IDEI and Northwestern University - Toulouse 7-8 November 2003

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IDEI and Northwestern University - Toulouse 7-8
November 2003 Railroad Industry
Structure, Competition and Investment - Some
remarks from the Community of European
Railways ______________________ Dr. Johannes
Ludewig Executive Director Community of European
Railways
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CER The Community of European Railways

• The Community of European Railways brings
  together 34 railway companies and
  infrastructure managers from the EU Member
  States, Norway, Switzerland and the CEEC
• The CER deals with all policy areas of
  significance to railway transport
• The CER offers advice and recommendations to
  policy makers in Brussels
• CER works in close collaboration
  with the Paris-based UIC

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Development of Railway Lines and Motorways (in
KM)in Europe (15) from 1970-2000 (Index 1970
100)
  Motorways Rail High Speed Lines
1990 40.000 km 900 km
2000 50.000 km 3.000 km
2010 70.000 km 6.000 km
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The challenge of demand growth EU White Paper
Achieve a modal shift towards environmentally
less damaging transport modes ( Revitalising
RAIL ).
and White Paper objective
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• Revitalising Rail
• (1) Competition as a necessary condition
• (2) Industry structure Rail as a system
• (3) How to safeguard system advantages while
  allowing for fair competition
• (4) Other needs to realise a sufficient framework

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(1) Competition as a necessary condition
The European Union has opened up network
industries for competition

• Starting point in the rail sector Directive
  91/440, followed by 1st and 2nd railway
  package
• Competition leads to a variety of choices for
  consumers and increases thereby the overall
  market volume
• (Potential) competition puts pressure on market
  players to increase
• efficiency

But -- historical, political differences in EU
Member States (e.g. importance of
service publique in France) -- opening
of rail passenger market not so straightforward,
overlap between contracted (public
services obligations) and commercial
traffic (mostly long distance)
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(2) Industry structure Rail as a system
Technical interdepencies and economics of scope
exists

• Railways are a track-guided transport system
• The performance of the system is largely
  determined through the infrastructure
• Traffic management functions (e.g. signalling)
  will in future be divided between track and
  vehicle (ERTMS)
• Investment decisions in new rail infrastructure
  depend on the planned services (detailed
  planning including train programme, foreseen
  time table)
• just to name some examples

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(3) How to safeguard system advantages while
allowing for fair competition

• Although EU Directive only ask for a separation
  of essential functions, EU policy is leading
  in some countries to a very complex structure
  (e.g. Slovenia)
• Some countries separate infrastructure from
  operations although no competition on tracks
  takes place or is actively supported (e.g.
  Finland)
• In Germany the market is completely open since
  1994, more than 200 external operators - the
  system is still integrated
• Final remark in other network industries
  (telecommunications, electricity) only
  functional separation

It is possible to organise competition in
different ways, but it is difficult to safeguard
the system advantages in a separated environment
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(4) Other needs to realise the sufficient
framework
Infrastructure as key for future development of
the rail mode

• Reduce bottlenecks
• Build new lines
• Dedicated Freight Network / Priority Network
• Harmonize investments on rail infrastructure
  between EU Member States at European level

Taking into account the long time delays for
infrastructure investments gt Decisions have to
be taken now !
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Develop Rail Infrastructure
Dedicated network in Germany
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BETUWE-Line

• 160 km new freight line
• 25 tons axle load
• 120 km/h design speed
• Capacity 10 trains/h per direction
• ERTMS level 2
• Early 2007 in operation
• approximately 4 billion Euro investment
  costs

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CER Corridor Programme 2003
3 corridors analysed. 3 action plans
developed involving RUs, IMs and States
Iberian Peninsula Ukraine Iberian Peninsula
Germany (Slovakia) Benelux Italy via Luxemburg
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(4) Other needs to realise the sufficient
framework
Comparable framework conditions between modes of
transport- unbalanced assignment of cost to road
and rail

• Infrastructure charging (Eurovignette revision)
  weak points (1) insufficient inclusion of
  external costs (2) unclear definition of
  cross-modal financing options
• The expected Framework Directive on Cross-Modal
  Charging Financing has been abandoned !
• Energy taxation
• VAT question

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In conclusionThe need for simultaneous action
In order to bring rail in a position to reach the
targets, three conditions have to be met at the
same time
(1) improve railways performance to meet
market requirements (task by the
railways) (2) establish fair framework
conditions for all competing modes (task for
politics) (3) develop the necessary rail
infrastructure so that the expected
growth in transport demand can be accomplished
(task for MS/EU)
This means EU Commission / Parliament / Council,
national governments and railway undertakings
must act according to their responsibilities
without waiting for one another!