2008 was a tough year – for Hupac, combined transport and the logistics industry as a whole. Hupac had a very strong start to the year with double-digit growth rates. But the second quarter saw a slump in demand, which necessitated a capacity adjustment. The effects of the financial crisis on the real economy became increasingly clear in the second half of the year. Freight transport collapsed across all industries in the final quarter, making a drastic impact on Hupac's traffic development. Only modest growth of 1.8% was achieved by the end of the year. Hupac carried a total of 702,308 road consignments by rail – a new record, albeit by a narrow margin.
In the face of the economic downturn, Hupac quickly took steps to ensure an acceptable result for the business despite the tough conditions. It focused on adjusting capacity to match the drastically reduced demand. The traffic offering for 2008 had been designed for considerably higher volumes and needed to be reduced in several stages so that train capacity could be utilised economically. Restructuring measures and gateway solutions made it possible to maintain the network in all major markets.
Despite the crisis, Hupac continues to believe in the future of combined transport. That is why we invested CHF 73.5 million in 2008 to expand it. We enlarged our own fleet of wagons, modernised the main terminal at Busto Arsizio-Gallarate and set about expanding our terminal capacity. In September, work began on the construction of the HTA Hupac Terminal Antwerp. In October, Hupac co-founded the joint venture Combinant, which aims to build another terminal in the port area of Antwerp. These important steps will secure Hupac's future in the rapidly growing Benelux market.
As the recession has intensified in the current year, further measures have become inevitable, such as the reduction in rented wagons and the postponement of part of the planned investments in rolling stock and infrastructure. Reduced working hours have also been introduced in some areas. I am impressed by the professionalism and commitment shown by the Hupac team under these difficult conditions and thank all the staff for that.
The best way to cope with a crisis is to anticipate it, as the American economist Walt W. Rostow himself realised. Hupac started doing this early on, by operating sustainably, investing continuously and building a solid foundation.
Nonetheless, the force of the current crisis demands a far broader perspective. The massive reduction in the international exchange of goods in Europe, unmatched in the post-war era and amounting to more than 20% across every sector, is having a particularly serious impact on combined transport. Shrinking volumes are forcing the operators to abandon connections with inadequate utilisation because of the high fixed costs. The consequences are predictable: the European combined transport network built up over the decades will be thinned out, which in turn will cause further traffic to shift to the roads, and even more connections will have to be closed – a scenario that poses a threat not only to Hupac but also to combined transport in Europe as a whole.
Anticipating this development is an urgent task for transport policy makers today. To prevent the current crisis from causing irreparable damage to the combined transport system and throwing the process of modal shift back by many years, a coordinated approach is required of all partners in the transport chain and the public institutions.
The pricing pressure on industry, which is being passed onto the combined transport operators via the carriers, demands an appropriate railway pricing policy, particularly as the roads are facing huge competitive pressure due to the large surpluses of cargo space. This is not the time for the railways to raise their prices.
In contrast, we are pleased that the recession has prompted certain railways to work partner-like to maintain the combined transport network. We are also confident that the institutions in Switzerland, the EU and the individual European states will quickly find solutions to enable combined transport to survive this difficult phase.
As well as great challenges, the year in progress also offers new opportunities. We are actively using these chances to maintain our position as one of the leading combi operators in Europe. At the beginning of the year, Hupac successfully integrated a connection between Taulov and Verona into the Shuttle Net. In March we initiated new connections to Spain and Portugal. Further connections are planned both on the North-South and the East-West axis. These product innovations underline Hupac's intention to expand the network in close cooperation with its customers despite the crisis, while systematically adjusting it to logistical requirements.
I do not expect the economic crisis to end before 2010. The whole of 2009 will remain a great challenge for Hupac and its staff. Yet this is also an outstanding opportunity to reform our core business processes. Hupac aims to use the crisis to cast off some ballast and become even more flexible, fast and customer-focused. We aim to focus even more clearly on our competitive advantages – the Europe-wide network, safety, reliability – so that we can offer the market even more added value. We are convinced that this strategy will enable us to emerge more strongly from the crisis.
At this point I would like to offer my sincere thanks to the staff of the Hupac Group, our customers, shareholders, business partners and institutions for their trust. Together we are expanding the combined transport system and thus creating added value for the economy, environment and society. We stand by this obligation – even in uncertain times.