LDz Cargo, the freight subsidiary of Latvian Railways (LDz), is expanding its portfolio: it has merged with other subsidiaries that are responsible for maintenance and freight forwarding. The move aims to optimise costs and operational efficiency, a necessity following the collapse of the rail freight business in the Baltic states.
The merger concerns freight operator LDz Cargo, maintenance company LDz ritošā sastāva serviss and LDz loģistika. “The company becomes one of the largest and most comprehensive transport and logistics service providers in the region, with clear ambitions to strengthen its leading position in the Baltic market and expand its operations in Europe and other markets”, LDz writes.
LDz Board Chairman Artis Grinbergs explained that the LDz Group has experienced significant changes in recent years. Those relate to a decline in freight transportation and market changes caused by “geopolitical events”.
“In order to adapt to these new circumstances, we have both focused on reviewing our operating processes and actively carried out various optimisation measures”, Grinbergs said.
Freight collapse in the Baltics
“One of the important steps is also the reorganisation of subsidiaries – by combining the forces and resources of the three companies, not only will cost savings be created and administrative processes will be facilitated, but most importantly – in all types of commercial activities offered by the companies, we will strengthen our business positions and become more efficient.” The long-term goal of the newly expanded LDz Cargo is to operate profitably and to contribute to the national economy, says Grinbergs.
A restructuring at LDz became necessary following the collapse of rail freight in the Baltic states. The overall volume between the three countries dropped from over 130 million tonnes to 52 million tonnes over the course of only five years.
Earlier, LDz had said that the merger should lead to a total reduction in operating costs of approximately 1,4 million euros in 2025. Other measures were said to 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 said that it expects the newly expanded freight branch to have a turnover of 120 million euros and a 7,5 million euro profit by 2029.