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Danish Freight Railway Seeks Alliance

October 26th, 1997

The Danish State Railway DSB wants to integrate its freight traffic with that of one of its neighbours

Most of Danish rail freight goes to or from other countries, much of it is in transit -- and almost all of it loses money. A restructuring plan from 1995 which addressed this last issue has been ineffective, which is why management has been working in secret on a plan to close six of nine terminals, and move one across the border to Sweden.

This is part of a plan to integrate operations with another, larger freight railway. "The co-operation should be as binding as possible. Preferrably in the form of a fusion", says the boss of DSB Gods, Hans Winther.

Interestingly, single consignment freight, often local in character, breaks even, while carload and trainload freight, mostly international, looses money. This situation makes it natural to want to integrate operations with a neighbouring company.

DSB management would rather work with Swedish SJ than with German behemoth DBAG as little DSB Gods would be insignificant as a part of DBAG Cargo, which also is quite east-west oriented. SJ is more north-south oriented as it attempts, figuratively and literally, to negotiate passage for its trains to traditional Swedish export markets in Europe.

An alliance with SJ also provides DSB with a bridge to growing Eastern European markets. SJ has a project with Polish PKP to drive trains eastward via Ystad in southeastern Sweden. This is not only to deliver goods there, but the Polish connection also allows SJ to bypass expensive and congested western corridors when running trains to southern European markets.

Part of management's plan, made public last week, is to close the marshalling yard in Copenhagen and move operations there to Malmö in Sweden (the Öresund Fixed Link will be ready in three years). This raises the ire of unionized workers in Copenhagen, who point out that merging with DBAG would gain DSB much more weight in the increasingly competitive European rail market.

The unkown factor is at what level track access charges will be set. In Denmark as in other European countries, the plan is for the tracks to be controlled by a government authority, which will license and charge operators for access. But nobody knows how high access charges will be; a widely held conviction in Sweden as well as in Denmark is that freight trains should have low or zero access charges in order to bolster rail's competitive position against road, for safety and environment reasons.

Source: Jyllands-Posten