Latvian Railway Sector 's Sustainable Development amid a Challenging Economy

  • 2009-11-04
  • By Layla Banks

ROLLING THUNDER: Even the trains are going green, as new technologies are turning the railway sector into a modern and more efficient industry.

RIGA - State Joint Stock Company Latvian Railway (LDz), one of the largest employers in the country, plays an important role in diminishing road traffic by facilitating inter-city mobility as well as constituting a growing and dynamic freight transport market. It is also one of the oldest companies in the country 's this year LDz celebrated its 90th anniversary.
The first railways were built in Latvia in the 19th century. The Riga-Jelgava line, installed on Feb. 1, 1873, has just celebrated its 140th, while the Riga-Valka line marked its 120th anniversary. The lines were initially managed and operated by private companies, and were later consolidated into one monolithic enterprise.

According to the information available on the company's Web site, LDz operates three core lines of business: passenger and freight shipment, rolling stock repair services and railway infrastructure management. There are several types of cargo transported via rail in Latvia, for instance oil products, fertilizers, minerals, timber, chemicals, coal, sugar and grain.

Latvia's rail industry has historically shown strong sustainable financial results. As stated in the company's annual report, despite the economic hardships experienced by businesses all over the world, last year was very successful for LDz. Statistics show that in 2008 the demand for rail traffic was growing. Almost 27 million passengers and over 56 million tons of freight were transported via the Latvian Railway infrastructure (in comparison with 2002, the previously most successful year of this decade, 22 million passengers and 40.1 million tons of freight were transported by the company). The results for 2008 in terms of transported freight were the highest among the Baltic states and Finland (Lithuanian railways carried 55 million tons of freight, Estonian railways 's 26.1 million, but Finnish railways 's 41.9 million tons of freight for the reported period). In 2008, net turnover of LDz amounted to 299 million lats (427 million euros), with profit 's 13.4 million lats.

Kaspars Gerhards, the Minister of Transport of the Republic of Latvia said that LDz is one of those rare railway companies in Europe posting an increase in freight volumes last year. "Last year in Europe there started a decrease in freight volumes, and it is now continuing. Latvijas dzelzcels is an exception 's last year the volumes of freight increased and this year until now these volumes are being maintained," underlined the minister.

This success is largely based on the considerable investments in rail infrastructure that the company made previously. Besides the good freight turnover indicators last year, LDz invested a considerable amount of money in rail infrastructure improvement 's 23.5 million lats were invested in 88.5 km of track reconstruction; 5.4 million lats in changing 111 turnout sets; 471,000 lats in repairs of B type rail tracks, while 4.1 million lats were invested in the modernization of the rolling stock hot-box detection system. As a result, in the first half of this year more freight was transported in Latvia via rail than in the first half of 2008. In the first 6 months of 2009, 28.1 million tons of freight were transported by Latvian Railway, which constituted a 1.2 percent increase year-on-year (27.8 million tons were transported for the respective period of 2007).

Those excellent results were achieved largely thanks to the increase in import volume, which grew 7 percent year-on-year. This year 24.8 million tons of import freight was transported, while 23.2 million tons were carried by LDz for the same period of 2008. Freight volumes grew due to transportation of oil products, chemicals, coal and coke. The main type of freight transported this year was oil products, amounting to 11.5 million tons, which is a 12 percent increase year-on-year. The volume of coal and coke increased by 16.9 percent, or 10.3 million tons. The volume of chemicals carried by rail in the first six months of 2009 grew by 20.2 percent, ie. 1.45 million tons.

The management was understandably pleased with the performance of the company, "We are satisfied that regardless of the difficult economic situation and considering that freight volumes for the majority of European railway companies have decreased, LDz Cargo not only kept freight volumes at the same level as last year, but also increased them," commented Ugis Magonis, Chairman of the Board of LDz.

Since the mid-1990s the railway sector in Latvia has been going through a period of increasingly rapid change. New and innovative solutions are being used by the company in order to make the best use of the latest technology developments worldwide and deliver the value-added services to Latvian customers. For instance, on Oct. 14 of this year the subsidiary of LDz, LDz Rolling Stock Service, presented the first modernized diesel locomotive that is equipped with a diesel engine corresponding to the ecology norms Euro 3 (European emissions standards that define acceptable limits for vehicle exhaust emissions in EU member states). Currently this engine is the most ecologically-friendly diesel locomotive in Latvia, thus helping to strike the right balance between economic imperatives and environmental responsibility. This was the first locomotive modernized by LDz subsidiary LDz Rolling Stock Service, in cooperation with the Estonian company Baltic Marine Group and LATRAPS, the Latvian farmers' supply and marketing cooperative established by 12 farms in the Zemgale region.

"Thanks to LDz Rolling Stock Service and our colleagues from Estonia - Baltic Marine Group - our locomotive now has more horsepower and we can be sure that cargoes will be delivered on time. The locomotive is equipped with an engine that has a new control device, which is necessary for engine operation. This locomotive is an economic, strong, handy and low-cost instrument. It is important that we can also operate this locomotive with a 30 percent bio-diesel mixture, which we produce ourselves," commented LATRAPS Chairman of the Board Gunvaldis Sprogis.

Seeking to increase customer convenience through the improved service offering and striving to support further growth in the sector, LDz has introduced wireless Internet on the Riga-Moscow train. Internet coverage is provided by the Latvian telecommunications services provider Triatel. The service is absolutely free and the passengers only need a laptop to use it. The customers of LDz will be able to use Internet in the territory of Latvia, from Riga Central Passenger Station to Zilupe station (for about 4 hours). This innovation will increase passenger comfort and motivate customers' use of the railway mode of transportation. It also serves as a good example of cross-industry cooperation, boosting customer convenience through partnership.

Mihails Zotovs, member of the board of Triatel, emphasized in the company press release: "Internet service on trains will widen considerably Triatel's Internet use opportunities, and will ensure better passenger comfort. We are sure that the passengers will have a huge interest in this service. Thanks to the successful cooperation of three companies we have made an important step towards modernization of passenger transportation. We are satisfied with implementation of the new and unique service on the international link Riga 's Moscow."

Another innovation aimed at improving customer satisfaction is the recent introduction of a unified monthly ticket for trains and public transport passengers in Riga. Also to promote rail travel, this past summer Latvian Railway, in cooperation with Tourism Development State Agency and Tourism information offices, launched the campaign "Travel around Latvia by Train." Students and teachers were invited to go on spring excursions to the Bicycle Museum and Sunset Path in Saulkrasti, to Durbe Palace in Tukums and to the Energetics Museum and Cross Hill in Kegums by train, free of charge or at discounted rates.

Overall, despite challenging economic conditions that the Baltic states are currently faced with, the outlook for the market seems to be positive going forward.