SJ meets competition and scores high with improved efficiency and new trains

SJ has been on quite a journey following its conversion to a limited-liability company. In 2002, SJ was an inefficient company on the verge of bankruptcy. Since then, the company has undergone tremendous change and is now market-focused. SJ has identified various customer groups and their needs and then developed products and services that satisfy as many travellers as possible. The company has created a flexible pricing model that enhances its profitability, despite a significant reduction in the lowest prices. Unnecessary costs have been eliminated, and the fleet is used more efficiently. SJ has reversed the trend and is now one of Europe’s most profitable rail companies, with all-time high profitability of a 13.9% return on equity achieved in 2008.

On 16 June 2009, the decision was taken to completely deregulate passenger traffic in Sweden. Deregulation will take place in several stages and reach its full effect by December 2011. Accordingly, SJ’s continued journey will involve meeting competition on the tracks through further efficiency measures and continuing to develop new offers for customers. SJ will continue to offer more and better sales channels, attractive ticket offers and new and better onboard service, in part through the establishment of the SJ Service Academy, more efficient traffic production and better trains. Underlying these improvements will always be the knowledge that SJ and the train are the most environmentally friendly means of transport.

Higher quality and development initiatives will attract more travellers

An important component in the continued increase in efficiency involves the trains themselves. First and foremost, the trains must be clean, in good order and run on time. Travellers must be able to rely on the trains. SJ has now reduced the number of disturbances affecting traffic by two-thirds to a low level in relation to the industry as a whole. Secondly, other costs must be reduced through further rationalisation in cooperation with maintenance providers. Finally, capital utilisation in the fleet must be increased. The absolute goal for 2010 is that none of the fleet will be out of service during rush hours. Instead, all trains must be used for the benefit of our passengers.

Business development is another important concern when SJ has to increase its efficiency. Part of this will involve increasing industrial expertise. The rail industry in general has a low degree of industrialisation, compared with other sectors. Expertise is currently being brought in from the automotive, IT and telecom industries, as well as other manufacturing industries in which standardised production flows are employed.

Furthermore, internal processes must be enhanced and enforced, in part with respect to management and the correction of non-conformities. SJ has created measurability by developing merit values for various components in the process. This is not only done from a customer perspective, but also to be able to measure maintenance and fleet status.

Instead of a simple ‘buy-and-sell’ relationship with subcontractors, partnerships are now being developed. SJ is integrating its management principles and processes and creating reliable measurement tools for joint performance, thus bolstering confidence in the trains and reducing costs. In summary, this involves confidence, delivery accuracy, availability and punctuality.

Upgrading the trains

The trains are an important parameter for SJ’s continued success. The premium product comprises high-speed X2000 trains. These are now 15 years old and their interiors were refurbished in 2006 and 2007. All trains will now undergo extensive technical upgrades. All 25 sub-systems on the trains are being evaluated, and SJ has started extensive upgrades to ensure that they will function without fault for an additional 10-15 years. The company is investing €30-40 million in this upgrade.

At present, slightly more than half of SJ’s approximately 300 passenger cars are being upgraded. Comfort will be increased and the exterior and technical equipment will be renovated. In the carriages, wall panels, carpets and seats will be replaced and made brighter and more colourful. The exterior of the carriages will be black. Technical upgrades will extend the trains’ service life for another 15 years. All carriages will be completed by the autumn of 2010.

Improvement of the sleeping car fleet totalling 110 carriages was recently completed. In the interior, sleeping compartments were rebuilt, and toilets and aisles renovated with new, modern colours and Nordic materials. The carriages also underwent a technical renovation to increase reliability and reduce maintenance. This is another product that is being used increasingly and is appreciated by SJ travellers.

SJ’s double-decker X40 trains are primarily operated for distances up to 200 kilometres from Stockholm. Problems were experienced when these trains were introduced and subsequently, a long and arduous process involving resetting and other major measures was required. Today, all double-decker trains are in full service and they are the most reliable trains in the fleet. Feedback has shown that customers are now also satisfied with the trains.

High-speed

In May 2008, SJ placed an order with Bombardier for 20 new high-speed trains, which are being built on the Regina platform. The new trains will have four carriages driven on 12 of 16 axels for fast acceleration. The interior and the service concept, with restaurant service in first class and a bistro in second class, are based on SJ’s successful X2000 premium product. In total, the new high-speed trains represent an investment of approximately €250 million.

SJ’s new high-speed trains are expected to be in service in August 2010. They will replace the X2000 on smaller lines, thus increasing capacity on the larger lines in Sweden where demand is great. Many X2000 trains are already being operated in multiple sets, an arrangement that will increase in the future since average seat bookings are well over 80%. With the new trains, SJ will increase the number of seats in its high-speed fleet by 40%.

SJ is meeting the future with new technology and European expansion

Internet and Infotainment

SJ was an early starter when it came to introducing mobility and Internet onboard the X2000 and the double-decker X40 trains. These services have attracted many travellers and been greatly appreciated. Making travel more efficient has increased usage manifold in recent years, which in turn has led to an upgrade of the systems every 18 months. Today, full broadband capacity is available onboard the trains. The company is now taking the next step by introducing what we call Infotainment, which consists not only of mobile coverage and Internet, but also makes it possible to read electronic magazines and enjoy other services onboard. For example, passengers will be able to rent games and movies for their own PCs, and use information displays in vestibules and bistro cars.

ERTMS

Sweden is one of the first countries in Europe to deploy the new European ERTMS system for traffic control. The new Bothnia Line in Northern Sweden and the City Tunnel in Malmö will be the first to implement the new signalling system. The new X55 high-speed train will be the first in SJ’s fleet to have ERTMS as standard directly upon delivery, although the trains will continue to function with the existing ATC system. This autumn, we will also upgrade two RC6 engines to ERTMS for testing on the Bothnia Line.

Future plans

SJ is looking to the future with plans to increase volume through imminent expansion in Europe. The company already operates a service to Berlin and has 14 daily departures to Copenhagen.

It also has advanced plans to invest in new night trains called hotel trains that will run to Brussels starting in 2010. This will enable passengers to board the train in Stockholm at 5:00pm, eat a good dinner, have a conference, sit in the lounge and, after a good night’s sleep and breakfast, arrive in Brussels at 8:30am, refreshed and ready for the day’s work.

SJ is also already planning for the next generation of express and high-speed trains, depending on what the Swedish government and parliament decide over the coming year. This concerns not only the successor to the X2000, but also shortening travel times on longer routes within Sweden and down to Europe. SJ is naturally promoting the use of high-speed trains in Sweden, since they would significantly reduce travel time on the main lines Stockholm-Gothenburg, Stockholm-Malmö and Stockholm-Sundsvall. Passengers could travel from Stockholm to Gothenburg in two hours instead of three, for example.

How SJ is managed?

Since 2001, SJ operates as a limited-liability company owned by the Swedish state. The business concept is to offer travellers efficient and environmentally friendly travel. The goal is to be a modern, profitable and customer-focused travel company.

SJ is divided into four divisions and six staff functions. The four divisions; Service; Railway Traffic; Fleet Management; and Sales and Distribution work primarily with production and have operational responsibility. The Railway Traffic and Service divisions have the greatest number of employees – slightly more than 2,000 – including onboard service personnel and train drivers. The Fleet Management division includes everything from purchasing and maintenance of trains to switching. The Sales and Distribution division includes the SJ Travel offices, customer service and telephone sales. The staff functions – Business Development, Finance, Traffic Safety, Corporate Change, Strategic Communications and Legal Affairs – are responsible for such matters as strategic management and coordination.

SJ and the environment

On a daily basis, SJ works to reduce its impact on the environment. This includes everything from selecting environmentally labelled electricity to source-sorting onboard trains. All trains operated by SJ are driven by electricity. Only renewable electricity from hydroelectric and wind power plants is purchased for SJ trains in Sweden. This means that electricity production for the trains results in minimal emissions. Measured per person, emissions of carbon dioxide for a trip from Stockholm to Gothenburg, for example, are the same as emissions from three millilitres of petrol.

All travel on SJ’s electric trains meets the Swedish Society for Nature Conservation’s criteria for Good Environmental Choice, which has the world’s most stringent ecolabel requirements. This does not mean that rail travel has no environmental impact. Since train maintenance, purchasing and bistro products all have an impact on the environment, SJ works continuously to reduce its environmental impact. Some 51% of customers choose to travel with SJ for environmental reasons. Travel with SJ contributes to sustainable development of society.

SJ in brief

• Each day, 115,000 people travel with SJ, Sweden’s largest train operator
• 4,000 employees work to ensure that train travel will be safe, reliable, comfortable and simple. SJ servers 250 stations from Narvik to Berlin
• SJ’s electric trains in Sweden are 100% powered by renewable energy from hydroelectric and wind power plants. Travel with SJ bears the label Good Environmental Choice, which has the world’s most stringent ecolabel requirements
• SJ had sales of SEK 9 billion in 2008

SJ’s history

• 1856 – Swedish Railways, SJ, was established
• 1871 – Stockholm Central Station was inaugurated
• 1894 – Sweden’s first dining carriage was introduced. Travellers on the Uppsala-Gävle route were the first to try the new service
• 1939 – The Swedish parliament ruled that all private railways are to be taken over by the state. Voluntary agreements were reached with the various companies.
• 1988 – Swedish Railways was divided into the Swedish Rail Administration and the Swedish State Railways (SJ). In the same year, environmental work was initiated and the first environment policy adopted.
• 1990 – Premier for the X2000 high-speed train.
• 1991 – The music initiative Rock Train begins its tour of Sweden. Thomas Ledin, Niklas Strömstedt and Lena Philipsson were the first artists.
• 1995 – A parliamentary ruling from the preceding year created free competition. Only a small percentage of traffic went to other operators. Only several years later did SJ begin to lose contracts to a significant extent.
• 1996 – The Swedish Society for Nature Conservation awards SJ the Good Environmental Choice label, which has the world’s most stringent ecolabel requirements.
• 1997 – It became possible to book SJ tickets via the Internet.
• 1999 – SJ sees that demand for regional rail travel is increasing, primarily in the Mälardalen region. Decision was taken to invest in new express trains.
• 2000 – The public enterprise SJ was divided into six different companies. The new SJ AB was given responsibility for passenger traffic. The other companies are the freight transporter SJ Green Cargo, the property manager Jernhusen, the service provider TraffiCare, the system and maintenance company EuroMaint and the IT company Unigrid. Öresund trains were taken into service during the year. SJ was now responsible for only 40 percent of passenger traffic in the country.
• 2002 – SJ suffered an acute financial crisis.
• 2004 – SJ showed a profit for the first time in years.
• 2005 – The new regional express trains and the renovated X2000 trains were taken into service.
• 2009 – On June 16, the Swedish parliament ruled that the market for passenger traffic on the country’s railways was to be opened to other players.