National interests slow down rail liberalisation
International Freighting Weekly: 21-11-2008
Several member states need to make changes if rail liberalisation is to run smoothly, says Tony Berkeley, chairman of the UK Rail Freight Employers' Group
Seventeen years after the first relevant EU Directive was approved, and seven years after a stronger one, the process that would allow any licensed train operator from any EU state to operate across Europe has still not been completed by members.
The barriers to operating are still high in many member states as well as being different in each. New entrants find that they are not allowed to haul a train across an internal EU frontier because the members concerned have not cancelled a bilateral treaty that permitted only the-state owned railways to perform this task. Or they are refused use of state-owned terminals that are declared "full" even when they have not seen a train for 10 years. There is no open market in the supply of electricity for traction power in Germany, with new entrants having to buy it from the same infrastructure owner, DB Netz, that supplies its "own" operator, Railion, with current at no cost. In Italy, the incumbent gets priority on access and performance charging - a set-up one new entrant described as a "hell on rail".
Even though technical harmonisation of standards and working practices is supposed to exist, operators have to comply with national standards as well as these European Technical Standards of Interoperability. The former often impose detailed conditions which, conveniently, can be met by the government-owned incumbents but involve great expense for a new entrant. So new entrants lose a lot of time and money or, at worst, give up and go away.
Standard Class 66 locomotives, which are used extensively in the UK and across continental Europe, fell foul of the Polish rail regulator which, having approved them for use in Poland several years ago, then introduced retrospective legislation requiring the drivers’ seat to be moved from right to left, or the employment of two drivers, since they were no longer safe to be used with right-hand drive. One wonders what changed after four years’ safe working with right-hand drive.
Unsurprisingly, the incumbent operator, PKP, has no right-hand drive locomotives.
Johannes Ludewig, executive director of the trade association of the incumbent railways, the Community of European Railways (CER), has said liberalisation is complete and no further legislation or directives are necessary.
CER believes these state-owned monoliths can provide all the services that are needed - as they have done in the past 40 years or so.
He forgets that, even in the past 10 years, French Railways rail freight has lost 40% of its traffic, and that the story of poor service quality, uncompetitive prices and disruptions have made rail freight in many member states something to be avoided except in extremis.
But things are changing as the larger incumbents, Deutsche Bahn (DB) and SNCF, look for opportunities in other member states and realise how hard it is for SNCF to operate in Germany, DB to operate in France, and anyone but the incumbent to operate in Italy.
At a rail freight conference in Paris recently to mark the French presidency, Luc Nadal, SNCF’s new head of Fret, said his company welcomed competition in France and elsewhere.
Some incumbents now look to the European Rail Freight Association as the only grouping of independent operators to continue to press the European Commission for the liberalisation to be fully completed and implemented.
The single market in goods and services has been a cornerstone of EU policy for years, and has been enthusiastically supported by the UK government, which saw it as bringing competition and business opportunities for UK industry across Europe. In return, there are few restrictions on "foreign"- owned firms buying even our industry, and several rail franchises and EWS Railway are now owned by Dutch or German railway companies.
In the past few years, the UK railway industry has developed good business opportunities for wagon and locomotive leasing, passenger and freight operations in several EU member states. Similarly, our rail regulatory structure has been welcomed elsewhere, and by the independent operators, as providing fair treatment for their investments and operations. Network Rail’s operations - albeit still expensive, according to the UK’s Office of Rail Regulation - can provide examples of asset management and costs data that many continental infrastructure managers lack.
So the UK rail industry has much to offer, in both the technical and commercial side of rail operations, if only it were allowed fair access to businesses on the continent. The prospect on offer to the continent is lower costs (Network Rail’s will come down 50% in 10 years) and therefore lower charges; more trains on the network (UK freight grew 60% in the past 10 years); and more reliable services (the UK is the best in Europe, except for Switzerland, for passenger and freight performance). We have demonstrated that customers will flock back to rail freight if it is reliable and cost-effective.