“Rail investments need to be made where there are socio-economic returns…”

Interview with Jack Short, Secretary General ITF

Innovation and progress were the two major themes of this year’s edition of the International Transport Forum, held during May 26-28 in Leipzig. About the 2010 edition of the Forum, as well as the implication of the political factor in transport development, how the economic recession affected transport, about the necessity of establishing rail freight transport corridors in Europe and, last but not least,  about the investment demand in rail transport in areas that could bring added value to the economy,  Jack Short, Secretary General of the International Railway Transport Forum, talked in an interview exclusively for Railway Pro.

Railway Pro:
Do you consider that railway transport is the most affected mode of transport during the economic downturn?

Jack Short:
Container shipping was hit harder, and aviation initially hit hard although it has bounced back quicker than other modes. Rail passenger transport was remarkably resistant but rail freight hard hit and although the decline in volumes has halted there has yet to be a recovery in most countries. China and India have however been fairly immune and Russia has shown some turnaround.

Railway Pro: Do you believe that more attention should be given to this type of transport e.g. increasing budget investments?

Jack Short: No, not as a sweeping generalisation. Rail does need public funding and in some countries it has been funded in some periods below optimal levels in terms of socio-economic benefits. The problem is often not so much the overall level of funding, but too much emphasis on new investments and not enough spending on maintenance and renewals. High speed rail programs have sometimes been overambitious. Rail investments need to be made where there are socio-economic returns that justify the use of public funding and not pursued on the grounds that every region must have its high speed train. Because of the capital intensiveness of rail such an approach is simply not financially sustainable. On the freight side in Europe there has been a tendency to under-investment but increasing spending only makes sense if  it is accompanied by the reforms agreed for the sector to introduce competition and the potential for new private investment. Romania has been highly effective in achieving reforms and unlocked a substantial amount of investment as a result. Some of the older EU member countries have been much slower to create the conditions for investment in economically sustainable freight rail businesses.

Railway Pro:
We are all aware of the fact that transport, in general, represents a factor of economic and social cohesion. To what extent could the authorities, operators and citizens contribute to a faster and more efficient development of railway transport?

Jack Short: There could be integrated development of rail with other modes in freight and passenger transport: metros, buses, trams, cycling. And authorities could play more proactive role in integrated ticketing between long distance and urban transport systems, to broker revenue sharing arrangements to allow integrated ticketing, ensuring through ticketing and integrated timetable planning where rail operations have been divided into separate companies and for integration with bus systems. In Japan, the rail and bus operators have for decades published annually a joint timetable that covers every route in the entire country. They did this in the days of printing on paper. With the internet and iPhone apps it should be simple but most countries are lamentably poor at producing information for users. This kind of information becomes a classic kind of public good once more than one company is involved in providing services and there are good reasons for government to assist in supporting such information systems with partial funding.

Railway Pro: What can you tell us about the recent adoption of European Parliament on “European rail freight corridors”, on which trains will be able to pass easily from one national network to another? Is “One-stop shop” a competent body for the granting of train paths the right decision in order to reduce traffic congestion?

Jack Short: It should help, although completing separation of infrastructure from train operations is ultimately the only way to guarantee decisions on access to train paths fully based on commercial merit. This is essential if the system of regulated access agreed for Europe is to work well. The concept of freight corridors holds a lot of promise. It was actually an idea the European Conference of Transport Ministers, the predecessor of the International Transport Forum, floated a decade or more ago. At the time, it was seen as a distraction from the efforts to fundamentally reform the sector through creating a regulated access regime. A number of national railways identified freight corridors in cooperation to prioritise international services with a reasonable degree of success. The more formal identification of corridors by the Commission is a positive step in terms of providing more appropriate train path management and charging arrangements for freight on some key routes. To return to your earlier point, it also should help channel funding to some key bottlenecks. Key areas for congestion that are well known to us will reappear when the economy picks up again after the downturn.

Railway Pro: Political involvement in transport system development brings both advantages and disadvantages. In your opinion, what would be the future role of political involvement in this matter? Do you believe that the government should maintain a major role in transport development?

Jack Short: Yes. Only Government can set the framework conditions for fair intermodal competition, for example on charges and taxes for using infrastructure open to multiple users. The transport sector will remain a large source of public tax revenues whether we like it or not because of the nature of transport demand – less elastic than many other goods and services and therefore easier to tax with less distortion of overall economic activity. Government is required to arbitrate for fair access to rail infrastructure too. What I hope to see is the spread of independent regulatory agencies that provide a high degree of transparency in the way the law and the rules set by government are implemented.

Railway Pro: In regards to pan continental transport, in what way could the freight transport corridors on the Central Asia-Caucasus-CEE axis (Wider Black Sea Area) be improved? What are the main obstacles related to interoperability and how can they be surpassed?

Jack Short: The fundamental issue is to treat the whole corridor as a single service and price the services to suit the market. The tendency is unfortunately for each national operator and infrastructure manager to try to extract the maximum income from international traffic. The accumulation of charges for each national leg then makes end to end operation too expensive to attract projected demand. Truly joint companies that pay adequate infrastructure charges are required if intercontinental services are ever to take off.

Railway Pro:
The modern society seems to be “avid” for transport and the demand is increasing. This year’s ITF edition focuses on innovation. Was this message especially chosen to illustrate the idea that innovation and progress play a major role in transport system improvement, which leads to a “greener” transport?

Jack Short:
Yes. Meeting demands to cut CO2 emissions from the sector radically is perhaps the sectors’ biggest challenge. Rail can play its part, although it only makes sense to expand services where there is a market for rail itself. Building HSR and expecting passengers to follow because it is a bit greener than road or air is not going to work. The core demand for the rail service has to be there. All modes need to cut their emissions, and for rail this partly depends on the power sector cutting its emissions too.

Railway Pro: At global level, what are the regions that require urgent investments in the transport infrastructure, investments which play a decisive role in terms of economic development?

Jack Short: China – where infrastructure, and especially rail, is a potential brake on growth. Conversely, there may have been over-investment in ports, it is the inland network that requires most attention. The government has a massive rail investment program, though it would be wise to improve the conditions for private investment as the public sector might not be able to do the whole job. India is in a similar situation, with growth not quite as strong but with infrastructure in a much poorer state. The emphasis is currently on roads but there are some very large rail investments, focusing on freight in India’s industrial triangle.
High speed rail investment is going to be focused on China, where geography, population patterns and rapidly rising incomes create conditions for the expansion of high speed rail. Europe is in a phase of reviewing sometimes over-ambitious expansion plans, for example in Spain. The UK has a solid plan for its first purely domestic high speed rail line to Birmingham and we can expect that to be developed. In the USA there is much work underway in planning potential HSR lines, but federal funding is limited and a strong dose of realism in planning systems to make a socio-economic return rather than serving everyone’s backyard will be required before plans turn into investments.

Railway Pro:
In your opinion, will railway transport act as a winning card in the Wider Black Sea Area in the long-term?

Jack Short: If services are of good quality, and the borders and other obstacles are overcome, rail can play a very valuable role in the Black Sea region.

by Elena Ilie

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