PKP Cargo on verge of bankruptcy

by

BTWT Exclusive

banczun-rynek-kolejowy

Wojchiech Balczun, Chairman PKP Cargo in April,
Photo Railway Market Forum

(Click to see photo in its original context (Polish) on the pages of Railway Market Forum.)

PKP Cargo has advised railway trade unions that it is heading for a loss of nearly 200 million PLN in 2008 and that, unless drastic economy measures are taken, the losses will rise to some 500 million PLN in 2009. As recently as April this year, PKP Cargo Chairman, Wojchiech Balczun was telling delegates at a conference organised by Railway Market Forum, that he intended to turn PKP Cargo into a modern logistics company. He set himself the task of writing a strategic plan which would take Cargo forward for the next 10-15 years and prepare it for a floatation on the Warsaw Stock Market in a couple years time.

The problem was that while Balczun and his board were thinking about writing a plan, Cargo’s ‘open access’ competitors, companies such as CTL, PCC, Lotus and PTK, had creamed of 22% of the most lucrative freight traffic on Poland’s Railways. As oil, gas and petrochemicals freight were lost to the new operators, PKP retrenched to the markets it knew best: coal and iron ore. Enter the world financial crisis stage in October and ArcelorMittal are telegramming Cargo that they have closed down their giant coke oven in Nowa Huta, Cracow and that are in no position to accept the iron ore trains that are beginning to stack on the Polish border. PKP Cargo’s management board see the only way forward as abandoning their investment plans and introducing a drastic cost-cutting exercise involving the cutting of benefits to railway workers and sacking 5,000 staff.

BTWT have an alternative plan which would involve sacking the entire PKP Cargo management board, selling 33% of Cargo to a modern railway freight operator, giving 33% to Cargo’s employees and keeping 33% in the state treasury. Then encouraging all three parties to hammer out the best way forward, bearing in mind the collapse of the global economy. Such a solution would be anathma to all advocates of minimum government intervention, maximum deregulation and leaving everything to market forces. However, as governments around the world try a range of interventionist measures in an attempt to stave off the global financial collapse, the remaining disciples of Milton Freidman are going the way of the dodo.

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3 Responses to “PKP Cargo on verge of bankruptcy”

  1. Gavin Whitelaw Says:

    Given that Cargo can’t even run one depot (Wolsztyn) with only two trains a day profitably or reliably – this isn’t exactly surprising news.

    Why is it that most railway management is so inept? Letting the lucrative contracts go to Private companies hasn’t worked in most countries it has been tried in so why did the Poles think it would work in Poland? Or are there a few backhanders involved? Heaven forbid that that sort of thing can happen in Poland?

  2. Rik Degruyter Says:

    I think it is now better that we set up a heritage railway from Wolsztyn on one of the closed lines. The sooner the better. The paid staff will go anyway. Involving money from local and regional autorities and from Europe may give us a chance.

  3. dyspozytor Says:

    There are a number of competing bids for Wolsztyn’s future. There is a very real danger that in true Polish fashion, after a great deal of discussion and expensive consultants, nothing will happen.

    Last time I counted there were three separate plans to take over Wolsztyn in the Wielkopolska Council Office alone! (One by the Director of Tourism, one by the Director of Railways and one by the Deputy Governor.) In addition, Fundacja Era Parowozow is also preparing a project for Wolsztyn and Howard Jones has submitted his own ideas.

    My own view is that the strongest argument will be ‘facts on the ground’. If a group of friends can bring some steam locomotives and volunteers to the Czempin – Srem railway, and start regular operations there they will be in a good position to catalyse further developments. There may also be an opportunity to tie in to the railway centre that is being established at Jarocin.

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