OPERAIL Yearbook 2019
1 44
Table of contents OPERAIL Yearbook 4 INTRODUCTION 7 Operail in brief 8 Address by the Chairman of the Management Board 2019 10 Certification 11 Sponsorship activity 12 Key results for 2019 14 Top headlines in 2019
16 ABOUT OPERAIL 18 Operating environment and trends in society 21 Operail’s strategy 23 Fundamentals of Operail’s strategy Operail – More Than Railways 25 Description of Operail’s strategy 26 Structure and management of the company 28 Management board 29 Guiding principles 32 Risk management We are an international logistics
36 SERVICE company with the railway at the heart 38 Railway safety 44 Customer relations of our operations. 46 Cyber security 48 Innovation We transport goods, lease out wagons and repair and build railway vehicles. 50 ENVIRONMENTAL IMPACT We have nearly 150 years of 58 EMPLOYEES AND WORKING ENVIRONMENT 60 Employees and working environment experienceand employ 700 people across Estonia. 70 GIVING EVEN MORE TO SOCIETY 72 Contribution to the development of the sector
76 MANAGEMENT REPORT 78 Management report for 2019 79 Executive summary of activities and results for 2019 79 Freight transport 81 Wagon rental market 82 Repair and modernization 83 Economic performance 85 Outlook for 2020
2 3 INTRODUCTIONSISSEJUHATUS
2 Lühidalt Operailist 3 Juhatuse esimehe pöördumine 4 2019. aasta peamised tulemused 5 2019. aasta peamised sündmused 6 Saadud tunnustused
4 5 Beginning of financial year: 1 January 2019 End of financial year: 31 December 2019 Operail in brief Name of company: AS Operail
Commercial Register code: 11575850
Registered office: Metalli 3, 10615 Tallinn, Estonia Our business areas Interesting facts about Operail: Telephone: +372 615 7600
E-mail: [email protected] 1. Freight transport We have longstanding experience ● We have three subsidiaries Website: www.operail.com in transporting different groups in Estonia and Finland. of goods by rail, we handle transit Principal activities: organising railway transport goods and carry international ● . Our employees have worked and domestic Estonian freight. for us for an average of 17 years. Management Board: Raul Toomsalu, Paul Priit Lukka . Our locomotives travelled Supervisory Board: Kuldar Leis, Madis Ermo, Peeter Kadarik, 2. Wagon rental ● Our wagons move goods via 2,194,415 kilometres in 2019. Ahti Kuningas (until 01.11.2019) and Indrek Gailan (from 21.11.2019)* the 1,520 mm gauge railway network and successfully service ● . In a shift of 12 hours, our Auditor: AS PricewaterhouseCoopers trade between the People’s wagon inspectors and repair Republic of China and Europe. personnel perform technical inspections on 150-200 3. Construction and repair wagons and can walk up to Our biggest repair unit at 140 kilometres per month. Tapa depot with its more than 135-year-long history is one ● The modernised loco of the oldest companies in the motives being completed in the region in the field of repair and Tapa depot have over 4,000 maintenance of railway vehicles. welding operations made.
Objective: we aim to be an ● . Using multimodal freight engine for implementing new transport service saves over service standards in inter- 50,000 tonnes of carbon national railway logistics. emissions each year (compared to transporting the Vision: we are an international same quantity of goods by road). logistics company with the railway at the heart of our operations.
* Operail advisory board as of 01.06.2020: 6 Indrek Gailan, Leon Jankelevitsh, Siret Liivamägi, Tarmo Porgand, Kaido Saar 7 Address by the Chairman of the Management Board
ended the year with a profit of this allows our nature to flourish. What about the future? around ten million euros, but on But we are not stopping just yet. the other hand, it was a year full We have undertaken the obli- of ups and downs and tensions. gation to invest in even bigger I am certain that our aims taken The latter was caused due to the environmental preservation and years ago in order to expand the general instability in the world. have entered into agreements services and markets and preserve in order to research the possi- our nature will bring about the We at Operail believe that we bilities to use natural gas and expected results in the near future. are an organisation with an hydrogen as fuel for locomotives. Never before have we been more important place in the world and focused on preserving our beau- especially in Estonia. Every day, 2019 was a massive year for tiful and clean Estonian nature. our work increases safety in traf- investments. The discovery Never before have we emphasised fic and allows all four seasons to of and timing for new services environmental preservation when flourish in Estonia. In our railway and markets will be the key to it comes to new investments as we hub in Tapa, our own people with our success. The prerequisi- have now. And never before have their wits and skills completed tes needed for entering a new we considered the benefits received the new, more fuel-efficient loco- market in Finland were met via environmental preservation. motives Karl and Rudolf. These in 2019. We invested nearly Therefore, I am of the opinion that twins serve as confirmation that 50 million euros in this new our company has a solid vision, engineering in Estonia can and area. Most of the investment we have committed personnel must be developed further. Why was made for purchasing and we have made rational inco- couldn’t Tapa become one of next-generation locomotives. me-bearing decisions. Please the hubs of machine building in take the time to read our year- Estonia in the future? Whatever In the last year, we made the book and you will be certain of it. the case, we have planted the decision to use as little paper seeds. Our multimodal routes as possible in the future. As of I wish to extend my regards to between Tartu and Tallinn and now, we have entered into an all the people of our company! Sillamäe serve as clear proof that agreement with an internatio- This is our first ever yearbook. our journey. It is our blessing to we care about the environment nal IT development company To our clients, partners and stake- Dear reader, When we, with our collective, acknowledge that we have been and about safety. There were in order to render our activities holders – our heartfelt thanks! started the reorganisation of cared for and there is faith in us. countless naysayers and scep- paper-free. The amount of the a company which is incredibly While the journey is endless, the tics, but regardless, in the last investment was an impres- Respectfully, important for Estonia and boasts beginnings have been promising. year, we brought 8,000 lorries’ sive six-figure amount. We will a long-standing history with the worth of goods to the railway invest in the same proportion Raul Toomsalu aim of better adjusting to the Looking back at 2019, on the one from the highway. This was the in order to improve the working changing world in 2016, we could hand, it served as a confirmation exact amount of reducing the risk conditions of our employees. not foresee the exact outcome of to the strategy we chose as we of collisions on the highway, and
8 9 Certification Sponsorship activity
successful Estonian compa- nies, compiled by the Äripäev business daily. The year before, Operail placed 490th.
● Operail is among the ten strongest companies in the exporter of the year cate- gory in the business awards handed out by Enterprise Estonia and the Estonian Employers’ Confederation.
● At Estonia’s largest hacka- thon held in Tallinn as part of the JCI World Congress, the Operail team places second Oleg Paltšonok and ● Operail’s multimodal freight with a DAS (Driver Assistant Vassili Prodanets, our welders transport project launched System) solution that gives and engineers, who led our in 2018 to increase domestic locomotive drivers informa- construction of the wagons railway transport receives tion and instructions on what for the armoured train. acclaim as the logistics achieve- gear position, speed and travel ment of 2019 at a competition style to choose to make freight In its sponsorship activity, Operail As a state company, we cannot The HR and Marketing Manager organized by the Äripäev busi- operations even more efficient. proceeds from the principle of distribute support for various of Operail Jane Etverk delive- ness daily’s logistics news and supporting R&D that contribute to community initiatives. We support ring a grant to Janno Õunpuu. the PROLOG supply chain ● The Harju Business and achieving the company’s opera- various projects that advance the association. The multimodal Development Centre chooses ting and financial goals. railway field and projects related freight transport project helps the replica of historical armour- In 2019, we allocated 2,220 euro to railway children. We have taken to save over 8,000 truck ed train, the No. 7 Wabadus, as grant to TalTech’s development a leading role in popularizing the trips per year on the highways, the achievement of the year. fund SA Tallinna Tehnika- profession of railway worker. increasing traffic safety and Four of its wagons were built ülikooli Arengufond to fund a reducing environmental impact at Operail’s Tapa depot. The scholarship for one successful in the logistics sector. authentic looking replica of master’s degree student in the the train built for the national engineering faculty studying ● Operail placed fifth in centenary has separate cars logistics or product development the 2019 instalment of the for medics, machine-gunners, and production technology. Top 100 rankings of the most assault troops and artillery.
10 11 Key resultsresults for 2019 for 2019
13,2 million tonnes freight transport volume 0 incidents of (2018: -1%) non-compliance with laws and regulations 75,4 million euros 2 204 leased 688 employees (2018: 0) operating income wagons (2018: 676) (2018: +3%) (2018: +8%) 0 rail accidents on public railway 17 million euros infrastructure involving EBITDA Operail (2018: +8%) 4,9% voluntary (2018: 10) 9,6 million employee turnover 0 / 0 rail accidents on euros net profit (2018: 5,8%) public railway infra- (2018: +4%) structure involving Operail (2018: 10 / 5) 60,7 million euros 29 216 tonnes CO2 of investments equivalents (green- (2018: 27,8 million euros) house gas emissions)¹ 3 / 0 on-the-job 839 children and (2018:0 seadustele 29 405) ja 1,5 million euros accidents / fatalities young adults who 1regulatsioonidele Includes data on fuel consumption (2018: 7 / 0) participated in railway dividends paid by the Freight and Repairs unit. mittevastavust safety training courses (2018: 0) (2018: 84)
12 13 Top headlines in 2019
March April September November
WagonPro AS gets a new We introduce a new group of We and other organizations in the An anonymous tip feature is name and identity – Operail goods to our multimodal freight railway and rescue sector take part in a added to our website to allow Leasing AS. transport: crushed stone. major exercise for practising coopera- reporting of tion, readiness and interorganisational suspicions or incidents We discontinue provision of wagon cooperation in the case of a train involving business ethics repair services in Tapa. accident with many casualties. lapses or violations of law, corrupt behaviour, damage to We join a charter between state property or misuse of enterprises to abide by responsible information. business principles, wishing to set an example to encourage the prioritisation of these principles.
January June August A joint railway safety campaign October led by Operail, Elron, Estonian We enter into a cooperation Janno Õunpuu, an engineer- We establish the Finnish Railways and Edelaraudtee WagonPro Holding Oy gets a agreement under which ing student who is studying subsidiary Operail Finland Oy Infrastruktuur takes place, new name – Operail Leasing C30-M locomotives built in product development and to start servicing freight focusing on narrowly averted Finland Oy. Tapa will be exported to product technology, receives streams on the Finnish railway railway accidents. Ukraine. the Operail in 2020. We introduce a freight train with scholarship for promising a single driver, marking the start Master’s degree students. We introduce a new group of of a new era for the railway sector goods to our multimodal at large. freight operation: grain. We train eight new safety We enter into an agreement with ambassadors so that we can The first multimodal container the Latvian company DiGas to spread safety train, which made its maiden develop the first LNG freight knowledge to even more trip a year ago, carries 2,828 locomotive in our region. It will young Estonians. Our containers during the year, i.e. save at least 30% of fuel costs, objective is to reach 5,656 trucks’ worth of goods emit 20% less greenhouse gas kindergarteners and children moved along the rails instead and 70% less sulphur dioxide. in the early elementary grades. of the roads, increasing safety on the highways and helping to conserve the environment.
14 15 ABOUTOPERAILIST OPERAIL
2 Tegevuskeskkond ja ühiskondlikud trendid 3 Operaili strateegia 4 Ettevõtte struktuur ja juhtimine
16 17 Operating environment and trends in society
The development The total length of the Estonian Clean transport power locomotives performing railways is 2,144 km, of which shunting work. We are going of the railway 1,514 is public and 630 is non- even further and are developing public railway. The majority of the Emissions from the logistics the first LNG locomotive for line sector is currently public railway (more than 1,200 km) sector make up one-quarter of operations. Building a LNG line influenced the most is managed by the state enterprise the European Union’s green- locomotive marks the dawn of AS Eesti Raudtee, and house gas emissions and this a new era in performing Baltic 3000-4000 t 27 t by two keywords: Edelaraudtee Infrastruktuur AS share is growing. To reach climate railway transport and the entire goods goods administers the rest. neutrality by 2050, emissions region’s railway sector. Com- environmental from the transport sector will pared to a diesel engine, use of 0,3 l 1,1 l The Ministry of Economic Affairs need to be cut by 90%. Climate an LNG-powered locomotive for conservation and fuel/nt/100 km fuel / nt / 100 km and Communications, in coope- neutrality must be achieved freight transport will save a at digital solutions. ration with institutions in its area through the joint contribution of least 30% on fuel costs and emit of administration, coordinates road, rail, air and sea transport. 20% less greenhouse gas and 1-2 >100 the development of the railway 70% less sulphur dioxide. The first people (per train) drivers infrastructure, logistics, passen- We consider environmentally sus- LNG line locomotive should enter ger and freight transport, and tainable transport very important into operation at the end of 2020. traffic and environmental safety. and have taken significant steps In Estonia, the Railways Act to reduce greenhouse gas emis- governs the railway sector. sions in the logistics sector. We Digitization have developed domestic multi- railway transport. We currently Railway transport has seve- Tallinn is the European Union modal railway transport services, use several different informa- ral advantages compared capital closest to China, and thereby replacing more than The speed of movement of data tion systems to organize railway to road transport. Estonia is crossed by a 1,229-km- 8,000 truck departures per year and digital storage of data are freight operations. However, they long 1,520-mm gauge public on our country’s primary highways. playing an increasingly impor- have become outdated and it railway network that connects us Use of rail transport has significant tant role in the logistics sector. would not be reasonable to in- to Russia and Asia. We are the advantages over road transport. Our major objective for the years tegrate them with each other. key link in Estonian-related import ahead is the digitization of freight and export trade and also when To increase environmental operations. We have set a goal With the new information system, it comes to intermodal freight in conservation even more in the of implementing a new freight we can digitize all data currently Estonia and between Estonia, logistics sector, we have been information system throughout circulating on paper and re-route Russia, China and Scandinavia. putting great effort into looking the entire group, which will allow work processes to digital media. We haul freight throughout for ways of decreasing the eco- us to consolidate freight plan- This will allow us to become more Estonia and transport goods logical footprint of railway freight ning systems and operation and efficient and ensure smoother via the Estonian-Russian and transport. Countries in the region create an integrated whole to business processes and more Estonian-Latvian border points have experimented with using offer better customer experience effective everyday administration. to the rest of Europe and Asia. liquefied natural gas (LNG) to and increase the efficiency of
18 19 Operail’s strategy
Trends in the railway sector Digital rail – processes are being Shareholder expectations The Republic of Estonia holds ● fulfilling the transport around the world actively digitalised on railways for AS Operail shares in AS Operail for the obligation arising from the Agree- all over the world. Large-scale purpose of earning income on ment on Direct International data analyses and automation the following considerations: Goods Transport by Rail (SMGS) Similarly to Operail, companies of processes allow expenses to Operail is an Estonian state- around the world are looking for be optimized and railway trans- owned company. The state owns ● the existence and The Estonian state considers it ways of making railway trans- port made even more efficient. the railway company in order to preservation of the railway trans- important that Operail operate port more efficient and cleaner. We hope to adopt the use of a have an efficient railway transport port capacity (i.e. a sufficient and profitably on the open market new freight system by summer company that is independent of well-maintained locomotive fleet, and that it carry out its economic ATO 2021. This first step will pave freight owners on the market with crews and dispatcher service activity at an average risk level (Automatic Train Operations) – the way for our next moves the goal of earning a profit and necessary for operations), capabi- and with the optimum capital In summer 2019, the Australian toward digital transformation. covering the risks related to its lity for performing shunting work structure for a comparable sector. mining company Rio Tinto moved economic activity. at hub and sorting stations its entire 1,500-km-long railway Hydrail – hydrogen-powe- The state aids the company It is the shareholder’s expectation infrastructure and the trains – red trains – the adoption of as a profit-oriented transport ● ensuring the performance of that Operail ensure, in the up to 2.4 km in length – to fully hydrogen technology has undertaking to ensure the repair and maintenance of railway medium-long perspective, that automatic control. The Auto- the potential to make railway functioning and competitiveness vehicles, including extending the income grow proportionally Haul management system can transport – already relatively of the railway market. lifespan of wagons, leasing and faster than expenses and operate up to 50 heavy trains clean – a zero-emissions mode rental of wagons, administration guarantee efficient economic at once. The adoption of various of transport. That means that and management of wagons in the activity that would ensure the automatic control systems will goods would travel the rails railway administrations’ rental fleet development of the company be sure to make our opera- without harming the environment. and ensuring regular repairs of the and income for the owner. tions more efficient as well. Renewable natural resources wagons in other 1,520 mm gauge such as solar and wind energy railway administrations’ fleets could be used to produce hydro- gen. Hydrogen is considered an ● taking part in settlements ecologically clean fuel as the related to international railway production process does not transport and in so-calledOperail Operail Leasing Operail release carbon dioxide into the integrated settlements Finland (via Oy Finland Oy Leasing AS environment. Hydrogen techno- the railway administration) logy is poised to transform the railway sector and we are thus ● ensuring the fulfilment of taking the first steps toward adop- the functions of data entry/ ting the technology in Estonia. forwarder in all exchange of information in the field of wagon management and freight transport between railway administrations
2620 21 Fundamentals of Operail’s strategy
Vision Mission Role and responsibility future and know that we can shape ● showing initiative in our in society that future by what we do. To this role as an advocate for the end, we work on bringing goods field, so that by promoting inno- We are an international We offer environmentally over from road to rail and develo- vation, education and coope- logistics company with friendly, cost-effective We clearly understand that by ping LNG- and hydrogen-powered ration, we can improve quality contributing to carriage of different locomotives. We also call on and efficiency in the long run the railway at the heart and safe logistics service. goods in the railway logistics field, other transport and logis- we are operating in a field that is tics undertakings to look for ● caring about our personnel of our operations. We are a responsible strongly tied to the surrounding more sustainable solutions. (and indirectly their families partner in cooperation. environment – society, the as well) is a value that stems Values economy and nature. We allow In general, we see Operail’s from our ethical principles; it Objective goods to circulate and thereby role and responsibility in allows us to remain a sufficiently Responsibility, support the development of the society as the following: attractive employer for qualified economy, yet due to our position, employees who can help us safety, solutions, We aim to be an engine for our attitude also dictates the ● ensuring safety and to achieve our aspirations broader impact of our activities. security in (railway) traffic, cooperation, openness. implementing new service freight operations, for nature Our strategy must support standards in international We seek to be a responsible and surrounding regions and in all of these goals. We know partner for the railway, offering cooperation between our person- the world’s resources are not railway logistics. environmentally clean, cost- nel and cooperation partners, to unlimited and that is why it is effective and safe logistics and the extent within our control important to take into account railway-vehicle-related services. our surrounding and be caring. ILITY SA SIB FE Twenty-four hours a day and ● contributing to environmen- N TY O seven days a week, our personnel tal conservation by reducing The railway sector has historically P S E make sure that goods get to our activity’s footprint and by been closed and slow to change. R where they’re going safe and offering solutions for rerouting Our efforts in recent years have
O intact. That is why we are always flows of goods from road to rail helped Operail to become S
P N striving to maximize the safety a more open and innovative E O N I of our personnel and goods and ● being honest and open and organization, which is a pillar N T E U environmental conservation – oriented and visible to society, of our future development. S L S O S responsibility is one of our values. including behaving ethically, C communicating proactively, In late 2019, we took the first OO ON PERATI Freight transport on the railway is being transparent in regard to steps for more systematic mana- 28 times safer than by road. One related risks; take responsibility gement of activities that express freight train can carry as much for resolving local problems in the our sense of responsibility. By freight as 100 tractor-trailers. communities in which we operate the time of the publication of the We believe in a clean and safe yearbook in spring 2020, we had
26822 239 Description of Operail’s strategy
started reflecting more broadly Our management board allow freight documents to be on Operail’s societal impact and In the Wagons feels that the main strategic handled more efficiently, trains can thinking about how we could business unit, we objectives that impact profit and be better planned and customer promote our business in line capability for growth in the next satisfaction can be increased. In with sustainable development are planning more few years are the following: addition, the group’s objective of society. We will release our efficient use of in 2020 is to start servicing objectives in the course of 2020. 1. expanding our existing freight transport in Finland. our workforce. business and making it more cost-effective In the Repairs business unit, Multimodal freight transport keeping wagon repair profitable will increase traffic safety 2. expanding our geography has been a challenge in recent on roads and conserve the to reduce dependence years. In the first half of 2019, environment. on a single market we discontinued scheduled repair services for wagons and The logistics sector inevitably has 3. implementing new services and will direct the resources freed a large ecological footprint and products to create value added up to locomotive rebuilding – solutions are being sought for in other words, to production – transporting goods more sustai- 4. raising the capital which has high value added. nably. The railway is the best necessary for growth replacement for overburdened In the Wagons business unit, we highways. Operail has brought 5. high-calibre general are planning more efficient use of goods from the road to the railway, at a time. Thus, one train equals In 2019, Operail’s activities resul- administration of the company our workforce. Likewise, the objec- thereby increasing traffic safety more than 30 trucks. Over ted in removing more than 8,000 tive of the group is the internatio- and reducing the environmental 12 months, such multimodal trucks from the highways by way of We are planning significant nal expansion to new markets. burden from the entire sector. freight trains have replaced container trains. Photo: Operail’s financial and qualitative 8,000 truck departures. container train in the beautiful improvements in all business In recent years, Operail has Southern Estonian landscape. areas in the parent company. increased the volumes of freight carried by containerized The Freight Transport business trains in Estonia and opened unit focuses on preserving new routes: Operail now existing transit volumes and transports container trains growing them. A major challenge weighing more than 1,000 for the business unit in the coming tonnes from Tartu to the ports years will be to replace the freight of Muuga and Sillamäe. For transport information system and comparison, one truck can digitize the data. The new freight carry only 27 tonnes of goods transport information system will
24 25 EttevõtteStructure andstruktuur management ja of juhtiminethe company
Kontserni tegev- Operaili kontserni omanik on Emaettevõtte struktuur lähtub The management EestiThe owner Vabariik of Operail ning kontsern Group is kolmest(also 100%) põhitegevusalast, and its subsidiary Structure of the Operail Group juhtimise eest kuulubthe Republic Majandus- of Estonia ja Kommuni and the - igaühegain Finland tegelebOperail Leasingeraldi äriüksus: board is katsiooniministeeriumicompany is in the area of haldus administ- - kaubaveoFinland Oy äriüksus, (100% subsidiary). vagunite vastutab juhatus, responsible for alasse.ration of Kontserni the Ministry tegevjuhtimise of Economic äriüksus ja remonditööde äri- Supervisory board mille määrab eestAffairs vastutab and Communications. juhatus, mille The üksus.The structure Äriüksuseid of the toetavad parent the executive määrabmanagement ametisse board nõukogu. is respon - omakordacompany is tugiosakonnad: divided into three main ametisse nõukogu. sible for the executive manage- finants-areas of activity,, IT-, personali- and a separate ja turun - AS Operail management management of Ettevõttement of the juhatusse group. It iskuuluvad appointed dus-,business ohutus- unit deals ja kvaliteedi-, with each one: the group. It is juhatuseby the supervisory esimees Raulboard. Toomsalu tehnoloogia-,the Freight Transport arendus-, business õigus-, ja finantsdirektor Paul Priit Lukka. haldus-unit, Wagons ja müügiosakond. business unit and Audit committee appointed by the LisaksThe company’s emaettevõttele board includes AS Operail Repairs business unit. The busi- kuulubthe chairman kontserni of the ka manage Soome - ness units are supported by the supervisory board. raudteeveoettevõtement board, Raul Toomsalu, Operail and other departments: finance, IT, Finlandmember Oy of the (osalus management 100%) ning human resources and marketing, Administrative divisions vagunirendiettevõteboard, Paul Priit Lukka. Operail In addition safety and quality, technology, Leasingto the parent AS (osalus company 100%) AS Operail, ja selle development, legal, administ- tütarettevõtethe group also Soomes includes Operail the Finnish rative and sales department. Leasingrailway freight Finland transport Oy (osalus company Operail Leasing supervisory board 100%).Operail Finland Oy (100% subsi- diary) and the rolling stock rental Operail Leasing company Operail Leasing AS Operail Finland Operail Leasing Finland management management management Freight Wagon Repairs Transport business business Operail Finland business unit unit unit CEO
Operail Operail Leasing Operail Finland Oy Finland Oy Leasing AS
268 279 Management board Guiding principles
We also wish to Open structure and culture Operail’s Tapa depot has an ISO 9001 quality control standard. reduce vertical Within the company, we monitor In the last decade, the railway service quality and quality cont- management sector, which has historically rol by way of internal audits and levels to become tended to be closed and regu- analysis of customer complaints. lated, has been experiencing more flexible great change toward open- ness. Our goal at Operail has Corruption prevention and increase likewise been to operate in responsibility for an honest and law-abiding manner, while remaining trans- We have a high regard for ethical management parent, innovative and always in and responsible business activity decisions at search of more effective solu- and expect all of our employees, Chairman of the management board Member of the management board tions. We are making concer- customers and partners to Raul Toomsalu and CFO Paul Priit Lukka every level. ted efforts to change the ethos operate in the same way. We thus inside the company to make consider corruption prevention it open to new solutions and very important. Possible cases of Serving since 29 February 2016 Serving since 1 February 2013 support the objective of being corruption, abuse of position and customer centred and a good other incidents related to viola- Spheres of responsibility in the company: general mana- Spheres of responsibility: financial management of steward of the environment. This tions or unethical conduct always gement of the Freight, Wagons and Repairs units of the the company, general management of the financial, makes us strong and compe- mean a risk to reputation. Operail company, management of the supporting units (staff accounting, ICT and administration units; substituting titive as an organization. has zero tolerance for corruption. and marketing, sales, technology, safety and legal), as for the Chairman of the management board. Mana- well as public communication. gement of the projects for Finnish freight, logistics and We also wish to reduce vertical In 2019, Operail did not have a Previous experience: Raul Toomsalu previously wagon rental. Capital involvement. management levels to become single case of non-compliance worked as a technology adviser for a number of Previous experience: Paul Priit Lukka was previously more flexible and increase with law or regulation that would Russia-based manufacturers, and served as the direc- employed as the head of investments and asset responsibility for management have led to significant penalties tor of the Russian office in the international Olam management for Mandatum Life Insurance Baltic. decisions at every level. Coope- for the company (2018: 0). Group and the Trigon agricultural group in Russia From 2005 to 2007, he worked as an investment ration between different depart- and Ukraine. In 2004−2008, he was the director consultant at Danske Capital Finland /Amber Trust. ments and business units is of The main activities aimed at of SEB Leasing in Russia and later, as a member of crucial importance. The goal for corruption prevention and increa- the board of the Russia branch of the SEB Group, 2020 is to map the company’s sing transparency in 2019 were: was at the helm of the corporate banking unit. Supervisory board core processes to find problem Chairman of the supervisory board Kuldar Leis areas that need to be tightened ● drafting Operail’s action Members of the supervisory board Madis Ermo, up and commence digitization. plan for corruption prevention; Peeter Kadarik, Ahti Kuningas (until 01.11.2019) and Indrek Gailan (from 21.11.2019)*
* Operail advisory board as of 01.06.2020: 28 Indrek Gailan, Leon Jankelevitsh, Siret Liivamagi, 29 Tarmo Porgand, Kaido Saar ● setting up an anony- Purchases of more than 10,000 Open communication ● . posts on LinkedIn and mous tip line for reporting euros must receive manage- Facebook, to support Operail’s corruption suspicions; ment board approval and star- image as an employer ting from 2019, we organize One of the most important ● .switching to the Mercel such purchases in the Mercel values at Operail is openness. ● . sending out information purchasing environment procurement environment. That means our decisions are over in-house channels (the starting 1 February 2019; clear, our actions are goal- in-house quarterly newsletter All Operail employees who are oriented and consistent and we Igiliikur, intranet, other bulletins) ● creating a gift registry; able to influence the decisions are open as a company. We want made in regard to a customer our communication between inter- We want to be a respected opinion ● the decision to revive, star- or partner in a transaction and est groups and the public to be leader and spokesperson in our ting in 2020, the tradition of who have access to account- direct, honest and transparent. sector, part of the dialogue on organizing anti-corruption trai- ing data or relevant business future trends in railway transport ning for employees each year. information (a total of about 60 In 2019, we devoted significant and freight transport as a whole. positions) file an annual decla- attention to open communica- This requires us to be internally By the time of publication of ration of economic interests. tion with our employees, custo- prepared, which is why our goal the yearbook, we approved, in mers, partners and the media. for the next few years is to train March 2020, a comprehensive This presupposes the existence of spokespersons who commu- code for avoidance of conflicts channels for in-house and exter- nicate smoothly with the public. of interest, which is obligatory for Operail’s in-house publication Igiliikur is published once every quarter. The main conclusions drawn nal communication. Over the last all Operail employees to hedge in the corruption prevention few years, we have recruited new risks to the company’s opera- study conducted among heads of marketing and in-house ting activity and reputation. The Operail personnel following and external communication, deve- code is a framework document the reporting year loped a new website and maintained for ensuring honest behaviour. The code sets forth the ● participation in events (spring 2020): a regularly updated news stream on following, among other the website. We have also started things: ● declaration of perso- publishing an in-house newsletter. nal economic interests ● 87% of respondents say that the management style and The most important acti- ● Operail’s good reputa- To mitigate risks related to actions taken by management vities in 2019 for ensuring tion and confidentiality transactions, we have estab- at Operail express an attempt open communication: lished a purchasing procedure to reduce the risk of corruption ● avoidance of to ensure thrifty and expedient and fraud at the company ● . regular media coverage conflict of interest use of the company’s funds and (press releases, op-eds) of key equal treatment of all interested ● additional awareness-raising developments for the company ● giving and receiving parties and transparency and and training of employees on for more deeper insight into gifts and incentives traceability of procurements. this topic needs the most work important topics for Operail
30 31 Risk management
Our objective is Financial risks Operating risks to consistently Thanks to our international Our objective is to consistently provide the position, we are exposed to provide the international international certain financial risks, the main market with freight transport ones being currency risk, interest service and railway vehicle market with rate risk, credit risk, liquidity risk rental, repair and locomotive and capital risk. The group’s upgrades. The main risks that freight transport general risk management may affect the achievement service and programme focuses attention of our goals are, above all, on the unpredictability in the malfunctions and disruptions railway vehicle financial markets and attempts to information system, quality rental, repair to ease potential negative problems and damage to influences on the group’s rolling stock. To mitigate these and locomotive financial results. To hedge risks, risks, we consider it important it is important to continuously to constantly analyse our upgrades. analyse objectives, financial needs and use information indicators and potential risk systems that are up to date and mitigation instruments. appropriate to the purpose.
The group’s assets and Market risks liability are insured against unforeseeable incidents, curtailment of business activity Restrictions on or extraordinary and additional expenses, and interruptions of freight transport third-party claims against the in Estonia and other countries, group. We are also covered Operail is staffed by profes- In our everyday activity, we face The management board takes competition and changes in custo- against, e.g. environmental sionals who contribute to the various risks and managing them general responsibility for mer behaviour are the main market damage, losses from crime, success of the company. is part of the group’s operating shaping the framework for risk risks that may impact on our activi- losses stemming from liability of activity. Identification and management and oversight. ties and achievement of our goals. the management (management analysis of risks and a systematic The system is supported by the To hedge these risks, it is important board, supervisory board approach to risks are one of the supervisory board, the audit to diversify our field of activities, and managerial employees) most important components for committee and the internal auditor. offering a broader portfolio of and accidents, thefts and achieving the group’s services and minimize the risk of vandalism involving rolling strategic goals. income declining in individual fields. stock and motor vehicles.
32 33 raise awareness of employees and manner on their side. For hazardous employees so that we can minimize The most partners in cooperation, set a good materials, it is critical to handle employee turnover and increa- example through a transparent them in the required manner. se the efficacy of our workforce. important step is to attitude and instilling a culture of Mitigation of workplace safety reporting potential risks. Possible risks is aided by the creation of prevent crises that cases of corruption, abuse of posi- a safe work environment, raising Cyber security risks could pose a threat tion and other incidents related employees’ awareness and to violations or unethical conduct developing a culture of safety to to the environment may lead to a risk to reputation. ensure that rules are followed and Because Operail does not safety measures are adopted. administer a large amount of and human health. customer data, our main emphasis Environmental and safety risks lies on protecting employee Risks related to employees data and strategic business information. We must ensure Defect detection specialists are Accidents involving freight that our information systems can inspecting whether the wheelsets transport or the workplace, spills The main risk as regards employ- withstand outside attacks, that have been properly attended to and handling of hazardous waste ment and human resources mana- they are functional and online at and that the aggregates, nodes are the main environmental and gement concerns the challenges all times and that our employees and details have been maintained safety risks. The most important of ensuring sources of future work- cannot access sensitive personal in an orderly manner. Up to 5,760 step is to prevent crises that could force. This is related to the ageing data or classified documents. wheelsets are inspected each year. pose a threat to the environment personnel, the current percei- and human health (including ved lack of appeal of the sector as technical maintenance of rolling a career, and Operail’s relatively stock, awareness among related new name as a market player. We parties and the public) and to have to consider that professional ensure readiness for sufficient railway training is something that The overseer/repair specialist Ethics and corruption risks action if they do arise (accidents, must be provided at the company of wagons inspects a train. leaks of hazardous materials and in situ or we must explore options other incidents). The underpinning of tapping the international mar- Risk of fraud and corruption is, of readiness is the existence of a ket. We have to contribute to imp- above all, connected to fuel thefts, crisis plan, the capability for rapid roving our reputation as an emp- giving and receiving of gifts, conflict coordinated action with partners loyer so that positions are always of interest and dishonest behaviour and employees’ awareness of their filled by highly qualified employees on the part of customers. To mitiga- role. In transporting hazardous who are able to contribute to the te the risks, it is important to estab- substances, we must be aware company’s development. Second- lish clear rules, ensure transparency that the customer must also ly, we have to be a trustworthy and and correct procedure, prepare the goods in a correct motivating employer for our current
34 35 SERVICETEENUS
2 Raudteeohutus 3 Kliendisuhted 4 Küberturvalisus 5 Innovatsioon
36 37 Railway safety
The main hazards on the railway for ensuring safety and other railway accidents; are collisions with road vehicles, other trains or people, tech- ● procedure for evalua- ● to avoid or reduce health nical malfunctions, derailments, ting safety risks risks impacting employee obstacles blocking the railway; and health and safety. spills of hazardous goods. Accor- ● organizing of training ding to the risk analysis conducted by Operail, in no case is the likeli- ● action plan in case of hood of risks occurring and their accidents or incidents We are very consequences very high or high. pleased that 2019 In addition, safety-related We are very pleased that 2019 operations are governed by the did not see any did not see any collisions with Railways Act, which proceeds collisions with either vehicles or pedestrians from European Union regula- related to Operail’s activity tions. The conformity of safety either vehicles (2018: 10 collisions, five inju- management systems to the red, 0 other high-risk incidents). requirements is inspected by the or pedestrians There was only one accident Consumer Protection and Tech- related to involving rolling stock (2018: 0). nical Regulatory Authority (TTJA). Operail’s activity.
Risk management system Operail’s safety goals are
Railway safety is one of the key As a company engaged in railway of our customers and partners, areas of Operail. A derailed wagon freight transport, safety is our other road users’ behaviour Due to the requirements in a ● . to minimize incidents that may cause huge damage. number one priority. We make (drivers, pedestrians) and readi- Minister of Economic Affairs disrupt railway traffic and pose efforts each and every day to ness to respond in the case and Communications regula- a risk to people and property; ensure that our personnel and of an accident. This means tion, Operail has a valid railway goods are healthy and intact and that safety is the result of a undertaking’s safety management ● . to plan and implement that no environmental damage is combination of the actions of system, according to which we preventive measures based caused, and to increase railway different participants. Ensu- have laid down the following: on assessment of risks safety awareness in society. ring safety and developing and risk sources for avoi- various safety measures is ● safety policy and goals ding major accidents; Ensuring railway safety depends the responsibility of our safety and measures for achieving on maintenance of rolling stock and quality department. them (reviewed each year) ● to minimize railway acci- and infrastructure, our person- dents with consequences nel’s awareness, the conduct ● those responsible harmful to the environment
38 39 In case of 2. The Wagons business of locomotives and, if necessary, unit organizes technical locomotive repairs are performed accidents, we have service for train assemblies, regularly. Repair is performed on including decoupling repair. wagons on a rolling basis, plus the capability for depot repairs every three years and a fast response a major overhaul every 12 years. Example and can assemble In case of accidents, we When passing through Narva, have the capability for a fast and dispatch Kohtla, Vaivara, Tapa, Ülemiste, response and can assemble to the scene an Tartu, Koidula, Muuga and Maardu and dispatch to the scene an stations, technical inspection emergency team made up of emergency team takes place where the wagon our employees. The make-up of made up of our inspectors and repair personnel this team may vary depending check the wagons’ technical on the nature of the accident employees. condition and documents and if and it can include employees necessary conduct a brake test. from different business units. In the case of major technical malfunctions, the wagon is decoupled from the train and the Example repair is performed immediately. If the wagon has a technical problem Operail’s contribution to increasing that can be resolved on the station traffic safety on highways: In everyday practice, bols- Example siding, the repair is performed tering safety means working In the scenario of the major without decoupling the wagon. In August 2018, we launched closely with Operail’s safety Close to 63% of Operail’s exercise ‘Kopli raud’, a passen- multimodal freight transport to and quality department and goods are considered ger train and a freight train reduce freight transport on roads. cooperation between three hazardous consignments were involved in an accident. 3. The Repairs business unit One outcome has been improved business units as follows. subject to special requirements. ensures that rolling stock undergoes traffic safety. Every container we The safety advisor for railway depot repair and major repairs as bring over to rail from the roads 1. The Freight Transport transport makes sure that well as repair of individual parts. means two fewer trucks on the business unit ensures training all requirements related highways. In 2019, we transported of locomotive drivers (including to hazardous freight are over 4,000 containers and regular test drives, periodic followed, including the correct Example re-routed 8,000 truckloads of in-house training courses) and the means of transport (wagons), goods, which otherwise would existence of the permits and certi- technical maintenance, The unit administers depots in have increased traffic densities ficates necessary for transport. labelling and documentation. Muuga and Tapa. Modernization on Estonia’s primary highways.
40 41 requirements. Every position AS Eesti Raudtee, the Rescue has guidelines for action in the Board and other agencies case of a hazardous situation. ● . eliminating consequences: We expect our subcontractors, restoration of the pre-crisis customers and partners to abide situation, internal investiga- by the safety requirements they tion and improvements are briefed on. We see our task as educating customers and partners as well to ensure that Cooperation for raising they are aware of the dangers awareness of railway safety as well as of preventive and precautionary measures. We also demand that customers We are cognizant that the inci- implement a safety manage- dence of rail accidents can be ment system, including ensuring minimized only through raising railway safety on their terri- general traffic safety aware- tory such as sidings in ports. ness in society. We contribute to railway safety publicity Rescuing locomotive drivers during the exercise ‘Kopli raud’. campaigns in cooperation with Preparedness and action in MTÜ Operation Lifesaver Esto- Operail’s Tapa depot, boasting 135 Awareness among the case of accidents nia (OLE), other railway compa- different scenarios involving emergency services, Consumer years of experience, is one of the employees and partners nies and government authorities. freight and passenger train Protection and Technical oldest and most unique depots We have taken important steps accidents were played out. In Regulatory Authority, the with 1,520 mm gauge in the region. We must ensure that our Operail’s business continuity risk for spreading railway safety this year’s scenario, a passenger Tallinn City Government, the employees are competent, trained analysis and plan describe the messages and have provided train rear-ended a freight train. Environmental Board and the as required, and have undergone functioning of the emergency training to employees who volun- An extensive hazmat spill and Environmental Inspectorate. in-service trainings and briefings. system. Actions in an accident teer to be safety ambassadors injuries to a number of passengers Depending on their position, are distributed into three phases: who visit schools and preschools resulted. Due to the spill, nearby We will participate in such employees may need professio- to talk about railway safety. residents had to be evacuated. exercises in future as well to nal or qualification certificates ● . prevention: evaluating possi- ensure that Operail employees or licence for working on railway bilities for avoidance of risks and The exercise was organized in and other stakeholders are infrastructure. Locomotive drivers accidents, ensuring readiness Example collaboration between Operail, aware of what action to take all have valid locomotive driving AS Eesti Raudtee, AS Eesti in an accident and to increase licences and certificates. Direct ● . rescue operations: response September 2019 saw Estonia’s Liinirongid, the Police and general safety on the railways. supervisors are responsible for and participation in rescue largest railway exercise of the last Border Guard Board, Rescue inspecting compliance with safety operations in cooperation with eight years, ‘Kopli raud’, where Board, Alarm Centre, Tallinn
42 43 Customer relations
● oil terminals in Muuga, Pal- clean mode of transport; devote more attention to the fol- diski and Sillamäe, who are lowing in order to ensure customer Operail’s clients through their ● trustworthiness as a part- satisfaction in the coming years: own logistics companies; ner – we earn this reputa- tion by ensuring stability, qua- ● speed of response to price ● manufacturing or lity and long-term relations. queries and customer relations trading companies. Customer experience has a very ● pricing The main goods transported by important role in offering the Operail are fertilizers, fuels, che- service, and digitization of railway ● finding flexible solutions mical goods, and, in the case of freight transport undoubtedly to customers’ requests domestic transport, oil shale, tim- allows efficiency and speed of ber, metal products and other service to be increased. In addi- ● finding the most efficient ways categories of goods. Fertilizers tion, we see that we should of transporting consignments make up about 46% of our trans- port volumes, fuels 35%, che- micals 11% and other goods 8%. Operail’s logistics and locomotive logistics plan trains and locomotives daily. They receive about 200 phone calls a day.
Customers appreciate:
● price and stability – railway infrastructure usage fees have the most influence on this fac- tor in our case. The usage fees are adjusted and reviewed each year with AS Eesti Raudtee as Operail’s C30-M locomotive We offer our customers clean and Operail’s freight the infrastructure owner and the in front of the Muuga depot. safe logistics service at the best price transport clients are: Consumer Protection and Tech- to quality ratio. For customers, we nical Regulatory Authority; are part of Estonia’s integral trans- ● logistics companies port corridor when it comes to trans- (mainly forwarders) selling a ● quality of service – includes porting freight, with connections to comprehensive logistics pac- the responsiveness of customer ports and truck transport as well. kage to their clients as a ser- service, the speed and accuracy of Logistics service is the product of vice along with freight services transport, safety of goods and the cooperation between many parties. in ports and on the railway; railway as an environmentally
44 45 Cybersecurity
As a responsible As a responsible enterprise, we enterprise, we devote attention to potential risks related to cybersecurity devote attention and requirements for ensu- ring data protection. We have to potential performed a risk analysis for risks related to identifying bottlenecks. cybersecurity Besides business secrets and customer data, the main data and requirements in the possession of Operail for ensuring data that need to be protected pertain to personnel. We have protection. implemented all obligatory rules, and we monitor traffic within the company’s informa- tion systems, applying various safety measures (principles for creating secure passwords, double authentication of users, obligatory cyber hygiene trainings for all employees, IT-related user trainings).
Example Operail Operail Leasing Operail October 2019 was cyber Finland Oy Finland Oy Leasing AS responsibility month at Operail, as part of which we published articles and videos on in-house No cyber security or data Operail is part of the roundtable Operail team at the largest channels on topics related to protection related incidents with on cybersecurity that unites hackathon in Estonia organized cyber security. We also carried significant impact were estab- major logistics enterprises and by the JCI in cooperation with out a cyber-hygiene test where lished in 2019. We were able to where risks, experiences and Tehnopol Science Park. employees could check their intervene in the case of a couple new avenues are discussed. knowledge of cyber security. incidents before losses resulted.
2646 47 Innovation
To facilitate The railway sector is not in the ● introducing actions and The most important innova- world’s vanguard when it comes processes to the systems (auto- tion projects processed by innovation, we to digital solutions, automa- mating part of the work and Operail in 2019 tion and innovativeness. The directing people to do what the are taking part same is true for Estonia’s system cannot do), which would Replacing the Freight Trans- actively in various local railway sector. In recent lead to commercial benefits; port business unit’s information years, we have grown a great system with a more modern and conferences and deal and are open to deve- ● consolidating knowledge reliable one. In this project, we lopment, implementation and based on experiences and automate work segments that hackathons and adoption of new solutions. information (historical informa- were previously done on paper. working closely tion that can be used to make By making the processes auto- To facilitate innovation, we are business decisions in future). matic, we reach an understan- with universities taking part actively in various ding of why a given work segment and research conferences and hackathons In this way, we reduce the risk that is performed the way it is. The and working closely with univer- manual labour and knowledge information is thereafter avai- institutes. sities and research institutes. that are not saved will be lost when lable directly from the system; it Implementing changes often there is a generational change. moves faster and efficiency rises. requires cooperation with other companies in the railway sector Optimizing travel. The DAS – for this purpose we take part (Driver Assistant System) gives Raul Toomsalu and then Minister of Economic Affairs and Infrastructure in development projects and locomotive drivers information and Kadri Simson in the Tapa depot during the ceremony for putting innovation discussions that instructions on what gear position, the C30-M into service. unite companies in the field. speed and travel style to choose to make freight operations even more The priority of our develop- efficient, reduce fuel expenses and to draw more efficacious conclu- by a driver and assistant driver ment activity is to deal with plan to reach the destination on sions and make improvements. but the first single-person depar- automation of work processes time. The goal is to use fuel econo- ture took place in autumn 2019, and data digitization projects. mically and optimize expenses. Digitization of production at marking the start of a new era. The The purpose of digitization is to Tapa depot – in the first phase, locomotive driver is solely respon- collect all of the data circula- Establishing an incident mana- transitioning the locomotive sible for all of the necessary work ting in the company, categorize gement system. This is a solution construction and moderniza- procedures and safety. The goal of and save it in digital form so that that allows the smoothness of tion process to a digital environ- this new feature is to increase the the information stream would actions related to incident reso- ment (Dynamics 365). efficiency of the Estonian railway be verifiable and fact-based. lution and communication to be sector. For now, only a few loco- administered, allowing incidents Single-person locomotive motives have this readiness, but in The overarching goals for to be monitored and analysed and operation. In the past, freight train the future we plan to use single- larger projects are: statistics consolidated to be used locomotives were always manned person mode on all direct trains.
48 49 ENVIRONMENTALKESKKONNAMÕJU IMPACT
2 Energia- ja kütusetarbimine 3 Õhuheited ja kliimamuutus 4 Lekked ja reostused 5 Jäätmed 6 Müra ja vibratsioon
50 51 Transport and logistics are one Operail’s greatest environment Energy and fuel Fuel consumption of the areas of activity with the impact and risk aspects are: consumption greatest environmental impact. thousands of litres 2019 2018 At Operail, we believe that ● fuel consumption and it is important to make great emissions into ambient air; Our greatest direct environ- Freight Transport business unit’s 8 703 9 092 efforts to avoid environmen- mental impact comes from fuel fuel expenses tal harm. Similarly to compa- ● transport of hazardous burned in internal combustion of which fuel expense (diesel fuel) 8 669 9 060 nies all over the world in this freight and possible spills engines, needed for rail freight of which fuel costs for trucks 34 32 sector, we, too, are looking for from railway vehicles; operations. We have compo- (diesel and petrol together) ways to reduce the carbon sed a table of quantities of footprint of our activities. ● waste generated fuel consumed by vehicles in Wagons business unit’s in the process of main- 2019 (thousands of litres). truck fuel cost 18 18 tenance of locomotives. (diesel and petrol together) Freight Transport’s fuel cost Environmental conservation and in 2019 was 3.95 litres/km Repairs business unit’s looking for new and energy- (2018: 3.87) which includes truck fuel cost 14 17 efficient solutions is of key impor- total mileage of locomotives (diesel and petrol together) tance for us. It has a direct impact for freight traffic, manage- on the cost effectiveness of the ment operations, shunting Support Services truck fuel cost 11 13 company, and it also strengthens and reserve travel as well as (diesel and petrol together) competitiveness on the market. for travelling with a train. Total 8 746 9 140 In 2019, Operail did not have a In autumn 2019, we entered into single case of a non- an agreement with the Latvian conformity that led to a fine company DiGas, to develop the or precept (2018: 0). first LNG freight locomotive in our region. Converting the 2020, we plan to implement the American General Electric C36 same technology for all locomo- locomotive to dual-fuel (i.e. split- tives that carry out line transport. ting the fuel tank between diesel and LNG) will result in at least The LNG locomotive information 30% fuel savings. The modified systems save all information on LNG line locomotive will emit fuel consumption and by analy- 20% less greenhouse gas and sing the data it will be possible to 70% less sulphur dioxide than a increase savings even further. diesel. After the end of the pilot testing period planned for spring
52 53 ● we have started developing ● we are making our first Quantities of electricity consumed in 2019 digital solutions for locomotive steps for adopting the use of drivers that guides them to operate hydrogen technology in the MWh 2019 2018 their locomotives more smoothly Estonian railway sector and with greater fuel efficiency Freight Transport business unit 443 419 To reduce emissions in the Estonian ● we are looking for various logistics sector more broadly, Wagons business unit 531 586 possibilities to use alterna- we have launched multimodal tive fuels to power locomo- freight operations to reroute more Repairs business unit 2 097 2 551 tives (LNG, hydrogen) of freight transport from roads to rails. Railway transport is much Support Services 186 252 cleaner than road transport. The Atmospheric emissions and total carbon emissions forgone Total 3 257 3 808 climate change due to our services in 2019 was 51,262 tonnes (2018: 58,797).
Our primary emissions into ambi- We believe that hydrogen locomo- In the environmental management ent air consist of greenhouse tives are the future of logistics. system, we have set the goal of gases emitted from combustion They will allow us to trans- reducing energy consumption. In of fuel used for freight transport. form railway transport into a locations in our own ownership zero-emissions mode of trans- (Tartu loading lot and Tapa Direct greenhouse gas emissions in port. With use of hydrogen as a Bringing freight from road to rail helps reduce the ecological footprint of
depot), we can track and reduce 2019 (tonnes of CO2 equivalent): fuel, the only by-product given the transport sector. consumption, while in rental off is pure water – no harmful spaces, we depend on the lessor. We are actively engaged in finding substances are released into solutions oriented to reducing the ambient air when a hydro- To increase energy efficiency emissions. We have launched the gen locomotive is used, and in in recent times we have following projects to this end: other respects it has the same done the following: capabilities as a diesel engine. Direct greenhouse gas emissions in ● we are modernizing old tonnes of CO equivalent 2019 2018 ● in the procurement for new locomotives, equipping them Renewable natural resources such 2 modular containers meant for with more fuel-efficient engines. as solar and wind energy can be employees’ break areas, we In addition, we are building the used to produce hydrogen. The Freight Transport business unit 28 479 28 613 set a condition that environ- first LNG line locomotive, which hydrogen fuel production process 792 mentally friendly solutions saves 30% on fuel and gives does not give off carbon dioxide. Repairs business unit 737 must be used (e.g. local solar off 20% less carbon dioxide This will definitely have an impact Total 29 216 29 405 panels for the water boiler) and 70% less sulphur dioxide on the future of the railway sector.
54 55 Leaks and spills soak up any spills so that it does generated in the course of loco- not come into contact with the soil. motive maintenance. With regard to hazardous waste, we engage As we often transport hazardous As safety measures in our in cooperation with waste hand- goods and use various chemicals repair areas, we use oil wells ling partners with the necessary for repair and maintenance, and traps that catch any oily licences. We do not cease to be leaks and spills are one of our substances from oil before the an interested party once we hand greatest environmental risks. water reaches the sewerage over the waste; rather, we want system or deeper into the soil. to be sure that the waste is either In 2019, transport of hazardous removed or properly recycled. goods made up 63% of all freight Four leaks took place in freight We sell waste that has a posi- carried (i.e. about 8.3 million tonnes transport in 2019 (2018: 0). All tive value and is appropriate for of hazardous freight), a year earlier of these leaks were insignificant recycling (such as scrap metal) 66% (i.e. about 8.8 million tonnes (slight drips) and there was no so that it can be used again. of hazardous freight). In 2019, we risk of environmental contami- used slightly over 5,200 litres of nation. The wagon inspectors We sort the waste generated by chemicals at Tapa depot, and a took the necessary measures. the Tallinn headquarters in their year earlier, nearly 14,000 litres. everyday work and also plan to introduce sorting in other loca- The environmental risks in our loca- Waste tions as well. We are implementing tions are mainly related to our tech- We believe a new freight transport informa- nical inspection points and depots tion system to reduce documen- where locomotives and railcars The waste generated mainly that hydrogen tation circulating on paper. are repaired and maintained and arises in the course of rolling stock locomotives where there is a risk of leakage. repair and maintenance. In 2019, 8 October was a commu- We collect the waste generated a total of 137 tonnes of waste was are the future of nity clean-up day at Tapa in the course of locomotive main- generated in depots (2018: 182; logistics. depot, with close to 60 Operail tenance (oil residues, oily rags, 2017: 185), including 62 tonnes employees participating. A total Operail’s employees at the community clean-up day at grey water) and hand it over to a of hazardous waste (2018: 82; They will allow of almost 4 tonnes of mixed Tapa depot, where we also cleaned Estonian nature. certified waste handling partner. 2017: 70). Of all waste, we recycled waste, 5 tonnes of wood waste 33% through waste handlers. us to transform and branches and 6 tonnes of The noise caused by movement of Parking of locomotives during This proportion has seen strong railway transport scrap metal was collected. rolling stock and loading of goods are looking for ways of routing train the period between repairs is a growth year after year, as it was can be perceived as a nuisance traffic away from the city centres risk source as well because the oil 10% in 2018 and 2% in 2017. into a zero- Noise and vibration by the inhabitants in the vicinity. to pose less of a nuisance for resi- and lubricants used in locomotive emissions mode dents. Operail is ready for coope- operation may leak. To lower this We are careful and observe the Train traffic causes a certain Local governments through ration to move services that cause risk, we use absorbent mats that requirements when handling waste of transport. amount of noise and vibration. whose territory the railway passes noise and vibration to the suburbs.
56 57 TÖÖTAJAD JAEMPLOYEES TÖÖKESKKOND AND WORKING ENVIRONMENT
2 Personali ülevaade 3 Järelkasv 4 Koolitus ja areng 5 Tööohutus ja tervishoid 6 Tervislik eluviis 7 Tasustamine ja tunnustamine
58 59 Employees and working environment
Professional, experienced even now has a greater share Although the Estonian population Gender and age diversity and development-oriented of male employees. This also as a whole is ageing, Operail’s employees are Operail’s grea- stems from the distribution of business units are characterized test asset. Operail employs positions that have traditionally by an even greater proportion Freight Transport business unit Wagons business unit close to 700 people across been considered male or female of middle-aged and 50-plus Number of employees Number of employees Estonia, and most of them areas of activity. For example, in employees compared to the gene- 8% (42%) work in the greater Tallinn the Freight Transport business ral population. At the same time, we area, 22% in Tapa and 16% in unit, all of the nearly 200 see that the Operail workforce is 8% 7% Narva and vicinity. Twenty per locomotive drivers and assistant becoming more and more diverse cent of our personnel work drivers are male, yet the same in various business units. As an 11% in southern Estonia (Tartu, business unit employs 150 employer, we are open to this trend Valga, Koidula and nearby females who work in the field and see great potential in diversity. 45% 34% 50% stations). We are thus an of freight transport regulations 66% 89% important local employer even and documentation. In total, the The main focus of the human 47% 43% away from the capital city. employees of Operail amount resources department has been to 71% men and 29% women, and will continue to be on As to employee diversity, we while in leading positions, the are aware that we operate in division of men and women is ● promoting a values- Repairs business unit Administration a field that historically and 82% and 19%, respectively. based management and Number of employees Number of employees organizational culture ● promoting two-way in-house communication 14% 25% 27% ● activities necessary for ensu- 22% ring future growth of personnel 45% 55% 44% Key personnel indicators 78% Youth and future employees 42% 2019 2018 2017 48%
Average number of employees, 688 676 667 Operail and the railway sector in reduced to full-time equivalent general are characterized by the Men 34 years old and younger somewhat advanced average age Women 35-49 years old Number of new jobs added during the year 12 10 12 (48 years of age in Operail and Over 50 years old long seniority with the company Employees’ voluntary turnover rate 4,9% 5,8% 4,0% (average of 17 years at Operail).
60 61 the railway logistics business The railway is a Training and development Currently locomotive drivers’ will remain higher than average certification education, in- and indicate the strength field where, due service training and other cour- of the organization in retai- The railway is a field where, due to ses are held there. We offer these ning specialists in the field. to the specific the specific nature of the work, it trainings outside the company nature of the work, is not possible to work in specia- as well, including to our partners We realize that the historically lized positions without specialized in cooperation and customers. closed nature of the railway sector it is not possible to training or a professional quali- If we are unable to find people and the low attractiveness of the fication or certificate. Estonian with a suitable speciality or field are already now a significant work in specialized educational institutions do not experience in working on the risk when it comes to doing sustai- positions without teach all of the fields necessary railway, we offer a specialized nable business. For this reason, on the railway. That is why we training option ourselves. we have made it our goal to take specialized training ourselves actively contribute to conscious steps to strengthen our or a professional the development of current and In establishing training plans, image as an employer. future employees. Each month, we proceed from specialized We recently rebranded and we qualification or technical training days take and company-wide deve- have taken the next steps to intro- place in positions related to the lopment needs (the skills and duce ourselves to the general certificate. railway field where we deal more knowledge we need to be able public and youth – our potential in-depth with developing and to develop in the future). next generation of employees. maintaining specialized skills However, our attractiveness also and safety matters. Training and In 2020, we will focus on depends on the sector’s general retraining for specialized positions the following in addition development toward innovative- field at TalTech (2018: 4). There is are strongly intertwined with our to specialized needs: Operail’s people at the Looking at the future, this trend is ness. Digitization is making work actually greater demand for intern- everyday work and examinations company’s strategy days. changing with many employees processes more efficient, creating ships than we are able to satisfy. are also held. Since the people ● IT skills related to nearing retirement age, the inno- the possibility to work smarter who work on the railway (including intra-company digitization vative trends taking place in the together and creating a need for In recruiting personnel, we proceed station employees, locomotive logistics sector and the changes reappraising work processes and from our own values and the drivers, technical inspection point ● training of managers within the company (develop- roles of positions. We are expen- principle that we need a collective workers) must have professio- ments in structure, change in the ding efforts to introduce jobs with of professionals in our field who are nal certification, Operail also ● development of in-house leaders’ generation, digitization new tasks to reinforce our position experienced and able to take the takes part actively in the work trainings and in-house trainers and innovation), which increase on the logistics sector labour initiative in their field, be confident of professional committees. the attractiveness of the entire market with its specialized nature. about their decision-making and sector, including Operail as an follow through in executing their In 2017, we opened our training employer. Still, looking to the In 2019, Operail had six interns plans. We offer our employees centre on the basis of a permit future, we can expect that the from the Tallinn University of great decision-making freedom applied for from the Ministry average employee seniority in Applied Sciences and the logistics to act and develop the field. of Education and Research.
62 63 Occupational safety and ● we upgraded the smoke Healthy lifestyles We are also healthcare gas and ventilation system at Muuga locomotive depot to devoting attention significantly improve air quality We are also devoting attention Any activity on the railway to popularizing health promotion, to popularizing always involves higher risks. To ● we renovated the break supporting employees’ healthy health promotion, ensure a safe working environ- areas, wash rooms and lifestyles and being active and ment, we follow all of the manda- offices at Muuga depot exercising. We provide 100 euros supporting ted requirements. We deter- of compensation for employees’ employees’ mine the needs for improvement ● we replaced six shelters sports, rehabilitative care, physical through conducting working meant to be used as employee therapy, speech therapy or psycho- healthy lifestyles environment risk analysis and break rooms located between logical counselling every quar- eliciting suggestions. The most railway segments in order to ter. We have joined the SportID and being active important factor in comp- improve conditions there signi- web platform to make applying and exercising. liance with work safety require- ficantly and make the shelters for compensation for sports ments is the consistent train- usable year-round expenses as easy and conve- ing of employees and mana- (the project will continue in 2020) nient as possible for employees. gers and keeping topics in the focus. Advancement of safety ● we launched locomotive cab In lieu of the sports compen- culture is something we must repairs for improving work condi- sation, Operail employees can be engaged with consistently. tions for locomotive drivers also opt to use the Viveo Health (we replaced windows, installed solution. Similarly to compen- On-the-job accidents have air conditioners and microwave sating sports expenses, we pay been declining for the last three ovens), we renovated 20 of the 85 100 euros per quarter directly for ● in the 2019 series of events in years. In 2019, three on-the- locomotives owned by us in 2019 each employee on the basis of the Estonia’s most Sports- job accidents were registe- (the project is continuing in 2020) an invoice from Viveo Health. Minded Government Institu- red in Operail (2018: seven), of New module container at the Tapa station. tion, Operail teams competed in which one was severe. All work- As to the organization of work, We incentivize and support partici- volleyball, basketball and indoor place accidents resulted in at we reviewed locomotive drivers’ pation in team sports competitions: football tournaments (Operail least one day of absence from We dedicated 2019 to the work and break time. We wish came in fourth out of 15 institutions) work. No accidents resulting in following: to change the transport sche- ● as part of the workplace fatalities occurred (2018: 0). dule and service shift so that the sport month organized by the The number of days absent from drivers do not have to spend the Estonian Corporate Sports work due to illness per employee in Improvement of working condi- ● improving work areas night at the point of return but Association, Operail employees 2019 was an average of 10.8 days tions is important for us at Operail and non-work conditions could come home every night squared off with 20 compa- (2018: 9.4; 2017: 11.0), i.e. sick days and we must continue to focus and launching a uniform nies and finished fifth made up 4.3% of all planned work on this in the future as well. replacement project days (2018: 3.7%; 2017: 4.3%)
64 65 ● ‘idea days’ held once a year where the employees can raise some questions that need to be resolved, propose solutions, form a team and then execute the solution
● . strategy days for managers held once a year (about 40 managers take part)
● . an appreciation gala for all employees along with the distribution of traditional awards and recognition and thanks for the best employees
● . a summer event that promo- tes teamwork and a sense of unity for all employees (related to open- air activities and healthy lifestyles)
Management board members (the CEO and head of human Our team achieved a strong 4th Getting employees involved intranet for circulating internal resources department) visit all A total of 54% of our employees Our Chairman of the board place in a competition series for information, and the bilingual Operail locations in Estonia at are union members: either the Raul Toomsalu together with the Estonian State Authorities. quarterly in-house newsletter least once a year to meet face to locomotive drivers’ union or the locomotive drivers Juri Murzi- We have a high regard for open Igiliikur and information bulle- face with employees and give an Estonian railway workers’ union. nov and Vladimir Žarik. communication and the opinion tins (if necessary in hard copy). overview of how the company is Relations with employees, of every Operail employee is Local managers based all over faring and familiarize themselves including wage and work condi- important. In the last few years, Estonia also have key informa- with the positives and negatives in tions, are also governed by we have laid much emphasis tion in distributing information each area. The heads of business a collective agreement with on promoting internal commu- and involving employees. units make visits to the various both unions, covering all of our nication, creating different locations much more frequently. nearly 700 employees. There channels and possibilities for In 2019, with the purpose of We encourage employees to were no discrimination incidents our employees to express their involving employees, we intro- express their opinion and have a registered in 2019 involving opinion. We primarily use the duced some new initiatives: say in the company’s activities. Operail personnel (2018: 1).
66 67 with the trade unions. In the case compensate the costs of glas- In addition, managers can recog- of individual salaries, we divide the ses for employees who work at nize their employees on a day-to- positions into work ‘families’ and display equipment and sports day basis by giving them a gift as a compare wage statistics with the expenses for all employees token of gratitude and announcing situation on the labour market. it to others over the intranet. In recognizing employees, we have For providing additional moti- retained the traditional awarding vation for employees, we have of badges to employees who have created a system of support, worked on the railway for 10, 20, 30 rewards and additional holiday: or more years. At an appreciation gala held once a year, we recognize ● we pay monetary support for Operail’s colleague of the year, the various events in the employees’ best employees, active volunteers personal lives: round-number and safety ambassadors and select birthdays starting from 50th the best project in the smart solu- birthdays, retirement, a son tions category. Depending on the or daughter entering the first year’s achievements and objec- grade, Christmas, funeral for an tives, the list of categories recog- employee or their loved one nized may be longer.
● we give monetary rewards for all employees when the company and business units achieve good business results, When celebrating 50 years of Remuneration and for paying bonuses for good and also every five years that work at Operail, the employees recognition economic results as well as on the they have worked for Operail receive a golden badge. In the occasion of work anniversaries. picture: Valentina Antonova ● . we give paid additional holi- Operail Leasing Operail with board members Raul Operail uses both pay grades and In 2019, the average salary at our day based on their seniority (star- Finland Oy Leasing AS Toomsalu and Paul Lukkaga. individual remuneration, conside- company was 1,425 euros (2018: ting with three full years working ring work positions. Remuneration 1,317 euros; 2017: 1,168 euros). Due for Operail) and in the event of is based on position and does not to the difference in positions, the marriage, a family member’s depend on gender, ethnicity or male employees’ average salary funeral and birth of a child other employee background (other is 26% higher than that of the than the employee’s competence women. We review salary levels ● we maintain employees’ sala- in the field). In 2019, we deve- once a year and negotiations on ries when they are taking part in loped a company-wide system the pay grades also take place donor days, and
2668 69 TÄIENDAV PANUSGIVING ÜHISKONDAEVEN MORE TO SOCIETY
2 Panus valdkonna arengusse 3 Toetustegevus
70 71 Contribution to the development of the sector
Membership ● . Estonian Human Resources With the help of Management Association PARE Estonian railway Our goal is to be an advocate in companies, the Estonian logistics sector for Promoting railway safety everything having to do with freight the main transport. We look for the most advocate for sustainable transport solutions With the help of Estonian and try to educate our partners in railway companies, the main railway safety cooperation in regard to not just advocate for railway safety price and speed of service but is MTÜ Operation Lifesaver is MTÜ also the importance of taking into Estonia (OLE), which regularly Operation account environmental impacts. runs publicity and awareness building campaigns to increase Lifesaver In cooperation with other safety on and near the rails. Estonia. companies, we develop the sector and the Estonian Besides the fact that we have economy by being a member of been members of OLE since the following organizations: its founding, we have also set an important goal of partici- ● Operation pating systematically and Lifesaver Estonia (OLE) to a greater extent than ever before in raising awareness ● Federation of Estonian of railway safety in society. Engineering Industry
● Logistics and Tran- Operail’s contribution to sit Association increasing railway safety in 2019 Employees’ children Operail’s activities have a social We make a direct contribution to ● .Estonian Chamber of celebrating a railway safety impact that is broader than the development of both our field Commerce and Industry event in Valga station. merely offering service to custo- and local communities through ● We contributed to the following mers. We help enterprise and actively participating in selected ● .Estonian Logistics and OLE publicity campaigns foreign trade to develop, are an networks, initiatives or projects. Freight Forwarding Association important employer in regions ● “Dismount your bike and and contribute to the develop- ● . Coordinating Council on let the train pass”, focusing ment of the logistics sector. Trans-Siberan Transportation on crossing tracks by bicycle
72 73 ● “Be smart and let the train schoolchildren and of crossing the railway and Cooperation with pass”, aimed at reminding kindergarteners (2018: 8). During dispensing recommendations educational institutions people that they should the year, we conveyed messaging for safer crossing. not be doing anything that on safety to 839 children (2018: poses a distraction while 82). That is more than 10 times All of the participants in the Estonia has a critical shortage of crossing the railway and more than the previous year. training courses gained the people who have studied the neces- make sure that no train is right to independently give sary specific fields necessary to approaching the crossing In 2019, a major focus was laid presentations on railway safety work on the railway. The main reason on raising awareness, and we and organize activities in the field is the relative unpopularity of the ● Christmas campaign have been continuing this in in their own geographic area. logistics sector, which is conside- “Let the train pass – your 2020 as well. Operail’s goal is red old-fashioned, and the lack of family wants you home to spread awareness of railway In 2020, it is planned to the necessary specialties taught in for Christmas” to remind safety above all among child- continue training a new crop the Estonian education system. people that they should ren attending schools and of safety ambassadors. always make sure the kindergartens near railways and To ease the situation and ensure crossing is safe when broadly throughout society. a future pool of employees, we approaching the railway are doing our part to promote and popularize education in the field. ● Together with other railway Example We are engaged in cooperation Operail recruiting interns at the students' career event Key to the Future. companies, we have organized a with a logistics seminar orga- publicity campaign focusing on In October 2019, in cooperation nized for students at the Tallinn near misses to draw attention to with MTÜ Operation Lifesaver University of Applied Sciences and the fact that the number of such Estonia (OLE), we trained TalTech students’ career event We are exerting effort to make “almost-accidents” is increasing eight new volunteer safety Key to the Future (Võti Tulevikku). Operail a serious choice among ambassadors among our youths looking for an ● We started holding lectures employees who acquired basic We believe that it is important to internship or a place to work. on railway safety in preschools knowledge of the principles deal with popularizing the railway and schools located in regions of railway safety and public sector simultaneously with promo- 8 October was a community where Operail is a key employer: speaking. The training course ting Operail itself as an employer. clean-up day at Tapa depot, in areas in the immediate proxi- was targeted at employees We have agreements in place with close to 60 Operail mity to Tallinn, Tapa, Maardu, who have a sense of mission for giving lectures and providing employees participating. A total Narva, Tartu, Valga as well as and work in different Operail internships, supervising final of almost 4 tonnes of mixed Koidula border checkpoint locations and who want to theses at the Rakvere Vocatio- waste, 5 tonnes of wood waste volunteer to contribute to nal School, TalTech and Tallinn and branches and 6 tonnes of In 2019, 21 of our employees raising people’s awareness University of Applied Sciences. scrap metal was collected. served as volunteers in adminis- of railway safety, including In 2019, we offered an intern- tering railway safety courses to raising awareness of the risks ship to six students (2018: 4).
74 75 MANAGEMENTTEGEVUSARUANNE REPORT
2 2019 tegevusaruanne 2 2019 tegevuste ja tulemuste lühikokkuvõte
76 77 Management report for 2019 Executive summary of activities and results for 2019
Consolidated Income Statement in thousands of euros Note 2019 2018 Freight transportOperaili veomaht (mln t) ja osakaal OPERATING REVENUE
Revenue from client contracts 11 71 457 71 342 16 100% Other operating revenue 11 3 950 1 379 Market overview 14 80% 12 Total operating revenues 75 407 72 721 We have longstanding experience 10 60% OPERATING EXPENSES in transporting various groups of 8 goods. Each day, we transport 6 40% Goods, raw materials and services 12 37 831 38 514 transit, import and export domestic 4 chemical goods, fertilizers, 20% Other operating expenses 12 4 413 4 350 petroleum products, oil shale, 2 timber, grain, heavy and oversized 0 0% Labour costs 13 15 844 14 172 loads, solid bulk materials, palm oil, 2015 2016 2017 2018 2019 unrefined sugar and more. In 2019, we transported 100% of the goods Operail Transported on Depreciation and impairment of non-current assets 3 6 402 6 085 freight volumes EVR infrastructure on the AS Eesti Raudtee- Other operating expenses 286 96 administered infrastructure and 71% of it consisted of transit goods Total operating expenses 64 776 63 217 transported through Estonia. and Kazakhstan, each with a corridor. In recent years, the OPERATING PROFIT (- LOSS) 10 631 9 504 The greatest volumes of goods 7% market share. Rail transport development of Russia’s ports transported by rail in 2019 were is the most heavily used mode has had a significant influence Financial income and expenses 14 -628 -280 to and from Russia – a total of of transport in Russia (85%), on Estonia and its neighbouring 8.1 million tonnes, which made Ukraine (79% and Kazakhstan countries. Russia’s eastern Gulf PROFIT (LOSS) BEFORE INCOME TAX 10 003 9 224 up 61% of total freight trans- (64%). Since 2009, railway of Finland port of Ust-Luga ported. Russia is the unrivalled freight transport has seen strong handles Russia’s transit streams, Income tax on dividends 375 0 railway transport market leader growth, averaging 3.3% annually. largely superseding the Baltic among the CIS countries and Sea ports used in the past. The NET PROFIT (LOSS) FOR THE FINANCIAL YEAR 9 628 9 224 accounts for close to 83% of Latvia, Lithuania and Finland completion of Ust-Luga has also railway freight transported in are the primary rivals to the resulted in decreased transport TOTAL CONSOLIDATED PROFIT/LOSS FOR THE FINANCIAL YEAR 9 628 9 224 the CIS. It is followed by Ukraine Estonian railway transit volumes on Estonian railways.
78 79 Distribution of Operail transported goods 2018/2019 Goods transported through Finland are mainly shipped 6% 2% by sea transport. The ports of Wagon rental market southern and western Finland 11% 2% 46% Fertilizers make up an important transit 6% corridor for Finland together with 8% 40% Coal the road and rail network, which Mineral fuels connect the country to Russia, Finland's largest trading partner. Chemicals 31% In the case of Lithuania’s Other goods 27% transit corridor, the Kaliningrad 13% Bulk cargoes direction oriented to Russian transit can be distinguished from the Belarus direction. The 8% port of Klaipeda is Lithuania’s main gateway to the sea, located at the intersection of an international transport corridor Classification of the freight transported on the railway. and connecting sea, road and rail transport. As the Lithuanian railway transit corridor mainly services goods from Belarus or Russia en route to Kaliningrad, thanks to state subsidies for 2019 results Lithuania’s railway transit use of railway infrastructure. corridor cannot be compared to other countries in the region. Considering the geographic Our freight volumes in 2019 locations of the countries, were 13.2 million tonnes (2018: Shipping connections from Estonia’s biggest competitors −1%). This made up 100% of the New woodchip wagons We entered the wagon similar level as the year before. Germany, the Netherlands or in rail transit are Latvia, total volumes transported on AS in Tartu station. rental market in 2016 when Belgium directly to ports in Finland and Russia. Estonia’s Eesti Raudtee infrastructure. there was a significant shift At the end of the financial year, Kaliningrad and Russia proper neighbours have the advantage in demand and supply. 1,178 Operail-owned wagons can be considered an alternative of much lower railway Similarly to years past, the fertilizers were leased out (2018: +1%), as to the Baltic Sea transit corridor. infrastructure usage expenses. group accounted for the greatest Long-term goal of the business were 956 AS Operail Leasing volume – 6.1 million tonnes (2018: unit: be the preferred partner in owned wagons (2018: +8%) Similarly to Estonia, Latvian Long-term goal for the busi- +13%). Fertilizers are mainly expor- the field of rolling stock rental and 70 Operail Leasing Finland freight transport companies ness unit: be the preferred ted to Russia, and are handled both on the CEE and CIS market Oy-owned wagons (2018: also pay much higher fees than logistics partner for north- as liquid and solid bulk goods via +100%), a total of 2,204 wagons passenger transport companies south and east-west transport the ports of Sillamäe and Muuga. were leased out (2018: +8%). and thereby support passenger The next most important cate- 2019 results travel. In Finland, the rates of the gory was mineral fuels – 3.5 million In 2019, the number of wagons usage fees are more similar for tonnes (2018: −14%). The third in Operail’s joint fleet decreased, passenger and freight companies largest volume was chemicals – A stabilization of demand took and as a result, income dropped and several times lower than we transported nearly one-third place on the rolling stock rental by 16% to 1.998 million euros. in Estonia or Latvia. The use of more than we did in 2018 – 1.4 market in 2019, and rolling stock In addition, the group’s wagons lower rates is possible in Finland million tonnes (2018: +30%). rental prices remained at a service local transport.
80 81 Repair and modernization Economic performance
Slightly over a thousand compa- Income and expenses nies have been certified by the Business income and expenditure 1520 Railway Council – they The group’s operating income for provide repair service or produce 2019 amounted to 75.4 million rolling stock and spare parts euros (2018: +3%). Freight trans- 80 000 for 1,520 mm gauge railways. port income dropped by 6% 70 000 75 407 Estonian freight wagon owners to 44.4 million euros. Income 72 721 possess about 12,000 wagons, of connected to wagons increased 60 000 63 217 64 776 which 2,000 circulate in Estonia and amounted to 14.9 million 50 000 and the rest operate primarily in euros, increasing by 3.3 million Kazakhstan, Ukraine and Russia. euros compared to 2018 (2018: 40 000 +29%). Among other things, 30 000 Our Tapa depot-based unit that income from wagon rental rose 20 000 provided repair service was no Prime Minister Jüri Ratas examining the first new to 12.9 million euros (2018: longer profitable; it depended completed and modernized C30-M locomotive Adam. +40%) and usage fees for use 10 000 heavily on the market situation in of the rental fleet fell to 2 million 0 neighbouring countries. Unfor- euros (2018: −16%). Other opera- 2018 2019 tunately, we cannot compete ting income grew to 3.9 million Business income Business expenditure in wagon repair services with motives rebuilt in Tapa meet all 2019 results euros (2018: +186%), of which depots where workforce, mate- requirements and are certified for the bulk came from the sale of rials and parts are cheaper. This use in the EU. A six-axle locomo- In 2019, we performed scheduled non-current assets (deprecia- is why, in the first half of 2019, tive weighs 138 tonnes, the axle repairs on 188 freight cars at Tapa ted wagons) and inventories we discontinued scheduled load is thus 23 tonnes. The loco- depot, of which 141 were our own (scrap metal and wheel chains). repair services for wagons and motives have AC/DC electrical and 47 belonged to other compa- fees for some segments of freight The group had 678 employees directed the resources freed transmission. The locomotive has nies. Due to economic considera- The group’s operating expen- transport (ntkm 2018: −10%). A as of the end of 2019 (2018: up to locomotive rebuilding a Caterpillar 3512C HD diesel tions, we discontinued scheduled ses grew to 64.8 million euros total of 20.5 million euros in usage 692). The decrease in the – in other words, production – engines rated at 1550 kW (2079 repair services for wagons in 2019 (2018: +2%). The increase in fees was paid. Fuel expenses were number of employees was due which has high value added. hp) and has a top speed of 100 and directed the resources freed operating expenses was due to 8.9 million euros (2018: −5%) The to restructuring of the Repairs km/h. The speed limit for freight up to our locomotive moderniza- the increase in usage fees for drop in fuel expenses was likewise business unit. The average Our locomotive fleet has over 80 trains in Estonia is 80 km/h. tion and rebuilding project. In 2019, wagons in the rental fleet, work- due to a lower freight transport gross salary of employees rose locomotives, the majority of which we performed 618 sche- force expenses and the cost volume. Depreciation rose to 6.4 in 2019, reaching 1,425 euros were made in the 1980s. Major Long-range goal of the business duled locomotive repairs and 431 price expenses of goods sold. million euros (2018: +5%) due to a month (2018: 1,317 euros). overhauls of ageing locomotives unit: become and innovative unscheduled locomotive repairs. an increase in non-current assets. are not economically expedient; railway vehicle development In addition, that year, we comple- Expenditure on infrastructure instead we have started rebuilding company ted modernization of two locomo- usage fees fell by 14% due to the Workforce expenses during old C30-type General Electric tives and started modernization lower freight transport volumes the financial year amounted to locomotives. The C30-M loco- of three more locomotives. and the lower infrastructure usage 15.8 million euros (2018: +12%).
82 83 Outlook for 2020
Profitability and debt burden increased ratio of euros and, where possible, receipts net debt to EBITDA and net debt and disbursements of foreign to equity capital. The group’s net currency are kept in balance. In The group’s EBITDA was 17 million debt as of the end of 2019 was other cases, derivatives are used. euros (2018: +8%). The group’s 72.8 million euros (2018: 24.3 operating expenses grew to 10.6 million euros) and the ratio of net million euros (2018: +12%). debt to EBITDA was 4.3 (2018: Dividends 1.6). The change in the ratio of net The group’s interest expenses debt to equity capital during the increased by 75% due to a rise reporting period was 47% to 121%. The group paid 1.5 million euros in in the loan volume and totalled dividends in the 2019 financial year 940 thousand euros. Income tax The group is impacted above all (2018: 0 euros). The payment of expenses were 375 thousand by changes in the exchange rates dividends is decided by the group’s euros (2018: 0 euros) and 1.5 of the Swiss franc, US dollar and general meeting as represen- million euros in dividends were paid Russian rouble. To hedge currency ted by the Minister of Economic in 2019. The group’s net profit for risks, most contracts are signed in Affairs and Communications. the financial year was 9.6 million euros (2018: 9.2 million euros). EBITDA and profits Investments Freight transport Wagon rental market Repairs
18 000 In 2019, the Operail group inves- ted a total of 60.7 million euros 16 000 17 033 We forecast a freight transport Supply has increased on the We do not plan to continue foresight (2018: 27.8 euros). The main 14 000 15 720 volume of 11.1 million euros for wagon rental market and market wagon repair services in 2020; investments were the acquisition 12 000 2020 (-16% compared to 2019). prices have stabilized. Compared rather, we will focus on modernizing of wagons (31.3 million euros), 10 000 to previous years, we plan to locomotives and plan to increase prepayments made for Finnish The main reason for the fall in reduce investments into the the number of decoupling repairs 8 000 9 628 locomotives (21.6 million euros), 9 224 the freight transport volume wagon fleet. With regard to wagon and major repairs, which will extend modernization of C30-M loco- 6 000 is a substantial decrease in oil rental income, we forecast growth the lifespan of the existing locomo- motives (6.4 million euros) and 4 000 shale transport and Belarusian for 2020, but wagons will make tives. We forecast that in 2020, overhauls of rolling stock (1.3 2 000 oil products volumes. However, fewer sorties from the joint fleet we will complete five moderniza- million euros). The group’s liquid we are forecasting an increase and income will be lower in 2020 tions and four decoupling repairs 0 assets as at the balance sheet 2018 2019 in the goods sector of fertilisers than it was in the previous year. and the number of scheduled date amounted to 4.6 million and an increase in the volumes maintenance and unscheduled euros. The growth of investments EBITDA Profits of our multimodal freight. repairs will remain the same.
84 85 Authors of the photos used:
Agne Kaur Andres Raudjalg Artur Ivlejev Arvo Meeks Firmasport Juta Kubarsepp Priit Raamat Raul Mee Sakari Salo TalTech
Operail Operail Leasing Operail Finland Oy Finland Oy Leasing AS
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