Continual efforts to achieve results

The history of Croatian Railways dates back to 1860 when the Kotoriba-Cvakovec-Pragersko line was built in the scope of the Budapest-Vienna line. Croatian Railways were established on 5 October 1991, upon the proclamation of the independence of the Republic of Croatia. The railways became a member of the UIC in 1992, joined CER in 2003 and are one of the youngest railways in Europe’s railway network. In parallel to Croatia’s negotiations to accede to the EU, Croatian Railways are enforcing their modernisation and restructuring plan so as to be ready for the moment when Croatia becomes a full member of the EU.

The current Management Board of Croatian Railways began its mandate on 30 September 2005 establishing from the first three basic objectives. These are profit-making business operations, the gradual reduction of the railways’ burden on the State Budget and social responsibility in solving employee surplus. Profit-making business operations means that we wish to satisfy the public interest through contracts with the state and local communities. We aim to achieve this by:

• Working competitively on the transport market
• Modernising the corridor lines and lines towards the Adriatic ports
• Procuring modern traction vehicles and rolling stock

The gradual reduction of the railways’ expenditures funded from the State Budget means a continuation of the process of restructuring and preparation of the newly established companies for their independent survival on the market and a continuation of the privatisation of non-core businesses. As for social responsibility, I believe that a close cooperation with our social partners should exist in solving all the crucial issues connected to railway employees and in strengthening technological discipline and responsibility for the job done in order to maintain traffic safety and orderliness in the first place.

Restructuring

In December 2006, four newly established daughter companies of Croatian Railways were registered, these were; Croatian Railways Passenger Transportation, Croatian Railways Cargo, Croatian Railways Train Traction and Croatian Railways Infrastructure. These all operate under the Croatian Railways Holding Company, acting as an umbrella organisation. I expect that these companies, primarily the Passenger and Cargo companies, will be maximally focussed towards the users and perform in a positive business manor. The Train Traction Company, as the internal provider of services to both the Passenger Transportation and Cargo companies, is expected to operate cost-effectively and enforce quality integration into the newly established Holding system.

Therefore, the Croatian Railways management has had numerous contacts with the Slovenian and German Railways. We have had frequent meetings on the subject of restructuring with people from Austrian, German, Slovenian and Hungarian railways in order to hear of their experiences. They each have their own experiences and in their own way have tried to apply EU directives. Croatian Railways has chosen as its model one that is closest to the German Railways model of an integrated company for the advantages which we evaluated to be interesting. For example, the fluctuation of employees within these companies is much simpler than in completely decentralised companies, as are simpler mutual communications, particularly when problems arise.

One of the objectives of restructuring is the reduction in the number of employees. According to current estimates, the number of employees is to be reduced from the current 14,000 to 12,000 in the next few years. When we compare ourselves to other railway authorities, we can clearly see that we are not sufficiently productive. We must reduce the number of employees, however, no one will insist on this reduction if it is to the detriment of traffic safety or if it disturbs technological processes. There are processes on the railways which may be rationalised, thus creating a basis for the reduction of employees. We expect that the new organisation will contribute to the improvement of business operations by showing where this surplus lies. In our attempt to solve the issue of surplus employees, we shall search for solutions which will be mutually acceptable, both for the company and for its employees. We shall solve this problem with the aid of severance payments and via a fund. The advantage of the fund is that the companies will quickly be able to solve their surplus problems, on the condition that, if necessary, some of the employees in the fund may be retrained and re-employed. In certain parts of the process, a deficiency of certain posts will be identified. Therefore, we shall attempt to solve this problem in a socially sensitive way and this includes the retraining of employees, who are perhaps a surplus in one process, but a deficit in another.

Infrastructure construction

For the first time, Croatia has brought a National Programme for the construction of the railway infrastructure which is to secure 9.6 billion kunas for the construction of new lines, and 5 billion kunas for the maintenance of old lines in the period from 2007 to 2012. The main project of the Programme is the new Karlovac-Rijeka section in the scope of the flat-land line from the state border with Hungary in Botovo via Koprivnica and Zagreb to Rijeka. Also, other important projects and works on Corridor X include:

• The Vinkovci-Tovarnik line (state border with Serbian) which is being partially funded by the EU ISPA programme
• The complete reconstruction of a section of the Vc Corridor (state border with Hungary-Osijek-Plocve)
• The replacement of the traction system on the Vb Corridor (more exactly the Moravice-Rijeka section)
• The termination of the track and stations’ reconstruction on the Zagreb-Ogulin-Knin-Split line
• The introduction of remote control on all sections of Croatian Railways

We shall also focus on the revitalisation of the ports through the reconstruction of the railways, as well as on suburban traffic, by which I primarily mean the reconstruction of the Zagreb junction. Then there are also the suburban trains which we intend to procure with the City of Zagreb Authorities, the procurement of 15 electro-motor multi-system locomotives and the construction of 600 freight cars according to the five-year programme time-plan. The details of the financial sources are not yet known, however, the purpose of the programme is to clearly define the sources of the needed funds as was done for Croatian Motorways. Each individual source will be precisely indicated, as well as the percentages of the budget and the loans in the funds, and for this reason this programme is of exceptional importance to the infrastructure.

The moment when the Croatian Government shall have to open railway infrastructure to other European carriers is drawing near. Therefore, all of our current projects and work ethics are for the preparation of this competition. The Government would like to give access to the railways to our competitors and thus to increase the efficiency of the railways and to decrease the railways’ burden on the State Budget. This is a process which is awaiting us in the near future. We are certain that by acceding to the EU, regardless of when this is achieved, we shall have to open our corridors to other operators.

Passenger and cargo transportation

Even though we are registering a continual growth in traffic (8% in passenger and 12% in freight traffic), there is certainly still room for an even greater increase. We also have daily works in progress and heavy maintenance of the tracks and all works on single track lines immobilize traffic on these sections. Since these lines have not been maintained properly for many years, a lot of work needs to be done to them and this automatically means that traffic is disabled. We must also examine many hindering factors, among which the fact that the capacities of the ports were previously too low for all the freight. Last year, for example, we experienced a large number of cars being held-up in front of the port of Rijeka, simply because the port was unable to receive, store and unload the freight the railways could carry. Traffic is increasing on Corridor X as well which, prior to 1990, was Croatian Railways’ main corridor. War damages were extensive on the infrastructure with a devastating effect on traffic so that in the meantime other routes were chosen for freight. Thus, a large portion of traffic was transferred from Corridor X to Corridor IV via Hungary. The problem is that it is difficult to get the goods back once routes are permanently established, and we would have to offer significant tariff reductions in order to turn this around. Corridor X is of great significance to us; it is a high utilisation line, primarily because it is a double track line and has great potential. We are optimists and we are setting in motion new activities on this corridor. For example, we are working with Slovenian Railways on a RO-LA train from Spacvva, on Croatia’s eastern border, to Ljubljana in Slovenia and we have estimated that on this route we could carry more than 100,000 trucks per year. Today, approximately 120,000 vehicles per year enter at Bajakovo, on Croatia’s eastern border with Serbia of which as many as 70,000 trucks are from Turkey. We plan to ‘lift’ approximately 10,000 of these vehicles from the road, and if this project proves successful, we shall introduce a second and even a third train. The transportation price would be competitive therefore we anticipate positive results.

While awaiting EU accession, Croatian Railways are preparing themselves to face their competitors and intend on becoming an important transportation factor in the region, primarily in neighbouring Bosnia and Herzegovina. I believe that Croatian Railways Cargo, if it remains within the borders of Croatia, does not have much of a future. The potential of Bosnia and Herzegovina is strong. The potential of goods being carried by railways is enormous and we have good cooperation between our railway companies. So, I feel that in the future, we are certain to join forces in some form or other. The future of the railways in Europe will, namely, be reduced to two or three alliances, as is the case with European air traffic. Therefore, choosing a good alliance to belong to and having some influence within that alliance is imperative.

About the author

Mr. Davorin Kobak graduated from the Interfaculty Traffic Engineering Studies at the Faculty of Civil Engineering in Zagreb in 1975, and began his professional career the same year. Mr. Kobak is an acknowledged expert in railway transport who worked at the railway from 1975 till 1990, and filled numerous responsible posts in the domain of freight transport. From 1990 to 2002, he was a Director of the AGIT, which is the daughter company of HZv. On 4 November 2002, he returned to Croatian Railways as the Executive Director of HZv Cargo, the position he was holding at the time of his appointment as President of the Management Board of the Croatian Railways.