Jānis Lange

Chairman of the Council

The year 2018 has been a year for positive changes for VAS “Latvijas dzelzceļš”. The business and organizational processes of the Company were reviewed, productivity increased significantly, cooperation with the existing counterparties was strengthened and new partnerships were created.

Despite the uncertainty at the beginning of the year, which was due to the decline in the turnover of freights resulting from the regional and global geopolitical situation, the performance for the year turned out to be even better than expected. Furthermore, it is especially satisfying that the Group’s productivity indicators have also improved considerably.

Changing the visual identity of LDz was an important event, which proved once again that LDz is a modern company capable of changing with the times. Continuous changes – this is the new reality, in which LDz must operate. One should always be ready to respond flexibly, adapt to the market situation. This is never easy for a large company, however, to ensure competitiveness, it is crucial for LDz to sense these trends both now and in the future and act accordingly.

Conversely, some things will never change: security will always be one of the core values of LDz, and it will always be among the priorities.

Furthermore, in 2018, a significant industry policy document paper “The Indicative Railway Infrastructure Development Plan” was passed, as well as a multiannual contract was entered into with the Ministry of Transport. The implementation of the decisions related to long-term investment plans was continued, including the development of the railway electrification project. It should be underlined that the electrification of railways is by substance not only the project owned by LDz but also a matter of the competitiveness of the country as such because nowadays it is not companies that compete but rather countries and even regions.

In terms of the electrification of the Latvian railway network, the key aspect is related to decision-making and the continuity thereof.

The need to electrify the railway is set forth in Latvia’s Sustainable Development Strategy, the National Development Plan as well as in the Transport Development Framework. Electrification has many practical advantages, such as the reduction of CO2 emissions, rendering transport more environmentally friendly, a higher tractive force that will enable carrying longer and heavier train stocks, which would result in the reduction of costs to the owners of cargoes. What infrastructure we will leave for our future generations also depends on the electrification of the railway. I believe that the Company has a duty to make investments in a systematic manner, rendering the infrastructure and consequently the whole industry more competitive and profitable.

In 2019, the key challenges will be related specifically to the large investment projects, in terms of their compatibility with the market situation, anticipated costs and returns. The efficiency of the implementation of the projects and the transparency of the processes are of no less importance. It is also one of the tasks of the Council of LDz. Using a metaphor, if the Board of LDz is like a car pilot in a race steering and speeding thus determining how quickly the company moves forward, then the Council holds a map in its hands and sees to it that the car is driving in the right direction and helps the Board to make the right decisions at critically important moments.

LDz has set as its future objective that Latvia must become the transport and logistics services excellence centre of the Baltic Region. At present, Latvia has a fine railway network coverage, a very well developed port infrastructure and an airport. We also have the expertise, knowledge and a high ability to adapt to the market circumstances. Whereas this in turn means that, to achieve the said objective, a coordinated and balanced cooperation between the ports, railway, airports and freight shippers is an important factor. Undeniably, Lithuania is the largest and closest Latvia’s competitor, and the competition for freights from Belarus is high. It should be pointed out that in the competitive battle with Lithuania, a critical importance is attached to the electrification of the Latvian railway network, which will enable the lowering of the tariffs. Freight transport volumes from Belarus have been increasing, and this has occurred in part thanks to the activities carried out by the representation office of LDz in Belarus, maintaining great relationship with the railway company of Belarus as well as all other players engaged in the process.

Looking to the year ahead, we are aware that various trends persist at global and regional levels, which can affect the flow of goods in a favourable as well as unfavourable way not only to the direction of Latvia, but in various different corridors in general. Therefore the management of LDz must be prepared to continuously monitor the current trends as well as to aim its work not only at maintaining but also developing competitive infrastructure and improving the quality of the rendered services while increasing the volume of handled cargoes.

In the near future, along with promoting freight transport volumes, one of the key tasks will be to develop a strategy for hiring new employees. The average age of the employees of the company implies that it is critically important to think about a timely and balanced succession of generations at the company. It is important to find the right way to show young people that railway is an exciting as well as promising industry. What is clear now is that the requirements for the competences of employees will change over time, with increasingly more emphasis being laid on the specific qualifications of the employees. Conversely, simple and routine jobs would be robotised, where possible.

Looking further ahead, I am convinced that LDz will be a successful operator of the railway structure as well as a technology company. It will connect different modes of transport and promote their synergies at national level. It will be an innovative, digitalised company that owing to its skilled and knowledgeable staff will be capable of adapting to market changes and working under the circumstances of fierce competition, while ensuring a consistently high level of safety.

Having worked in the transport industry for more than ten years, I have ascertained that the infrastructure existing in the country is a means to build up the nation’s welfare. LDz is a powerful tool enabling Latvia to earn money and contribute to the public welfare. Any of the employees of LDz is working not only for the benefit of their family and the employer but also for the benefit of the whole nation.