Assuming an Active Role
Shortly after becoming the CEO you announced an internal reorganization and increased sales in the field of cargo traffic, which is the activity with the biggest losses for the company. When do you expect to see more concrete results of your actions?
It is true that cargo traffic is our only money-losing activity, but this is significantly connected to the economic crisis, because 90 percent of the cargo is transported in international traffic. Together with my co- workers, I have been paying the utmost attention to cargo traffic. Our goal is to adapt the operations to the new conditions as quickly as possible and try to seize new opportunities. The measures that we are carrying out include enhancing the capacities of our sales team, expanding operations in the field of full logistics services, greater attentiveness for the needs of the buyers, partnership with the port Luka Koper, expansion of activities abroad and expansion to the new markets in south eastern Europe. We are also developing a modern logistics terminal in Moste, optimizing the operation processes, enlarging productivity and rationalizing material costs. All of these activities should eventually bring some positive results.
How do you plan to approach the small number of competitors that could quickly take a bigger piece of your market share? You said recently that there is a danger of losing up to 60 percent of the market.
We cannot delude ourselves; competitors have already taken away some market share. This is logical, because our biggest competitor is a company from Austria, a county that is connected to almost half of our cargo. The advantage of our competitors is undoubtedly that they are more adaptive and more cost efficient, because they have only recently started their business. It is no secret that they can attract the former staff from Slovenske železnice, because they can promise them better work conditions. Nevertheless, we are confident that we can match the challenge. We will not be passively waiting for cargo; we are assuming an active role on all company levels. I am personally assuming the role of the lead sales person of the company. I constantly travel abroad and look for new business anywhere I can.
How, in more concrete terms, do you plan to provide full logistics services?
Slovenske železnice must become a technologically advanced and cost-efficient logistics provider and in this regard we must look abroad. Our multisystem locomotives enable us to transport cargo to almost every European country. We are currently waiting for permission to start using railways in Austria. We are also expanding our cooperation with companies from the Balkan countries and Germany. Our aim is to be able to provide quality service for the whole cargo route. The mentality of the staff needs a definite change: no more just picking up orders and waiting for the buyers to contact us. These are the first concrete steps; others will follow suit. We don't anticipate immediate positive results, but we are heading in the right direction.
Is it at all possible to secure the successful business operations of Slovenske železnice, if the current company structure is to remain the same?
The structure of the company needs a definite adaption. Reorganization will be a result of precise analysis, so I decline to speak off the top of my head and give rough assessments. I believe that the employees need to have responsibilities and a mandate. We need to monitor their work and both take action if they are not successful and reward them for doing well. We need to motivate them. Reorganization, together with financial consolidation and greater income from cargo traffic, is definitely urgent, because the current system will not survive in the long term.
Neither the Ministry of Transport nor the Slovenian government have yet announced which of the models for the reorganization of Slovenske železnice they will carry out. How much information do you have on their planned decision and, in your opinion, which model is the most suitable?
The three models you are talking about are: making a uniform company or a holding or splitting up the company and having separate infrastructure and transport operations. The decision is in the hands of the owner. Prime Minister Borut Pahor said that the study made by the company KPMG does not represent the final decision of the government. The government also believes that all the participants that will take part in the company reorganization should also give their opinion. We will discuss all of the possibilities, but the fact is that if the current work practice continues, we will not be efficient in any of the system. I do not wish to prejudice a solution; I wish to decide only after all of the facts are clear.
When do you plan to confront the powerful company unions who oppose any company reorganization?
The unions are an important part of Slovenske železnice. They are loud and efficient. They are doing their job very well. I neither view them as opponents or enemies. I believe that they also generally support the interests of this company. Thus we will be looking together for the solutions that will benefit the company.
What is your opinion on the idea that the most important Slovenian companies in the field of logistics should integrate to provide more efficient full logistics services?
Railways and road carriers are not just competitors, but also partners in the logistics chain, together with forwarding agents, ports and land terminals. Logistics is an integrated activity and providing just railway transport cannot meet the demands of the majority of buyers or be competitive on the full logistics services market. There are several ways or means of cooperation among the logistics companies. For defining a concrete model of business integration, clear roles, expectations and strategies for individual companies should be decided.
The Slovenian government emphasises that potential partnerships with foreign companies will take place after the company reorganises. The German railway company Deutsche Bahn has been appearing as potentially the most promising strategic partner for some time now. The recent Slovenia-Germany government agreement on the cooperation in the field of the railways development is also another confirmation of that. How do you view this potentially strategic partnership?
The basis for any strategic partnership is firstly the stabilization of the conditions inside of Slovenske železnice. Setting aside reorganization and strategic connections, sales and marketing activities also need to start with Deutsche Bahn, who is already a good partner. We do not wish to attach ourselves to a specific company in advance, so the contract on the strategic partnership is something completely different to everyday business cooperation.
In the coming years, Slovenia together with the help of the EU plans to invest as much as nine billion euro in the railways infrastructure. How does Slovenske Železnice plan to seize these big investments?
Slovenske železnice, of course, welcomes the announced investments and hopes that they will be realised as soon as possible, as they will enable us a further development that is hindered by the current infrastructure. First of all, we expect the quick and efficient abolition of current bottlenecks and slow rides. All main and some secondary railways also need to allow bigger axle burdening for up to 22.5 tons. We also wish the main railways would enable speeds of up to 160 km/h. All of the main railways and some of the secondary ones should be electrified, the sections of the main railways should get a second railway, signal and security devices should be modernised.
How do you view the railway infrastructure investments in regards that Austria has been lobbying at the European Commission to divert the railway part of the so called 5th corridor through Austria?
Modernization of the railway's infrastructure and building new infrastructure in Slovenia has been running late for at least 15 years. In the first period after independence, this made sense, because all of the structures needed to be established, but later on this delay caused major damage for the whole Slovenian economy, not only for Slovenske železnice. Lobbying is completely legitimate; there is a special meaning to it, if it is being done by a government for a specific economic branch. At Slovenske železnice, we wish that the responsible government authority would lobby for Slovenia's rail interests at the European Commission. Our role as a company in preventing these attempts to divert the cargo is to offer the quality service and a proactive marketing approach, but all this is connected with the state of the infrastructure. Thus, we welcome the declarations from the prime minister and Minister of Transport Patrick Vlačič that the railways will be Slovenia's infrastructure priority in the following years.
How could Slovenia's government quickly secure a bigger diversion of the cargo traffic from the roads to the railways, bearing in mind that carriers' lobby in Slovenia is strong?
The government can, with various measures of its active transport policy, significantly influence the diversion of the cargo from roads to railways, because this is also one of the goals of Slovenian transport policy. In this regard, the government should include this in its attempt to achieve its environmental goals. When talking about measures, we should not consider only the compulsory ones, but mostly the ones that would stimulate railway traffic, such as combined traffic or transport of dangerous cargo. The participants of the Copenhagen conference made it clear that concrete measures that would affect the costs of using a specific means of transportation need to be taken. It is important that suitable infrastructural conditions for this kind of transport are established. We are also aware that the government needs to have a holistic economic policy to provide answers for the road carriers when the cargo is diverted from roads to railways. We should also consider how railway and road transport could become partners offering full logistics service and not just competitors.
Under ideal circumstances, when do you think Slovenia could become a European or world leader in the field of railways logistics service?
If we put things into realistic perspective, we can say that our goal for the following ten years is to become an important partner in central in south eastern Europe that provides full logistics services.