“Interoperability of the networks is of key importance – without this, competitiveness of the rail is unimaginable. National differences amongst the regulations are not in our favour, and neither are the unimaginably high costs, for example, of ETCS systems.”
As the name in our company suggests, we like to cover as much of the world’s rail industry as possible – so we’re really pleased to be able to feature a country that until now hasn’t been featured in 5 Minutes With…, Hungary. The subject this week is from Rail Cargo Hungaria (RCH), Román Kotiers, a Slovakian who since 2016 has held the position of chief financial officer at the freight operator. Román speaks to SmartRail World about his involvement in the operational management of the company ahead of increased duties that will see him supervise the production area of the business.
Read this fascinating interview to learn more about his work across Europe and Eurasia, the challenge related to stabilising rail freight’s fortunes, the “sense of mission” he gets from working in the industry and his favourite rail journey, which sadly is no longer possible…
Dave Songer (DS): First of all, can you tell me a little about the Rail Cargo Group?
Román Kotiers (RK): Rail Cargo Hungaria (RCH) is a key member of the Rail Cargo Group, the rail freight subsidiary of the Austrian ÖBB, which is one of the leading rail freight companies in Europe, with a turnover of 2.2 billion Euro. RCH, as the leading rail freight company in Hungary, carries around 33 million tonnes of goods for its customers every year. We have a nationwide coverage and we take on an important role in fulfilling the freight transport needs of several industrial sectors, including the transport of raw materials and for the automobile industry. We offer innovative rail logistics solutions in the European and Eurasian regions, forwarding the products and goods of our customers to their destination safely. Our company considers the long-term support of sustainable and eco-friendly objectives as a high priority.
DS: How do you think the European rail freight industry has changed over the past few years and what are the main challenges now?
RK: Until recently we've faced a rising demand for rail freight transport across Europe which exceeds the capacity by 15-20%. Railway undertakings are now facing a dilemma that although the demand is growing, their profits cannot be increased as their service expenses have got significantly higher as well. They also very often have to deal with a shortage of locomotives and wagons, but mostly of staff – locomotive drivers and wagon inspectors. The fact that the growing volumes do not go hand in hand with the rise of the profits is very unsettling, especially considering the more and more perceptible impact of the economic slowdown in Europe.
In addition, in Hungary railway construction works have an adverse impact on the current transports. The freight trains need to take a detour because of the renewal and upgrading of the railway infrastructure, resulting in a 20-30% longer transport time.
DS: What are the main challenges facing the European freight industry?
RK: Providing a competitive alternative to road freight transport is a constant challenge. Considering that the railway has a 17-18% share of the European freight transport market, it seems that the competition already has a winner. Railway cannot regain its dominance, but it is important to stabilise its position and grow its share, even when this is not really jeopardising the position of road freight transport. We are worried that the traditional heavy industry, which used to rely mostly on rail transport, is constantly scaled down. With this decrease, the new emerging transports – like the automotive industry or intermodal transports – need to be able to provide a double-digit growth in order to keep the share of the rail market. To increase the rail’s share in Europe to 30% stricter regulations on EU-level are required, which should take all externalities of road freight transport (traffic jams, accidents, noise, pollution) and even the actual costs of the road network into account.
DS: I see, how do you think those challenges can be overcome?
RK: The whole rail freight market should enhance their customer service and quality; this is our intention as well. Our services correspond to our customer’s needs, hence there is a carrier, a freight, a terminal and an operator segment of the Rail Cargo Group in Hungary. Our company is constantly growing and getting stronger, but it is also necessary that taking the demands into account we develop as well.
It is also important to mention the digital transformation, because as a rail freight company it is essential for us to keep up with the technological challenges. Customers prefer easy processes. When requesting the transports, they would like to quickly receive feedback about the fastest and most efficient way of the delivery, transport time and costs. Once consigning the goods, they would like to know its progress and to be notified in the event of a delay. All this information should possibly be connected to their own systems, requiring minimal human intervention. What are considered to be basic requirements for a webshop, aren’t yet evident for rail. This is the reason why RCG has started its own digitalisation project, called 1492, in which Rail Cargo Hungaria has several important development projects as well.
If you enjoyed this, why not register for SmartRail on 17-19 June in Munich, where Román will be speaking?
Joining his will be fellow freight operators and also infrastructure managers, passenger rail operators and industry suppliers. A perfect networking opportunity!
Visit the show website to see the agenda, speakers and register for the show.
Similar to most European rail freight companies, we handle transnational transports too. Interoperability of the networks is of key importance – without this, competitiveness of the rail is unimaginable. National differences amongst the regulations are not in our favour, and neither are the unimaginably high costs, for example, of European Train Control System (ETCS) systems. While road hauliers have cheap options to follow and manage their fleet and transports, equipping a locomotive with an ETCS system costs in the region of €300,000-400,000 (if someone buys it in a large amount). And we have not even mentioned the infrastructure yet; people having a better knowledge in the topic can surely justify each cent, I only know that these extra costs are not easily welcomed by the market and it also makes the competition difficult.
DS: What do you enjoy most about working in the rail industry?
RK: I studied electrical engineering and acquired a second degree in economics. Although I have been working in the railway industry since 2011, I still consider myself an outsider. I like two things the most: firstly, in this branch we have a strong connection with the physical reality, as we operate real and not virtual trains. Secondly, there is the human factor: the best colleagues are partly all rail fanatics, they have a sense of mission and commitment which helps us through many difficult situations.
DS: And your career; what’s been your biggest challenge?
RK: As I said before, I come from another sector, so for me the first big challenge was this change and getting accepted. And currently I am facing my second challenge: the takeover of the production area in RCH. In this scope one of my important tasks is the digitalisation of this area, as I feel we have a great backlog, even when other railway companies have not achieved a lot more progress. The other important task is to maintain our production capacity, even when our biggest traction partner is slowly leaving the freight sector.
DS: You’re due to speak at SmartRail in June – what do you think you’ll cover at the event?
RK: My topic will cover the financial aspects of the digitalisation processes in the railway sector. I don’t want to reveal all the details, but for now maybe I can tell that for me the biggest question is not how we find financing for a project, but how we will be able to present a robust business case for it.
DS: Where in the world have you enjoyed your favourite rail journey and why?
RK: To be honest, I like the rail very much, but as there is no feasible train connection between my home and my workplace, I use a car. Maybe for me the most nostalgic journeys were those between my hometown Samorin in Slovakia and the neighbouring village, Kvetoslavov. The train used to have one wagon and in the winter season heating was provided by a furnace. The line was closed at the end of the 70s and since then the tracks have been removed – it’s completely understandable from an economical perspective, but of course I still miss it very much.
DS: Thanks so much, Roman. We look forward to welcoming you at SmartRail in June!