The financial numbers for 2024 show that rail freight and the infrastructure management segment in Poland took losses, with the passenger sector performing much better. For the freight sector, restructuring at PKP Cargo had a huge impact on the financial picture, but that will likely subside in 2025.
In 2024, only passenger carriers in Poland managed to close the year with a positive operating result. They achieved revenues of nearly three billion euros, while costs amounted to 2.83 billion euros. Not a huge margin, but definitely better than their freight counterparts.
The latter ended the year with significant losses. Total costs were 2.62 billion euros, whereas the revenue was 2.22 billion euros. In other words, the Polish freight sector took a loss of around 400 million euros in 2024.
Infrastructure management costs of 2.9 billion euros exceeded the 2.36 billion euros in revenues by more than 500 million euros. “This negative operating result is largely systemic and results largely from the adopted rail infrastructure financing system”, comments Poland’s Office of Rail Transport (UTK).
Stable TACs
Let’s take a closer look at said rail financing, and with that, also at the broader cost picture for rail freight companies.
Track access charges (TAC) as a share of the total cost picture for the freight industry has fallen quite significantly in recent years. In 2019, TACs accounted for 14.7% of all costs incurred, and that had dropped to 8% by 2024. There are various reasons for this. For one, Poland has kept TACs stable throughout the years. As other costs grew, the nominal access price per kilometer driven remained stable at around 3.02 euros.
Secondly, amortisation costs skyrocketed in 2024. Its share of total costs nearly tripled: from 11.2% to 29.6%. That has everything to do with the situation at PKP Cargo, which is currently in restructuring proceedings.
The company is looking to change its business orientation, and because of that, it had to write off a lot of its assets (164 million euros in H1 2024). That is then reflected on the balance sheet as costs. The share of amortisation in total costs will likely bounce back to more typical levels in 2025. PKP Cargo only wrote off 20 million euros worth of assets in the first half of this year.
The restructuring at PKP Cargo skews the overall cost picture for 2024. As amortisation costs come back down in 2025, other cost items will probably appear to grow in importance again. That also applies to TACs, although it must be said that their share of total costs was already on the decline before PKP Cargo’s transformation, thanks to Poland keeping them at a stable rate.
Forget about reducing TACs?
A return to normalcy at PKP Cargo will reveal employee benefits, external services and fuel and energy to be the biggest cost burdens for the sector ‘as usual’. They will continue to hinder the profitability of the sector. In contrast to rail freight association ZNPK, which has called for a 50% reduction in TACs over five years to help rail freight turn the financial tide, UTK issues a number of different recommendations. Those reflect the cost picture: rail operators should, for example, look to reduce traction energy consumption in light of the volatility of energy prices and their large share of the incurred costs.
Energy consumption consistently occupies the third place in costs for Polish freight operators, closely approaching employee benefits and external service costs. The unpredictability of energy prices makes it necessary to suppress those expenses as much as possible – energy efficiency is highly desired.
Moreover, freight companies should pursue cost reductions in maintenance and modernisation costs, says UTK, as well as invest in better route planning and the optimisation of operational processes.