The newsletter of VTG Rail UK Ltd ISSUE 30 • WINTER 2017 ISSUE

A Merry Christmas and a healthy and perous 2018 from everyone at VTG Rail UK Repurposed wagon wins top award

VTG Rail UK ended “It’s a huge pat on the back for 2017 on a high, win- everyone involved in the project.” ning the prestigious VTG anticipated there was going Freight and Logistics to be an issue with coal wagons Achievement category becoming redundant following the at the National Rail Awards government’s decision in April 2015 to in September. double the carbon floor price – effectively VTG took the top prize for its making coal uneconomical as a power conversion of redundant coal station fuel. wagons into revenue generating Rob explained: “We were convinced that aggregate hoppers. this problem could also be a business A delighted Rob Brook, VTG’s opportunity, so we invested in the Managing Director said: “We are conversion or “repurposing” of the coal absolutely thrilled to have won wagons to carry aggregates. this award.

Rob Brook receives the NRA’s Freight and Logistics trophy from the BBC’s Huw Edwards.

“As coal carriers, the wagons were 18.3m long with a maximum payload of 75 tonnes. Now they are shorter but payload has increased to 78 tonnes. “This conversion is faster and less expensive than producing new build wagons and the wagons are able to carry significantly more product in a train of the same length, which is a clear benefit for our customers.” The bravery of our transport heroes “On behalf of everyone involved in the project, including the team at VTG, our The National Rail Awards also paid a moving with Judges’ Special Awards. suppliers and customers, I thank the judges tribute to the British Transport Police and Secretary of State for Transport Chris Grayling for recognising the effort they have put in the Manchester Victoria, Arriva Rail North also presented PC Wayne Marques with a and the results we have achieved. staff for their services and bravery during the special gold-plated NRA trophy to recognise “It’s another example of VTG pushing Bridge and Manchester terror attacks his gallantry in confronting three knife the boundaries for the whole industry and earlier this year. Both teams were honoured wielding terrorists at London Bridge. delivering success.” www.vtg.com/uk VTG Rail UK Ltd Sir Stanley Clarke House, 7 Ridgeway, Quinton Business Park, Birmingham, B32 1AF Tel: 0121 421 9180, Fax: 0121 421 9192, Email: [email protected] OnLine issue 30 | winter 2017 VTG AG boosts revenue in first nine months of 2017

Chairman of the Executive Board of VTG of new and used wagons and, hence, into AG. “Regrettably, one-time charges for tangible assets – above all to expand the the preparation of unleased wagons and fleets in North America, Russia and Europe. the planned acquisition of Nacco slightly put the brake on our EBITDA. At the same Increase in EBITDA at logistics divisions time, continuing growth in demand for our The Rail Logistics Division saw revenue products and services is an indicator for the increase by 5.7 percent to EUR 247.2 million development of our business.” in the first nine months of 2017 (9M 2016: EUR 233.7 million), again continuing the Railcar: Revenue up in third quarter positive trend experienced in recent months. – Fleet capacity utilization at highest Sustained positive business development level since 2008 in southeastern Europe is the main reason Revenue at the Railcar Division rose 2.7 for this gain. Transports for the metalwork- percent in the third quarter of 2017, up ing industry and in Project Logistics likewise from EUR 128.5 million in the second plotted a positive trajectory. quarter to EUR 131.9 million. Revenue On the back of this revenue trend, the thus totaled EUR 386.0 million in the first division’s EBITDA improved by 10.4 percent Dr. Heiko Fischer nine months of 2017 (9M 2016: EUR 387.7 to EUR 5.1 million in the first nine months million), corresponding to a minor year-on- of 2017, up from EUR 4.7 million a year ago. – Railcar capacity utilization at year decline of 0.4 percent. The sustained The EBITDA margin for Rail Logistics, which positive trend in revenue [in the past two is based on gross profit, edged up by 0.8 highest level since the end of 2008 quarters] thus virtually made up for the percentage points from 22.0 percent in the rather lackluster start to the year. At EUR same period a year ago to 22.8 percent in Hamburg, 16. November 2017 249.1 million, EBITDA for the division was the first nine months of 2017. - Further increase in revenue - Railcar capacity utilization at highest level since the end of 2008 - Revenue and EBITDA up again at Rail Logistics - One-time charges prompt slight decline in Group EBITDA and Group net profit

VTG Aktiengesellschaft (WKN: VTG999), one of the leading railcar leasing and rail logistics companies in Europe, increased its revenue in the first nine months of 2017. Group revenue improved to EUR 750.2 million, slightly up on the same period a year ago VTG has created Retrack as a wholly-owned freight operating subsidiary of its Rail Logistics division. (9M 2016: EUR 742.0 million). Despite this increase, EBITDA of EUR 250.7 million 2.5 percent down on the same period a year Tank Container Logistics posted revenue of fell just short of the previous year’s figure ago (EUR 255.5 million). One-time charges EUR 117.0 million in the first nine months of (9M 2016: EUR 255.9 million). This drop is totaling EUR 4.2 million for the planned 2017, a year-on-year decline of 3.0 percent attributable essentially to one-time charges takeover of the Nacco Group and the (9M 2016: EUR 120.6 million). The transpor- for the preparation of unleased wagons and preparation of newly leased wagons were tation volume was higher but freight rates the planned takeover of the Nacco Group. the main reason for this dip. On the other were lower in the period under review. The Accordingly, Group net profit of EUR 44.1 hand, one-time income of EUR 3.2 million temporary closure of the key railway line million was slightly down on the figure for had positively influenced EBITDA in the third near Rastatt, southwestern Germany, also the same period of the previous year (9M quarter of 2016. The EBITDA margin for this had a negative impact on revenue develop- 2016: EUR 45.0 million). Earnings per share division, which is based on revenue, thus ment in the third quarter. Despite this slight (EPS) followed suit, slipping from EUR 1.24 in edged down 1.4 percentage points to 64.5 decline in revenue, the division’s EBITDA the comparable period of 2016 to EUR 1.21 percent (9M 2016: 65.9 percent). Capacity improved in the first nine months of the in the period under review. utilization for the entire fleet increased to current financial year, climbing 8.4 percent “The numbers for the first nine months 92.1 percent (9M 2016: 89.8 percent), the from EUR 7.7 million in the same period of show that we are consistently maintaining highest level since September 2008. 2016 to EUR 8.3 million in the period under the positive revenue trend witnessed in Investments of EUR 211.8 million in the review. The EBITDA margin, which is based recent months. Development at the logistics first nine months of 2017 were substantially on gross profit, was up by 1.0 percentage divisions is satisfactory, and capacity higher than the figure of EUR 154.8 million point to 37.0 percent, slightly higher than utilization at Railcar has reached the highest for the same period a year ago. Most of this at the same point in the previous year (36.0 level since 2008,” explains Dr. Heiko Fischer, money was channeled into the purchase percent). 2 OnLine issue 30 | winter 2017 PAM’s the one for us!

A bespoke system called ProActive Main- tenance (PAM), is now being developed by VTG and 3Squared to deliver a new system that brings the management of rail freight wagon maintenance into the 21st century. PAM will be a web-based online and mobile app and will replace existing and inefficient paper-based processes whilst allowing for improved data collation and In our Summer edition we introduced the project that is bringing VTG’s analysis. This will in turn act as a condition- wagon maintenance regime firmly into the 21st century. based management tool that will spot This vitally important piece of work is called ProActive Maintenance trends and predict the optimum time for maintenance events on the wagon fleet. (PAM). In this edition we take a closer look at how it is being managed. “There’s a lot of pretty useful information out there that is currently very difficult to Less than a decade ago, few people would Sam Hunt, VTG’s Project Engineer. obtain, especially on a regular basis” says have thought it unusual for a company to Sam takes up the story: “It began around Sam, “we therefore want to capture some have a string of computer based manage- two years ago when VTG thought it time of this information through PAM and then ment systems that probably didn’t talk to to carry out an independent review of its use it to improve our maintenance regime. each other and which were ‘supported’ by processes. “The company had been using From tracking wheelset wear to following paper-based systems. a central IT system that operated through component failure trends, we will be able Thankfully, times change and VTG has Microsoft Access.” Sam said. “Although these to streamline our maintenance processes engaged software experts 3Squared, the systems work, ours was decades old and to further improve on our, already industry people behind the popular RailSmart system, modern technologies can offer so much leading, levels of wagon availability and to help the wagon company play its part more. reliability, ultimately saving time and money in the drive towards a joined-up, digital “Having the independent assessment for all stakeholders.” railway as the UK’s rail companies bring their corroborate our view that things needed to “Having a system that predicts when a processes up to date. change, we began the process of scoping wagon needs attention will be a major It’s widely acknowledged that the digital the project. benefit, and importantly, it will link to railway is much more than the development “When setting out the requirements for existing systems. of sophisticated signalling systems that this new system, we decided that rather “Currently all maintenance records are create the capacity needed to enable the than just replicate what we have currently written on paper and filed away, which rail network to run more trains. Companies on a more up to date platform, we would set means that no one is utilising this valuable are also looking at ways of using technology about improving our processes and, in turn, information to its full potential. to become more efficient, faster to react our business.” “PAM will enable VTG, as both wagon and more consistent in their approach to At the time of the independent assess- lessor and Entity in Charge of Maintenance, managing their businesses and their people. ment, VTG MD Rob Brook had begun talking to better service our customers and improve VTG is now working towards the creation of to the Sheffield based software company our operational effectiveness through better new systems for managing the maintenance 3Squared to seek ways of digitalising the quality information and operational insight of its wagon fleet. Responsibility for deliver- company’s wagon maintenance processes in partnership with our suppliers.” ing the modernisation project rests with and management.

PAM using agile project management methods

But what is agile project management? the project is broken down into incremental able. This improves the chances of having Sam explains: “Traditional projects have steps called sprints. the exact product that we want by the time a project scope which is followed from “Each sprint contains a number of ‘stories’ we go live.” beginning to end. There is usually some or deliverables which should be available for The next PAM milestone is the first key communication in between and ultimately key user testing by the end of each sprint. user testing. a final product. “Key users are 5 or 6 colleagues selected During the testing, those key users will use “A common issue with the traditional from each department, whose role is to be the product and say whether or not it is work- approach is that if there are any problems kept informed and essentially ensure we have ing and give necessary feedback. If some- with the final product that are not picked up covered everything that we need to cover. thing is wrong it shouldn’t have a big impact early on it can be costly and time consuming “At the end of each sprint, which typically on the final project because the testing is to make any changes towards the end of the lasts 2 weeks, we are then able to review incremental, rather than get to the end of the project. progress and make any necessary changes project and find there is an issue and have to “By running in agile project management, while the problem is still small and manage- go back through it all to find the fault.

3 OnLine issue 30 | winter 2017

Collaboration Spotlight on: gets PAM off to a “great start.” Nigel Day, Head of Engineering

By Tim Jones, When did you join VTG? and ensuring they get listened to and 3Squared Managing Director October 2002. answered. With suppliers it’s about continuous We are extremely excited to be working on How long have you worked in engineer- improvement and ensuring they have the the ProActive Maintenance project with VTG. ing and how long have you been Head of structure to deliver their service. PAM is a first for the industry that through Engineering for VTG? the application of technology and digitisa- I am an “engineering lifer” as they say. I What is your or your team’s greatest work- tion will bring VTG closer to its customers started building passenger trains straight out related success and how did you do it? and suppliers. of school in 1987 at Metro After a 7 year journey, we It will improve visibility of the maintenance Cammell, Washwood have a successful re-struc- process for all stakeholders, provide an Heath, then spent 8 years tured maintenance regime enhanced level of detail and increase the on design, production and and supplier base that timeliness of information delivery to help commissioning at Hunslet. focuses on each company’s individuals make more informed decisions. I’ve been VTG’s Head of speciality and delivers on PAM will also provide VTG with a solid and Engineering for 4 years. a daily basis. scalable technology platform that can grow We started to re-struc- and change as the demands of the business What do you do on a day ture in a dark room with change. This will give VTG to capability to to day basis? a lot of white boards to move PAM and its data into areas such I am responsible for safety ensure we get it right, as predictive modelling and preventative (internal personnel, exter- then we re-structured maintenance. nal personnel and wag- with a tender process and Moving beyond that, cutting edge technol- ons). I am also responsible new contract structure for ogies such as Machine Learning and Artificial for QA and Environmental each supplier. This was all Intelligence could be introduced to automate management systems, completed with a new IT some of this analysis too. maintenance contracts, supplier performance platform called SWIFT (supplier web interface In the future, we’re looking to integrate and budgets. for transport). the 3Squared developed RailSmart applica- tions with PAM, further delivering benefit Who is in your team and what do they do? Tell us about any major lessons you have to VTG customers in deeper parts of the Russ Campbell (Senior Engineer). Russ is learnt since becoming Head of Engineering customers organisation. responsible for overseeing the maintenance Probably the biggest lesson is that we are The sky really is the limit. contracts and contractor performance which on a journey to continuously improve and The project itself has got off to a great extends to fleet issues and customer issues we never reach the end. You have to be start thanks to the collaborative nature of when we have problems. patient with strategy and have the long- VTG and their willingness to adopt the agile Adrian Freely (Fleet Engineer). Adrian, term vision. methodology for delivering this project. is our trouble shooter and works for Russ. The 3Squared team work closely with VTG Adrian is usually dealing with fleet and Name one thing you would like your UK and VTG Germany and are in constant supplier performance. customers to do differently communication as we work through the There’s a new role for a new recruit (Safety On the hopefully very rare occasions when process to deliver PAM. and Performance Engineer) – to manage problems do occur, not to presume VTG The project is progressing well against our Safety Management System, Integrated wagons are guilty before the evidence is plan and the collaborative mechanisms Management Systems and Reliability concluded. put in place by 3Squared and VTG ensure Management Systems. that any blockers, risks or assumptions are What would you be if not an engineer? quickly resolved. What three words best describe your team? According to my psychometric profile I 3Squared has also established a ‘project Happy, motivated, skilled. should be a teacher but I think I would have hub’ for PAM for members of the 3Squared liked to be a Doctor or Dentist. PAM delivery team to meet and review pro- Who within VTG do you work most closely? gress, lock down designs and discuss issues. Rob Brook and Russ. And finally, any observations about your A drop-in space that’s being used formally With Rob its mainly around strategic moves sector, your role, people you deal with etc? and informally by the team. in supplier base, digitalisation etc and ensur- is a great sector to work in but, As we progress through the project we ing I am running the Engineering team in we need to ensure we are not the ‘poor hope to share more information on PAM line with the business expectations. relation’ to passenger trains, and to keep including a sneak peek at some of the inter- With Russ is bouncing fleet, customer and campaigning to take lorries off the road to face designs for PAM web and PAM mobile. supplier issues around to conclusion. reduce the traffic congestion that’s all of us. The rail industry is undergoing To this end Railfreight needs so much more unprecedented change. It’s great to see What is the most challenging aspect of help from the Government, for example such a renowned and respected brand such your job and how do you do it? central distribution hubs and total logistics as VTG innovating within the sector to stay Keeping the customers happy and the solutions. A lot of good people are apply- ahead of those changes. suppliers performing ing pressure in this direction but sometimes Primarily by keeping close to customers unfortunately progress can seem very slow. 4 OnLine issue 30 | winter 2017 HS2 materials removal needs collaborative approach

High Speed Two (HS2) is the planned new high-speed rail network con- necting London with the West Midlands, Manchester and Leeds. During its build millions of tonnes of excavated material – significantly more than that generated by Crossrail – will need to be moved from the sites along the route. But with demand for box wagons at a high, how is that going to be accomplished? VTG’s new JNA box wagons.

The HS2 plan says the high-speed line is to from and who knows enough about rail rial has ceased demand from elsewhere for be built in two stages. Phase one is a 225 freight to make it happen? VTG box wagons, a large part of its construc- km (140 mile) route from London to the West VTG certainly does. tion sector fleet, remains close to 100%. Midlands due to be constructed by 2026. The multi-national wagon lessor is the UK’s And that’s before HS2 digs its first hole in Phase two, from Birmingham to both Leeds number one supplier of box wagons for spoil the ground. and Manchester, would be built by 2033. movements, much of this from tunnelling “No one organisation is going to make this This is good news for engineering activities, most recently during the Crossrail work on their own,” said Ian. “What’s needed companies. project. VTG’s wagons also played a major is a collaborative approach involving our- HS2 will provide the sector with a huge part in the construction of the London 2012 selves, the freight operating companies and boost, generating £8.6billion of major civil Olympic site as well as many other major the main contractors involved in phase one engineering contracts in phase 1 during infrastructure projects. as well as the HS2 project team themselves. which there will be 46km of tunnels and During the building of Crossrail eight “As well as synchronising the future avail- 74km of cuttings created. tunnelling machines excavated a total of ability of our existing fleets with predicted Which will leave some 132million tonnes of 3.4million tonnes of material, over 90% of demand, at this point in the project there phase 1 excavated material to be disposed of. which was moved from site by rail – much of is also time to look at alternatives such How it is to be moved is a matter that it in VTG wagons. Ian adds: “VTG understands as repurposing redundant coal wagons or needs attention now. the key role that rail plays in these major new build. Assuming all goes smoothly, an According to Ian Shaw, VTG’s Sales and projects and the importance of not only order for new or repurposed wagons placed Marketing Director, the experience his providing the right wagons for the job but now could see them available for traffic in company gained during the building of also in ensuring fleet availability levels are between 15 to 18 months’ time.” Crossrail suggests that the rail freight maximised in this most arduous of activities. Ian concluded: “VTG would like to see a industry is more than capable of meeting We work closely with customers and collaborative approach to this discussion HS2’s project goals. However, whilst suppliers to plan the correct maintenance involving the consortia, the freight operat- estimates vary, it could need a fleet at the most appropriate times to ensure the ing companies, government and other key around 400 box wagons just to remove the wagons fleet is available where and when opinion formers. excavated tunnelling spoil as well as other required. One of the most vital things to “It’s too important to be left unresolved.” wagons to supply inbound materials such understand is that once the tunnel boring as aggregates, tunnel segments and track machines start working it’s a 24/7 operation panels into work sites during the project. and the spoil produced has to be moved No single company is likely to have 400 without delay. Investing in the spare wagons to move HS2’s materials, so Although that project is more or less com- where are these wagons going to come plete and the movement of excavated mate- future

High Speed Two (HS2) is a massive project Crossrail’s tunnels – VTG’s experience that will slash rail journey times between London, the Midlands and the North of Working closely with Crossrail’s project Crossrail’s trains was built by eight giant England. management and rail freight hauliers, VTG’s tunnel boring machines. Each tunnel is 21km Once complete, it will take trains travelling fleet of box wagons were employed in tak- (13 miles) long, 6.2 metres in diameter and at speeds of up to 250mph just 67 minutes ing spoil from the tunnelling operation and up to 40 metres below ground. They weave to travel between London and Manches- moving it to Northfleet in Kent. From here their way between existing underground ter instead of the current 127. London to the material was loaded on to barges and lines, sewers, utility tunnels and building Glasgow will be reduced from 271 minutes moved to Wallasea Island, Essex where it foundations from station to station at depths to 220. was used to create an RSPB nature reserve. of up to 42m. HS2 is said to be one of the most In total 1,528 barge shipments delivered 3 The machines were operated by “tun- expensive single peacetime project ever million tonnes of excavated material and nel gangs” of 20 people, working in shifts attempted by a UK government. With an nearly 80% of all Crossrail related material around the clock to construct the tunnels, official total of £55.7billion the rail project was transported by rail and water, removing carving out around 3.4 million tonnes of dwarfs the cost of the Royal Navy’s new approximately 150,000 lorries from London. earth, over 90% of which was removed by aircraft carrier (around £7billion) or the The network of new tunnels to carry rail, much of it in VTG wagons. Millennium Dome (£1billion).

5 OnLine issue 30 | winter 2017 VTG – Santa’s big helper!

©Keith Skipper The Christmas season is, for most, trees or slipped into our stockings this year. furniture and sporting goods to name but a a time for celebration and, hope- Stores and outlets will have spent months few. fully, some well-earned relaxation planning and making decisions on what Wholesale goods are purchased and loaded exactly they want to offer to the public this into predominantly, 40-foot containers and time. festive season. Once agreed, orders will sent to the UK on ships not dissimilar to For VTG it includes the annual have been placed for all manner of items, the one pictured above. It’s the CSCL Globe challenge to satisfy the increase many sourced in the economic powerhouse arriving at Felixstowe on its maiden voyage in demand for its wagons to bring of China. to the UK a couple of years ago. If you ever had any doubt about China’s Approximately 25 per cent of the goods into the country through capability to produce the goods the containers it holds would have moved ports such as Felixstowe and world wants, and that much of the UK’s from the port on train loads of wagons to Southampton. manufacturing base has disappeared, take distribution hubs around the country for a look at www.made-in-china.com onward delivery by rail or road to the end It’s usually around August that demand It’s a huge site offering the commercial customer – an occurrence repeated day after starts to grow for VTG’s container carrying buyer thousands and thousands of pages of day throughout the year. Megafret or Ecofret wagons to import goods goods that range from agricultural machinery Imagine the impact on the environment into the UK for Christmas. to zipped food bags and it would appear if they all left by lorry. However, it was probably as early as to include literally everything in between Thankfully the economic advantages offered December last year that companies began to including 12,439 jeans-based items and by VTG’s Ecofret, Optifret and Megafret identify what’s going to be tucked under our countless thousands of toys, items of garden wagons make rail a viable alternative.

Multimodal – join us This year we are supporting Christmas cheer TACT (The Adolescent and Children’s Trust) VTG will be joining other Rail Freight Group We will give to charity the money saved CHECT (Children’s Eye Cancer Trust) members at the Multimodal 2018 exhibition by having an e-card. Greyhound Trust which will take place at the NEC, Birming- MND – Motor Neurone Disease ham between May 1st and 3rd next year. The RFG is hosting the first ever “Rail Freight Pavilion” which, as well as VTG, will showcase other organisations active in the sector including , , Wagons up close! Freight Industry Times, GB Railfreight, Pauley, Rail Freight Group, Russell Group, Maria Connolly’s Service Delivery team Victa Railfreight and, of course, VTG Rail UK. joined Russ Campbell, VTG’s Senior Fleet In line with the main theme of Engineer, for a wagon familiarisation day at Multimodal, VTG will be focussing on its Long Marston in September. comprehensive Intermodal fleet offering, Maria explained: “Although we work with but our team will be on hand to discuss the wagons operationally on a daily basis, wagon your requirements relating to any we rarely see them ‘in the flesh’. This was a sector of the rail freight market. good opportunity for us to get up close and We look forward to welcoming you to the personal with a variety of wagons. VTG stand during the show. If you would “We also looked at stored wheels and like to arrange a meeting with a member of bogies. It was very interesting to see the the VTG team to discuss a particular project various bogie types in close proximity. or topic please call Caitlin Lippitt on 0121 “We all enjoyed our day, finding it not only 421 9198 (or email [email protected]) informative and beneficial but also a good to make an appointment. opportunity to do a bit of team building.”

6 www.vtg.com/uk