DB Schenker Rail ECM Registration and Impact on Strategy

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DB Schenker Rail Dr. Markus Hunkel

Member of the Management Board

DB Schenker Rail

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2 DB Schenker Rail GmbH, Hunkel/Bobsien, 02.07.2012

ECM - Background, Targets, Registration DB Schenker Rail at a glance

Agenda

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DB Schenker Rail is the No. 1 rail freight company

in Europe

transports

over 400

million tons a year resulting in

112

billion ton kilometers

being

no. 1

Europe nearly three times larger than no. 2

operates

5,200

freight trains a day throughout Europe with a fleet of

3,400

locomotives and

105,000

freight cars and a workforce of over

32,000

employees in

14

countries

and generates a turnover of nearly

5

bn Euro

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DB Schenker Rail is a international company –

14 countries, different cultural as well as linguistic identities

Region East Deutschland / Region Central Region West DB Schenker Rail UK Doncaster ECR France Paris Transfesa Madrid RBH Logistics Gladbeck Schkopau DB Schenker Rail Polska Zabrze

DB Schenker Rail Nederland

Utrecht

DB Schenker Rail Scandinavia

Tåstrup

NordCargo

Milano

DB Schenker Rail Romania

Timişoara DB Schenker Rail Bulgaria Pirdop MEG Frankfurt (2013ff) DB Schenker Rail DB Schenker Rail Deutschland Mainz

Most internationally diverse railway group in the world with

11 different

languages

in 14 countries From

startup

companies to companies with over

175 years of history

Acquired

companies vs.

„always DB group“

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Past Present Future PKP SNCF SBB ÖBB NS DSB

DB Schenker Rail is on its way from today’s

patchwork to a truly European Network

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Rail

European Production takes responsibility for certain

tasks to contribute to the whole and energize the network

Production Europe

European Service Design

European Operations Management

Technical Management Resource Management

Contribution to the whole by …

West Central East

 Transnational development and implementation of service & production concepts

 Cross-border Operations Management with end-to-end perspective on rail transport

 Cross-entity Asset Management, Operational Benchmarking and Best Practice Transfer

 European-wide type support loco & wagons,

maintenance rules & quality guidelines,

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Agenda

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EU has put in force a regulation about maintenance of

freight wagons – main target is to ensure safety and ease market access

 Ensure that freight wagons are

in a safe state of running by a process-oriented system

 Improvement of market access

(particularly for the wagon keeper)

 Harmonization of the

requirements and methods

concerning the maintenance of freight wagons

 Harmonized certifications of

ECM

Target EU1

 Commission Regulation (EU) No 445/2011 on a system of certification of entities in charge

of maintenance for freight wagons and

Regulation (EC) No 653/2007 issued

10/05/2011

 This Regulation (ECM-REG) is directly applicable in each member state

 The national laws of the member states […] where the wagon is registered, are mandatory and contain partial supplementary rules as well as interpretations of the

implementation of the ECM-REG

Legal basis ECM (Entity in Charge of Maintenance)

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Responsibilities Keeper today

Today’s „keeper“-function will change

Registration/ Administration

Registration in national vehicle register

Selection of ECM

Maintenance/ Safety

Definition of technical standards over the lifetime of wagons

Ensure the requirements based on the safety management system (SMS)

Responsibility for safe construction and operational standards of wagons

New Role of ECM

„Reduced“ Role of Keeper

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Mgmt. of Maintenance rules & guidelines

Definition of target state

Regime documentation

Maintenance orders

Removal and return from/to operations

Auditing of workshops

Observing of

maintenance execution

Deliver the required technical maintenance of a freight wagon

Provision of infrastructure,

equipment and tools

Supervision and coordination of the three ECM sub-functions

Responsible for safety conditions and risk evaluation of freight wagons

Management function

Maintenance development Fleet management Maintenance delivery

The ECM organization is built up modularly – opportunity

to subcontract sub-functions lead to more competition

ECM organizational framework

can be subcontracted1

1_{in any cases the management function has the general responsibility for ECM}

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The ECM certification focuses on the Management

function and its interfaces with the sub-functions

 Mgmt. of Maintenance rules & guidelines  Definition of target state  Regime documentation  Maintenance orders  Removal and return from/to operations  Auditing of workshops  Observing of maintenance execution

 Deliver the required technical maintenance of a freight wagon  Provision of infrastructure, equipment and tools

 Supervision and coordination of the three ECM sub-functions

 Responsible for safety conditions and risk evaluation of freight wagons Management function Maintenance development Fleet management Maintenance delivery

Scope of ECM certification

Two possible cases of certification process:

 First-hand-certification

- Certification of Management function and processes/ procedures of ECM - No sub-contraction

 Sub-hand-certification

- Sub-functions are outsourced - Management function ensures

supervision of sub-contractions - Outsourced sub-functions can

obtain a part-certificate of ECM

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 Processes and procedures of the SMS should be congruent to ECM requirements

 “Double” Certification effort

SMS and ECM must be avoided

 Two possible ECM procedures in place

- Full ECM certification

- “Fast and lean” ECM

certification process based on SMS

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Position DB Schenker Rail

 High diversity concerning freight

wagon constructions and technologies - fleet of 105.000 freight cars

- approx. 110 different types of wagons across Europe

 Different maintenance strategies in different entities

 SMS for railway undertakings implemented

 Maintain the existing level of safety

ECM REG and SMS @ DB Schenker Rail

ECM certification will only be manageable if it is based on

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05/2011 05/2012 05/2013! ECM-REG coming into force Beginning of certification of ECM Deadline for certification of ECM

 Railway undertakings which have certified their SMS by no later than 05/2012 do

not need to apply for an ECM certificate as long as the SMS certification is valid

 This Exception ends 31/05/2015

05/2009 to 20182 Signing of the MoU ECM1 Potentially expansion of ECM to all vehicles

The certification of ECM or ECM-functions within DB SR D

will be started in 06/2012 together with EBA

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DB Schenker Rail GmbH, Hunkel/Bobsien, 02.07.2012

Agenda

ECM - Business Benefits

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Keeper

The implementation of ECM basically supports the DB

SR strategy "European production network

 Exemplary Framework:

 Wagon Keeper Netherlands  Registered ECMs regional

entities Germany, Poland, Romania and Bulgaria  Maintenance delivery/

Workshops in Germany,

Netherlands, Austria, Poland, Romania and Bulgaria

 The ease to install and adjust this framework will dramatically

increase through ECM Regime

International flexibility due to ECM

Example maintenance framework for Central-East wagon flows

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Cost reduction/ realization of

synergies because of international flexibility Effective and suitable

maintenance plan through the

joint technical know-how

Harmonization of

- national laws and

- specification of NSAs - technical standards DB SR Additional administration effort because of implementation of ECM Nationally different interpretations of ECM DB SR is pioneer in the

field of ECM certification

according to ECM-REG but

faces the risk of changes resulting from different national certification processes

Potential Risks of additional administration and

outstanding cross-national-alignment (e.g. NSA’s) must be balanced

Opportunities

–

Risks

+

16 The ECM-REG offers opportunities for DB SR

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 The implementation of ECM supports DB SR strategy to get from

patchwork to network also concerning maintenance rules & guidelines

 A separation of the roles RU, Keeper and ECM leads to more flexibility

within the European Railway System & business models

 The opportunity to subcontract sub-functions in ECM leads to more

competition in maintenance business

 Harmonization of national laws and specifications of NSAs decrease the

complexity of the rolling stock in maintenance

 Keep ECM certification manageable - “Fast and lean” ECM certification

process based on SMS must be established

 Potential Risks of additional administration and outstanding

cross-national-alignment (e.g. NSAs) must be balanced

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