1. Part-financed by the European Union (European Regional Development Fund) RAIL BALTICA GROWTH CORRIDOR, PROJECT MEETING WP4 25/11/2011

2. Part-financed by the European Union (European Regional Development Fund) PROJECT TEAM 2 Piotr Dwojacki, PhD (College of Business and Administration) Maciej Komosa, PhD (Consultant, expert in evaluation projects) Miron Mironowicz, MSc. (Expert in transport) Magdalena Jażdżewska-Gutta, MSc. (Assistan Lecturer of University of Gdansk)

3. Part-financed by the European Union (European Regional Development Fund) INTERVIEW MEETINGS 3 Latvia - DB Schenker – logistics service provider - BMGS customer - Kreiss – truck carrier - Pindstrup Latvia - customer - Sungate – logistics services - LDz – rail infrastructure management - MSC LATVIA – sea carrier - TRANSPORTBETONS MB - customer - DSV Transport – logistics service provider - LUKOIL BALTIJA R - customer

4. Part-financed by the European Union (European Regional Development Fund) INTERVIEW MEETINGS 4 Lithuania - ORLEN Lietuva - customer of freight transport - DSV TRANSPORT – logistics service provider - JSC Lithuanian railways – rail services and infrastructure - AB Achema – producer of fertilizers - AD REM Group – logistics services provider - Lietuvos Geležinkeliai, AB - Transimeksa – logistics services provider - Schenker (28.11) - Gefco Baltic (29.11) - Maxima Grupe (28.11)

5. Part-financed by the European Union (European Regional Development Fund) INTERVIEW MEETINGS 5 Poland - CTl Logistic – rail carrier - PKP CARGO Logistics – rail services provider - PKP CARGO S.A - rail services provider - PKP CARGO service sp. z o.o. - rail services provider - Polimex-Mostostal SA – customer of freight transport - Adampol Sp. z o.o. - customer of freight transport

6. Part-financed by the European Union (European Regional Development Fund) INTERVIEW MEETINGS 6 Germany - Müller - Die lila Logistik- logistics services provider - Leipa Logistik (28.11)

7. Part-financed by the European Union (European Regional Development Fund) SOME DIFFICULT ISSUES Language! – Could tell more – Members of board of management Did not want to reveal confidential information (e.g. in the area of networking) Problems with German respondents – Not interested in RB project – Don’t have time 7

8. Part-financed by the European Union (European Regional Development Fund) UNDERSTANDING RAIL BALTICA… „The simple way to get to the Western countries by railway and the simple way to transport goods and people from the western part of Russian Federation to the Western Europe” „In Poland goods are usually transported on the line N-S and Rail Baltica will connect the E with W” 8

9. Part-financed by the European Union (European Regional Development Fund) DIRECTIONS Latvia, Lithuania (mainly E-W) – from seaports to the East (mainly Russia) – East-West direction – Sometimes: Kaunas, Riga, Tallin („the inland connection – not really” – sea carrier) Germany, Poland (E-W) – Berlin or German border to Łódź or Warsaw Rail Baltica: N-S 9

10. Part-financed by the European Union (European Regional Development Fund) A BOTTLENECK? Lithuania to Poland? Lithuanian customer: „to Klaipeda and Tallin mainly railway, to areas in Poland mainly trucks” „I: Which part of existing RB railway needs improvement? R: The part to Poland I: Which of those parts give you the most trouble? R: Poland” 10

11. Part-financed by the European Union (European Regional Development Fund) ROUTES, DIRECTIONS The customer decides about everything „what are the main obstacles in using rail transport on the Berlin-Kaunas-Tallinn route? Nobody operates this route” 11

12. Part-financed by the European Union (European Regional Development Fund) OTHER BOTTLENECKS? Not enough wagons (LV) – limited resources 12

13. Part-financed by the European Union (European Regional Development Fund) PASSENGER VS. CARGO Modernisation – first for passenger cargo In the situation of congestion – passenger train goes first Not good for cargo operators 13

14. Part-financed by the European Union (European Regional Development Fund) PASSENGERS Culture of using railways „it’s not a profit making area” (LT) 14

15. Part-financed by the European Union (European Regional Development Fund) WHO DOES INTERMODAL? Rather railway operators offer trucking service Trucking companies treat railways as competitors 15

16. Part-financed by the European Union (European Regional Development Fund) Enabling transportation that would eliminate the need of changing of the loading unit, whilst re-loading of goods increases the cost of transport considerably, would for sure generate an attractive solution Reloads are quite expensive. Less reloads we have, the more attractive it is [the transport mode] (Latvia, Poland) 16 INTERMODAL PERSPECTIVE

17. Part-financed by the European Union (European Regional Development Fund) I – „What are the barriers to increase the intermodal transport in the company?” R – „It is combination for passengers, number of reloads from box to box, from unit to unit. It is kind of risk of enemies, of loss customers, when we are talking about reloading containers, sea to truck, from truck to rail.” 17 INTERMODAL PERSPECTIVE

18. Part-financed by the European Union (European Regional Development Fund) RAIL BALTICA Needed vs. not important? 18

19. Part-financed by the European Union (European Regional Development Fund) IMPORTANT „ to rail all the goods in the same wagon from Europe to Latvia. Right now we do not have this option. This would be easier and save a lot of time” (LV) 19

20. Part-financed by the European Union (European Regional Development Fund) NOT IMPORTANT „Does your comapny have any expectations towards Rail Baltica? No. It does not concern us” (sea carrier) 20

21. Part-financed by the European Union (European Regional Development Fund) RAIL BALTICA - ASSESSMENT Cannot say anything as it doesn’t exist – talking about non-existing product Someone must offer services in this route 21

22. Part-financed by the European Union (European Regional Development Fund) COMPETITIVENESS RB must be more competitive than sea and road transport What does competitiveness mean? – Speed – Cost 22

23. Part-financed by the European Union (European Regional Development Fund) COMPETITIVE ADVANTAGE: „FAST AND CHEAP” „[competitive transport] is ease of use, reasonable price, speed, door to door transport, faster than flights” „First of all this is the speed of delivery and possibility to reduce the costs of delivery” „in some cases the cost of transportation by the railway is similar to transportation by the air. It is quite expensive” 23

24. Part-financed by the European Union (European Regional Development Fund) COMPETITION: ROAD TRANSPORT The demand shows that Europe needs road transport. Fruits cannot be transported by trains, because the time of transport is too long and it is not compatible. It would probably be [important] for Russia. (Latvia) 24

25. Part-financed by the European Union (European Regional Development Fund) COMPETITION: SEA TRANSPORT „Rail Baltica is, in a way, a competitive project, as it will enable transportation from the Hamburg port, through Berlin, to Warsaw, Lithuania, Latvia, Estonia and that eliminates the need of sea transportation” (Poland) 25

26. Part-financed by the European Union (European Regional Development Fund) COMPETITION: AIR TRANSPORT „Today’s mobility is low cost airlines, especially for young people. This really opens the world” (Latvia) 26

27. Part-financed by the European Union (European Regional Development Fund) COMPETITION: PIPELINES TRANSPORT „using the railway is very expensive (…) this is very expensive comparing to the transport by the oil pipeline” 27

28. Part-financed by the European Union (European Regional Development Fund) Amount of elements for one project in one region in one time (construction projects - customers’ perspective) Oversize - units longer than 40-45 feet - size, it is too complicated for logistic process the roads Density of stations / terminals FACTORS INFLUENCING COMPETITIVENESS 28

29. Part-financed by the European Union (European Regional Development Fund) PRICE Should be cheaper Price for the access to infrastructure (even 25-30 PLN - 5-7 EUR per km) 29

30. Part-financed by the European Union (European Regional Development Fund) PRICES The only condition that it [Rail Baltica] would be interesting for us, it could be very cheap. Then we will use it instead of our trucks. The price must cover the risk of railway (…) – It should be for free. (Latvia) 30

31. Part-financed by the European Union (European Regional Development Fund) TIME 1 Time of loading of a train – Longer than truck – Shorter than train Time to change the gauge of tracks: – „few to less than 20 hrs” (PL) 31

32. Part-financed by the European Union (European Regional Development Fund) TIME 2 Kaunas to Berlin by truck: – 60 hrs (25 hrs pure driving) (DE) Tallin to Warsaw/Berlin truck – 36 hrs sea – 60+12 hrs road – Tallin to Berlin: 24-30 hrs would be attractive Kaunas to Berlin – 3-4 working days would be sufficient (customer) – 1500 EUR per trailer (price) – 14-20 hrs (road) (trucking company) 32

33. Part-financed by the European Union (European Regional Development Fund) TIME 3 Passenger – Kaunas to Berlin 20 hrs (a guess) by bus – -Riga to Tallin 9 hrs by rail – Tallin to Warsaw should be 10 hrs – Warsaw to Berlin 7 hrs 33

34. Part-financed by the European Union (European Regional Development Fund) SPEED Rail (cargo) – Poland: 22 km/h (some places 14 km/h) – Latvia: 40 km/h – Europe: 60 km/h Truck: – 60 km/h (average) – German company – 80 km/h (PL) What speed? – 50-60 km/h would be attractive – 100 km/h for freight (LV) – 120 km/h – standard required by EC 34

35. Part-financed by the European Union (European Regional Development Fund) STANDARDS Gauge: narrow vs. wide track Common (Europaen) standards 35

36. Part-financed by the European Union (European Regional Development Fund) CAPACITY Is not a problem – there is excess capacity 36

37. Part-financed by the European Union (European Regional Development Fund) RELOADING Reloading to other wagon or changing from truck to train (or the other way round) – Not suitable for all products (e.g. fruit, fertilizers) – Time-consuming 37

38. Part-financed by the European Union (European Regional Development Fund) TERMINALS Should include couple of terminals Availability of terminals – Important for customers – Availabity of rail-road terminals for customers – max. Of 40 km (DE) 38

39. Part-financed by the European Union (European Regional Development Fund) MODAL SHIFT Forecast: „could shift 10 mln tons per year from road to rail” (if there is the same gauge) 750 m of train carries the same load of cargo as 3 km of trucks 39

40. Part-financed by the European Union (European Regional Development Fund) SOME IDEAS Semi-trailers – „possible”, „interesting” 40

41. Part-financed by the European Union (European Regional Development Fund) RB AS SEEN BY SOME CUSTOMERS Will get opportunity to chose the way of transport 41

42. Part-financed by the European Union (European Regional Development Fund) COMPETITION ONCE MORE RB seen as a competition (THREAT) – Sea transport (can be complementary as well) For bulk cargo – Trucking companies Not for bulk cargo „Trucking lobby is too great” (said by railway operator) Free the trucks for other customers (or it will be easier for us to get a truck) – problem of limited resources and high demand The gap is getting bigger and bigger 42

43. Part-financed by the European Union (European Regional Development Fund) TOTAL PRODUCT! Speed Price Quality Paperwork Regular and often connection (not once a week - DE) Trustworty, on time safe (DE) 43 CUSTOMER DECIDES!

44. Part-financed by the European Union (European Regional Development Fund) CUSTOMER DECIDES! Factors for RB success: – „There must be cargo” – „Cargo to carry” 44

45. Part-financed by the European Union (European Regional Development Fund) COMPETITIVE ADVANTAGE Bulk Overgauge Time and cost? 45

46. Part-financed by the European Union (European Regional Development Fund) „OPERATIONALITIES” Need to „unify custom processes. And unify the amounts of payment” (Latvia), Challenge: „Different systems of the documents required going to transit through the countries” (Lithuania) 46

47. Part-financed by the European Union (European Regional Development Fund) ACTION Modernisation/building: „The ones who will gain sth from this should do sth” (LV) 47

48. Part-financed by the European Union (European Regional Development Fund) NETWORKING Universities – training, internships, sometimes planning and analyses „You need to create clusters of cooperation” (PL) Cooperation in order to increase profit Mainly suppliers and customers Competitors – rarely Producers: – Producers’ organisations 48

49. Part-financed by the European Union (European Regional Development Fund) NETWORKING Rail – cooperation with seaports (sometimes and only cooperation) (LT) 49

50. Part-financed by the European Union (European Regional Development Fund) NETWORKING The Association of Harbors Construction Association in Latvia Latvian Logistic Association Latvian Supply Chain Cluster Association of Producers of Building Materials in Latvia Latvian Association of Transportation PKP Group Polish International Freight Forwarders Association – PIFFA (PISIL) University of Latvia, Transport and Communication institute and Riga Technical University 50

51. Part-financed by the European Union (European Regional Development Fund) RAIL BALTICA STAKEHOLDERS MAP (FOR INITIAL STAGE OF RB PROJECT) 51

52. Part-financed by the European Union (European Regional Development Fund) PRIVATE BUSINESS: BASIC DIMENSIONS Stage of the project Attitude (positive / negative) Single and multi business Strategic analyses Strategic options Bargaining power / barriers of entry Strategic analyses according to Michael E. Porter Forcefield analysis according to Kurt Lewin 52

53. Part-financed by the European Union (European Regional Development Fund) EARLY STAGE: DECISION PROCESS 53 At the stage different options are possible / available - according to individual perception of Rail Baltica concept and own business uderstanding

54. Part-financed by the European Union (European Regional Development Fund) We distinguish single- and multi-business transport companies, differing with the way of understanding the effects of the Project and with approach to their strategies. 54

55. Part-financed by the European Union (European Regional Development Fund) DECISION MAP: FACTORS INFLUENCING STRATEGIC DECISIONS* (RBGC stakeholders response) 55 * General idea to be adopted to specific group of companies or country

56. Part-financed by the European Union (European Regional Development Fund) 56 INTERVIEW MEETINGS CONDUCTED BY LUT KOUVOLA Finland: –DHL Freight (Finland) Oy(Logistics service provider) –Itella Logistics Oy(Logistics service provider) –Schenker Oy(Logistics service provider) –Viking Line Abp(Passenger + freight) –YIT rakennus Oy(Client of freight transport) –Peikko Group Oy(Client of freight transport) –Stora Enso Oyj(Client of freight transport) Estonia: –AS Schenker(Logistics service provider) –Ericsson Eesti AS(Client of freight transport) –AS Estonian Air(Passenger + freight) –AS Lux Express Estonia(Passenger transport) –AS Balbiino(Client of freight transport) –AS Onninen(Client of freight transport) –Ensto Elekter AS(Client of freight transport) –DHL Estonia AS(Logistics service provider)

57. Part-financed by the European Union (European Regional Development Fund) 57 INTERVIEW FINDINGS (FIN & EST) - Inland transportation mostly by road –Price level of road transport has decreased since 2008 - Number of passengers have decreased in road and air transport (Estonia) –Using private cars has increased its market share, and the trend is continuing –Attitude towards public transportation is poor - Local public transport companies are trying to improve their image

58. Part-financed by the European Union (European Regional Development Fund) 58 INTERVIEW FINDINGS (FIN & EST) - Price level of supply chain costs is the most important factor –Should be comparable with road and sea transport –”No one want to use rail transport if it costs more” –Interviewee - Time is important factor –In Finland from 20 to 48 hours (Helsinki - Berlin) –In Estonia from 10 to 24 hours (Tallinn - Berlin) - Frequency should be at average level (1-4 times a day at least) - Easiness is very important for some clients of freight transport - Most global companies stress the importance of good connections forward from Warsaw and Berlin –Connection between Tallinn-Warsaw-Berlin is not enough, especially on freight side –Many logistics service providers have need for good connections to South from Warsaw

59. Part-financed by the European Union (European Regional Development Fund) 59 INTERVIEW FINDINGS (FIN & EST) - Rail Baltica is seen mostly as positive - More positive attitude in Finland - Estonians are a little bit sceptical whether the actual investment project will ever start - Rail Baltica is not seen as threat for logistics providers and freight transport companies - Rail Baltica will be success only, if it co-operates with other transport modes and companies - Logical to extend to Helsinki and St. Petersburg - ”Is there enough volume?” –some interviewees - IMO sulphur regulations are seen as a great threat for Finnish transportation and whole economy - Rail Baltica is seen as a great alternative for sea transport