www.neurope.euA NEW EUROPE POLICY REPORTN

ERAILLIBERALISATION

Monika Heiming, SecretaryGeneral of the European RailFreight Association, outlineswhat needs to be achieved in therecast of the 1st RailwayPackage. .Page II

The European Parliament'srapporteur on the recast, DeboraSerracchiani, discusses theimportance of rail liberalisationfor European market. .Page II

DG Transport answersquestions on its continuing rolein the opening up of the railfreight market.

.Page III

Jeroen le Jeune, Chief Executiveof Crossrail, says that rail freighttransport needs to be given abetter chance if it is to achieve abright future.

.Page VII

The Managing Director of ERSRailways, Frank Schuhholz, saysthat the Railway Package needs tobe more ambitious if it is to achievea level-playing field. .Page VII

MEP Dirk Sterckx laments thelack of political will in Europewhich is delayingimplementation of fullliberalisation. .Page VIII

Europorte's Director of StrategyFrancois Coart explains whyderegulation in France has so faronly been a part success.

.Page III

Freightline's BusinessDevelopment Director, KonstantinSkorik looks at how liberalisationcan overcome current stagnation inthe market

.Page V

Brian Simpson, the chair of theEuropean Parliament's TransportCommittee, takes the memberstates to task over their failure toimplement the law. .Page IV

MEP Michael Cramer looks atthe economic, environmental andsocial benefits of railliberalisation.

.Page VI

Page II| New Europe NEWEUROPE

RAIL LIBERALISATIONNovember 14-20, 2010

Ambitions … ERFA, the European Rail Freight Asso-ciation, was set up in July 2002 as a direct“spin-off ” of the liberalisation of the EUrail freight market by the EC. The mem-bers of ERFA at that time were a few railfreight operators in just 6 countries.Today, the association counts 31 membersin 16 countries. The common objective ofall of them is the same since 2002,though: they want to seize the market op-portunities that the EC intended to create

with the 1st Railway Package in 2001. Inconcrete terms, this means a marketwhich is fully open, which is economicallyattractive, which offers optimal operatingconditions, which is interoperable andwhich has the same safety standards. Inbrief, a competitive, attractive and opensingle EU market for rail freight.

Problems … In 2010, this objective has still not beenreached. In fact, the market for rail freightservices is not functioning due to the in-correct or incomplete transposition ofCommunity law by Member States. Thisis also underlined in a report to Jose Bar-roso in May this year, written by MarioMonti, the former Competition Commis-sioner. In June, the EC referred no less than 13Member States to the EU's Court of Jus-tice for not having implemented correctlycore elements of the 1st Railway Package:insufficient independence of the rail in-frastructure manager, inadequate rail ac-cess charges and insufficient regulatorybodies. On the market, these failures have a di-rect effect on the business of the membersof ERFA. Since 2007, the number of

complaints for market obstruction, mar-ket distortions and market discrimina-tions has increased 6 times. Worse,though, these problems affect not only themembers of ERFA, but the entire supplychain: state railways operating in foreigncountries, customers, shippers, forwarders,wagon keepers, terminal operators, infra-structure managers. Systematic problems are experienced inItaly, Poland and Belgium whilst specificproblems are reported from Austria,France, Germany, Lithuania, the Nether-lands, Sweden and others. All are obsta-cles to enter a market or to operate anddevelop on a market on an equal levelplaying field, such as: • Infrastructure managers are discrimi-nating against new entrants in terms ofslots, resources, information and serviceprovision;• Terminals are closed without the con-sultation of any market actor; • Requests to use certain infrastructuresections are not answered or prohibited;• Energy supply conditions are not trans-parent and not liberalised;• Shunting services are priced excessivelyby the incumbent monopoly supplier;• Independent service providers are pre-

vented from entering certain market sec-tions; • Safety certifications are awarded forlimited infrastructure sections only;• Network usage conditions require hugeinvestments by new entrants in terms ofreserve rolling stock;• Access to terminals is refused or pricedin a prohibitive way; • Infrastructure sections are closed or dis-mantled at short or without prior notice; • Complaints of competitors are nottreated by regulatory authorities; • The return of wagons to workshops ispriced excessively;• State railways are protected againstbankruptcy by law;• Discriminatory and non-transparent ac-cess conditions are imposed on workshopsand terminals for their connection to thenational infrastructure; • Subsidies are given to the national staterailway only;• Incumbents act de facto as legislator,regulator and operator;• Freight facilities and services are trans-ferred to the national incumbent. Unfortunately, this list is not exhaustive.The measures above have already trig-gered a shift from rail back to road.

Rail freight liberalisation – Ambitions, Problems, Solutions

By Monika Heiming

INTERVIEW| DEBORA SERRACCHIANI MEP

An efficient rail market will deliverhigh quality transport services

How important is rail freight transport in general forEurope ? It’s extremely important because in the last ten years, the airtraffic has made a big progress with free liberalization; thefreight transport is liberalized while the rail transport hasmade no progress on this. The main aim is that the rail trans-port freight will be competitive in Europe thanks to the inter-operability and the revision of infrastructure charges.

What do you think about further liberalisation and morecompetition in rail freight ? Is it necessary ? Do you believe incompetition and liberalisation ?Liberalization exists already but it did not give any results.There is a lack of interoperability and the infrastructure con-nections to ports, where they exist, are not well developed.There are also a lots of technical and administrative barriers toentry in the EU rail market.

How do you judge the situation on the Italian rail freightmarket ? For example, the Italian incumbent Trenitalia ap-pears to be progressively abandoning the rail freight marketand more goods are shifted from rail to road, including dan-gerous goods.Rail freight market is not performing at all but I believe thatliberalization in Italian freight market will be important forTrenitalia in order to develop the potential that it has in thissector.

Looking at the situation in Italy: critics say that terminals andinfrastructure sections are being closed, employment is re-duced in workshops and that the Italian rail freight market isjeopardised by the monopoly strategy of Trenitalia. How ac-curate is this?Yes it is true that the situation in Italy is critical: there is a lackof infrastructure investment and interoperability and the con-nections to the ports are poor. That is not Trenitalia’s fault, butin the last ten years no government has invested in infrastruc-ture.

If the current trend of “TI policy only” continues in Italy, isthere a possibility the rail freight market is going to collapse ?No, I don’t think so because Italy has still an important inter-nal market that guarantees it will survive; the point is that wedo not want just to survive and, to do so, we need to do more.

How important is, do you think, private investment in therail freight sector ? It is extremely important as it can contribute to better developthis sector. One of the weaknesses of the rail sector is the lowlevel of public and private investment which cause a very lowquality in infrastructure and services.

What is you opinion on on independent and private opera-tors in the rail freight market ?

I am totally agreed with the Commission, as I do believe thatthere should be independent and private operators in order toguarantee a major competitiveness in rail sector.

What are the most important elements for you in the Recast? For example, investments in the infrastructure, more regu-lation or more independence ? I think that is very important to increase public and privateinvestment, as I think it is necessary to delete barriers to mar-ket access. I believe it is quite important to have also an inde-pendent regulatory body with specific competencies as anadequate supervision of the market is necessary to preventconflicts of interest and ensure fair competition. But also Isupport the unbundling between the infrastructure managerand the services operators.

How important is the Recast for the rail freight sector in gen-eral ? It is extremely important as it contributes adequately to citi-zen’s mobility and economic growth. A more efficient railmarket can deliver high quality, reliable, safe and secure trans-port services. It can also contribute to new forms of mobilitythat are environmentally friendly.

DEBORA SERRACCHIANI IS THE EUROPEANPARLIAMENT’S RAPPORTEUR ON THE RAILRECAST

RAIL LIBERALISATION

New Europe | Page IIINEW EUROPE

November 14-20, 2010

French deregulation showspositive and negative trends

Deregulation is France a paradox. In less than 5 years themarket shares of new entrants is over 15%. It took 15years to achieve the same results in UK, and over 20 yearsto achieve 20 % in Germany. Despite those positive results, the situation seems disap-pointing as regards volumes, which have been stagnatingsince the opening of the market. They dropped by over 20% in the last 10 years.

The reasons of this lack of performance are numerous:

• Lack of investment on the conventional network withbottlenecks. • A priority given to passenger-oriented investments. • An inefficient system of infrastructure management,delegating the operation of the system to the historic op-

erator, which triggers unavoidable conflicts even if bothparties are trying to make it neutral. • A poor path allocation system. • A complex safety certificate system. • Sophisticated homologation process for the new loco-motives triggering shortage and high prices. • Some operators having a predatory pricing policy, butneglecting quality.

But the overall picture is far from negative• RFF, the infrastructure manager, is undertaking a hugerenewal process of the conventional network which willbenefit all operators. • The government is clearly supporting modal transfer tothe rail network. • Shortliners initiatives are developed all around France.

• An ambitious, very high speed rail freight schema, Euro-carex is being implemented from Roissy CDG airport toLondon, Amsterdam, Liège, Lyon and Germany. The recast of the first railway package offers a unique pos-sibility to continue the opening of the market.• Giving the necessary tools and means to the infrastructuremanagers to ensure open access, empowerment, servicequality and neutrality. • By making some open access notions on essential facilitiesmore clear. • By guaranteeing clear rules and legal background in easyto understand manner. • By empowering national regulators to ensure the enforce-ment of national and European regulations at all levels.

Franois Coart, Director of Strategy, Europorte

By Francois Coart

1) How important is rail freight transportin general, and how important is railfreight liberalisation in terms of morevolumes and better competitiveness andmodal shift?While the share of railways in the freighttransport market fell constantly in previ-ous decades, the situation has stabilisedsince the early 2000s when the first resultof the EU's rail freight liberalisation be-came visible : in EU 27 countries, the railshare, in tonne-kilometres, in the freightsector fell from 12.6 % in 1995 to 10.6 %in 2002, before increasing to 10.8 % in2008.After several years of a constant decreasewhich was particularly marked in new

Member States, rail freight transport hasgrown at a not insignificant rate between2000 and 2007. This is particularly thecase in certain countries where non in-cumbent rail undertakings have acquiredsignificant market shares. Example:freight performance in the UK 13,3MTK in 1995, 24,8 in 2008.

2) How necessary is further liberalisationand more competition in rail freight ?The above mentioned examples showthat rail freight will only be able to fulfilits role as an environment-friendly trans-port mode if it becomes competitive inrelation to other modes, in particular if itbecomes customer friendly and if is ableto offer good and reliable services at com-petitive prices. The development in pre-vious decades has shown that this is notpossible in a monopolistic environment,but only where railway companies aresubject to intra-modal competition.

3) How important are private invest-ments in the rail freight sector ?If competition is to be developed, it is ofcourse not enough to have the (ex)state-monopolist, but private companies mustalso have a possibility to enter the mar-ket and grow.

4) How important is the unbundlingissue and the independence of operators ?The independence of the infrastructure

manager for decisions on track access andaccess charging is essential in order tocreate a level playing field and to guaran-tee that the incumbent operator whichalso controls the infrastructure will notdiscriminate against new entrant opera-tors in order to protect the business in-terests of its own transport operators. Animportant aspect in this regard is the sep-aration of accounts between infrastruc-ture and transport operation, in order toexclude that public funds spent on infra-structure are used to cross-subsidisetransport activities of an integrated in-cumbent.

5) With 13 ongoing infringement pro-ceedings against Member States, how isthe effective implementation and appli-cation of EU legislation best maintained- at what point does the Commission feelit needs to intervene?

The Commission is in close contact withMember States to discuss on infringe-ment issues in order to solve these issuesbilaterally. Where the Commission hascome to the conclusion that bilateral dis-cussion will not bring about a solution, orin cases in which there is a disagreementwith the relevant Member State on theinterpretation of the railway directives,the Commission has no choice but torefer these issues to the Court of Justicefor clarification.

Questions for the European Commission

Transport Commissioner Siim Kallas: The Com-mission is currently pursuing 13 member statesthrough the courts over failure to liberalise therail network

Solutions … The problems outlined above, and themeasures taken on EU level are evidencethat the national rail freight markets arenot functioning correctly. The Recast musttackle all these issues by reducing the anti-discriminatory potential to the strictestminimum possible, whilst paving the wayfor access for all actors to each sector of themarket: • To ensure fair competition, the infra-structure manager must be fully neutralfrom all rail operators and therefore sepa-rated from operations; • To ensure liberalisation of all market seg-ments, rail-related services must be opento all undertakings at clear conditions;• To ensure rail freight perspectives, infra-structure investments must follow long-term strategies which reflect the needs ofall market actors;• To ensure rail freight market growth,public assets (terminals, workshops) mustbe offered for sale or rent to the market ifthey are not used any more;• To ensure rail freight competitiveness, in-frastructure access and usage conditionsmust be non-discriminatory and regu-lated;• To ensure a better rail freight marketfunctioning, the national rail regulatormust be independent and more compe-tent. A strong Recast can provide the EU witha strong, competitive, innovative and at-tractive rail freight market. That’s why itneeds a strong support of the EU: theCommission, the Council and, above all,the Parliament!

Monika Heiming, Secretary General,ERFA

Page IV| New Europe NEWEUROPE

RAIL LIBERALISATIONNovember 14-20, 2010

In a recent transport committee meeting,

you compared the current set-up to

“Thomas the Tank Engine and the Trou-

blesome Trucks”. Can you expand upon

this?

In railway terms, what we have said is

true: the member states are the ones who

are causing the problems, because they

haven’t implemented the first railway

package, so it's member states failing to

implement something that they've already

signed up to. One of the reasons for that is

that there has been certain pressures in

some member states from the national

railway operator, but at the end of the day,

the member states have signed up, so that

is why I call them the “Troublesome

Trucks” because that's exactly what they

are!

This first railway package is not some-

thing we passed last week and expect

them to implement tomorrow. This has

been going on for a number of years, and,

frankly the member states have not put

into action what they agreed to do in the

first railway package, and that is why the

Parliament is cheesed off.

If the Parliament is “cheesed off ”, then

what's the Commission's position?

I think the Commission is as frustrated as

we are. The Commission have a role to

uphold the treaties and enforce Union law,

and in this instance they are trying to do

that, which is why they have taken out

court proceedings against many member

states; and incidentally, once those pro-

ceedings were taken out, some member

states all of a sudden started to take ac-

tion, so I do think they are as frustrated as

we are on this matter.

The first railway package was the first step

in rail liberalisation, and in opening up the

railway market and access to infrastruc-

ture, but it's a bit like running the Grand

National: there's thirty fences to jump and

we haven't jumped the first one yet!

There are thirteen court proceedings at

the moment, the Commission says possi-

bly another nine. Out of the twenty-five

rail networks in the EU, that's still a huge

hurdle to jump.

What we want to see is progress being

made. The frustration from Parliament is

that some member states have done ab-

solutely nothing in regards to implement-

ing the first railway package. Some

member states hide behind the issue of no

money or no finance or whatever, but the

fault with this is the member states. They

have obligations, they have responsibili-

ties and we are calling them to account.

Which is Parliament's role.

What is a typical argument that a mem-

ber state might put up?

There argument is that if they open up,

then they will damage their own national

railway operators, particularly on freight.

They also say that they think by splitting

their infrastructure it causes a disjointed

railway. The arguments are spurious. They

hold no water, because all these guys

signed up to the package, so therefore,

whatever their excuses are, I don't give a

damn – they signed up! They should abide

by the law, and some of them aren't abid-

ing by the law.

How can you convince people that this

process will not lead to some of the old

problems of privatisation that they had in

the UK, for example?

Let's distinguish between liberalisation

and privatisation. Liberalisation does not

necessarily mean privatisation; privatisa-

tion was the route that the British went

down, liberalisation is a completely differ-

ent route, the route the Swedes went

down.

We're not advocating privatisation, or na-

tionalisation. What we are advocating is

that the rail market has to be liberalised,

and it has to be open so that people can

come in and compete. It may be that it is

the German national railway that is com-

peting with the French national railway

that is competing with the Italian national

railway; that's not private, that's national

railways competing. Half the problem

with this is that certain national railways

are not happy at having competition on

their networks. That's the top and bottom

of it: they want to keep their cosy arrange-

ment in place.

You look at the UK, and yes, it's had its

ups and downs, but one thing you can't

deny is that having had many years of

having no new rolling stock, privatisation

did bring about new investment in rolling

stock. Now, it's not enough, but if we'd

have been waiting for British Rail to build

a new high-speed train, it wouldn't have

happened, if we are to be brutally honest.

Let's look at modal shifts in rail freight,

the connecting of rail to ports. The truck-

ing industry argues that it is are more

flexible than rail. Have the trucks got it

right?

Yes. A truck is inter-modal. It can go

across borders. Other modes of transport,

like maritime, haven't got it right, because

they are always faced with national bu-

reaucracy over customs and goodness

knows what, railways haven't got it right

because they can't deliver, because they

have different systems. The truck has an

easy ride as far as freight is concerned.

There is no competition to it; it's the only,

truly inter-modal form of transport. It's

environmentally a bit of a disaster, but in

transport terms, it works.

Are the Parliament pushing that environ-

mental aspect?

Very strongly. For us, the major issue is a

bout sustainability – economic, social and

environmental. They are the three key is-

sues in any transport policy. And clearly,

if you have a transport policy that forces

everything to go by road, then it falls

down on the key area on environmental

sustainability. But the question I pose is,

why does it go by road? It goes by road be-

cause the railway can't deliver.

How important, then, is private invest-

ment in all this?

Private investment is crucial. If you look

at where we are with public spending at

the moment, it is going to be very limited,

and restrictive. So, private investment is

crucial. But you ain't going to get private

investment on a railway network that

can't give you sure-fire delivery dates or

when it can run the trains and so forth.

There has to be a return in it for private

investors, and there has to be a surety of

service, and this is where railways, and rail

freight fall down. They need to know that

there is political stability, but they need to

know also that the railways can deliver;

the surety of delivering the service.

If you look at America, it is the reverse of

Europe. There they have 90% rail freight,

10% passengers. In America, the passen-

ger train has to give way to the freight

train, in Europe it's the other way round,

so the freight operators are trying to get

slots after the passengers have been given

them. And that is the dilemma we face.

We have to get the railways to move for-

wards, to move into the 21st century, in

the way that they work with each other

and the way that we work towards mak-

ing the railway fully interoperable. If we

fail to do this, then I believe the future if

rail freight in particular is bleak.

Brian Simpson is chair of the European

Parliament's Transport Committee

Brian Simpson: Member states are like"troublesome trucks"

INTERVIEW| BRIAN SIMPSON MEP

“Member states should abide by the law”

This first railway package is not some-

thing we passed last week and expect

them to implement tomorrow. This has been

going on for a number of years, and, frankly

the member states have not put into action

what they agreed to do

RAIL LIBERALISATION

New Europe | Page VNEW EUROPE

November 14-20, 2010

Rail freight stagnation at its

best – despite a huge potential!

Freightliner Group is the 2nd largest railfreight operator in the UK, operatingsince 1965. Following the liberalisation ofthe UK rail freight market, the companyincreased its annual turnover from £95min 1996 to over £250m in 2009 turningfrom loss-making to healthy profitability.During this period, we created some 1000additional jobs, increased the daily volumeof intermodal containers from 1.850 to2.800 and entered the UK bulk freightmarket where we currently operate some1.000 bulk trains per week. This growthwas achieved with investments in excessof £300 million in new locomotives, wag-ons and terminal equipment.

In 2007 Freightliner started its Polishoperation that today employs 120 staffand operates some 100 bulk trains perweek. Freightliner Poland has grown into

one of the largest independent freightrailway undertaking in Poland.

Whilst in the UK, the rail freight sectorhas benefited from liberalisation of therail freight market with a fully independ-ent infrastructure manager, pro-active reg-ulatory body, fair infrastructure accesscharges and transparent consultation pro-cedures, other countries on the continentare still protecting their old-fashionedrailways and not moving fast enough to-wards opening of their markets.

Such policies in Poland resulted in stag-nation of the rail freight over the pastdecade, while road freight volumes havemore than doubled. Poland started liber-alising its railways in 2002 opening mar-ket to competition. It led to modestrevival of rail freight volumes during2004-2007. During these years, the Pol-ish incumbent PKP Cargo failed to in-crease its productivity and to becomemore competitive and lost 30% marketshare to its competitors.

To ensure PKP Cargo’s survival, themarket access barriers to competitors in-vesting in the Polish market have beensteadily increasing since 2007. Whilst thePolish regulatory authority UTK at-tempted to prevent the homologation fornew locomotives, PKP Cargo obstructedaccess to critical infrastructure and sidingsto the competitors so that they cannotenter certain market segments. The infra-structure manager PLK, owned by PKP

Group, has excessively increased infra-structure access charges (e.g. 300% in-crease for intermodal trains introduced inDecember 2009), as the network qualityand performance remained inadequateand the trains continued to be delayed orsuffered from congestion. The tranship-ment terminals on the Eastern Polish bor-ders remained under PKP Cargo effectivecontrol as it charges 5-6 EUR per tonneto competitors for the last mile servicesabusing its monopoly position. Thesepractices do not effectively eliminate com-petition, but make rail freight uncompet-itive compared to road.

Furthermore, PKP Cargo is not onlyprotected from bankruptcy as per Polishlegislation, but also it squeezes out com-petitors by applying dumping prices de-spite mounting losses (PKP Cargorecorded a loss of 120 Euro million in2009). Eventually, the increasing debt ofPKP Cargo will have to be paid by thePolish taxpayer.

The liberalisation of rail freight marketshas proven to be beneficial for rail freight.With liberalisation, customers have al-most instantly turned to new, innovativeoffers on rail instead of road. Whilst inthe UK rail is becoming a preferred modeof transport even for time-sensitive goodsand short distances, rail freight in coun-tries like Poland is stagnating or decreas-ing because of the national incumbent

powers to eliminate competition and pro-tect its home market. This neither leads toinnovation, customer-focus or higher ef-ficiency nor encourages much needed in-vestments in locomotives and rollingstock. Nor it gives any confidence to thepublic authorities that taxpayer’s money inrail freight is well spent.

Therefore, rail freight liberalisation is amust for the revitalisation of this mode oftransport. The liberalisation requires wellmanaged open access rail infrastructureseparated from its largest customer - thenational incumbent. The infrastructuremanager should be equipped with sidingsand last mile lines and encourage devel-opment of open access commercial termi-nals. Governments have an opportunity toinvest into rail infrastructure and magnifyeffect of these investments by granting railregulators a stronger role in driving in-creased infrastructure productivity and ef-ficiency, ensuring open access andcontrolling pricing of the infrastructuremanager.

These measures would attract privateinvestments, increase rail competitivenessagainst road and lead to a strong growthof rail freight across Europe, not just inthe UK!

Konstantin Skorik, European BusinessDevelopment Director, Freightliner.

By Konstantin Skorik

"With liberalisation, customers have almost instantly turned to new, innovative offers on rail instead of road"

Page VI| New Europe NEWEUROPE

RAIL LIBERALISATIONNovember 14-20, 2010

In your view, how important is unbundling,

and maintaining the independence of the rail

companies from the regulators?

First of all I would ask, how important is com-

petition? Because we have an opening of the

sky, we have an opening of the roads for trucks,

and in these sectors there is a big increase in the

volume of use. You can feel that it is good for

Europe, but bad for the environment. The rail-

ways, the environmentally-friendly mode of

transport, there we have seen a nationalist area;

and therefore it is necessary to have a European

situation where the access must be for the

whole network across the whole European

Union, and that was the First Railway Package.

For freight transport it was from 1 January

2007, and because the date was fixed very early,

some countries in Europe have said they will

open our networks before this date. There you

can see the following consequences: the UK

has an increase in freight transport by opening

the network for other railway companies; an in-

crease of 60%, the Netherlands, 42%, Poland

30%, Germany 25%, and France in the same

period has a decrease of 28%. So now you can

say that this freight transport is now on the

road, and the jobs are gone. And I say it also to

the unions that it was crazy to fight against the

access to the network because because of the

loss of jobs and because of the climate.

In the First Railway Package it was clear that

there must be a difference between the network,

the infrastructure, and the railway companies,

and we as Greens say that the infrastructure

must remain in public ownership after the dis-

aster in Great Britain, or the disaster in New

Zealand, or Estonia, but we want competition

on the network. Therefore it is crucial that the

organisation is independent. In Germany, we

have different railway companies, but under the

head of the German railway authority. So there

is a disadvantage and a discrimination for a lot

of other railway undertakings.

It is right that the Commission has made a re-

port on it, that they have gone to court, because

the Commission has to look after the Treaties,

and the Treaty is clear: there must be a separa-

tion. In 13 countries, that is not the case.

Lots of MEPs have spoken about Modal

shifts. How will the Railway Package facilitate

this?

If you have a truck it is easy for you to take the

truck from Tallinn to Lisbon. In the railways it

is more complicated, because we have more

than 20 different signalling systems, we have 6

power systems, and we have 4 different gauges.

And so, we are looking for a European-wide

signalling system, which is called ERTMS, and

that should be installed in 6 corridors for

freight.

If we have only one system, then the locomo-

tives will be cheaper, because it is different if you

produce 50 locomotives for Germany, and an-

other 50 for Great Britain, and another 50 for

France. But if you can produce the same type,

150 locomotives for all three countries, it is

cheaper, a question of scales.

The lawmaking process goes back about 10

years, and it might seem to an outsider that it

hasn’t gone as smoothly as it could. How effec-

tive do you you think the implementation of

this has been?

Those countries that are in favour of competi-

tion, they have has big successes, and the oth-

ers not so; but there are hurdles. For example, in

each European country they could only run

their locomotives there if the security system

was OK for that particular country; and that is

the hurdle which is used, not for reasons for

reasons of security, but for reasons of providing

obstacles for competitiveness.

Therefore, we have a Directive, on cross-bor-

der acceptance, that each locomotive in the Eu-

ropean Union, which is accepted in one

member state, is accepted in the whole Union

as long as a country doesn’t say ‘that is not good

enough for us’. If they do, then, they have to say

why it is not good enough. Before, they’d say

no, and other countries would just keep asking

‘why, why, why?’ So, now we have a change, that

those countries have to say why it is not possi-

ble. That is the law, but in reality there are still

big, big, big obstacles.

The European railway agency must have more

power, the agencies in the member states must

give up some sovereign rights to the European

one. They have only to look on the German sit-

uation, or the French situation. All the 25 rail-

way agencies have the same power. That is

ridiculous. There must be an institution above

it, and that must look at security issues, for ex-

ample, and then the member states can look at

the situation in their own country.

How important has the liberalisation of legal

and technical issues been in the evolution of

European railways?

We now have a European licence for locomo-

tive drivers, there was also the passenger rights

in the Third Railway Package, and there is an

opening of the international long distance

trains, which was from 1 January 2010. There-

fore the train will go from Frankfurt via

Cologne and Brussels to London, or to Paris

and so on. Before, it was only if the two agreed,

but now you have a right as a company to go

there.

Also, for tunnels, we need a security law which

is for all Europe, not just for special tunnels, like

the channel tunnel, because then companies say

‘our company has built the trains for this tun-

nel, and the others cannot go there’. And that is

ridiculous.

Where do the Greens stand on private invest-

ment in the rail sector, which in the worst case

can lead to a monopoly?

We are against monopolies in state ownership

or in private ownership. We, as Greens, want to

have competition. We have private companies,

and they have private infrastructure, but the

companies won’t get sate money, or taxpayers’

money, for their infrastructure, and that we

want to change, because it is a discrimination

of private companies by state-owned compa-

nies; they have to pay more for using the system

than the others, because they are not backed by

the state. But what does competition mean?

The German railways wanted to cut a line in

Germany from Kaarst via Düsseldorf main sta-

tion to Mettmann because on one day there are

maybe only 500 passengers. Then the local au-

thorities didn’t want it, and they took away the

line, and called for tender.

The new investor changed the stations away

from the green grass to the places where peo-

ple are living, and they made a combination

with the timetables of buses in the region and

the other trains from the main station in Düs-

seldorf, and after 10 years they’ve had 20,000

passengers. If you had a state monopoly, all the

20,000 passengers would now be on the road,

where today they are using rail. Therefore: no

monopoly. They can decide they don’t like it,

but they should not decide, we don’t like it but

another organisation is not allowed to do it.

Michael Cramer is a Member of the European

Parliament's Transport Committee

Moving freight by rail can be difficult compared to roads

Michael Cramer: Environmentally-sound trans-

port system is being undermined

INTERVIEW|MICHAEL CRAMER MEP

Competition leads to economic,environmental and social success

It is right that the Commission hasgone to court, because the Commis-sion has to look after the Treaties,

and the Treaty is clear: there must be a sepa-ration.In 13 countries, that is not the case

RAIL LIBERALISATION

New Europe | Page VIINEWEUROPE

November 14-20, 2010

Level playing field essentialfor future of freight

ERS Railways was established as privaterailway company back in 1994.Today itis a company which is a 100% owned bythe A.P. Moller-Maersk group. Sincethe very first beginning ERS manage-ment as well as its shareholders wereconvinced that the upcoming liberalisa-tion process within Europe would facil-itate faster, more efficient and thusmore competitive, intermodal hinterland

connections. Today ERS Railways BV isthe biggest 100% privately owned rail-way undertaking in Europe active in in-termodal rail transportation.How does the management of ERSRailways see the future of the liberaliza-tion process within the European rail-way industry? A lot of positive initiativeshave been launched during the pastyears. All were meant to make the rail-way based intermodal supply chainsmore competitive and therefore attrac-tive for customers like carriers, for-warders, logistics companies and last butnot least manufacturers. When looking at today's European rail-way industry it becomes clear that manyinitiatives regarding infrastructure orharmonized operating and IT systemshave not materialized yet and are even atrisk not to be implemented partly or atall due to a multitude of political and in-

dustrial interests as well as budgetaryconstraints of many member countries.In a nutshell: today's European railwaysystems are still very fragmented andcomplicated to operate on. In case railway based intermodal supplychains are expected to cope with a sub-stantial higher amount of cargo infra-structure, systems and processes need tobe harmonized and simplified in a waythat railway undertakings as well as op-erators will be enabled to assume theirroles as important pillars of sustainableand safe pan-European transport net-works. This also requires that national rail au-thorities, infrastructure managers, en-ergy providers and state incumbentsunderstand the need to accept a multi-tude of railway undertakings (and oper-ators) rather than accepting orsupporting reverse developments where

a few big players dominate this industrylimiting the positive effects of competi-tion like increased efficiencies, compet-itive pricing models, innovations etc. Therefore, the Recast of the 1st RailwayPackage must be more ambitious toachieve and maintain a level playingfield between incumbents and privateoperators. Some measures are absolutelyessential, e.g. clearer infrastructureprices, more independence of service andfacility providers and stronger regulators. However, these measures must be im-plemented in a controlled, harmonisedand interoperable way in the EU. So far,this was not the case, leaving many "no-go areas" for independent and privaterailway operators on the European rail-way map.

Frank Schuhholz, Managing DirectorERS Railways

By Frank Schuhholz

The private rail freight operator Crossrail

was set up in 2002, as one of the very first

operators in Belgium following the adop-

tion of the First Railway Package to lib-

eralise rail freight in the EU. Crossrail

started with a handful of employees.

Today, Crossrail is running trains with

own resources in five countries: Belgium,

The Netherlands, Germany, Italy and

Switzerland. The most liberalized coun-

try of those five is Switzerland, a country

outside the EU.

After 8 years of operational experience

on the market as a private rail freight op-

erator, it is evident that liberalisation in

rail freight has saved the market from a

further downturn. Clients have gone back

to rail freight, new products been devel-

oped and jobs created.

However, our company would like to

develop more destinations and products

but is not able to! We can run trains from

point A to point B, crossing several bor-

ders, with high quality and being prof-

itable. However, we cannot enter certain

terminals, we cannot have access to cer-

tain ports, we cannot use certain services.

Conclusion: we are excluded from ap-

proximately 50% of the market. Even

worse, the facilities and services we want

to use and pay for are mostly subsidised

by public money and they are sometimes

rather destroyed than give others the

chance to use them.

All this does not do any good to rail

freight, but rather the contrary: customers

and industry do not fully trust rail freight

and its potential for growth. But without

rail freight, the EU cannot solve its prob-

lems, like congestion, CO2 reductions and

safer transportation.

More than ever, the EU needs a highly

competitive internal market to be able to

compete with other markets, such as Asia

or India. Such an internal market needs

highly efficient, innovative, reliable rail

freight services to transport goods. And

this transport of goods must be as green

as possible. Switzerland shows that in-

vesting in rail together with a liberalized

policy does not harm the economic posi-

tion of the country, but instead made it

number one! It also does not harm their

ecological system.Therefore, liberalization

must go on, but we only have achieved

50%.

This is even more astonishing as virtu-

ally all other sectors have been liberalised.

People can choose amongst different tele-

com operators or airlines or shipping

lines. This is not the case in railways.

Therefore, the European Parliament, the

Council of Ministers and the European

Commission must ensure an equal level

playing field for all without any discrimi-

nation.

Thus, the Recast of the 1st Railway

Package is highly important for our com-

pany and its future development. We ex-

pect, and so do our customers, that

infrastructure will be fully neutral and

offer all services necessary for all opera-

tors. This can only be achieved by making

infrastructures fully independent from all

operators, which is not the case today.

Otherwise, it is the same as if a trucking

company builds and owns a majority part

of the roads in a certain country with pub-

lic money, collects usage fees from com-

petitors to use those subsidized roads and

use the profits coming out of this activity

to buy other competitors. Today, this is

common business in the railway world!

So, to liberalise the rail freight market,

the European Parliament must pave the

way for the remaining 50 %, which is

made up of single wagon traffic . Single

wagon traffic puts goods on rail than road

right from the start or keeps it there much

longer. To do so, we need free access to

terminals, railports, shunting yards &

services, etc.

In some countries, though, it is almost

too late. For example in Italy, the national

state railway is closing down single wagon

services. Since then, customers are turn-

ing away from rail and put their goods on

lorries again. This applies also to danger-

ous goods, which are transported on road

and in tunnels.

So, if Europe wants to create growth,

jobs, innovation, CO2 reductions, it must

opt for a much stronger rail freight liber-

alisation. Europe has no choice other than

to go forward.

Jeroen Le Jeune, Chief Executive Officer

Crossrail

Rail Freight has a great future

…if it is given the chance!

By Jeroen Le Jeune

Page VIII| New Europe NEW EUROPE

RAIL LIBERALISATIONNovember 14-20, 2010

INTERVIEW| DIRK STERCKX MEP

Lack of political will is holding things up

There have been problems with the rail

network in Belgium over the ability to

liberalise the rail networks. What are

these problems?

There has never been a willingness, not in

the railway companies, and not in the

political majority, to open up the railways

and to think of the role that Belgian rail-

ways can play in Europe, in the European

network, let’s say. We have always politi-

cally opposed ourselves to opening; both

the Belgian state and the railway compa-

nies.

What is their justification for that?

The argument is just monopoly thinking.

They think that this is normal, like,’why

would we change after 150 years?’. I don’t

think that the conviction that change

would bring improvement is there: they

think they can do it themselves. It is only

slightly comparable, but I worked for the

Flemish public broadcasting company,

and we thought we were the only ones

who could lake TV. They think they are

the only ones who can make trains. And

they still think that.

Where, though, is this lack of conviction

coming from?

I think it’s a habit. People still think it’s

there god-given task to do it. Of course,

rail is a heavy instrument, it is not easy to

open up, you need huge companies to do

it. You can have smaller companies doing

smaller parts of, for instance, freight traf-

fic on the market, but in general, like for

the infrastructure manager, it is always

one of the largest companies in a country

by workforce, capital and so on.

It is not a question of not enough public

money going to railways. Belgian railways

have a yearly subsidy of more than €3bn,

which is huge sum of money, more than

what we spend on the military, and more

than on the department of justice – so

they can’t say that the government is

neglecting them financially. It’s difficult

to say, it’s a culture; there is an opposition

to opening up the markets, a general idea

that you shouldn’t liberalise railways.

In an opinion poll that asked should we

liberalise railways, I think you would have

a large majority saying no, because most

people do not see what the alternative

could be. And there is no political will to

try the alternative, so it is forced upon us.

It is like the postal service in Belgium.

People don’t see the necessity to open up

the postal market, but the postal organisa-

tion is doing it already – under pressure

from the European Union. But they are

preparing because the opening of the

market is the end of this year. They have

been preparing for a number of years, but

our railway company just had a strike

because some of the union leaders said

they are opposed to the fact that our boss-

es are preparing the freight branch for the

liberalised market. That’s the kind of situ-

ation we are in.

At what point, and how effectively, can

the EU intervene in the situation?

Since the freight market has been opened,

you see that others are taking care of some

of the freight that has to be moved in

Belgium. So we have six or seven railway

companies working on Belgian tracks.

That’s where you see the way our incum-

bent is organised; it’s not efficient. So

clients chose someone else. That’s the way

Europe come in. that is what is happening

now for international passengers and what

will happen when the national markets

are opened – you see other people coming

in and offering services in a much more

efficient way, and cheaper.

That’s the passenger market. With

freight there are technical issues to be

overcome as well.

There’s technical issues, and all kinds of

incompatibilities, like in workforce, sig-

nalling, licensing, can your driver drive a

train in another country – yes or no? All

these things have been originally made for

national use and not as a cross-border

operation in general, and most of them

still are.

It’s not illogical to assume that rail freight

has a cross-border dimension to it.

Of course, and that is what the

Commission has been saying since the

beginning of the 1990s, which is twenty

years ago already. The Commission said,

We absolutely need rail as a transport

mode for freight at European level, not at

national level, because the national level

doesn’t help us.

We see market share going down dramat-

ically since the 1950s, and we have to do

something about it, because rail is an

important part of your modal split. But

over the last twenty years you don’t see

this market share growing dramatically,

and this is where the European network

should help.

Is the reason for this lack of growth a

member state problem? Is it fair to blame

individual countries?

Why not? They are the ones that do it.

They are all, or almost all, state-owned

companies. No one told the incumbents

that they couldn’t do it – there was no law

at European level that said you can’t work

together as railway companies! Yes, they

did work together, but in such an old-

fashioned and nationalistic way that it

never worked; which means that the level

of service quality is lower than it should

be. They have never really worked on a

European collaboration, they have always

worked for national protection. And now

you see these things moving slowly, but

very slowly! There are a few countries

where it works, and a few countries where

it doesn’t work at all.

When they signed up to the Railway

package, did they give any assurances that

they would sort things out?

Yes, that they would separate track and ser-

vice. And it happened legally, it didn’t hap-

pen in practice. This is why the Commission

has sent so many letters to so many member

states, and why the Commission now has

come out with this recast.

Dirk Sterckx is a member of the

European Parliament's Transport

Committee

Dirk Sterckx: Too much "monopoly thinking"

Will rail freight be brought to a standstill in Europe? | Jason Roberts

It's a culture; there is an oppositionto opening up the markets, a generalidea that you shouldn't liberalise rail-

ways...there is no political will to try thealternative, so it is forced upon us