January 18, 2017

The future of freight: challenges and opportunities facing the industry

Written by  Irmtraut Tonndorf
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THE European Rail Freight Association (ERFA) brings together newcomers on the European rail market. ERFA covers the whole value chain of rail transport across Europe and all members are united in a commitment to work towards a competitive and innovative single European railway market underpinned by attractive, fair and transparent market conditions for all railway companies.

The decarbonisation of transport is the main political priority for the coming years. Although rail freight has a clear competitive advantage, the rail sector is not seizing the opportunity presented by decarbonisation to improve its efficiency and competitiveness. Customers do not choose rail on the basis of European Union (EU) policy priorities, but on decisions based on performance and quality. The rail sector must adopt a commercial and business-minded approach in order to become an attractive option for customers, and 2017 is the right moment to improve rail freight’s competitive position against other modes. This represents many challenges, but also many opportunities.

 

Today, over 50% of the rail freight traffic in Europe is international. The international market is constantly growing as customers and shippers are thinking more and more globally. In this context, rail faces a major challenge: how to overcome national borders and a resistance to new ways of working Rail is still behaving too much like a national monopoly service provider. Thinking supranationally and making infrastructure managers customer-orientated will unlock rail’s growth.

Poland VOSMANIn that regard, the 2016 rail freight corridors’ Sector Statement and Ministerial Declaration of Rotterdam were a first step in improving rail operations at the EU level. ERFA has initiated the translation of the declaration, in coordination with the sector, into a concrete action list, defining the responsible actors for implementation, the timeline, and the objectives to be reached. Now the sector has to launch serious initiatives to boost quality and network efficiency.

Among all of the priorities identified, I would like to highlight one, which I consider crucial for the attractiveness and marketability of rail freight: the estimated time of arrival (ETA) and the status of the train in transit. Customers are demanding more reliability and punctuality of rail services, and while other modes of transport already have real-time information systems, rail freight is lagging behind. That is why ERFA has promoted a pilot project, which provides the end-customer with information about the status of their shipment, and will be launched in 2017.

However, ERFA acknowledges the limits of the action list’s approach. Although it can solve many operational issues, it won’t be sufficient to give clear and much-needed supranational leadership and governance to rail freight corridors. In this respect, ERFA contends that an ambitious revision of the rail freight corridors legislation will be vital for the competitiveness of rail freight.

We are committed to making a real success of those initiatives and to extend the marketability beyond the rail freight corridors.

Promoting dialogue

Coordination and dialogue need to be considered normal practise in the rail sector. ERFA strongly supports the notion that infrastructure managers should act as business partners of train operators, responding to the market’s needs. In addition, they should work together on a daily basis to improve the whole European railway system.

Removing technical and operational obstacles is an urgent task for railways in Europe and must be a priority for 2017. Small-scale investments can make a real difference in improving rail freight’s performance and quality, for instance, by allowing longer and heavier trains and removing bottlenecks.

Generally any unilateral national decisions have a terrible impact on railway undertakings’ businesses and the interoperability of the European network. This is the case with the measures announced by some national governments to tackle noise. We recognise that noise is a big challenge for rail freight, but it must be addressed at a European level with sufficient financial support for wagon owners and rail freight operators.

The same applies to the deployment of ERTMS. We believe in high benefits in the long term, but a significant financial risk remains in the meantime. Many rail operators won’t survive long enough to see the interoperability and safety benefits because of the high cost for equipment. Therefore, ERFA is pushing for concrete financial solutions to support operators by sharing the cost and the benefits of ERTMS between the different stakeholders.

Finally, I am convinced that one of the main challenges to unlock private investment into the rail system is to ensure that fair and transparent market conditions are in place. While we welcome the Technical Pillar, the disappointing result of the Fourth Railway Package Political Pillar highlights that not all member states and their incumbent operators are ready for a fundamental reform of the sector. However, ERFA will continue to pursue the creation of an open and competitive rail market through a full, timely and correct implementation of EU rules in all member states, but also by promoting ambitious implementing legislation.

In that regard, ERFA fully supports the EU’s efforts to ensure optimal utilisation of and non-discriminatory access to service facilities. The facility market needs to be transparent and should support rail’s competitiveness.

Existing obstacles and discriminatory practises faced by small and private operators across Europe continues to undermine the ability of the rail sector to grow and to compete with other modes of transport.

I am confident that in 2017 we can transform these challenges into opportunities if all rail stakeholders work together as a team. This will improve our businesses, but also ensure that rail freight will be a strong and efficient driver for the decarbonisation of transport.

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