Xrail The European Wagonload Alliance

Project initiator:

February 18th, 2010 Zurich

11

The objective of today’s presentation is

Source: Xrail

to inform the European journalist about the new international wagonload project Xrail, especially about the :

–Wagonload situation in Europe

–Xrail alliance

–Xrail benefits to customer

22

Agenda

Xrail – The European wagonload service

Xrail – Alliance

Xrail – Customer Benefits

Source: Xrail

3

Strong road competition

Subsidized in several countries

~ 15%

Finished goods

Containerizedgoods

Focus of road competition

Complex production process, high barriers to entry

~ 50%

Chemicals

Paper and pulp

Automotive

Traditionally barge competitionFocus of intra-modal rail competitionPrice decline

~ 35%

Coal, Steel

Constructionmaterials

Competitive environmentShare of volumeCommoditiesSegments

Block Train

Wagonload

Combined traffic

Source: Mc Kinsey

The railway sector is divided into three main products, whereby the wagonload accounts for 50 per cent of the total rail volume

44

Wagonload transport accounts for around 10.6 % of the market and hassignificant growth potential if competitiveness can be enhanced European transport market for full truck-load shipments* compared to wagonload transport

Full truckLoad (FTL)

• Wagonload has only a small market share due to intense competition mainly from road transport

• Wagonload has certain strengths** but is not always competitive in some key aspects of the service such as transport reliability, transport information etc.

• In many countries wagonload is not economically sustainable(up to 90% fixed costs) today

• Wagonload network coverage is therefore declining in many markets (Spain, Norway etc.)

* Estimates percentage of rail and road transport, no official figures available for wagonload on a European level**E.g., pricing for long distances, flexibility of capacitySource: Xrail, Figures: McKinsey research based on statistics EU27+ Switzerland, 2006

ESTIMATE

89,4 % 10,6% Wagon-load

5

What is wagonload traffic and how does it work?

Source: Xrail

• Customer provides at least one wagon • Single wagons or wagon groups are collected at

different customer sidings and assembled to form a full-length train in a yard

• Wagons are shunted in yards on route from A to B, C and D and delivered to different customer sidings with different trains

A

C

D

B

Customer sidingShunting/ marshalling yardFeeder trainLong haul train

Country A Country B

Country C

Wagonload production in Europe

6

How does international wagonload traffic work today?

Source: Xrail

• The wagonload traffic between two or more countries is no transparent for the customers

• No transport schedules existing for international wagonload transport from one customer siding to another

• The main focus is on trains, not single shipments or wagons

A

C

D

B

Customer sidingShunting/ marshalling yardFeeder trainLong haul train

Country A

National Timetables

Country B

Country C

Wagonload production in Europe

77

Agenda

Xrail – The European wagonload service

Xrail – Alliance

Xrail – Customer Benefits

Source: Xrail

8

The International Union of Railways (UIC) initiated the Xrail project and supported the today’s Alliance partners during the first three project phases

Source: Xrail

•Product definition

Design ITtools

Launch ITand Pilot

Firstrelease

• Develop international wagonload product

• Develop recom-mendations for levers to speed up offer process

• Create joint commitment of RUs

• Define and agree on product definition and processes

• Develop IT system (central tool)

• Work and agree on governance mechanism

• Enable selected Xrail pilot relations

• Implement IT system (central tool)

• Start monitoring of the pilot relations

• Prepare the first Xrail pilot release

• Inform and train the different stakeholders

• 7 Alliance partners will introduce the first release

• The main economic centers will be connected with each other

I II III IVProductdefinition

• Design international wagonload product

• Develop recom-mendations for levers to speed up offer process

• Create joint commitment of RUs

I

99

Commercial

Production

Xrail wagonload Alliance Block train RUs can approach customers directly in all networks and remain in direct competition

No impact on competition for block trains

No impact on competition for block trains

Contractually agreed wagonload production alliance with • Mutual commitments to Xrail

service standards• Progress is constantly

monitored by a KPI system

The Xrail alliance is a cooperative venture in wagonload traffic which impacts neither other types of rail transport nor commercial aspects

Source: Xrail

Xrail

Combined traffic No impact on competition for combined trains

No impact on competition for combined trains

10

The Xrail alliance will be centrally supported by a dedicated service entity jointly owned by Xrail members

• Gatekeeper of the agreed quality• Further development of the

European wagonload systemand service standards

• Think tank and innovation engine for the member railways

• Further development of the IT tools e.g. capacity booking

• Attract new members and coordination of the entry of new members

Source: Xrail

Tasks of the service entity

11

The alliance’s organization consists of an steering and decision making body as well as an implementation body

Source: Xrail

Production ManagerOperations

CEO (Strategy, Governance,Commercial)Günther J. FerkDeputy-CEO (Roll-out of Production and IT)Rabet Sassan

Ludo Honings Martin Zwingmann

Product & Marketing ManagerT B D

Production ManagerStrategy / best practices

IT supportDevelopment central tool

Gerhard Leitner Markus Lund

IT & Process Manager

Business analyst

T B D

CEO – Decision BoardSteering and decision making body

Project Leaders and work stream experts Implement together with the Central Team the decisions

1212

Agenda

Xrail – The European wagonload service

Xrail – Alliance

Xrail – Customer Benefits

Source: Xrail

1313

Xrail will create significant customer benefits and increaseinternational wagonload competitiveness in relation to full truck load

*Commercial aspectSource: Xrail, customer surveys

Xrail focus

Dec

isio

n-m

akin

gcr

iteria

in o

rder

of i

mpo

rtan

ce

• Xrail has a 90% minimum reliability rate for the given estimated time of arrival (ETA)

Transport reliability

• Not within Xrail scope*Price

• Xrail customers are provided with– International transport schedules– Delay alerts

Transport information

• Xrail transport quotes will be provided within a maximum of 3 working daysOffer time

Environment• Rail transport is leading in environmental

performance, particularly on long distances

1

2

3

1414

A reliability rate of > 90% will allow customers to reduce their in-transit and on-hand inventories

* Reliability measured on 8 pilot relations at the beginning of the Xrail projectSource: Xrail

Current international wagonload

• Reliability against Xrail schedule

Road competition

• Depending on the transport route, high reliability close to 100%

Xrail

• At least 90% of Xrail shipments arrive at the planned arrival timeTransport reliability*

PercentODs12345678

1916

9297

8867

5444

1ILLUSTRATIVE

Customer benefitConstant conformity with communicated transport plan reduces need for large in transit and on hand inventories

1515

Road competition

The provision of transport information will enable the customer to plan and manage his supply chain more efficiently

*Manual tracking possible in selected casesSource: Xrail

XrailCurrent international wagonload• No transport

schedules for international wagonloadexist for door to door transports (one customer siding to customer siding)

• No (scalable) means for tracking individual international wagonload shipments*

• Full international transport schedulesaccessible over internet

Customer benefit Customers are now able to proper-ly plan/monitor their international wagonload supply chains

• Agreed door to door delivery times

• Location and estimated arrival time available upon request

+• Delay alert in case of deviation from

international transport schedule

EXAMPLE

In line with TAF-TSI goals

2

+• Information on estimated time of arrival

16

Today, the Xrail Alliance partners are focusing on transparency before, during and after carriage

Source: Xrail

A

C

D

B

Wagonload production in Europe

Customer sidingShunting/ marshalling yardFeeder trainLong haul trainNational timetables

Country A

National timetables

2

Country B

Country C

• International transport schedule• Transport specific timetable• Estimated time of arrival• Delay alerts

17

Today, the Xrail Alliance partners are focusing on transparency before, during and after carriage

Source: Xrail

A

C

D

B

Wagonload production in Europe

Customer sidingShunting/ marshalling yardFeeder trainLong haul trainNational timetables

Country A

National timetables

2

Country B

Country C

• International transport schedule• Transport specific timetable• Estimated time of arrival• Delay alerts

1818

The Xrail product is supported by the Central IT tool which align the plan with the actual data and provide internal and external information

• Xrail RUs have different IT systems in place• Xrail IT tools use available RU data and

aggregate it in one platform• Common Xrail IT platform provide:

*RUs – Railway UndertakingsSource:Xrail

a) International transport plansb) Estimated time of latest arrival (ELTA)c) Delay alerts based on status information

from wagon flow d) KPIs including reliability figures

Common IT platform between RUs*

XrailXrailCentralCentral

ToolTool

Planning data

Train schedules

Pickup/delivery

points

Pickup/delivery

feeder schedule

Wagon transferinform

ation

b)

RU4RU4RU 1RU 1 RU 2 RU 3RU 3 RU 5RU 5 RU 6 RU 7RU 7

Actual data

Status inform

ation (IS

R)

RU

4R

U4

RU

1R

U 1

RU

2R

U 3

RU

3R

U 5

RU

5R

U 6

RU

7R

U 7

a) c) d)

RU4RU4RU 1RU 1 RU 2 RU 3RU 3 RU 5RU 5 RU 6 RU 7RU 7

C u s t o m e r s

2

1919

A maximum offer time of 3 days will simplify the contracting of wagonload services for customers

*Figures from all 7 member Railway Undertakings (RUs)Source: Xrail

Current international wagonload

1 - 2

Customer survey

Road

8 - 12

≤ 3

3 - 8

XrailMeasure-ment*

Competi-tion

Customer benefitContracting of wagonload services will be significantly simplified

3

Xrail will improve interfaces and work processes among Xrail members but has no impact on

commercial issues

20

Rollout, mid term

• Connection of all (15) economic centers of participating RUs

• Increase the share of total Xrail volume

The geographic coverage and network density of Xrail is expected to increase over time to an extensive network

*O/D’s Origin and DestinationSource: Xrail

ILLUSTRATIVE

First release, 2010

• Connection of 10 economic centers of participating RUs

• Introduction of about 200+ pilot O/D’s*

• 1st release will cover ~ 10 per cent of total Xrail volume

• CFL Cargo and CD Cargo start with pilot O/D’s

Long-term vision

• Wide-scale international coverage

• Additional RUs to join Xrail, complying with common product standards

• Introduce the next evolution level of Xrail – capacity booking system (XCB)

21

Signing of the Xrail Alliance18th February, 2010Zurich