Changing Trains

The rising spectre of protectionism

2009-03-28T20:06:00.001Z

An inevitable consequence of the economic downturn has been a demand for trade barriers and the protection of home markets. Politicians spending taxpayers' money to stimulate the local economy and create or protect jobs want to see the benefits accruing to their constituencies. 'Local jobs for local people' is the rallying cry.

At the behest of Congress, the US$787bn stimulus bill signed by President Obama on February 17 includes a clause to strengthen the 'Buy America' procurement rules, although he insisted that it will be consistent with international trade agreements. 'One of the most important things during a worldwide recession is that each country does not resort to "beggar thy neighbor" policies, protectionist policies, that can end up further contracting world trade', he said.

The rail industry has moved a long way from the days of national suppliers - or even local as in Australia where rolling stock builders had to have assembly plants in each state. Last year's UNIFE/Roland Berger study of the global market found that around 70% was 'accessible'
to inter-national competition, and the proportion was growing steadily.

Open markets provide more than just a competitive supply environment; they encourage the exchange of ideas and the spread of technology. The past 20 or 30 years has seen a welcome 'convergent evolution' between once-distinct North American, British and European railway practices. Europe's drive for interoperability is not just about overcoming differences in cross-border operation, it is also about opening up a competitive single market for suppliers no matter where they are based.

The biggest question about protectionism is where it would end. Should 'Buy America' be limited to US suppliers, or the North American Free Trade Area? For many years the US transit sector has been dependent on Japanese and European suppliers, but conversely most locomotives in Australia use US technology. Most countries no longer have home suppliers with the capacity for complete production. Fortress UK would not be sustainable, but what about Fortress EU? Mergers in the supply sector and a focus on standard modular products have seen the bigger firms developing integrated supply chains with centres of excellence in many countries.

Some commentators in the UK were quick to criticise the announcement on February 12 that the new Super Express Train fleet would be supplied from Japan, albeit with the promise of a new local assembly plant (p12). This ignores the reality that the UK's only remaining 'traditional' rolling stock plant in Derby is run by a Canadian group with its rail business headquartered in Berlin. And it relies on components sourced from other plants and sub-suppliers across the world.

Earlier this year, EU Transport Commissioner Antonio Tajani called for opening of the Japanese rail market as Japanese suppliers were competing in Europe. By contrast Alstom Transport President Philippe Mellier suggested that western markets should be closed to Chinese companies because the local market was being closed to international firms - a claim that the Ministry of Railways strongly denied.

Mellier's concern focuses on a different problem. In recent years, China has developed a strong domestic industry through localisation and technology transfer, requiring international suppliers to work through subsidiaries, joint ventures or partnerships. The companies accepted this requirement to break into the Asian market. But they also recognised the challenge of protecting their intellectual property rights in countries where issues such as patents are not so clearly understood or enforced.

In recent weeks we have heard reports, from other sectors as well as rail, of transferred technologies being offered for sale in markets not covered by their licence agreements, sometimes in competition with the original supplier. And of public-sector bodies seeking technical assistance to re-engineer proprietary systems. Such practices are clearly unacceptable, and play into the hands of the protectionists.

Railway Gazette International has long supported the exchange of technologies across the world, as this can only help to strengthen the rail mode and its contribution to a sustainable transport mix. But a true exchange of technology demands that intellectual property rights are fairly respected by all parties, or suppliers may legitimately refuse to co-operate, and users will not get the benefits of the technologies on offer. Rail will become less competitive, and the whole world will suffer.

High Speed 2 edges closer to take-off

2009-01-28T15:24:00.002Z

The decision to rebrand the Channel Tunnel Rail Link as High Speed 1 appears to be starting to pay off. Quite intentionally, the name created an assumption that the UK’s first 300 km/h railway would in due course be followed by more.

Not that there has been any shortage of proposals. Lobby group Greengauge 21 put forward a suggestion for High Speed 2 between London and Birmingham in June 2007. Network Rail has a working group looking at options for increasing network capacity, with a brief that includes examining the case for high speed lines. And last year Greengauge 21 put together a consortium of businesses and local authorities to fund a feasibility study of five potential corridors.

At long last the Department for Transport seems to be starting to recognise that high speed rail may have a role in the UK. With the multi-modal ‘national networks’ steering group convened by Transport Minister Lord Adonis expected to report shortly, Secretary of State for Transport Geoff Hoon announced on January 15 that a company called (surprise, surprise) High Speed Two is being formed to consider options for a new line between London and Birmingham, as the first step in a route which could later serve Manchester, Liverpool, Leeds and Scotland. High Speed 3, 4, 5 and 6 may follow, we hear.

At first glance, Hoon’s announcement was more about mitigating protests against government backing for a third runway at London’s Heathrow airport and further expansion of motorway capacity than a specific endorsement for high speed rail. But with decades of experience to draw on from countries such as Japan, France, Germany and Spain, where construction is still proceeding apace, the main question to be addressed is how any new lines could best fit into the UK transport mix.

The opposition political parties and many other bodies believe high speed rail could avoid the need for the third runway at all, as rail could substitute for short-haul domestic and international flights. But with or without the extra runway, there is little doubt that Heathrow needs to be properly plugged into the inter-city and international rail networks in the same way as rivals such as Schiphol, Frankfurt, Paris or Zürich.

Hinting at an announcement later this year about electrification of the Great Western Main Line between London, Bristol and South Wales, Hoon suggested that HS2 and Crossrail could converge at a new Heathrow International hub on the GWML. Given that this line passes about 4 km north of Heathrow, a better option might be to copy what the Swiss did at Zürich 20 years ago and re-route the railway under the airport.

One problem is that the volume of air traffic which could be diverted to rail is not enough in itself to justify a new line. Most rail business would still be city centre to city centre, unless the proposed hub can attract large volumes of connecting traffic from the surrounding region. And a 20 km westward kink to serve Heathrow would add a significant time penalty for passengers between London and the north. So there will be plenty of topics to debate at our forthcoming conference on Growth & the Capacity Challenge, being held in London on March 10-11.

London & Continental Railways has already demonstrated with HS1 the benefit of having a dedicated company to champion a high speed rail project. Let us hope that HS2 will have the same effect, although at this stage there seems little urgency. There are suggestions that work is unlikely to start on the ground before 2015, with opening dates of 2027 or later being floated.

A reminder of what can happen without clear leadership is painfully apparent in the Netherlands, where there are still no services running on HSL-Zuid long after the original planned opening date of October 2006. With a multitude of different companies responsible for building, equipping and operating the line, not to mention commissioning ETCS Level 2 equipment on both track and trains, target after target has been missed. There have been acrimonious claims for compensation, and regular ministerial statements to parliament.

We reported in Railway Gazette International last April that NS Hispeed was hoping to ramp up services during 2008, starting with an interim Amsterdam – Rotterdam shuttle using leased Traxx locomotives pending delivery of the 250 km/h Albatros trainsets from AnsaldoBreda, followed by diversion of Thalys and Benelux services to the new line this year.

On December 19 the concessionaire announced the fares for its shuttle service, revealing yet another target date of July 1. A further two years may elapse before the whole Thalys fleet has been retrofitted with ETCS, and there is still no indication of when the Albatros sets might be ready.

Doing more with less

2009-01-05T09:17:00.002Z

For all the politicians’ brave words about boosting railway investment to help stave off the economic downturn, and rail’s long-term role in a sustainable transport mix, there are clear signs that times will be tough in the next few months, particularly in the freight business.

We hear reports that traffic is falling sharply as the liquidity crisis starts to bite. Already badly affected are the steel and automotive sectors, and there has been a sharp drop in the movement of raw materials, which does not bode well for railways heavily dependent on bulk flows serving traditional industries.

We can expect even fiercer competition, as road hauliers and shipping lines are also hungry for work. And these modes have traditionally demonstrated an ability to react much more rapidly to changing markets, flexing their operations and cutting rates in ways that the rail sector finds difficult to match.

Open access operators seem to be more responsive to customer requirements, but only where the legislative structure enables them to compete effectively. On December 11 the European Commission published a proposal for a ‘regulation on competitive rail freight priority’ which would give commercially-sensitive freight traffic greater rights to timetable paths and priority over passenger services on designated corridors. This is to be welcomed, but we wonder why infrastructure managers and train operators have to wait for a rigid rule to be imposed rather than taking the initiative themselves to meet a commercial imperative.

We reported in the December issue of Railway Gazette International about the glacially slow progress being made in reforming European rail freight. As for developing new lines or dedicated freight corridors, the inconclusive final report from the European Commission’s New Opera research project suggests that little progress has been made after four years of consultation, and concrete proposals are years away from any meaningful implementation.

Whilst open access competition is proving successful over relatively short distances, winnning long-haul business to rail requires operators to work together, as RZD President Vladimir Yakunin suggested in November. But co-operation should not be at the expense of a competitive ethos, and it seems that some major state railways still have little appetite for reform.

With Fret SNCF haemorrhaging business to open access players and forecasting a loss of €300m for 2008, SNCF has been pointing the finger at DB, claiming that Euro Cargo Rail has been able to poach traffic whilst its owner enjoys state support in a far from transparent home market. DB in turn lodged a complaint with the European Commission about unfair competition and a lack of liberalisation in France, and it has been joined by FS which seems to have been stung by SNCF’s decision to buy a stake in Italian high speed promoter NTV.

SNCF’s weak position was underlined on November 20 when the French finance ministry’s general directorate for competition and fraud prevention raided the Fret SNCF offices, investigating claims of anti-competitive practices in the allocation of rolling stock and train paths.

Writing to staff last month, SNCF President Guillaume Pepy implicitly rejected proposals for reforming the relationship between SNCF and RFF, claiming that the railway provided public services in the national interest and should therefore not be broken up or privatised. Pepy had pinned his hopes for staff reform on demonstrating that making Fret SNCF more competitive would create more jobs rather than putting them at risk, but the recession has clearly dealt a blow to his argument.

Railways large and small need to use this recession to streamline their activities, trim out inefficient practices and get costs under control, ready to grasp new opportunities as the economy recovers.

One thing is certain: the competition is not waiting. With effect from November 24, the Danish government has allowed the operation of 25 m long lorries on selected routes in that country, as part of a three-year trial. And a ‘blueprint’ on freight policy issued by the UK Department for Transport on December 16 revealed that DfT was studying the potential for increasing the length of lorries there too. With the European transport ministers failing to agree last month on revisions to the Eurovignette directive designed to reflect the external costs of road transport, there seems little prospect of the railways being offered a level playing field in the near future. The only way to stay in business will be to compete.

Governments and voters back rail spending

2008-12-01T14:48:00.000Z

Amid all the coverage of the US Presidential election on November 4, and the victory of Democratic candidate Barack Obama, there has as yet been little focus on the implications for the rail sector. When Americans turned out in record numbers, they also approved most tax increases and bond issues that appeared on local ballots to fund rail and public transport projects, despite the faltering economic conditions.

California led the way, approving four out of five rail-related votes. Biggest by far was the proposal for the state to issue $9·95bn in bonds to help fund the $30bn first phase of the proposed high speed rail network linking the Los Angeles and San Francisco regions. Proposition 1A was supported by a 52% majority. However, before construction can begin, another $10bn must be found by the federal government and a similar sum from the private sector, which may not be easy.

Voters in Los Angeles, West Sacramento, and Marin and Sonoma counties north of San Francisco all backed sales tax increases to fund metro, light rail and commuter rail projects, whilst King, Pierce and Snohomish counties overwhelmingly endorsed further expansion of Seattle’s Sound Transit, including another 55 km of light rail lines. Honolulu residents backed proposals for a $5bn steel-wheeled heavy metro, whilst voters in Rhode Island and Albuquerque approved tax increases to help fund commuter rail.

With such clear signals from voters in a country once notoriously wedded to the private car, we can only hope that rail investment will feature in the stimulation packages which many governments favour to rebuild confidence and revitalise the flagging global economy.

Meeting in Washington DC last month, representatives from the G20 leading nations largely backed the idea of using public sector spending on major infrastructure projects to help get their economies moving again. There have been calls — which we would endorse — for investment to be targeted at building a more sustainable global economy, developing ?renewable energy sources, and investing in ‘green infrastructure’ such as public transport and transit-oriented development.

Last month the Chinese government confirmed that it was stepping up road and rail spending to stimulate its national economy. On October 27 the State Council approved a total of 2 000bn yuan for railway construction over the next 12 years, as envisaged in the Ministry of Railways’ medium and long-term plan prepared in 2004. Some of this is now to be brought forward, with suggestions that the 2020 target of a 120 000 km rail network could be reached as early as 2015.

Chinese railway investment is already running at record levels, as CR races to catch up with an average 8·7% annual increase in freight tonnage between 2003 and 2007. With a total of 1 250bn yuan approved for the 2006-10 plan period, spending is expected to reach 342bn yuan in 2009 and 334bn in 2010, compared with 245bn being spent this year.

In Germany, the federal government announced on November 5 that an extra €1bn per year will be spent in 2009 and 2010 to tackle bottlenecks in the country’s road and rail networks, creating an estimated 40 000 jobs. However funding for other rail projects may be tight, with the postponement of the DB Mobility Logistics flotation reported to have left a €1bn hole in the railway’s budget (p941).

With President-Elect Obama apparently indicating that he would favour a public works approach, US lobby groups are already lining up for federal handouts. The American Short Line & Regional Railroad Association says its members have capital projects worth US$500m ready to start, and the States for Passenger Rail Coalition wants Congress to earmark $250m for inter-city rail improvements. Such schemes surely make more sense than simply propping up the ailing car manufacturers now knocking on President Bush’s door.

Rail industry suppliers continue to report substantial orderbooks, but we are still at an early stage in the recession. Global trade volumes have been hit by the lack of liquidity, and around 80% of respondents to a recent poll on railwaygazette.com believed that the economic crisis will impact on rail traffic volumes. This will hit revenues and profitability, although strategic investment and the longer term demands for modal shift suggest that future prospects remain good.

Continuing investment demands technical expertise

2008-11-22T12:21:00.002Z

Uncertainty is stalking the corridors of operators and suppliers around the world, as they try to assess the potential impact on the rail sector of the current crisis in the global financial markets. With huge sums of state funding being pledged to rescue the banks, liquidity for private-sector investment disappearing and share prices plummeting, the omens do not look good at first glance.

Perhaps the most high-profile casualty so far is the partial flotation of DB Mobility Logistics, which was postponed indefinitely on October 9. There is clearly a risk of a downturn in traffic. UK franchisee c2c, which serves London's financial districts, is reported to have seen a 7% fall in commuting during September, although SNCF President Guillaume Pepy said passenger traffic in France was holding up well. UK freight operators reported that the usual pre-Christmas surge in containers of seasonal goods from the Far East is much depressed this year.

And then there is the question of investment, with the prospect of projects being cancelled or postponed to relieve hard-pressed state budgets. Nevertheless, at the InnoTrans trade fair in September there was a widespread view that investment would continue at a high level, and this optimism has been reflected by almost everyone we have spoken to in recent weeks.

As Ireland's Transport Minister Noel Dempsey explained when confirming the retention of rail spending in the Irish budget cutbacks, railway investment today is all about 'sustainable transport for the future'.There seems to be a recognition at political level - certainly in Europe - that the current modal balance is not sustainable, and there still needs to be a substantial transfer of traffic from road and air to rail for environmental reasons. Even if the economic downturn manages to halt the seemingly-inexorable rise in demand for transport, modal shift will continue to put pressure on rail networks with limited spare capacity.

Rail investment is also seen by politicians as an economic stimulus. Arguing in favour of continued spending on modernising the London Underground and the £16bn Crossrail project, the right-wing Mayor of London Boris Johnson suggested in the Daily Telegraph on October 14 that 'we will beat this recession more speedily, and emerge in far better shape, if we make sure we put people to work in projects that boost the long-term competitiveness of the country'. He concluded 'this is one of those rare moments when the sound advice to someone in a hole - especially a hole as big as Crossrail - is that they should keep digging'.

Meanwhile, there is an emerging crisis in engineering and technical skills. Many exhibitors at InnoTrans exp-ressed concern about recruiting and training sufficient staff to meet the levels of spending projected by the UNIFE/Roland Berger market study and a similar report prepared by German consultancy SCI Verkehr.

CEO of Thales Rail Signalling Solutions Dr Alfred Veider gave one example. Advanced train control systems can boost line capacity, improve produc-tivity and eliminate unskilled tasks. But they are dependent on technical expertise. Whilst design and manufacturing can be done off-site, or subcontracted to low-cost countries, installation and maintenance requires local engineers and technicians. He pointed out that Europe's skilled workforce is ageing, and a bulge of retirements will aggravate the problem over the next few years.

Several railways have expanded their graduate recruitment and apprenticeship programmes, but operators and suppliers are competing for a declining pool of talent as young people are lured to jobs in other sectors. US railroads are working with universities to establish courses in railway-specific engineering skills, and similar programmes are emerging across Europe and Asia.

Noting that 'Crossrail plans to set up an academy for tunnelling', because it would need 28 000 workers by 2013, 'and these will be skilled, high-end, engineering jobs', Johnson claimed that 'for the first time in decades, we can tell our sons and daughters that they have a future in engineering'.

The biggest challenge, perhaps, is to overcome rail's popular image as an outdated 19th-century mode and demonstrate that it is re-inventing itself for the future. As Veider said, 'we have to tell people what we are doing, and give engineering a new image - today's railway is all about cutting-edge technology'.

Another tragedy on the tracks

2008-10-01T15:06:00.000+01:00

What are we to make of the tragic head-on collision between a Metrolink commuter rail service and a UP freight train at Chatsworth in California's San Fernando Valley on September 12, which killed 25 people and injured 135 in the worst US passenger train accident for more than 15 years?

As is all too common, the simple cause appears to be that Metrolink train 111, outbound from Los Angeles Union Station on the Ventura County line, passed a signal at danger. It forced the blades of a locked turnout to enter the occupied single line instead of waiting at Chatsworth, where the two trains regularly passed each day, accelerating to around 65 km/h before meeting the double-headed freight train on a blind curve.

Such was the force of the collision that the Metrolink loco was driven three-quarters of the way back into the leading bi-level car, causing most of the fatalities and serious injuries. The entwined vehicles toppled over, but the other two coaches remained upright.

After testing signals, brakes and other equipment, National Transportation Safety Board investigators determined that the signal had been working correctly. NTSB calculated that the trains would come into sight of each other just 4 sec before the impact; the UP crew braked, but Metrolink driver Robert Sanchez, who was among the dead, did not.

Federal regulations require drivers who are alone in the cab to report every signal aspect by radio to their conductor, but NTSB member Kitty Higgins said the last two signal calls from train 111 were missing from the data, video and audio recordings recovered from the shattered loco. It was subsequently confirmed that Sanchez had been sending a text message on his mobile phone shortly before the collision.

Southern California Regional Rail Authority had already ordered a fleet of new coaches with Crash Energy Management following the 2005 Glendale collision, which led to questions over the safety of push-pull operation (RG 8.06 p440). However, the severity of the Chatsworth crash suggests that CEM might not have had much effect.

With much more intensive passenger services, European and Japanese operators have focused heavily on preventing collisions through the use of automatic train protection or similar technology to prevent trains passing signals at danger. Questions are being asked in California why Metrolink has not adopted Positive Train Control, although it is not clear whether this is yet sufficiently developed or reliable for widespread installation. According to an SCRRA spokesman, the sprawling five-county commuter network is too complex, and much of it is shared with heavy freight trains operated by UP and BNSF.

Nevertheless, California's US senators Barbara Boxer and Dianne Feinstein introduced draft legislation to Congress on September 16 that would require the installation of PTC on all mixed freight and passenger routes, with planning to be completed a year after the bill becomes law. Lines designated as 'high risk' by the Department of Transportation would have to be equipped by the end of 2012, and all other major routes by December 31 2014.

Several variants of PTC are under development, and widespread installation of a compatible system across the USA is estimated to cost up to US$2·3bn. But as the 1999 head-on collision at Ladbroke Grove in London showed, technology such as ATP is rendered useless if not all the trains operating on a line have been equipped.

Whilst every accident is a tragedy, it provides valuable opportunities to learn. Eurotunnel staff and fire crews dealing with the September 11 fire in the Channel Tunnel (p779) were able to draw on the experience of a similar fire in 1996, evacuating everyone from the train within 8 min. And the spectre of the horrific derailment at Eschede in 1998, caused by a broken wheel, led Germany's Federal Railway Office to intervene decisively when an ICE3 axle broke under a slow-moving train at Köln in July. Fortunately neither of these high-profile incidents resulted in any fatalities.

The railway industry enjoys a deserved reputation for safety, which compares well with the estimated 1·2 million deaths on the world's roads every year, causing a knock-on loss of economic productivity valued at US$100bn or more. This reputation has been hard earned over almost 200 years, as operators, authorities and regulators have sought to learn from successive incidents with different causes. Safety management regimes are improving all the time, yet accidents still happen. When one does, it remains as important today as ever before to challenge established practices, and consider whether technical advances offer opportunities to enhance safety at an acceptable cost.

A good time to be in the rail industry

2008-09-08T14:22:00.003+01:00

September 1 saw the official publication of a new study of the world railway market, conducted for UNIFE by Roland Berger Strategy Consultants and produced by Eurailpress. Updating an earlier study, the report finds that ‘the industry has grown tremendously’ since 2006.

Driven by several large orders in the rolling stock sector, the average annual volume of the world market has increased by €19bn in two years, or a nominal growth rate of 9%. And despite worries about a global economic downturn, the consultants predict that ‘robust growth will continue for the foreseeable future’. From today’s estimated €120bn a year, the market is expected to grow by between 2·0 and 2·5% per annum to reach €154bn in 2016. Within this, the 'accessible' element will grow by between 2·5 and 3% a year from €86bn to €111bn.

According to Roland Berger, Europe, NAFTA and the Asia-Pacific region remain the dominant markets, with Asia-Pacific expected to overtake NAFTA to become the second-largest ‘accessible’ market by 2016. Eastern Europe and the CIS region will also see above-average growth.

As an example of the current optimism and buoyancy in the rail sector, we need only to look at the forthcoming InnoTrans trade fair in Berlin on September 22-26, which has attracted more than 1900 exhibitors from 41 countries. And this is not to mention the REMSA and RSI events taking place in the USA at the same time.

I have remarked before on the fact that major investors are taking a greater interest in the rail sector, notably amongst the US Class Is as highlighted by the public battles between CSX and its activist shareholder TCI. But the phenomenon is not confined to the USA, nor to the bigger railways. Private-sector investment is flowing into many other railways, notably those serving mineral resources. When I talked discussed with him about the forthcoming sale of Central East African Railway, Railroad Development Corp Chairman Henry Posner commented that ‘the value of railways is significantly greater than it was’.

It is a far cry from a few decades ago when the very existence of railways was under threat. The death at the end of July of Sir David Serpell – at one time a senior civil servant in the UK’s Department of Transport – reminds me that it is 25 yeas since he chaired the Review of Railway Finances. This suggested - in all seriousness, that the British Rail network could be slashed from 16 000 to little more than 5 000 route-km in order to achieve profitability. Serpell never understood why his report was so roundly rejected, but the economic model he used was ‘pure’ to the point of lunacy. And although Serpell is reported to have recognised personally that rail offered wider social and economic benefits, they were not considered because they were not in his terms of reference.

Today almost all governments recognise that railway investment brings wider economic and societal benefits, which David Burns explores in the September issue of Railway Gazette International. It may be wishful thinking to believe that rising oil prices and environmental concerns are having a significant impact on modal choice, where the main drivers remain cost and quality of service, but looking further ahead, it seems likely that the rationing of carbon emissions and pressure on energy sources will have a fundamental effect on transport policy at the political as well as economic level.

Just how this will play out is by no means clear, but the scenarios developed by RSSB’s groundbreaking Foresight Studies project unveiled at the World Congress on Railway Research earlier this year present some possible directions. For rail to prosper, it needs to form part of a balanced transport strategy, and as the ongoing debate about the use of very large lorries in Europe highlights the risk that attempting to optimise each mode separately risks a seriously sub-optimal overall result.

Nevetherless, with market optimism and investment both running at high levels, it is, as Posner and others have remarked to me recently, ‘a good time to be in the rail industry’.

Freight majors will dominate in Europe

2008-09-01T11:07:00.002+01:00

Making rail freight more competitive is an intrinsic element of the European Commission’s transport strategy, as most recently outlined in its official Communication on Greening Transport which was adopted on July 8. This sets out initiatives to 'make transport greener and more sustainable’, including measures to internalise external costs and changes to the Eurovignette lorry-charging rules – although ironically these do not address the crucial issues of road accidents and greenhouse gas emissions.

Boosting the market share of 'less congested’ modes like rail is seen as crucial if Europe is not to grind to a halt. According to EC figures, the demand for freight transport rose by 31·5% over the decade from 1995, and further growth is predicted. The Commission says it will 'come forward with actions that will have positive effects’ including legislative proposals on rail freight and revisions to the directive on infrastructure charging. Later this year we can expect legislation on reducing rail noise.

A belief in the efficacy of competition has underpinned European transport policy, with the presumption that this will provide better customer service. And it must be admitted that many of the former state railway monopolies do not score highly in this respect. Liberalisation saw small open access operators target specific niches, notably block trains of containers and chemicals. But three years after the EU rail freight sector was opened up to full competition, market forces are coming into play, and we are starting to see signs of consolidation.

This reflects experience in North America, and more recently Australia. Deregulation in the USA triggered a spate of mergers and spin-offs, leading to a marked polarisation between the seven big Class I railroads and a multitude of short lines providing local feeder services. In Australia, Pacific National is now effectively competing head-to-head with QR and there are few other major players in the general freight market.

Deutsche Bahn was early into the game with Railion’s takeover of NS Cargo and DSB Gods, followed by strategic expansion into the logistics and shipping industries that has made DB Schenker a global player. Having acquired EWS and Transfesa, DB is now increasing its stake in BLS Cargo to strengthen its place in the transalpine market. DB is also reported to be in talks with ÖBB to create a joint venture subsidiary known as RailSelect. Meanwhile, Rail Cargo Austria expects to receive approval from the competition authorities this month for its takeover of MÁV Cargo which RCA says would make it the third biggest rail freight operator in Europe handling almost 150 million tonnes a year.

DB’s purchase of EWS was driven by the desire to break into France through Euro Cargo Rail. SNCF is now starting to fight back, with President Guillaume Pepy putting freight at the heart of his 'Destination 2012’ vision unveiled last month. Fret SNCF is now expected to become profitable by 2010, with a 20% increase in traffic and a 15% to 20% improvement in productivity, raising its annual turnover to €10bn. Pepy wants to give Fret SNCF 'an international dimension’, with the re-purchase of logistics group Geodis and the acquisition of open access operator ITL 'just the start’.

Pepy would also like to see SNCF buying a US logistics group, and there are suggestions that he is courting Ferrovie Nord Cargo to expand in the Italian market. With Transport Minister Dominique Bussereau backing the creation of 'proximité’ operators to take on the local feeder business, Fret SNCF will be able to focus on more profitable long-haul flows.

Spain too wants a piece of the action, with RENFE’s freight business set to become a stand-alone company later this year. CD Cargo in the Czech Republic and ZSSK Cargo in Slovakia have also started merger talks, with the aim of forming a bigger and more competitive operation.

But without strong regulatory protection it is difficult to see some of the smaller national operators surviving in an increasingly cut-throat market. If US experience is anything to go by, another decade could see European rail freight dominated by a handful of multinational operators, either state-owned or perhaps strong enough to break away from their national origins.

Railway research in a changing world

2008-07-15T10:42:00.000+01:00

'Spring is a season of hope', began South Korea's transport minister Chong Jong-Hwan, inaugurating the 8th World Congress on Railway Research in Seoul on May 19. Welcoming delegates from more than 40 countries, Chong commented that the rail mode 'embraces great meaning for civilisation'. More prosaically, Korail's Acting President Park Kwang-Suk suggested that 'we are witnesses to a global change in the perception of railways - and I believe that it is research that has helped this to happen.'

With almost 300 presentations, WCRR explored a wide range of topics. Separate streams addressed infrastructure, rolling stock, system interaction, operations, and human factors, as well as 'global railway issues'.

As SNCF's Director of Research Alain Le Guellec pointed out, 'innovation is not just about designing new train concepts'. Focusing on customer service, he ran through areas such as touch-and-travel barcode ticketing, internet sales and distribution, freight telematics, scheduling, and management tools as just a few examples. But whilst innovation is all very well, 'it is up to the operators to implement the results'.

There was a strong focus on international projects bringing together infrastructure managers, operators, suppliers and academics, and evidence of more commercial developments with a clearly-targeted application. The reason was simple, suggested Joachim Meyer of Deutsche Bahn. 'Traffic is growing faster than we can build infrastructure to accommodate it, so we have to use technology to make the best use of what we have got'.

This point was picked up by Semih Kalay of TTCI, reviewing the 'huge drive' in North America on wayside monitoring and inspection to support the operation of longer, heavier and faster trains. Bringing together axlebox, bogie ride, wheel profile and a host of other detectors allows railways to track individual vehicle performance in near real time, but this poses a huge challenge in terms of 'changing data into actionable information'.

We have commented before about the challenges of climate change and energy consumption, and more than one speaker at WCRR suggested that sustainability - in its broadest sense - would be a major driver of railway research over the coming years. UIC Chief Executive Luc Aliadière looked at current demographic trends and pointed out 'a clear contradiction between globalisation ?and sustainability' - although he added that 'human philosophy is all about managing our contradictions.'

The UK's Rail Safety & Standards Board is working on some innovative 'Foresight Studies' to try and understand the implications of the changing shape of the global economy. Joanna Gilligan's prize-winning paper in the 'global rail' stream pictured four radically different scenarios based around energy resources, personal mobility and political direction, which she hopes will trigger a strategic debate about what they might mean for the rail sector over the next 50 to 100 years.

Summing up at the end of the congress, Aliadière said it was clear that rail 'has an important role to play in the future transport mix'. But he emphasised that 'continuous improvement is vital', adding that 'research and development are key to keeping the railway improving'. Sustainability 'should be a guideline for everything you do', he suggested, identifying three areas for future research:

sustain rail's environmental advantage, as its competitors are improving all the time;

face up to the increasing cost of energy, and all of the related implications;

attract investment to develop the capacity and technology to handle growing demand.

However, we feel that it is important to highlight Aliadière's warning that 'people are not choosing rail because of its environmental advantages, but because the service quality is better.' With the emerging risk of a global economic slowdown driven by soaring oil prices and turbulence in the financial markets, railways must face up to the fact that potential customers are more likely to make their transport and logistics decisions on the basis of cost and quality than on global sustainability. And here there is still much for the researchers to do.

Private railways and the public good

2008-06-16T10:03:00.000+01:00

The long-awaited decision by the German government to push ahead with a partial flotation of Deutsche Bahn, followed by confirmation that its counterpart in New Zealand has decided to buy back the railway operations sold off a decade ago brings back into sharp focus the continuing debate over railway ownership.

Experience with privatisation over the past two decades has been mixed, to say the least. European opinion remains divided, whereas Japan and Australia seem convinced of its merits. Concessions in Africa and South America seem to be barely keeping their heads above water. But traffic figures seem to suggest that countries which have embraced the competitive ethos have benefited.

In many parts of the world, railways have been intrinsically linked with economic development and political control. And it is here that we find the greatest reluctance to release them fully into the private sector. The European compromise of private or state-owned operators competing on state-funded infrastructure seems to be a step forward, but some commentators suggest that vertical separation is only a half-way house, and this model may not prove sustainable in the longer term.

There are many privately-owned railways around the world, ranging from the huge Class I freight operators in North America to dedicated heavy-haul mining railways. The majority of them are freight operators, although the three biggest JR companies run profitable passenger businesses

We have commented before that one of the sticking points seems to be a reluctance amongst politicians to accept commercial reality — that a private-sector railway needs to earn profits to fund reinvestment and generate shareholder value, or it risks going out of business. A key factor behind the renationalisation in New Zealand is the perception that the private owners failed to invest in renewal of infrastructure or rolling stock, running down the value of the assets.

The importance of shareholder value is also highlighted by the ongoing dispute at CSX. The best way to make money is to identify market opportunities and exploit them — which may lie behind recent calls for reregulation from shippers in the USA reluctant to face the prospect of rising tariffs. But profitability is essential if a railway operator is to ensure access to capital for investment, and freight rates should be naturally constrained by competition if the market is working properly.

Last year’s study by the Association of American Railroads into future growth trends suggested that $135bn would have to be invested in capacity expansion on the US trunk network over the next 30 years. AAR estimates that the private railroads can raise $70bn of this through revenue growth and find another $26bn from productivity savings. But that still leaves a shortfall of $39bn to be addressed, and in this bastion of free market policy there is growing talk of seeking public money to reflect rail’s wider societal advantages.

To some extent, this change of attitude may reflect the growing awareness of environmental sustainability, with the perceived benefits of a modal shift from road to rail further complicating the balance between public and private control. Such societal benefits need to be properly valued, in order to avoid the risk referred to by CER Chairman Aad Veenman that mobility is seen as a ‘public good’ and under-valued. In a market economy, everything has a price. And if the public and politicians want their railways to provide services which are not commercially justified, they must be willing to meet the costs — whether the operator is publicly or privately owned.

We have always adopted the view that there is a place for both public and private operators, and neither should be seen as intrinsically better than the other. But it is vital to recognise that no railway — whatever its ownership — can deliver unless the underlying political and commercial framework within which it must operate is right for its market. Getting this right will be the biggest challenge for the railway industry in the years ahead.

Three priorities on the path to a sustainable railway

2008-04-25T22:10:00.002+01:00

Environmental considerations are assuming an increasing importance in shaping global transport policies. Such is the potential impact that delegates to the UIC Highspeed 2008 congress in Amsterdam agreed by a substantial margin that environmental concerns and global warming were the biggest single issue to emerge in the rail sector over the past three years.

There are many unanswered questions about the science of climate change, but there is a growing concern about the use of fossil fuels, which account for 80% of global energy production, and pressure to develop alternative sources of renewable energy. Figures suggest that the transport sector now accounts for 30% of total energy use.

Earlier this year the European Environment Agency published Climate for a Transport Change, looking at the impact of transport across 32 countries. The report warns that 'greenhouse gas emissions in the transport sector continue to increase steadily', with rising demand for freight and passenger movement outweighing any gains from improved energy efficiency and the introduction of non-fossil fuels.

EEA believes that measures to reduce the environmental impact of transport ‘must go beyond the sector itself’ to address wider economic issues, although ‘the transport sector must raise its game’. Rail is seen as more sustainable than other modes, but whilst both freight and passenger traffic are rising in absolute terms, the report finds that rail’s market share is continuing to fall. And UIC’s Senior Adviser, Environment & Energy, Raimondo Orsini warned in Amsterdam that ‘in some areas public perception is very different from the real data’.

I believe that there are three main ways in which the rail industry needs to address environmental issues – competitiveness, innovation and campaigning.

There is certainly much that can be done right now to encourage greater use of rail. As we have remarked before, if high speed trains are to compete effectively against air there is an urgent need to improve the customer interfaces, particularly in terms of information and ticketing. To compete with the flexibility of the private car, rail operators must offer fast, reliable and cost-effective transport, plus better integration with other modes to provide convenient door-to-door service. Freight shippers also demand reliability, quality of service and competitive rates, alhough recent surveys suggest that when it comes to modal choice environmental issues are still some way down their list of priorities.

As Eurostar CEO Richard Brown told us earlier this year, the operator’s Tread Lightly campaign not only includes a pledge of carbon-neutral operation, but addresses other aspects such greater use of recyclable materials, rainwater harvesting, and cutting paper consumption by 25%. Barely six months after the campaign was launched, a survey found Eurostar was perceived as one of the top 20 environmentally-aware companies in the world.

Research is needed into emissions, energy and noise, as well as operational innovations such as freight telematics. Prof Roger Kemp addressed the energy questions in the January issue of Railway Gazette International, and recent concerns over rising prices and food shortages seem to confirm his warning that biofuel production may not be as ‘green’ as its proponents believe.

Noting that some governments are imposing environmental obligations or increased taxes on the rail sector, but perversely not on its less-sustainable competitors, UNIFE Chairman André Navarri pointed out in Amsterdam that ‘the EU needs a legal framework where rail is not penalised in taxes and aviation gets away scot-free’.

The European rail industry continues to campaign for a level playing field, driven in part by a remit for the European Commission to bring forward proposals by June for revisions to the Eurovignette Directive on road tolls for heavy lorries. Suggesting that the EU needed a policy that would ‘achieve emissions reduction without damaging the economy’, which implied ‘a modal shift to rail’, UNIFE Director General Michael Clausecker insists that ‘as an industry we do not believe in dirigiste measures’. Nevertheless, he is concerned that the proposals envisage a marginal rather than full-cost approach to meeting the external costs that road users impose on society.

With the external costs of European transport as a whole put at around 7% of GDP, it is clearly important to address policy imbalances and campaign for fairer treatment. However, there is inevitably a risk that the rail sector will be seen as lobbying for its own interests, unless it is seen to be making efforts to put its own house in order.

There is still much to do, but if the industry can get it right, as Navarri told congress delegates in Amsterdam, ‘we are only at the beginning of a railway renaissance throughout the world.’

Railteam bids to relaunch international travel

2007-08-10T22:41:00.000+01:00

A DRIVE to position rail as the natural mode for international travel across Europe came on July 2, when the Railteam alliance of high speed train operators was launched in Brussels.

A year of detailed negotiations has shaped the Railteam concept since a provisional accord was signed last year (RG 10.06 p659). With Europe's high speed network expected to grow from around 5 000 km to more than 15 000 km by 2020, the opreators believe that the time is right to present international rail travel as 'a real alternative' to air or the car in an era of growing environmental awareness. The Railteam partners predict that international travel by high speed train will reach 25 million passenger-journeys by 2020.

As well as the current four high speed operators DB AG, Eurostar UK, SNCB and SNCF, the founding partners include NS Hispeed, whose plans hinge on completion of HSL-Zuid, ÖBB of Austria, where the Railject concept is steadily taking shape, and SBB. The international joint venture passenger operators Thalys (SNCF-SNCB-DB), Lyria (SNCF-SBB) and Alleo (SNCF-DB) are associate members. Eurostar CEO Richard Brown said other high speed operators would be welcome to join the alliance if they met the membership criteria.

Asked about competition issues, DB Board Member for Passenger Services Karl-Friedrich Rausch confirmed that Railteam has kept DG COMP and DG TREN fully informed, and has 'good backing' from the European Commission. Railteam sees itself as comparable to the airline alliances such as OneWorld or Star Alliance, where members co-operate on sales and marketing but compete in terms of service delivery.

Railteam's first projects include the creation of five interchange hubs at Brussels, Köln, Lille, Frankfurt and Stuttgart with dedicated multi-lingual information centres and lounges accessible by members of any partner's frequent traveller programme. Other hubs may follow. The 'hop' facility will allow passengers who miss a connection to continue on the next available train regardless of operator, without the need to re-book or change reservations.

To be developed over the next 18 months, the Railteam Broker will provide an online ticket distribution system where travellers can 'find an attractive combination of prices, make a reservation, pay and receive their ticket in one transaction'. Intended to overcome the fragmentation of international ticketing that has developed with the introduction of market pricing, it is intended to work for any combination of origin and destination. But the inclusion of connecting services beyond the high speed network will make the Broker an order of magnitude more complex than most airline booking offices.

SNCF CEO Guillaume Pepy summed up the vision by explaining that Railteam's goal is 'to position the train as the natural choice for every European business journey under 4 h and every leisure journey under 6 h'.

EVR's private-sector interlude is over

2007-01-30T18:34:00.000Z

Baltic Rail Services announced on January 9 that the sale of its 66% holding in Eesti Raudtee had been completed, ending five years of private-sector operation of the Estonian rail network.

The move was followed by the appointment as Chief Executive of the former infrastructure director Kaido Simmermann, who immediately said his objectives included separating infrastructure management and freight train operations, as suggested in November by Minister of Economic Affairs Edgar Savisaar.

The Estonian story offers a salutary warning about the political risks involved in railway privatisation. At first everything seemed to go well, as BRS invested to drive up productivity. With just 2 000 staff, EVR carried a record 44·38 million tonnes of freight in 2006.

Former Board Member Henry Posner III, as Chairman of BRS shareholder Railroad Development Corp told Railway Gazette International that the legacy of BRS 'is reflected not only in EVR's operating results - by the numbers, EVR's safety, traffic and financial performance since privatisation - but also investment in rolling stock, infrastructure and best practices'.

Posner insists 'our deal was good. We put in the money. Under normal circumstances it would have been a sound investment. But the Estonian government let the foreign investors down.' Having bought its stake for 680m kroons in 2001, BRS had driven up the value of the company to an estimated 5bn kroons four years later.

Following an election in 2003, the new administration changed the rules on open access rights and capped the level of track charges, which reduced the railway's viability. Posner suggests that 'a limited group' of politicians was behind the move, but managed to achieve sufficient consensus to drive the changes through.

'Faced with regulation that in economic terms represented confiscation of most of the value in EVR, we made the best deal that we could under the circumstances', he explains. After an appeal to independent arbitration, agreement was reached late last year for the government to buy back the BRS stake for 2·35bn kroons (RG 12.06 p768).

Posner believes 'the alternative would have been worse for all concerned.' He insists that EVR is 'now well-positioned to maintain Estonia's role in the increasingly-competitive Russian transit business', with new traffic including Russian containers and grain from Kazakhstan.

Highlighting an improved safety culture at EVR, Posner reports 'a 75% reduction in the personal injury rate' and fewer level crossing incidents despite increased traffic and higher vehicle ownership. The cultural legacy includes establishment of the BRS Foundation 'which will continue to support railway safety, railway history and railway employees in Estonia'.

Reflecting the bitter disputes that characterised the final period of BRS ownership, the company is understood to have agreed to deposit 50m kroons as security for possible claims by the state. Savisaar said that the railway would never be privatised again.

Alternative energy

2006-06-27T13:51:00.000+01:00

An interesting article by Michael Meacher in Monday’s Daily Telegraph looked at global energy consumption, and suggested that the world has already used up half of its identified oil reserves. And whereas the first half lasted 145 years, such is the rate of consumption that we will get through the rest in just 40.

So where will that leave the railway industry? After more than 100 years of reliance on steam, the majority of rail operators today use diesel traction. Trials with alternative technologies are negligible. A prototype biogas-fuelled railcar unveiled in Sweden last year attracted interest, and US investors are looking at growing crops for biodiesel. Next month East Japan Railway plans to put into operation a three-car multiple-unit powered by fuel cells.

There has been a lot of talk about fuel cells, particularly if the rail industry can piggyback on developments in the automotive market. Fuel cells offer potential benefits in terms of reduced emissions at the point of use. But as with biodiesel there are questions about the energy needed to generate the fuel in the first place. Writing in the August 2005 issue of Railway Gazette International, traction expert Professor Roger Kemp explained that the use of fuel cells was less efficient, in terms of power losses, than conventional electrification.

Fuel is really only a means of storing and transferring energy to the point where it is needed. Given that the recent steep oil price increases are not likely to be the last, perhaps more railways need to revisit the idea of electrification. Today electric operation is mainly restricted to Europe and parts of Asia. And only in Russia and China are there big programmes of railway electrification: Chinese Railways is currently wiring around 5 000 km a year. Electric traction also offers the prospect of sustainable generation: trains in Japan and Sweden and trams in Calgary are driven by wind power, and Swiss railways have has long relied on hydroelectricity thanks to the mountainous terrain.

Since early electrification schemes were abandoned in the 1950s and 1970s, North America's freight railways have been the bastion of efficient high-power diesel operation. Pressure from the railways has seen loco builders squeezing more and more fuel efficiency out of their engine designs, with spin-off benefits for operators in other parts of the world. Common wisdom says the high fixed costs of electrification do not sit well with the long straggling transcontinental main lines.

Recent electrification proposals in the USA have been driven mainly by concerns over air pollution in urban regions such as the Los Angeles basin or the Texas chemical belt. But in operating terms short regional electrified networks are inefficient, forcing extra loco changes and requiring the wiring up of a dense network of low-density feeder routes.

In terms of global energy consumption, perhaps we should look at the other end of the spectrum – at those long straggling main lines. Over the past two decades, the Class I railroads have concentrated more and more traffic onto a few high-capacity corridors. Add in the FRA requirement for trains to be inspected every 1 600 km, and a possible strategy emerges.

Electrifying the trunk lines from the West Coast to the Midwest in ‘chunks’ of 800 or 1 600 km, corresponding to crew change or inspection division points, would minimise the impact of loco changes on utilisation. The long distances and the need to minimise the supply infrastructure suggest 50 kV – as on South Africa’s Orex iron ore line – or at least 2 x 25 kV autotransformer feeding. Overhead electrification would have to provide clearance for double-stack intermodal under the wires, but this is being pioneered in Russia and should not be insurmountable.

Turbulent times ahead

2006-06-24T18:02:00.000+01:00

Attending the World Congress on Railway Research in Montreal earlier this month, Canada's junior transport minister Brian Jean referred to a 'new Golden Age' for rail. It set me wondering what exactly does the industry face in the years ahead?

The increasing globalisation of the world economy offers huge potential for rail transport over the next few years. But harnessing this successfully will require some radical thinking from operators, investors, and politicians alike. If the rail sector is to succeed, it needs to identify its core strengths and build on them. What are the market sectors where the industry can capitalise on the inherent advantages of rail technology?

That the industry is in for a turbulent time was indicated again on Thursday, when the European Commission formally adopted a mid-term review of its 2001 White Paper on Transport Policy to 2010. This endorsed the strategy of opening up Europe's railways to greater competition and deregulation over the next few years. The Commission's hope is that new entrants and new thinking will make rail more competitive with other modes and boost Europe's global competitiveness.

So what role can research play in this? In North America the private freight railroads' focus is primarily on getting better value for money, or 'doing more with less' as former WCRR Chairman Roy Allen of TTCI put it. Engineers are pushing at the boundaries of railway technology in terms of heavier axleloads, longer rail life, better fuel efficiency and so on. In Europe, we are still at the stage of seeking common technical standards for cross-border operation, which would open up the prospect of longer and more profitable hauls.

Also needing to be addressed in the next few years will be the increasingly important area of environmental sustainability, where the industry has perhaps been resting on its laurels for too long. Work is needed on issues such as noise, exhaust emissions, energy consumption and alternative fuels, and even such apparently esoteric topics as drainage and watercourse pollution. If rail can get its act together, it offers the prospect of reduced environmental impact and a reduced reliance on cars, lorries or aircraft.

All of these topics - and more - will still be regularly explored in the news and feature pages of Railway Gazette International, but over the coming months I hope this forum will allow people to discuss some of the issues in a more relaxed manner.