THE NEWS that Deutsche Bahn has been actively discussing acquisition of the UK's largest freight carrier, English Welsh & Scottish Railway, and is considering a 'partnership' with Fret SNCF, which lost €840m in 2006, has once again set alarm bells ringing among the fledgling private sector rail freight operators in Europe.
Monika Heiming, Secretary General of the European Rail Freight Association which represents them, told the Rail Freight 2007 conference in London on June 5 'I think in the long term what we will see is a closing down of the European market, meaning everything that can run will be German for me this move is no good'.
FirstGBRf director John Ellis told delegates 'I think we would feel some concern about the ability of DB if they're controlling EWS to be able to withdraw what is a liberalised, open and transparent market in the UK, and that would be a concern to us. In the UK currently we have a fully privatised rail freight operation and industry, and one that is pretty responsive to customer needs'.
Tom Jones of the UK's second largest operator said Freightliner shared the same concerns 'there is a very grave danger that a market which is really a beacon within Europe' and performing very well could be jeopardised. Jones urged DG TREN in Brussels 'to have to look at this very carefully'.
The tactics used by DB to acquire often unprofitable freight operations from its neighbouring state railways was criticised by Ed Burkhardt, who took a substantial commercial risk when he bought the majority of British Rail's freight businesses in 1996 to form EWS.
Referring to DB's acquisition of NS Cargo in 2000 and DSB Gods in 2001, Burkhardt would have been 'far more comfortable with an action like this if DB was a private company'. But 'there is concern when a state-owned company, presumably with the instrumentality of the state - they have the state finances and are considered a sovereign risk, gets involved in what ought to be private businesses. They are the big gorilla not having to get a rate of return which private industry does, they have unlimited funds'.
'Probably nobody in this room, other than I, knows that the shareholder group that controlled EWS at the time was very close to purchasing the Netherlands freight company', Burkhardt confided. 'We had had very productive negotiations we had been invited in by the management who were going to talk to us to get their company ready for bidding.
'Well, one morning I got a call from the Chairman of the Dutch railway saying he was embarrassed to tell me that overnight his company had been sold to the DB', Burkhardt revealed. 'He said it was a political deal, the ministry agreed to it, and when I said "what did they pay for it?" he replied "almost nothing". They got Railion shares in exchange, which is nothing. They are worthless, they don't make any money.'
'The Danish sale was very similar. I don't know the details of that one, but more recently there was an attempt to do the same thing for Green Cargo, and I will tell you right now that we were interested in Green Cargo and had a relationship with them for a long period of time. I got wind that this was coming from [the Swedish government] and that they were going to hive this company off to DB in a private deal.'
'We immediately went to work, generated a lot of resistance from shippers, and got them to call their MPs and people in the government to know what's going on. Immediately there was a denial that anything was going on, where we knew it was, but their calls and their pressure killed the deal'.
It is not just a question of state-owned operators being bought up. Bernhard Kunz, Managing Director of Hupac Intermodal - one of Europe's largest and most successful independent operators - said that at its 40th anniversary forum in Lugano his company had been 'very open against the danger of re-monopolisation of the railway systems in Europe'.
'As for Deutsche Bahn, which is increasing its activity, they are right', he admitted. But 'whether that is right in Europe - whether that creates or diminishes competition in the future - that's a very political issue'.
'What we need is competition between railways', Kunz insisted, citing the success of multiple operators competing for traffic between Germany and Italy through Switzerland. However, 'we need political support in Brussels, and should tell them Watch out! You are moving too slowly!"
'I am asking myself: Why are the incumbent railways fighting so much the liberalisation process? We help them. We are growing business. We are creating more jobs, and we feel the share that we have today in Europe is very little'. A bar chart displayed by Kunz (above) showed clearly that 'where we have the highest share of new railway undertakings we have the biggest growth, and where we don't have any alternative we diminish freight on railways'.
'Let it go. Let it slide. Let's keep the market, create demand, and the better operators will win'.
- CAPTION: The market share of new railway undertakings in 2005 (red) correlates well with the percentage increase in demand in total tonnne-km hauled (blue) in these countries in 1995-2004. Source: Hupac
- CAPTION: Rail Technology & Logistics GmbH began open-access freight operations in August 2006 in DB's home market using V100 locos overhauled by Alstom Locomotve Service Stendal. Europe's private operators are increasingly concerned by DB's plans for further expansion. Photo: Ernst-Joachim Gerlach