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Wholesale Banking

During the Corona pandemic, even though travelling was not possible or only possible to a limited extent, transportation of goods largely continued.  Rail remains an important and eco-friendly means of goods transportation.  Thierry S. de la Brélie, CFO of Touax Group, tells us in an interview how the sector has changed during the pandemic, what is being done to improve the environmental balance even further and what role sustainable financing plays for companies like Touax.

What are the current trends in the rail sector? How has the Corona crisis changed the sector?

During the Corona pandemic, the sector was very active despite two long lockdown phases that lasted for two periods. At the end of March 2020, we saw a weak decline in transport activity in the sector and the utilization rate of our freight wagons dropped but at a slower pace than during the previous big crisis at the end of 2008. From September onwards, the numbers have begun to recover, and we expect them to stabilize at pre-crisis levels by the end of the year.

An interesting effect of the crisis was that more freight was transported than people, which can be explained by the restricted freedom to travel and the resulting increased sourcing of goods online. This development strengthened freight transport and was a significant change for the sector.  

As for the mid- and long-term outlook for the sector, I am highly optimistic. Rail transportation is becoming increasingly part of a global intermodal transportation system, which is more efficient and eco-friendlier. Intermodal means that goods are not transported by just one means of transport, but rather, they reach their destination via a mix of rail, ship, and truck. The European Union has also defined corresponding targets for this and aims to increase the market share of rail from 18 to 30 percent within Europe by 2030. To this end, The EU is attempting to simplify cross-border transportation in Europe to make long-distance freight transportation more attractive. The sector is, thus, at the center of a global initiative for more sustainable transportation routes.

Do you think the rail sector is doing enough to curb its environmental impact?

I am convinced that we are on the right track but, of course, there is always room for improvement. We basically have to make cross-border transport within Europe more attractive so that rail remains competitive with other means of transportation, such as trucks or shipping. We also need to make further investment into electrification so that electric-powered locomotives become the standard. Companies can do their part by investing in digital and sustainable technologies. At Touax, for example, we are currently investing in a new GPS system for our wagons to enable better data collection on their usage and capacity. This will enable us to manage where and what wagons to use in a more efficiently and sustainable manner. We are also investing in new brakes system to mitigate the noise as much as possible. These seemingly little things can make a big difference.

You recently issued your first green loan - why did you choose this instrument? What are the benefits?

There is a great willingness within the industry to become more sustainable. At Touax, we already invest in sustainable equipment and are part of a greener transport network. At some point, we asked ourselves what more we could do. We then worked with ING to explore different sustainable financing options for our existing portfolio. It was very important for us to demonstrate that we are aware of our social responsibility and continue to look for ways to become even more sustainable. Our freight wagon portfolio is equivalent to 22g CO2 e/tkm, well below the limit of 40g CO2 e/tkm set by the Technical Expert Group on Sustainable Finance in their advice for an EU Taxonomy. Therefore, the Green Loan was the best financing solution for us. This financing is evidence of what sustainable rail transportation can be today and is also an important signal to new partners and our investors.

For us, however, this transaction is just the beginning in the field of sustainable finance. In a few years, we hope to be ready to issue our first Sustainability Improvement Loan, which links the external sustainability rating of our performance with the interest rate of the loan.

How do you think banks can best support companies to become more sustainable?

Banks play a crucial role since the field of sustainable finance is still quite new for many companies. First, it is important that banks make their clients aware of sustainable financing solutions because many are often not aware that there are alternatives to traditional financing. ING advised us on which instrument best suited our situation and contributed their expertise in structuring the financing. I believe with their in-depth expertise and structuring resources, banks can best support their clients in the area of sustainable financing.

What are the next steps on your way becoming more sustainable?

We will of course continue to invest in sustainable transport equipment and technology. We will also be looking more into sustainable financing options step to allow us be able to use more complex products such as the Sustainability Improvement Loan in the future. Ultimately, this type of financing also serves as a financial incentive for us to operate more sustainably.

TOUAX: Successful asset refinancing

In December 2020, Touax announced the refinancing of its Railcar division for total of EUR 180 million Euro. ING was one of the arranger banks – together with Credit Agricole CIB and Landesbank Hessen-Thüringen Girozentrale - and also acted as Green Advisor for structuring a Green Loan in alignment with the Green Loan Principles. For more information on the transaction, click here.

About Touax:

TOUAX Group leases freight wagons, river barges and containers worldwide. With managed assets of nearly 1.1 billion euros, TOUAX is one of the leading European players in the leasing of such assets.

For more information please visit: www.touax.com