European Union action
67. Despite the problems and difficulties surrounding
the rail freight industry at the present time, there is potential
for the industry to grow if the necessary steps are taken at European
and Member State level. In this chapter we outline what action
we believe the European Union should take.
68. The Commission must first and foremost
ensure that the First Railway Package is fully implemented across
the EU-15. The 10 new Member States may need longer to implement
the legislation but the Commission should work with them to ensure
compliance as soon as possible.
69. The First Railway Package, which aims to
introduce open access to the infrastructure and fair, transparent
and non-discriminatory rules for the allocation of paths, has
already made some progress towards solving some of the problems
faced by the rail freight industry. Mr Hilbrecht from the European
Commission put it to us that, "there are small flowers starting
to come out." (Q 306). We were pleased to note particular
signs of progress in a number of areas which we now consider.
70. It is encouraging that in some parts of Europe
real competition does exist between rail freight companies. We
were told that competing operators exist in many countries, including
Germany, Denmark, Sweden, the Netherlands and Italy. By contrast
there is no competition at all to date in France and Spain.
71. The freight corridor through the Alps is
one of the most important in Europe and competition between rail
companies is developing here. The pattern typically is for the
main operator in one country to form a subsidiary in another through
which to operate European services. For instance, Swiss Rail Cargo
Germany (a joint venture between the Swiss operator SBB Cargo
and the German private railway company HGK) operates trains between
Switzerland and the Netherlands in direct competition with the
German operators, including Railion. SBB Cargo also competes with
the Italian operators including Trenitalia, through its Italian
branch, Swiss Rail Cargo Italy. Railon Deutschland, through its
association with BLS Cargo, now operates freight trains through
Switzerland in direct competition with SBB Cargo. For their part,
Trenitalia Cargo have entered the German rail freight market through
a stake in the German private operator TX Logistics (CER written
evidence).
72. These are encouraging ventures and we hope
that they will be replicated across Europe so that real competition
and choice for the customer becomes an integral part of the rail
freight industry. The full implementation of the First Railway
Package in spirit and in the letter should help to further this
welcome competition.
73. Many of our witnesses told us that getting
rail freight through France was very difficult. The significance
of this problem is greater because France's geographical position
means that international rail freight to and from Great Britain
and the Iberian Peninsula travels through France. We were therefore
encouraged by Mr Hilbrecht's confirmation that Europorte 2, a
subsidiary of Eurotunnel, had received a licence and a safety
certificate to operate in France. A subsidiary of Connex was awaiting
a safety certificate, having already obtained an operating licence
and Rail4Chem, a German Company, was exploring the possibility
of operating in France (Q 287).
74. The French two-part tariff system was also
said to be a particular barrier to open access and fair competition
within France. Mr Hilbrecht was happy "to say that we have
achieved agreement with France . . . . They agree that it (the
two-part tariff system) should be changed" (Q 283). Unfortunately
the French government claim that because of the public service
contracts with regions they cannot do so before 1 January 2006.
This two-part tariff system needs to be abolished. We hope
that the Commission will ensure that the French government abolish
it as soon as possible.
75. The last problem that we identified is the
least tangible, but is nevertheless an important challenge facing
the rail freight industry. The evidence we received led us to
believe that the rail industry in general, and in particular the
rail infrastructure managers, have inadequate incentives to win
new traffic. We recognise that, for political reasons, rail passengers
are given priority over the movement of rail freight. This appears
to have resulted in an institutional framework within the rail
industry in which there is little incentive to increase and improve
rail freight. Whatever the cause of this lack of commercialism
and competitive performance, it has to be overcome if the rail
freight industry is to revive and achieve its potential.
76. We were pleased to note however that an alliance
of European rail freight operators, known as European Bulls, had
been formed in January 2005 to enable freight customers to use
rail for their European long-haul transport requirements. The
organisation aims to guarantee high quality over the whole route
and to achieve a significant increase in rail's share of international
transport services in the next few years.
77. We were similarly pleased to learn about
Rail Net Europe which is a group of infrastructure managers from
23 European Union Member States with a head office in Vienna.
They work together to provide every rail freight operator with
a one-stop shop to plan, organise and troubleshoot any rail freight
path they want to use. The operator can use any member in any
country (Q 409). In Great Britain this group is still in its embryonic
stages but it has worked well in other Member States. The Group
aims to provide a champion for rail freight operators so that
they do not have to negotiate with a myriad of infrastructure
managers but simply interact with one person who will deal with
all the issues that might arise. This Group therefore seemed to
us to be a good example of the industry seeking to be more customer
focused.
78. We applaud these initiatives and hope
that the Commission and the United Kingdom Government will do
all that they can to help them to succeed.
79. However, despite these encouraging signs,
implementation of the First Railway Package is still patchy. A
number of Member States, including the United Kingdom, have not
fully implemented the Directives. The European Court of Justice
has taken negative decisions against the United Kingdom, Germany,
Greece and Luxembourg. The Commission has prepared infringement
procedures against Spain and Belgium, and has entered into dialogue
with countries such as France where they have seen problems or
have concerns. The Commission must maintain pressure on Member
States to ensure they implement this package.
80. The continued existence of vertically-integrated
rail freight companies which have both infrastructure and operation
arms is a potential barrier to fair competition. As we have already
explained, some of our witnesses believed that the two functions
were imperfectly separated in some companies. On the face of it,
the simplest solution would be to pass European Union legislation
which would force the complete separation of these two functions.
Mr Hilbrecht said however it had proved impossible to achieve
agreement in the European Council to complete separation, although
he would like to see this (Q 300).
81. We have already indicated that we believe
that the issue of complete separation of infrastructure from operations
should be re-examined. In its absence, we accept that the requirement
that rail freight operators should be at arms length from the
infrastructure managers and that their funding should be transparent
may be the best alternative. But we believe it is important that
track access should be regulated and appeals concerning the conduct
of the infrastructure manager should be heard by an independent
regulator.
82. The current legislation requires that the
regulator be independent of the infrastructure manager. The regulator
can still be a part of the Ministry which is also responsible
for the finances of both the infrastructure manager and the incumbent
operator, as is the case in France.
83. Whilst we understand that some Member States
are unwilling to set up an independent rail regulator because,
with the current situation and lack of competition, they would
have little to do, we perceived this as a chicken and egg situation.
An independent rail freight regulator can only operate in a fully
competitive market but for a fully competitive market to develop,
there must be fair and open access to the infrastructure. Only
an independent regulator can ensure this. The half-way house adopted
by some Member States where the regulator is a department within
the transport ministry (Q 287) is not acceptable in the long-term,
given that the same ministry is frequently responsible for the
state owned infrastructure manager and main freight operator.
84. We believe therefore that the relevant
legislation should be amended to make clear that each Member State
requires an independent rail freight regulator, independent from
the government, with appropriate powers and resources and tasked
with ensuring fair and open assess to the rail freight market.
