Unfair Competition between Mixed Transportation and Automotive Transportation

Interview with Mr. Paul Augustin, Manager of CFR TRANSAUTO SA

 

Rail Journal: CFR TRANSAUTO SA company has already a year since it was created. How could you characterize this period for the company’s activity?
Paul Augustin: Our main task was, since the beginning, simultaneously with the activities of the former TMC departments from which the new CFR Transauto emerged, the organization of activity. We were created as a juridical independent subsidiary of CFR Freight. Practically we were the forced to mange ourselves. We had to start from zero, by registering the company with the Trade Registry Office, by organizing in the field, which was pretty hard considering that CFR TRANSAUTO develops its activity all over the country.
    Before starting our reorganization we first analyzed our resources and economic efficiency of each TCM department that were organized on the structure of the eight railway regional departments.
    Unfortunately, we noticed that their majority were unprofitable, fact that is maintained even today, despite all our efforts. We have taken over a deficient situation and had to take into consideration the social environment as well. We renounced at a certain number of personnel; within this first year of activity, there have been two reorganization stages implying also personnel restructuring, thing that was extremely painful but necessary in order to make our company work within the market economic conditions.
    Presently, the efficiency process goes on. Our main concern is still the social environment. On April 1, 1999, we had 960 employees in the entire network and now we are left only 800. We had also hire qualified personnel for certain activities. We also had to close stations where the economic situation of the region didn’t allow a development of our activity; an example is Miercurea Ciuc Terminal. In the agencies Brasov, Timisoara, Craiova, important restructuring have been made.
RJ: Will these personnel reductions go on?
PA: yes, we have been still registering financial losses at Craiova, Timisoara and Brasov because of the modest economic environment and of the unfaithful concurrence from the part of some auto transporters . They dispose not only of some advantages that we don’t have (in a auto transportation entity, usually there are one or two employees, plus the owner and the account) but they also have the possibility that we cannot prove or use, that of using underground economic modalities: oil black market, black market transportation, etc.
RJ: What methods do you use in order to impose on the market?
PA: our methods have as goal reducing of costs in order to maintain our tariffs on a competitive level. In order to reduce costs, there are several market mechanisms we have to use. You see, on one hand, we are under pressure of trade unions, that concluded an agreement with CFR Freight that we have to undertake. This situation is inopportune for the CFR TRANSAUTO employees because the income we realize does not allow us to correlate our wages with those stipulated in the agreement, but we have to do it. On the other hand, we have some specific job positions – I mean drivers, mechanics – that work in special conditions and cannot be paid according to their work, because they are paid under the provisions of the collective working agreement where their jobs are considered auxiliary. Unfortunately, jobs related to the mixed transportation field were left aside in the past years, affecting thus our activity.
RJ: Did CFR TRANSAUTO succeed in persevere its clients all this time?
PA: Hardly had we managed this – and we are still fighting for this important client-one of the most important ones – to remain ours. It is about INTERCONTAINER. Unfortunately it works with us just partially since our collaboration was affected by a very serious phenomena we cannot correct and fight against either: tanks robbery. All these robberies happen with the agreement and collaboration of the railway men. We notified the police, even the Internal Affair House, but we still cannot stop or prevent this fact.
    As a result, INTERCONTAINER rebuffed our services, especially wine transportation that was for us to provide. Robberies of this kind took place in Bucurestii Noi Terminal and in the border stations where these transports stationed for a longer time.
    Other important clients are LEVANT, SUN SHIPPING, ROMTRANS, DAEWOO. An important agreement has been concluded this year with Aurul Baia Mare company that exploits the golden area of Zlatna region. We are to insure for this client for 2001 an important transportation of gold from Brad Region, Hunedoara County.
RJ: Still, your activity has some greater advantages that should propel you on the market. Could you give some examples?
PA: The advantages the mixed transportation could exploit at the moment are few in number. Ever since the 90s this type of transportation failed, especially because of the automotive transportation. It is true that an attempt of the legislation has been done in order to support mixed transportation, in the spirit of European integration, because in the West Europe this type of transportation acknowledges a continuous development. An Emergency Ordinance was issued, but, because of the current conditions of our country, it brings only few advantages to our branch. It is about tax exemption for the reinvested income, but this is not much for a company as TRANSAUTO that cannot have a substantial income. Presently, in my opinion, the advantage given by this legislative support is worthless for our company. To support the development of the mixed transportation, a normative act that would protect the environment would be more helpful in this respect. That because of freight transportation made mostly by means of railway, pollution is in fact more reduce than in the case of automotive freight transportation Pollution is also be essentially reduce if automotive freight transportation will be limited for shorter distances, as for example from a railway terminal to the depots of the beneficiaries and back and forth.
    There is a ponderous competition between automotive transportation providers on the routes from Constanta Harbor to the country and back. Mob exists even within Constanta Harbour, that aims at covering the entire transportation market, by supporting automotive transport providers. We have no chance to compete with them. Our only argument is the lower price. But we lack traffic speed and commercial speed which in the case of the automotive transportation is insured more efficiently. Our prices are lower than those practiced by the automotive transporters, but the time in which we complete our services is longer, our commercial speed being of 20/30 km/h.
RJ: Recently I have read some studies made by the European Union, in which they emphasized especially the need for development of the railway transportation related to the importance of mixed transportation in Europe. Because we want to join European Union, why don’t we apply the same principles?
PA: You are right, but this is for the Ministry of Transport to decide. There have been some attempts, by issuing a normative act, which unfortunately hadn’t the effect we had wished for. We also participated to this act and made some proposals. For instance, regarding transports within Constanta Harbor: in order to avoid excessive pollution we proposed the area designated for auto transportation should be limited to 100 km and what gets over that limit should be for the railway transportation to perform.
RJ: Do you also provide services abroad?
PA: No, the auto park does not allow us to engage in transportation for foreign countries. We own exclusively vehicles produce in our country and which do not fit the European norms for the traffic abroad; to modernize our park would lead to higher costs than the annual income.
RJ: I know that in 1989, Romania had 42 terminals plus other 19 provisory terminals. Many of them were abandoned because of the decreased freight transportation activity, so that only 30 of them were still functioning. What is the situation now?
PA: Out of 30 terminals still operable the moment TRANSAUTO was created, all of them still work, with the exception of the one of Miercurea Ciuc. But unfortunately, another two or three are to be soon out of use; it is about the one of Satu Mare, that we couldn’t make profitable any longer.
RJ: I understand that it is not about reopening other terminals.
PA: No way, at least not now…
RJ: What are planing for the future?
PA: Our future plans are pretty decent and they are related mostly to the modernization of the rolling stock. Besides, CFR Freight, the real owner of the terminal, intends to modernize a part of them – those that fit the provisions of the Law No. 8 AGTC- with our contribution as well. Accomplishing this, we will be able to operate mobile boxes in much more profitable conditions. Presently, the only terminal where we develop maneuvers on European level, is the one of Bradul de Sus but soon we will also do that in Bucurestii Noi as well. For 2001, CFR Freight intends to restructure also the terminals of Semenic, Logovat, Ploiesti and Crang.
RJ: What are the most profitable terminals?
PA: The most profitable ones are those from Baia Mare and East Oradea where we offer transportation for European Drinks and General Transilvania-that have, as I have understood, the biggest capacity for bottling mineral water and juice, and the raw materials they use are transported in containers by our company trains. The terminal from Bucurestii Noi is also profitable but lately, the activity there has diminished.
RJ: What future do you foresee for this kind of transportation in our country?
PA: Should we be a part of the European Union, the economic exchanges will increase, so that this must be the transportation type preferred by all clients.
    On the other hand, regarding our internal sources I do not foresee great changes. The majority of our economic agents prefer automotive transport to the mixed one. Not to mention that the improvements of the auto-routes contribute more and more to the advantages this kind of transportation has to offer. Taxes perceived for using the auto-routes may orient clients toward the railway transportation. Even so, the reduced speed we use in the mixed transportation will still be a handicap for our activity. An argument in our advantage would be our preoccupation with the environment protection so much praised on the European level – this will lead to some norms that could give a chance for the railway transportation. And of course for the mixed one in whose qualities I do believe.
RJ: You have all the reasons since there are signs that mixed transportation will soon enter a progress axes.

Reporting Ileana Statie