COMMUNICATION FROM THE
COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT
Towards an integrated
European railway area
2. Ways to make the railway market more dynamic and
improve quality: future action
2.1. Conditions for success for rail freight
The foregoing analysis of the rail freight situation and the
further details set out in Annex 1.1 point to the need for
further action to make this sector truly dynamic. Quality is the
key to attaining the desired shift of the balance between modes.
The legislative measures proposed in Part 1 are the essential
conditions for creating the framework needed for developing rail
freight. However, they are not enough and must be backed up by a
series of legislative and other measures already announced in the
White Paper "European transport policy for 2010: time to
decide" [12] and discussed in further detail here to open a
dialogue with all concerned.
[12] COM(2001) 370.
2.1.1. Ensuring high-quality rail freight services
According to customer surveys [13] one of the most important
reasons for customers' dissatisfaction with rail freight services
is the mediocre and still worsening service quality, especially
for international services. The average commercial speed of
international rail freight services, punctuality and reliability
of service are far from satisfactory. The operators of combined
transport report a dramatic deterioration of the punctuality of
combined transport trains over the last few years (see table x)
causing significant costs to railway undertakings due to claims
from unsatisfied customers, inefficient asset utilisation and
profit on lost turnover.
[13] See, for instance, Symonds Group (2001), A study on single
wagonload rail traffic, p. 95 et seq.
The importance of high-quality rail freight services for
improving the environmental performance of freight transport, in
particular in mountainous regions
Rail freight transport has to contribute more than hitherto to
easing the environmental pressures of road transport,
particularly in sensitive areas such as mountainous regions (e.g.
Alps and Pyrenees). The eco-point system for road haulage
crossing the Austrian Alps is trying to cap environmental impacts
on the Austrian Alpine valleys. This scheme will expire in 2003.
Therefore, alternative measures to marry the needs for
environmental protection of mountainous areas with the traffic
needs of an efficient transport system will have to be found.
The Community already supports, in the framework of the
trans-European network policy, the development of major new rail
infrastructure across the Alps (Mont-Cenis and Brenner tunnels).
However, the size and the cost of the projects are very high and
it is of vital importance that rail operators are able to draw
maximum benefit from this future infrastructure to make them
profitable. Moreover, these projects will be completed only in
the long term. It is therefore necessary to improve the existing
infrastructure (by the removal of bottlenecks on the lines
crossing the Alps and on their accesses) as well as quality of
services on these axes to make rail more attractive against road.
Both the Alps and Pyrenees present a natural barrier between
important economic regions of Europe, which witness strong
traffic growth. Combined rail transport through the Alps accounts
for 25% of total traffic; for the Pyrenees, the figure is much
lower, around 5%. These figures show that road transport still
has a prominent part in this traffic. On the other hand, the
traffic flows crossing these mountains lend themselves well to
combined transport. The overwhelming part is long-distance
transport, and consists of manufactured or semi-manufactured
goods. As there are only a few passes through the mountains,
traffic tends to be concentrated naturally, and thus offers good
opportunity for block trains and shuttles.
It is now time that the service quality of rail improves so that
it can make full use of its competitive and environmental
advantages to take traffic from road.
The quality problem is particularly acute on certain corridors
such as the North-South Alpine crossing between Germany, Austria
and Italy where the lack of locomotives frequently causes huge
delays at the border. The appalling performance of rail freight
has serious repercussions on the other transport sectors and thus
on environmental impacts of transport activities in Alpine
regions. As road haulage generally takes over the goods transport
lost by rail, Alpine countries such as Austria, France and
Switzerland suffer increasingly from air pollution and noise
emissions from road transport. These countries claim urgent and
effective measures for reducing the number of trucks crossing
their territory and for shifting freight from road to other more
environmentally friendly modes such as rail.
A study [14] commissioned by UIRR, the international association
of combined transport, and co-financed by the Commission under
its PACT programme analysed the quality problems of rail-based
combined transport on 8 major European transport corridors taking
into account more than 18 000 annual train movements. The study
highlighted clearly that 2/3 of the punctuality problems are
caused by malfunctioning rail operations. The report issued a
number of recommendations at structural level, at institutional
level and at operational/procedural level. The major
recommendation on structural measures is to open rail freight
markets in order to promote competition. The Commission fully
shares this conclusion. The policy advocated by the Commission of
charging for the use of transport infrastructure, on the basis of
the "user pays" principle, can only be fully effective,
if there is a competitive alternative to road transport through
the Alps. In order to fulfil the expectations, adequate rail
infrastructure capacity has to be ensured, investment in
appropriate rolling stock has to be made and most important of
all the quality of rail services has to be improved swiftly.
Wider introduction of piggyback services (Rollende Landstraße)
can be seen as a quick solution to Alpine transport problems;
however, it does not constitute a strategy to stimulate modal
shift for long-distance traffic. On the contrary, it tends to add
to the attraction of long-distance road haulage.
[14] UIRR (2000), A Quality Strategy for Combined Transport - The
beginning of a transformation, Final report, 21 November.
The Commission proposes a number of measures to address the
issues of environmental impacts of goods transport and modal
shift in mountainous regions and in particular in Austria as
announced in the report from the Commission on the transit of
goods by road through Austria (COM(2000) 862, paragraph 1.6.3):
- A European approach to securing a high level of quality for
rail freight services in Europe is explained in more detail in
this chapter.
- The Commission intends to present a Framework Directive on
transport infrastructure charging including the pricing for
environmental effects of transport activities for all transport
modes.
- In the context of the trans-European transport network policy,
the Commission has decided to intensify its support for the
development of cross-border rail infrastructure in areas
characterised by natural barriers.
- The Commission has launched a large-scale thematic network
"Alpnet" within the fifth framework programme for
R&D activities and will, after conclusion of this exercise at
the end of 2002, make full use of the knowledge gained to
encourage further rail transport in and through the mountains.
- The Marco Polo programme, which should be operational by 2003,
will give important support to all suitable actions in the market
improving the quality and performance of rail transport in these
sensitive areas.
Punctuality of UIRR trains compared to programmed arrival time
1999 - 2001 (in %)
> TABLE POSITION>
Source: UIRR (2001)
One major reason for the low quality performance is the lack of
responsibility of any one railway undertaking for the good
execution of the entire international service in the traditional
cooperation mode. Various quality initiatives by the railways
[15] have shown that rigorous quality management on specific
corridors can improve quality significantly. However, railway
undertakings have not generally applied such quality management
to all international services. The objective for railways must be
to regain an image as a reliable, high-quality service in order
to compete successfully and to absorb a higher share of expected
future growth on the freight transport market.
[15] For instance, the UIC quality project SAPPI Gmbh in 1999 and
various national projects.
The Commission expects that the complete opening of rail freight
markets and the ensuing increase of competition will provide the
necessary incentives to railway undertakings to improve the
quality of their services. However, market opening is likely to
show tangible effects only in the medium term, as the rise of
competition will be gradual. In the short term, specific measures
to improve service quality must be taken in order to re-establish
the confidence of customers in rail freight services. The Rail
Market Monitoring Scheme set up by Directive 2001/12 will closely
monitor the development of service quality on the European rail
freight markets on the basis of a number of key indicators.
The Commission proposes three specific measures to address the
quality issue.
(i) The Commission intends to propose an amendment of Directive
2001/14 in order to enable authorised applicants other than
railway undertakings to apply for train paths. An authorised
applicant in rail freight could be, for instance, a shipper or a
forwarder with an interest to use the rail mode to transport
significant and, over time, fairly stable cargo volumes. If the
shipper cannot find an offer from a railway undertaking on the
market place satisfying his needs, he himself might apply for a
train path. This would enable him to design and organise a
service, for which he would subcontract the traction to a railway
undertaking. The provision of authorised applicants in the
regulatory framework would significantly strengthen the position
of rail freight customers vis-à-vis the railway undertakings and
thus contribute to improving service quality.
(ii) The Commission expects the European rail industry to
undertake a number of voluntary measures to improve the incentive
structure for service quality. In particular, the European
railway undertakings should undertake systematically to include
service quality commitments in their contracts with customers in
a fair and non-discriminatory way. Based on a common
understanding between railway undertakings and customers such
quality criteria shall include, for instance, regular and
reliable service, market conform arrival and departure time,
punctuality, transparent invoicing, etc. (for railway
undertakings) and timely presentation of wagons and cargo to the
take-over point, etc. (for customers). Performance regimes
between cooperating railway undertakings should provide effective
incentives for ensuring high quality and making all partners
responsible for those risks under their control. Furthermore,
European railway undertakings should undertake voluntary action
to improve their operational procedures especially for
international services in a joint effort with their customers.
(iii) Complementarily, the Commission intends to propose a
Regulation that will lay down the terms of compensation in case
of non-compliance with contractual service requirements. This
legal act will provide effective incentives to both parties,
railway undertaking and customer, for ensuring a high level of
service quality. Such incentives will be defined according to
common principles. They should be financial in the form of a
compensation scheme or a "bonus/malus" performance
scheme with appropriate sharing of risk and reward, avoiding
rewards for simply doing what was contracted. The incentives
should apply to the whole product rather than to just parts and
they should embrace risks that are controllable by the railways
and the customers respectively.
The elements of a future European approach to service quality in
rail freight are discussed further in Annex 1.2.
2.1.2. Overcoming entry barriers to pan-European rail freight
services
The past experience with attempts by railway undertakings to
enter the market for rail freight services, either at national
level or at international level, has shown that new entrants,
including existing operators outside their country of origin,
face a multitude of entry barriers. Especially newcomers have to
spend a considerable amount of time and resources to overcome
such hurdles before they can start providing services. Here is a
typical example: each railway undertaking needs traction for its
wagons, but newcomers will have difficulties to obtain the
traction they need, as there are only a few, very small
second-hand markets or markets for leasing locomotives. If they
get a locomotive, the locomotive driver cannot cross borders
routinely as national regulations governing their training
curricula and examination conditions are different. The
locomotive has to be equipped with an automatic train protection
system (ATP) to obtain the safety certificate. However, ATP
systems usually all differ from country to country and it is
difficult, especially for a small railway undertaking, to buy and
to fit such a system to its locomotives as there are no
second-hand markets. In addition, monopolistic suppliers charge
very high prices and have long delivery times.
Once operational and after having received a train path the
railway undertaking also needs access to service facilities to
get, for instance, traction current, diesel fuel, access to
stations and to shunting services as well as maintenance and
repair services. Often there is a risk that the independent
railway undertaking does not obtain the service for a competitive
price or not on the same conditions as the national rail
operator.
A further challenge for railway undertakings that want to carry
out international services can be the customs transit procedures.
National railway undertakings have been taking advantage of a
specific simplified transit procedure. This procedure provides
among other facilities for the waiver of guarantee and of
transit-related border formalities that ease the provision of
international services significantly. However, the conditions
that have to be complied with to qualify for the simplified
procedure (e.g. the requirement to carry goods in each country by
a separate railway undertaking, to break down transport costs for
each of the countries whose territory is entered during a given
transport operation and to hold records for inspection by customs
in a central accounting centre to be set up by the railway
undertaking in each country) cannot be fulfilled, or only under
economically unreasonable conditions, by independent railway
undertakings or for transport operations under open access
conditions. Thus these conditions are hindering the development
of open European rail freight markets and impeding competition.
In order to reduce market entry barriers, the Commission proposed
three concrete actions:
i) Swift, coordinated implementation of the European Rail
Transport Management System ERTMS will be instrumental in
overcoming the entry problem with national ATP systems. The ERTMS
command and control system will be able to fulfil the same
functions as the national ATP systems. Coordinated implementation
would also have the advantage of reducing the costs of backward
compatibility with existing national command and control systems.
Therefore, the Commission, in cooperation with the
Interoperability Committee, intends to ensure coherent national
ERTMS deployment plans for conventional rail systems.
ii) The Commission considers that non-discriminatory access to
service facilities is vital to foster competition on rail freight
markets. Regulatory bodies will have to play a decisive role in
this. In order to enable national regulatory bodies to fulfil
this role, the Commission intends to make a proposal to amend
Directive 2001/14 to reinforce the powers of rail regulators with
respect to ensuring non-discriminatory access to services and
service facilities.
iii) The Commission intends to make proposals in 2002 for
defining the conditions under which all railway undertakings can
benefit from simplifications of the Community customs transit
procedure in a transparent and non-discriminatory manner taking
due account of the liberalised regulatory framework for European
rail freight. This would also foster the competitiveness of
transit traffic by rail in particular through Switzerland.
Entry barriers and measures to overcome them are discussed in
more detail in Annex 1.3.
2.1.3. Developing the infrastructure for efficient European rail
freight services
Inefficient use, lacking interoperability, low priority for
freight in train path allocation as well as technical and
physical insufficiencies are major stumbling blocks to the
development of European rail freight. In order to promote swift
penetration of interoperability specifications, the Commission
will establish a link with Community financial support to
trans-European rail infrastructure projects, i.e. introduce an
interoperability condition for Community funding. Rail
infrastructure managers have to cooperate internationally in
order to ensure better utilisation of existing infrastructure.
Instrumental in that would be better harmonisation of (slow and
fast) traffic flows when allocating international and national
train paths while attributing due importance to international
freight. In order to optimise the network, the concept of a
European core network for high-quality rail freight services
should be further developed. The concept envisages using the
existing infrastructure but attempting to separate where possible
the different types of traffic, mainly according to speed, and to
give priority to freight on certain major axes. Upward
harmonisation of key quality parameters such as train length,
loading gauge and axle load, in the framework of the
interoperability process, would allow a significant improvement
of service economics and performance.
The Europeanisation of rail freight services increases the needs
of competitive railway undertakings and infrastructure managers
for efficient data exchange and information systems (e.g. for
fleet management, timetabling, tracking and tracing, customer
relations, etc.). Although there are national information
systems, problems arise when it comes to international traffic.
The protocols defining the data format and the network interfaces
generally do not match. In order to address the technical aspects
of interoperable information systems the Commission has mandated
AEIF swiftly to develop the technical specifications for a
European rail data exchange system in the framework of the
interoperability process for conventional rail systems. Turning
to the operational aspect, the Commission encourages the
enterprise sector (e.g. railway undertakings, logistics
integrators, or forwarders) to take the initiative to set up a
commercially managed data exchange platform once the technical
specifications for freight telematics applications become
available. For implementation of such a concept fostering
intermodal transfer, the industry could request Community support
under the future Marco Polo programme.
Annex 1.4 provides further details on the measures envisaged to
improve the infrastructure for European rail freight.
2.1.4. Improving the environmental performance of rail freight to
foster its contribution to sustainable mobility
Rail is a relatively environmentally friendly mode of transport.
However, rail freight must improve its performance in terms of
noise emissions and diesel engine emissions if it does not want
to fall behind other modes such as road haulage that recently
have been making significant progress in their environmental
performance. Noisy freight wagons that wake up urban dwellers
when passing through the city at night and smoking diesel
locomotives are at the centre of criticism from a European
population that is becoming more and more aware of environmental
issues.
The Commission intends to address the noise issue for new freight
rolling stock through ambitious noise limit values set in the
framework of the interoperability process. The Commission also
intends to take account of cost effectiveness when working
towards such values. In order to exploit the potential for
reducing atmospheric emissions from diesel locomotives, the
Commission will propose to amend Directive 97/68 on emissions
from internal combustion engines to include (light duty) rail
diesel engines and to set cost-effective but bold emission limit
values. Emissions from heavy-duty diesel rail engines will be
tackled through limit values within the interoperability process
for conventional rail. Member States are encouraged to combine
the limit value approach defining a minimum abatement level with
an economic instrument such as an emission-based infrastructure
charge in order to reach higher levels of abatement if desired.
However, it is essential for an effective policy on rail freight
noise to act also on the existing fleet especially as the
investment cycles for rail rolling stock are particularly long.
The Commission will enter into a dialogue with the industry to
assess cost-effective options including voluntary measures by the
industry for rolling stock noise abatement (e.g. through
retrofitting with less noisy composite brake blocks) and the
reduction of atmospheric emissions from diesel rail engines (e.g.
through retrofitting or ex-post engine optimisation).
The environmental measures for European rail freight are
discussed in more detail in Annex 1.5.
2.2. Developing high-quality international passenger services
Active provision of high-quality passenger services will be one
of the best means to achieve a modal transfer from car and plane
towards train services and to contribute to the objectives of the
common transport policy and the White Paper. To achieve this
transfer, it will be necessary to have a common analysis and
understanding of the problems which occur in the provision of
passenger services, and to develop and implement measures to
address these problems and to solve them. For the Commission,
this is not a new problem. As a matter of fact, the Commission
has received and still continues to receive many complaints and
requests from individual citizens and interest groups to address
the problems in this sector and to draft proposals aimed at
improving the current service levels. The complaints and
suggestions vary, but mostly address the punctuality of services;
the availability of information on fares, timetables and delays;
the accessibility of trains for persons with reduced mobility
(PRMs) or for persons travelling with their bikes. Healthy and
secure travel conditions as well as security and safety in trains
and on stations are frequently mentioned in complaints addressed
to the Commission. Finally, complaint handling procedures for
insufficient service levels or unfair contracts as well as the
lack of involvement of the users in consultation procedures
concerning timetables and opening or closures of services or
entire lines have been quoted by different user organisations.
This leads the Commission to consider two aspects to improve the
situation. First, the introduction of regulated competition for
both national and international passenger services and, second,
the affirmation of passenger rights. A detailed description of
the current situation in relation to international passenger
services, the Community's existing legal framework as well as the
new proposals is given in Annex 2 to this communication. A
substantial input to the description of the current situation has
been provided by a study carried out by OGM-consultants and a
hearing for user and passenger organisations organised by the
Commission in Brussels on 15 October 2001.
2.2.1. The case for a progressive opening of the market
First of all, the present legal situation allows for access
rights for international groupings. Directive 91/440 gives access
rights for international groupings which provide international
rail passenger transport. According to Directive 95/18, a
licensed railway undertaking may request a licence in a Member
State and form a grouping with another licensed railway
undertaking or even with an affiliated railway undertaking.
Second, experience within the Member States shows that regulated
competition is associated with more efficient and attractive
passenger rail services. Sweden and the UK, the two States that
have made most use of regulated competition, are also the States
where passenger rail traffic has grown most rapidly since the
mid-1990s. Other Member States that have used regulated
competition on a smaller scale for regional services - including
Germany, Portugal and the Netherlands - also report good results.
For these reasons, in 2000 the Commission adopted a draft
Regulation [16] on public services in public transport. This
states that in almost all cases financial compensation or
exclusive rights for the operation of passenger rail services
should be awarded through regulated competition. This proposal is
currently under consideration by the Council and the European
Parliament. Not only will it lead to better rail service, it will
also substantially reduce the risk of existing subsidies and
exclusive rights for rail operators being challenged and
overturned under the provisions of Community competition law.
[16] COM(2000)0007 Proposal for a Regulation of the European
Parliament and of the Council on action by Member States
concerning public service requirements and the award of public
service contracts in passenger transport by rail, road and inland
waterway (presented by the Commission), OJ C365E, 19 December
2000, p. 169.
The provisions of this draft Regulation apply to international as
well as domestic services. However, a study on the development of
international rail passengers markets by OGM [17] showed that
there is a widespread view that international rail services do
not receive financial compensation and are not protected by
exclusive rights. This assessment will need to be revisited
following the adoption of the draft Regulation.
[17] OGM study on the development of (international) rail
passengers markets and policy, to be published in 2002.
In the light of this situation, it is appropriate to consider the
options available for a meaningful opening of the market for
international rail passenger services.
The thorough assessment of the structure and size of the market
for international passenger services, as made in the OGM study,
allows the identification of 5 segments with distinct features
and addressing different users. The first segment is made up of
the regional cross-border services for commuting or tourist
trips, which do not go beyond 80-90 km. These services mainly
serve citizens living in border areas of one Member State who
work in another. Long-distance intercity services are to be found
in the second segment. This type of services is, together with
the international high-speed services, the best known, and mainly
serves the leisure and business traveller markets. The high-speed
services segment only started with the introduction of dedicated
high-speed lines. It is a segment which has been very successful
in achieving a modal transfer. The best example of this can be
provided by the dramatic shift from air and car travel to rail on
the Brussels-Paris link. A fourth segment is made up of
"regular niches": night trains and car-sleeper trains,
which are of great importance to the leisure market. Finally, the
market for occasional services should be mentioned, which
consists of seasonal services to wintersport areas or coastal
resorts.
Besides the possibilities for market opening offered by the
existing Directive 91/440 and the Regulation on public service
obligations, additional measures for enhancement of rail
passenger services would be more efficient once the regulatory
structures foreseen by the infrastructure package directives [18]
are implemented. Such enhancement could be achieved through the
following steps:
[18] Directives 2001/12, 2001/13 and 2001/14 of 26 February 2001,
OJ L 75 of 15 March 2001.
- The first step consists of full opening of the market for
regular niches, such as night trains and car sleepers, with the
possibility for cabotage, as well as the occasional services. The
Paris-Vienna night service for example has many domestic
travellers without whom this service could not be run on a
profitable basis. This market segment is very limited: less than
20% of all international services are night services, many of
which do not allow domestic passengers. Private operators who
hire staff and equipment for the service from the incumbent
operator already carry out occasional services;
- A second step to further market opening is the full opening of
all international services, including long-distance and
high-speed services, without cabotage. The high-speed services
between Brussels, Paris and London are a good example of this
segment: the proportion of domestic passengers on these services
is extremely small;
- The last step of the market opening process could then be full
opening of the market for all international services with the
possibility for cabotage - at least in cases where this would not
undermine the effectiveness of exclusive rights awarded following
the regulated competition to be introduced by the Regulation on
public services in public transport.
The question of the availability of and fair access to rolling
stock for new operators should also be examined in further
measures to be considered for ensuring fair market access. The
Commission will examine further all these issues with a view to
making proposals as appropriate.
2.2.2. Improving passenger rights
As announced in the White Paper, the Commission intends to
propose in 2003 a Regulation on passenger rights which would
include provisions on fair terms and conditions of contracts and
their transparency; consumer consultation; complaint handling and
out-of-court dispute settlement, as well as compensation and
assistance for delays, cancellations, missed connections and seat
reservations not being honoured. Improved availability of
information in electronic form on fares, tickets, timetables and
services will be addressed as well.
In this context, it will examine the links between national and
international rail travel with a view to determining whether and
to what extent the rights of consumers in international and
national rail travel can in practice be separated. The effects of
the proposed Regulation on consumer rights in the candidate
countries will also be examined.
The Commission will also examine the case for legislation
requiring transport operators to offer passengers minimum
standards of service integration.
The rail industry, notably the operators and the manufacturers,
will be encouraged to improve service levels by providing better
information in electronic form on fares, tickets and timetables.
They will also be encouraged to improve quality, safety and
security on international services and at stations by providing
safe, comfortable and accessible rolling stock for these
services.
In particular, rail operators will be encouraged to develop a
voluntary charter on service quality covering such issues as
punctuality, provision of information in electronic form,
accessibility for groups with special needs, such as persons with
reduced mobility or persons travelling with their bike, and
protection of non-smokers.
In addition, the Commission will promote the setting-up of a
European platform of rail passengers organisations, which would
negotiate with and be consulted by the railway undertakings and
participate in the establishment of regular customer satisfaction
surveys.
* * *
List of measures announced in the White Paper "European
transport policy for 2010: time to decide" [19] and proposed
in Part 2 "Ways to make the railway market more dynamic and
improve quality: future action"
[19] COM(2001) 370.
> TABLE POSITION>
1. ANNEX 1: Lines of action to improve the performance
of European rail freight
1.1. Developments and shortcomings in the rail freight
market
As a result of nationally organised markets rail freight can be
described as a very fragmented sector with often outdated
operational techniques and incompatible equipment and, where they
exist, largely outdated and incompatible IT systems. It often
fails to respond to the needs of customers, and delivers services
that are often not competitive especially in international
transport. Railway undertakings are often not able to tell their
customers the whereabouts of their consignments and services are
astonishingly unreliable. Rail freight despite some good examples
is on the whole not a benchmark for others. Of course, global
figures hide differing performance whether it is between
different segments of the rail market or different companies
operating in that market [20].
[20] See, for instance, Observatoire des politiques et des
stratégies de transport en Europe (2001), Dossier n°2 Le fret
ferroviaire en Europe, October.
Wagonload formed the traditional core of rail freight traffic.
Wagonload services by railways compete with road haulage for the
market of small to medium-sized, high-value shipments. This
freight market segment achieves a particularly dynamic growth
rate and is expected to do so in the future. However, wagonload
services are not competitive for various reasons (e.g. high cost
especially for marshalling and delivery services at the end point
of production, unreliability, lack of customer focus,
inappropriate rolling stock, lack of wagon positioning
information for customers, etc.). As a consequence, their
relative importance has declined considerably, particularly over
the past four decades. Even as recently as the late 1980s,
wagonload traffic in the EU accounted for nearly 45% of all rail
freight traffic. By the late 1990s, its share had declined to
about 35%.
Some railway undertakings are abandoning low-volume customers and
reducing the number of sidings and stations that their wagonload
system serves with the objective of cutting costs. A reduction of
traffic volumes and of connected customer sidings has a negative
effect on the economics of the system, hence on its cost
competitiveness. Clearly, this market segment needs a new
European vision to be developed by the market players and better
framework conditions to improve its performance on the transport
market.
Combined transport was perceived by many railways as a solution
to the traditional problems of wagonload operations. The tendency
was to establish autonomous combined transport organisations
within railway companies (frequently selling space on trains to
third parties for retail to customers). However, the inherent
change of mode adds extra costs, which cannot be recouped over
short-distance rail movements. Furthermore, the payloads which
can be carried by each unit are less than those which can be
carried by modern wagons, limiting the suitability of combined
transport solutions for bulk traffic, particularly for low-value
traffic. The greatest success for intermodality has not been in
supplanting wagonload traffic, but in entirely new traffic to and
from ports, driven by the continuing growth of deep-sea container
traffic. This is growing at sustained high rates and is not
penalised by a modal transfer to road at the port end.
Trainload operations are well suited to rail, and it has been in
this sector of the freight market that rail has performed best
over past decades to the extent that it now comprises almost
two-thirds of all rail freight traffic. These services have lower
total operating costs than equivalent wagonload or intermodal
services, and usually offer faster and more reliable transit
times. It is also this segment where new entrants - in general,
independent railway undertakings - usually try to position
themselves.
It is clear that the freight market is not homogenous. Different
sectors have substantially differing requirements with regard for
example to price, speed, reliability and punctuality. The
economics of shipment to the final destination mean that in the
vast majority of situations at least a part of the journey will
be carried out by road. The economics of rail freight seem to
indicate that larger loads over longer distances ought to show a
relative advantage for rail freight. However, the level of
infrastructure charges affects the ability of railway
undertakings to compete with road haulage to a great extent. With
low infrastructure charges based on social marginal cost, the
break-even point between road and rail corresponds to a distance
of ca. 450 km for a single wagonload in international traffic.
With high infrastructure charges covering full costs, break-even
is around 700 km [21].
[21] Nelldal/Troche/Wajsman (1999). How the railways should solve
Europe's transportation headaches, Centre for Research and
Education in Railway Engineering, Stockholm.
The ability of the sector to compete in the various market
segments will be influenced by many factors. Effective management
and understanding of costs and their drivers, as well as measures
to control and reduce costs are primary requirements for
competitive rail freight services.
Factors that contribute to the poor performance of rail freight:
i) Railway undertakings are often out of tune with customers'
quality requirements in terms of speed, reliability (e.g. to
ensure just-in-time delivery) and other service characteristics
such as additional value-added services (e.g. packaging,
warehousing, distribution, customer information, etc.). For
instance, punctuality of trains operated for combined transport
on major European corridors has deteriorated dramatically in the
last few years. In 1999, only 60% of all trains were on time
(i.e. they were delayed by less than 30 minutes) [22]. In the
first half of 2001, the percentage of trains on time dropped
further to 42%. The quality problem is particularly acute on
certain corridors such as the North-South Alpine crossing between
Germany, Austria and Italy where the lack of locomotives
frequently causes huge delays at the border.
[22] Letter dated 29 August 2001 from UIRR to Commissioner Loyola
de Palacio.
ii) Service prices are often not competitive either and vary
significantly from operator to operator. Case studies on
transport of petrochemical goods comparing prices between
national railway undertakings and new entrants show that prices
of national "flag carriers" can be double those charged
by new entrant companies for the same type of service requiring
similar resources [23].
[23] IG&H Management Consultants (2001), EPCA rail
benchmarking study, 30 October.
iii) Inefficiencies in operation, the use of rolling stock and of
infrastructure, are still an important handicap for the railway
sector. According to the findings of a Community research project
[24], potential cost savings (i.e. some 25% of total current
costs or 15 billion per year) could be achieved if all players
performed as well as the best. Of this, one third could be
allocated to the operation of services and two thirds to the
operation of the infrastructure. Mercer consultants [25]
estimated the potential savings from better utilisation of
rolling stock and staff including a potential to increase loads
per wagon by 30%, to reduce maintenance costs per wagon by 40%,
to increase locomotive productivity by 25% and to increase crew
productivity by 15%. Clearly, some railway undertakings have made
considerable efforts in recent years to tap this potential.
However, a long road still remains ahead to realise the full
potential.
[24] Halcrow Fox (1999), Profitability of rail transport and
adaptability of railways (PRORATA). Project funded by the
European Commission under the 4th Framework Programme for
transport research.
[25] Reinhardt M./D. Schneiderbauer/M. Kadar (1998), Levers of
Value Creation for Freight Railways, Mercer on Transport, Volume
VI, Number 2.
iv) There is still very little competition on national and
international rail freight markets. Although the national
legislation allows competition in some countries only very few
companies are actually competing with the national railway
undertakings. Their market share seldom exceeds a couple of
percentage points. According to current European legislation,
international groupings and combined transport operators could
run international services in open access mode. Only very few
examples of such services have materialised. Due to the low
market share of competitors to the national rail carriers the
market provides little incentive for innovation and productivity
increases.
v) National railway companies or infrastructure managers - often
at the request of Member States' governments - have employed
priority rules to determine the use of rail infrastructure. These
generally favour passenger over freight services and vary from
country to country. Implications for freight are that rail
freight services are slower, less reliable and make poorer use of
capacity. This makes a discussion at European level desirable to
render existing priority rules more consistent and less
anti-freight.
vi) Infrastructure charges represent a significant proportion of
overall production costs for rail. The proportion depends on the
level of utilisation of the infrastructure and the type of
service but realistically can reach about 30%. A good
understanding and the correct attribution of these costs are
essential to ensure that rational decisions are made about the
operation of services. It is important that this is carried out
in a way that does not price marginal traffic off the
infrastructure.
vii) Where trains cross from the network of one infrastructure
manager to another, or trains are exchanged between two railway
undertakings, or control authorities (e.g. safety, customs) are
involved, then there is likely to be a need for electronic data
exchange. These data needs may increase as more railway
undertakings perform services, but in any case today's
paper-based systems of data transfer are not appropriate to the
needs of the 21st century and lead to delays and unreliable
services.
viii) Capacity constraints may constitute a threat to the
development of rail freight. Even at modest growth rates the
situation will arise where for certain parts of the rail
infrastructure commercially attractive capacity can no longer be
found, even after steps have been taken to rearrange traffic.
ix) Rail freight's competitiveness suffers to some extent from
unbalanced intermodal framework conditions. The absence of a
consistent and comprehensive infrastructure charging framework
and non-internalised external costs in other sectors such as road
haulage leads to a certain distortion of competition between the
modes. Additionally, rail freight is put at a disadvantage by the
insufficiently enforced social legislation in other sectors such
as road haulage.
1.2. The alarming deterioration in the performance and quality of
rail freight
According to customer surveys [26], the competitiveness of
European railways suffers from a number of problems such as
uncompetitive prices, unacceptably late fare quotes, lack of
customer orientation and often unavailable information about the
whereabouts of wagons and cargo. However, the most important
reason for customers' dissatisfaction with rail freight services
is the mediocre and still worsening service quality, especially
for international services. According to estimates by the Symonds
Group the average commercial speed of international rail freight
services on major North-South and East-West corridors is
typically around 20 km/h in Europe [27]. The punctuality and
reliability of service are also far from satisfactory.
[26] See for instance Symonds Group (2001), A study on single
wagonload rail traffic, p. 95 et seq.
[27] Symonds Group (2001), A study on single wagonload rail
traffic, p. 43.
In 1999, only 60% of all combined transport trains were on time
(i.e. they were delayed by less than 30 minutes). In the first
half of 2001, the percentage of trains on time dropped further to
42%. The quality problem is particularly acute on certain
corridors such as the North-South Alpine crossing between
Germany, Austria and Italy where the lack of locomotives
frequently causes huge delays at the border.
Lacking service quality causes significant cost to the railways.
For instance, it has been estimated that under-performance of
rail-based, UIRR-sponsored international combined transport
operations caused a total cost of EUR 41 million in 1999 [28]
(including asset utilisation inefficiency, claims by combined
transport operators and profit on lost turnover). [29] It is
sometimes argued that this situation is satisfactory as long as
the customers have a choice, for instance by turning to a road
haulier. From a broader policy perspective, however, this is not
acceptable as the poor performance by a dominant railway company
results in additional burdens on society.
[28] The sum corresponds to some 6% of total international UIRR
revenues of around EUR 650 million.
[29] UIRR/Booz Allen & Hamilton (2000), A quality strategy
for combined transport, The beginning of a transformation, final
report, 21 November, p. 40.
It is vital for the future of rail freight to take a consistent
set of measures to introduce incentives for high-quality service
provision into the business relationships between railway
undertakings and with other market players such as the clients
and the infrastructure managers. For this purpose, the Commission
proposes a comprehensive European approach to service quality in
rail freight, which addresses railway undertakings,
infrastructure managers and rail freight customers.
Directive 2001/14/EC requires establishment of performance
regimes that make infrastructure managers and railway
undertakings responsible for the quality of their services and
contribute to efficient utilisation of the rail network. Such
incentives have to be extended to all providers of international
rail freight services. In the absence of a sufficient level of
competition such a mandatory scheme based on a legal act would
provide incentives to improve the performance of European rail
freight operations. Some railway undertakings have already agreed
to sign performance contracts with their clients for national
services [30]. However, in many countries this is not yet the
case. Only very few performance contracts for international
freight services have been concluded.
[30] Mainly for combined transport operations but also for some
big customers.
Alternatively, the Community could take a compensation approach
and determine through Community legislation the conditions and
level of compensation payments in case of non-compliance with
service obligations.
The European Commission intends to propose legal measures and
suggest complementary voluntary actions to provide a
comprehensive system of quality incentives.
This European approach to rail freight service quality consists
of 5 elements:
1) Monitoring of rail service quality
The Rail Market Monitoring Scheme (RMMS) will monitor
implementation of this European approach to rail freight service
quality with the help of appropriate indicators that it will
collect. If this approach turns out not to be viable, the
Community will legislate in order to establish rail freight
service indicators.
2) Voluntary contractual quality commitments
The European railway companies undertake systematically to
include service quality commitments in their contracts with
customers in a fair and non-discriminatory way. Based on a common
understanding between railway undertakings and customers
contractual quality criteria shall at least include:
For railway undertakings:
* a well defined schedule for departure and arrival times
(obligatory)
* punctuality (obligatory)
* clear responsibility towards the customer for the entire
transport chain (obligatory)
* safe and damage-free transport (obligatory)
* providing appropriate and timely information to the customer
(obligatory)
* regular and reliable service (obligatory)
* market-conform transport times (optional)
* market-conform arrival and departure time (optional)
* transparent billing (optional)
* adequate and clean rolling stock as well as timely provision of
rolling stock (optional)
For customers:
* timely presentation of wagons and cargo to the take-over point
(obligatory)
* proper and timely documentation (obligatory)
* earliest notice to railway undertakings of any delays or
changes (optional)
* hand-over of cargo in the form and packaging agreed between the
parties (optional)
3) Legally binding incentives for ensuring a high level of
service quality
The contractual commitments shall be complemented by legally
binding incentives to both parties for ensuring a high level of
service quality. Such incentives should be defined according to
common principles. They should be financial in the form of a
compensation scheme or a "bonus/malus" performance
scheme with appropriate sharing of risk and reward, avoiding
rewards for simply doing what was contracted. The incentives
should apply to the whole product rather than to just parts and
they should embrace risks that are controllable by the railways
and the customers respectively. A "bonus/malus"
performance scheme shall be conceptually compatible with the
performance regime between railway undertakings and
infrastructure managers that is to be set up in compliance with
Directive 2001/14 in order to assign risk appropriately in a back
to back manner.
4) Voluntary performance regimes between cooperating railway
undertakings
The European railway undertakings should commit themselves to put
in place a performance regime among themselves in the case of
international rail freight services provided in cooperation mode.
The system should provide effective incentives for ensuring high
quality levels and making all players responsible for those risks
under their control. This regime shall be conceptually compatible
with the performance regime between railway undertakings and
infrastructure managers that is to be set up in compliance with
Directive 2001/14 in order to assign risk appropriately in a back
to back manner.
5) Improving operational procedures of railway undertakings
The European railway undertakings should undertake voluntary
action to improve their operating procedures for national and
international services in a joint effort with their customers.
These efforts revolve around the following commercial and
operational issues:
* Improved planning procedures between railway undertakings and
their customers, for instance using common service request
templates and joint phased planning procedures;
* Clear and common booking rules and procedures to address timing
norms, overbooking and late acceptance issues;
* Joint planning of diversionary routes when main ones are closed
for maintenance;
* Appointing a lead railway undertaking as responsible for each
service provided in cooperation so as to provide a clear and
accountable interface with the customers.
Reinforcing the position of rail freight customers through
allowing authorised applicants to apply for train paths
An authorised applicant in rail freight could be, for instance, a
shipper or a forwarder with an interest to use the rail mode to
transport significant and, over time, fairly stable cargo
volumes. To do this the shipper might choose to contract with a
rail freight operator, but if he cannot find an offer on the
market place satisfying his needs, he himself might apply for a
train path and start to design and organise a service, for which
he would subcontract the traction to a railway undertaking.
Authorised applicants imply a customer-oriented shift in
influence on the definition of the transport service from the
(traditional) railway undertaking towards the freight customer.
The possibility for a shipper to present its needs both to the
infrastructure manager and to one or more potential railway
undertakings is moreover important for innovation and service
development. Allowing authorised applicants in the rail freight
sector also means that the customers can act in the same way
vis-à-vis all transport modes. If they cannot find a suitable
offer on the market place it is always possible to design and
launch tailor-made logistic solutions, including everything from
transport planning to operation and ownership of the vehicles.
The independence of essential infrastructure management functions
such as train path allocation from the business of railway
undertakings constitutes a prerequisite for the beneficial
effects of allowing authorised applicants on the rail freight
market. It will be instrumental in creating a climate of
cooperation characterised by mutual trust and long-term
commitment. The Commission will meanwhile monitor closely the
effectiveness of the existing sectoral framework in facilitating
fair and non-discriminatory access to infrastructure.
Ensuring efficient functioning of the freight wagons market and
of their allocation rules in international use
Since the seventies, a large reduction of the wagon fleet has
been observed in the EU. During the nineties, rationalisation of
the fleet accelerated and in 1997 it consisted of only some 550
000 units compared to 1.5 million in 1970. Approximately one
third of the fleet are privately owned wagons. In Western Europe,
most rail freight wagons in 1995 were in the 16-26 year age
category, while Eastern European fleets, which were replaced with
greater consistency, were 6-16 years old. Private wagon fleets
are generally of a lower average age than the state-owned fleets.
As the average age of wagon is high their technical
characteristics are often out of tune with today's market
requirements.
The general characteristics of European freight operations are
such that wagon fleet productivity is severely constrained and
below that reached by American and Russian operators. For
instance, the average for Europe of 350 000 net
tonne-km/wagon/year compares with around 4 million net
tonne-km/wagon/year in the USA. This reflects, in part, the
respective average lengths of run, which are 250 km and 1350 km
respectively, but also the technical constraints in Europe (e.g.
lacking interoperability, emphasis on mixed passenger and freight
operations). One particular productivity issue is the empty
running time of wagons. Almost 50% of wagons on the European
network run empty generating no sales revenues for the railways.
There is considerable potential for improving cost
competitiveness as the costs of freight wagons account for about
20% of the total production cost of a rail freight company.
The Commission encourages the industry to set up an efficient
system of wagon allocation for international use to diminish
empty backhauls. The allocation of wagons for international use
between railways could be made more efficient by using IT
techniques taking into account empty running charges to get them
to the point of use in order to satisfy demand. This scheme could
be complemented by a system of auctions of rail wagon capacity
for backhauls [31].
[31] This could either be accomplished by shippers placing bids
for empty space on trains as in a traditional auction, with a
reserve price (i.e. the marginal cost difference between handling
the traffic and hauling empty trains) or, alternatively, the
shippers could offer a price that the railway undertakings either
accept or reject.
1.3. Overcoming entry barriers to the rail freight market
Any freight train operators who would like to provide European
services continue to face a number of significant market entry
barriers.
i) The access to service facilities is a major issue. In some
networks for instance, the traction current provided by the
national railway undertaking is much more expensive than on the
normal electricity market. Often, the traction current provider
does not provide for the distribution of electricity by
alternative suppliers. On other networks, access by private
railway undertakings to important facilities such as stations,
shunting yards and parking tracks is sometimes
"reserved" for the national operators through long-term
contracts. Sometimes, there is no non-discriminatory access to
essential services such as towing services.
If new rail operators want to establish themselves successfully
on the market against dominant national railway undertakings to
enhance competition they clearly need some support to face the
petty market entry barriers. National regulatory bodies have an
important role in monitoring and assessing such structural
barriers and in taking appropriate action to overcome them. In
cases where the competence of a national regulator would not
cover the crux of the problem, for instance in the case of
international services, it is important that regulatory bodies
cooperate internationally. Additionally, the Commission proposes
to reinforce the powers of the national regulatory bodies with
respect to ensuring non-discriminatory access to services and
services facilities.
ii) One important barrier for starting up private rail services
is the lack of a well functioning market for traction. There are
only a few, very small second-hand markets or markets for leasing
locomotives. Some railway suppliers and rolling stock leasing
companies are active on the European market. If they exist, the
supply is often not sufficiently well developed to meet the
demand. Different certification and admittance procedures in the
Member States create significant risks and costs for the rental
or leasing company as the rolling stock can, a priori, only be
used on the national network. The lease-takers are usually
interested in short-term contracts; however, the depreciation
period is rarely below 20 years. Therefore, as the leasing
company has to carry the residual risk the leasing rates are
generally so high that they are often not interesting for a new
entrant.
To address this problem, the Commission proposes to provide
initial start-up support to all logistics operators who transfer
transport volumes from road to other modes such as rail. A new
intermodal support programme ("Marco Polo") covering
the period up to 2010 is going to be proposed soon. In
particular, catalyst action (i.e. measures that help overcome
structural barriers and foster efficient functioning of transport
markets such as the rail freight market) will be eligible for
financial and administrative support by the Commission.
iii) Locomotive drivers cannot yet cross borders routinely.
Different national regulations governing their training curricula
and examination conditions constitute a major barrier for those
intending to set up competitive, international services as they
need drivers who have a licence for all networks crossed.
Harmonisation of drivers' training conditions would eliminate one
important market barrier and foster the creation of an internal
market in rail services.
The proposal for a rail safety directive together with swift
implementation of the interoperability directive for conventional
rail systems will lead to approximation of training curricula and
examination conditions for locomotive drivers. Additionally, the
Commission encourages the industry to set up an open European
locomotive driver training centre. Such an initiative can be
promoted through support from the EU social funds and through the
6th Community Framework Programme for RTD defining innovative
methods for European driver training.
iv) Railway undertakings providing open access services abroad
and private wagon owners currently face the hurdle of having to
return their rolling stock to their home stations in case of a
defect or a periodic overhaul. Current rules do not permit repair
or maintenance on site. By contrast, road vehicles can be
serviced and repaired anywhere in Europe. Such requirements raise
the cost of rail operations and contribute to diminishing the
competitiveness of rail services compared to road haulage. In
order to tackle this problem the proposed European Rail Agency
will help to promote mutual recognition of maintenance workshop
qualifications and a system of workshop certification.
v) The requirement for small railway undertakings entering the
market to install an automatic train protection (ATP) system is a
great (and often insurmountable) barrier and thus puts the new
entrant at a competitive disadvantage against national operators.
Problems have arisen, for instance, in Dutch-German rail traffic,
in German-Danish traffic and with traffic on the Öresund bridge.
One common complaint is that ATP systems take an excessive time
to obtain and fit. Prices of such national systems, which are
often produced by monopoly suppliers, are generally high and vary
enormously from country to country. One of the reasons for the
monopolistic supply situation is the absence of second-hand
markets for rolling stock and ATP systems. Swift implementation
of ERTMS and the appearance of second-hand locomotives equipped
with ERTMS are likely gradually to solve the problem.
vi) Private railway undertakings are currently discriminated
against compared to State-owned railway undertakings as they have
no access to the European Company for the Financing of Railway
Rolling Stock (EUROFIMA). The current State guarantee for the
national railway undertakings gives them a competitive advantage
over private railway undertakings.
Maintaining simple customs transit procedures while fulfilling
legitimate supervising functions for the customs authorities
National railway undertakings have long been taking advantage of
a specific simplified customs transit procedure. This procedure
provides, among other facilities, for waiving the guarantee and
transit-related border formalities. The simplified transit
procedure for railways was set up at a time when the railway
undertakings were public enterprises. In this framework a number
of (public) customs functions were delegated to the railway
undertakings. This enabled them to simplify customs procedures to
the mutual benefit of all concerned, rail undertakings, exporters
and customs authorities (e.g. reduced cost through less staff for
customs handling, higher commercial speeds of international
services as border stops could be avoided, etc.).
The main conditions which must be met for access to this
simplified procedure are:
* keeping records for inspection by customs in a central
accounting centre to be set up by the railway undertaking in each
country;
* use of the rail transport document as the customs declaration;
* goods to be carried in each country by a separate railway
company which acts in cooperation with all the other companies
involved in the transport operation; breakdown of transport costs
for each of the countries whose territory is entered during a
given transport operation;
* for all transit operations the railway company must accept the
legal customs responsibilities which implies, in particular,
completion of the formalities.
Since the emergence of international services provided by one
sole rail operator under open access conditions, it has become
apparent that these railway undertakings cannot meet the
conditions for access to the simplified procedure. Some of the
conditions such as the obligation to cooperate in providing an
international service or to provide a breakdown of transport
costs for each of the countries entered clearly run counter to
Community internal market objectives in the transport sector and
competition rules.
Railway undertakings that want to take advantage of the recent EU
rail market opening have to use at present the standard customs
transit procedure, which is open to all modes of transport. As it
does not take account of the special nature of transit operations
by rail, this standard procedure is more costly and involves (in
principle) more formalities, even though the standard procedure
also provides for certain simplifications (authorised consignor,
authorised consignee, comprehensive guarantee or guarantee
waiver), subject to fulfilling the necessary legal conditions.
The question of simplification of the customs procedure applying
to rail transport and of the conditions of access to the
simplified procedures is of vital interest to all rail freight
service operators subject to a customs transit procedure in the
EU. The number of international (transit) services has increased
significantly in the past and is most likely to continue to do so
in the light of further rail freight liberalisation. The question
is most pressing for services between two points in the Community
through Switzerland. The cost of the standard transit procedures
can constitute a significant cost factor which may create further
burdens for new rail freight services.
For some time it has been felt that an overall reform of the
simplified procedure is necessary taking into account the
following:
* the present provisions do not reflect the liberalisation of the
rail freight sector;
* the conditions for access to the simplified procedure have not
all been published in a transparent way and should therefore be
integrated into the relevant legislation.
In this context, the Commission will formulate staged solutions
for modernising the rail customs transit procedure granting the
liberalised rail freight sector as many simplifications of the
customs transit procedure as can be reconciled with the
legitimate requirements of customs authorities to control
international transport.
First, as an intermediate measure the Commission will make a
proposal for defining the conditions under which railway
undertakings can take advantage of the simplified Community
transit procedure in order to increase the transparency of the
existing procedural framework. Second, in the short to medium
term the introduction of NCTS, the electronic data exchange
system between customs authorities and transport operators will
bring about a modern electronic procedural environment for all
operators, to the benefit also of the railway undertakings. The
Commission considers that in about two years NCTS will be
implemented on a large scale so that all railway undertakings,
including those that want to operate under liberalised market
conditions, can enjoy meaningful customs simplifications on a
non-discriminatory basis. In order to attain an equivalent level
of simplification, as in the case of the simplified transit
procedure for rail, in 2002 the Commission will propose an
amendment of the Customs Code that would allow for a general
guarantee system for transit by rail (including for independent
railway undertakings). These provisions will ensure a simple,
transparent and non-discriminatory procedural framework that will
create no unnecessary barriers for railway undertakings in
international transport and that takes into account the control
requirements of customs authorities according to EU rules. The
Commission will endeavour to make the specifications for NCTS
compatible with the future TSI "telematics applications for
freight" to ensure interoperability in international rail
freight operations.
1.4. Providing high-quality infrastructure for a more efficient
rail freight sector in Europe
Developing an efficient European network with rail freight
priority enabling a high level of service quality
Major stumbling blocks to the development of European rail
freight are inefficient use and technical and physical
insufficiencies of the rail infrastructure. Incompatibility of
slow and fast trains as well as technical and operational
differences between national networks in combination with a low
priority for freight trains in train path allocation and daily
train path management limit the growth potential of rail freight
services. Infrastructure saturation, for instance at national
borders, in the vicinity of major urban and industrial
conglomerations and on major freight corridors, worsens the
situation.
A first step towards a more efficient European rail freight
network will be to render it gradually interoperable. With each
new investment or upgrading project on the trans-European rail
network the technical specifications for interoperability (TSI)
provided for by Directives 96/48 (high-speed rail systems) and
2001/16 (conventional rail systems) should be applied. In many
cases Member States receive Community financial support for such
projects out of the TEN budget or other financial instruments.
Past experience has shown, however, that in some cases Member
States do not apply the TSI when they commission new or upgraded
rail infrastructure, energy systems or command and control
systems.
In order to promote swift penetration of interoperability
specifications, the Commission therefore has to ensure a link
with Community financial support to trans-European rail
infrastructure projects, i.e. introduce an interoperability
condition for Community transport funding. This link has to be
more clearly affirmed in all the financial instruments of the
Community.
Secondly, infrastructure managers should cooperate
internationally in order to work together for better utilisation
of existing infrastructure. This could be achieved, for instance,
through better harmonisation of (slow and fast) traffic flows
when allocating international and national train paths while
attributing due importance to international freight.
Thirdly, if rail freight is to play a more prominent role in the
future to render the European transport system more efficient and
to contribute to sustainable mobility, operation of the rail
freight network must be redesigned to allow attractive and
high-quality services at European level.
Working towards a pan-European rail information exchange system
Data exchange and information systems are the Achilles heel of
international freight services. The data exchange needs of modern
railways are significant. They include information related to the
operation/production of the service (e.g. train planning, fleet
management, timetabling), location/status reporting and
commercial applications (e.g. consignment notes, bookings by the
customer, invoicing, etc.).
National information systems cover these functions more or less.
Problems arise when it comes to international traffic. The
protocols defining the data format and the network interfaces
generally do not match. International systems based on UIC
leaflets and the existing cross-border transmission networks such
as Hermes Plus and HOSA could theoretically provide a framework
for achieving data interoperability for cross-border rail freight
services. However, most national railway operators have not
adhered to these systems, often considered too costly, and have
preferred to set up bilateral arrangements. In addition, private
operators and third-party service providers have no access to
these networks and have now built their own systems (e.g. the
combined transport operators work with the CESAR system). The
emergence of new market entrants is unlikely to increase the
acceptance of UIC-based systems.
However, the need for interoperable, open exchange systems for
operational data and customer information is vital for the
competitiveness of European rail freight. Among other things they
would allow:
* A rapid European rate/tariff quotation system;
* Improved IT links between railway undertakings to facilitate
transfer of wagons or trains between cooperating operators,
including paperless transfer of consignment information and
better consignment status information;
* An integrated European daily train planning and timetabling
system to operate freight services flexibly on a wide scale.
Outside Europe, the US data exchange system sets standards
providing real-time information from a central database via
electronic data exchange and the Internet. RAILINC, a stand-alone
organisation (a former wholly owned subsidiary of the Association
of American Railroads) manages this process to the satisfaction
of the stakeholders (railway undertakings, customers, customs,
regulators and fleet owners/managers). Railway undertakings pay a
charge to RAILINC for the data transfer services, whereas the
information is generally provided free of charge to rail
customers. The American example shows that data exchange can be a
viable business if the players on the market take a common
commercial approach.
Although Europeans can learn a lot from the US experience, the
European approach must be based on the existing infrastructure
and the specific framework conditions in Europe (e.g. division
into national networks, separation of essential functions from
train operation, etc.). Ideally, the future system should build
on the existing national systems to optimise investment, defining
the interface specifications and providing a European
superstructure for storing, processing and exchanging the data.
In September 2001 the Commission mandated AEIF swiftly to develop
the technical specifications for a European rail data exchange
system in the framework of the TSI for freight telematics
subsystem of Directive 2001/16/EC (interoperability of
trans-European conventional rail systems). This TSI describing
mandatory procedures, message format, data type and data
capturing means of the system should draw as much as possible on
existing standards and best practice. The TSI for freight
telematics could be adopted by 2004.
The Commission encourages the enterprise sector (e.g. logistics
integrators, forwarders, railway undertakings, etc.) to take the
initiative to set up a commercially managed data exchange
platform once the TSI for freight telematics becomes available. A
high-level consensus-finding conference would be instrumental in
this respect. Although currently industry seems to be reluctant
to launch itself into this venture, the Commission expects that
the opening of the rail freight market proposed in this railway
package will trigger a process of converging the business
strategies of European railway undertakings towards real
cooperation. Then there will be sufficient economic incentives to
set up a commercial European data exchange platform either by
railway stakeholders or by other parties such as logistics
integrators.
For implementation of such a concept fostering intermodal
transfer, the industry could request Community support under the
Marco Polo programme.
1.5. Improving the environmental performance of rail freight
services
Rail is a relatively environmentally friendly mode of transport.
Studies on the external costs of transport modes [32] underline
this statement. One major advantage of rail with respect to
energy consumption is its low rolling resistance compared to road
transport. This translates into a relatively favourable energy
efficiency record. Thus, for instance, in 1999, the energy
intensity of rail freight in the EU was on average ca. 0.03 koe
per tonne-km compared with 0.05 - 0.11 koe per tonne-km for
trucks [33].
[32] For instance, INFRAS/IWW (2000), External costs of transport
(accident, environmental and congestion costs) in western Europe,
March or TRL Ltd (2001), A study on the cost of transport in the
EU in order to estimate and assess the marginal costs of the use
of transport, commissioned by the European Commission,
Directorate-General for Energy and Transport.
[33] TERM 2001 indicators on transport and environment.
However, the railways have done little in recent times to sustain
this position in the future. The performance of rail freight in
terms of noise emissions, energy efficiency and diesel emissions
is hardly improving, also due to the long investment cycles for
rolling stock (25 to 40 years). This is worrying especially
knowing the load factor of rail freight wagons is low (ca. 50% of
wagons run empty). Other modes such as road haulage are making
significant progress in their environmental performance. Trucks
are becoming quieter, more energy efficient and cleaner thanks to
stricter emission standards. Hence, there is a serious risk that
the railways could lose the environmental bonus that constitutes
one of their advantages.
1.5.1. Railway noise
The most significant source of noise from rail rolling stock is
the rolling noise, i.e. the noise created by the wheel-rail
interaction. This concerns, of course, both passenger and freight
services, but the problem is much more acute in the case of
freight. The iron brake blocks of freight wagons scratch the
surface of the wheels, which aggravates the rolling noise. The
continuous use of these iron brake blocks could lead to operating
restrictions (e.g. during the night) imposed by national
authorities to protect the population against sleep disturbances
and other health impacts of noise. Therefore, there is a serious
risk that international rail freight traffic could be hampered by
national measures and that the railways could lose further
competitiveness against road haulage.
Today modern brake blocks based on composite materials (e.g.
K-block and LL-block) can reduce the noise emissions by 8dBA to
10dBA. Railway undertakings consider the equipment of new freight
wagons with K blocks and the retrofitting of existing wagons with
LL blocks as cost-effective. New freight wagons equipped with
K-blocks are currently being purchased by some national railway
companies. However, the technical development of LL blocks seems
to be encountering problems. Retrofitting with K blocks is deemed
too expensive by the industry. Beside this technical problem a
major challenge to the environmental record of rail is the
critical noise performance of wagons from accession countries
that circulate freely on the Community networks. Any meaningful
rolling stock noise abatement strategy has to include those
wagons. The UIC has estimated that out of the existing ca. 1
million freight wagons in Europe 700 000 would need retrofitting.
The Commission undertook a study to investigate cost-effective
railway noise abatement measures [34]. The project recommends a
set of actions such as defining limit values for new rolling
stock, a voluntary agreement on retrofitting brakeblocks for the
existing wagon fleet and the introduction of an emission-based
track access charge to provide incentives for investment.
[34] Ødegaard&Danneskiold-Samsø A/S (2001), A study of
European priorities and strategies for railway noise abatement,
Study for the European Commission, Directorate-General for Energy
and Transport.
In September 2001 the Commission mandated the AEIF to develop TSI
that define cost-effective but ambitious noise emission limit
values for new rolling stock and appropriate maintenance rules to
tackle the noise problem in the framework of the implementation
of Directive 2001/16/EC (interoperability of trans-European
conventional rail systems). The working group on railway noise
set up in the framework of the Commission's new approach to noise
policy will assist the AEIF in this endeavour.
Acting on the existing fleet the Commission will enter into a
dialogue with industrial players to assess cost-effective
options, including voluntary measures by industry for noise
abatement in the existing rail wagon fleet and specific measures
for the rolling stock in accession countries.
1.5.2. Atmospheric emissions from diesel train engines
At local or regional level emissions from diesel train engines
can constitute a significant nuisance as diesel locomotives
ensure ca. 13% of all rail traction in Europe. Modern diesel
engine technology for trucks and non-road mobile machinery
brought about a significant improvement in particulate emissions,
CO, HC and NOx emissions. The technology is available for both
modes. The basic problem of the poor performance of rail in this
respect is the long service life of diesel locomotives (30 to 40
years) compared with trucks (10 to 15 years) which slows down the
spread of new technologies in the fleet. Therefore, the
Commission's approach must be twofold, addressing new rolling
stock as well as the existing stock.
On new locomotives:
The Commission proposes to revise Directive 97/68 on measures
against the emission of gaseous and particulate pollutants from
internal combustion engines to be installed in non-road mobile
machinery in order to include (light-duty) diesel train engines
and to set cost-effective but ambitious emission limit values.
In 2002 the Commission intends to mandate AEIF to develop
technical specifications for interoperability for the rolling
stock subsystem defining cost-effective limit values for
heavy-duty diesel engines.
On existing locomotives:
The Commission will enter into a dialogue with industrial players
to assess cost-effective options including voluntary measures by
industry to improve the emission performance of existing diesel
locomotives, for instance through retrofitting or ex-post engine
optimisation.
2. ANNEX 2: Situation with international rail
passenger services
This annex is based on a study of the market for
international rail passenger transport, which assessed [35] the
supply and demand in the market. The different markets for rail
passengers will be described with respect to their current
developments and potential.
[35] OGM study, 2001
2.1. The existing Community legal framework
An international rail passenger service is defined as a service
which crosses at least one internal EU border.
The limitations and opportunities of international groupings
It seems that the access rights according to Directive 91/440
have hardly been used. [36] In practice, international rail
passenger services within the EU are carried out by railway
undertakings cooperating on the basis of their existing domestic
market access rights. The limitations of the "international
grouping" as a means of fostering the freedom to provide
rail transport services was acknowledged in the Commission's 1996
White Paper A Strategy for Revitalising the Community's Railways:
"the effectiveness of the access rights created by Directive
91/440 has been limited by ...the condition of belonging to an
international group." It seems clear, for the short term at
least, that most intending new entrants to the international
passenger market will be dependent upon an incumbent in order to
access the network. This is hardly satisfactory.
[36] COM(1998) 202 on the implementation of Directive 91/440.
However, in that connection, it should be borne in mind that the
concept of "international grouping" is not confined, as
some parties have maintained, to the type of joint arrangement
typically engaged in by the incumbent operators. On the contrary,
it is settled case law that "international grouping" is
capable of very wide interpretation indeed. In European Night
Services Ltd [37], the Court found (paragraph 182 of the
decision) that the definition of international grouping in
Article 3 of Directive 91/440:
[37] Joined cases T-374/94, T-375/94, T-384/94 and T-388/94.
"...does not lay down any specific mandatory form...The
essential feature which is clear from that definition is merely
that it must be a form of association under which the provision
of international transport services is possible. The Court
therefore considers that, failing a precise definition...use of
the term...cannot be confined to "cooperative
associations" among railway companies ("traditional
joint operation agreements"), to the exclusion of any other
form such as a cooperative, or even concentrative, joint
venture."
It should also be underlined that the fact of belonging to an
"international grouping" does not confer any anti-trust
immunity whatsoever.
Public service obligations and exclusive rights
Exclusive rights can protect an operator from competition from
one type of competitor, while permitting competition from others.
Today, any exclusive rights for the provision of rail passenger
services must take a form that permits international groupings to
seek to enter the market and must be treated on a
non-discriminatory basis. 'Grandfather rights' used in the
capacity allocation process do not exist. Infrastructure managers
may conclude framework agreements with railway undertakings to
give some multi-annual guarantees on capacity. However, these
framework agreements cannot have an exclusive nature and
therefore imply that a new grouping may always have a possibility
to enter the market and reserve capacity, even if current
capacity seems to be fully used.
On international rail passenger services, cabotage is allowed
only for railway undertakings having domestic market access.
According to Regulation 1191/69 [38] - as amended by Regulation
1893/91 [39] - public service contracts must be concluded for
international rail passenger services if financial compensation
for public service obligations is paid. The Commission has
submitted a proposal [40] to replace this Regulation, according
to which these public service contracts can only be awarded -
with limited exceptions - following tendering.
[38] Regulation 1191/69 of 26 June 1969, OJ L 156, 28 June 1969,
p. 1.
[39] Regulation 1893/91 of 20 June 1991, OJ L 169, 29 June 1991,
p. 1.
[40] COM(2000)0007 Proposal for a Regulation of the European
Parliament and of the Council on action by Member States
concerning public service requirements and the award of public
service contracts in passenger transport by rail, road and inland
waterway (presented by the Commission), OJ C 365E, 19 December
2000, p. 169.
People need rail services that cross administrative boundaries.
To achieve this, neighbouring authorities need to cooperate.
Within a Member State, if competent authorities fail to
cooperate, national authorities can take remedial action to
protect the interests of passengers. The same does not apply for
regional services that cross international borders. Therefore,
the draft Regulation on public services in public transport has a
specific provision to make it easier to develop cross-border
regional services.
Exclusive rights for passenger rail services can be granted in
ways that still allow a limited amount of competition from open
access services. This is already the case with respect to
"91/440" services (no exclusive right can protect an
operator from competition from such services).
2.2. Current market situation for international rail passenger
services
It is estimated that approximately 5% of the turnover of the
railway undertakings is generated by international rail passenger
services, which account for approximately EUR 1.3 billion [41].
[41] According to data provided over 1999 by the UIC, the
turnover of incumbent railway undertakings for rail passengers
totals EUR 24.878 million, with no data available from DK, IRL
and L.
The rail market must function and develop in an environment which
is not always favourable to this mode of transport. Though rail
transport continues to receive a considerable amount of State aid
for domestic services (see table at the end of this section), it
is at a competitive disadvantage compared to other modes due to
external reasons, such as unequal infrastructure charging levels
between rail, air and road transport and the fact that important
external costs of road are not allocated to the users. VAT is not
levied for international air services, whereas VAT for rail
services varies between 0 and 16%, as the latter are not
harmonised. There are no kerosene fuel taxes for air services. It
should also be remembered that the liberalisation of aviation has
led to low-cost carriers on routes traditionally served by rail.
Moreover, public authorities have difficulties in cooperating on
the international services to conclude international public
service contracts for cross-border rail services. A sign of this
is the small number of public service contracts concluded for
these services. The same problems occur within Member States
where regional public authorities have to cooperate on concluding
such public service contracts.
For international rail passenger services, 5 major market
segments can be identified, though it was not possible to
determine precise market shares:
(1) Regional cross-border services
Regional cross-border services usually serve commuters working in
one Member State but living in another. Roughly, these services
consist of international trips not exceeding 80 kilometres, and
they often have a domestic function as well. Examples can notably
be found in Luxembourg (commuters from France, Belgium and
Germany) or in the south- eastern part of the Netherlands
(commuters to and from Germany and Belgium).
For these services, there is obviously a potential market as the
number of cross-border workers has increased considerably. It is
now estimated that approximately 2.5 million Europeans commute to
another Member State. However, in the (recent) past, many lines
allowing these services have been closed down, and it seems that
the lack of cooperation between public authorities on both sides
of the border is part of the explanation. Replies to a
questionnaire on public services in rail transport sent by the
Commission to the Member States reveal that only in very few
cases was a public service contract concluded for cross-border
services as these services are usually not profitable. In one
case [42] public authorities tried to tender such a service but
failed to let the service start because of a lack of consensus
between the two public authorities on financing the service.
[42] Groningen - Leer service between The Netherlands and
Germany.
(2) International long-distance services
Long-distance services are probably the best known international
rail passenger services. Examples are Paris-Madrid or
Amsterdam-Milan. For distances from 300 kilometres, train
services can compete on price and speed with air and road travel,
which represents an enormous potential that can be exploited, if
the negative effects of borders can be overcome. These services
have an important domestic component as well.
(3) International high-speed services
These services are relatively new and often use new dedicated
high-speed lines, such as the Paris-Brussels, Paris-London and
Brussels-London services. These services are currently operated
by Thalys and Eurostar, joint ventures of railway undertakings
sharing mainly marketing facilities (international groupings as
defined by Directive 91/440). Trains and rolling stock are still
owned and controlled by the participating railway undertakings
SNCF, SNCB and Eurostar UK. Thalys has managed to win a 53% modal
share between Brussels and Paris and is currently offering Air
France customers the possibility to start their flight from
Paris-CdG at Brussels Midi station by means of code-sharing. The
business market is important for the profitability of this
segment and yield management on fares is widely applied.
(4) Niche services, night trains, car trains
These are regular services that serve a very special part of the
market. Night trains can be good value for passengers wanting to
arrive in the morning in city centres. Car trains are of great
value for longer distances, e.g. to tourists as well as people
with reduced mobility who need their own car. Not all these
services run all year round.
Night services have been in a difficult position for years but
recent efforts show that if set up and marketed well these
services have good growth potential. [43]
[43] The OGM-study showed 10% yearly growth in the DB night
services market since DB restructured its services. Recently DB
extended its initiative to Austria and Switzerland in combination
with ÖBB and SBB.
(5) Occasional services
Occasional services are services that are not run all year round
with the same times and schedules. These services have value for
tourists or are used for incentive travellers. Travel agencies
have traditionally been involved in such transport by taking the
commercial risks for hiring complete trains from railway
undertakings and selling the tickets on their own account. This
market has become smaller, largely due to competition with, for
example, air transport. However there are signals that in
specific parts of the market there is still demand for occasional
travel.
The table below clearly shows the relative importance of the
market segments for each of the targeted groups of travellers.
> TABLE POSITION>
***: very important; ** important; * less important
2.3. Improving the quality of international passenger services
Both the study as well as the hearing on passenger rights
organised by the Commission showed significant underperformance
in certain segments of the international rail passenger market.
However, there is considerable evidence that international rail
passenger services could be largely improved. The market for
international passenger travel and services in general can grow
considerably because of the increase on the demand side:
enlargement of the EU; the increasing number of cross-border and
other migrant workers; growing tourism and the growing number of
retired people with sufficient resources and time, who prefer
safe and comfortable travel. The supply side of transport
services has been improved by the introduction of high-speed
services as shown by the market success of new international
high-speed services such as Thalys and Eurostar, or the new
occasional services for incentive travel offered by GVG. The
recent successes of new night trains undertaken by DB/ÖBB/SBB
and the success of cross-border public service contracts where
they are applied, e.g. between Copenhagen and Malmö, also
indicate that the market structure itself allows an increase in
passenger services.
A number of issues seem particularly important to make this mode
more attractive:
(a) Travel information and booking (timetables, preboarding,
real-time travel information)
During the hearing on rail passenger rights, the lack of good
information was the most frequently quoted problem. Both
passengers and travel agents have many difficulties in finding
information on timetables, scheduled services, fares and fare
structure, real-time travel information and service facilities
offered, for example for bikes or for people with reduced
mobility (PRM). However, some railway undertakings have
successfully developed online ticketing systems, through a
multilingual website, and offer free home delivery services.
(b) Punctuality of services and compensation in case of delay
Punctuality of services is regarded as low, and for international
services there are indications that it is even lower than for
domestic services. On the other hand it must be added that
recently the competing air mode has also been facing considerable
delays.
Railway undertakings do sometimes compensate their passengers for
late trains, but this varies widely and the railway undertaking
sometimes put a lot of constraints on this (e.g. when the delay
is beyond its control).
(c) Complaint handling
During the hearing, examples of studies were given presenting
considerable lack of good responses to complaints. For rail
travel especially, where passengers usually have no alternative,
this can be regarded as monopolistic misbehaviour.
(d) Accessibility for persons with reduced mobility (PRM)
Accessibility levels on stations and trains are still
insufficient. Sometimes trains are equipped to allow easy access
for PRMs, but stations have no escalators to move PRMs from one
platform to another.
(e) Accessibility for bikes
A study by the European Cyclists Federation [44] showed that the
possibilities to transport bikes vary widely within the EU but
are, in general, rather limited.
[44] Bicycle Transport on International Trains, report on the
arrangements for the carriage of bicycles on international
long-distance trains, 40 p. + annexes, ECF - UCI, published by
ECF, December 1999.
The Commission will table a proposal on rail passenger rights
laying down the basic consumer protection rules for international
rail passenger services. The range of topics that will be
addressed in this Regulation has been described under section
2.2.2 of this communication.
Besides, the railway industry will be encouraged to improve
service quality standards and to develop quality commitments by
developing a voluntary charter on service quality (see section
2.2.2). The interoperability of the services with domestic
services and with other modes should be improved as well. The
effectiveness of this quality commitment should be one input to
the evaluation of the implementation of market opening to assess
the necessity and feasibility of further opening of the market
concerning cabotage services.
Basic data on State aid (1999), turnover and passenger km per
Member State [45]
[45] Source:Annual questionnaire on State aids (columns 1 and 2),
UIC (columns 3 and 4).
> TABLE POSITION>
Abbreviations
AEIF: European Association for Railway Interoperability
ATP: Automatic Train Protection
COTIF: Convention concerning International Carriage by Rail of 9
May 1980
ERTMS: European Rail Traffic Management System
ETCS: European Train Control System
OTIF: Intergovernmental Organisation for International Carriage
by Rail (see COTIF)
RMMS: European Rail Market Monitoring System
RIV: Regolamento Internazionale Veicoli
TSI: Technical specifications for interoperability
UIC: International Union of Railways
UIRR: International Union of combined Rail-Road Transport
Companies
© European Communities, 2001 All rights reserved