Delegates attending the freight day at EuroRail 2008 focused on the regulatory and capacity issues facing the sector as it works to realise the EU's vision of an open, liberalised and inter-operable market.

Separation of infrastructure and operations remained a touchstone issue among an audience that included numerous representatives from new entrant operators. A consensus rapidly emerged that much is still to be done to ensure a level playing field for freight operations within member states, and in ensuring a transparent regulatory framework is also applied to different member states.

To this end, Luca Ronzoni, President of the European Rail Freight Association and Chief Executive of Ferrovie Nord Cargo, said ERFA is keen to work with the European Commission to amend the First Railway Package in light of experience since its implementation. 'State aid remains a key issue, some players still receive unfair subsidy that distorts the open market and prevents cross-border harmonisation.'

'Some players still receive unfair subsidy that distorts the open market and prevents cross-border harmonisation'

Luca Ronzoni
President, European Rail Freight Association

Level playing field

Raimund Stuer, Board Member at TX Logistik, was more forthright, insisting that 'liberalisation should not resemble Champions League football. If France is at the bottom of the league table, then we all have a problem - not least because it hinders access to Spain.' He urged the industry to press for more common standards to be adopted across the continent to ensure national markets became more closely aligned. 'Everyone must liberalise; if they don't, it's a crime!', he insisted.

Stuer was also adamant that, despite Trenitalia holding a 51% stake in TX Logistik, 'it is still a private company'. Yet other delegates were concerned at the consolidation of the market around a small number of supra-national operators. Alberto Grisone, Business Manager for Project Development & Strategy at Hupac, pointed to the transalpine market, where competition between five major operators had offered an incentive for a better price-performance ratio and bolstered rail's market position relative to road.

However, infrastructure investment is essential to help rail win and retain traffic, he cautioned, pointing to the cost savings that are likely to be generated once the Gotthard base tunnel is open - train weight will increase by up to 25% while traction costs are likely to be reduced by up to a third. But Grisone argued that, on a European level, the current policy priorities would not help rail's market position versus road: 'ERTMS will not get costs down, and leasing locomotives will not get costs down'. He urged policymakers to push the reform process through more quickly, and questioned whether ERTMS was the only way to deliver the kind of interoperability that would enable rail to compete with 'the truck driver who gets in his cab in Lisboa and drives his vehicle through to Moscow'.

Integrated logistics

Several speakers pointed to an ongoing disparity between the strategic vision of the freight market envisaged under the First Railway Package and the reality on the ground. The difficulties facing new entrants have been well-documented, and although progress is being made, it is occurring far more slowly than the industry would like.

The north-south transalpine axis was cited as a useful model to show how liberalisation could bring market benefits, in contrast to the limited level of market opening on the east-west axis between France/Spain and eastern Europe, and the difficult birth of the Betuwe Route (RG 9.07 p536).

Stuer argued that 'infrastructure managers do not yet understand the 'just in time' approach of the logistics industry', echoing earlier comments by Grisone that 'coal and steel are not the future' for rail freight, adding that integrated end-to-end intermodal operations would be key to growth. But without impartial access to terminals, marshalling yards, fuelling points and other essential facilities, a truly open market would not be viable, and it is here that the infrastructure managers have the key role.

'Sometimes we look at the infrastructure managers and we wonder what they will think of next to make our lives more difficult', announced a forthright Henrik Würdemann, Managing Director of Veolia Cargo Deutschland, describing the competitive environment in Germany. He added that European legislation could not clarify every possible interface between operators and infrastructure managers, citing the ongoing dispute over charges for electricity for traction supply between DB Energie and several open access players (RG 12.06 p771).

Chinese walls

Monika Heiming, Secretary General of ERFA, told delegates that total separation of infrastructure manager and incumbent railway had to be rigidly enforced to avoid such loopholes. 'We cannot have Chinese walls between parent companies and infra­structure managers, because this doesn't work … and this must include IT systems', suggesting that holding companies could have access to sensitive market data from both operators and infrastructure managers.

The question of enforcing access rights naturally led delegates to ask about what kind of regulation the market required. Michael Robson, Secretary General of EIM, firmly believes that independent regulation must be enshrined across Europe without parent companies of incumbent railways 'breathing down the necks' of either regulator or infrastructure manager.

By the same token, some delegates expressed concern at the prospect of 'over-regulation', which would also inhibit smaller operators through undue bureaucracy. 'The objective of open-access operators is to run trains, not to launch legal cases against the infrastructure manager', noted Sandrien Bennebroek, Legal Counsel for Dutch operator ERS Railways, whilst other delegates argued that increasingly-stringent safety standards, rather than anti-competitive behaviour, was hindering market development in some countries.

The last word arguably went to Zoltan Kazatsay, Deputy Director General at DG TREN, who asked for greater feedback from the industry to Brussels when the EU consults on future policy direction. He went on to remind his audience gently that 'life is full of compromises, and we should not forget that'.