Strategic partnerships for SBB Cargo: next steps defined.

SBB has completed the competition process in which it invited potential partners to submit their concepts for the future of SBB Cargo. The entries reflected a high level of interest in cooperation with SBB's freight division. At the close of the competition phase, there are seven names on the shortlist of potential strategic partners. A decision about exactly what form any partnership(s) will take is due to be made this year.

SBB is now holding negotiations with the remaining seven companies about possible partnerships. These involve two possible options.

  • The first option is to offer the two major railway companies DB (Germany) and SNCF (France) a close partnership, together with a minority shareholding in SBB Cargo. In the context of this type of participation, the possibility of additional cooperation with the five other potential partners is being investigated. The close relationship between both international and domestic freight services and the logistics requirements of the market means that it makes business sense for a partner company to acquire a stake in SBB Cargo in its entirety, which in turn would be integrated into a European network.
  • However, SBB is only prepared to consider such a “participating interest” solution if it holds out a more successful long-term future for SBB Cargo than if the railfreight provider were to continue independently. This is why the latter option is being pursued as an alternative. If SBB Cargo were to remain an autonomous entity, alliances with individual partners in specific segments of both the domestic and the international business would be considered.

SBB is convinced that both these options would contribute to a strengthening of SBB Cargo, thus enabling an attractive range of railfreight services to be sustained in Switzerland in the long term and making a significant contribution to achieving the targets for the transfer of freight from road to rail.

As part of the concept competition, SBB had invited expressions of interest in a partnership with SBB Cargo at the beginning of September. The invitation met with a very good response: 25 interested parties requested the tender documents. Fourteen of these delivered concrete proposals by the 15 October 2008 deadline. SBB then held discussions with these remaining interested parties and evaluated their proposals.

Following the conclusion of this process, SBB has now reduced the number of potential partners involved in further negotiations to seven. In the coming months, these discussions will lead to more precise proposals. During this next phase, DB and SNCF will be invited to submit their proposals for a 49% minority stake in SBB Cargo. The involvement of one of these two major railway companies is designed to ensure that a suitable partner will participate in the risks and investments in a suitable way, thus contributing to the long-term success of the business. SBB wishes, however, to continue determining the scale and quality of the Swiss wagonload freight network.

The option of continuing SBB Cargo as a separate entity is being investigated in parallel. It is hoped that these investigations will show which of the options is likely to guarantee SBB Cargo a more successful long-term future.

With regard to both of the options now being evaluated, SBB wishes to talk to all seven potential partners about cooperation in individual fields – both in the international and the Swiss domestic market – insofar as this sensibly complements the business model. The proposals submitted to date are to be explained in greater detail, along with their likely benefits for SBB Cargo.

Concrete decisions on the preferred option and on actual partnerships are to be taken in 2009.

This will then complete the competition process, which has so far given SBB a valuable overview of the market and of ways to meet the strategic challenge of establishing a sustainable position for its SBB Cargo subsidiary on the international market.

A fully intact SBB Cargo corresponds to customer needs.

SBB has come to the conclusion that it is necessary in the long term for SBB Cargo as a whole to be integrated into a European network if customers’ needs are to be met. Swiss customers are increasingly interested in and obliged to look for international solutions from a single source. A fully intact SBB Cargo supports the integration of Swiss industry in the European network and can also help to retain jobs in Switzerland. Even today 40% of the railfreight transported on the Swiss domestic network is related to foreign business.

In particular, SBB Cargo expects potential partners to help it improve its financial result, to contribute to the targeted transfer of freight from road to rail, and to improve the competitiveness of intermodal freight – thus also helping to secure a nationwide wagonload network that covers its own costs. In addition, the proposals must be sustainable and compatible with anti-cartel legislation.

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