Operail closes its wagon rental business for good

Operail closes its wagon rental business for good
@Raul Mee

AS Operail Leasing sold its last 1,036 rental wagons in February and March for a price of 22.7 million euros. This means that all the wagons owned by Operail Leasing have been sold and the rental business has ended.


The opportunity to participate in the auction of the assets of Operail Leasing, a subsidiary of Operail, the Estonian state railway group, was presented to more than forty companies. Twenty interested parties submitted their bids at different stages of the process.

The sale took place in three stages. In the first phase, last December, 522 wagons located in Ukraine were sold for 6.51 million euros. In the second phase, last December and this January, Operail concluded sales contracts with two buyers who bought 807 wagons at a price of 22.1 million euros.

In the third stage, in the last few months, Operail sold all the remaining 1,036 rental wagons of Operail Leasing. As a result of the auction, the wagons were sold to six Estonian companies and one company from Kazakhstan. The total value of these transactions was 22.7 million euros.

“Overall, the detailed sales process and its result can be considered a success for Operail, although it turned out to be longer than originally planned due to the war in Ukraine. For us, the sale of all rental wagons means that the Operail Leasing wagon rental business can be considered finished,” said Merle Kurvits, Member of the Management Board of Operail and Executive Director of Operail Leasing.

Wagon rental has been Operail's most profitable business for the past six years, accounting for 99% of its profits. In the period 2017-2022, the wagons of Operail and Operail Leasing earned a total of 68 million euros in rental income.

Operail started wagon rental in 2001, when the company was still part of AS Eesti Raudtee. In 2009, the wagon rental business together with freight transport was transferred to a separate company, EVR Cargo (later Operail). In 2017, the business was expanded and more wagons were purchased. In the summer of 2021, the rental of wagons was concentrated in the subsidiary Operail Leasing.

“The reason for expanding the business was that after the events of the Bronze Night (protests by Russian-speaking residents in Tallinn), Russian transit through Estonia decreased significantly and freight transport separately was no longer self-sustaining. As freight transport is strategically important for the country, it was necessary to find ways to remain economically viable. We were looking for alternative income until freight transport in Estonia could be optimised and reformed. The media has given the impression that the wagon rental is the ‘Russian business’ of Operail. This is not true, the business was started for the opposite reason – to reduce dependence on the transport of goods in transit from Russia,” recalls AS Operail Chairman of the Management Board Raul Toomsalu.

Throughout the period of operation, the business model has been to lease wagons to European companies, which use them to transport goods on the 1,520 mm railway, both domestically and internationally.

Since wagon leasing is not a strategically important activity for the state, and since this sector is also successful in the free market, the state decided to get out of the business. The idea was written into the coalition agreement in 2016, and in practice the withdrawal began in the spring of 2021. In the spring of 2022, due to Russian aggression, the method of sale changed - instead of partial privatisation of AS Operail Leasing, it was decided to sell its assets.

Join Our Circle of Insiders: Receive the Weekly Digest That Keeps You Ahead!

Not using RAILVIS Platform yet?

Rent a wagon, sell a locomotive, find a container, convert free capacity to profit. The RAILVIS Platform is the tool you need. It's faster, better organized, and more secure than email or phone calls.

Try RAILVIS Railway Marketplace
RAILVIS screenshot

Related

Featured