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November 12 2018

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November 12 2018 | The Journal of Commerce 37 Surface Transportation market that has grown by nearly 25 percent over the past 20 years and is projected to expand by 50 percent by 2050, according to the European Commission. The potential of the rail sector was underscored by the 1.53 billion euro ($1.77 billion) bid by US invest- ment bank Morgan Stanley's infra- structure unit, Warwick Holdings, for VTG, which Europe's leading railcar leasing and rail logistics com- pany has rejected. Warwick Holdings, which has a 27 percent stake in Hamburg-based VTG, has agreed to acquire the 20 percent holding of Kuehne Holding, headed by Klaus Michael Kuehne, who has a 25 percent stake in ocean carrier Hapag-Lloyd. VTG's fleet grew by around 11,000 railcars to more than 94,000 railcars in October when it closed on the 780 million euro acquisition of Par- is-based Nacco Group, the European THE RAIL INDUSTRY, long regarded in Europe's freight transport, partic- ularly containers, may see an in- creased market share if it can cash in on a rash of commercial and political opportunities. These could be the best of times for rail freight operators: The dom- inant trucking sector's shortage of drivers and capacity, rising fuel prices, and toll roads are boosting rates; barg- es still face congestion at Rotterdam and Antwerp, Europe's top ocean con- tainer hubs; and plans to significantly increase inland waterway capacity are at a virtual standstill. Also, the "love affair" between rail and governments and shippers is deepening amid growing fears of surging carbon dioxide (CO2) emis- sions from trucks on increasingly congested roads across the continent. There are plenty of opportunities for the rail sector to boost its Euro- pean transport market share — a rail leasing unit of CIT Group, the New York-based financial holding company. Still, the rail sector's woes are highlighted by the negative news from the continent's two leading rail companies. Germany's DB Cargo's first-half operating loss jumped to 127 million euro from 28 million euro a year ear- lier, as revenue slipped 2.2 percent to 2.255 billion euro on a 6.7 percent drop in traffic. "Our rail freight business did not have an easy first half of 2018" because of rail strikes in France and a serious storm in January, according to CEO Richard Lutz. "We also faced problems of our own making. Howev- er, we will be addressing those prob- lems in a lasting way." The company is expected to post a full-year loss of 150 million euro to 200 million euro. The freight unit of SNCF, France's state-owned railway, which has racked up debts of more than 4 billion euro, was hard hit by a wave of strikes earlier in the year in re- sponse to the government's planned reforms to modernize its heavily loss-making parent. The reforms, which are the biggest shake-up since the French rail industry was nationalized in the 1930s, focus mainly on the pas- senger business and are unlikely to Europe lis rails Tightening truck capacity gives containerized rail an opening By Bruce Barnard The rail freight industry's European transport market share is projected to expand by 50 percent by 2050. Trucking | Rail | Intermodal | Air & Expedited | Distribution

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