New player on Finnish rail freight market
Estonian national rail freight operator Operail announced its international expansion plan. To realise this goal, the company has established a subsidiary in Finland and considers investments to purchase rolling stock. The neighbouring country will become the second market where Operail provides rail freight operations.
In over a year after its rebranding and reorganisation, Operail has managed to lease a part of its rolling stock to companies from Lithuania, Finland and Ukraine, motivated by the need to reduce costs. Now, Operail is willing to enter the rail freight market of Finland in order to make the business profitable. “With the decisions in previous years, we already foresaw the diversification of markets and services. New business lines have made us profitable and we will continue this growth trend over the next years. The expansion in Finland is part of the company’s long-term strategy”, said Raul Toomsalu, Chairman of Operail’s Management Board.
Operail Finland Oy
Operail has been preparing to enter the Finnish market for almost a year now. Its subsidiary in Finland is called Operail Finland Oy, which is run by Ilkka Seppänen, an experienced manager who previously ran the rail freight business of VR Group, the Finnish national railway operator and major player on the market. “Seppänen knows all the important stakeholders and customers, and his knowledge and experience in the railway sector is undoubtedly extraordinary and invaluable”, said Paul Lukka, Member of Operail’s Management Board.
Among the first steps, the newly born subsidiary intends to acquire rolling stock for rail freight operations. “In the first phase, we will invest nearly 50 million euros for the acquisition of rolling stock and the creation of the necessary structure for the operation of the railway company in order to enter the market”, specified Lukka. According to him, the negotiations are being held with potential partners and customers. “We have received a very positive response from Finnish customers and various stakeholders. Further competition in the market is welcome and will contribute to the competitiveness of the whole sector”, he added.
Transformation of Operail
For the past eleven years, Operail (former EVR Cargo) has experienced significant transformations. In 2009 Estonian railway company Eesti Raudtee (EVR) established EVR Cargo, a specialised freight entity within the state holding. Three years after EVR Cargo was separated from Eesti Raudtee into a fully independent company. At the end of June 2018, EVR Cargo changed its name into Operail in order to restructure the company’s business.
Operail employs a staff of over 700 people. The company operates a fleet of 64 locomotives and over 3,500 wagons. Most of the wagons were leased to the partners in Lithuania and Finland. In 2018 Operail posted a net profit of 9.2 million euros and carried 13.4 million tonnes of freight. The railway operator has a well-developed network of international container services to Russia, Ukraine, Kazakhstan and Lithuania. This year Operail launched the domestic container train between Tartu and Sillamäe for reducing truck traffic on the highways of Estonia.