Interviews

Tomáš Tóth: We Want Be Able to Be Back in the Black

Published: 1. 1. 2021
Author: Karel Černý
Photo: Photo ČD Cargo, Michal Roh ml., Lukáš Růžička, Jiří Štembírek, Karim Ibrahim
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The appointment of Tomáš Tóth as the head of the Board of Directors of ČD Cargo after his predecessor Ivan Bednárik "switched" to the same position in Czech Railways was not a big surprise. He knows the company perfectly, he has been working there for many years, he was the executive director of it. But still - what is it like to take the lead in a period so dramatically marked by the covid pandemic?

How did ČD Cargo close last year having it been marked by covid? The previous years were in profit, in 2019 alone it was over half a billion...

The pandemic affected our entire economy, including the rail freight segment. Last year, we  transported 59 million ton of goods, which is about 5 million ton less than in 2019. The shortfall was caused mainly by the first half of last year. We did not lose clients, but their production and subsequently our cooperation were paralyzed by the first wave of the pandemic. However, we managed to get additional transport volumes abroad, thus strengthening our position on the European transport market. As for the expected economic result, unfortunately, the capital market rules do not allow me to comment on it in more detail at this time. In May 2020, we prepared two scenarios for the development of the economy until the end of the year. They were conservative and purely pessimistic scenarios. Unfortunately, both of them expected loss-making management. Today, I can, at least, say that the loss will be lower than both of these scenarios predicted. We have the development of management under control and we are fully liquid.

Have you had to or will you have to take any drastic austerity measures? And if so, what do they concern?

Naturally. We cannot live detached from reality, and therefore we are working on how to adapt our capacities to the requirements of our customers, basically, since the outbreak of the pandemic. Simply put, within the company we focus only on core business, we optimize operating technologies and reduce all short-term unnecessary costs that do not directly support the core business. The second half of last year and the beginning of this year is also about reducing the number of employees, in most cases at the level of the so-called company procedures and instructions, simply put, in the administration.

On the other hand, we haven’t reduced the maintenance and repair work on our vehicle fleet, nor will we significantly reduce the volume of investment funds in rolling stock.

By continuously streamlining our activities, which is by no means just about reducing the number of employees, we will save approximately CZK 450 million this year.

It's been almost a year since you started rail transport in Germany. Are your plans being fulfilled?

Through the ČD Cargo Niederlassung Deutschland branch, we have been authorized to operate rail transport on the German railway network since 1st March 2020. About a month later, at noon on Friday, 3rd April, the first train arrived in Ingolstadt, which was operated on German territory under the license of ČD Cargo and driven by a ČD Cargo driver. The key transports last autumn included the transport of newly manufactured passenger cars on the route Bratislava-Petržalka - Wien - Passau - Falkenberg (Elster) and back. In cooperation with the ČD Cargo Niederlassung Wien branch, 10–14 pairs of trains were operated per week. The route through Austria and Germany was chosen due to capacity and operational problems at the crossing in Děčín, caused by the continuous closure of the track with a complete interruption of operation at night. Despite the fact that the route through Austria and Germany was more than 400 km longer, it managed to offer the customer a comparable journey time and a proportionally more advantageous price, mainly due to the cost of the transport route in Germany, where the German infrastructure manager DB Netz assessed deviations as operationally justified and contributing to the relief of the congested section of the Elbe valley, and partially favoured the diversion route. Our plans are therefore being fulfilled by specific transports, and last year we ensured the transport of more than a thousand trains in Germany. Our Viennese branch is no less successful. Thanks to their activities, our locomotives appear at the head of freight trains on the Italian border in Tarvisio and in Basel, Switzerland.

In October you became a full-fledged carrier in Hungary, in November you sent the first train to Romania. Where everywhere do you actually operate? And are you planning to enter another country?

We currently hold the relevant documents for the operation of rail freight in six European countries, and this is certainly not the final number. I have already spoken to two foreign branches in Austria and Germany. In recent years, our subsidiary CD Cargo Poland has gained a reputation on the Polish market as a reliable carrier offering quality and at the same time cost-effective services. Last year, they transported about 2.8 million tons of goods, with the largest volume being black coal, but that is not surprising. CD Cargo Poland provides transport of this raw material not only from the Upper Silesian mines, but also from the Baltic ports, and in case of demand also from the transhipment points on the Belarusian / Ukrainian-Polish border. In addition to business cases realized for the parent company, CD Cargo Poland has a portfolio of their own Polish clients to whom they offer their services. So now we are talking activities in the east. Since last year, we have been able to operate trains in Slovakia through the subsidiary CD Cargo Slovakia and, and since autumn also in Hungary - here under the "license" of CD Cargo Hungary. The Balkans is a very promising market and we would like to implement several new projects there this year.

You have signed a loan agreement for approximately 3.4 million crowns. According to your website, the money will go to the acquisition of 50 new electric trains and 140 intermodal cargo trains, retrofitting of 310 locomotives with an ETCS security system and, in general, supporting sustainable transport and cohesion in Czechia. Will this do for the time-being?

Investments associated with upgrading the vehicle fleet is one of our company priorities, and I am proud that the European Investment Bank has chosen ČD Cargo as a reliable company that will provide us with a relatively high loan on very favourable terms. We had been trying to get a loan from the EIB for a long time, but the decision was preceded by a really thorough analysis, or rather an audit. There are not many companies directly financed by the EIB on the Czech market, the more I appreciate signing the contract. I would like to emphasize that this is an investment loan framework that allows us to draw funds for the individual specific projects that you mentioned. As for the time horizon of the cooperation with the EIB, the contract is concluded for 3 years, with the proviso that we can draw funds for a period of 10–12 years, depending on the parameters of individual projects. The funding system can be flexibly changed and expanded.

There have been concerns, as far as ecology goes - as many goods as possible should be transported by train. But how is are Czech rail tracks doing? Can there be more trains operated?

This question should be addressed to the Railway Administration. Unfortunately, the capacity of some main services is already almost "sold out" and it is very difficult to imagine a sharper increase in freight volumes without stopping the growth in passenger trains, expanding backbone capacity, building high-speed services, and other related steps.

It is necessary that the state transport policy not only takes into account the requirements related to the increasing mobility of the population, but also supports the development of freight transport within the so-called Green Deal. We already have capacity problems not only on corridor lines, but also on lines at large railway junctions. Last autumn, we were able to see how everything is on the edge of possibilities during the interruption of an important international service from Děčín to Germany. Thanks to the intensive cooperation with the Railway Administration, we managed send some of our trains there, but unfortunately we lost some transport due to the insufficient capacity of this border crossing. Similarly large interruptons await us this year as well. In this context, I fully agree with my predecessor, Ivan Bednárik, who considered the relaxed track capacity load to be the only positive consequence of last year's pandemic for freight carriers.

What goals have you set for 2021?

After large declines in transport volumes in connection with the covid-19 pandemic, we want to be able to be back in the black, continue investing in the renewal and sustainability of rolling stock, maintain our position in the Czech market and strengthen ČD Cargo's role in Europe.

CV BOX

Ing. Tomáš Tóth (born in 1981 in Pardubice) is the Chairman of the Board of ČD Cargo.

He graduated from the University of Pardubice, Jan Perner Faculty of Transport, majoring in Transport Management, Marketing and Logistics.

In September 2006, he joined the ČD Supply Centre in Česká Třebová as a clerk. In preparation for the establishment of the joint-stock company ČD Cargo, he was a Member of the Procurement Team.

He worked at ČD Cargo as a Project Manager in the IT department and in September 2013 he became the Director of the Controlling and Financial Management department. On 1st April, 2018, he was appointed to the position of Executive Director, on 4th December, 2020, he was elected a member and subsequently Chairman of the Board of Directors of ČD Cargo.

He is married and has two children. His biggest hobby, which he’s done all his life, is cycling.

BREXIT

Many predictions were made in connection with the withdrawal of the UK from the European Union. The catastrophic ones even predicted the collapse of all trade. "In direct connection with Brexit, we do not monitor any problems at the moment," says Tomáš Tóth. However, according to him, the question remains how Brexit will be reflected in long-term trade between Czechia, or more precisely throughout the European Union, and the United Kingdom. "Of course, any fluctuation will affect freight transport in all modes - especially in road, intermodal, sea and, to some extent, rail transport," Tomáš Tóth adds.

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