T&E’s position on rail policy

June 2000


Current decision-making process

T&E’s position on rail policy

- Initial considerations

- Separation of infrastructure management and railways undertakings

- Access to rail infrastructure

- Charging for the use of railways infrastructure

- Monitoring



1. Introduction

Despite political statements supporting an increase in the importance of railways especially in the freight sector, this mode has consistently lost market share and transported volumes since 1970.

Different political attempts have been made to reverse these developments. Almost 10 years ago, the European institutions adopted a directive (91/440/EC) which was intended to improve the railways’ performance by applying competition within the rail sector. In 1995 two other directives were adopted, defining the rules of licensing railway companies and of allocating and charging for the railways infrastructure.

The effectiveness of this legal framework was very low. Only in a few countries, were these rules applied in reality in a transparent and open way. Apart from a few exceptions, the current situation in the rail sector is consequently almost the same as it was 10 years ago with a structure that stems from the late 19th or early 20th century. Huge national companies dominate the market with a local and modal monopoly. These companies show only limited interests and abilities in improving and developing their freight services towards the requirements of current or potential customers to regain market share.

Currently, the existing legislation is being revised. With regard to this process, but also with regard to the following implementation of the revised directives, and with regard to T&E’s project "Freight: From Road to Rail", T&E has defined its position on rail policy (chapter 2).

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2. Current decision making process

The following three proposals from the Commission to the Council and the Parliament are currently in discussion at the Transport Committee of the Parliament:

· Proposal for a Council directive amending Directive 91/440/EEC on the development of the Community’s railways (Council Directive 91/440/EEC on the development of the Community’s railways: OJ L 237, 24.8.1991; Bull. 7/8-1991, point 1.2.108)

This proposal defines the institutional rules of the Community’s railways. This includes the principle of fair and non-discriminatory access, the definition of the network where access must be allowed, and the railway undertakings which are allowed to access the rail infrastructure of another country. Finally, it also defines the degree of separation between infrastructure management and rail transport service provision.

· Proposal for a Council directive amending Council Directive 95/18/EC on the licensing of railway undertakings (Council Directive 95/18/EC on the licensing of railway undertakings: OJ L 143, 27.6.1995; Bull. 6-1995, point 1.3.122)

The Commission’s proposal aims to ensure a common licensing scheme to all railway undertakings while observing a high standard of safety. The proposal establishes certain requirements with regard to financial fitness, professional competence and insurance as well as safety conditions.

· Proposal for a Council directive replacing Directive 95/19/EC on the allocation of railway infrastructure capacity and the charging of infrastructure fees (Council Directive 95/19/EC on the allocation of railway infrastructure capacity and the charging of infrastructure fees: OJ L 143, 27.6.1995; Bull. 6-1995, point 1.3.123).

The Commission’s proposal aims to define the framework for the allocation of railway infrastructure capacity and for charging for the use of railway infrastructure. It contains elements to harmonise processes where capacity is constrained and to harmonise information for the use of rail infrastructure.

The current and immediately following steps in this process are:

1. Recommendations from rapporteurs (Jarzembowsky EPP/Germany for 91/440 and Swoboda PSE/Austria for the two others): Draft recommendation for second reading in the Parliament (discussed on 23 May 2000 at Transport Committee Meeting of EP).

These draft recommendations include amendments to the proposal from the Council. The amendments are mainly correcting the Council attempt to protect their national railway companies in contradiction with the objectives of the internal market in the rail sector. The position of the current reports reflects the position already stated by the Parliament at first reading.

2. Transport Committee approval 21 June 2000

The current draft recommendation will be amended according to the discussion in the Transport Committee and the amendments will be approved or rejected.

3. Negotiation with Council to avoid formal procedure

If differences exist between the Council and the Parliament, the conciliation process is required. However, if the Council agrees on a non-formal procedure, the conciliation process could be avoided and progress accelerated.

4. EP Plenary approval 4/5 July 2000

Only without conciliation process, will a final decision be taken in July. However, it is very unlikely that this time schedule will work. The differences between the Transport Committee (TC) of the Parliament and the proposal from the Transport Council seem to be so big that the Council would agree on a non-formal agreement without the conciliation process after the second reading of the Parliament.

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3. T&E’s position on rail policy

3.1 Initial considerations

1. The rail freight sector stands in tough competition with other modes, primarily with the road freight transport sector.

2. Changes in the economy with regard to types of goods (less weight and volume per transported physical entity, more value per transported physical entity) and availability of goods (just in time) require increased flexibility from the rail freight sector with regard to the offered services.

3. For different reasons rail freight service suppliers presently show limited possibility in offering the required flexibility and services.

4. Whereas some technical reasons are system inherent which can be only partly reduced by changes in technology (e.g. by interoperable and standardised solutions), other reasons are simply caused by the existing institutional, structural and organisational framework railways are kept in.

5. These technical and institutional obstacles together with the changes in the economic environment have lead to a stagnation or even a reduction in transported volume and consequently to a loss of market share for rail freight transport.

6. Nevertheless, freight transport by rail is generally environmentally less harmful as freight transport by road generally which is also recognised by the Council Strategy on the integration of environment into the transport policy (October 1999, Art. 16 b).

7. Consequently, a shift of transported goods from road to rail generally improves the environment and the life condition of the European citizens and must be the objective of a coherent, comprehensive, integrated and efficient transport policy.

8. In order to allow the rail freight sector to compete successfully with the road freight sector and to regain market share, fair competitive conditions must be established, i.e. institutional and organisational obstacles in the rail sector must be removed, fair pricing rules considering the social costs must be applied simultaneously for all transport modes and social, environmental and technical regulations must be fixed and enforced at the same level and to the same degree within all transport modes.

9. There must be an upwards harmonisation of standards in order to comply with the treaty, and to avoid the situation arising where harmonisation forces railways to lower their current standards.

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3.2 Separation of infrastructure management and railways undertakings

10. The provision of transport infrastructure, mainly transport networks, is politically and economically a public task, which should be an outcome of a democratic process, whereas rail transport services can be provided by the private sector.

11. A separation of the two tasks allows for a commercial and more market oriented behaviour of the rail service providers (according to the proposed directives named as "railway undertakings") as they are decoupled from the infrastructure. This is essential for rail freight transport with regard to the competition with road transport where hauliers are not in charge of infrastructure provision either.

12. A separation of infrastructure management and railways undertakings allows also for open and non-discriminatory access to rail infrastructure by different operators and is therefore a pre-condition for fair and open intramodal competition. This is aimed at improving rail services and providing intermodally competitive services.

13. The infrastructure management should be regulated in a way that all the political requirements can be met, but that there is nevertheless an incentive for the infrastructure manager to attract the most possible numbers of users to its infrastructure.

14. Even if the provision of rail services can be executed by the private sector, the public sector maintains the responsibility to define the framework, rules and legislation. Furthermore it should also ensure the quality of services, timetables etc. Politics must not withdraw from setting social, environmental and technical rules and enforce them equally with regard to transport service provision in each transport mode. Furthermore, public authorities must also demand transport services from railway undertakings in the case that these services are not provided automatically but required according to political objectives, e.g. to protect sensitive areas from road transport by alternatively offering rail options.

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3.3 Access to rail infrastructure

15. The access to rail infrastructure should be open to the maximum possible level with regard to the network and to railway undertakings. This is essential to be competitive with road freight services as accessing road network is possible throughout Europe with hardly any barriers.

16. The access should be open for all licensed railway undertakings to the entire rail network with regard to personnel, engines and rolling stock.

17. Railway undertakings must fulfil social goals and high environmental standards, and the equipment used has to meet high technical requirements, in order to be licensed. However, these requirements must be non-discriminatory and must not create strategic entry barriers to protect existing railway undertakings.

18. The allocation of railway infrastructure capacity must be transparent, fair and non-discriminatory and therefore executed by the infrastructure manager or another body with the required knowledge which is independent from any railway undertaking.

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3.4 Charging for the use of railways infrastructure

19. The main principle of charging for the use of railways infrastructure must be the application of equal rules in all transport modes.

20. Furthermore, charges for the use of railways infrastructure should only be levied if corresponding charging schemes for road infrastructure are already in use.

21. The social marginal costs approach seems to be appropriate at the moment covering just the operational, social and environmental costs by the users for all transport modes. Social marginal costs should be defined in a way that secures to reach the desired political goals.

22. Pricing measures should be acknowledged as an efficient political instrument of demand management which cannot be justified only by scientifically calculated social costs but just for the purpose to influence modal decisions, e.g. to protect sensitive areas from transport.

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3.5 Monitoring

23. The liberalisation and the introduction of competition in the railway sector is aimed at improving its services and regaining its market share thereby reducing the environmental impact to the transport system.

24. Member states and the Commission must be in charge of monitoring the implementation process in order to ensure that the instruments are properly applied but also to avoid possible negative effects of the instruments such as the destruction of the railway system.

25. This monitoring includes at least the development of the number of licensed railway undertakings, the development of market share of existing and up-coming railway undertakings, and the development of transport volume and market share of the different transport modes.

26. If the developments do not show an increase of the market share of railways and if this development threatens the fulfilment of the defined environmental goals, additional measures will have to be taken.

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4. Conclusions

  1. T&E supports the path proposed by the Commission towards liberalisation and competition in the railway sector.
  2. T&E supports the separation of infrastructure management and railway undertakings.
  3. T&E requests the application of the same pricing principle, which should secure the fulfilment of the environmental goals, for the use of all transport infrastructure .
  4. T&E requests the application and enforcement of social, environmental and technical rules on the same level in all transport modes.
  5. T&E supports the promotion of environmentally less harmful transport modes such as railways and shipping which means that instruments may be taken which clearly favour the less harmful transport modes.
  6. T&E will follow the implementation and its effects actively. In case of undesired developments, e.g. further decline of rail freight volumes and market share or destruction of the rail system, T&E has to make interventions at a European and Member State level. This will be a long and ongoing process. A detailed strategy must be developed in case such undesired developments occur.

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Author: Markus Liechti

T&E Project Manager

Date: 05/06/2000