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Efficient logistics

Efficient logistics

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G
r
e
e
n
C
a
r
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o
’s
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l a
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in
a
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p
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t
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p
o
r
t
2
0
0
8

Co-operation for more
sustainable logistics

Annual and sustainable development report 2008

CEO’s report

2

External factors

7

Our solutions

18

Administrative report
About Green Cargo

25

Our stakeholders

28

Business management

30

Board of Directors

32

Executives

33

Scorecard

34

Safety

37

Employees

38

Society

40

Environment

41

Customers

44

Finance

45

Risks and risk management

52

Outlook and proft appropriation

56

Income statements

57

Balance sheets

58

Changes in equity

60

Cash fow statements

61

Notes

62

Signatures

95

Audit report

96

Corporate governance report

97

Defnitions

99

Green Cargo reports its work with sustaina-
bility issues using the framework set out in
the international reporting standard, GRI
(Global Reporting Initiative). The sustainabil -
ity report includes the information in Green
Cargo’s Annual and sustainable development
report 2008, pages 25–99, and defnitions of
measurement methods and GRI cross-refer-
ences located on Green Cargo’s website,
www.greencargo.com. The sustainability
report encompasses Green Cargo AB. The

Parent Company represents approximately
87 percent of Green Cargo Group’s net sales
and, as a result, has the greatest impact on
sustainable development. The most important
sustainability aspects are presented on pages
34–51 and form what we refer to as our Score-
card. The fnancial, environmental and social
issues discussed here represent the factors
that we and our primary stakeholders believe
to be signifcant for Green Cargo’s success.
The Scorecard was introduced in 2002 and

serves as a governance tool based on internal
and external requirements and expectations
on our operations.
The sustainability report is attested sepa-
rately by the company’s auditors. Their verif-
cation report is located on Green Cargo’s
website, (www.greencargo.com).

For more information,
please contact Erica Kronhöffer,
erica.kronhoffer@greencargo.com.

Effcient green logistics – a sustainable formula
for success. For us and our customers.

Sustained domestic
rail punctuality in 2008 for the
second consecutive year.

95%

VISION

Green Cargo will be the leading logistics company that builds on and
contributes to sustainable national and international development.

BUSINESS CONCEPT

To offer sustainable logistics solutions that take into consideration
social responsibility, the environment and proftability.

Operating income, 2001–2008

SEK million

0

1000

2000

3000

4000

5000

6000

7000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

01

02

03

04

05

06

07

08

Rail share of freight in Sweden
transported more than 100 kilometres.

25%

Green Cargo Rail, income per sector, 2008

Percent

0

10

20

30

28

23

15

13

12

9

Steel

Forestry/
Paper

Intermodal/
Contract

Whole-
sale/Retail

Automotive/
Engineering

Chemical/
Energy

30

20

10

0

6,1516,170

6,192

5,9505,8645,8836,1576,432

Green Cargo offers effcient green logistics using rail trans-
ports as its base. The company is mainly present in the Nordic
region, although its footprint in other areas of Europe is contin-
uously increasing. This expansion is the natural result of Green
Cargo’s efforts to accompany its customers onto the Continent
and co-operate with other international rail and logistics opera-
tors. We are to a greater extent integrating road transports and
different types of logistics services into our rail solutions, while
also offering these services as separate products.

We should always take our surround-
ings into consideration and our opera-
tions should not in any way have nega-
tive effects. We value good dialogue
with our employees, customers, owners,
neighbours and other stakeholders af-
fected by our operations. Our social
sustainability activities are continuously
measured in three target areas: safety,
employees and society.

Score (Parent Company)

Target

Score

Target

2008

2008

2009

Traffc-safety index, rail

94.5

92.7

94.5

Traffc-safety index, road

94.5

95.3

94.5

Accident costs, rail, SEK million

9.56

13.17

9.65

Average no. of full-time equivalents 1

2,861

2,859

Sick leave rate, %

4.0

4.0

4.5

No. of direct activities carried out

70

215

150

Green Cargo Volunteer, no. of hours

2,400

739

1,500

We strive to constantly enhance
company-wide effciency and quality
via operational excellence. In this way,
we will ensure that our customers are
satisfed and achieve stable fnancial
results that will allow us to continue
developing long-term sustainable
logistics solutions. The outcome also
refects the success of our efforts in
our other target areas.

Score (Parent Company)

Target

Score

Target

2008

2008

2009

Customer satisfaction (customer’s overall assessment)

71

65

71

Punctuality to customer, %, domestic rail

95

95

95

Picking quality, logistics, complaints/1,000 order lines

1.5

0.7

1.5

Invoicing quality, road, credit notes, %

0.13

0.14

0.13

Operating margin, % 1

4.9

2.2

Return on equity, % 1

12

0

Equity/assets ratio, % 1

38

35

Financial SuSTainabiliTy

Our strength is in our fossil-fuel-free
transports (91%); carbon dioxide
emissions are one of the most dan-
gerous threats to the environment.
Reducing fuel consumption in diesel
rail and road transports by 9% is an
essential focus. We are constantly
seeking new ways to minimise the
effects from our operations.

Score (Parent Company)

Target

Score

Target

2008

2008

2009

Environmental performance, g CO2/tonne km,
electric and diesel trains

2.8

3.1

2.7

Environmental performance, g CO2/tonne km, trucks 52.0

52.9

51.7

No. of Green Cargo Climate Certifcates issued

30

24

30

Environmental values from Customer Dialogue

64

71

72

Environmental image, index from Employee Dialogue 77.0

75.3

78.0

Environm

EnTal

SuSTainabiliTy

Social SuSTainabiliTy

1)

Due to uncertainty on the market, we have opted not to report this target for 2009.

Recent surveys show that the
sustainability concept has been so
well received by both consumers and
businesses that green arguments are
proving to be much more resistant
during the current economic
downswing.

1)

Due to uncertainty on the market, we have opted not to report this target for 2009.

Effcient green logistics – a sustainable formula
for success. For us and our customers.

Sustained domestic
rail punctuality in 2008 for the
second consecutive year.

95%

VISION

Green Cargo will be the leading logistics company that builds on and
contributes to sustainable national and international development.

BUSINESS CONCEPT

To offer sustainable logistics solutions that take into consideration
social responsibility, the environment and proftability.

Operating income, 2001–2008

SEK million

0

1000

2000

3000

4000

5000

6000

70007,000

6,000

5,000

4,000

3,000

2,000

1,000

0

01

02

03

04

05

06

07

08

Rail share of freight in Sweden
transported more than 100 kilometres.

25%

Green Cargo Rail, income per sector, 2008

Percent

0

10

20

30

28

23

15

13

12

9

Steel

Forestry/
Paper

Intermodal/
Contract

Whole-
sale/Retail

Automotive/
Engineering

Chemical/
Energy

30

20

10

0

6,1516,170

6,192

5,9505,8645,8836,1576,432

Green Cargo offers effcient green logistics using rail trans-
ports as its base. The company is mainly present in the Nordic
region, although its footprint in other areas of Europe is contin-
uously increasing. This expansion is the natural result of Green
Cargo’s efforts to accompany its customers onto the Continent
and co-operate with other international rail and logistics opera-
tors. We are to a greater extent integrating road transports and
different types of logistics services into our rail solutions, while
also offering these services as separate products.

We should always take our surround-
ings into consideration and our opera-
tions should not in any way have nega-
tive effects. We value good dialogue
with our employees, customers, owners,
neighbours and other stakeholders af-
fected by our operations. Our social
sustainability activities are continuously
measured in three target areas: safety,
employees and society.

Score (Parent Company)

Target

Score

Target

2008

2008

2009

Traffc-safety index, rail

94.5

92.7

94.5

Traffc-safety index, road

94.5

95.3

94.5

Accident costs, rail, SEK million

9.56

13.17

9.65

Average no. of full-time equivalents 1

2,861

2,859

Sick leave rate, %

4.0

4.0

4.5

No. of direct activities carried out

70

215

150

Green Cargo Volunteer, no. of hours

2,400

739

1,500

We strive to constantly enhance
company-wide effciency and quality
via operational excellence. In this way,
we will ensure that our customers are
satisfed and achieve stable fnancial
results that will allow us to continue
developing long-term sustainable
logistics solutions. The outcome also
refects the success of our efforts in
our other target areas.

Score (Parent Company)

Target

Score

Target

2008

2008

2009

Customer satisfaction (customer’s overall assessment)

71

65

71

Punctuality to customer, %, domestic rail

95

95

95

Picking quality, logistics, complaints/1,000 order lines

1.5

0.7

1.5

Invoicing quality, road, credit notes, %

0.13

0.14

0.13

Operating margin, % 1

4.9

2.2

Return on equity, % 1

12

0

Equity/assets ratio, % 1

38

35

Financial SuSTainabiliTy

Our strength is in our fossil-fuel-free
transports (91%); carbon dioxide
emissions are one of the most dan-
gerous threats to the environment.
Reducing fuel consumption in diesel
rail and road transports by 9% is an
essential focus. We are constantly
seeking new ways to minimise the
effects from our operations.

Score (Parent Company)

Target

Score

Target

2008

2008

2009

Environmental performance, g CO2/tonne km,
electric and diesel trains

2.8

3.1

2.7

Environmental performance, g CO2/tonne km, trucks 52.0

52.9

51.7

No. of Green Cargo Climate Certifcates issued

30

24

30

Environmental values from Customer Dialogue

64

71

72

Environmental image, index from Employee Dialogue 77.0

75.3

78.0

Environm

EnTal

SuSTainabiliTy

Social SuSTainabiliTy

1)

Due to uncertainty on the market, we have opted not to report this target for 2009.

Recent surveys show that the
sustainability concept has been so
well received by both consumers and
businesses that green arguments are
proving to be much more resistant
during the current economic
downswing.

1)

Due to uncertainty on the market, we have opted not to report this target for 2009.

G
r
e
e
n
C
a
r
g
o
’s
a
n
n
u
a
l a
n
d
s
u
s
t
a
in
a
b
le
d
e
v
e
lo
p
m
e
n
t
r
e
p
o
r
t
2
0
0
8

Co-operation for more
sustainable logistics

Annual and sustainable development report 2008

CEO’s report

2

External factors

7

Our solutions

18

Administrative report
About Green Cargo

25

Our stakeholders

28

Business management

30

Board of Directors

32

Executives

33

Scorecard

34

Safety

37

Employees

38

Society

40

Environment

41

Customers

44

Finance

45

Risks and risk management

52

Outlook and proft appropriation

56

Income statements

57

Balance sheets

58

Changes in equity

60

Cash fow statements

61

Notes

62

Signatures

95

Audit report

96

Corporate governance report

97

Defnitions

99

Green Cargo reports its work with sustaina-
bility issues using the framework set out in
the international reporting standard, GRI
(Global Reporting Initiative). The sustainabil -
ity report includes the information in Green
Cargo’s Annual and sustainable development
report 2008, pages 25–99, and defnitions of
measurement methods and GRI cross-refer-
ences located on Green Cargo’s website,
www.greencargo.com. The sustainability
report encompasses Green Cargo AB. The

Parent Company represents approximately
87 percent of Green Cargo Group’s net sales
and, as a result, has the greatest impact on
sustainable development. The most important
sustainability aspects are presented on pages
34–51 and form what we refer to as our Score-
card. The fnancial, environmental and social
issues discussed here represent the factors
that we and our primary stakeholders believe
to be signifcant for Green Cargo’s success.
The Scorecard was introduced in 2002 and

serves as a governance tool based on internal
and external requirements and expectations
on our operations.
The sustainability report is attested sepa-
rately by the company’s auditors. Their verif-
cation report is located on Green Cargo’s
website, (www.greencargo.com).

For more information,
please contact Erica Kronhöffer,
erica.kronhoffer@greencargo.com.

Many actors are joining forces
to advocate smart logistics.

2

CEO’s rEpOrt

Sustainable, smart logistics despite the crisis

We have built our entire logistics operations around the
concept of a sustainable balance between three develop-
ment perspectives: People, Planet and Proft. We believe
that the best way to successfully weather the current
downturn is to remain true to this formula for smart logis-
tics.

Like most CEOs, I wish I could limit my comments to the frst
three quarters of the year. We exercised normal levels of con-
trol during this period and our strategies were being tested
against given conditions. Green Cargo witnessed stronger vol-
umes and sales than the previous year, and profts, even if
somewhat lower, were well into the black.
Like for many other companies, Green Cargo’s story in the
fourth quarter took a considerable turn for the worse. The turn-
ing point can almost be traced to a specifc day, October 1,
when volumes, which had started off the fall season in line with
trends from previous years and about 3 percent ahead of 2007,
collapsed. The industry abruptly ground to a halt, taking us
with it. We lost the entire upswing for the year and observed
the start of a volume crash that we have never previously expe-
rienced. Volumes have not fallen this rapidly since 1992 and,
unsurprisingly, our proft suffered a heavy blow. Proft after net
fnancial items decreased to SEK 27 million.
The start of 2009 has demonstrated similarly grim trends. To
protect our competitiveness in the slowing economy, we have
initiated a forceful action plan that will reduce overhead and
operating costs in our rail operations.

“COmpEtitivE priCEs” vs.

“high EnvirOnmEntal standards”

From our perspective, one major unknown factor is the degree
to which the recession will affect our industry at its foundation.
In addition to the decrease in total transport volumes, experi-
ence from previous downturns has shown us that attributes
such as sustainability and environmental performance become
less of a priority as than low transport prices. We usually talk
about “competitive prices” versus “high environmental stand-
ards”. However, a number of recent surveys indicate that sus-
tainability values have been so frmly entrenched among both
consumers and businesses that green arguments are proving
to be much more resistant during the current economic down-
swing.

Quality is always a top priority for transport customers – fol-
lowed by price and the environment. Our quality levels for do-
mestic Rail and for Logistics are the light in the midst of this

economic crisis. We regularly ask our customers what they be-
lieve is most important about our services. For our transport
customers, predictability and punctuality are the most crucial.
For our third-party logistics customers, delivery precision is
number one – the right product, at the right time, at the right
place. We measure our punctuality for each customer on a
daily basis, which means that we check that our rail wagons ar-
rive at their destination (delivered to the customer’s siding)
during the promised hour. We track around 40,000 wagons
each month. Within our warehousing operations, we measure
errors as complaints per 1,000 order lines. Our targets mirror
industry requirements and we exceed them on a rolling twelve-
month basis. Punctuality reached 95 percent and picking qual-
ity 99 percent.

We are dedicating extra resources to maintain this high level
of quality, for example reserve capacity to offset disruptions to
the infrastructure. This naturally has an impact on our profta-
bility and one of our greatest challenges is to maintain an ap-
propriate equilibrium in this context. Rail is most effcient for
large basic fows and for large customers, with whom we often
become a partner on a structural level. For the past several
years, we have worked hard to be able to compete with trucks
for smaller customers – for example as a part of intermodal so-
lutions. This should make it possible for more companies to
use smart logistics – where the cost is right for both the cus-
tomer and the environment.
Improving our own environmental performance is particu-
larly essential for a company like ours that has the beneft of
offering the most environmentally-friendly method of transpor-
tation available on the market. We are fully aware that we must
also be judged on our achievements above and beyond the
benefts we inherited from the nature of our business. We are
engaged in ongoing discussions with STR (National Associa-
tion of Swedish Driving Schools) about how to continue to de-
velop the concept of Eco-Driving Rail. The largest potential for
savings is in our rail and road diesel transports. We will com-
plete our investments in new locomotives and wagons, which
should further improve our environmental performance. Our in-
vestments in the renewal of the feet for the period 2008–2011
will total SEK 2.2 billion. Twenty-one percent of the new feet
was delivered in 2008 and an additional 35 percent is planned
for delivery in 2009.
Sustainability has become a buzz word in recent years. There
is a risk that the concept will become watered down if we are
not vigilant and if we do not understand its deeper meaning. I
do not mean to boast, but I would say that Green Cargo has

3

4

CEO’s rEpOrt

been involved in defning the concept of sustainable logistics in
Sweden. When the company was founded in 2001, the Execu-
tive Management and the Board of Directors determined that
the company’s core value would be sustainable development.
We then built our entire system around three fundamental de-
velopment concepts: People, Planet and Proft. We have de-
signed our management system around these concepts and
are now starting to see that our core value truly works.
The harsh conditions of the next few years will put our model
to the test. As CEO for Green Cargo, I will not move away from
our established course. We will make it through crises and fall-
ing demand with an unwavering belief in our concept and never
consider systems that have a more narrow fnancial focus.
People, Planet and Proft is the motto we live by under all con-
ditions. We believe in a sustainable life even after this crisis.

CapaCity dEfiCiEnCiEs in thE infrastruCturE

must bE sOlvEd bOth in thE lOng and shOrt tErm

There has been a lot of discussion around the defciencies of
the existing infrastructure for both road and rail. I take the po-
sition that the demands put forward are highly relevant. Invest-
ing in a modern rail system is synonymous with providing the
conditions for a sustainable future. Along with other rail freight
operators, we are prepared to pay track fees for new high-
speed tracks in exchange for the Swedish National Rail Ad-
ministration’s release of capacity in the existing infrastructure.
However, those of us that work in the transport industry and
intend to do so in the long run must realise that customers will
not wait 5-20 years for us to build new road or rail systems. We
need to be innovative and make sure that we are creating cus-
tomer value with the resources available to us today.
This is of particular importance for those of us who have
built our operations around the rail system. After the frst oil
crisis thirty-fve years ago, the general belief was that rail
would emerge the winner. However, that proved not to be the
case. Trucks made the most of their fexibility and actors in the
road transport industry found creative solutions for enhancing
customer value. Once again, we have found ourselves in a situ-
ation where the possibilities of rail are in the spotlight. We can-

not afford to sit and wait for new tracks while new customers
are looking to improve their carbon footprint. Capacity is avail-
able for additional freight transports, particularly at night. Bet-
ter planning processes and systems would allow us to ft more
freight transports onto the tracks than we already do. A com-
mon message standard between shippers, transporters and
infrastructure owners at the national or, even better, global
level, would also dramatically improve utilisation of the trans-
port system. All of these measures would lead to a more sus-
tainable transport sector. If the Government and actors in the
transport industry were to invest several billion into better plan-
ning and communication, we would be able to realise the effects
even sooner.

The frst thing that needs to be done is to make sure that the
entire rail network is electrifed. Sweden still has long stretches
of rail lacking electrifcation and, to reach these areas, we are
sometimes forced to drive diesel locomotives on electrifed rail
in order to deliver the wagons to the promised customer rail-
way track. If the Swedish National Rail Administration invested
in just over 200 km of electrifcation, we, and the industry in
general, could reduce the environmental impact of rail by half.
Bottlenecks in the rail system must also be removed, as well
as the regional mindset that is present. If we were to receive in-
creased rail capacity in the Skåne region, we would be able to
boost the effciency of heavy industrial transports between
Västerbotten and Europe, which would make Västerbotten’s
county governor very happy. If steel from Luleå, trucks from
Umeå and paper from Sundsvall are to maintain their competi-
tiveness, rail capacity needs to be better across the country as
a whole.

COntinuEd COmmitmEnt tO

intErnatiOnal transpOrts

Green Cargo has made major improvements to its opportuni-
ties to offer high-quality, competitive international rail traffc.
During the year, we have focused our energy on restructuring
our Danish operations – DB Schenker Rail Scandinavia A/S –
together with our co-operation partner, DB Schenker. This now
gives us access to an effcient corridor, primarily between
Malmö and Hamburg. Three new lines with direct traffc opened
during the year and previous transport solutions, such as the
Volvo train, are now pulled by the same locomotive all the way
from Älmhult to the Dutch border. It is our shared ambition to
increase continental traffc and offer the market not only addi-
tional capacity, but above all improved quality.
Green Cargo has played a leading role in the development

Our quality targets mirror industry
require ments and we exceed them
on a rolling twelve-month basis.
Punctuality reached 95 percent and
picking quality 99.8 percent.

5

CEO’s rEpOrt

of an alliance for rail freight in Europe, XRail. Along with fve
other major operators, we are aiming to build a revitalised pan-
European network for single wagon load traffc. During the
second half of 2009, we will be able to offer the frst transports
in Europe that fully meet the quality expectations of the mar-
ket. In the long run, our ambition is to be able to apply this offer
to the majority of our shared networks.
As a principal sponsor, we are also heavily involved in the ITS
(Intelligent Transport Systems) World Congress that will be
held in 2009 in Stockholm. This congress will provide us with a
platform to advocate a global interface for the exchange of in-
formation between freight owners and transport companies.
This could improve the utilisation of road, water, rail and air
transports as a whole.

tOward wOrld-Class CustOmEr sErviCE

One positive trend we are witnessing is interest from new cus-
tomers, often customers who have never used rail transports
before. Through our third-party logistics unit of the Logistics
division, we initiated new contacts that led to new solutions
featuring primarily intermodal transports. One example is our
new agreement with Coop for a daily shuttle service between
Skåne – Mälardalen and Norrland. We have previously estab-
lished rail solutions with Bauhaus, which is active in the build-
ing sector, and wine importer Fondberg, after initially serving
as a partner for their third-party logistics. I am convinced that
we will be able to fnd more new customers based on our ap-
proach to smart logistics.
One of my frst acts as CEO one and a half years ago was to
establish a new customer service division with the goal of cre-
ating “world-class customer service”. A little over a year later, I
can report that we have taken several signifcant steps in the
right direction. Our customer surveys confrm that we have be-
come signifcantly more pro-active, a crucial dimension of all
customer service. We have established effcient procedures
for communicating successes and obstacles in our commit-
ments to our customers. The systems, people and procedures
are now in place, but this does not mean that from now on it is

If we were to receive increased rail capa-
city in the Skåne region, we would be able
to boost the effciency of heavy industrial
transports between Väster botten and
Europe, which would make Västerbotten’s
county governor very happy.

smooth sailing. We had signifcant problems with regard to in-
voicing during the year and I would like to take this opportunity
to apologise to our customers for this.

a tEst Of thE timEs intErnally

We are not meeting our internal targets for traffc safety, which
are consciously set at a higher level than what is required by
the authorities and the industry. We want to create such high
levels of safety that there is no doubt what we consider to be
our highest priority.
We worked intensively during the year to train the 1,800 peo-
ple with traffc-safety duties at Green Cargo. We focused on
our knowledge of and attitude toward safety issues. We know
that when an operation is functioning well and has not be bur-
dened with accidents, there is a tendency to lower one’s guard.
We never compromise on safety; we do not allow our trains or
trucks to enter into traffc if safety levels are not at least in line
with our standards. In our warehouses, we give safety the same
high priority. Despite this focus, incidents still occur and, in
some cases, accidents. For this reason, we worked intensively
last fall to establish an open, honest reporting culture and im-
plemented a new reporting system that we used during the year
to identify additional improvements to our procedures.
We started the year by increasing the number and educa-
tion of locomotive drivers. Unfortunately, we had to conclude
the year by letting people go. We believe it is equally important
to focus on the situation of our employees during good times
as well as bad times. I must confess that the rapid change from
growth to falling volumes and proft has put our company and
leadership to the test. I am looking forward to our next em-
ployee dialogue and hearing what our employees think.
Last year’s annual report focused on our relations with em-
ployees and customers. These relationships continue to be our
foremost priority even as our focus shifts to proftability.

Stockholm, February 2009

Sören Belin
CEO

6

OmvÄrld
OmvÄrld

a wEll-tailOrEd fit

Green Cargo’s responsibility for Lindex’s ready-to-
wear clothing on hangers begins already at the Port of
Gothenburg when the freight arrives from the Far East.
On an annual basis, 800,000 garments pass through
Green Cargo’s logistic centre in Gothenburg. There,
the clothes are unpacked, hung, steamed, marked and
ftted with alarm tags before distribution on hangers to
all of Lindex’s stores in Sweden, Finland, Norway, the
Baltics and the Czech Republic. Green Cargo’s contain-
ers are specially equipped to enable the freight to hang
all the way from the warehouse to the store, and they
can be used for both road and rail transports. Seventy-
fve percent of the long-haul shipments are transported
by train. For the last stretch, trucks and local drivers are
used. In addition to ready-to-wear clothing on hangers,
Green Cargo annually transports large volumes of
clothing packed in boxes to stores in Norway from
Lindex’s warehouse outside of Gothenburg.

Clothing by sea
from the Far East

Terminal

Truck

Truck

Train

Train

Train

Train

Here we handle 800,000
hanging garments + 27,000 m3
of clothing in boxes

Delivery to
Czech Republic
and the Baltics

Co-operation partner
for distribution in Finland
– Itella logistics

7

ExtErnal faCtOrs

Financial downturn and future ventures

The 2008 fnancial year was characterised by falling de-
mand for logistics services as a result of the rapid con-
traction of the world economy. At the same time, the
share of rail freight increased. Today, rail is viewed as
the mode of transport for the future – it is environmen-
tally friendly, safe and effcient. Investments in infra-
structure and an increased global focus on the environ-
ment are contributing to a larger number of intermodal
logistics solutions both nationally and internationally.

The 2008 fnancial year was characterised by falling demand
for logistics services as a result of the rapid contraction of the
world economy. At the same time, the share of rail freight in-
creased. Today, rail is viewed as the mode of transport for the
future – it is environmentally friendly, safe and effcient. Invest-
ments in infrastructure and an increased global focus on the
environment are contributing to a larger number of intermodal
logistics solutions both nationally and internationally.
Sweden is experiencing its weakest fnancial situation since
the 1990s and business transactions are at a historic low. Ex-
port growth has cooled and many Swedish companies are
fnding that customers are cancelling previously placed orders
due to fnancing problems. The atmosphere in the industry is
extremely pessimistic and production volume is expected to
decrease sharply in most industries during 2009.
The National Institute of Economic Research believes that
the global downturn and the fnancial crisis will continue to
have a considerable impact on the Swedish economy during
2009. GDP is falling and the business cycle is expected to bot-
tom out in 2010 before rebounding 2011. In 2008, the customer
segments that were hardest hit were in the export industry,
which contributed to decreasing freight fows of, for example,
steel, timber and automobiles. Freight volumes also decreased
in the wholesale and retail sector, with the exception of food
and alcohol, which continued to show strong growth.

dEClining ECOnOmy impOsEs

hEavy blOw tO thE industry

The forestry industry is currently facing considerable chal-
lenges. With the exception of hygiene products, there is no in-
dication of a reprieve during the coming year and experts be-
lieve that, even after a turnaround, volumes will continue to be
low in the long run. The Swedish Forest Industries Federation,
an industry organisation, estimates that the production drop
will cause a contraction in timber consumption on an annual
basis of more than 3 million m3

sub (solid volume under bark),

which corresponds to more than 4 percent of the annual timber
consumption in the Swedish industry.
The steel and automotive industries are also facing a diff-
cult future. The demand for steel is expected to decrease over
the next few years, which will contribute to decreased freight
volumes and the risk for even more redundancies. Orders in
the automotive industry are also expected to continue to de-
crease during 2009.
Within the wholesale and retail sector, purchasing behav-
iour has gone from being loan-fnanced to salary-fnanced.
The electronics industry has been hit hardest and it is working
hard to offer customers competitive fnancing solutions. The
Swedish Retail Institute (HUI) is not ruling out structural trans-
actions in the near future. The wholesale and retail segments
least affected were food and alcohol.

glObalisatiOn drivEs intErmOdal dEvElOpmEnt

Global trade has increased 30-fold since World War II and is
expected to reach even faster growth rates than domestic vol-
umes in the long term. Increasing global trade fows mean that
shippers are launching increasingly larger ships. In 2012, the
number of ships with capacity exceeding 10,000 TEU is ex-
pected to reach 205. Because of the size of these new ships,
the shipping companies are expected in turn to establish hubs
on all continents. During the period 2006–2007, Hamburg’s
port grew by 1 million TEU, which is more than twice the volume
of the Port of Gothenburg.
Every year, 1 million trucks pass the Hallandsåsen ridge,
many of which are shuttling between Sweden and Hamburg.
This is why Hamburg, together with Gothenburg, is one of
Sweden’s most important junctions. Hamburg’s port is ex-
pected to double its sales to 18 million TEU by 2015. The con-
centration of large container ships to a small number of ports
places considerable demands on land-based logistics. More
intermodal rail transports are necessary to maintain a func-
tional logistics system. Rail competition to and from Europe’s
largest ports is expected to increase dramatically in the next
few years. Deutsche Bahn and Green Cargo are not the only

The concentration of large container ships to
a small number of ports places considerable
demands on land-based logistics. More
intermodal rail transports are necessary to
maintain a functional logistics system.

8

ExtErnal faCtOrs

actors investing in continental rail traffc. In 2008, Hector Rail
and TX Logistik also developed their international offering, for
example with direct rail transport to the Ruhr Area in Germany.
Another factor that will affect the development of Hamburg’s
port is the route to China via the Trans-Siberia Railway. Traffc on
this route is expected to start in 2009. Test-runs have shown that
transports take 15 days, which is half the time it takes by sea.

sharE Of rail frEight is inCrEasing

In Sweden, 25 percent (source: Swedish National Rail Adminis-
tration) of freight travelling more than 100 km is transported by
rail, compared to the EU average of 16 percent, and this number
is increasing. The increase can be traced to high quality, a larg-
er selection of creative and cost-effcient logistics solutions

and improved co-operation with sea and road transports. Rail
transports are also environmentally friendly and energy-eff-
cient. From a sustainability perspective, rail will therefore play
a key role in decreasing the greenhouse gas emissions of the
transport sector. It is most effcient to use rail for long energy-
intensive transports and trucks for shorter hauls to and from
the terminals. Swedish rail is 90 percent powered by renewable
energy, which is positive from a climate perspective.
High oil prices have been a problem for the logistics industry
for a long time – in particular for road, sea and air transports.
Companies that offer rail-based logistics solutions, on the other
hand, have benefted despite sharp increases in the price of
electricity. After a sustained period at record-high levels, the
price of oil plunged during the second half of 2008. However, un-

9

certainty surrounding what will happen with fuel prices in the fu-
ture is expected to beneft rail.
Road transports have long been characterised by heavy
competition. In the short-term, the hauling industry can beneft
from temporarily low oil prices and improvements to the fuel
effciency of trucks. However, from a longer perspective, costs
are expected to increase due to raised taxes on vehicles and
road tolls. This increase, combined with surplus capacity in the
industry, can lead to structural transactions in the future. An
effcient intermodal rail solution can play an important role
while the road transport industry is rebuilding itself.
During downturns in the business cycle, many companies opt
to outsource their logistics operations. This means that there is
a negative relationship between the business cycle and third-
party logistics growth. The trend toward regional distribution
centres in Europe is contributing to the growth of peripheral
services such as inbound freight and distribution as well as in-
ternational solutions for return fows.

many COntributiOns tO sustainablE transpOrts

Around 200 million tonnes of freight pass through Swedish ports
every year. This makes Sweden one of the most shipping-de-
pendent countries in the world. Import volumes by sea increased
in 2008, which further strengthens the ports’ signifcance for to-
tal freight traffc in the country. Investments by the ports in rail
connections and the swelling number of rail shuttles to the ports
increase their opportunities for growth. Sustainable logistics so-

lutions also beneft from investments by municipalities and the
private sector – whether self-initiated or in consultation with
ports and rail operators.
Nässjö Logistic Park is the result of a partnership between
the municipality and the private sector to build a combi termi-
nal and provide transport services. In recent years, major in-
vestments in rail infrastructure have strengthened Nässjö’s
position as a hub. This has led to the creation of new jobs and
cost-effcient transport solutions to and from the Port of
Gothenburg. Other examples of municipalities and companies
investing in the development of rail logistics in Sweden include
a new rail branch line at Nykvarn, which was a prerequisite for
Volkswagen’s decision to base its large warehouse in the area.
Falun renovated Ericsson Cable’s industrial tracks and rail
transports were resumed. Örnsköldsvik Municipality’s con-
struction of a combi terminal by the Bothnia Line is also an in-
vestment in increased intermodality.
Södertälje, Botkyrka and Huddinge are investing in the Nor-
dic region’s largest power and heating plant fueled by bioen-
ergy. In October 2008, Söderenergi signed an agreement with
Green Cargo for the rail transport of biofuel to a terminal in

Sweden’s international freight traffc by rail, import and export, 2008

Import Export

Tonne, thousands

0

500

1000

1500

2000

2500

3000

3500

Export
Import

Other

Finland

The Nether-
lands

Poland

Denmark

Austria

France

Belgium

Italy

Norway
excl. ore

Germany

ExtErnal faCtOrs

The Götaland Line and the Europe
Line would free rail capacity for up to
three times the amount of freight the
current rail network can handle.

Source: Swedish National Rail Administration

816

469

438

331

283

260

249

223

463

2,361

3,500

3,000

2,500

2,000

1,500

1,000

500

0

3,100

10

ExtErnal faCtOrs

CO

2 per net tonne kilometre,
average in Sweden

Grams

1)

Heavy truck with trailer, 70% fll rate.

Data for calculations: NTM

2)

80% electric train, 20% truck.

www.ntm.a.se

0

10

20

30

40

50

0,003

48

10

Electric trainDiesel train

Truck1

Intermodal2

50

40

30

20

10

0

Green Cargo’s development of gross tonne
kilometres and full-time equivalents, 2001–2008

Gross tonne kilometres
Full-time equivalents in rail production, average

2001 = index 100

80

90

100

110

08

07

06

05

04

03

02

01

110

100

90

80

18

Total long-haul (more than 100 km), national1

and

international2

transports, 2008

National International

Percent

1)

Percentages refer to the transport mode’s market share of traffc between national sites.

2)

Percentages refer to the transport mode’s market share of international traffc in Sweden.

3)

Rail’s market share excludes ore transports.

Source: Swedish National Rail Administration

0

20

40

60

80

100

55

23

29

13

16

64

Road

Rail 3

Sea

100

80

60

40

20

0

Intermodal traffc growth in Sweden, 2001–2008

Domestic International

Tonne, thousands

0

1000

2000

3000

4000

5000

6000

7000

utrikes

inrikes

08

07

06

05

04

03

02

01

4000

5000

6000

7000

8000

08

07

06

05

04

03

02

01

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

Source: Swedish National Rail Administration

01

02

03

04

05

06

07

08

Green Cargos1

share of rail transports
and total transports in Sweden2

Rail transports Total transports

Percent

1)

Group.

Source: Swedish National Rail Administration

2)

Estimated market shares based on transport in net tonne kilometres.

0

20

40

60

80

100

79

79

78

78

69

65

64

64

18

18

15

15

15

15

17

17

100

80

60

40

20

0

GNP and transports (index), 2001–2008

GNP Rail Total transports

2001 = index 100

100

105

110

115

120

125

Alla transportmedel

Järnväg

BNP

08

07

06

05

04

03

02

01

125

120

115

110

105

100

Source: Swedish National Rail Administration

01

02

03

04

05

06

07

08

01

02

03

04

05

06

07

08

01

02

03

04

05

06

07

08

11

ExtErnal faCtOrs

Nykvarn outside of Södertälje, operation of the terminal and
road transport to the Igelsta power and heating plant. The in-
termodal transport solution entails a reduction in CO2 emis-
sions by 6,000 tonnes annually compared to only using trucks.

inCrEasEd dEmand lEads tO

bOttlEnECks On thE traCk

There is capacity for larger volumes of rail freight, but rail traf-
fc around our large cities constantly operates at near capacity.
Disruptions cause reliability to fall dramatically. However, an
investigation by the Swedish National Rail Administration
shows that, with an investment level of SEK 50 billion annually
starting in 2010, the share of freight transported by rail can in-
crease 50 percent by 2020. Since infrastructure projects are
both expensive and time-consuming, decisions about major
road and rail constructions, which will take 10–20 years to com-
plete, must be taken now.
In September 2008, the Government presented its Infra-
structure Bill. During the period 2010–2020, SEK 417 billion will
be dedicated to infrastructure, of which SEK 64 billion specif-
cally for the operation and maintenance of public rail. Trees will
be removed from the vicinity of 4,500 km of track to minimise

the risk for disruptions, for example during storms or heavy
snowfall. Cutting trees next to major tracks is one of the issues
for which Green Cargo has successfully lobbied.

high-spEEd traCks frEE up rail

fOr frEight traffiC

As a step in its efforts to resolve the rail capacity issue, the Gov-
ernment has appointed an investigation into high-speed tracks
with a maximum speed of 320 kilometres per hour. The Götaland
Line, Stockholm to Gothenburg via Jönköping and Borås, and
the Europe Line, which connects Sweden to Denmark and Ger-
many, are being considered in this context. One condition for the
Europe Line is the planned Fehmarn Belt bridge. This connec-
tion is expected to promote the development of both freight and
passenger traffc between Scandinavia and the Continent.
The Industrigruppen consortium, consisting of Green Cargo,
SJ, Jernhusen, Alstom and Nordiska Investeringsbanken, con-
ducted its own investigation into high-speed tracks. The conclu-
sion was that high-speed tracks on the Götaland Line and the
Europe Line would free rail capacity for up to a three-fold in-
crease of freight the current rail network can handle. High-speed
tracks are a strategically important investment for Sweden. The

12

ExtErnal faCtOrs

total investment of SEK 100 billion is expected to bring in three
times as much in return over the life of the track, which is esti-
mated to be 60 years. Another key advantage is that only 35
percent would need to be fnanced by public funds; the rest will
be fnanced by regional and private investors as well as by EU
contributions. The Industrigruppen consortium’s investigation,
in which Green Cargo’s CEO Sören Belin was a participant,
takes a positive stance to the build-up of high-speed tracks.
Even if there are strong indications that the investment in
high-speed tracks will be approved, it will not become a reality
until the distant future. One way to free rail capacity on the major
freight routes from a shorter perspective is to expand the rail’s
entry and exit points in Stockholm, Gothenburg and Malmö.
Competition for track today leads to quality issues and delays in
freight traffc. With more, longer sidings, passenger and regional
traffc could pass without freight trains needing to stand still.

striCtEr EnvirOnmEntal

rEquirEmEnts within thE Eu

The EU Commission has presented several initiatives to im-
prove the effciency of freight transport systems within the un-
ion (COM (2007) 607). Its focus is on the development of green
freight transport corridors for rail and sea, support for techno-
logical development both in terms of logistics and vehicles and
a simplifcation of administrative procedures. At the end of
2007, the EU Commission approved a proposal that all Member
States must participate in at least one corridor structure by
2012. Through its partial ownership in DB Schenker Rail Scan-
dinavia, Green Cargo is taking an active role in the freight cor-
ridor that connects Sweden to the Continent.
At the EU summit meeting in December 2008, it was decided
to keep the climate targets from 1990. These targets require
that Member States decrease their greenhouse gas emissions
20 percent by 2020. At the same time, SIKA reported that CO2
emissions from the transport industry increased 9 percent com-
pared to 1990 levels. SIKA indicates in its report that the shift to
intermodal alternatives would make it possible to reduce emis-
sions of CO2 by around 4–5 million tonnes.
The EU Commission is considering raising the emissions
target to 30 percent if it receives broad international support.
High expectations are also being placed on the new American

Government with regard to USA’s climate and energy policies.
The climate targets set by the EU and the Swedish Govern-
ment assume aggressive investments in the infrastructure of
rail freight. Improved capacity and quality in logistics fows and
increased co-operation between infrastructure owners and rail
operators are important for both the competitiveness of EU
countries and their citizens’ quality of life.
The decrease of emissions within the EU will be achieved
through a number of different measures. These measures are
also intended to secure Europe’s supply of energy and the
competitiveness of the industry. The conditions created for the
logistics industry will determine if both of the targets will be
met. In July 2008, the EU Commission reported how the Eu-
rovignette Directive would be developed to link external costs,
for example CO2 emissions, to each mode of transport. This
will drive intermodal development; even if truck engines are im-
proved and enhance their environmental performance, the
share of freight transported by rail must increase if the climate
target will be met. As of 2013, air transports will also be in-
cluded in EU’s system for the trade of emissions rights.

Eight Out Of tEn willing tO pay

fOr EnvirOnmEntal aCCrEditatiOn

Despite the economic downturn, the latest consumer survey
conducted by the Swedish Environmental Protection Agency
shows that eight out of ten consumers are willing to pay more
for a product that is environmentally accredited. However, the
share of consumers who prioritise individual companies based
on their environmental profle is not as large. Even if 91 percent
of the respondents would like to see clearer environmental la-
belling – which also includes the transport industry – only 62
percent say that they would choose products from companies
that actively work to decrease environmental impact. Compa-
nies that use environmentally friendly rail transports have a lot
to gain from emphasizing more clearly how their freight has
been transported, thereby initiating a change of behaviour. But
even if green logistics services can go a long way, the current
economic situation tightens requirements on transport solu-
tions that are also smart from a cost perspective.

Companies that use environmentally friendly
rail transports have a lot to gain from
emphasizing more clearly how their freight
has been transported, thereby initiating a
change of behaviour.

With more, longer side tracks, passenger
and regional traffc could pass without
freight trains needing to stand still.

transpOrts fOr thE COnnOissEur

Prime Wine Group annually imports 700,000 cases of wine and alcohol from producers around the world. Since March
2008, Green Cargo has been responsible for the rail transports from Europe to the warehouse in Jordbro. On its way to
Sweden, the freight can pass Germany, Denmark and Hallsberg without having to be re-loaded, which saves time. The
logistics solution also includes picking up freight shipped from South Africa and South America to the Port of Södertälje.
The freight is then delivered by truck to Systembolaget’s (Swedish Alcohol Retail Monopoly) stores, restaurants and whole-
salers. At the logistics centre in Jordbro, Green Cargo’s personnel have many years of experience handling alcoholic drinks
for Fondberg and Maxxium. This means that Green Cargo can guarantee a high level of quality throughout the entire chain.

smart lOgistiCs frOm ship tO stOrE

When Clas Ohlson’s products arrive at the Port of Gothenburg by ship from the Far East and other locations, Green Cargo
is standing on the quay to transport them by rail. On an annual basis, 1,000 containers are transported by rail to Green
Cargo’s intermodal terminal in Insjön. Our modern, swap bodies can be easily re-loaded onto trucks for the fnal stretch to
the distribution centre. The co-operation started in 2003 and today encompasses 70–80 percent of the freight fow that
arrives by sea.

rEfinEd frOm lOading tO unlOading

Every year, Green Cargo transports almost 130,000 tonnes of refned sugar and sugar solutions to Danisco Sugar’s cus-
tomers in Sweden – primarily by rail. The logistics solution includes 35 different rail lines, from Arlöv in the south to Luleå
in the north. Part of the assignment is to deliver rail transports all the way to the customer’s industrial track. Green Cargo’s
assignment covers the entire chain, from transport to unloading at the end customer. Where there are no rail tracks to the
end destination, the cargo is re-loaded onto trucks for the fnal stretch. Vehicles specially-equipped with a tipping chassis
are used for bulk transports.

16

Terminal

Shunting yard

Train

Boat

Train

Truck

Rail control and
Customer Service

Our solutions
Green Cargo offers sustainable logistics solutions. We guarantee that your freight will
arrive in the right condition, to the right location, at the right time. This applies regardless
of whether the transport is a standard transport from A to B or a customised solution
from A to Z. Our logistics concept meets most customer needs.

Customers

Customers

Customers

grEEn CargO
natiOnal and
intErnatiOnal

Cost-effcient transports of both

large volumes and individual wag-

ons. Our network connects Swe-
den with the rest of Scandinavia
and the European continent.

grEEn CargO
systEm transpOrt

Tailored logistics fows directed

to companies that need guaran-

teed capacity for large volume
transports between fxed desti-
nations.

grEEn CargO
spECial transpOrt

Secure transports of extra heavy,
wide, long, tall or sensitive freight
that require special handling and
expertise. This can include every-

thing from individual shipments
or short series of bulky freight

to large volumes with a single de-

livery.

grEEn CargO
COntraCting

Our contracting services within
shunting, administration, pro-

duction, logistics and consultant

services guarantee a high level
of quality throughout the entire
logistics chain.

17

Terminal

Logistics Centre

Train

Train

Truck

Truck

grEEn CargO
intErmOdal

Long-haul transports of free-
standing containers that com-

bine rail and road. Door-to-door,

simple and cost-effcient.

grEEn CargO
biOfuEl

Customised transport system for
biofuel that is directed to compa-

nies that need regular access to

biomaterials. Where rail does not

reach to the fnal destination, we
supplement the transport solu-
tion with trucks.

grEEn CargO
biOflEx

Flexible transport solutions for
bio-mass. Containers optimised
for volume with special equip-
ment keep raw products pure
throughout the entire transport
chain and allow chipping directly
into load carriers.

grEEn CargO
rOad

Customised road solutions for

distribution, transport to and from
rail terminals and long-haul trans-

ports.

Customers

Customers

Customers

Train

18

Our sOlutiOns

Smart logistics – for both customers and the environment

Green Cargo offers effcient green logistics primarily by
rail freight. By combining rail, road and third-party logis-
tics, we can offer our customers transport solutions that
are both cost-effcient and environmentally friendly. This
is what we mean when we talk about smart logistics.

Our core business is national and international rail transports.
Our assignments range from standardised transports between
point A and point B to customised logistics solutions that offer
sustainable solutions along the entire logistics chain. Most of
our assignments are long haul rail transports in a comprehen-
sive rail network that are combined with fne-meshed distribu-
tion by truck to the customer’s location. Our third-party logistics

streamline our customers’ supply chains by offering warehous-
ing, distribution and control of the freight fows – either via our
own logistics centres or via our customers’.
The need for transports and effcient logistics will increase
even if the global market is currently being affected by the
economic downturn. Strong environmental performance for
transports continued to be important in 2008. However, cus-
tomer requirements for capacity and availability, as well as pre-
cision and cost-effciency of deliveries, tightened, primarily in
the industrial and wholesale and retail sectors, as a result of
the challenging economic situation.
Green Cargo has 1,500 customers. Despite the downturn,
we signed several new agreements during the year, primarily

19

Our sOlutiOns

within intermodal transports and third-party logistics. We also
developed our co-operation with DB Schenker and today have
several international customer solutions concentrated in Ger-
many, Norway and Italy.

lOng-tErm sustainablE OffErs

that mEEt Our CustOmErs’ nEEds

A central component of our sustainable logistics concept is
sustainable customer promises. Our potentially strongest com-
petitive advantage is that we can fulfl our customers’ demands
on delivery punctuality. We continued to maintain a stable
punctuality rate to customer sidings of 95 percent during 2008.
Since a large portion of our customer solutions include both
road and rail transports, we have gathered experts in both of
these areas in a single central Customer Service site. This has
facilitated our efforts to establish a clear interface with our
customer that encompasses the entire chain, from agreements
to orders and invoicing.
Many of our customers choose Green Cargo because of the
excellent environmental performance of the transports – often
a result of their own customers’ demands. Customers with
transports that have less than 10 grams of carbon dioxide
emissions per net tonne kilometre are presented with a Green
Cargo Climate Certifcate. The certifcation serves as proof
that they have chosen a green logistics solution. In 2008, 24
customers received their Green Cargo Climate Certifcate at a
ceremony attended by Maud Olofsson, Sweden’s Minister of
Industry, Employment and Communications.
Our solutions within rail logistics are divided into a number
of services, the majority of which are packaged concepts.
Most of the services include different levels of service agree-
ments, IT set-ups and administrative solutions. These can also
be added as optional services. In industries or situations that
require large or regular volumes, customised solutions are
available. Our customers’ reality and requirements change,
which means that we must be able to change our offer as well.
Our strategy is to develop services that strengthen Green
Cargo’s competitiveness and contribute to both volume and
value growth. In order to succeed, we always need to consider

the needs of our customers from both a short-term and long-
term perspective.
Our services are developed in close co-operation with our
customers and co-operation partners. The ultimate goal is to
develop solutions that effectively meet our customers’ needs
primarily using rail-based logistics and where cost-effciency
and the environment are critical factors of competitiveness.
In 2008, we focused on the development of our intermodal
business.

grOwth OppOrtunitiEs fOr rail frEight

grEatEst in intErmOdal sOlutiOns

Demand for intermodal transports is increasing, both national-
ly and internationally. As a result, more and more actors are of-
fering their customers logistics fows that combine road, rail,
sea and air transports. Even if trucks currently dominate land
transports, increased environmental awareness among con-
sumers, the continued high price of fuel and traffc congestion
are encouraging more companies to choose rail.
Fuel prices dipped at the end of 2008 after reaching record-
high levels. However, uncertainty surrounding the long-term
price trend of oil will most likely drive a transition from road to
rail. Increasing the share of rail freight is one way to meet the
market’s requirements on smart logistics that are effcient for
both customers and the environment. Green Cargo believes
that the future for intermodal solutions is extremely bright. The
greatest potential is transferring freight from the road to rail
for long hauls. In 2008, intermodal rail freight volumes totalled
just under 259 TEU. This represents an increase of 2.3 percent
year-on-year.

third-party lOgistiCs – a strOng grOwth markEt

There is a negative relationship between business cycles and
third-party logistics growth. The reason for this is that many
companies look more closely at their logistics operations dur-
ing tighter economic times and turn to external specialists for

Increasing the share of rail freight is one
way to meet the market’s requirements on
smart logistics that are effcient for both
customers and the environment.

Our potentially strongest competitive
advantage is that we can fulfl our cus-
tomers’ demands on delivery punctuality.
We continued to maintain a stable
punctuality rate to customer sidings
of 95 percent during 2008.

20

help. There is a trend in Europe to move toward regional distri-
bution centres, which is contributing to the growth of periph-
eral services such as inbound freight and distribution, as well
as international solutions for return fows.
Green Cargo is one of the three largest actors in the Nordic
region in third-party logistics and is the only one that can offer
proprietary rail solutions. We focus on companies that need ef-
fcient warehousing, distribution and control of their product
fows. Our customers place explicit demands on short lead
times, decreased capital tie-up, effciency and quality, and
strive for strong environmental performance. Our employees
have many years of experience and, using new technology,
guarantee high picking quality, fexibility and safe deliveries to
our customers. For the sixth consecutive year, we have an ac-
cumulated picking quality of more than 99.8 percent.
Our third-party solutions are designed to save money for our
customers. Our experience in complex logistics assignments
is based on co-operations with several customers in market
leading positions that have global volume fows. Thanks to our
complete turnkey solutions, we can streamline our customers’
supply chains and help them meet the demands of the market
on fexibility and product modifcation. Our primary sectors in-
clude clothing, alcohol, food, electronics, tires, construction
and sports/leisure.
Our third-party logistics solution includes import, customs
clearance and bonded warehousing, arrival checks, warehous-
ing, customer order registration, order picking, distribution and
processing of freight. We manage, control and take responsibil-
ity for the entire freight and information fow between our cus-
tomer, our customer’s customer and our customer’s supplier.
Our Track & Trace function makes it possible to follow an item
throughout the entire chain, from the warehouse to its fnal des-
tination.

Green Cargo’s 11 logistics units, with a total surface area of
195,000 square meters, are strategically located in Stockholm,
Norrköping, Gothenburg, Helsingborg and Copenhagen, and
the majority of them have a rail connection. Green Cargo’s

growing operations within third-party logistics demonstrated
strong proftability and new customer assignments during the
year. Sales in 2008 increased by 22 percent compared to 2007.
To be able to meet the increasing demand and to strengthen
Green Cargo’s third-party logistics offer, we are investing in an
additional 50,000 square meters of terminal space in Stock-
holm, Norrköping and Helsingborg.

Our sOlutiOns

rail data

Locomotives: 421, including 230 electric locomotives and 191
diesel locomotives.
Wagons: 6,678, in 20 standard wagon types and load carriers for
various types of freight.
Capacity: Our regular freight wagons carry up to 30 tonnes and
have capacity of more than 100 cubic meters. Green Cargo runs
trains with weights up to 3,000 tonnes.

rOad data

Trucks: 150. The truck feet is continuously upgraded. In 2008,
19 new trucks entered into service, including 2 Euro 4 and
17 Euro 5. In total, 40 percent of the feet now have Euro 4 or
Euro 5 engines.
Terminals: 13 nationwide.
Safety: The new trucks are equipped with airbags, opticruise to
optimise fuel economy and alcohol safety interlock devices.
Green Cargo installed alcohol safety interlock devices in all of
its trucks.

third-party lOgistiCs data

Logistics centres: 11 located in Stockholm, Norrköping,
Gothenburg, Helsingborg and Copenhagen.
Surface area: 195,000 square meters in total.
Offering: Complete logistics solutions for companies throughout
the Nordic region. We manage imports, customs clearance,
bonded warehousing, arrival checks, warehousing, customer
order registration, order picking, distribution and processing.

Green Cargo is the only nationwide freight transport
company that qualifes for the Swedish Society for
Nature Conversation’s Good Environmental Choice
certifcation.

Our third-party solutions are designed to
save money for our customers. Our expe-
rience in complex logistics assign ments
is based on co-operations with several
customers in market leading positions that
have global volume fows.

wOrking tOgEthEr fOr

vOlkswagEn’s transpOrts

Volkswagen annually saves 1,500 road transports of
spare parts through its rail solution from Germany to
Sweden. This is an example of a sustainable logistics
solution that is the result of a co-operation between a
number of parties, with Volkswagen and Nykvarn Munic i-
pality leading the way. When Volkswagen expressed
interest in building its Nordic warehouse with an industrial
rail connection, Nykvarn Municipality made this request
a reality. The trains are handled by DB Schenker Rail
in Germany. Our joint venture then provides reliable
transport for the Germany-Denmark-Sweden stretch
without needing to switch locomotives. From
Malmö, Green Cargo transports the wagons
up to Volkswagen’s warehouse in Nykvarn.

Volkswagen

Green Cargo

DB Schenker Rail
Scandinavia

DB Schenker Rail

53% return to Germany

NYKVARN

LILLESTRÖM

Truck

Truck

Train

trains CannOt bE drivEn On rOads – but Cars Can Easily bE drivEn On traCks

In 2008, Scandinavian Motortransport transported 79,277 cars via rail, which corresponds to 11,300 wagons. Rail has
been an important component of Scandinavian Motortransport’s environmental and quality efforts since the 1980s. The
company owns 100 rail wagons and has invested in 14 terminals across the country. The cars’ journey starts on a ship from
continental Europe. After arriving in Sweden, they are re-loaded onto trains for transport to one of Motortransport’s termi-
nals. Well-known brands such as Citroën, Alfa Romeo, Volvo, Toyota and Peugeot are mixed in the wagons. The rail solu-
tions only use trucks for the fnal stretch to the store. Green Cargo’s responsibility is primarily related to transport, but occa-
sionally includes unloading the cars.

partnErship that has kEpt wEll OvEr timE

The entire Green Cargo organisation works together to meet Procordia’s logistics needs. Our logistics centre in Helsing-
borg handles warehousing, including around 180,000 pallets of dry goods on an annual basis. Our road operations handle
the distribution from Helsingborg to recipients in the Skåne region and our rail operations annually handle just under 400
freight wagons for Procordia from Helsingborg to Bro and Umeå. A new agreement was signed with Procordia in 2007, but
the co-operation stretches further back in time. Felix, which is today a part of Procordia, began to transport large volumes by
train as early as the 1970s.

Our targets and our Sustainable development report are presented in the Administration report.

Administration report:
Our operations in 2008

25

Our stakeholders

28

Business management

30

Board of Directors

32

Executives

33

The Scorecard

34

Safety

37

Employees

38

Society

40

Environment

41

Customers

44

Finance

45

Risks and risk management

52

Outlook and proft appropriation

56

Income statements

57

Balance sheets

58

Changes in equity

60

Cash fow statements

61

Notes

62

Signatures

95

Audit report

96

Corporate governance report

97

Defnitions

99

JAN

FEB

MAR

ApR

JuN

JuL

AuG

SEp

oCT

NoV

DEC

MAY

Decreased volumes by 20%

25

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT abOut grEEn CargO

Key fgures

Group

Parent Company

2008

2007

2006

2005

2004

2008

2007

2006

2005

2004

Operating income

6,432 6,157 5,883 5,864 5,950

5,571 5,357 5,214 5,266 5,252

Proft/loss after fnancial items

27

246

245

137

40

11

257

235

132

51

Assets

4,242 3,809 3,949 3,928 3,071

3,699 3,290 3,694 3,682 2,851

Liabilities

2,753 2,182 2,420 2,557 2,662

2,256 1,703 2,202 2,361 2,462

Equity

1,489 1,627 1,529

1,371

409

1,443 1,587 1,492

1,321

389

Cash fow from operating activities

221

360

386

311

282

119

375

367

315

292

Net investments

591

202

163

244

287

591

212

128

238

259

Operating margin, %

2

5

5

4

2

2

5

5

4

3

Return on equity, %

0

11

11

39

11

0

12

12

41

12

Equity/assets ratio, %

35

43

39

35

13

39

48

40

36

14

Our operations in 2008

This information pertains to 2008. All amounts are expressed
in SEK million, unless otherwise specifed.

thE grOup

Green Cargo AB, the Parent Company, is a freight transport
and logistics company that operates in the European market.
The vision is to be the market-leader in the logistics sector,
basing services on and contributing to sustainable national
and international development. Rail transports form the core of
our operations. We supplement this core offering with road
transports, and the combination of rail and road is becoming
more common. To offer end-to-end logistics solutions, Green
Cargo also provides third-party logistics, which includes ware-
housing, handling and distribution. Our largest customers are
in the steel, chemical, automotive, engineering, forestry and
retail industries.

Green Cargo AB is organised into three operational areas:
Rail, Road and Logistics. The business is divided into six divi-
sions: Business, Marketing & Sales, Customer Service, Opera-
tions, Road and Logistics. All divisions are responsible for their
own proftability. There are also seven staff functions.
Green Cargo is fully owned by the Swedish State, managed
by the Ministry of Enterprise, Energy and Communications and
is part of the group “Companies with market-based require-
ments”.

In addition to the Parent Company, the Green Cargo Group
consists of four subsidiaries, Nordisk Transport Rail (NTR),
TGOJ Trafk AB, Hallsbergs Terminal AB and Green Cargo
Road & Logistics A/S, and three associated companies, Cargo-

Net AS, SeaRail EEIG and, since March 2008, DB Schenker
Rail Scandinavia A/S. These companies are primarily control-
led via board representation. All transactions between the
Group companies take place under market conditions. See
pages 50–51 for more information about Green Cargo’s sub-
sidiaries and associated companies.

grOup ChangEs in 2008

Green Cargo’s acquisition of DB Schenker Rail Scandinavia
A/S was fnalised in March 2008. DB Schenker Rail Scandinavia
A/S is a joint production company between Green Cargo and
the German rail freight company, DB Schenker Rail Deutsch-
land AG. After a restructuring of its organisation, the Denmark-
based joint venture will provide effcient freight transports with
high punctuality between Scandinavia and Central Europe.
Green Cargo owns 49 percent.
During the second quarter of 2008, Tallink Silja Oy exited
its holding in SeaRail EEIG and the participating interest was
acquired by the two remaining owners, Green Cargo and the
Finnish rail company, VR Cargo, each of which acquired half.
The company will continue to be reported as an associated
company. In January 2009, it was taken over by the newly
formed limited liability company, SeaRail OY, in which both
Green Cargo and VR Cargo own 50 percent.

kEy EvEnts in 2008

Green Cargo’s 2008 fnancial year was characterised by con-
tinued product development, including both international traf-
fc and intermodal solutions. Transported freight volumes were

26

abOut grEEn CargO ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

on the rise until October, at which point they began to fall dra-
matically. As a result, focus shifted to cost cuts and adapting
production resources to demand.

The following events occurred in 2008:
Green Cargo maintained its high punctuality level for nation-
al rail traffc customers. Average punctuality was 95 percent.
As a result of the sharp downturn in the economy, approxi-
mately 400 redundancies were announced.
The acquisition of 49 percent of DB Schenker Rail Scandi-
navia A/S was fnalised. In the middle of June, freight trains
for Volvo Logistics pulled by a modern, multi-system locomo-
tive entered into service between Älmhult in the Småland
region and the Continent.
The modernisation of 104 locomotives continued. Gross in-
vestments in 2008 totalled SEK 608 million (240) and are a
central part of our future development plans. Ordered invest-
ments that have yet to be delivered totalled SEK 1.8 billion at
year-end.
The company issued 24 Green Cargo Climate Certifcates to
customers.

Signed a contract for a ten-year co-operation with SSAB
that is the largest rail transport agreement ever signed. The
agreement encompasses transports of steel slabs and rolled
products between Borlänge, Luleå and Oxelösund. SSAB
placed high demands on capacity and a minimal environ-
mental impact, which led to Green Cargo’s decision to invest
in 16 state-of-the-art locomotives.
The company signed an agreement with Coop to transfer a
large portion of the company’s long-haul transports within
Sweden from road to rail.
Agreements were signed with several new customers within
the Logistics business area. These customers come prima-
rily from the clothing, alcohol and building industries. Third-
party logistics grew by 22 percent and we are investing in
50,000 square meters of additional warehouse capacity.
Sales of road transports increased by 23 percent.
Green Cargo joined the “On the Road to Climate Neutral” ini-
tiative, thereby opening the possibility for a co-operation be-
tween road and rail transports with the goal of cutting the
transport industry’s carbon dioxide emissions in half by 2020.
Sick leave fell for the seventh consecutive year.

27

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT abOut grEEn CargO

Green Cargo is fully owned by the Swedish State through the Ministry of
Enterprise, Energy and Communications. The Board has 8 members and
4 employee representatives (2 ordinary and 2 deputies). Operations are pri-
marily performed by the Parent Company, Green Cargo AB. Supplementary

operations are run in 4 subsidiaries and 3 associated companies, which are
controlled via board representation. The CEO is supported by a 13-member
Group executive team, staff representatives and the 6 divisions.

Ministry of
Enterprise, Energy
and Communications

Annual General
Meeting

Board of Directors

CEo and
Group management

Subsidiaries

Nordisk Transport Rail
TGoJ Trafik AB
Hallsbergs Terminal
Green Cargo Road & Logistics A/S

Associated companies

CargoNet AS
SeaRail EEIG
DB Schenker Rail Scandinavia A/S

Finance

Safety
& Security

ICT

Human
Resources

Sustainable
Development

International
Business

Corporate
Communications

Rail

Road

Logistics

Marketing
and Sales

operations

Customer
Service

Road

Logistics

Business

One stakeholder among many

Our stakEhOldErs ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

28

We are convinced that responsible behaviour and a long-
term approach to both our internal and external relations
are key factors for our success. Just as we expect the
actors in our surroundings to meet our expectations, they
place demands on us for matters that are important for
them. These demands can be fnancial, environmental or
social. In our ongoing interaction with our stakeholders,
we establish clear priorities and targets and follow up on
them. In addition to striving to achieve our vision, our
management should ensure that our daily activities are
in line with what our stakeholders expect from us. An
overview of Green Cargo’s stakeholders is presented
below. From among these groups, our customers, em-
ployees and owner have the most infuence on how we
work. See pages 37–45 for more information about “Key
fgures for follow-up”.

Overall priorities: Our customers place stringent demands on
industry knowledge and logistics expertise and expect these
skills to improve the effciency of their processes. We should be
market leaders in punctuality, cost-effectiveness and environ-
mental performance.

Follow-up: In addition to daily contact with our customers, we
conduct an annual survey, Customer Dialogue, to keep our-
selves updated on our customers’ priorities, how well we meet
their expectations and how we can improve our services. We
also regularly measure our punctuality and availability. We have
business development agreements with a number of customers
and, since 2008, a customer service advisory board with repre-
sentatives from each division to track how Green Cargo is per-
ceived by its customers.

Key fgures for follow-up: Customer satisfaction, punctuality
(national rail), picking quality (logistics), invoicing quality (road),
environmental values from Customer Dialogue.

Overall priorities: We have several national and international
partnerships to guarantee the quality of our operations. Every
partnership is crucial for improving the quality of our solution
and is built on reciprocal expectations.

Follow-up: We hold regular status review meetings with our
major suppliers. We are very demanding when it comes to fac-
tors such as technology, safety and the environment. Tangible
projects for increasing customer benefts beneft both parties.
For example, we co-operate with Deutsche Bahn in a number
of strategic projects ranging from IT solutions and product de-
velopment to the use of locomotives and wagons, and together
own a joint production company since 2008.

Overall priorities: The demands placed on us by authorities
and organisations are different than the demands of other
stakeholder groups. Quality, infrastructure, regulations and
safety are frequently the topic of discussion in our contacts with
this group. For example, to focus on joint issues in the transport
sector, we co-operate with the Swedish Transport Agency,
Swedish Rescue Services Agency, Swedish National Rail Ad-
ministration, Swedish International Freight Association and the
Association of Swedish Train Operators. Green Cargo also par-
ticipates in the Government’s Logistics Forum.

Follow-up: We have regular status review meetings with au-
thorities and organisations that have an interest in our opera-
tions and place demands on us. We also turn to them to lobby
for changes within the logistics industry.

Key fgures for follow-up: Number of direct activities carried
out, traffc-safety, environmental performance.

Suppliers and
other partners

Authorities and organisations

Customers

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT Our stakEhOldErs

29

Overall priorities: Our employees would like to work on mean-
ingful, motivational projects, be proud of their workplace and feel
that Green Cargo is working to improve the environment. We put
considerable emphasis on management, internal communication
and health promotion. We would also like our employees to feel
that they can infuence Green Cargo’s development.

Follow-up: Frequent workplace meetings, interactivity, em-
ployee plans, employee reviews and daily management all play
an important role in the development of our employees and our
efforts to create a pleasant working environment. The Employ-
ee Dialogue, which is conducted on a regular basis, also gives
us an indication of what our employees consider to be impor-
tant for job satisfaction and strong work performance.

Key fgures for follow-up: Number of employees that partici-
pated in at least one workplace meeting, percentage of employ-
ees with an updated employee plan, Employee Dialogue, envi-
ronmental image, sick leave.

Overall priorities: Our owner has specifed that it expects a
market-based return with relevant, clear targets for our opera-
tions. The Government has also identifed specifc areas in
which state-owned companies should act as role models, for
example, equality, the environment, diversity, a healthy work-
place and the company’s role in society.

Follow-up: The tools for control applied by the Ministry of En-
terprise, Energy and Communications include the composition
of the Board, auditors and the annual review. Green Cargo’s
Board of Directors is appointed by the Ministry. Demands
placed on Green Cargo’s reporting are the same as those for
companies listed on the stock exchange. Starting in 2008,
state-owned companies will also report on their sustainability
work using the framework set out in the accounting standard,
Global Reporting Initiative (GRI).

Key fgures for follow-up: Operating margin, return on equity,
equity/assets ratio, traffc-safety index, environmental perform-
ance, sick leave.

Overall priorities: We are located in about 100 locations
across Sweden and would like to have a positive infuence on
the local environment. As an employer and actor within the
community, it is necessary to maintain a local dialogue. Co-
operation with schools and consideration for nearby homes
that could be affected by pollution and noise from shunting
and traffc are topics we handle on a daily basis.

Follow-up: We co-ordinate our operations with local munici-
palities and welcome the opinions and demands of the local
population. We also maintain contact with schools and colleg-
es to provide students with insight into the logistics sector and
Green Cargo.

Key fgures for follow-up: Number of direct activities carried
out, Green Cargo Volunteer, environmental performance, traffc-
safety.

Overall priorities: Media enables us to reach out with our
message, to strengthen Green Cargo’s image as a sustainable
company and to promote insight and awareness of the trans-
port sector’s impact on the environment. We use a number of
different channels as needed to communicate these issues.

Follow-up: Media does not only distribute facts and messag-
es from us, but also monitors our activities. We strive to be
open and honest to facilitate media’s mission and purpose in
society.

Employees

owner

Media

Municipalities and
nearby residents

30

businEss managEmEnt ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Management via six equally important target areas

The management of Green Cargo should take the com-
pany in the direction of the owner’s business targets and
the company’s vision.

During the 2008 fnancial year, Green Cargo AB was led by a
Board of Directors consisting of eight members, two of whom
were newly elected at the Annual General Meeting on April 25,
2008. The Board also includes two employee representatives
and their deputies. The Board consists of three women and
seven men. During the year, the Board convened nine times;
one of these meetings was attended by the auditors. Green
Cargo’s CEO is the Board’s primary contact forum with the
company and its employees. To operate and monitor the com-
pany in accordance with Green Cargo’s vision and the condi-
tions stipulated in the State’s ownership policy, the strategic
issues in 2008 were:

Cost rationalisations.
Consequences of the fnancial crisis and the
economic recession.
Traffc-safety.
Investments in property, plant and equipment.

COntrOl and fOllOw-up via thE sCOrECard

Green Cargo uses rolling three-year plans to manage its op-
erations. These plans are prepared by Group executives and
adopted by the Board. They stipulate one-year and three-year
strategies and targets for the company as a whole as well as
for the divisions within the company. These are then translat-
ed into concrete actions. The targets are social, environmen-
tal and fnancial and are followed up on all levels of the
organi sation – from Board members to shunting staff – using
the Scorecard. This means that the Board, management and
employees at each local worksite regularly receive the same
information. The Scorecard consists of six target areas, Safe-
ty, Employees, Environment, Society, Customers and Finance,
all of which are linked to our vision and core value, i.e. sustain-
able development. The target areas also help us manage our
operations so we meet the demands placed on us by our
stakeholders. The targets are followed up on a yearly, monthly
and, in some cases, even weekly and daily basis. In this way,
we are always updated on our performance. The Scorecard
therefore serves as a critical tool for implementing continu-
ous improvements while at the same time providing an oppor-
tunity to counteract negative trends before they can have a
major impact.

In order to ensure that the Scorecard refects the activities of
the company and to make it easier for each employee to learn
about the results, the Scorecard is distributed to each local unit.
At the local unit, the Scorecard results are then broken down
into local scorecards with tailored targets. We believe this will
create transparency in the company and increase participation
since all employees will have the opportunity to observe and in-
fuence how the operations – and their own contribution – at
their local sites are developing in relation to committed goals.
The local and Group-wide results can then be followed via the
intranet and monitors. Workplace meetings provide a forum for
employees to discuss the results and ongoing activities and
fnd new ways to improve. A local scorecard generally covers a
single work site and its manager.
The following section presents Green Cargo’s work and re-

hOw thE sCOrECard rEaChEs EmplOyEEs

Monitors/message boards – each unit receives
up-to-date information about its local outcome.
Workplace meetings – reporting for Green Cargo
as a whole, but focus is on local outcomes and
activities.
Employee reviews – local targets are broken
down to the perspective of an individual employee.
Intranet Cargonet – main source of outcome
reporting for Green Cargo.
Employee magazine, Axel – central outcome
reported in six issues every year. Each issue takes
a closer look at one of the target areas.

thE sCOrECard

Supports operational control and helps us reach our
business targets.
Improves transparency within the organisation.
Via follow-up, increases opportunities to implement
preventive measures and mitigate risks.
By permeating the entire company, strengthens the
feeling of participation and understanding for how
employees can contribute to development.

31

sults in 2008 in the six target areas: Safety, Employees, Soci-
ety, Environment, Customers and Finance. Target area report-
ing refers to the Parent Company, Green Cargo AB, with the
exception of Finance, which is reported at a Group level. The
events and activities reported in each section under the head-
ing “Events in 2008” are not meant to serve as a comprehen-
sive list of all events during the year, but rather a small selec-
tion. Along the same lines, “Priorities for 2009” provide exam-
ples of future initiatives.
There are a number of guideline policies in each target area
for the environment, occupational health and safety. Procedures
and guidelines help employees in their day-to-day activities.
Green Cargo has a joint certifcate for ISO 9001: 2000 (qual-
ity), 14001:2004 (environment) and AFS 2001:1 (occupational
health and safety). Our customer interaction forms the basis of

our quality controls. Green Cargo has used the SIQ (Swedish
Institute for Quality) model since 2005 for customer-oriented
business development and to further hone our efforts to con-
stantly improve.

Defnitions of the measurements included in each target
area are available at www.greencargo.com.

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT businEss managEmEnt

businEss managEmEnt

The business plan includes the vision, business concept, targets and
activities of each target area. The Board approves the business plan.
The Scorecard helps us work toward our vision.

Vision

Business
concept

The Score-
card

policies

Guidelines and
procedures

Follow-up

32

bOard Of dirECtOrs ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Karl-Gunnar Holmqvist

Born 1946. Chairman since
January 2001. Domicile: Luleå.
Chairman of HSB Norr, Swed-
bank Luleå and Valrossen AB.
Board member of Norrbottens
Media AB.

Stefan Bieder

Born 1958. Union representative.
Board member since May 2001.
Domicile: Lands krona. Employee
representative appointed by
the Union of Civil Servants (ST).
Employed since 1981.

Lena Olving

Born 1956. B.Sc. (Mech. Eng.),
Chalmers University of Tech-
nology. Board member since
May 2008. Domicile: Gothen-
burg. Executive Vice President
and Business Group Chair-
man Systems&Products Saab
AB, Board member of Gunnebo
AB, Board member of Kungliga
Ingenjörsvetenskapsakademin
(Royal Swedish Academy of
Engineering).

Lotta Lundén

Born 1957. B.Sc. (Econ.). Board
member since April 2006. Dom-
icile: Stockholm. Partner and
founder of Konceptverkstan AB,
Board member of Swedish Trade
Council, Bergendahlsgruppen,
Glitter, Lammhults Design Group,
Akademibokhandeln, Twilft.

Anders Gustavsson

Born 1961. Union representative.
Deputy Board member since
August 2004. Domicile: Gothen-
burg. Employee representa-
tive appointed by the Union of
Service and Communication
Employees (SEKO). Employed
since 1981.

Björn T. Johansson

Born 1960. Union representative.
Deputy Board member since May
2001. Domicile: Laröd. Employee
representative appointed by
the Union of Civil Servants (ST).
Employed since 1984. Industry
chairman of ST SpårTrafk.

Björn Mikkelsen

Born 1962. B.Sc. (Econ.), LL.B.,
Lund University. Board mem-
ber since April 2003. Domicile:
Stockholm. Deputy Assistant
Under-Secretary at the Swedish
Ministry of Enterprise, Energy
and Communications. Board
member of SJ AB.

Anne Gynnerstedt

Born 1957. Board member since
April 2007. LL.B., Stockholm Uni-
versity. Domicile: Stockholm.
Group Senior VP Legal Affairs
and member of Group Manage-
ment of Saab AB (publ.), Board
member of Saab AB’s subsidi-
ary in the US.

Jan Sjökvist

Born 1948. B.Sc. (Econ.). Board
member since January 2001.
Domicile: Stockholm. Chairman
of Concordia Buss AB and Oden
Anläggningsentreprenad AB.
Board member of Stora Enso OY
and Aspen AB.

Håkan Buskhe

Born 1963. Technical licentiate.
Board member since April 2007.
Domicile: Malmö. CEO of E.ON
Nordic AB.

Peter Lundmark

Born 1958. Union representa-
tive. Board member since May
2001. Domicile: Umeå. Employee
representative appointed by the
Union of Service and Commu-
nication Employees (SEKO).
Employed since 1976.

Tryggve Sthen

Born 1952. B.Sc.(Eng.). Board
member since April 2008. Domi-
cile: Gothenburg. President of
AB SKF Automotive Division.

33

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT ExECutivEs

Sören Belin

CEO. Born 1953.
Joined Green Cargo: 2006.

Bertil Nilsson

Senior Vice President
Operations. Born 1950.
Joined Green Cargo: 2008.

Kine Jangren

Director Human Resources.
Born 1955.
Joined Green Cargo: 2005.

Gunnar Andersson

CFO, Executive Vice President.
Born 1952.
Joined Green Cargo: 2000.

Anette Löhnn

Senior Vice President Customer
Service. Born 1965.
Joined Green Cargo: 2003.

Erica Kronhöffer

Director Sustainable
Development. Born 1971.
Joined Green Cargo: 2002.

Olle Wennerstein

Executive Vice President
International. Born 1947.
Joined Green Cargo: 2004.

Hans Paridon

Senior Vice President Road.
Born 1953.
Joined Green Cargo: 2007.

Mats Hollander

Director Corporate
Communications. Born 1954.
Joined Green Cargo: 2001.

Jan Lillieborg

Senior Vice President Business.
Born 1955.
Joined Green Cargo: 2007.

Atna Nasiopoulos

Senior Vice President Logistics.
Born 1950.
Joined Green Cargo: 1998.

Mats Hanson

Senior Vice President Marketing
and Sales. Born 1954.
Joined Green Cargo: 2000.

Björn Rosell

CIO. Born 1962.
Joined Green Cargo: 2006.

34

finanCial sustainability

EnvirOnm

Ental

sustainability

sOCial sustainability

visiOn

COntEnt

targEt

COntrOl

aCtivitiEs

visiOn

COntEnt

targEt

COntrOl

aCtivitiEs

visiOn

COntEnt

targEt

COntrOl

aCtivitiEs

Safe operations for
employees and the
public.

A bright future and an
appealing workplace for
employees.

An open, honest
dialogue with our
stakeholders.

To always consider
external factors in
everything we do.

That our operations
do not have a nega-
tive effect in any
context.

Safety

p. 37

Traffc-safety policy and targets
for safety initiatives.

Employees

p. 38

Occupational health and
safety and staffng policy
and employee-related goals.

Society

p. 40

Ethics policy, ethics guide -
lines and community-related
targets.

Minimal own environ-
mental impact.

Marketing of green
logistics solutions and
understanding for the
link between transports
and environmental
impact.

To constantly mini-
mise the environmental
impact of our opera-
tions.

Environment

p. 41–43

Environmental policy and
targets that are present in all
areas ofof our operations.

Sustainable fnancial
performance.

Offers that result in
long-term, trustful
relationships with our
customers.

Strong fnancial
performance allows
us to develop sus-
tainable logistics
solutions.

Customers

p. 44

Quality policy and targets
for improving delivery to
customers.

Finance

p. 45–51

Financial control and
fnancial targets.

35
35

Score 2006 Score 2007 Target 2008 Score 2008 Target 2009

Safety

Traffc-safety index, rail

92.3

93.0

94.5

92.7

94.5

Traffc-safety index, road

n/a

94.4

94.5

95.3

94.5

Accident costs, rail, SEK million

14.5

13.10

9.56

13.17

9.65

Employees

Average no. of full-time equivalents1

2,842

2,770

2,861

2,859

Percentage of employees who attended at least one
workplace meeting during the current quarter, %

72

66

85

81

85

Percentage of employees with up-to-date employment plan, %

32

67

90

67

90

Employee Dialogue – Management Index

64.2

n/a

67.0

75.0

80.0

Employee Dialogue – Employee Index

62.8

n/a

65.0

77.0

80.0

Sick leave rate, %

5.3

4.4

4.0

4.0

4.5

Society

No. of direct activities carried out

81

107

70

215

150

Green Cargo Volunteer, no. of hours

n/a

398

2,400

739

1,500

1)

Due to uncertainty on the market, we opted not to report this target for 2009.

Score 2006 Score 2007 Target 2008 Score 2008 Target 2009

Environment

Environmental performance, gram CO2/tonne km,
electric and diesel locomotives

3.6

3.0

2.8

3.1

2.7

Environmental performance, gram CO2/tonne km, trucks

48.0

46.0

52.0

52.9

51.7

Electricity consumption, kW/m2

(storage)

38.0

41.0

38.0

35.6

35.0

No. of Green Cargo Climate Certifcates issued

16

22

30

24

30

Environmental values from Customer Dialogue

63

n/a

64

71

72

Environmental image, index from Employee Dialogue

75.0

n/a

77.0

75.3

78.0

Score 2006 Score 2007 Target 2008 Score 2008 Target 2009

Customers

Customer satisfaction, customer’s overall assessment

68

n/a

71

65

71

Punctuality, national, % (within promised hour, rail)

94

95

95

95

95

Picking quality, logistics, complaints/1,000 order rows

0.4

0.7

1.5

0.7

1.5

Invoicing quality, road, credit notes, %

1.2

1.6

0.13

0.14

0.13

Finance1

Operating income, SEK million 2

5,883

6,157

6,425

6,432

Operating margin, % 2

4.8

4.8

4.9

2.2

Proft after net fnancial items, SEK million 2

245

246

280

27

Return on equity, % 2

11

11

12

0

Equity/assets ratio, % 2

39

43

38

35

Volumes, billion gross tonnes 2

31.67

31.70

32.10

31.48

1)

Refers to the Group.

2 )

Due to the uncertainty on the market, we have opted not to report fnancial targets for 2009.

fOllOw-up

fOllOw-up

fOllOw-up

36

safEty ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

37

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT safEty

Our quality is built on safety

Safety forms the foundation for the quality of Green Car-
go’s delivery to customers, provides employees with a
safer working environment and decreases costs and en-
vironmental impact. Our safety initiatives ensure that we
not only meet the requirements of the Railway Act and
the Swedish Transport Agency, but prevent all types of
accidents in our operations.

We continued to focus in 2008 on changing attitudes toward
safety within our Rail operations. Most accidents occur be-
cause people are not paying enough attention during shunting.
A number of shunting accidents, primarily derailments and
collisions, meant that we did not meet the targets for the traffc-
safety index in our Rail operations. We also did not meet the
cost estimate for shunting accidents. An employee was seri-
ously injured in a collision in Oxelösund and a number of serious
derailments were caused by problems in the Swedish National
Rail Association’s track system. The number of reported acci-
dents was considerable lower in our Road operations, which
met the target for the traffc-safety index.

EvEnts in 2008

Changed perspective on traffc-safety

We focused on giving feedback after incident reporting so em-
ployees feel it is meaningful to report incidents. We also
worked on providing management with the conditions needed
to work safely and making it clear for employees what the con-
sequences are of breaching existing regulations.

Safety training

The Operations division introduced a new concept for traffc-
safety training that combines interactive modules with instruc-
tor-led classroom sessions. Employees receive study ques-

tions and diagnostic tests to study on their own, and the course
is concluded with a test. The training is need-based and is of-
fered over the course of one full year.

Safety co-operation

Green Cargo started a partnership with Trätåg, one of its cus-
tomers, and the trade association, Swedish Forest Industries
Federation, to improve and secure quality levels for loading and
load securing of timber and wood transports travelling by rail.
The objective is to prevent accidents caused by dropping logs.
In addition, we held a constructive safety dialogue with the
Swedish National Rail Administration during which we primarily
discussed infrastructure-related accidents and near-accidents.

priOritiEs fOr 2009

New traffc-safety regulations (JTF)

On 31 May 2009, the most comprehensive change to the Swed-
ish rail traffc-safety regulations in modern time will be intro-
duced. New regulations tailored to today’s rail market, where
infrastructure managers and rail companies both co-operate
and compete with one another, will enter into force. Green Car-
go worked closely with the Swedish Rail Agency (now part of
the Swedish Transport Agency), the Swedish National Rail Ad-
ministration and the Association of Swedish Train Operators to
design the new regulations. In the spring of 2009, all rail staff
with traffc-safety duties will undergo training in preparation
for the transition to the new regulations.

Targeted review of our follow-up system

In addition to regular reviews within the company, we will imple-
ment a new system to follow up our safety, quality and working
environment. Under the new system, each unit will regularly
evaluate its own activities using established check lists. We will
run checks to ensure that the new system has a positive impact
on traffc-safety.

traffiC-safEty pOliCy

Green Cargo will be Sweden’s safest transport and logistics
company.
We will achieve this by working consistently with:
− Good planning
− Maintaining the right skills
− Straightforward management
− Professional performance
Open, honest incident reporting from all employees is a vital
foundation for our ongoing safety improvements.
Traffc-safety is always our top priority.

Safety target area

(Parent Company)

Score Target Score Target
2007 2008 2008 2009

Traffc-safety index, rail

93.0 94.5 92.7 94.5

Traffc-safety index, road 1

94.4 94.5 95.3 94.5

Accident costs, rail, SEK million

13.10 9.56 13.17 9.65

1)

Road has a new model for calculating the traffc-safety index.

Visit www.greencargo.com for defnitions of measurement methods.

38

EmplOyEEs ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Employees the reason behind customer benefts

Employees are a strategic resource for Green Cargo. Our
goal is to offer an attractive workplace and ensure that
the company has the right skills and motivation to deliver
effcient sustainable logistics.

During the year, we focused on management, health promo-
tion and increasing the number of females in production. We
continued our efforts to increase the percentage of employee
plans and quarterly workplace meetings by reviewing the in-
structions and educating the managers in this subject. Due to
the weakened economy, at the end of 2008 we were forced to
decrease the scope of planned and ongoing activities, intro-
duce a hiring freeze for the Rail and Road operations and an-
nounce the redundancy of 400 employees.
The annual Employee Dialogue showed that Green Cargo’s
strength lies in clear decision paths, procedures and clear roles of
responsibilities. The areas we need to improve are management,
the working environment and workplace meetings, which were
also the focus of the manager programme held in the autumn.
We met our targets, with the exception of the percentage of
employees with up-to-date employee plans and participation
in workplace meetings.

EvEnts in 2008

Managerial training

The annual training programmes for managers continued. In
addition to “Managerial training”, the “Basic programme” was
held with 196 managers, project managers and specialists.
Thirteen employees from different divisions and staffs partici-
pated in “Future managers” and a new programme was started
in September. More than 100 managers, specialists and safety
representatives participated in a basic training course on the
working environment.

The working environment and health

Preparations are underway to be certifed in accordance with
OHSAS 18001:2007 (international occupational health and
safety). We decided upon a new work environment policy, pre-
pared health-accounts that show the fnancial effects of sick
leave rates, which continue to fall, and organised a health pro-
motion week with a “Healthy weekdays” theme.

Skills development

We continued to recruit production staff to Rail and Road. We
completed ongoing efforts to profle Green Cargo in periodi-
cals and trade journals, continued our participation in Advanced

Employee target area

(Parent Company)

Score Target Score Target
2007 2008 2008 2009

Average no. of full-time equivalents3

2,770 2,861 2,859

Percentage of employees who
attended at least one workplace
meeting during the current quarter, %

66 85

81 85

Percentage of employees with
up-to-date employment plan, %

67 90 67 90

Employee Dialogue – Management Index i.u. 1

67 75 2

80

Employee Dialogue – Employee Index i.u. 1

65 77 2

80

Sick leave rate, %

4.4 4.0 4.0 4.5

1)

Employee Dialogue not conducted in 2007.

2)

Employee Dialogues are not comparable between years. New measurement method adopted as of 2008.

3)

Due to uncertainty on the market, we opted not to report this target for 2009.

Sick leave, employees, Parent Company,
2002–2008

Percent

0

2

4

6

8

10

8.1

7.0

6.7

6.0

5.3

4.4

4.0

10

8

6

4

2

0

02

03

04

05

06

07

08

Vocational Education for locomotive drivers and carried out an
internship programme for locomotive and truck drivers.

priOritiEs fOr 2009

Adapt the size of the company to market demand

We will focus on the redundancy of 400 employees. It is impor-
tant that the size of our company refects demand and that we
keep the right skills in the right place.

Coaching and change work

As a result of the fall in business volumes and the redundan-
cies, we will also intensify our efforts to educate our managers
about the working environment. This will improve awareness
about psycho-social issues and guide them in how to best han-
dle processes of change.

39

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT EmplOyEEs

Our goal is to offer an attractive workplace
and ensure that the company has the right
skills and motivation to deliver effcient
sustainable logistics.

EnvirOnmEntal pOliCy

Our vision is that Green Cargo will be the market leader in the logistics
sector, basing its services on and contributing to sustainable national
and international development.
In order to achieve this goal, our working environment and health
promotion efforts must be characterised by preventive measures and
continuous improvements. Based on the physical and psycho-social
working environment risks we identify in our operations, we must work
to prevent injury and illness.
To do this, we need to have an engaged management with good
insight into our employees’ working environment, full participation of
all employees in our efforts to improve the working environment and
full compliance with the laws and government agency requirements
that apply to our operations.
We will establish and follow up working environment targets every
year based on this policy to ensure that we reach our goal.

40

Our business should make a difference

Green Cargo works closely with a number of actors that
are neither customers, employees nor its owner. We value
an open dialogue with external parties and strive to have
a positive impact on our surroundings.

We divide the Society target area into activities with direct and
indirect connections to our operations. During the year, our
direct activities provided expertise in fnding superior logistics
solutions from an environmental and safety perspective and
proposed infrastructure initiatives that could increase the
share of long-haul freight travelling by rail. Green Cargo also col-
laborated with national and international authorities and organi-
sations. For example, we are active within the Logistics Forum,
Swedish International Freight Association and the Association
of Swedish Train Operators. We achieved our targets for the
full-year with regard to our direct activities carried out.

EvEnts in 2008

Advocating infrastructure investments

Maintenance and new investments in the rail network are an
absolute must if Green Cargo is to continue to offer competi-
tive logistics solutions. Infrastructure and climate issues have
been at the centre of the political debate during the year, partly
due to the Government’s Infrastructure Bill. We participated in
this public debate primarily by pointing out in the report “Håll-
bara transporter för framtiden” (Sustainable transports for the

future) which investments would most effectively increase rail’s
share of total freight streams. As a member of the Industri-
gruppen consortium, we conducted an investigation into how
to make high-speed tracks a reality.

Partnership for climate neutral road transports

Green Cargo joined the co-operation initiative organised by
the Swedish National Road Administration, “On the Road to
Climate Neutral”, which has the goal of cutting the relative car-
bon dioxide emissions from road transports in half by 2020.
Our assignment within the project was to provide training for
locomotive drivers and refresher courses for truck drivers in
eco-driving, switch to new, cleaner and more effcient engines
in our diesel locomotives and invest in trucks that are hybrids
and/or use alternative fuels.

Lectures on sustainable rail logistics

During the year, we participated regularly as lecturers at trade
fairs, seminars, universities and colleges. Our lectures touched
on topics such as sustainable logistics solutions from the per-
spective of the climate (environment), quality and traffc-safety.

priOritiEs fOr 2009

In 2009, we will continue to participate in events that give us
an opportunity to make an impact. In addition to the activities
reported for 2008, we will continue to distribute information
about the possibility to volunteer time during working hours
via Green Cargo Volunteer.

EthiCs pOliCy

Green Cargo has high standards for ethical and moral behaviour
inside and outside the company. We will:
strive to make judicious, sustainable choices in all matters.
maintain an open, honest dialogue with our stakeholders.
secure effcient utilisation of the resources on which our
business depends: fnancial, natural and human resources.
deliver on our commitments inside and outside the company.
involve and motivate our employees through well-defned tasks
and skills development.
maintain proper relationships with business contacts and
government agencies and refrain from any form of price
collusion, cartel formation or misuses of market dominance.
refrain from accepting or offering gifts, entertainment or other
personal benefts that can be reasonably presumed to infuence
a business transaction.
exhibit social responsibility by supporting our community with
no view to our business interests.

Society target area

(Parent Company)

Score Target Score Target
2007 2008 2008 2009

No. of direct activities carried out

107

70 215 150

Green Cargo Volunteer, no. of hours 1

398 2,400 739 1,500

1)

Activities will be carried out in 2009 to increase the outcome of Green Cargo Volunteer.

Visit www.greencargo.com for defnitions of measurement methods.

sOCiEty ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

41

The environmental impact of transports
more evident for the customer

The climate continues to be a very relevant topic. When
companies choose their freight solutions for the future,
they are giving increasingly more consideration to the
environmental impact of their transports. This means
that, as a competitive advantage, Green Cargo’s envi-
ronmental profle is growing in signifcance. Our envi-
ronmental approach reaches to the farthest corners of
our company.

Low-emission transports are the primary difference between
Green Cargo and the logistics and transport industry in gener-
al. The environment continues to be a strategically important
issue for us. We look to our environmental management sys-
tem, environmental targets and stakeholder requirements to
determine our priorities in this area. Despite our already strong
environmental performance, we work systematically to contin-
uously lower our environmental impact. By choosing us as a
logistics partner, our partners can improve their own environ-
mental performance.

EvEnts in 2008

Modernisation with environmental consideration

The modernisation of our diesel and electric locomotives con-
tinued according to plan. Around 60 T44 locomotives are re-
ceiving new environmentally adapted diesel engines that lower
fuel consumption by 20 percent and emissions by up to 75 per-
cent. This is expected to decrease carbon dioxide emissions
by more than 6,000 tonnes per year. The modernisation project
is planned for completion in 2011.

Climate Certifcates and Climate Comet

At the “Sustainable logistics” seminar held at the beginning of
June, 24 of our customers received the Green Cargo Climate
Certifcate from Maud Olofsson, Sweden’s Minister of Industry,
Employment and Communications. To receive the Green Car-
go Climate Certifcate, a company’s transports with Green
Cargo must not exceed emissions of ten grams of carbon diox-
ide per net tonne kilometre. This requirement is very demand-
ing and allows for road transports only if the long-haul portion
of the transport occurs via electric train.
At the same seminar, wine importer Fondberg was named
Climate Comet of the Year for 2008. Green Cargo established
this award to give recognition to companies that, given the
conditions they operate under, make signifcant improvements
to the environmental impact of their logistics.

EnvirOnmEntal pOliCy

Our operations include transport and logistics solutions by rail
and road.

We strive to reduce the use of resources and prevent emissions
through our signifcant environmental commitments.
Adopt and follow up environmental targets and activities in our
business plan to achieve continuous improvement.
Comply with all laws, internal guidelines, standards and
recommendations relevant to our business.

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT EnvirOnmEnt

42

Interactive environmental training for our employees

We developed a new, interactive environmental training course
that the majority of our employees attended in 2008. The
course focuses on changes to the climate and specifc envi-
ronmental initiatives being implemented at Green Cargo. It
consisted of two parts, one general and one division-specifc,
during which several of our employees described what their
region or work site is doing for the environment. The training
course concluded with a test.

Green Cargo’s daily green efforts

Green Cargo Green Weekday is in part a new approach to
small, yet important, environmental issues. We have primarily
focused our efforts on implementing large, production-related

environmental projects that decreased electricity and diesel
consumption. We would now like to take a clearer stance on
more daily environmental issues, for example more stringent
environmental requirements during the procurement of clean-
ing, taxis, car rentals and deliveries, Green IT projects, better
follow-up of the environmental impact of business trips and
KRAV and/or Fair Trade-certifed products.

Partnerships with suppliers

During the year, we paid particularly close attention to our part-
nerships with maintenance suppliers and updated all of our
agreements to meet stricter environmental requirements. With
the help of these suppliers, we compiled a list of all chemicals
and chemical products used in the maintenance of locomotives

EnvirOnmEnt ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Green Cargo’s total transport volume
by transport mode

Electric train, 91.2%

Diesel train, 4.2%

Truck, 4.6%

Environment target area

(Parent Company)

Score Target Score Target
2007 2008 2008 2009

Environmental performance,
gram CO2 /tonne km,
electric and diesel locomotives

3.0 2.8

3.1

2.7

Environmental performance,
gram CO2 /tonne km, trucks

46.0 52.0 52.9 51.7

Electricity consumption,
kWh/m2

(storage)

41.0 38.0 35.6 35.0

No. of Green Cargo Climate
Certifcates issued

22

30

24

30

Environmental values
from Customer Dialogue

n/a 1

64.0 71.0 72.0

Environmental image,
index from Employee Dialogue

n/a 1

77.0 75.3 78.0

1)

Neither the Customer Dialogue nor Employee Dialogue was conducted in 2007.
Visit www.greencargo.com for defnitions of measurement methods.

Environmental impact of Green Cargo AB

Total emissions

2006

2007

2008

CO2 , transports, tonne

65,008 67,819 66,853

NOX , transports, tonne

404.4 389.5 413.6

Hydrocarbons, transports, tonne

37.0

39.7

42.7

Particles, transports, tonne

7.8

7.1

7.5

Fossil energy, transports, GWh

239.1 249.4 245.9

Renewable energy, transports, GWh 644.8 650.0 635.5

Re-flled refrigerant, rail,
kg CO2 equivalents

n/a

n/a 39,975

Energy consumption, warehouse

2006

2007

2008

Electricity consumption, MWh

i.u.

i.u. 7,643

CO2 , electricity consumption, kg

i.u.

i.u.

242

District heating, direct energy, MWh

i.u.

i.u. 3,571

District heating, indirect energy, MWh

i.u.

i.u. 2,771

CO2 , district heating, kg

i.u.

i.u. 90,786

Emissions per net tonne kilometre

2006

2007

2008

CO2 , transports, gram/ntkm

5.42

5.17

5.41

NOX , transports, gram/ntkm

0.034 0.030 0.033

Hydrocarbons, transports, gram/ntkm 0.0031 0.0030 0.0035

Particles, transports, gram/ntkm

0.00065 0.00054 0.00061

Fossil energy, transports, kWh/ntkm 0.020 0.019 0.020

Renewable energy, transports,
kWh/ntkm

0.054 0.050 0.051

43

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT EnvirOnmEnt

and wagons and conducted an environmental assessment of
each of them. In 2009, we also began to develop a strategy to
decrease the environmental impact of maintenance activities.

priOritiEs fOr 2009

Continued education in Eco-driving Rail

In the spring of 2009, we will develop an interactive training course
for our large diesel locomotives. The training will be based on the

Eco-driving Rail concept we developed last year in co-operation
with the National Association of Swedish Driving Schools. The
training module will be linked to the overall educational plan for
T44 locomotives (basic programme) and will be offered to all
existing and new locomotive drivers and freight yard operators.
Dialogue with maintenance suppliers and external haulage

companies

In recent years, we have shifted a considerable amount of
focus to our own environmental initiatives. We would now like to
become more clear about what we expect from our suppliers
and in our follow-up, primarily with regard to maintenance and
road transports. The intention is to increase understanding for
our sustainability work and the requirements we place on qual-
ity, the environment, traffc-safety and the working environment.

As companies choose their freight solutions
for the future, they are giving increasingly
more consideration to the environmental
impact of their transports.

44

CustOmErs ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Every step forward benefts our customers

High quality deliveries secure Green Cargo’s long-term
capacity for proftability and new business. The Customer
target area should ensure that we meet and exceed our
customers’ expectations for transport and logistics serv-
ices.

We have reached a stable punctuality level in our national Rail
operations. Despite congestion on the tracks, we maintained a
punctuality rate of 95 percent for the second consecutive year.
We are continuing to work on raising the quality of arrival times
to our international destinations. This year’s customer survey
demonstrated that more of our customers, almost 80 percent,
believe they will use our services as much or more in the future.

EvEnts in 2008

Punctuality in international rail traffc

It is important that punctuality improves in the European rail
system. The entry of DB Schenker Rail Scandinavia A/S into
operation is a key component for achieving this goal. During
the year, we created a tool that measures punctuality in real
time for our rail transports between Sweden and Belgium.

New terminal for intermodal transports

The Skövde Combi Terminal was inaugurated and is part of our
investment in intermodal transports. At the terminal, trailers,
demountable bodies and containers are lifted between trucks
and trains, giving us a window to around 40 locations in
Västergötland.

Customer reception

We formed a customer service advisory board consisting of
representatives from each division to track how Green Cargo
is perceived by its customers and implement improvement
measures. One of the board’s decisions was to open a cus-
tomer information site online in 2009.
In the Customer Dialogue survey, we received much higher
ratings for professional reception during personal contact.

New business transactions

We appointed a task group to oversee the quality assurance of
new business relations and new transport solutions with exist-
ing customers. Part of the task group’s assignment was to
clearly inform the customer about how a booking is carried out,
which information is needed and why. The group verifes that
the frst transport meets our commitment to the customer and
receives feedback from customers about how to improve the
delivery.

Good procurement

Our Road division is a role model in the industry with regard to
quality, the working environment and the environment. We are
now extending our work in these areas to include our suppli-
ers. During the year, Green Cargo was awarded QIII’s (Quality
in Road Transport Procurements) Quality Certifcate for its work.
QIII is a non-proft organisation owned by LO and NTR and
fnanced by insurance companies and the Swedish National
Road Administration.

priOritiEs fOr 2009

Overview of customer processes

We will conduct an overview of our own processes to continue
to strengthen our customer orientation. Work with our sales
procedures started in 2008.

In-depth interviews

We will conduct interviews with customers who participated in
the Customer Dialogue to gain more in-depth feedback and en-
sure that our planned activities are relevant for our customers.

Customer target area

(Parent Company)

Score Target Score Target
2007 2008 2008 2009

Customer satisfaction,
customer’s overall assessment1

n/a 2

71 65

71

Punctuality, national, %
(within promised hour, rail)

95 95 95 95

Picking quality, logistics,
complaints/1,000 order rows

0.7 1.5 0.7 1.5

Invoicing quality, road, credit notes, % 1.6 0.13 3

0.14 0.13

1)

The customers’ responses in the Customer Dialogue are translated to an average expressed on a scale
from 0 to 100.

2)

The Customer Dialogue was not conducted in 2007.

3)

The measurement unit was changed from credit notes/thousand orders to % credit notes in 2008.
Visit www.greencargo.com for defnitions of measurement methods.

quality pOliCy

We will continuously improve our processes so that we can offer
competitive transport and logistics products. We will always
perform our tasks in such a way that we help our customers
deliver their products to the right recipient, at the right time and
with the right product characteristics. We should be able to make a
promise and keep it.

45

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT finanCE

Sustainable logistics via proftability and productivity

Lasting proftability enables Green Cargo to continue to
develop sustainable logistics solutions for its customers.
The results of the other target areas are refected in the
fnancial results. For the Finance target area, which is the
only target area to encompass the entire Group, we
measure proftability and productivity.

The downturn in the business cycle was signifcant during the
autumn. The most obvious signals indicating a decreased need
for rail freight transport and lower volumes came from the steel,
forestry and automotive industries. We still believe in the future
from a long-term perspective, but in order to counteract the
effect of the economic downturn, to improve cash fow and to re-
main a strong business partner, we must cut costs. As a result, a
number of rationalisations will be implemented in 2009 and 2010.
We will re-evaluate almost all of our activities on the cost side, al-
though our safety and the service we offer our customers will not
be compromised. We will complete the investments in the mod-
ernisation of the locomotive feet and are prioritising customer-
driven investments. All other investments, in total SEK 1 billion,
will be postponed. Green Cargo’s staffs and other operations are
also implementing rationalisations. A general employment freeze
has gone into effect in our Rail and Road operations, and in
December we were forced to announce 400 redundancies.
As Green Cargo is facing diffcult times, fnancial issues –
and thereby relations with banks and other fnanciers, as well
as customers, suppliers and employees – become even more
important.

prOfit fOr 2008

Net sales for the Green Cargo Group totalled SEK 6,392 mil-
lion (6,111) and proft after fnancial items SEK 27 million (246).
The operating margin was 2.2 (4.8) percent, compared to the
target of 4.9 percent. All of the operational areas within the
Parent Company increased their sales in 2008. Falling volumes
during the fourth quarter and higher cost levels had a negative
impact on proft for our Rail operations, while both Road and
Logistics increased their proft in 2008 despite the contracting
market.

Our subsidiaries made a positive contribution to the Group’s
operating proft, but the contribution from the associated com-
panies was negative. See pages 50–51 for more information.

businEss gOals

Our owner’s overall fnancial targets for the Group are long-
term value creation, capital effciency and a reasonable level

of fnancial risk. The targets are return on equity of 10 percent
and an equity/assets ration of 30 percent. Return on equity for
2008 was 0 (11) percent and the equity/assets ratio was 35 (43)
percent. It is recommended that no dividends (85) will be paid
for the 2008 fscal year.

EvEnts in 2008

Ongoing investment programme

We are investing in new, modernised locomotives, intermodal
wagons and expanded logistics centres with a long-term per-
spective. Green Cargo’s largest investment ever, the modernisa-
tion of the locomotive feet, totalling SEK 1.1 billion, is ongoing.
During the year, we completed and tested the construction of
the new engine for diesel T44 locomotives.

Green Cargo Intermodal

Intense efforts were carried out during the year to create an
intermodal network and an attractive business model with
capacity and standard prices. Municipalities and ports are
important partners in our construction of new combi terminals.
Today we can offer 25 lines for intermodal transports. As the

dividEnd pOliCy

Green Cargo is targeting an ordinary dividend payout ratio of
50 percent of annual proft after tax, provided the equity/assets
target is attained.

Finance target area

(Group)

Score Target Score Target1
2007 2008 2008 2009

Operating income, SEK million

6,157

6,432

Operating margin, %

4.8 4.9

2.2

Proft/loss after net fnancial
items, SEK million

246

27

Cash fow, SEK million

–143

–154

Return on equity, %

11

12

0

Equity/assets ratio, %

43

38

35

Net investments, SEK million

202

591

Volumes, billion gross tonne

31.70

31.48

1)

Due to the uncertainty on the market, we have opted not to report fnancial targets for 2009.

46

finanCE ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

product offering develops and customers increase their envi-
ronmental focus, we expect to see sales grow.

Partnership with Deutsche Bahn

The partnership with Deutsche Bahn grew via the jointly owned
company, DB Schenker Rail Scandinavia A/S, and other joint
projects. The acquisition of 49 percent of DB Schenker Rail
Scandinavia was fnalised in March. The owners made large
investments during the year in multi-system locomotives that
can operate in Germany, Denmark and Sweden. The frst joint
“Volvo Train” between Älmhult and Gent in Belgium started in
June. During the year, the jointly owned company also took
over freight traffc from Gothenburg, Malmö and Hallsberg to
destinations in Germany.

New agreements

SSAB and Green Cargo signed a ten-year agreement for the
transport of steel slabs and rolled products between Bor-
länge, Luleå and Oxelösund. The agreement is worth more
than SEK 2.5 billion and entails an annual transport volume of
more than 4 million tonnes. The co-operation also requires that
Green Cargo invests SEK 0.5 billion in 16 state-of-the-art,
energy-effcient electric locomotives.
Coop is transferring a large portion of its freight transports
within Sweden from road to rail based upon a new three-year
agreement with Green Cargo. The new solution decreases
Coop’s environmental impact by almost 8,000 tonnes of CO2;
more than 10 percent compared with previous solutions, while
using a new cost-effective and safe solution. The total order is
valued at about SEK 250 million. This new cooperation demon-
strates that, despite the fnancial crisis and depressed eco-
nomic cycle, the climate must remain a high priority.

priOritiEs fOr 2009

Cost rationalisations

The action programme, “Vändskivan”, was implemented during
the year, but it has not progressed according to plan. At the
same time, the sharp contractions to the economy and the fall in
volume placed additional demands on rationalisations within
both production and administration. In December 2008, we de-
cided to introduce a number of measures that would adapt the
business to the current market conditions and improve our abil-
ity to compete in the future. The redundancy of 400 positions
affectes primarily Rail production and administration. In 2009, a
rationalisation programme will be implemented to decrease
other production costs. The goal is to lower the unit costs by

(amongst others) decreasing maintenance expenses and in-
creasing fll rates. Rationalisation efforts are currently underway
in other business- and staff units within the Parent Company.

Investments to improve competitiveness

The locomotive modernisation programme, which encompass-
es the majority of the Parent Company’s electric and diesel lo-
comotives, will continue. The frst prototypes will be delivered
during the frst quarter of 2009. At the same time new business
in Rail and Logistics will require investments. In addition to new
electric locomotives at a cost of more than SEK 0.5 billion, we
are investing in approximately 50,000 square metres of ware-
house space at existing facilities in Helsingborg, Norrköping
and Stockholm for third-party logistics.
Given the extensive investment programme that lies ahead, it
is critical that our fnancing is sound to ensure that our invest-
ments can be made according to plan. Due to the continued un-
certainty and lack of trust on the fnancial markets, fnancing
has been given even higher priority within the Green Cargo
Group. Consequently, we have reviewed all of our planned
investments and those not considered critical have been post-
poned. At the beginning of 2009, we reached agreements for
the fnancing needed for the majority of the investments
planned for the coming year.

Volume adjustment and international focus

We will further adjust our volumes through consolidation of the
rail network and by implementing measures that increase fll
rates. At the same time, we are focusing our sales initiatives
toward utilising capacity and increasing the effciency of exist-
ing transport solutions. The acquisition and restructuring of
DB Schenker Rail Scandinavia A/S creates completely new
conditions that will allow us to offer competitive rail transports
between Scandinavia and the Continent. In 2009, several
projects were carried out, partly in co-operation with DB
Schenker Rail in Germany, to improve utilisation of the corridor
through Denmark.

GREEN CARGO AB (PARENT COMPANY)

rEvEnuEs

Operating income for 2008 totalled SEK 5,571 million (5,357).
The Rail division’s income increased only marginally due to the
low volumes during the fourth quarter. Road’s revenues in-
creased by 23 percent during the year. Sales in freight forward-
ing fell while the revenues of both the haulage operations and
the Terminals/Ports segment increased.

47

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT finanCE

Logistics also reported high growth. Revenues increased by
22 percent, primarily due to revenue growth in the clothing, al-
cohol and construction industries.

Costs

Costs increased by SEK 399 million compared to 2007.
Rail’s costs increased by 5 percent. Operating expenses in-
creased mainly due to higher prices for electricity and diesel,
and costs for repair and maintenance were higher than last
year. Overhead costs, primarily staff expenses, increased due
to the increase in full-time equivalents, compensation for
shifting holidays and the allocation of an extra day of vacation
in 2008.

Costs for Road rose by 21 percent compared to 2007, mainly
due to an increase in volume. Road’s costs were also affected
negatively by the price increases for diesel, haulage and con-
tracted services. Higher fuel costs were compensated for to a
large extent by invoicing a fuel supplement.
Costs in Logistics increased by 20 percent during 2008.
New assignments were carried out primarily using contracted
staff. More transport assignments led to higher transport costs
and, at the end of the year, costs rose in conjunction with the
establishment of new assignments and organisational rein-
forcements in preparation for the growth secured for 2009.
The increase in joint administrative costs refers primarily to
staff costs and costs for strategic development, mainly con-
sultant costs.

The Parent Company’s net fnancial income was signif-
cantly weakened due to the revaluation of loans in foreign cur-

rency and value changes for derivatives and fnancial assets
and liabilities. Other interest income and expenses indicate
only minor deviations from 2007.

thE grOup

Business performance overview

Consolidated operating income grew to SEK 6,432 million
(6,157). Operating proft for 2008 fell to SEK 143 million (295).
The Group’s share of the associated companies’ proft after
tax was –10 (8). The TGOJ Trafk subsidiary reported an oper-
ating proft of SEK 22 million (25), despite the fall of capital
gains from the sale of fxed assets to SEK 2 million (15). Higher
volumes in Rail increased revenues, and improved effciency
restricted costs. The NTR subsidiary increased its operating
proft to SEK 2 million (1), including restructuring costs of
SEK 3 million to adapt the Swedish operations to the expect-
ed lower volume level in 2009. Cargo Net (associated company)
reported weakened results due to increased operating costs
and lower volumes. Green Cargo’s share of the loss after tax
totalled SEK –22 million (9). DB Schenker Rail Scandinavia re-
ported a proft as a result of capital gains from the sale of loco-
motives. Green Cargo’s share of profts since the acquisition in
March 2008 was SEK 10 million. The shares of SeaRail and
Railtrans together totalled SEK 2 million (–1).
Net fnancial income totalled SEK –116 million (–49). The
decline was almost entirely due to fuctuations to the market
values and exchange rates as a result of uncertainty on the
international fnance market. The change in the market values
for fnancial investments totalled SEK –41 million (5). Exchange

Operating income

Operating proft/loss

2008

2007

2006

2005

2004

2008

2007

2006

2005

2004

Green Cargo AB

5,571 5,357 5,214 5,266 5,252

109

294

265

224

156

Nordisk Transport Rail

936

920

822

847

886

2

1

–3

–4

–10

TGOJ Trafk AB

285

257

224

193

205

22

25

5

9

14

Hallsbergs Terminal

31

20

14

12

10

5

2

1

1

0

Green Cargo Road & Logistics A/S

25

25

20

17

29

1

1

–1

–2

1

Group adjustments and other companies

–416 –422

–411

–471 –432

4

–28

16

–6

–40

Group

6,432 6,157 5,883 5,864 5,950

143

295

283

222

121

Summary of fnancial data for the Green Cargo Group and its operating subsidiaries.

48

finanCE ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

49

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT finanCE

rate differences related to revaluation of loans in EUR had a
negative impact on net fnancial income by SEK –37 million
(–7).

Cash fow

Consolidated cash fow from operating activities totalled SEK 221
million (360). The investment in DB Schenker Rail Scandinavia,
investments in new wagons and the ongoing locomotive mod-
ernisation programme affected cash fow negatively by SEK
745 million (–117). Financing via borrowing contributed to a cash
fow of SEK 390 million (267) and the decrease in current invest-
ments had a positive effect on cash fow of SEK 158 million
(–12). Amortisation of loans and leasing debts and owner divi-
dends negatively affected cash fow by SEK 176 million (646).
Total cash fow for 2008 was SEK –154 million (–143).

Financing

Consolidated interest-bearing liabilities were SEK 1,801 million
at year-end, of which SEK 1,015 million referred to fnance leases
and SEK 711 million to loan fnancing. SEK 75 million referred
to other short-term liabilities. Leasing contracts refer to the
fnancing of locomotives, freight wagons, logistics facilities,
equipment and road vehicles. New freight wagon fnancing has
a 15-year duration and new trucks a 7-year duration. Rail wag-
ons, trucks and equipment were fnanced through fnancial
leases totalling SEK 121 million. The acquisition of 49 percent of
DB Schenker Rail Scandinavia was fnanced through borrow-
ings totalling SEK 422 million.
On 31 December 2008, the debt portfolio, including interest
derivatives, had an average fxed-rate term of just over 1 year at
an average borrowing rate of 4.19 percent. Green Cargo AB
has a SEK 50 million unused line of operating credit with Nor-
dea Bank.

Net debt increased in 2008 due to the decline in interest-
bearing assets of SEK 349 million and the rise in interest-bearing
liabilities of SEK 551 million, of which the majority consists of
new borrowings.

Asset management

The Board determines Green Cargo’s investment and capital
provision policy and specifes the framework for managing li-
quidity and liabilities. The framework specifes maturities,
counterparty risks and permissible investment instruments.
The goal for asset management is to support the company’s
operations and provide the best possible net interest within the
boundaries determined by the Board. Results of capital provi-

50

finanCE ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

sion are measured using various comparisons, including the in-
terest index, OMRX-O/N and OMRX mortgage bonds.
Group liquidity management includes short-term operating
liquidity that must amount to at least SEK 200 million and a
medium-term invested liquidity reserve. Operating liquidity re-
fers to cash and market-listed investments that can be con-
verted within three banking days and unused, confrmed
credit. The purpose of the short-term portfolio is to minimise
liquidity risk. The average fxed interest period may not exceed
six months.

The liquidity reserve is defned as cash and cash equivalents
that exceed the above operating liquidity. The average fxed in-

terest period may not exceed two years. For both portfolios,
counterparty risk must be low and security holdings must have
high liquidity. This is particularly true when investing operating
liquidity.

The debt portfolio, i.e. leasing contracts and loans, totalled
SEK 1,801 million, of which more than SEK 1,400 million is at-
tributable to the Parent Company. Financing at variable inter-
est rates is done regularly. To achieve the desired fxed interest
period, interest swaps are used to exchange variable interest
for fxed interest.

Activities subject to environmental permits

The Parent Company does not conduct activities requiring en-
vironmental permits under the Swedish Ordinance (1998:899)
concerning Environmentally Hazardous Activities and the Pro-
tection of Public Health, but it does operate a diesel flling sta-
tion for which reporting is mandatory. Fire protection regula-
tions cover other small flling stations. TGOJ Trafk AB, a
subsidiary, operates a workshop for maintaining and washing
locomotives. The workshop must submit reports under the or-
dinance mentioned above. Green Cargo has a permit to trans-
port waste, including hazardous waste.

grOup COmpaniEs

The Group consists of Green Cargo AB (Parent Company),
four subsidiaries and four associated companies. These com-
panies enhance the Group’s capacity to deliver effective logis-
tics solutions. Green Cargo’s major subsidiaries and associat-
ed companies and their earnings trends for 2008 are presented
below.

Nordisk Transport Rail (NTR) is an international rail freight
forwarder. NTR buys, sells and develops rail transport and lo-
gistics solutions combined with other transport modes. The
company’s markets are primarily in Europe, where it has built a
network of subsidiaries and sales offces in ten countries. NTR
reported an operating proft of SEK 2 million (1) for 2008.

TGOJ Trafk AB provides tailored transport solutions, often
involving block trains, and rents out rolling stock. Its services
include vehicle maintenance. The operating proft for 2008 was
SEK 22 million (25).

Hallsbergs Terminal AB is a subsidiary owned by Green
Cargo and Hallsbergs Municipality and is consolidated in the
Green Cargo Group. The company operates a combi terminal

51

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT finanCE

Nordisk Transport Rail – 2008 data

Net sales

SEK 931 million

Head offce

Trelleborg

No. of full-time equivalents

65

CEO

Jan Lundström

Equity interest

100%

TGOJ Trafk – 2008 data

Net sales

SEK 282 million

Head offce

Eskilstuna

No. of full-time equivalents

196

CEO

Bengt Fors

Equity interest

100%

Hallsbergs Terminal – 2008 data

Net sales

SEK 26 million

Head offce

Hallsberg

No. of full-time equivalents

19

CEO

Ulf Gustavsson

Equity interest

67%

CargoNet AS1

– 2008 data

Net sales

SEK 1,751 million

Head offce

Oslo

No. of full-time equivalents

956

CEO

Are Kjensli

Equity interest

45%

DB Schenker Rail Scandinavia A/S1

– 2008 data

Net sales

SEK 638 million

Head offce

Copenhagen

No. of full-time equivalents

320

CEO

Stig Kyster Hansen

Equity interest

49%

SeaRail EEIG1

– 2008 data

Net sales

SEK 159 million

Head offce

Åbo

No. of full-time equivalents

13

CEO

Krister Sigfrids

Equity interest

50%

that creates an infrastructure for combining rail and road trans-
ports. It has an annual volume of 50,000 lifts; operating proft
for 2008 was SEK 5 million (2).

CargoNet AS is owned by Norges Statsbaner (NSB), 55 per-
cent, and Green Cargo, 45 percent. CargoNet provides inter-
modal transports by rail to, from and within Scandinavia via its
own Scandinavian rail network. CargoNet reported an operat-
ing proft for 2008 of NOK –21 million (29). Green Cargo’s share
of the loss after tax totals SEK –22 million (9).

DB Schenker Rail Scandinavia A/S is a production compa-
ny that supplies freight transports between Sweden, Denmark
and Germany for the joint owners Green Cargo and Deutsche
Bahn’s freight company, DB Schenker Rail Deutschland AG.
Green Cargo owns 49 percent of the company since March
2008. DB Schenker Rail Scandinavia A/S’s operating proft for

2008 was EUR 3 million; Green Cargo’s share after tax was
SEK 10 million.

SeaRail EEIG is an equal partnership between Green Cargo
and the Finnish rail freight company, VR Cargo. The company
provides rail freight transports between Scandinavia and Fin-
land, Russia and other CIS countries via regular train/ferry
connections across the Baltic Sea between Stockholm and
Åbo. Green Cargo’s share of profts for 2008 was SEK 2 mil-
lion (0).

1)

Associate company not included in consolidated net sales.

52

risks ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Risk taking and risk management are a natural part of all
business operations. Strategic choices, the daily opera-
tions and the developments in Green Cargo’s surround-
ings contain risks. The Scorecard and its six target areas
are also used to regularly evaluate our exposure to dif-
ferent risks and offset them. Green Cargo does not have
a single function for risk management since the assess-
ment and management of risks are an integrated part of
the organisation and its control.

safEty risks

Accidents

Accidents disrupt the business operations and can harm em-
ployees, equipment or third parties. High safety levels are a re-
quirement for the entire operation. We are working methodi-
cally with safety issues as well as to become even more
proactive by reporting near-accidents. The safety aspect is in-
cluded in every activity and initiative.

Key fgures for follow-up: Traffc-safety index (rail and road),
accident costs.

EmplOyEE risks

Appropriate skills

Green Cargo runs the risk of not having the skills needed to
meet our customers’ demands, which could hinder the compa-
ny’s growth.

New requirements and Green Cargo’s development into a
service company places demands on totally new skill sets that
are in high demand.
We work with a long-term perspective to recruit the right
people and to educate our employees. Green Cargo has a
good reputation on the labour market as an attractive em-
ployer, not in the least because of its strong environmental pro-
fle, which continues to grow as a competitive advantage.

Key fgures for follow-up: Number of employees with up-to-
date employee plan, leadership index, employee index, sick
leave, environmental image in the Employee Dialogues.

sOCial risks

As a member of society, we are exposed to risks occurring in
our surroundings. Risks due to macroeconomic trends, altered
conditions within the rail and logistics sectors or altered con-
sumption patterns are three examples of external events we
must monitor and manage. Examples from the current market
include:

Inadequate infrastructure

Investments in infrastructure are an absolute necessity if
Green Cargo is to be able to contribute to positive growth in
society and to offer competitive logistics solutions. There is an
obvious risk that an inadequate, outdated infrastructure could
inhibit this development.
Green Cargo gathers information on a regular basis and par-
ticipates in debates on this topic. For example, we maintain a
continuous dialogue with Banverket (the Swedish Rail Adminis-
tration) and utilise other possible channels for reaching decision-
makers.

Changing transport patterns

Changes in the set-up of geographical economical activities
are affecting transport patterns, while at the same time the in-
creasing need for long-haul transports is causing a shift within
modes of transport. If companies and industrial production
continue to move abroad, the Swedish and Nordic industries
could be at such a disadvantage from a cost perspective that
transport volumes fall.
Green Cargo continuously develops its product offering to
secure value-creation for its customers’ operations.

Macroeconomic changes

The fnancial crisis and the slowing economy are also a signif-
cant uncertainty factor for Green Cargo. We are facing lower
demand in several of our markets, the automotive industry
being one of the frst to feel the effects of the downturn. GNP
in 2008 fell 0.2 percent, which also effects Green Cargo.
A stronger focus on cost effciency will help us withstand
the falling business cycle more successfully.
Price variations and future access to oil and electricity also
have an effect on our costs.
We purchase electricity to operate our trains from Banver-
ket, which has a long-term strategy for electricity procurement
in order to provide rail operators with a stable electricity cost
over time. We also have fuel clauses in our customer agree-

Risks and risk management

53

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT risks

ments in order to control our cost levels. However, higher fuel
prices in general encourage a shift to more environmentally
effcient transport alternatives.

Key fgures for follow-up: Energy consumption.

Ports

Green Cargo’s intermodal offer with free-standing load carri-
ers partly includes transports from and to Swedish ports.
There is a risk that decisions on forthcoming infrastructure in-
vestments will be made for ports that do not have a rail con-
nection. Another risk is that the existing Swedish ports are not
equipped to effciently receive the super maxi container ships
of the future. In practice, calls from these ships require rail so-
lutions in order for the port to be able to manage the large con-
tainer volumes. Green Cargo has developed its own port strat-
egy and has close partnerships with several ports to offset
these risks.

EnvirOnmEnt risks

Climate changes

The extreme weather conditions of recent years are not only a
risk for our operations, but represent a global problem that
must be managed. The effects of climate changes can in-
crease the need for Green Cargo’s operations, for example
during storms, and at the same time can prevent freight trains
from running. In the long-run, raised water levels could have a
negative effect on our operations.
Every freight transport that we transfer to rail benefts the
environment. To eliminate the risk for traffc interruption due to
fallen trees because of storms, we have required tree-free
zones that are just as large as around motorways around the
major rail stretches.

Key fgures for follow-up: Energy consumption (electricity and
diesel), emissions.

Sustainable logistics solutions

There is a risk that the industry, including Green Cargo, might
not succeed in developing solutions with suffcient customer
value to meet the need for competitive logistics and that also
take the environment into consideration.
Green Cargo has a clear advantage due to its comprehen-
sive environment initiatives and its track-bound logistics. We
believe that there is a growing risk that companies will under-

estimate the importance of environmental issues when pur-
chasing logistics solutions. In particular when consumer re-
quirements for environmentally friendly solutions are growing.

Key fgures for follow-up: Energy consumption, environmental
value from Customer Dialogue, traffc-safety index.

CustOmEr risks

Competition

Competition on the tracks and market demand for new, high-
quality products are growing. Green Cargo must be able to
adapt itself to each situation and fnd competitive advantages
in its size. Both new competitors as well as established logis-
tics actors might choose to enter the rail market.
To successfully develop and market solutions with suff-
ciently high customer value, we are investing heavily in cus-
tomer-driven product development. The intermodal product
launch and the partnership with Deutsche Bahn are two key
elements in protecting existing business and winning new
business.

Key fgures for follow-up: Customer satisfaction, punctuality,
picking quality, invoicing quality.

International transports

Green Cargo’s success in international projects and the quality
of cross-border transports greatly depend on the partnership
with DB Schenker Rail. Green Cargo currently owns 49 per-
cent of DB Schenker Rail Scandinavia A/S, which provides us
with good opportunities to infuence its development. We es-
tablished a clear governance model for our joint production
company.

Key fgures for follow-up: Customer satisfaction, punctuality.

Intermodal products

Investments to expand the network and production capacity
and reliable relationships with suppliers are necessary to att-
ract critical freight volumes to rail via our intermodal offer.
Green Cargo is now focusing on establishing new combi ter-
minals and intermodal fows through ports that have good
growth potential. We transport to more than 40 destinations
that have the capacity to lift intermodal load carriers.

Key fgures for follow-up: Customer satisfaction, punctuality.

54

risks ADMINISTRATION REPORT

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

Customer mix

Forestry and steel account for two-thirds of Green Cargo’s to-
tal business volume. There is a large risk that new business
volumes from new growth segments will not compensate for
lost business volumes in these industries.
We are developing new services and logistics concepts for
our different customer groups. Other key measures are contin-
ued rigorous streamlining, unit cost reductions and greater
total cost fexibility.

Key fgures for follow-up: Customer satisfaction.

Changed purchasing behaviour

Changed purchasing behaviour is becoming more common, i.e.
outsourcing to third-party or fourth-party logistics companies
where the capabilities and values differ from the product owner.
To meet these new demands, Green Cargo must ensure that
the company has the skills and cost-effciency the customer
requires.

finanCE risks

Green Cargo’s business is exposed to a number of fnancial risks
that affect the consolidated proft/loss and cash fow. Green
Cargo’s Parent Company has a fnance function that identifes,
assesses and effciently manages these risks. It functions as an
internal bank and is responsible for capital supply and cash
management. This assignment is conducted in accordance with
the fnance policy decided by the Board. It establishes the re-
quirements on regular risk follow-up to facilitate good internal
risk control. More information about Green Cargo’s exposure to
these risks is available under Note 32 on pages 90–94.

Investments

Each investment can be linked to uncertainty if it does not gen-
erate the intended customer value. Green Cargo continues to
invest in climate smart capacity via new locomotives and loco-
motive modernisation.
The ongoing locomotive modernisation project is progress-
ing generally according to plan, which decreases our invest-
ment risks. Before each investment, we rigorously analyse the
business concept and customer relations. As a result of the
economic situation, we decided to postpone investments total-
ling SEK 1 billion.

Key fgures for follow-up: Operating margin, return on equity,
equity/assets ratio.

Cost developments

Financial risk increases as unit costs within Green Cargo in-
crease, which is why we initiated a rationalisation programme
containing concrete measures for lowering unit costs. Be-
cause of the economic downturn, we are also taking additional
measures to lower unit costs and improve effciency in all are-
as of our business.

Fixed costs and customer contrasts

Our operations require large amounts of resources, primarily
to the capital-intensive nature of production. This is particularly
the case in rail transports, which utilises an integrated system
in which all customers share resources.
About 70 percent of the total costs for rail operations are
fxed for 12 months. To increase fexibility, Green Cargo aims to:
share volume risks with customers through a combination of
variable and fxed pricing plans and longer contract terms.
size operations taking more clearly into account the entire
business cycle.
supplement company resources with contracted capacity.
enhance opportunities for co-use of various resource cate-
gories.

For the Road operations, the total cost, including the fxed
component, is relatively volatile. Large volume decreases and
the loss of important customer accounts can to a large extent
be offset by a corresponding cut in costs. Risks within the
Road operations can also be reduced through partnerships
with contracted haulage companies.
The fxed costs for third party logistics, which are slightly
less than 20 percent of total costs, are adjusted whenever
possible to existing customer contracts. From a logistics per-
spective, the risks are limited by the attractiveness of the facil-
ities and their location in attractive regions. Resources can be
adapted to peak or low seasons by operating partially with
temporary employees and outsourcing certain elements of
our operations.

Long-term, strong relations with customers and suppliers
are the primary way for us to counteract the risks related to
fxed costs.

Key fgures for follow-up: Operating margin, return on equity,
equity/assets ratio.

55

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436

ADMINISTRATION REPORT risks

Financial risks

Transactions with different parties can create risks for signif-
cant cost variations, such as interest risks, currency risks, coun-
terparty risks, liquidity risks (our own liquidity) and refnancing
risks. The current instability of the fnancial markets is causing
fnancial risks to rise due to its infuence on the interest and
currency markets. In order to maintain a reasonable fnancial
risk exposure, the fnance policy establishes boundaries for in-
terest risks and currency exposure and specifes allowable
counterparties and limits.

Interest risks

Interest risk must be limited to attain the Group objective of
stable earnings growth. The fnance policy defnes parameters
for permissible interest risk in average fxed-interest terms. For
investments, the average term is a maximum of six months (op-
erating liquidity) and two years (liquidity reserves). The maximum
permissible fxed-interest term for borrowing is 39 months.
Derivatives may be used to adjust fxed-interest terms. At year-
end, 25 percent of the debt portfolio was subject to variable
rates. A sensitivity analysis shows that a change in interest
rates of +/– 1 percentage point would affect net fnancial items
by SEK +/– 3.7 million.

Currency risk

Exposure to foreign currency is primarily related to the Group’s
international transports. Currency risk is reduced using cur-
rency forwards and to a certain degree, currency options. Dur-
ing the year, a portion of the gross exposure, i.e. outstanding
accounts in foreign currency, were hedged. The currency
hedges totalled EUR 51 million.
At year-end, the company’s outstanding derivative contracts
(maturity in 2010) had an equivalent value of EUR 43 million.
A sensitivity analysis shows that a change in currency rates
by +/– 2.5 percent would affect net fnancial items by SEK +/–
5 million.

Counterparty/credit risks

Counterparty risk is the risk that a counterparty will be unable
to meet its obligations in full and/or on time. The Group’s
placements of cash and cash equivalents are restricted to liq-
uid instruments with low counterparty risk. Our fnance policy
specifes what counterparties are permitted and amount limits
per counterparty. Counterparty exposure falls into three cate-
gories with a maximum limit per issuer. At year-end total cash
and cash equivalents exposure totalled SEK 551 million.

Liquidity risks

Liquidity risk is defned as the risk of incurring costs or being
compelled to suspend payments due to lack of access to liquid
funds or inability to borrow to cover expenses. The category
includes the risk that securities can not be sold at the desired
time, at the desired price or in the desired volume. Liquidity risk
is managed by setting a minimum level for assets disposable
within three banking days.

Refnancing risks

Refnancing risk is defned as the risk that Green Cargo will in-
cur costs or be compelled to suspend payments because the
company cannot cover a debt that has fallen due for payment
with cash and cash equivalents or equivalent new fnancing.
The debt maturity structure must be allocated evenly over time
and, at the most, one-fourth of the Group’s loans may fall due
within a 12-month period. At year-end the average remaining
contract period for our fnancial liabilities was nine years.

Key fgures for follow-up: Operating margin, return on equity,
equity/assets ratio.

56

OutlOOk and prOfit apprOpriatiOn

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436 6

ADMINISTRATION REPORT

signifiCant EvEnts aftEr yEar-End 2008

Due to the current economic developments and sharply de-
clining transport volumes, Green Cargo announced 400 redun-
dancies in the Parent Company in December 2008. It is our in-
tention to resolve as large a number of these redundancies as
possible via voluntary redundancy and early retirement not only
to avoid termination notices but also keep key competence in
affected areas for the coming year.
At the beginning of 2009, we co-operated with personnel or-
ganisations to develop early retirement offers and voluntary re-
dundancy or leave of absence possibilities. It was determined
that the actual number of redundancies in the Parent Company
was 336 due to natural retirement opportunities and employee
contracts that were already terminated. Based on this number,
negotiations are continuing to determine how the redundan-
cies will be distributed and resolved at the regional and local
level. We also need to ensure at this stage that the changes do
not affect our transport network to such a degree that our cus-
tomers suffer from unacceptable consequences. Final infor-
mation about the redundancies and termination notices as well
as the calculation for restructuring costs for this process are
expected to be completed during the frst quarter of 2009.

OutlOOk

We witnessed a continued fall in volumes at the beginning of
2009 and judge the market development for the year to be ex-
tremely uncertain. Even if the length and depth of the downturn
is diffcult to predict, we are convinced that there will continue
to be a need for sustainable logistics solutions. We have not
lost our long-term belief in the future of Green Cargo and the
sector. Growth opportunities are strong, but to offset the ef-
fects of the slowing economy, survive in the short-term in terms

of proft and liquidity and strengthen our competitiveness for
the future, we must continue to cut costs in 2009 and 2010. A
number of measures will help us fnd new business and im-
prove proftability.
In order to also successfully utilise started investments, we
must believe in the future and use fnancing that secures our
liquidity, despite that this coincides with a slowing economy
and crisis on the fnancial market. This means that fnancing
issues will receive a very high priority in the near future.
Our sustained, high punctuality rate, strong environmental
performance and acknowledged effcient third party logistics
offer provides a stable foundation on which to meet market de-
mand. Increased co-operation between our operations, new
products and international assignments will enable us to offer
logistics solutions for the future to both existing and new cus-
tomers.

apprOpriatiOn Of prOfits

At the disposal of the AGM (SEK):

Proft/loss brought forward

1,132,371,282

Group contributions after tax

10,491,120

Net proft for the year

– 352,744

Total

1,142,509,658

The Board and the CEO propose that
profts be appropriated as follows:

Carried forward

1,142,509,658

Total

1,142,509,658

Outlook and proft appropriation

57

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-6436 6

inCOmE statEmEnts

group

parent Company

(SEK million)

Note

2008

2007

2008

2007

Operating income

Net sales

5, 6

6,392

6,111

5,540

5,294

Other operating income

7

40

46

31

63

Total operating income

6,432

6,157

5,571

5,357

Operating expenses

Operating costs

5, 8

–3,499

–3,336

–2, 956

–2,785

Personnel costs

9

–1,800

–1,658

–1,624

–1,501

Other external costs

10

–757

–648

–688

–574

Depreciation and impairment losses

16, 17

–223

–228

–194

–203

Other operating expenses

–0

Share in associated companies’ proft

–10

8

Operating proft

6

143

295

109

294

Proft/loss from fnancial items

Proft/loss from participations in Group companies

11

6

Proft/loss from participations in associated companies

12

2

–0

Interest income and similar proft/loss items

13

44

40

41

39

Interest expenses and similar proft/loss items

14

–160

–89

–141

–82

Proft after fnancial items

6

27

246

11

257

Income tax for the year

15

–20

–72

–11

–76

Net proft for the year

7

174

0

181

Attributable to owners of the Parent Company

6

173

Attributable to minority shareholders

1

1

Total

7

174

Proft per share (before and after dilution), SEK

3,5

87

Number of shares at year’s end, thousands

2,000

2,000

Average number of shares during the year, thousands

2,000

2,000

58

balanCE shEEts

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-643

group

parent Company

assEts (SEK million)

Note

31 Dec 2008

31 Dec 2007

31 Dec 2008

31 Dec 2007

Non-current assets

Intangible assets

16

Capitalised development expenditure

20

33

20

33

Goodwill

8

8

2

3

Ongoing capitalised development expenditure

25

3

24

3

Total intangible assets

53

44

46

39

Property, plant, and equipment

17

Land, land improvements and buildings

295

318

1

1

Leased buildings

18

95

98

95

98

Leasehold improvements

21

17

22

18

Transport equipment

390

349

336

294

Leased transport equipment

18

737

722

679

660

Equipment, fxtures and fttings

72

66

64

59

Construction in progress

380

59

327

56

Total property, plant and equipment

1,990

1,629

1,524

1,186

Financial assets

Participations in Group companies

19

126

126

Participations in associated companies

19

560

265

537

236

Other non-current securities

1

1

0

0

Derivative instruments

32

1

16

1

16

Receivables from Group companies

5

3

2

Other non-current receivables

0

0

0

0

Total fnancial assets

562

282

667

380

Deferred tax assets

20

153

144

141

132

Total non-current assets

2,758

2,099

2,378

1,737

Current assets

Inventories

21

13

11

2

2

Trade receivables

640

620

518

492

Receivables from Group companies

5, 22

65

34

Receivables from associated companies

5

40

46

39

46

Current taxes

14

12

14

12

Other receivables

23

17

4

8

Prepayments and accrued income

23

230

146

220

138

Derivative instruments

32

0

0

0

0

Current investments

423

653

423

653

Cash and cash equivalents

31

101

205

36

168

Total current assets

1,484

1,710

1,321

1,553

tOtal assEts

4,242

3,809

3,699

3,290

59

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-643

balanCE shEEts

group

parent Company

Equity and liabilitiEs (SEK million)

Note

31 Dec 2008

31 Dec 2007

31 Dec 2008

31 Dec 2007

Equity

Restricted equity

Share capital

200

200

200

200

Statutory reserve

100

100

300

300

Non-restricted equity

Other capital contributions

1,047

1,047

Reserves

–51

9

–73

–4

Proft brought forward

280

192

1,216

1,110

Proft for the year

6

173

0

181

1,143

1,287

Total equity attributable to owners of the Parent company

1,482

1,621

Minority owners’ share of equity

7

6

Total equity

29

1,489

1,627

1,443

1,587

Liabilities

Non-current liabilities

Non-current leasing liabilities

18

928

863

872

803

Other non-current liabilities

24

696

303

412

12

Derivative instruments

32

27

1

27

1

Deferred tax liabilities

20

14

13

Provisions for pensions

9, 25

0

2

0

0

Other provisions

25

5

4

0

Total non-current liabilities

1,670

1,186

1,311

816

Current liabilities

Trade payables

343

313

269

262

Liabilities to Group companies

5

26

28

Liabilities to associated companies

5

7

10

7

10

Current leasing liabilities

18

87

79

83

75

Current tax liabilities

0

0

Derivative instruments

32

45

6

45

6

Other liabilities

127

109

103

85

Accruals and deferred income

26

473

474

411

416

Provisions for pensions

25

0

0

0

0

Other provisions

25

1

5

1

5

Total current liabilities

27

1,083

996

945

887

tOtal Equity and liabilitiEs

4,242

3,809

3,699

3,290

group

parent company

mEmOrandum itEms (SEK million)

Note

31 Dec 2008

31 Dec 2007

31 Dec 2008

31 Dec 2007

Pledged assets and contingent liabilities

28

Pledged assets

261

270

30

30

Contingent liabilities

632

28

915

326

60

ChangEs in Equity

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-643

parEnt COmpany (SEK million) Note

share
capital

reserves

fund for
fair value

proft/loss
brought
forward

proft
for the
year

total

Balance brought forward 1 Jan 2007

200

100

7

1,019

166

1,492

Allocation of proft/loss from previous year

166

–166

0

Dividend

–80

–80

Group contributions received

6

6

Tax effect on Group contributions received

–1

–1

Reporting of fnancial instruments at fair value

–11

–11

Proft for the year

181

181

Balance carried forward 31 Dec 2007

200

100

–4

1,110

181

1,587

Balance brought forward 1 Jan 2008

200

100

–4

1,110

181

1,587

Allocation of proft/loss from previous year

181

–181

0

Dividend to shareholder

–85

–85

Group contributions received

15

15

Tax effect on Group contributions received

–5

–5

Reporting of fnancial instruments at fair value

–69

–69

Proft for the year

0

0

Balance carried forward 31 Dec 2008 29

200

100

–73

1,216

0

1,443

Equity attributable to Parent Company owners

Minority
share-
holding

grOup (SEK million) Note

share
capital

Other
capital con-
tributionsreserves

proft/loss
brought
forward

proft
for the

yeartotal

total
equity

Balance brought forward 1 Jan 2007

200

1,047

5

107

165

1,524

5

1,529

Allocation of proft/loss from previous year

165

–165

0

0

Dividends to shareholders

–80

–80

–80

Translation difference for the year

15

15

15

Reporting of fnancial instruments
at fair value

–11

–11

–11

Total changes in proft/loss not reported
in the income statement

4

0

0

4

4

Proft for the year

173

173

1

174

Total changes in proft/loss

4

0

173

177

1

178

Balance carried forward 31 Dec 2007

200

1,047

9

192

173

1,621

6

1,627

Balance brought forward 1 Jan 2008

200

1,047

9

192

173

1,621

6

1,627

Allocation of proft/loss from previous year

173

–173

0

0

Dividend to shareholder

–85

–85

–85

Translation difference for the year

9

9

9

Reporting of fnancial instruments
at fair value

–69

–69

–69

Total changes in proft/loss not reported in
the income statement

–60

0

0

–60

–60

Proft for the year

6

6

1

7

Total changes in proft/loss

–60

0

6

–54

1

–53

Balance carried forward 31 Dec 2008 29

200

1,047

–51

280

6

1,482

7

1,489

61

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-643

Cash flOw statEmEnts

group

parent Company

(SEK million)

Note

2008

2007

2008

2007

Operating activities

Proft/loss after fnancial items

27

246

11

257

Adjustments for non-cash items

30

305

193

261

155

Payments for provisions

–8

–9

–5

–6

Tax paid

–34

–22

–25

–19

Cash fow from operating activities
before changes in working capital

290

408

242

387

Cash fow from changes in working capital

Increase/decrease in current receivables

–91

–41

–116

21

Increase/decrease in current liabilities

22

–7

–7

–33

Cash fow from operating activities

221

360

119

375

Investing activities

Dividends

0

5

0

6

Provisions

–2

0

0

0

Acquisition of intangible assets

–22

–3

–20

–3

Acquisition of property, plant and equipment

–465

–160

–400

–139

Sales of property, plant and equipment

27

66

15

22

Acquisition/sale of fnancial assets

0

–1

0

9

Changes in current investments

158

–12

158

–12

Acquisition of businesses

–285

–19

–285

–19

Changes in other current receivables

0

0

0

0

Cash fow from investing activities

–589

–124

–532

–136

Financing activities

Dividend to shareholder

–85

–80

–85

–80

Debts incurred

390

267

390

0

Amortisation of lease liabilities and loans

–91

–566

–80

–282

Group contributions received/paid

6

–2

Cash fow from fnancing activities

214

–379

231

–364

Cash fow for the year

–154

–143

–182

–125

Cash and cash equivalents at year’s start

255

398

218

343

Cash and Cash EquivalEnts at yEar’s End

30

101

255

36

218

62

nOtEs

Annual Report 2008 – Green Cargo AB, corp. ID. no. 556119-643

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