THE Connecting Europe Express (CEE) was undoubtedly the highlight of the European Year of Rail and proved a fantastic advertisement for rail transport. The train travelled 20,000km through 26 European Union (EU) member states over 36 days in the early autumn and was met by various national dignitaries and local people keen to celebrate rail’s role in their respective countries.
Rail generally has a good reputation as a green transport mode. But the CEE provided a useful reminder of the mode’s flaws. This was especially valuable to the Brussels administrators who stepped out of their bubbles to ride the train. They could clearly see that the utopia of a Single European Rail Area is still a long way off.
Europe’s railway remains a patchwork of national systems, keenly protected by the state incumbents. The EU wants to change this by introducing an interoperable network and an open market for operation. However, despite various policies, including four railway packages and billions of euros of taxpayers’ money, limited progress has been made, much to the frustration of some in Brussels who have voiced their concerns to IRJ.
Rail’s ability to carry a large number of people and goods relatively quickly over long distances with minimal impact on the environment means it remains central to the EU’s plans to decarbonise transport. This is a key objective of the Green Deal to deliver carbon neutrality by 2050, and the Fit for 55 programme to cut EU greenhouse gas emissions by 55% by 2030. Closely aligned with these objectives is the Sustainable and Smart Mobility Strategy, announced by the European Commission (EC) in December 2020, which includes several enviable targets for modal shift to rail, such as doubling high-speed traffic by 2030 and tripling it by 2050, and doubling rail freight traffic by 2050.
A flurry of policy proposals and announcements from the EC at the conclusion of the Year of Rail are intended to provide the framework to support delivery of these targets. These include long-promised revisions to the TEN-T Regulation, which governs the development of the continent’s key cross-border transport corridors and is the centrepiece of plans to develop an interoperable rail network (see panel below). The Action Plan on Long Distance and Cross-Border Rail also outlines further actions to help the EU reach the Sustainable and Smart Mobility Strategy objectives, and has been well received by the industry. It includes the launch of at least 15 cross-border pilot services by 2030.
“The European Year of Rail showed that we are far away from a Single European Railway Area. The objective which should unite us is to break the chains of national rules, which keep railways essentially locked in their home countries.”
Ms Barbara Thaler, Austrian MEP and member of the Transport Committee at the European Parliament
Several encouraging developments are similarly on the horizon in 2022. A special event will take place this month to launch Europe’s Rail, the successor to the Shift2Rail joint research undertaking, which was approved by the EU Council in November. Many of the railway technologies produced as part of the first iteration of the research initiative are eagerly awaiting updates to the Technical Specifications for Interoperability, likely to be issued in November. This includes technologies related to main line automation in the Control, Command and Signalling TSI. France has also vowed to prioritise transport and specifically emissions reduction and modal shift during its presidency of the European Council in the first half of 2022, although this work is likely to be disrupted by the French presidential election in April.
Of course, policy announcements and political postering are only worthwhile if there is cash available to improve the situation. But the EU is putting its money where its mouth is. Even in challenging economic times there are unprecedented sums now available to support member states to deliver many of Europe’s key rail projects and initiatives.
Of the €30bn in funding available in the Connecting Europe Facility (CEF), €23bn is earmarked for transport, including €10bn for cross-border rail schemes. Rail is potentially a major beneficiary of grants available from the €284bn European Regional Development Fund (ERDF) and Cohesion Fund (CF). The €723.8bn Recovery and Resilience Facility, established to support economic recovery from Covid-19, is also set to provide a major windfall for rail projects, estimated at €58.2bn by the European Rail Industry Association (Unife) although contributions do vary by country; as one of the largest overall beneficiaries of the fund, Italy has committed a staggering €29.5bn to rail projects, including the rollout of ETCS on main lines. Spain (€6.4bn), France (€5bn) and Romania (€5bn) are other big spenders. The European Investment Bank also launched its Green Rail Investment Platform on December 16, which is designed to fast-track rail investment.
Politically speaking rail has arguably never had it so good. The EU is seemingly doing its utmost to encourage member states to develop their railways as the centrepiece of sustainable transport networks. Yet there is growing frustration that the sector is failing to grasp these opportunities. At the current rate of progress, the Sustainable and Smart Mobility Strategy’s modal shift targets seem hopelessly out of reach.
“The European Year of Rail showed that we are far away from a Single European Railway Area,” Ms Barbara Thaler, an Austrian MEP and member of the Transport Committee at the European Parliament told IRJ. “The objective which should unite us is to break the chains of national rules, which keep railways essentially locked in their home countries.”
The Fourth Railway Package is effectively the fourth attempt to break these chains. There have been some successes. The expansion of the European Union Agency for Railways (ERA) to become a one-stop shop for railway vehicle authorisations and ERTMS trackside authorisations under the technical pillar is one: ERA has authorised more than 30,000 vehicles, more than 60 safety certificates and two ETCS trackside approval applications since June 2019. Critically, the vehicle authorisations are proving considerably faster and cheaper than the previous €300,000 estimated cost of authorising a new locomotive in some European countries, a process that could take up to a year or more.
Progress with instituting the reforms introduced under the package’s marker pillar is, however, slow.
The EU believes that opening the market to competition is the best way to raise the standard of passenger rail services and to optimise the offer to the customer. This has largely proven to be correct in areas where this has happened - Germany’s regional concessions market springs to mind, although this is far from perfect, as Abellio and Keolis have found in recent months. Italian high-speed open-access operator NTV is also credited for helping to grow the overall market in the country and there are similar hopes for Spain as new entrants begin to compete with Renfe.
Following various requests for delays from member states, the EC set a deadline of 2023 for the start of competitive tenders for public service obligation contracts as outlined in the Fourth Railway Package. However, with the deadline looming, several countries have backloaded contract awards to operate core networks to state incumbents without inviting others to bid. The Belgian government plans to award Belgian National Railways (SNCB) a 10-year direct award contract to operate national services effectively preventing competitors from entering the market until 2032. Netherlands Railways (NS) is also expected to be directly awarded a 15-year concession to operate the country’s core network from 2024 after the government deemed tendering the operation “as too risky and complex.” Italy has awarded similar lengthy regional contracts to Trenitalia.
In other areas, the ludicrously high cost of accessing infrastructure is pricing prospective open-access competitors to the state incumbent out of the market.
According to figures presented by EC’s seventh Rail Market Monitoring (RMM) report published in January 2021, the average cost for track access charges for EU countries in 2018 was typically just a few euros: in Germany it is €0.67/km on suburban and regional trains and €1.12/km on conventional long-distance. This appears entirely reasonable. However, these costs do not include markups, which in some member states are substantially inflating the figure an operator might end up paying. Markups are calculated from anything impacting the competitiveness of the service. This ranges from the speed of and type of train, the level of connectivity, and the distance and time of day the service will operate at, to the service’s priority and purpose, and whether it is an urban or inter-urban service.
FlixTrain halted plans to introduce five inter-city services in France indefinitely in April 2020, citing high access fees as the reason for the U-turn. While figures from RMM show that suburban and regional services are charged €2.84/km, conventional long distance €3.27/km and high-speed €4.77/km in France before mark-ups, FlixTrain told IRJ that it was quoted more than €20/km for the routes it proposed. These included links from Paris Austerlitz to Bordeaux St-Jean via Les Aubrais-Orléans and Angoulême, Paris Bercy - Limoges - Toulouse Matabiau, and an overnight service between Paris Bercy and Nice Ville via Marseille Blancarde. On Paris Bercy - Dijon - Lyon Perrache, as well as the French section of the Paris Nord - Brussels Nord route, the cost was more than €30/km.
FlixTrain was set to go head-to-head with French National Railways (SNCF) on these routes. Yet it would have been far from a fair and open competition. SNCF is the public service obligation (PSO) operator in France, meaning the cost of the access fees for any route deemed PSO are refunded by the taxpayer. SNCF is also the infrastructure manager, the recipient of the track access fees, meaning there is no incentive to run these services commercially itself or to encourage others to do so.
Rolling stock
New entrants also face the challenge of securing access to certified rolling stock. AllRail, which represents European new entrants, accuses SNCF of silently scrapping some older high-speed trains over allowing access to prospective competitors. Without state guarantees, new entrants are also unable to gain the same favourable financing agreements for new trains as the incumbents. Austria’s Westbahn chose to sell its original fleet of trains in 2019 to buy a new fleet under much improved terms.
In Germany, FlixTrain is reportedly paying €12/km after mark ups. And despite some attempts by the private operator and its predecessors to break German Rail’s (DB) hegemony, DB still retains a 99% long-distance market share. As well as the cost of operation, prospective new entrants face an arduous battle over securing suitable paths for their trains, a costly process that can take years to complete, potentially putting all but the most determined off.
Like SNCF, Italian State Railways (FS) and Austrian Federal Railways (ÖBB), DB remains an integrated railway. The same company competing with FlixTrain in the long-distance market is collecting the access charges and allocating paths.
The new German government has vowed to address the situation and proposes an internal restructuring, including the establishment of a new infrastructure division, a move welcomed by Mofair, which represents new entrants in the German market. Mofair prefers marginal access fee costs and the transfer of the railway infrastructure responsibility to a separate limited company. DB Energy would be unbundled from this company while DB itself would focus solely on commercial activities. Mofair says it has aligned its demands with the coalition agreement. Whether the government has the stomach to follow through with this pledge remains to be seen.
In Austria, the track access cost is more modest at €4/km. However, due to markups this cost doubles for cross-border traffic. Cross-border journeys account for just 7% of total passenger-km in the EU. Higher costs and the need for operators to comply with varying and often arduous national rules limits the incentive to introduce such services even where there is a market.
These are proving particularly restrictive to the development of rail freight services on the continent; while it is acceptable to run a 740m-long freight train in Germany, this is not possible when this train wants to cross the border into Austria. Equally a European lorry driver may only speak Mandarin, but a train driver must be fluent in the language of the country in which their train is operating, resulting in stops at borders to change drivers, potentially jeopardising path allocation.
Sources suggest that major European shippers are keen to use rail, but these limitations mean that the available service is too unpredictable, putting relationships with customers expecting timely deliveries at risk. Money is available to develop terminals and improve the efficiency of transferring freight to rail. But the potential of these investments, and achieving the EC’s goals for modal shift, will not be realised until these regulatory constraints are eradicated.
Reason for optimism
The Action Plan does provide reason for optimism. It seeks to assist regulatory bodies and operators to overcome the key obstacles to operating more cross-border services. A tender calling for a request for proposals for the inaugural pilot on the Munich - Verona corridor was launched on January 19 and lists 15 issues for which the pilot should seek solutions to provide the conditions for seamless operation. Most of these relate to discrepancies in national rules between member states. These include installing a common language requirement for the route, upgrading infrastructure where necessary to support longer freight trains, and aligning safety standards.
One suggestion pushed by MEPs is to allow EU governance to oversee the TEN-T corridors. However, member states and their railways have fiercely resisted, helping to preserve the status quo. Sources in the EU have described the situation as trench warfare. They say any resolution is met with a flurry of requests for exemptions from various states. The fact that a Fifth Railway Package is likely, with work reportedly beginning on this process, emphasises the challenges that remain.
The situation looks even more troubling when compared with road. While discussions on rail policies seemingly go round in circles resulting in ambitious targets being pushed or scaled back, the road sector is on the cusp of totally reinventing itself within the next 15 years. The first automated electric vehicles (EV) are likely to hit Europe’s roads by 2030 and there appears to be huge momentum behind the development of EVs. Unfortunately, as it stands, Europe’s railways will probably still be squabbling over rolling out ERTMS on the core network at the end of this decade. There would be little surprise if the revised 2040 delivery target is missed.
Things clearly need to change if rail traffic is to grow to the level required by the EU. But there is still time to turn the situation around.
For market access, Sweden could provide a model for other countries to follow. Here the mark ups on track access are less severe and there is an amendable process for securing slots, as reflected in FlixTrain’s relatively swift establishment of a service between Stockholm and Gothenburg/Malmö in 2020. Encouragingly a study of the Swedish market by the Swedish National Road and Transport Research Institute estimates that an average charge of €2/km would be sufficient to cover the cost of maintaining rail infrastructure.
Similar conclusions might be found in studies of other European networks. This raises the proposition of finding a happy medium: of setting fees at a level that covers the cost of maintenance and future investment while remaining commercially attractive to prospective operators. However, this is only possible if there is a definitive split between infrastructure and operations.
The EU also arguably needs to look at itself and forcefully impose the rules and regulations to which the member states have signed up, including the Fourth Railway Package. To do so will require strong leadership at the commission. Unfortunately, the last few transport commissioners have lacked the gusto to take on the big railways. But if they choose to go down the rabbit hole and really enforce the regulations and hand out meaningful fines and even restrictions on operation, the chances are that a DB or an SNCF will relent. If one falls into line, the others are likely to follow.
The European Year of Rail offered much to celebrate. It also provided a timely reminder of the challenges facing modal shift to rail in 2021 and in the years ahead.
Commission policy proposals aim to boost modal shift
On December 14, the EC announced its proposals for revising the TEN-T Regulation. The EC says these updates will address missing links and modernise the network, including increasing the minimum line speed on the majority of the core network to at least 160km/h by 2040.
The proposal calls for more transhipment terminals, improved handling capacity at freight terminals, reduced waiting times at rail border crossings, longer trains to shift more freight onto cleaner transport modes, and the option for lorries to be transported by train. It also creates nine “European Transport Corridors” that integrate rail, road, and waterways.
The proposal sets a new intermediary deadline of 2040 to advance the completion of major parts of the core network ahead of the 2050 deadline that applies to the wider, comprehensive network. There are calls for new high-speed rail connections, including between Porto and Vigo, and Budapest and Bucharest, to be completed by 2040.
All 424 major cities along the TEN-T network must also develop Sustainable Urban Mobility Plans to promote zero-emission mobility and to increase and improve public transport and infrastructure for walking and cycling.
The EC also announced several proposed revisions to the European Urban Mobility Framework, which sets out guidance on how cities can cut emissions and improve mobility. The plan prioritises zero-emission solutions for urban fleets, including taxis and ride-hailing services, the last mile of urban deliveries, and the construction and modernisation of multimodal hubs, as well as new digital solutions and services. The proposal maps out the funding options for local and regional authorities. The commission will propose a recommendation to EU member states to develop national plans that will support cities to implement their mobility plans.
In addition, the EC launched a consultation to alter the state aid rules for rail on December 23 and on optimum strategies for greening and digitising transport networks, including rail, last month.
