German railways buys EWS
Logisticsmanager.com: 28 June 2007
Deutsche Bahn, the German state-owned rail operator, is to buy EWS. It is also taking a majority stake in Spanish operator Transfesa.
The move will give DB Logistics direct links to the transport and logistics markets in Western and Southern Europe and will thus strengthen the south-west corridor. The integration is intended to lead to a noticeable boost in rail’s market share in Europe. Deutsche Bahn believes DB Logistics, EWS and Transfesa complement each other ideally, especially in the rail logistics, automotive, industrial and bulk goods segments.
Deutsche Bahn chief executive Hartmut Mehdorn (pictured) said the de facto liberalisation of the rail network was a crucial requirement for growth and economically efficient operations. Germany was a perfect example of how open access to the network, which is used by more than 330 rail companies, could lead to a substantial increase in rail traffic, and added that DB would continue to encourage European liberalisation in future, he said.
EWS is the largest rail freight operator in Britain, providing a range of freight, engineering support and hire services. It has sales of some £500m a year and operates more than 1,000 freight trains a day accounting for 70 per cent of all rail freight in Britain. It also operates services to mainland Europe through the Channel Tunnel, and recently expanded into France with a rail freight company called Euro Cargo Rail.
EWS, based in Doncaster, was formed in 1996, following the privatisation of British Rail’s rail freight divisions. Over the last eleven years, rail freight in Britain has grown by 60 per cent. It is currently owned by a consortium of investors from the UK, North America and New Zealand.
EWS chief executive Keith Heller said: “We can build on the platform we have created in the UK and France for rail freight growth, offering our customers a comprehensive European rail freight network. This agreement between DB and EWS will allow greater volumes to be moved by rail.”
DB Logistics hopes the EWS acquisition will improve its business position in France, where EWS is already represented by its subsidiary Euro Cargo Rail. At the same time, Deutsche Bahn says it aims is to continue its close cooperation with SNCF, which is already successful in the single wagonload segment, and win a higher volume of transport for rail by offering attractive products.
The Euro Cargo Rail business was launched in October 2005 becoming only the third rail freight operator in France. It targeted new services on a number of routes in northern France, particularly on routes to and from the French border, such as the Calais to Tourcoing, and Calais to Dunkerque rail routes.
Deutsche Bahn is a major player in the logistics market. Its logistics division has annual sales of some £11billion through brands such as Schenker, Railion and Intermodal. It is the European market leader in rail freight as well as being among the leaders in the road, air and sea freight markets.
Railion, Deutsche Bahn’s rail freight business, has sales of some £2.3bn. It has 25,000 employees serving 3,300 customer sidings in Germany alone.
The Railion Group consists of Railion Deutschland, Railion Nederland, Railion Danmark and Railion Italia focusing on block train, single freight car and combined transport segments, principally for bulk freight for the iron and steel, chemical, mineral oil, fertiliser, agricultural and forestry products, consumer goods, building materials and waste disposal sectors.
The European rail freight market has been open to competition since 1 January 2007 and Railion has been looking to exploit the opportunities offered by a liberalised market.
It already provides cross-border rail freight services from a single source, operating 100 freight trains non stop across the European continent daily.
Norbert Bensel chairman of DB Logistics said: “The expansion of our Europe-wide network is our answer to the increasingly complex demands of our customers. EWS and Transfesa will enable us to close important gaps in the DB Logistics rail freight network. As a result, we shall be better equipped in future to offer our customers attractive products.”
Deutsche Bahn’s land transport, air and ocean freight, contract logistics and supply chain management business units operate under the Schenker brand. The combined transport business is an independent business unit operating under the Intermodal brand with a clear focus on seaport hinterland transport services and the main continental transport corridors.
At the end of 2005, Deutsche Bahn bought Bax Global, the US-based freight forwarding and logistics business from The Brink’s Company for £623m in cash. This has now been merged into the Schenker business.
Madrid-based Transfesa has a fleet of 7,900 special wagons which are equipped with interchangeable axles enabling them to transit trough Europe's different rail widths eliminating the need of freight transhipment. It has sales of some £180m a year.
Over the past ten years, Transfesa has developed its intermodal transport services and built its own fleet of more than 2,000 swap-bodies. Its road-based transport services are increasing and it now has 250 trucks and 270 trailers of its own as well as sub-contracting work.
Europe's private freight operators under siege
Railway Gazette International: 01 July 2007
THE NEWS that Deutsche Bahn has been actively discussing acquisition of the UK's largest freight carrier, English Welsh & Scottish Railway, and is considering a partnership' with Fret SNCF, which lost €840m in 2006, has once again set alarm bells ringing among the fledgling private sector rail freight operators in Europe.
Monika Heiming, Secretary General of the European Rail Freight Association which represents them, told the Rail Freight 2007 conference in London on June 5 'I think in the long term what we will see is a closing down of the European market, meaning everything that can run will be German for me this move is no good'.
FirstGBRf director John Ellis told delegates 'I think we would feel some concern about the ability of DB if they're controlling EWS to be able to withdraw what is a liberalised, open and transparent market in the UK, and that would be a concern to us. In the UK currently we have a fully privatised rail freight operation and industry, and one that is pretty responsive to customer needs'.
Tom Jones of the UK's second largest operator said Freightliner shared the same concerns 'there is a very grave danger that a market which is really a beacon within Europe' and performing very well could be jeopardised. Jones urged DG TREN in Brussels 'to have to look at this very carefully'.
The tactics used by DB to acquire often unprofitable freight operations from its neighbouring state railways was criticised by Ed Burkhardt, who took a substantial commercial risk when he bought the majority of British Rail's freight businesses in 1996 to form EWS.
Referring to DB's acquisition of NS Cargo in 2000 and DSB Gods in 2001, Burkhardt would have been 'far more comfortable with an action like this if DB was a private company'. But 'there is concern when a state-owned company, presumably with the instrumentality of the state - they have the state finances and are considered a sovereign risk, gets involved in what ought to be private businesses. They are the big gorilla not having to get a rate of return which private industry does, they have unlimited funds'.
'Probably nobody in this room, other than I, knows that the shareholder group that controlled EWS at the time was very close to purchasing the Netherlands freight company', Burkhardt confided. 'We had had very productive negotiations we had been invited in by the management who were going to talk to us to get their company ready for bidding.
'Well, one morning I got a call from the Chairman of the Dutch railway saying he was embarrassed to tell me that overnight his company had been sold to the DB', Burkhardt revealed. 'He said it was a political deal, the ministry agreed to it, and when I said "what did they pay for it?" he replied "almost nothing". They got Railion shares in exchange, which is nothing. They are worthless, they don't make any money.'
'The Danish sale was very similar. I don't know the details of that one, but more recently there was an attempt to do the same thing for Green Cargo, and I will tell you right now that we were interested in Green Cargo and had a relationship with them for a long period of time. I got wind that this was coming from [the Swedish government] and that they were going to hive this company off to DB in a private deal.'
'We immediately went to work, generated a lot of resistance from shippers, and got them to call their MPs and people in the government to know what's going on. Immediately there was a denial that anything was going on, where we knew it was, but their calls and their pressure killed the deal'.
It is not just a question of state-owned operators being bought up. Bernhard Kunz, Managing Director of Hupac Intermodal - one of Europe's largest and most successful independent operators - said that at its 40th anniversary forum in Lugano his company had been 'very open against the danger of re-monopolisation of the railway systems in Europe'.
'As for Deutsche Bahn, which is increasing its activity, they are right', he admitted. But 'whether that is right in Europe - whether that creates or diminishes competition in the future - that's a very political issue'.
'What we need is competition between railways', Kunz insisted, citing the success of multiple operators competing for traffic between Germany and Italy through Switzerland. However, 'we need political support in Brussels, and should tell them Watch out! You are moving too slowly!"
'I am asking myself: Why are the incumbent railways fighting so much the liberalisation process? We help them. We are growing business. We are creating more jobs, and we feel the share that we have today in Europe is very little'. A bar chart displayed by Kunz (above) showed clearly that 'where we have the highest share of new railway undertakings we have the biggest growth, and where we don't have any alternative we diminish freight on railways'.
'Let it go. Let it slide. Let's keep the market, create demand, and the better operators will win'.
Deutsche Bahn plans takeover of EWS and Transfesa
Exec Digital: 28/06/2007
English Welsh and Scottish Railway (EWS) says Germany's Deutsche Bahn is close to announcing plans to buy the British freight operator.
Deutsche Bahn AG plans to take over the entire shares in English Welsh & Scottish Railway Holding Ltd (EWS) and acquire a majority share in the Spanish company Transportes Ferroviarios Especiales (Transfesa).
The acquisition of these two companies will consolidate DB’s leading position as a global player in the transport market, especially in the rail freight sector in Europe. As a result of this move, DB Logistics will extend its central corridors in Western Europe and will be able to develop even better products for its customers as a one-stop shop.
“The transport and logistics industry is booming. Only companies which can offer their own network and consistently high quality standards will be able to succeed in that market. The climate-friendly rail mode still is and will remain our core business,” explained Hartmut Mehdorn, CEO and Chairman of the Management Board of Deutsche Bahn AG.
DB Logistics Chairman Norbert Bensel stressed the growing business potential for the company resulting from this new constellation: “The expansion of our Europe-wide network is our answer to the increasingly complex demands of our customers. EWS and Transfesa will enable us to close important gaps in the DB Logistics rail freight network. As a result, we shall be better equipped in future to offer our customers attractive products.”
Following the takeover of the two companies, DB Logistics will have direct links to the transport and logistics markets in Western and Southern Europe and will thus strengthen the south-west corridor. The integration is intended to lead to a boost in rail’s market share in Europe and raise product quality.
DB Logistics hopes that this acquisition will improve its business position in France, where EWS is already represented by its subsidiary Euro Cargo Rail.
EWS is the largest British freight railway and one of the largest freight transport companies in Europe
“We can build on the platform we have created in the UK and France for rail freight growth, offering our customers a comprehensive European rail freight network”, said EWS Chief Executive Keith Heller.
The agreement between DB and EWS will allow greater volumes to be moved by rail. With a workforce of around 5000, the company generated revenues of approximately €770 million last year.
RailwayPeople: June 28th 2007
Deutsche Bahn AG is moving ahead with plans to acquire all shares in English Welsh & Scottish Railway Holding Limited(EWS) as well as buying up a majority shareholding in Spain’s Transportes Ferroviarios Especiales, Transfesa. The move places DB Logistics in a commanding position in Europe. Owning EWS International will enable DB to penetrate the lucrative French rail freight market through the EWS company, Euro Cargo Rail, already operating in France.
’The transport and logistics industry is booming. Only companies which can offer their own network and consistently high quality standards will be able to succeed in that market. The climate-friendly rail mode still is and will remain our core business,’ explained Hartmut Mehdorn, CEO and Chairman of the Management Board of Deutsche Bahn AG. Looking at the stagnant, loss-ridden rail freight transport markets in many European countries, Mehdorn claimed that de facto liberalisation of the rail network was a crucial requirement for growth and economically efficient operations. He pointed out that Germany was a perfect example of how open access to the network, which is used by more than 330 rail companies, could lead to a substantial increase in rail traffic, and added that DB AG would continue to encourage European liberalisation in future.
Deutsche Bahn extends reach in west Europe
The Financial Times: June 28 2007
By Robert Wright in Frankfurt
The acquisition of the UK’s largest rail freight operator and purchase of a stake in a Spanish logistics company have taken Deutsche Bahn, Europe’s biggest freight operator, closer to filling in the “blank spots” in its pan-European network, its chief executive has said.
However, speaking as he confirmed details of the purchase of the UK’s EWS and a 55 per cent stake in Spain’s Transfesa, Hartmut Mehdorn said there remained further areas where DB was not offering services and he wished to tackle them.
He confirmed the company was “sniffing around” the freight division of Hungary’s Máv, which is due to be privatised before the end of this year.
The purchase of EWS will give DB, which remains state-owned, 70 per cent of the UK’s rail freight market, with activities ranging from hauling coal and shipping containers to pulling the Queen’s royal train. The company turned over about €770m ($1.04bn) last year, according to DB.
Transfesa operates some trains in Spain in competition with Renfe, the national train operator, but is also a logistics company. Its sales last year were €290m.
Mr Mehdorn said DB’s western European strategy had now taken a big step forward.
EWS will be in charge of DB’s freight operations in the UK and France, where its Euro Cargo Rail subsidiary started operation in late 2005 and runs 30 trains a day.
Keith Heller, EWS’s chief executive, said DB had reviewed the company’s business plan and intended to allow it to continue to operate on the same basis, with substantial autonomy. Mr Heller, who came to EWS from Canadian National Railway, which is selling its 31 per cent stake in EWS as part of the deal, plans to stay with EWS for several more years.
Mr Mehdorn rebuffed suggestions from private competitors that he was able to afford large purchases mainly because of German federal government funding for infrastructure development. He said such funding was carefully earmarked for new construction projects and the company did not receive any federal subsidy.
Mr Mehdorn declined to discuss the price DB had paid for the two investments. However, he said they had been paid for out of DB’s 50 per cent share of the €1.56bn sale of the Scandlines Baltic ferry business, announced last week.
German rail giant confirms £300m deal for EWS shares
Daily Telegraph: 29/06/2007
By Alistair Osborne, Business Editor
Deutsche Bahn has confirmed that it will buy Britain's biggest freight rail company English Welsh & Scottish Railway in a deal thought to value the business at around £300m.
The German rail giant, which will take charge of most goods transport by train in the UK, said it "plans to take over the entire shares in EWS" and also "acquire a majority share" in Spanish operator Transfesa as it builds a pan-European freight rail network.
EWS is owned by four key investors. Rail operator Canadian National owns 31.6 percent. Boston-based private equity company Berkshire Partners has 16.8 percent. Fay, Richwhite - the investment vehicle of two New Zealand merchant bankers - has 16.6 percent and Goldman Sachs 5.8 percent.
EWS operates 8,000 rail freight services a week across Britain and into Europe via the Channel Tunnel. One attraction for Deutsche Bahn is EWS subsidiary Euro Cargo Rail, which operates in France. Deutsche Bahn said it hoped the acquisition would "improve its business position in France".
Norbert Bensel, chairman of DB Logistics, said: "The expansion of our Europe-wide network is our answer to the increasingly complex demands of our customers. EWS and Transfesa will enable us to close important gaps in the DB Logistics rail freight network."
EWS, which has 70pc of the UK rail freight market, employs nearly 5,000 people and has an annual turnover of more than £500m.
Keith Heller, EWS chief executive, said the deal would enable the company to offer "our customers a comprehensive European rail freight network".