The newsletter of VTG Rail UK Ltd ISSUE 28 • WINTER 2016 • 28 ISSUE Award winning VTG ends year on a high

Lee Griffiths (left) NNR Glogal Logistics and Milton Jones present the Environment Award to VTG’s Rob Brook, at the Global Freight Awards.

VTG Rail UK enjoyed an award winning end November’s Global Freight Awards jointly followed a win at October’s Rail Freight to 2016. with Hope Cement for the introduction of a Group (RFG) Annual Awards, where the The UK’s leading rail freight wagon leasing fleet of new, aluminium cement wagons. Birmingham-based company was named company won the Environment category at The success at the Global Freight Awards Support Service Provider of the Year. This was for the co-location of VTG personnel in key customers’ premises to improve service and performance levels by The challenges of collaborative working. Fleet controller Martyn Catlin is with GB Railfreight in Peterborough while Kevin York “Managing a business through the eco- In this latest edition of Online you’ll read is co-located with Mendip Rail in Merehead, nomic and political uncertainty the country about some of the innovative things we’ve . has been experiencing over the past 6–10 been up to in the second half of the year and The VTG/Hope wagon project was awarded months is a real challenge. some of the things to come in 2017. the runner up trophy by the RFG in its Envi- Talk of recession and even the collapse of We look at the impact of Brexit on business ronmental Innovation category. the EU itself followed immediately after the confidence, plus the successful on time The introduction of the innovative cement result of the UK’s referendum in the summer delivery of new hoppers and boxes to wagons by VTG and Hope was also highly and although talk of this nature has died Mendip Rail and Ecofrets to GB Railfreight. commended in the Freight and Logistics down (as I write) still the full impact of the We also take a look at how VTG UK’s sales Achievement of the year category at the country’s withdrawal from the European and marketing team works. National Rail Awards in September. The Union remains to be seen. Finally, as another year end approaches I judges said the project supported “The However, the challenges we face are wish you all a very happy Christmas and a lifeblood of UK construction and the key to mitigated by working alongside our prosperous New Year.” economic development”. customers to develop and provide innovative Rob Brook Comedian and Global Freight Awards MC new solutions and efficient wagons and MD VTG Rail UK Milton Jones presented the Environment services. category trophy to VTG UK Rail MD Rob Brook. www.vtg.com/uk VTG Rail UK Ltd Sir Stanley Clarke House, 7 Ridgeway, Quinton Business Park, Birmingham, B32 1AF Tel: 0121 421 9180, Fax: 0121 421 9192 OnLine issue 28 | winter 2016 News from the Group

2015 to EUR 0.71 in this period. Successful Hamburg, is mainly present in Europe, refinancing in 2015 and the realization of North America, Russia and Asia. synergies following the acquisition of AAE are two of several reasons for this positive New major shareholder in VTG development. VTG Aktiengesellschaft has gained a “The results for the first half of this year new major shareholder. Morgan Stanley show that we are well on the way to further Infrastructure has said that it will hold 29 increasing our profitability. We can be percent of the company’s share capital and Dr. Heiko Fischer pleased with an above-average increase in will therefor become the company’s largest Group net profit and EPS in the first half- shareholder. Andreas Goer, founder of AAE year,” says Dr. Heiko Fischer, CEO of VTG (Ahaus-Alstätter Eisenbahn) which was Net profit increases Aktiengesellschaft. acquired by VTG AG in 2015, sold all of his VTG increased its profitability in the first He added “The results confirm that we are shares at a price of 29 Euro per share. half of 2016, although revenue was slightly pursuing the right strategy, even though below the previous year. more positive developments in revenue and DB Cargo and VTG win research project Group revenue of EUR 493.3 million (first EBITDA were hampered by external factors DB Cargo and VTG have won a contract put half of 2015: EUR 512.3 million) and EBITDA such as the low price of oil and the reduc- out to tender by the German Federal Ministry of EUR 165.8 million (first half of 2015: EUR tion in truck tolls in Germany. We thus had of Transport and Digital Infrastructure (BMVI) 168 million) were both down by a small to slightly reduce our expectations regarding for the “Innovative Freight Cars” research amount year on year. the revenue trend in 2016.” project. The project has a budget of around The Group’s net profit improved sharply, In the financial year 2015, VTG generated EUR 17 million and will run until the end of increasing by around 50 percent to EUR 26.7 revenue of EUR 1,027.5 million and an 2018. Its aim is to develop quiet, energy- million (first half of 2015: EUR 18.1 million). operating profit (EBITDA) of EUR 336.5 efficient freight cars with lower operating Earnings per share (EPS) climbed even more million. Via its subsidiaries and affiliates costs. steeply from EUR 0.42 in the first half of the company, which has its head office in

short term, but for the life of the wagons”. The order and arrival of these wagons VTG delivers the goods reflects the optimism still running through the rail construction sector. New wagons for Mendip Rail, GBRf and DB Cargo arrive in UK. Billions of pounds worth of infrastructure projects have been given the green light in recent years and there are many others in the pipeline. Schemes such as Crossrail 1 and 2, HS2, Hinkley power station, the Cross Country and GWR upgrades all need rail wagons to bring equipment and materials in and out of sites. GBRf also took delivery of its 15 triple Ecofret wagons to help it to cope with the VTG has delivered to Mendip Rail Limited construction sector. At the time of going to demand for its intermodal services – services the 130 aggregate wagons ordered by the press, the first batch of a new fleet of 85 box that were boosted by the award to the company in 2015, and to GBRf new fleets wagons were being delivered to DB Cargo in freight operator of its eighth rail path out of of Ecofret container flats and box wagons. order to bolster its wagon fleet resources. the Port of Felixstowe. The Mendip wagon fleet, a mixture of With their improved speed of operation, It’s been a tough period since the EU Refer- hoppers and boxes, were built by Astra track friendly bogies and high payload endum with political uncertainty affecting all Rail Industries in Romania. They came capability the new wagons would be an of the freight markets. across Europe and into the UK through the efficient addition to any construction fleet. However, even though there was a down- in late summer 2016 and However, VTG’s experience and expertise turn the latest indicators suggest the econo- went into traffic straight away. The wagons in the freight wagon field means that its my is once again picking up momentum and will be used primarily to move stone from new wagons are built to a unique enhanced the message that rail freight is versatile and the Aggregate Industries and Hanson specification featuring high strength side efficient is being drummed home. “super-quarries” in Somerset to a range of walls, floors and cant rails meaning they The advantages rail brings in terms of both destinations, many in and the South will be more resilient to damage than its economics and the environment are huge. East. competitor’s offerings. According to Ian Bulk train loads of freight contribute enor- We placed an order for another 125 state Shaw, VTG’s Sales & Marketing Director, mously to rail’s environmental benefits. They of the art box wagons during the year, the “it’s details like this that mean we can can convey between 1,000 and 4,000 tonnes first 40 of which were delivered to GBRf in offer our customers market leading levels of material, with each train removing up to Autumn 2016 to boost its capability in the of availability and reliability, not just in the 75 HGVs off our crowded roads. 2 OnLine issue 28 | winter 2016 WASP – taking the sting out of wagon shortfall

look at the reasons why, agree what action is required and who is responsible so that ownership is taken. We look at issues that impact on availability such as material procurement and maintenance contractor performance. We also look at trends to assist with proactive forward planning.” Maria’s Service Delivery team plays an integral part in the process. It includes four fleet controllers, two of which are based in Birmingham and two “co-located” within the offices of VTG’s two biggest customers. One with GB Railfreight in Peterborough and the other with Mendip Rail in Merehead, Somerset. This relationship enables us to have a closer working relationship with the customer and improve our level of service delivery. Maria says reaction to VTG’s approach has been very positive. “Our customers are pleased that we are responding to their needs in such a proactive way. Our suppliers Thanks to our close relationship with GBRf, which includes having one of our fleet controllers co-located in their too are recognising the focus being brought Peterborough office, trainloads of Ecofrets are taken care of by VTG’s WASP team. to their performance and are “stepping up to the mark” to meet our requirements. “We have definitely seen an and reliability, while the VTG Group values “We all have the same goal and this shows improvement in average wagon of agility, customer orientation, appreciation our customers the commitment VTG has to and entrepreneurial mind-set are the foun- providing the quality of service they require. availability levels taking us from dations on which the company is built. Maria concludes: “One thing I have learnt 93.9% in 2014 to 96.9% now.” In charge of WASP activity is Maria Connolly about WASP is that it needs to evolve, so Maria Connolly, Service Delivery Manager, VTG’s Service Delivery Manager. Maria’s role I am always looking to gain, rather than VTG Rail UK is relatively new and was created to bring sustain, momentum by motivating the team, focus to meeting the operational needs of seeking the positives in difficult situations VTG’s customers have very similar and VTG’s customers. and showing appreciation for the effort understandably demanding expectations. “There have been many changes over everyone puts in to making WASP a success.” They are similar in that they all expect to the years, but the most significant one to have available as a matter of course the date is the ever increasing focus on wagon wagons they ask for in order to keep their availability,” she said. “Thankfully sustainable customers happy. performance improvement has long been If they are contracted to run a set of 20 part of our culture.” wagons, they expect 20 wagons to be WASP seeks to improve customer service supplied in time and in good order. If a train by identifying and targeting specific issues runs short, the impact on their business can which are causing problems. It uses a “visual be costly in monetary and reputational terms. management” technique, employing the So, they want a supplier they can trust and principles of continuous improvement and who is flexible enough to fit in with their lean manufacturing as developed in the often changing business requirements. motor industry. VTG has been at the forefront of service “We have a daily meeting starting at 09:10 advancement and innovation for years and in the “WASP Room” that lasts for 20 min- prides itself that it is constantly looking to utes,” explains Maria. boost performance to enhance availability. “All departments including Service Delivery, As part of this continuous improvement Engineering, Asset Management, Sales strategy a new performance management and Finance are involved and have an process has been injected in to its service input at some level. Cross departmental offer while a set of new company values has communication is key and the WASP room been adopted. gives us the ability to ensure that everyone Wagon Availability and Service Perfor- is aware of the issues and involved in the mance (WASP) has been part of the process solutions. that delivers wagons to our customers at “We focus on any fleet whose availability increasingly improving levels of availability level has dropped below what is required, 3 OnLine issue 28 | winter 2016 Brexit – in or out will rail freight be shaken all about?

It is absolutely clear that no-one terms of the 1986 Treaty of Canterbury While the UK’s departure may allow can be entirely sure what the UK’s between the British and French governments government to relax some existing laws, it and the UK is not part of the Schengen area will need to implement new legislation, so departure from the European Union so border controls are in place. it is likely that many of the major standards will mean for any organisation, M Gounon added: “The Channel Tunnel would continue to apply, possibly forming business sector or individual. fixed link was established with an interna- the basis of UK legislation. The detail of this tional treaty between two sovereign states. change however, will be of interest to those In order to withdraw from the EU, the UK will Our Anglo-French vocation is to offer our companies who have had to implement need to invoke Article 50 of the Treaty on customers a constantly improving and more European rolling stock legislation aimed at European Union, pass legislation to repeal competitive transport service. I am confident “interoperability” for example, knowing full the European Communities Act 1972 and put that we will achieve our goals.” well that the freight vehicle it was being in place transitional arrangements, making The rail freight optimists look to construc- applied to would never set foot (or wheel!) clear which EU standards and regulations will tion for business growth and at the moment outside of our shores. continue to apply. This will be neither easy there is great potential. Until there is clarity on the terms of the nor quick, given the intricacies of the legal Construction in 2015–16 accounted for UK’s exit from the EU, the UK legal and process. 22.4% of rail freight volumes and that is regulatory framework remains the same so Opinions as to how this might work abound expected to grow. it seems unlikely that, for the time being at but even as we write, in early December, Potentially, it’s big business. High Speed 2, least, there will be significant changes in the not even the prime minister knows yet how, for example, has some 16 million tonnes of railway sector and this should provide some when or by whom the Article 50 leaving earth to move out as well as all the materi- reassurance for the wider rail community. process will start. That’s in the hands of the als going in. But how future rail policy might be applied Supreme Court. Hardly surprising then that the rail freight in Britain depends largely on the UK’s future So right now everything is speculation, sector is calling on the government to status in Europe. From the day of withdraw- speculation fed by the roller coaster that is continue to invest in infrastructure. al, EU requirements in relation to access to the UK’s economy along with distractions With the vast majority of new UK freight railway facilities, safety, licensing, ECM and such as the government’s announcement of rolling stock currently being built overseas, TSIs are unlikely to change. a rail structure shake-up. the recent reduction in the value of the Over time, however, the two policy From reporter to exporter everyone has a Pound plus the continuing fluctuation in systems are likely to gradually to move view but what’s the view on how it might exchange rates, which seems to accompany apart as the UK begins to take a potentially affect rail freight? every new government announcement, increasingly different direction to the EU and Groupe Eurotunnel Chairman and CEO bring additional challenges to companies pursue its own objectives. Jacques Gounon, until very recently the seeking to invest in wagons and Will it be an amicable divorce? owner of GB Railfreight, said that the vote locomotives. However, these same factors Noises from European leaders suggest no- in favour of leaving the European Union ‘will may bring about new opportunities for one is going to make our life easy outside not affect the activity of the Channel Tunnel British companies looking to manufacture the EU and that’s especially true for a highly concession’. or refurbish rail vehicles domestically. As competitive market like rail freight. The Channel Tunnel operates under the always, the market will adapt. Watch this space! 4 OnLine issue 28 | winter 2016

Spotlight on: Ian Shaw, Sales and Marketing Director

efforts so far have been rewarded by the such as the Railfreight Group, the Freight faith shown in us by our parent company Transport Association and the Chartered and the investment this has enabled. Institute of Logistics and Transport. Some of the VTG team are active committee or How is your plan drawn up and who does it? council members of these organisations. This It’s a team approach involving the department close relationship means that, as well as plus the MD along with additional resource supporting the wider industry, we stay close from areas such as Engineering and Finance. to latest developments. We hold regular Sales Strategy meetings where we review market trends, update previous Competitors – anything to say about them? predictions and agree the most appropriate We prefer to deal with our customers’ future direction for the business. requirements and adding maximum value to their businesses. As Jeff Bezos, the How do you identify the way forward founder of Amazon said, “If we can keep our and what methods do you use to attract competitors focused on us while we stay interest in new business? focused on the customer, ultimately we’ll We have targets in the form of budgets and turn out alright”. forecasts which we need to adhere to as In general terms competition is a good meeting these is the way we can show the thing as it leads us to innovate and parent company that their faith in us is justi- encourages us to make the changes that fied. New business is attracted in a variety of distinguish VTG as the market leader it is. ways including advertising, publicity, etc but the sector is compact and we tend to know What are your/your team’s greatest and be known by the vast majority of key successes? players. The essential thing is to recognise We’ve had a lot of successes over the years. developing trends and position yourself to In this industry however, relationships are Ian was appointed to the position be able to meet market needs when re- all important and many projects are “slow of Director Sales and Marketing in quired. This is exactly what we did with the burners” due to their complexity and the ® 2011 having worked in the rolling development of Ecofret . amount of investment involved. The level of business we’ve been able to build up with stock leasing sector since 2001. What influence, especially the advantages, customers like GB Railfreight and Mendip does Hamburg/VTG Group bring? Rail, both of whom now have VTG Fleet Who else is in your sales and marketing We are fortunate to be part of a substantial Controllers “co-located” in their offices, is team? organisation with all of the investment very satisfying as it demonstrates the faith Paul Lugg (Sales Manager) and Caitlin Lippitt potential and support that that brings with such major organisations place in VTG as a (Sales & Marketing Administrator). We all it. There are many advantages including key business partner. work together as you would expect in a being able to learn from colleagues operating small team. Paul tends to manage our Tank in other rail freight markets throughout Any tough lessons? and Intermodal customers but inevitably Europe and worldwide. As a major purchaser We’ve learnt that nothing is forever and a there is a significant overlap. of new freight rolling stock we it also means change of customer group strategy, some- we have a much stronger negotiating times taken in a different country to where What three words best describe your team? position with wagon manufacturers and a the team you did the original deal with is Proactive, industrious, creative. project management/engineering presence based, can have far reaching repercussions. in all of the main workshops. The key is to “future proof” things as far as What is the most challenging aspect possible and have contingency plans in place of the job? Which department within VTG is your team wherever you can. Accurately predicting the long term picture closest to? and investing in the right areas for the mar- As VTG Rail UK is a relatively small team of And finally? ket that will exist in 10, 20 or 30 years’ time. 18 people, we work closely with all other Our business is ultimately not about owning, departments including Engineering, Asset leasing or maintaining wagons for their own There can only be a small number of Management, Finance and Service Delivery. sake. It’s about providing our customers potential business opportunities and your Each area needs to understand the commit- with the means to move their product wagons last for years. How do you market ments we have made to our customers in from A to B as safely, reliably and cost a ‘product’ that lasts for decades to such a order to allow them to fulfil their role in the effectively as possible while providing all of small target audience? organisation. the other benefits that Railfreight can offer Careful market research, collaboration with compared to other modes of transport. It’s strategic industry partners and an innovative Who else influences your activity? actually a key part of the VTG Group Mission approach to “repurposing” of wagons and We are involved and work closely with many Statement: “Together, we connect worlds recycling of key components. We don’t have organisations within the wider business with mobile infrastructure”. a crystal ball but we do our best and our environment. This includes industry bodies 5 OnLine issue 28 | winter 2016 A great day for Nigel

VTG’s annual family day out had a competitive edge this year, as we went Go-Karting. Held at Ace Karting, Walsall, in mid-September the competitors battled their way through many heats to qualify for the quarter finals. Quarters were followed by semis, then of course the final. The VTG family karting competition was won by our Head of Engineering, Nigel Day, VTG’s very own Lewis Hamilton, who was fol- lowed closely by second placed Kevin York and David Lippitt in third. According to Caitlin Lippitt, (wife of bronze medallist David), it was a fabulous day. She said: “There were lots of bruises and sore limbs No champagne? Winners and runners up at the chequered flag. the following day, but it was good fun.” The children particularly enjoyed it, with their fearless approach to driving coming into play. Caitlin said: “They all had to overcome the urge to drive their cars And it wasn’t just the winner who felt a Hamilton moment. All the home in Karting mode and to overtake everything in front of them men appeared to turn into Lewis for the adrenaline pumping day. on the motorway!” News in brief

Another path out of Felixstowe consecutive quarter of growth. The sector Rail Minister Paul Maynard said: “The The 33rd daily rail freight service was was given a further boost at a Parliamen- rail freight industry has faced a number of introduced at the Port of Felixstowe in the tary reception on 23 November hosted by uncertainties over recent months. I hope that summer. It came just seven weeks after the Martin Vickers MP, Chair of the All Party this strategy will enable the industry to look introduction of the 32nd path. The new ser- Parliamentary Rail Group. Paul Maynard, forward with confidence and ensure that vice is operated by GB Railfreight using VTG the Rail Minister, told attendees that the rail freight continues to play a central role Ecofrets and Megafrets and runs between Autumn Statement had highlighted the need in our future vision for the railway.” Maggie the Port of Felixstowe and Rotherham. to build houses and infrastructure and that Simpson, RFG Executive Director, said: “The rail freight is vital to deliver the construction rail freight sector is changing and working Intermodal record materials needed for these projects, and hard to deliver growth in new and existing According to ORR figures domestic intermod- added “The best way to bring them to sites, markets and to be fit for the future. This al accounted for the largest proportion of we believe, is by rail.” strategy will help to provide the stable and freight moved during 2015-16 (36.2%) – this supportive environment they need to do so. was the first year since 2010-11 that this RFG welcomes DfT’s rail freight strategy We welcome its publication.” commodity recorded the biggest share. The Department for Transport (DfT) pub- lished its rail freight strategy in September GBRf sale Construction growth saying that private rail freight operators had GB Railfreight is now officially part of the The Construction Product Association’s latest transformed the sector, doubling its share Hector Rail Group having been sold by ‘State of Trade’ survey reports continued of freight movements in 20 years through Eurotunnel. Hector Rail is a Swedish-based growth in sales of construction products in a spirit of commercial enterprise, customer independent train haulage provider operat- the second quarter of 2016, the thirteenth focus and innovation. ing in the European rail transport market.

VTG Rail UK wishes all of its Online readers a very happy Christmas and a prosperous and healthy 2017.

Once again we will be giving to charity the money saved by having an e-card. This year we are supporting:

• The British Heart Foundation • Cancer Research • Macmillan Nursing • Birmingham Dog’s Home

6 www.vtg.com/uk