Rail freight in Latvia and the wider Baltics is declining. Businesses are in trouble, and now Riga is planning to reorganise state company Latvia Railways (LDz). A merger of three subsidiaries is on the table.
The merger concerns freight subsidiary LDz Cargo, maintenance company LDz ritošā sastāva serviss and LDz loģistika. Latvia hopes to optimise costs and operations processes with the move. If the companies continue to be on the same track as they are now, the maintenance company will continue to make losses, and LDZ loģistika will go bankrupt by 2028.
Through simplifying administrative processes and reducing management costs, a total reduction in operating costs of approximately 1,4 million euros should be achieved in 2025. Measures also include a significant reduction of the workforce from 1,017 employees (as of January 2024) to 595 employees in December 2026. By 2030, the merger should lead to savings amounting to 25,9 million euros. LDz expects the new company to have a turnover of 120 million euros and a 7,5 million euro profit by 2029.
The reorganisation will start only after the Latvian government adopts an order to that end. Nevertheless, there is already a timeframe for the merger to be completed, namely by the end of the year.
Estonia continues negative trend
Over the past five years, rail freight volumes in the Baltic region have fallen from 134 million tonnes annually to 52 million tonnes. Freight volumes decreased by an average of 14,9 per cent per year since 2018, according to Latvian media. A big part of the rail freight decline is due to sanctions against Russia, which resulted in less freight coming into the Baltics from their eastern neighbour.
For its part, Estonia has come out with quarterly rail freight figures. Unsurprisingly, its volume is still on a downward trend. In the first two months of this year, 1,115 million tonnes of freight were transported by rail in Estonia – 27,6 per cent less than in January and February last year, according to data published by the National Statistics Office.
February’s volume of freight alone showed a 20,1 per cent decline year-on-year and amounted to 585,9 thousand tonnes. In 2024 as whole, freight on the Estonian rails decreased by 30,1 per cent to 7,1 million tonnes.