SZ – competitive progress

Slovenia is a small central-European country and Slovenian Railways (SZ) is a small railway company. With just over 1,200 kilometres of railway tracks and 8,100 employees, Slovenian Railways are among the smallest of European railways. These numbers, however, only tell part of the story about our company and the area in which we conduct business.

Slovenia lies on the crossroad of two important Pan-European corridors. Corridor V runs from Venice, through the port of Koper, through Slovenia’s capital Ljubljana, all across the country to the border with Hungary and on to Kiev. Corridor V is crossed by corridor X which enters Slovenia at the north-western town of Jesenice. It also runs through Ljubljana and exits Slovenia at Dobova station on the border with Croatia, and continues its path all the way to Thessalonica. It is supplemented by the Graz-Maribor-Zidani Most branch line. The two mentioned traffic corridors which form a junction in the capital of Ljubljana give our company an ideal opportunity for expanding our business far over the Slovenian state borders. This is an opportunity that Slovenian Railways has already started to concentrate on.

In contrast with many European railway companies which achieve their best results primarily with the passenger traffic, the backbone of the Slovenian Railways is freight traffic, which brings the majority of our income. Approximately 90% of all freight transports – import-export, ground transit, and port transit, are performed within international traffic, while merely 10% lies with internal traffic. The strategy of the Slovenian Railways is formed accordingly – our goal is to offer high-quality over-border products.

Our strategy of development in the field of freight traffic is called Network Europe. It is a growing network of international direct trains which connect Slovenia with its neighbouring countries and beyond. LjubljanaLine, East-West Rail Shuttle, Sava Express, East Express and East Gate Express have all been introduced to connect Ljubljana with Munich, Bologna, Belgrade, Istanbul and Milan respectively. These and other direct trains offer regular and reliable transport of different kinds of goods all across Europe, as they are connected to freight trains to further countries.

It therefore gives me great pleasure to say that in many respects the Slovenian Railways are surpassing their ‘smallness’ and are able to compete on equal terms with far larger railway companies all over Europe. It must be said, however, that by doing so we are confronted with some limitations which are typical of all the countries of ‘the new Europe’.

Firstly, I must certainly mention the all but ideal condition of the Slovenian railway infrastructure. From 1,229 kilometres of lines, only 330 kilometres are double-track and just 504 kilometres of lines are electrified. These two factors have an important impact on the quality of our services as we are not able to use our rolling stock to its fullest. Besides, we must admit that the condition of the tracks and overhead electrical lines is in many places not technically up-to-date. The condition of the Slovenian railway infrastructure negatively influences the competitive position of the railway transport and makes achieving the planned growth in passenger and freight traffic harder, if not impossible. In 2005, the average delays of passenger and freight trains have significantly increased because of the poor condition of our infrastructure. In recent years the number of damages on signalling equipment, switches and overhead electrical lines has also grown. This also holds true for the so-called ‘slow runs’ – sections of lines on which trains cannot run at their normal speeds. However, it seems that the investment curve is slowly turning in the right direction.

Slovenia’s public railway infrastructure is owned by the state which is also the only owner of our company. The infrastructure is managed by the Agency for the railway traffic which is also the direct recipient of the state budget finances. Slovenian Railways are the only authorised operator, which take care of the regular maintenance and investments of the public railway infrastructure by using the financial resources, allocated by the agency. These resources have failed to reach the necessary levels again and again in previous years. In 1996, the national programme of the development of the railway infrastructure in Slovenia was adopted. The programme set certain development goals, which, I am sorry to say, have only marginally been achieved. The majority of state funds have namely been allocated to the construction of highways.

After many years of less than sufficient funding for the railway sector, the highway programme in Slovenia is finally nearing its end and the spotlight is turning towards the Slovenian railway sector. I am glad that our government has recognised the importance of railway transport and has also begun shaping its decisions based on the fact that our company has to be enabled to compete on the liberalised European market.

Based on the new resolution about the Slovenian transport policy, a new railway infrastructure programme will be formed. We expect it to set a realistic framework for the development of the railway infrastructure and also provide the sources of necessary funding. As it seems now, our train is running in the right direction. This conviction is also reinforced by the words of the traffic minister Janez Bozvicv. He has declared on various occasions that the investments in Slovenian railway infrastructure should reach more than €10 million by 2020.

The most important infrastructure project in the next few years is to be the building of the second track on the Koper-Divaca line, which is a part of the fifth Pan-European traffic corridor. It is a project, whose importance by far exceeds the Slovenian Railways, and is vital for the whole of the Slovenian economy. Its importance lies in the connection of our company and the port of Koper which is an important generator of railway freight traffic in Slovenia. The port transit with the port of Koper constitutes a quarter of all freight traffic in our company. On the other side, the connection between the two companies is also that the Slovenian Railways transport no less that 70% of the freight of the Port of Koper. The only one-track line between Koper and Divaãa is increasingly becoming the limiting factor of the two closely connected companies.

The process of choosing the right course for the new track began in November 2003 with a comparative study. On 14 April last year the government set the most appropriate course for the new track. The second track will be electrified and will be 27 kilometres in length. Because the track is to run over an environmentally sensitive karst area, there will be three longer tunnels with the combined length of 17 kilometres and several shorter tunnels. The building of the second track will enable the Slovenian Railways to enlarge the capacity of the connection of Koper with inland, to achieve greater security of railway transports and to shorten running times. The fifth corridor will further be enhanced by building the second track between Maribor and Spielfeld-Strass on the border with Austria. The capacity of the tenth Pan-European corridor is to be enhanced by building the second track between the capital of Ljubljana and Jesenice, also on the Austrian border.

These long-term projects, which will require a fair amount of financing, will significantly uplift the properties of our infrastructure. But already today several projects are attributing to the revitalisation of the main railway transport cross. Let me mention two of them. On the Ljubljana-Sezana track electronic signalling and communication equipment is already being installed – the final goal being the introduction of central traffic management on this important track. The second larger project is the upgrading of the line between the two largest Slovenian towns – Ljubljana and Maribor. The installation of new signalling equipment and other works on both lines which also form part of corridor V – enabling us to achieve greater speeds and reliability and thus enhancing our competitive position.

In the next middle-term period we can therefore expect a substantial improvement in the condition of railway infrastructure along the most important corridors across Slovenia. Alongside the above-mentioned projects, the Slovenian Railways are also swiftly modernising our rolling stock – in passenger as well as freight traffic areas. The results of our endeavours can already be seen as the most modern and intercity and suburban passenger trainsets are already making their way across tracks all over the country.

Three Pendolino-family tilting trains are running between Ljubljana and Maribor. Buying electrically driven sets with 134 second-class seats and 30 first-class seats will enable us to significantly shorten running times on this line and offer business passengers a yet unseen quality of travel. By cooperating with the Italian FS railways we even extended the runs of the SZ 310 Pendolino class trains all the way to Venice. Thus we created a new marketing brand, Casanova.

For three decades, the bulk of our suburban passenger fleet consisted of Polish electrically driven sets of the 311/315 type, popularly named Gomulkas. They started arriving on our tracks in 1964. Despite their diligent maintenance the sets have long since become obsolete and their further maintenance no longer makes sense. That is why all over Slovenia they have been replaced by modern suburban sets of the Siemens Desiro family. SZ acquired 30 of these electrically driven sets which run as SZ 312/317. They are modern units, reaching a top speed of 140km/h. They brought a modern low-floor design to our lines, which enables disabled persons easy access, joined by adapted toiletes. An up-to-date diagnostic and information system, air-conditioned passenger compartment and driver’s cabin and a more comfortable ride are only some of the advantages that make for a better travelling experience. And last but most certainly not least, we should not forget that the costs of maintenance have been significantly lowered. I can say that our passengers have embraced the new units. This fact is proved by the continuous growth in the numbers of passengers, especially in the vicinity of larger towns. On some suburban lines around Ljubljana, the number of passengers has increased 70% over the last few years! That is why an analysis about the procurement of new passenger units is already being prepared.

I must also mention a seemingly smaller change which, however, is of a great importance for our passengers. Based on a public tender that is just about to be published, we will buy 280 mobile terminals for ticket-selling. We will also modernise stationary points-of-sale at our stations and in the offices of our partners and thus largely abolish manual selling of railway tickets.

The first investment round in the passenger traffic for many years, even decades, is nearing its end. However, the investments in freight traffic rolling stock are growing even stronger. Of the utmost importance is the modernisation of our locomotive pool. On average, our locomotives are more than 30 years old. This of course means low reliability and high maintenance costs. By 2007, the oldest electrical locomotives will have reached their final exploitation limit and will have to be replaced by buying new locomotives or leasing them. The growing traffic seen in recent years and the forecasts of further growth, especially in port transit, would otherwise make it impossible for our company to offer further reliable connections.

With all of the aforementioned reasons in mind, the Slovenian Railways have decided to purchase 20 locomotives which will enable us to flawlessly run over-border freight connections. The new four-axle more-system locomotives by Siemens are worth €77.8 million. They weigh 87 tonnes, with 6 MW power and have a top speed of 200km/h. The new locomotives will be able to run on lines with 3 kV DC and on lines with 15 kV and 25 kV AC. They will therefore be able to run on the lines of Austria, Germany, Italy, Hungary and Croatia. They will be running as the SZ 541 series. During preliminary testing in January 2004, a loco of the type performed admirably and set quite a few records on the steep Koper-Divaca line. At the end of December 2005, the first loco in the colours of SZ, 541-101, arrived in order to perform further tests. The loco will also be used to train drivers. At the end of test runs in Slovenia, the loco will set off to Croatia and Hungary in order to gain applicable permits for the two countries. The procedures to gain the licence for Austria and Italy are also already underway. The official takeover of the first new locomotive will take place on the 2 June 2006. From then on the supply will go on with approximately two locomotives per month, the last locomotive will be delivered by the end of May 2007.

The second large investment in the area of the rolling stock is the purchase of a 100 freight wagons. The contract for the purchase of four-axle Habbi(ll)nss wagons was signed on the 27 July last year. The first consignment of 26 wagons will be delivered in five months and the last 14 wagons in the tenth month after the signature. The purchase includes 85 Habbinss wagons and 15 Habbi(ll)nss wagons with movable inside walls which enable a quick adaptation of the inside space and a rational usage of the wagon.

When talking about major projects in forthcoming years, I cannot but mention the project of the Ljubljana passenger centre. Together with the city of Ljubljana, the railway agency and a foreign strategic partner, a modern passenger centre will grow in our capital which will enrich the centre of the city. The first phase will, as foreseen, not be finished until 2008. Building cost is approximately ?200 million. It will cover 50,000 square metres of area west of the current railway station’s main building. Amongst other benefits it will bring a new pedestrian underpass which will connect two now separated parts of the city and connect the centre with the new bus station. Adjacent to the publicly-logistical area there will be an area with shops, a hotel and other business and partly residential buildings.

A short description of only some of the major investments which lie ahead of the Slovenian Railways can by no means draw a complete picture of our company. All mentioned and also unmentioned larger and smaller projects in our company and outside it have a common goal – the transformation of a once monopolistic company to a modern, efficient player on the international railway market. I would like to express my conviction that by closely cooperating with our owner and especially by considering the wishes of our clients, but also the employees, the Slovenian Railways will most certainly achieve our goal – becoming a regionally leading, market-oriented, technologically developed and cost-effective provider of freight and passenger traffic services and the maintainer of a modern and safe railway infrastructure.