[SE] Vy (NSB) abandons night trains in Sweden from Dec-24

[jamesontheroad]

Vy Tåg (approximately pronounced Vee torg if you are an English-speaker), the Swedish subsidiary of the state-owned Norwegian VY Group has announced they will not seek an extension of the 4-year procurement of the Stockholm-Narvik and Stockholm-Luleå night trains when it runs out in December 2024. The framework provided for a 2-year extension but they chose to walk away.

Järnvägar reports, in Swedish, here: https://jarnvagar.nu/vy-overger-nattagen/

My translation of the key bits...

"The costs for the traffic have become higher than we expected, partly because the vehicles were in worse condition than we thought, and in addition, the ticket revenue has become significantly lower," says Dag Lokrantz-Bernitz.

The lower ticket revenue is primarily due to fewer travellers during the 2020-2022 pandemic, but also due to cancelled traffic west of Björkliden in recent months following the two derailments with ore trains.

But the underlying problem for Vy Tåg was that they won the tender with a very low tender. Vy Tåg only receives SEK 10-11.2 million annually from Trafikverket to run the night trains between Stockholm and Upper Norrland. The total compensation for the four years will be SEK 42.1 million. However, Vy Tåg must pay SEK 35 million per year to be allowed to use the Swedish Transport Administration's locomotives and wagons in the traffic in question. This means that traffic must generate a surplus of SEK 25 million per year for Vy Tåg to break even.

SJ, which ran the night trains until December 2020, received SEK 116 million per year but paid twice as much for the use of locomotives and carriages. SJ could consequently lose SEK 45 million per year for running the night trains and still report a zero profit.

...

Dan Lundholm, who is the contract administrator at the Swedish Transport Administration, confirms that the Swedish Transport Administration will carry out a direct allocation of the night train traffic for the two years December 2024-December 2026.

"It is too short a time to carry out a proper procurement of the traffic from December this year," he says. "In parallel with the preparations for the procurement of the night train traffic from December 2026, we are carrying out a direct allocation of the traffic in the next two years."

For my part, I'm not so sympathetic to Vy Tåg's argument. They bid incredibly low to operate a very complex pair of night train routes and didn't expect SJ to compete by launching commercial traffic on the Umeå-Gothenburg/Stockholm corridor.

Once again, the state has to step in and sort out a problem created by a private company. A direct procurement for 2 years will be announced in July. Only SJ, Snälltåget and possibly VR's new Swedish operation might be eligible. In all likelihood, SJ will get the 2 year direct procurement and then we start all over again with a new procurement in the next few years.

 

[doc7austin]

The lower ticket revenue is primarily due to fewer travellers during the 2020-2022 pandemic, but also due to cancelled traffic west of Björkliden in recent months following the two derailments with ore trains.

Yes, the primary problem for passengers is that this train (esp. the Narvik) run is often blocked for bookings.

 

[JonasB]

I'm also not that sympathetic to Vy, their bid was really low and I'm not at all surprised that it's hard for them to not make a loss on running the trains.

 

[RT4038]

V

Once again, the state has to step in and sort out a problem created by a private company.

Isn't Vy Tag the Norwegian State Railway? So one State stepping in to sort out a problem created by another State?

 

[Watershed]

Isn't Vy Tag the Norwegian State Railway? So one State stepping in to sort out a problem created by another State?

Yes but it's the foreign arm of what was NSB. A bit like how DB used to own Arriva, or how NS used to own Abellio.

 

[jamesontheroad]

Isn't Vy Tag the Norwegian State Railway? So one State stepping in to sort out a problem created by another State?

Vy Tåg AB in Sweden had to get a bailout from the parent company in Norway when things started to go south with the Swedish night train contract, so yes that was a Norwegian state-owned company subsidising a Swedish one. Now Trafikverket (the Swedish Transport Agency) will have to pay a premium to find an operator (likely SJ) to step in quickly from Dec-24 for two years.

The free market is the solution to everything, but only if the taxpayer can step in when it isn't.

Yes but it's the foreign arm of what was NSB. A bit like how DB used to own Arriva, or how NS used to own Abellio.

"Vy Tåg AB" (AB = Aktiebolag, i.e. limited company) was founded as Tågkompaniet ("The train company") in 1999. It was one of the new breed of independent railway companies that cropped up in Sweden after liberalisation of the railway.

NSB bought 34% of the company in 2005, another 51% in 2006 (to 86%) and then acquired the remaining shares in 2007. In 2019 NSB and Netbuss rebranded to Vy. I think Tågkompaniet rebranded a little later. I was still getting served coffee or buns with Tågkompaniet branded paperware on board Norrtåg as late as last year, so they clearly haven't been that fussed about it.

 

[deltic]

For my part, I'm not so sympathetic to Vy Tåg's argument. They bid incredibly low to operate a very complex pair of night train routes and didn't expect SJ to compete by launching commercial traffic on the Umeå-Gothenburg/Stockholm corridor.

Once again, the state has to step in and sort out a problem created by a private company. A direct procurement for 2 years will be announced in July. Only SJ, Snälltåget and possibly VR's new Swedish operation might be eligible. In all likelihood, SJ will get the 2 year direct procurement and then we start all over again with a new procurement in the next few years.

If I understand this correctly, the State ie the Swedish taxpayer saved 90% of the subsidy payments it was previously paying to have this service provided. Sounds like a good deal for the State. The fact that the State appears not to have allowed enough time to retender the service if the operator decided not to take up an optional tender extension is a problem of its own making and not the operator's.

 

[YorkshireBear]

If I understand this correctly, the State ie the Swedish taxpayer saved 90% of the subsidy payments it was previously paying to have this service provided. Sounds like a good deal for the State. The fact that the State appears not to have allowed enough time to retender the service if the operator decided not to take up an optional tender extension is a problem of its own making and not the operator's.

I agree, one party leaving a contract at a contractually agreed point, is not the fault of the company leaving. I suspect it will be no skin off their nose to get SJ to run it and that's what they'd have done anyway.

 

[jamesontheroad]

Järnvägar.nu reports (in Swedish) that Vy has also now lost the contract to operate trains for Norrtåg in the four northernmost Swedish counties of Norrbotten, Västerbotten, Västernorrland and Jämtland. They will hand over to VR Sverige. Vy might once have hoped to have consolidated costs and operations where the Norrland night trains and Norrtåg overlapped but to no avail.

Quick translated quotes from that article:

"Our assessment of the quality that the tenderers offered showed that they were largely equivalent, but VR offered to drive at a lower price," says Joakim Berg, CEO of Norrtåg,

Only Vy Tåg and VR Sverige submitted tenders for the traffic.

The traffic will initially be operated with the current 21 vehicles: twelve X62 trains, seven X52 trains (Regina) and three X11 trains.

During the contract period, train traffic will be increased, among other things when the Norrbotnia line is gradually opened to traffic

VR Sweden will take over Pågatågen in Skåne from Aviva and Östgötatrafiken's trains, the trams on Tvärbanan in Stockholm and since last year the trains for Tåg i Bergslagen. The latter traffic has been pulled with great problems since VR took over last December.

VR will take over the train operation for X-Trafik in Gävleborg from Vy Tåg in June next year. VR has also bought MTR Express from MTR. The takeover took place on 30 May this year.

With the agreements for Norrtåg and X-Trafik and the purchase of MTR Express, state-owned Finnish VR will in a short time become one of the largest train transport companies in Sweden, while state-owned Norwegian Vy shrinks to one of the smallest.

 

[Gloster]

Almost a repeat of when Danish State Railways was pushed by its government into agressive expansion abroad: win plenty of contracts, have problems due to overbidding to satisfy the political masters and compliant directors, get bailed out by the parent company and wind down. Now watch the masters in Copenhagen, sorry, Oslo distance themselves from the mess that they pushed NSB into.

 

[JonasB]

Almost a repeat of when Danish State Railways was pushed by its government into agressive expansion abroad: win plenty of contracts, have problems due to overbidding to satisfy the political masters and compliant directors, get bailed out by the parent company and wind down. Now watch the masters in Copenhagen, sorry, Oslo distance themselves from the mess that they pushed NSB into.

When you mention it, there are some similarities. Vy's bid for the night train was so much lower than SJ's, so it's hard to understand how they planned to make money. When you factor in the rental cost for the rolling stock, they have actually been paying Trafikverket for the right to run the trains.

But to be fair, the pandemic didnt help them and I can't blame them for not predicting it.

 

[jamesontheroad]

When you mention it, there are some similarities. Vy's bid for the night train was so much lower than SJ's, so it's hard to understand how they planned to make money. When you factor in the rental cost for the rolling stock, they have actually been paying Trafikverket for the right to run the trains.

But to be fair, the pandemic didnt help them and I can't blame them for not predicting it.

Notwithstanding the pandemic, which few commercial tenders had provision for, Vy made two unrelated fatal assumptions in their bid for night train traffic:

1) That all or a majority of SJ's employees on the Norrland night trains would transfer seamlessly over from SJ to Vy, minimising hiring and training costs. This didn't happen, and so Vy started on the back foot with a massive investment in new staff.

2) That Vy, like SJ before it, would have a monopoly on night trains to the north. When they lost the Norrland night trains contract to Vy, SJ decided to respond by starting a completely new night train without subsidy using its own rolling stock: Umeå/Duved - Stockholm/Gothenburg. That was another blow to Vy's calculations: although it's only one destination on the Norrland night trains, Umeå is the biggest city in the north and a major revenue generator. SJ also got to "save" the Gothenburg portion of the train (which had been operated without subsidy as a tag-on to the procured night trains) which also retained a lot of passengers.

 

[JonasB]

Trafikverket has just announced that SJ will take over the trains in December.

 

[jamesontheroad]

SJ press release (in Swedish) to that effect: https://nyhetsrum.sj.se/pressreleas...rafiken-stockholm-luleaa-slash-narvik-3333627

- We want to get even more people to choose the night trains and will work to develop the offer and lower the ticket prices. From SJ's side, we welcome the staff who currently work on these night trains to SJ, where we will offer jobs in Luleå, Umeå and Gävle, says SJ's business manager Jan Kyrk.
...
The agreement on the Stockholm-Luleå/Narvik night train service is valid for one year, with a possible extension of another year.

It will he interested to see whether or not they continue with a separate "southern" night train Umeå-Stockholm/Gothenburg.

 

[JonasB]

It will he interested to see whether or not they continue with a separate "southern" night train Umeå-Stockholm/Gothenburg.

That will certainly be very interesting to see. But my guess is that there will not be a separate train from Umeå.

 

[Halish Railway]

Are there any discussions of replacing the coaching stock on the SJ sleeper network given that the RCx locomotives will loose their daytime allocations over the forthcoming years?

 

[jamesontheroad]

Are there any discussions of replacing the coaching stock on the SJ sleeper network given that the RCx locomotives will loose their daytime allocations over the forthcoming years?

SJ has not yet initiated any such procurement but is presumably watching Trafikverket's procurement for new night train carriages with interest. I can't find a link to that, but it is ongoing and bidders will be submitting proposals (I think) later this year.

 

[JonasB]

Are there any discussions of replacing the coaching stock on the SJ sleeper network given that the RCx locomotives will loose their daytime allocations over the forthcoming years?

From what I've heard, SJ is thinking about the future of their night trains and are considering new trains. But they are very early in the process and it will probably take a while until they decide what to do.