Wednesday, May 21, 2014

European Rail Freight Decision 'Takes Sector Back Twenty Years'

New UK Report and Austrian Resignation Head the Weeks Track News
Shipping News Feature

UK – AUSTRIA – EUROPE – Rail freight news this week includes comment on a recently released report claiming UK industry savings currently equate to £2.7 million per day as against road haulage, with operators planning to invest hundreds of millions of pounds in the country’s track sector, and a swipe by the Rail Freight Group’s (RFG) boss Lord Tony Berkeley, at European state rail interests for a recent pronouncement which the RFG says is aimed at not just maintaining the status quo as regards pricing privileges but sets things back by 10 or 20 years.

Firstly that UK report, laboriously titled ‘Keeping the lights on and the traffic moving: The benefits of rail freight for the UK economy’ and unsurprisingly prepared by accountancy group KPMG (never known to use one word when a sentence will do) for the Rail Delivery Group (RDG), the organisation charged with rationalising relations between rail stakeholders in the UK. The report points out that advances in take up mean the UK is now closer to the average when comparing rail carried cargo to other modes.

Basically a cross between a glossy ad and a pat on the back the report credits privatisation with the recovery of the sector pointing out that although rail freight has not yet returned to its post-war peak (1953), it has achieved growth of over 70% since the mid 1990’s. Nick Radcliffe, Managing Director of FreightArranger which operates a web based system for extracting the best road/rail intermodal solutions, welcomed the report, but with 90% of tonne/miles cargo carried by road haulage feels more could be done, saying:

"Now is a crucial time for Britain's economy and a fantastic opportunity for the rail industry, one we can't afford to let pass us by. As the country has now put the recession firmly behind it, economic growth and transport movement are joined at the hip. We need to make sure that rail freight grows faster than overall economic growth, or we will see rising congestion on the road network which will add billions of pounds to the cost of doing business in UK and waste the benefit of the growth.

"Enabling measures include the removal of key pinch points on the rail network, electrification and continuation of gauge enhancement. It is also vital that more rail freight terminals and rail-connected warehouses are opened to provide a fuller service across the UK. More terminals will enable greater amounts of domestic intermodal rail freight as well as deep sea flows. Some parts of the country are not well served."

The RFG meanwhile has come out in support of Austrian open access inter-city operator Westbahn Management GmbH which ‘distanced itself’ from the Community of European Railway & Infrastructure Companies (CER) which it signed up to late in 2011. Westbahn says its reasons for joining the CER were it ‘had the aim of bringing more awareness of competition and liberalisation into the monopolistic thinking of CER, to develop ways of opening the market in partnership with the European Commission'.

The bulk of members of the CER are state related monopolistic outfits of integrated infrastructure managers and train operations, inextricably linked to member states’ governments. The RFG points to the days when such monopolies reigned in the rail industry across Europe and reminds us there was then generally only one choice for passenger and freight customers, one price and one, often very uncertain, delivery or arrival time, and old, dirty and noisy rolling stock. It claims when independent operators did appear, they were (and are still) ruthlessly attacked, by predatory pricing, access delays, refusal to sell their tickets, or technical rules invented and perpetuated by incumbents to keep others out.

Westbahn and the RFG share common ground believing, in the words of the Westbahn statement, ‘Incumbents are primarily interested in preserving the existence of their benefits at any cost but this is not future-proof and massively harms the railway industry’, a view which the RFG says it finds absolutely correct, saying that the CER recently persuaded the European Parliament to reverse the decision of its own Transport Committee and vote, not just for the status quo, but to take that back ‘10 or 20 years’.

The vote on the Fourth Railway Package in the European Parliament, where CER supported changes to the compromises agreed at the TRAN Committee caused Westbahn to state that it felt it was glaringly obvious there was no aim at liberalisation and market opening. The company says its view represents a different understanding from that of CER as regards rapid implementation of the 4th Railway Package and believes that the CER, ‘needs a totally new strategy, with the aim of supporting further policy initiatives at EU level in order to finalise the liberalisation instead of hindering it'. RFG Chairman Tony Berkeley commented:

“After the EP Plenary vote, we run the risk of having a series of vertically integrated monopolies run by the big boys where there is only one voice and one policy, and different in each member state. Service quality will get even worse since there will be no competition or incentive to succeed, costs to taxpayers will rise, and traffic will be lost to road and air whilst the rail network withers. This has already happened in France, where SNCF has lost 50% of its freight traffic whilst in the UK, where there is competition above rail, rail freight has grown 60%.

“How can any company that wants to operate in a competitive, fair and transparent environment, stay with an organisation that looks backwards to times when there was no choice, as Henry Ford said, ‘you can have any colour car as long as it is black!’

“We urge the European Transport Council, which is shortly due to start discussing the Commission’s draft of the 4th Railway Package, to support that and the EP’s Transport Committee version, and reject the version on which CER lobbied so strongly and which looks backwards to preserve the big monopolies. Strong independent regulators have a role, but the structure and transparency within the industry must be put right first to enable investment and fair competition to succeed, and the railways to grow.”