“Sensible rail investment to increase capacity and capability will benefit both passenger and freight traffic”

Interview with Lord Tony Berkeley, President, European Rail Freight Association

In his interview for Railway Pro Freight & Logistics, Lord Tony Berkeley, President of the European Railway Freight Transport Association (ERFA) explains the evolution of the freight transport market dictated by the financial crisis and the Recast of the First Railway Package on this business segment.Taking into account the announced privatisations and the growth of the industrial activity in Central Asia, the ERFA President explains the impact of these actions on the European railway market.

Railway Pro: The extension of crisis in 2010 generated contradictory information concerning the different volumes of freight shipped by different transport modes. How does the railway sector end this year and what are the prospects for 2011-2012?

Tony Berkeley: The railway sector’s performance in 2011 has been quite mixed, reflecting both the varied economic situation of different European countries, but also the performance of the railways themselves. Where there is competition above tracks, operators have often increased market share; where there are only monopolies, then rail freight’s share continues to decline. A necessary part of growing rail freight is to have reliable infrastructure open for traffic when it needs to run. Again, many governments seem to prefer to invest in road rather than rail infrastructure, presumably because they find it ‘easier’. Sadly, this will do nothing to improve their carbon footprint, and there are few road schemes which have not resulted in even more congestion a few years later. Sensible rail investment to increase capacity and capability will benefit both passenger and freight traffic.

Railway Pro:
Container transport is seen as the new recovery factor for the growth of traffic volumes. Is this a decline of bulk transport or a stimulus for new rail transport volumes?

Tony Berkeley: It is a little of both. Container traffic is increasing as a means of transport; it is more flexible being able to be carried by all modes, but also because a number of European railways have stopped operating rail wagon services, or drastically reduced their services. Unfortunately, these incumbent railways companies are not allowing other rail operators to take over these services or enter the terminals. It is extraordinary that they would prefer the cargos to go by road rather than see a competitor operate them by rail. So if customers want to use rail, sometimes they have little choice but to use containers.  Bulk traffic by rail will continue in many areas where road or water services are not really suitable or practicable to carry the cargos and here the growing competition between operators, where this is possible, is giving customers better service and more competitive prices.

Railway Pro: What is the role of terminals in increasing the rail transport attractiveness?

Tony Berkeley: Terminals are a necessary part of virtually all rail freight transport. They may be at stone quarries or coal production areas, ports, factories or locations where freight is stored and/or transferred from road to rail. They are also necessary if the origin or destination of the cargo is not rail connected. Some train operators owning terminals do not allow other operators to use their terminals, even though the facilities are not used much or at all. This is a serious issue preventing much rail freight from moving; since terminals owned by incumbent rail operators were generally funded by the state and its taxpayers, it is surely wrong that state owner operators should prevent others from using the terminals and their facilities if there is capacity.

Railway Pro: After the liberalisation of the freight transport market, the European Union has published the Recast of the First Railway Package. How will this impact on the market?

Tony Berkeley: Firstly the liberalisation is not yet complete, and the European Commission is taking legal actions against 13 member states for their failure to implement the First Railway Package, which has been a legal requirement for nearly ten years. There are still many problems as yet unresolved, for private operators to run trains in different member states, when too close relations between a government and the railway it owns produce all kinds of domestic legislation, both technical, legal and commercial, designed to make it as difficult and costly as possible for other operators to enter the market there. The Recast is the Commission’s present proposal to create a fully liberalised rail freight sector, with open and fair competition above rail, fair access to tracks and terminals for all on a non-discriminatory basis,  and more comprehensive and stronger independent regulation. The European Parliament wishes to go further, and may propose fully legal separation of infrastructure operation and ownership from any train operator. This is particularly important since it will make it much more difficult for incumbent train operators to receive hidden subsidies or state aids, transfer ownership of sites and equipment  and staff between difference subsidiaries, and otherwise gain inside knowledge and priorities. The European Rail Freight Association fully supports all of these proposals.

Railway Pro: Arriva’s takeover has been the top of transport business. What is the significance of this transaction for the European transport market?

Tony Berkeley: Arriva’s rail freight operations in Germany have not been taken over by DB but there is a wider worry about the growing concentration of rail freight operations around incumbents such as DB, SNCF and Trenitalia, who seem to manage to find the finance to buy private companies whilst still receiving massive state aids in their home territories. However, these companies are finding that their subsidiaries in other member states often suffer the same problems with access to track and terminals etc that the private operators continually face. They complain about unfair treatment in other countries whilst doing their best to make operations difficult in their home territories. Either way, the result is less choice for the customers.

Railway Pro: Will the announced privatisations in the 1520 area impact on the European rail transport market?

Tony Berkeley: It depends on how it is done. Privatisation of a railway without full compliance with the First Railway Package and the Recast may well mean that one private company will own both the track and the train operations. This will make it virtually impossible for any competition to emerge in the rail freight sector. Once a sale is done to a private company, then it is much more difficult for others, including governments, to achieve any change or open access. Secondly, it is important that the privatised rail freight company does not receive all the rolling stock and land for terminals. Much better than all the land goes with the infrascture manager, and the rolling stock is divided up among a number of actors who could then compete with each other above track. We successful moves towards privatisation in the right way, then of course new investment should be attracted, and there will be better connections and services to the 1420 gauge areas. I know of a number of companies who are keen to participate in such services.

Railway Pro:
What are the steps that EU and European countries should take in legislation and finances to ensure the growth of rail transport competitiveness?

Tony Berkeley: The proposals in the Recast include better ways of ensuring the longer term financing of infrastructure. It is very difficult to finance this work on a year by year basis, since enhancements and maintenance often need several years planning and development to achieve the best results. However, the rail industry itself has to greatly improve its efficiencies, both in infrascture management and train operation. The latter will come once full and fair competition is achieved; the former will need some strong pressures from governments and industry itself, as well as competition for the provision of railway improvement works, to demonstrate that costs have come down. Demonstrating that the railways are getting much more efficient is the best way of  improving competition with road and other modes and, in turn, justifying road user charges that better reflect the much lower carbon outputs for which rail can be proud.

[ Recorded by Pamela Luică ]
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