Analytics, Cargo, Latvia, Logistics, Railways, Transport

He indicated that the amount of freight carried by rail in 2019 decreased from a year before, with the situation becoming especially bad in the second half of the year, which normally is a time when rail freight increases ahead of the coming winter. 

"Unfortunately, the beginning of the fall and winter was rather unsuccessful because weather conditions were very warm. Energy prices in the world remained low and freight did not move, which resulted in a continued decline instead of an expected increase," said Lubans.

He said that 41.5 mln tons of rail freight were carried using LDz infrastructure last year, which is the lowest amount in 17 years. 

The worst aspect of this situation is that this drop in rail freight is probably not going to be a periodic occurrence, a year or two of declining freight volumes, but a lasting trend. The company has to be able to adapt to the life under the circumstances of reduced freight volumes and to also keep maintaining the infrastructure," Lubans said. 

He added that salaries and social security contributions make up around 66 % of the rail company's total costs. "It is absolutely clear that it will be extremely hard to balance the budget without cutting jobs," Lubans said, adding that the company started laying off employees already last year. 

The rail group has also started reassessing its business model. "This means that we will assess not only the parent company but also the operations, functions and mutual relations of subordinated companies. It is therefore highly likely that structural changes will be made in the entire Latvijas Dzelzcels Group, not just in Latvijas Dzelzcels," Lubans said.

As reported,  Latvijas Dzezlcels state-owned railway company plans to fire about 1,500 employees by the end of this year

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That year 2019 had been full of turbulences for the concern and the whole Latvian transport and transit sector – a significant reduction of incoming and outgoing cargo volumes due to a decline of fossil supplies prices in the global financial markets and lower transportation of these cargos respectively, as well as the region’s economic and political situation. 

On January 1, 2020, Latvijas Dzelzcels employed 6,265 people, while the number of employees in Latvijas Dzelzcels Group reached 9,950 early this year.

Latvijas Dzelzcels is a fully state-owned enterprise managing public railway infrastructure. It is the leading company of the LDz Group, which includes six subsidiaries.