It is time for the British Government to get tough with the European Commission on rail freight liberalisation

Plädoyer für einen gemeinsamen europäischen Markt - Britische Regierung soll Druck auf die EU-Kommission ausüben, die Liberalisierung fortzusetzen.

‘It is in the interests of the UK Government to support our industry by pressing the case for the complete liberalisation of the rail market across Europe, technically, commercially and legally, with the minimum of delay.’

That is the conclusion of RFG after attending a consultation meeting on Friday 7 November 2008, where representatives of EU industry, regulators and government heard the first results of an EC-sponsored study into the progress on the liberalisation of the European rail freight market and what still needs to be done.

These discussions about ‘what to do next’ provide a vital opportunity for the UK Government to press for urgent Commission action on the Recast of the First Railway Package to complete the single market in rail freight across Europe.  It would provide great opportunities for UK companies, train operators, leasing companies, suppliers and consultants and, in the process, help grow the volumes of freight carried by rail.

At the meeting, the Commission’s consultants, PwC, reported that most operators and infrastructure managers wanted no further change.  The UK government also appears to prefer to let the current situation settle down for a few years before pressing for more action. RFG chairman Tony Berkeley commented:  ‘Its extraordinary that the Commission and its consultants can believe that, because the majority of stakeholders are incumbents who do not want their monopolies curtailed, this is the correct way of achieving a liberalised rail freight market.  One would not expect turkeys to vote for Christmas!

‘RFG has welcomed the Commission taking infraction proceedings against member states for failure to implement the First Railway Package, but there is already general acceptance that further legislation is necessary, not least to provide total separation of track and train operations and comprehensive independent regulation. These are needed to give the private sector confidence they can invest and operate in a fair single market; without this, the sector will not grow.

‘The UK Government must not just sit on the sidelines and watch things develop.  In the UK, rail freight has grown by 60% on ten years due to competition, innovation, a fair and comprehensive regulatory structure and total separation of track and train.   The industry is keen invest these skills across Europe, but the present chaotic half way stage puts them off.  Our Government will be failing the rail freight sector if it does not take a more proactive stance in Brussels and press for the completion of the single market in rail freight across Europe, as it has done with other industries.’

Further information  

RFG Chairman Tony Berkeley +44 7710 431 542

RFG Communications Adviser Yvonne Mulder +44 7887 767 666     

Notes to editors

The European Commission has asked PriceWaterhouse Coopers (PwC) to undertake a study to assess the key options for developing the rail market from an institutional and legal perspective.  At the meeting on 7 November in Brussels, stakeholders, including infrastructure managers, train operators, suppliers, regulators and member states representatives were shown the first results of a questionnaire and the resulting impact analysis. Papers are available from RFG. Tony  Berkeley attended the meeting as a Board member of the European Rail Freight Association, as well as chairman of Rail Freight Group.

Further RFG comment on European rail liberalisation...

Seventeen years after the first Directive was approved, and seven years after a stronger one, member states have still not completed the process which would allow any licensed train operator from any member state to operate across Europe.

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 member states concerned have not bothered to cancel a bilateral treaty which only permitted the state owned railways to perform this task; new entrants are refused use of state owned terminals which are declared ‘full’ even when they have not seen a train for ten 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, which supplies its ‘own’ operator, Railion, with current at no cost and, in Italy, the incumbent gets priority on access and performance charging which one new entrant described as a ‘hell on rail’.

Even thought there is supposed to be technical harmonisation of standards and working practices, at present these European Technical Standards of Interoperability have to be complied with in addition to national standards.  These often impose detailed conditions which, conveniently, can be met by the Government- owned incumbents but at great expense by an new entrant, contributing to new entrants losing a lot of time and money or, at the worst, giving up and going away.

Standard Class 66 locomotives, used extensively in the UK and across continental Europe, fell foul of the Polish rail regulator who, 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 two drivers employed, 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, but it is of course no surprise that the incumbent operator, PKP, has no right hand drive locomotives!

Johannes Ludewig, the Executive Director of the trade association of the incumbent railways, the Community of European Railways, has stated that liberalisation is complete and no further legislation or directives are necessary. CER believes that these state owned monoliths can provide all the services that are needed – as they have done in the last forty years or so!    He forgets that, even in the last ten years, French Railways rail freight has lost 40% of its traffic, and 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.

This is now changing as the larger incumbents, DB and SNCF, look for opportunities in other member states and realise just how difficult 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, the company’s new Directeur Fret, said that 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 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 many 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 last few years, the UK railway industry has developed good business opportunities for wagon and locomotive leasing, passenger and freight operations in a number of member states.  Similarly, our rail regulatory structure has been welcomed elsewhere and of course by the independent operators as providing the comfort of fair treatment for their investments and operations. Network Rail’s operations, albeit still expensive according to the ORR, can provide some good examples of asset management and costs data which many continental infrastructure managers completely 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 ten years) and therefore lower charges, more trains on the network (UK freight grew 60% in the last ten 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.  

Tony Berkeley

Chairman

Rail Freight Group

Monticello House

45 Russell Square

London WC1 4JP

Tel +44 20 7907 4646

Fax +44 20 7907 4884

Mob +44 7710 431 542

tony@rfg.org.uk