Last year, rail passenger numbers continued to grow steadily, gradually approaching the pre-pandemic level of 2018, and a total of 17 million passengers used rail services in 2023, an increase of 8.9% compared to 2022. At the same time, due to the geopolitical situation and related factors, freight volumes transported by rail fell 27.6% year-on-year.
External factors continued to affect operations of SJSC “Latvijas dzelzceļš” and its subsidiaries in the past year: as sectoral sanctions against Russia and Belarus expanded, the volumes of freight transported by rail continued to decline. In 2023, a total of 15.6 million tons of freight were transported by rail, which is 5.95 million tons or 27.6% less than in 2022. Imports accounted for the largest share of freight transported at 61.6% of total freight turnover.
A key performance indicator of SJSC “Latvijas dzelzceļš” is the number of kilometres run by trains (train-km), which is the basis for calculating the infrastructure use charge and determining the depreciation of the infrastructure.
In 2023, the total train-km stood at 9.77 million, which is 9.1% less compared to 2021, consisting of a 27.7% decrease in freight transportation and a 4.1% increase in passenger transportation. Last year, a total of 3.22 million train-km of public-use railway infrastructure was used for freight traffic and 6.54 million train-km for passenger transport.
Last year, cereal products accounted for the largest share of freight carried at 36.7%, followed by petroleum products at 17%. Coal shipments decreased significantly to 10.7% of the total volume of freight carried by SJSC “Latvijas dzelzceļš”. In the meantime, the share of timber and timber products accounted for 2.7% in 2023.
SJSC “Latvijas dzelzceļš” Chairman of the Board Rinalds Pļavnieks: “In 2023, the impact of geopolitical developments on the freight transport industry continued to deepen and LDz, just like other international freight industry companies, is currently going through dynamic and challenging times. Several years ago it became clear that LDz’s historical positioning had changed: with freight volumes gradually declining, our priority focus has now completely changed, and we aim to become a modern passenger infrastructure developer, while continuing to develop new services and freight transport for Latvian farmers and other local producers. This change was evidenced by the Group’s efficient expansion beyond Latvia last year – LDZ CARGO successfully launched operations in Estonia, and the first shipments in Lithuania were also carried out. Other companies of the Group have also been highly active over the past year in promoting their services in the Baltic countries and elsewhere, signing contracts for significant freight shipments in Central Asia and successfully developing continuing with partners in Ukraine, Poland and elsewhere.”
The majority of LDz Group’s revenue is generated by “LDZ CARGO” Ltd., one of the key transport and logistics companies in Latvia. In order to increase freight transport volumes and diversify freight segments, in January 2023 “LDZ CARGO” Ltd. commenced freight shipments in Estonia and in June opened a branch in the neighbour country. Throughout 2023, “LDZ CARGO” Ltd. continued work on attracting new customers and developing new routes in Estonia, and in 2023 the company transported a total of 384,000 tons of domestic and transit freight in Estonia. At the end of last year, “LDZ CARGO” Ltd. signed an agreement with LTG INFRA to use Lithuania’s public railway infrastructure for development of the company’s operations in the neighbouring country.
“LDZ ritošā sastāva serviss” Ltd., another subsidiary of SJSC “Latvijas dzelzceļš”, also continued to promote its services in the Baltic countries and elsewhere last year, actively building cooperation with foreign customers and partners and successfully attracting new foreign customers for railway rolling stock repairs. In the meantime, “LDZ Loģistika” Ltd. revenues are generated by the provision of transport and forwarding services, and last year the company furthered cooperation with customers requiring transport of freight from the European Union and other countries via Latvia as a transit country, offering a wide range of services in all modes of transport: roads, sea, rail, and transhipments. “LDZ Loģistika” Ltd. is also actively working on the development of direct business and provision of high added value services, including the development of a full range of 3PL services, and in 2023 container transport volume exceeded 15,000 TEUs.
“LDZ apsardze” Ltd. continued to expand the range of its technical security services and offered customers a broad range of security and fire protection services in 2023. By actively participating in various security services tenders, LDZ Apsardze Ltd. acquired new customers outside of LDz Group.
In 2023, SJSC “Latvijas dzelzceļš” continued its efforts to improve the company’s operational efficiency by revising business, organizational and technological procedures in order to increase operational efficiency and reduce costs, as well as to improve the company’s competitiveness and sustainable operations.
The average number of SJSC “Latvijas dzelzceļš” employees in 2023 was 3,945, while LDz Group as a whole on average employed 6,219 people in 2023.
Net turnover of SJSC “Latvijas dzelzceļš” was EUR 165.41 million in 2023, which is EUR 12.25 million or 8% more than in 2022, while the operating performance result for 2023 is 0.
Despite declining rail freight volumes, LDz Group continued to maintain the quality of infrastructure and services provided as well las the required safety level, and the Group’s capital expenditure in 2023 totalled EUR 72 million, of which EUR 51.3 million was invested in infrastructure development, EUR 15.9 million in renovation, and EUR 3.85 million was invested in renovation, modernization and acquisition of fixed and intangible assets of LDZ CARGO Ltd.
In 2023, LDZ continued active work on major infrastructure modernization projects, completing the “Modernization of Riga railway junction Sarkandaugava - Mangali - Ziemelblazma” project last year. In the meantime, the geopolitical situation, coordination of technical solutions with third parties and other unforeseeable circumstances had an impact on meeting the deadlines for projects “Modernization of the railway passenger infrastructure” and “Modernization of the railway infrastructure to increase train speed”. Due to these circumstances, contracts concluded for implementation of the projects have been extended and the projects are to be completed between two programming periods for EU funds: 2014-2020 and 2021-2027.
LDz Group continues to work on its key operational priorities – quality infrastructure and a significant expansion of the current operations – while developing new services, improving the efficiency of infrastructure services, and attracting new freights to the Latvian transit corridor.
LDz Group’s main priorities and objectives for 2024 deal with a significant increase in operational efficiency and regaining and strengthening of the Group’s financial balance, as well as implementation and stabilization of newly developed organizational and technological processes. LDz will also continue to work actively on the development of comfortable and efficient infrastructure for railway passengers, as well as on the improvement of safety on and along the tracks.
The report on SJSC “Latvijas dzelzceļš” operations in 2023 is available here: https://www.ldz.lv/lv/neauditeti-starpperiodu-finansu-parskati