related to the development of intermodal transport can be also indicated. The most important factors of the growth of intermodal transport include: • the growth of international trade between the European Union members and between the European Union and the remaining countries in the terms of quantity, • elimination of trade barriers within the EU, • deregulation of the goods transport market is one of the important elements improving the quality of rail transport, especially time of transportation, and has a significant influence on prices, usually resulting in their reduction, • increase of international trade and transportation of goods in containers, • a strategy of involving ports and sea terminals in the land transport of containers from seaports, • a friendly regulatory system which concerns customs and VAT calculation and condemns non-compliance with regulations, • a dedicated system for subsiding intermodal transport, • an appropriate environmental policy implemented at the national and European Union level, meaning complete coverage of the external costs generated by road transport by the branch of road transport, • an appropriate intermodal policy concerning specific types of goods transportation introducing optimal levels of share of each type of transport in transportation of specific goods, such as containers, based on appropriate studies, should result from EU regulations and be implemented at the national level via the fees for getting access to the infrastructure, • an increase of the share of block trains,
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• decreasing the risk of overfilling trains taken by the operators by using a more universal fleet and a better infrastructure, ensuring a high quality of services provision, • including forwarders in the intermodal chain by changing the sales policy, • liquidation of dispersed siding rail traffic to the benefit of intermodal trains as a result of changes in the policy of national carriers, • supporting the development of the most effective and most widely used routes at the expense of routes of a small volume by making infrastructural investments, • pan-European operator and carrier companies, • supporting companies taking part in the intermodal chain to the greatest extent possible and from the beginning till the end of the chain with the use of the European Union funds and various support programmes, • administrational limitations concerning various types of transportation such as a regulation prohibiting truck traffic on chosen routes etc.
References [1] 2007 Report on Intermodal Rail/Road Transport in Europe, Developing Infrastructure and Operating Models for Intermodal Shift, DIOMIS. [2] D. M. Z. Islam, S. Ricci, B. L. Nelldal, How to make modal shift from road to rail possible in the European transport market, as aspired to in the EU Transport White Paper 2011, European Transport Research Review 8(3) 2016 1–14. [3] A. Kierzkowski, The Use of a Simulation Model of the Passenger Boarding Process to Estimate the Time of Its Implementation Using Various Strategies, Advances in Intelligent Systems and Computing 470 (2016) 291–301. doi: 10.1007/978-3-319-39639-2_25 [4] A. Kierzkowski, Method for management of an airport security control system, Proceedings of the Institution of Civil Engineers – Transport (2016). Available from Internet: http://dx.doi.org/10.1680/jtran.16.00036 [5] A. Kierzkowski, T. Kisiel, Simulation model of security control system functioning: A case study of the Wroclaw Airport terminal, Journal of Air Transport Management (2016). Available frim Internet: http://dx.doi.org/10.1016/j.jairtraman.2016.09.008 [6] P. Luica, The freight wagon is a key indicator of rail productivity, in Railway Pro 1 (2014), interview with Gilles Peterhans, electronic publication. [7] F. J. Restel, F. J., M. Zajac, Reliability model of the railway transportation system with respect to hazard states, in: Industrial Engineering and Engineering Management (IEEM), 2015 IEEE International Conference on. IEEE, 2015. [8] T. Rožić, K. Rogić, I. Bajor, Research Trends of Inland Terminals: A Literature Review, in: PROMET-Traffic&Transportation 28(5) (2016) 539–548. [9] J. Swieboda, M. Zając, Analysis of reshuffling cost at a container terminal, in: Dependability Engineering and Complex Systems. Springer International Publishing. 2016, pp. 491–503. [10] M. Zając, J. Swieboda, Analysis of the process of unloading containers at the inland container terminal, in: Safety and Reliability: Methodology and Applications-Proceedings of the European Safety and Reliability Conference, ESREL. 2014.
ScienceDirect Procedia Engineering 187 (2017) 371 – 377
10th International Scientific Conference Transbaltica 2017: Transportation Science and Technology
Analysis of the ROSCO in the Intermodal Transport Market Mateusz Zajac*, Justyna Swieboda Wroclaw University of Science and Technology, Poland
Abstract Flexible intermodal transport is the most advanced method of material transportation Its special feature is flexibility, reflected in transportation and storing of load units. Intermodal transport is also connected to high expectations of customers, especially within the scope of completion of deliveries in the “just in time” mode, price flexibility and fulfilment of time requirements. One of the specific requirements resulting from those high expectations is implementation of modern forms of business activity. ROSCO entities have become a key part of the intermodal market functioning. Their influence on the intermodal rolling stock market is increasing and their flexibility has a direct impact on the functioning of intermodal service providers. © 2017 2017The TheAuthors. Authors. Published by Elsevier Ltd.is an open access article under the CC BY-NC-ND license © Published by Elsevier Ltd. This Peer-review under responsibility of the organizing committee of the 10th International Scientific Conference Transbaltica 2017: (http://creativecommons.org/licenses/by-nc-nd/4.0/). Transportation and Technology. Peer-review underScience responsibility of the organizing committee of the 10th International Scientific Conference Transbaltica 2017 Keywords: Intermodal transport, ROSCO, intermodal service develompent
1. Introduction All over the world, the model of ownership of railway rolling stock (wagons) is of a dual nature: 55% of goods wagons are owned by railway undertakings, and 45% belong to companies other than railway undertakings– mainly leasing companies, but also operators, forwarders and shippers [9]. Fig. 1 shows the railway wagon ownership structure in various market. If we take into account the most important markets: in the USA there are 1.6 million wagons, including 800 thousand wagons leased by ROSCOs (rolling stock leasing companies), in Russia there are about 1.2 million wagons and almost all of them belong to
* Corresponding author. E-mail address: [email protected]
1877-7058 © 2017 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer-review under responsibility of the organizing committee of the 10th International Scientific Conference Transbaltica 2017
doi:10.1016/j.proeng.2017.04.388
372
Mateusz Zajac and Justyna Swieboda / Procedia Engineering 187 (2017) 371 – 377
leasing companies, including ROSCO companies, due to the form of privatisation of the wagon fleet and the tariff system applied in the Russian Railway; while in Europe, there are about 600–700 thousand wagons, including about 220 thousand belonging to ROSCOs. Contrary to other branches of transport, railway transport must face several challenges in order to stay in the intermodal chain: the axle load, availability of modern wagons and infrastructure – from tracks and terminals up to the capacity of railroads [8]. Thus, it competes with road transport by offering very long distance transports. Intermodality plays a significant role in the competitiveness of the railway freight and in the handling pick-ups from European ports and long distance transports in general, and the fleet is a very significant component of this competitiveness [7, 10]. ZK^K
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Ϭ͘ϮϮ
Ϭ͘ϲϱ
Ϭ͘ϴ
ϭ͘Ϯ
ϭ͘ϲ
Total wagons tĂŐŽŽŶƐƚŽƚĂů
h^
RUSSIA ZK^^/
h
Fig. 1. The ownership structure of rail wagons in various markets [in millions of items].
At the beginnings of intermodal transport, around the 60s, skeleton wagons were used, which were also used interchangeably with containers transport, for example, wood and steel. The development of intermodal transport led to the development of rail waggons whose only destination was intermodal transportation. Any other possible uses were treated as additional ones, such as in case of 40’ wagons for transportation of heavy steel rolls. The change in the materials transported resulted from technological changes. As the history shows, intermodal transportation fulfilled the requirements of the market in terms of flexibility. The need for flexibility was also present in the transportation process management and the approach to rolling stock ownership [2]. This resulted in the establishment of ROSCO entrepreneurships. The aim of this article is to analyse the effects of functioning of those entities in the field of intermodal transportation and their influence on the development of intermodality. Currently, in Europe, around 50% of intermodal wagons used for combined transport are 60’ wagons, and the remaining ones are 80’, 90’, 104’ and 40’. The choice of wagons is dictated by the length of the train, which is usually 600 metres in Poland, but can reach up to 750 meters; and the weight of one container, which is up to 10 tonnes for light ones and up to 30 tonnes in case of heavy wagons. According to the authors, around 80000 of intermodal wagons were used in Europe in 2016. 2. The method of operation of ROSCO entities ROSCO companies operate in several functional modes: • purely financial (the latest model) – outsourcing all possible activities, for example MRC, ERR • a subsidiary company, whose business is an addition to other activity – DB INTERMODAL SERVICES; • ROSCO PLUS – these are companies which usually do not buy rolling stock at their own risk, but manage private fleet on behalf of private owners, such as VTG, WASCOSA, ERR. Typical ROSCO – a company with its own technical, legal and sales experts, which frequently owns a workshop or workshops, such as GATX, VTG [5].
Mateusz Zajac and Justyna Swieboda / Procedia Engineering 187 (2017) 371 – 377
The boundaries between the functional modes are not clear and the models interpenetrate. An example of such a situation is the J.V. 50/50 wagon company belonging to the Slovak Railways and the AAE company, which combines a typical ROSCO and a subsidiary company managing the rolling stock of its parent company. The main task of ROSCO companies is to supply railway rolling stock as a form of leasing to companies which do not have enough creditworthiness to buy it themselves or which do not want to encumber their balance with a purchase of railway rolling stock. The biggest customers of ROSCO companies in Europe and United States are refineries and fuel companies. The key measure of their success is utilisation of wagons, that is the period for which a fee is charged. It is calculated on an annual basis and usually amounts to from 90 (low) and 95 (medium) up to 99% (high). The aim of each ROSCO company is to achieve 99% utilisation. Another important element is the purchase of new rolling stock. Purchase decisions are quite easy to make if a company has already obtained a customer and a leasing contract for several years – ROSCOs buy 80% of wagons on such a basis. However, up to 20% of purchases of new fleet are wagons bought on a “speculative” manner, without a signed leasing contract and at the ROSCO company’s risk that it will lease them in the nearest future. The economic risk of such orders is very significant as some ROSCO companies have new and modern remaining unleased wagons for several years. The main factors contributing to the growth of ROSCO companies are replacement of old wagons and introduction of technological changes to the railway system. The process of replacing wagons with a load of 20 tonnes/axis in the Western Europe has been almost completed and currently wagons with a load of 22.5 tonne/axis are used almost exclusively. What is important for ROSCO is the wagon’s axis, a possibility of using the wagon to transport many products, technological development as well as lighter bogies and frames which also influence customers’ decisions. Sometimes customers force replacement of fleet, such as BASF, which decided in 2016 that it will not use wagons older than 30-year-old. On the other hand, ROSCO can also lease very niche wagons under long-term contracts in the amount of, for example, 20 items for one customer. Within the scope of intermodal transport, ROSCO companies had an important contribution to the field’s beginnings, which has been already mentioned. Some stakeholders, such as HUPAC, could and wanted to finance their rolling stock business on their own, but the biggest supplier of intermodal wagons in 2000s was the AAE company from Zug, Switzerland [3]. Thanks to courageous decisions and regular purchases of wagons, it was able to provide wagons on a regular basis and quickly. What was also important was also that it offered the latest wagons. Forwarders and operators were able to quickly obtain wagons in a response to requirements of customers thanks to ROSCOs. The decision-making process in “labour intensive” logistics is much shorter than in case of “capital intensive” wagon goods and that is why wagons available “on the spot” are one of the advantages of companies leasing them. What is more, all ROSCO companies operating in all possible modes: • assume some risk related to the wagon purchase – return on investment in a wagon takes usually about 10–15 years, the length of the logistic contract covers this period only to some extent as standard transport contracts are signed for one to three or max. 5 years; • buy more at better prices – they buy large quantities of wagons for their customers in the entire Europe; • are very specialised – they can design, buy and lease a series of 20 wagons for one customer; • adjust and create railway technologies for the needs of their customers, for example a rail tanker of a weight of 22.5 tonnes and a capacity of 86 CBM; or a four axle 80’ intermodal wagon; • set up the European standards of wagon lease – such as GCU or the wagon repair standard – VPI; • invest with a perspective of 30-40 years of using the wagon; • pan-European ROSCOs have an extensive financial background; • one of the strengths of ROSCO companies is also their amortised costs of the rolling stock thanks to which they are able to finance the purchase of a new fleet even with a very long term of return on investment (10–15 years). After the return on investment period is completed, the profitability of leasing of a wagon is very high until the time it is decommissioned, which means another 15–20 years of profits. Currently ROSCO companies put the purchase of new wagons for the contracts concluded in the first place, that means, that, for example, wagons bought are leased for 10 years. This period is simultaneously the period of return on investment in a given wagon,
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while old wagons are treated as the source of profit and of funding the dividend. However, it is only a general approach; companies can also lease wagons with a longer period of return on investment and at a higher risk, especially in case of modern and popular types of wagons, which are treated as a secure investment. Above all, they do not include newly bought wagons in a wagon pool, as for every wagon there is a separate contract signed and each wagon has its own return of investment forecast; • have a high rolling stock utilisation rate and the wagon’s cost is settled at a rate per 24 h per wagon (for example 20 EUR/wagon/24h), which allows for making easy comparisons and is foreseeable for railway undertakings. ROSCO disadvantages: • aiming at returns to scale and consolidation of the ROSCO market can lead to its monopolisation, • investments only in a new rolling stock and the decreasing average age of the fleet will increase market rates, • aiming at universality (wagons leased within the whole Europe) – wagon types are unified regardless of local and justified differences, • investing only in promising types of wagons can cause periodical lack of specific, non-promising types of wagons, • key decisions are made at the headquarters level, which frequently is outside Europe. An appropriately designed and reliably implemented process of maintaining rail vehicles is one of the key factors contributing to the safety of the operation of the rail sector, including ROSCO companies. Requirements within this scope have been adjusted individually by countries for many years. Creation of one, unified European railway area forced harmonisation of the approach to maintaining rail vehicles within the entire European Union. At first, the process covered the rules for maintaining goods wagons, but in the nearest future, it will probably be extended to other types of vehicles. 3. The influence of operation of ROSCO entities on the intermodal transport The influence of ROSCO entities should be considered within the context of the functioning of the entire rail market in Europe, especially within the context of liberalisation of the rail freight market. The main trend is the progressing effectivity and lowering number of wagons used to transport the same amount of goods as before as well as decreasing share in the market of national rails [4]. The aim of some organisations, such as UIP – International Union of Wagon Keepers is to develop mutual solutions with shippers, recipients and carriers. Those solutions will not depend on the decisions and involvement of governments, such as “intermodal freight plan” for Europe [6]. When considering the influence of ROSCO entities, we have to be aware how great is the chain of dependencies in field of intermodal transport. Longer trains and common loads of 22.5 tonnes/axis are a solution for development of intermodal transport itself. Introduction of a unified loading gauge, P400 or UIC GC within the whole rail network would allow for increasing the capacity. Next, implementation of Regulation 913/2010 on Rail Corridors is also an important tool for increasing the share of the rail in the goods transportation. It will allow for more effective transportation and use of rail networks as well as for a problem free transportation in national and international traffic as a result of shifting management of the goods corridor from the national (several countries) to the international level (unit rail transport integrates several stakeholders to increase the share of the rail transport) – the entire European Rail Sector is supposed to coordinate shipments in order to improve the quality of services and make them more attractive, focusing on productiveness, reliability and effectiveness. In order to achieve that, funds are needed and have to be allocated to appropriate actions. Quicker and longer trains and civilizational changes related to the requirements concerning noise emissions and pollutions require new infrastructure and new types of wagons. In Europe, we are slowly aiming at wagons of a load of 25 tonnes/axis, while in Sweden there are already many sections with loads of 30 tonnes/axis. In United States, the increase of the load from 22.5 to 30 tonnes per axis has resulted in savings at the level of several hundreds of millions of dollars per year. Those savings are distributed between wagon owners, rail carriers and operators. This solution allows for a purchase of a unit of capacity and length of a wagon for a lower price, decreasing the traffic on tracks and the costs of traction services calculated per transported goods unit.
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Fig. 2. Number of intermodal wagons in Europe, source [1].
The diagram presented in Fig. 2 does not covers the trends after 2009. It is assumed that around 600000–700000 intermodal wagons are used in Europe, and that can lead to a conclusion that the trends of liberalisation and effectiveness growth have stopped. If we evaluate the rail companies’ data available, we can see that there are many areas for improvement of effectiveness, especially as national companies do not indicate how many wagons they really use. We can assume that the number of wagons used in Europe will decrease together with optimisation of rail transport, but only for national carriers, while it will increase for ROSCO companies. Trends of private carriers suggest that they are involved in the use of services provided by ROSCO companies in the field of rail transportation. Even though purchases of a locomotive can happen from time to time (for example by Hector Rail AB), purchases of wagons are extremely rare. There are a few sources of information on the number of wagons (such as Eurostat, UIC, National Vehicle Registers), but there is not completely reliable information on the number of rail wagons used (active wagons with a valid P4 review). However, it is still possible to describe the trends on the wagon market (including the intermodal market) quite accurately: • purchases of new wagons are forecasted to be at a very low level within the nearest 5 years as between 2005 and 2008 enough new wagons were bought and there still are unused wagons in Europe, while there is an uncertainty concerning the volume of goods transported from Asia in the upcoming years, • purchases will mainly be made in relation to replacement of old wagons, and not for new markets, • national rails will continue to reduce their fleets as they will lose shares in the market, • the ROSCO market in Europe will grow as the liberalisation of the rail market is increasing. In the European market, we have several companies providing ROSCO services. The biggest of them are presented in Table 1. The market is characterised by an aim to group and take over more and more smaller players, as well as to take over wagons belonging to entities other than ROSCO. Exemplary transactions include: in 2015 VTG took over 30000 wagons of AAE, TOUAX took over 2000 wagons of GE, and CIT took over about 1000 wagons from Eversholt.
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Table 1. ROSCO companies potency in the context of intermodal wagons, own work. Company
Resources
VTG (Germany)
80000 wagons, including 17000 intermodal wagons
ERMEWA (FRANCE)
45000 wagons, including intermodal wagons
GATX (USA)
22000 wagons, without intermodal wagons
TOUAX (SZWITZER.)
11000 wagons, including intermodal wagons
CIT (USA)
10500 wagons, including intermodal wagons
WASCOSA (SZWITZER.)
8000 wagons, including intermodal wagons
ON RAIL (GERMANY)
4000 wagons, including intermodal wagons
ERR (GERMANY)
3000 wagons, including intermodal wagons
ROSCO (ROMANIA)
2000 wagons
OTHERS
30000 wagons
The flexibility of intermodal transport is its great asset. This flexibility is reflected in the unique approach towards the client, which significantly differs from a typical activity of a rail company. The competition between intermodal transport with road transport is possible probably only if the intermodal transport offers quality and price comparable to those proposed by the road transport. One of the methods for increasing the potential of the intermodal transport within this scope is to provide services for entities also offering flexible forms of transportation focused at achieving a high level of customer service (in this case, operators of intermodal transports). ROSCO have entities become a significant part of the intermodal market. When considering the dynamic growth of ROSCO in the market of intermodal transportation, we should suspect that the trend will continue. In addition, without fundamental changes in the mentality of national carriers, they will start to lose their share in the market to the benefit of ROSCO. 4. Summary In the end, those changes (for the better) will be also experienced by the client. Other issues related to the development of intermodal transport can be also indicated. The most important factors of the growth of intermodal transport include: • the growth of international trade between the European Union members and between the European Union and the remaining countries in the terms of quantity, • elimination of trade barriers within the EU, • deregulation of the goods transport market is one of the important elements improving the quality of rail transport, especially time of transportation, and has a significant influence on prices, usually resulting in their reduction, • increase of international trade and transportation of goods in containers, • a strategy of involving ports and sea terminals in the land transport of containers from seaports, • a friendly regulatory system which concerns customs and VAT calculation and condemns non-compliance with regulations, • a dedicated system for subsiding intermodal transport, • an appropriate environmental policy implemented at the national and European Union level, meaning complete coverage of the external costs generated by road transport by the branch of road transport, • an appropriate intermodal policy concerning specific types of goods transportation introducing optimal levels of share of each type of transport in transportation of specific goods, such as containers, based on appropriate studies, should result from EU regulations and be implemented at the national level via the fees for getting access to the infrastructure, • an increase of the share of block trains,
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• decreasing the risk of overfilling trains taken by the operators by using a more universal fleet and a better infrastructure, ensuring a high quality of services provision, • including forwarders in the intermodal chain by changing the sales policy, • liquidation of dispersed siding rail traffic to the benefit of intermodal trains as a result of changes in the policy of national carriers, • supporting the development of the most effective and most widely used routes at the expense of routes of a small volume by making infrastructural investments, • pan-European operator and carrier companies, • supporting companies taking part in the intermodal chain to the greatest extent possible and from the beginning till the end of the chain with the use of the European Union funds and various support programmes, • administrational limitations concerning various types of transportation such as a regulation prohibiting truck traffic on chosen routes etc.
References [1] 2007 Report on Intermodal Rail/Road Transport in Europe, Developing Infrastructure and Operating Models for Intermodal Shift, DIOMIS. [2] D. M. Z. Islam, S. Ricci, B. L. Nelldal, How to make modal shift from road to rail possible in the European transport market, as aspired to in the EU Transport White Paper 2011, European Transport Research Review 8(3) 2016 1–14. [3] A. Kierzkowski, The Use of a Simulation Model of the Passenger Boarding Process to Estimate the Time of Its Implementation Using Various Strategies, Advances in Intelligent Systems and Computing 470 (2016) 291–301. doi: 10.1007/978-3-319-39639-2_25 [4] A. Kierzkowski, Method for management of an airport security control system, Proceedings of the Institution of Civil Engineers – Transport (2016). Available from Internet: http://dx.doi.org/10.1680/jtran.16.00036 [5] A. Kierzkowski, T. Kisiel, Simulation model of security control system functioning: A case study of the Wroclaw Airport terminal, Journal of Air Transport Management (2016). Available frim Internet: http://dx.doi.org/10.1016/j.jairtraman.2016.09.008 [6] P. Luica, The freight wagon is a key indicator of rail productivity, in Railway Pro 1 (2014), interview with Gilles Peterhans, electronic publication. [7] F. J. Restel, F. J., M. Zajac, Reliability model of the railway transportation system with respect to hazard states, in: Industrial Engineering and Engineering Management (IEEM), 2015 IEEE International Conference on. IEEE, 2015. [8] T. Rožić, K. Rogić, I. Bajor, Research Trends of Inland Terminals: A Literature Review, in: PROMET-Traffic&Transportation 28(5) (2016) 539–548. [9] J. Swieboda, M. Zając, Analysis of reshuffling cost at a container terminal, in: Dependability Engineering and Complex Systems. Springer International Publishing. 2016, pp. 491–503. [10] M. Zając, J. Swieboda, Analysis of the process of unloading containers at the inland container terminal, in: Safety and Reliability: Methodology and Applications-Proceedings of the European Safety and Reliability Conference, ESREL. 2014.