Lineas applies energy surcharge: ‘we can no longer absorb the high rates’
Lineas will apply a dynamic energy surcharge to all its transports as of 1 April, 2022 to compensate for soaring energy prices. The company says it is no longer able to absorb the increasing energy and electricity prices, which go hand-in-hand, it explains.
The surcharge will depend on the place of transport, as the energy market is different in each country. Moreover, some national governments may decide to introduce subsidies, where other governments don’t. This is why the surcharge of Lineas is a dynamic one, explained CCO Lars Redeligx in an interview with RailFreight.com. “It can be adjusted every month.”
Energy prices through the roof
Energy prices are currently skyrocketing, impacted by the war in Ukraine and, before the war started, in an attempt to reduce the reliance on fuel. Last year, several railway companies had already warned that the high prices were difficult to absorb, but it had not yet led to higher charges for the final customer. Railway undertakings thus far managed to cover the costs.
But since the end of last year, the energy prices placed a real financial burden on the railway company, explains Lineas. “At EEX, Europe’s leading energy market, the spot price per Megawatt hour has more than tripled compared to average prices in 2021. Also diesel, which railway undertakings need where electric locomotives cannot operate, has become significantly more expensive. This economic hardship has reached a level that cannot be absorbed by Lineas anymore.”
“We cannot continue to be the only mode of transportation that doesn’t pass on the rising energy costs. This is surely true for privately owned businesses like us, but even for state-owned competitors, the solution cannot be that the taxpayer has to cover their rising energy bill. Therefore Lineas will apply a dynamic energy surcharge to be able to offer sustainable rail transport solutions”, Redeligx says.
The surcharge differs between domestic and international transports. At the current spot price of 300 EUR per Megawatt hour, the surcharge will range between 3,5 per cent (Netherlands) and 8,1 per cent (Germany). The surcharge could change every month following market developments. If a national government adopts measures that support the rail freight industry, this will be reflected in the surcharge, Redeligx explains.
Impact on Lineas
Although the fuel prices are mostly considered a challenge for road transport at the moment, the rail freight industry is not immune to this. On the contrary, explains the Lineas CCO. The rising price of electricity directly correlates to the rising energy price.”
Besides, not all locomotives run on electricity throughout the entire supply chain. In the ports for example, the last mile is often carried out with diesel locomotives. And companies have only recently started to change their fleet from diesel locomotives to electric ones. Lineas currently has a fleet that consists for 90 per cent of electric locomotives and 10 per cent of diesel units, says Redeligx.
But what is most important, he explains, is that other transport modes have mechanisms in place to pass on the high energy prices to the market, whereas the rail freight industry has thus far not done this. “We are the first private railway undertaking to implement this measure, and we anticipate that other players in the market will follow suit.
“The introduction of an energy surcharge is long overdue in the rail industry. We are the greenest transport mode emitting 90 per cent less CO2 compared to road transport and use 6 times less energy than the truck. If we want to secure our societal mission and be able to continue serving our customers, we have to adopt an energy surcharge as is the practice in other sectors.”
Redeligx admits that the energy prices are not the only hurdle that Lineas is facing at the moment. In February this year, the previous CEO of the company Geert Pauwels was replaced with Bernard Gustin. The aim of the sudden change was to bring the company back to pre-COVID levels.
“COVID-19, the floods, infrastructural bottlenecks; in the last two years we have witnessed several external challenges. This has had an impact on the results of the company. The departure of Pauwels was a result of this”, explains Redeligx.
Hell of a ride
“We are aware that soaring energy prices are a concern of the whole transport sector and we humbly accept our challenge, but it would be nice to have a year within which we can focus on growth without these external disruptions. We want to develop rail freight solutions, proceed with digitalisation and provide the customer with smart solutions.”
Asked if the company can overcome the energy crisis, Redeligx remains positive. “Lineas has been in difficult times before, and it has overcome these challenges. We are sure the customer understands why we implement these measures. But we are also prepared for a hell of a ride.