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rail gb ok prepa 26/12/00 17:34 Page 1 RAILWAY REFORM EUROPEAN CONFERENCE OF MINISTERS TRANSPORT 2027en.fm Page 1 Wednesday, June 21, 2000 10:30 AM © OECD, 2001. © Software: 1987-1996, Acrobat is a trademark of ADOBE. All rights reserved. OECD grants you the right to use one copy of this Program for your personal use only. Unauthorised reproduction, lending, hiring, transmission or distribution of any data or software is prohibited. You must treat the Program and associated materials and any elements thereof like any other copyrighted material. All requests should be made to: Head of Publications Division Public Affairs and Communication Directorate 2, rue André-Pascal, 75775 Paris Cedex 16, France. RAILWAY REFORM Regulation of Freight Transport Markets EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT EUROPEAN CONFERENCE OF MINISTERS OF TRANSPORT (ECMT) The European Conference of Ministers of Transport (ECMT) is an inter-governmental organisation established by a Protocol signed in Brussels on 17 October 1953. It is a forum in which Ministers responsible for transport, and more specifically the inland transport sector, can co-operate on policy. Within this forum, Ministers can openly discuss current problems and agree upon joint approaches aimed at improving the utilisation and at ensuring the rational development of European transport systems of international importance. At present, the ECMT’s role primarily consists of: – helping to create an integrated transport system throughout the enlarged Europe that is economically and technically efficient, meets the highest possible safety and environmental standards and takes full account of the social dimension; – helping also to build a bridge between the European Union and the rest of the continent at a political level. The Council of the Conference comprises the Ministers of Transport of 40 full Member countries: Albania, Austria, Azerbaijan, Belarus, Belgium, Bosnia-Herzegovina, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, FYR Macedonia, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Moldova, Netherlands, Norway, Poland, Portugal, Romania, the Russian Federation, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine and the United Kingdom. There are six Associate member countries (Australia, Canada, Japan, New Zealand, Republic of Korea and the United States) and two Observer countries (Armenia and Morocco). A Committee of Deputies, composed of senior civil servants representing Ministers, prepares proposals for consideration by the Council of Ministers. The Committee is assisted by working groups, each of which has a specific mandate. The issues currently being studied – on which policy decisions by Ministers will be required – include the development and implementation of a pan-European transport policy; the integration of Central and Eastern European Countries into the European transport market; specific issues relating to transport by rail, road and waterway; combined transport; transport and the environment; the social costs of transport; trends in international transport and infrastructure needs; transport for people with mobility handicaps; road safety; traffic management; road traffic information and new communications technologies. Statistical analyses of trends in traffic and investment are published regularly by the ECMT and provide a clear indication of the situation, on a trimestrial or annual basis, in the transport sector in different European countries. As part of its research activities, the ECMT holds regular Symposia, Seminars and Round Tables on transport economics issues. Their conclusions are considered by the competent organs of the Conference under the authority of the Committee of Deputies and serve as a basis for formulating proposals for policy decisions to be submitted to Ministers. The ECMT’s Documentation Service has extensive information available concerning the transport sector. This information is accessible on the ECMT Internet site. For administrative purposes the ECMT’s Secretariat is attached to the Organisation for Economic Co-operation and Development (OECD). Publié en français sous le titre : LA RÉFORME FERROVIAIRE Réglementation des marchés de transport de marchandises Further information about the ECMT is available on Internet at the following address: http://www.oecd.org/cem/ © ECMT 2001 – ECMT Publications are distributed by: OECD Publications Service, 2, rue André Pascal, 75775 PARIS CEDEX 16, France. ACKNOWLEDGEMENTS ECMT would like to acknowledge the support of a number of people and organisations in the prepa- ration of this report. Within the OECD the Public Management Service, the Directorate for Fiscal and Financial Affairs and the Directorate for Science Technology and Industry collaborated in the work in the context of the OECD’s series of reports on regulatory reform. On an informal basis staff of the Australian Productivity Commission, British Office of Rail Regulation and United States Surface Transportation Board reviewed drafts of the report. Jeremy Drew and Professor Christopher Nash in the United Kingdom and Professor Alain Bonnafous in France provided consulting support. And most importantly members of the ECMT’s Railway Working Group, including the European Commission, and staff in the Ministries of Transport of the countries reviewed in detail in the report provided invaluable input. The work of these individuals is gratefully acknowledged and naturally responsibility for any errors in data or interpretation rests with the ECMT Secretariat. 3 © ECMT 2001 FOREWORD This report was presented to Ministers of Transport at the Prague Council in May 2000, to provide the basis for a discussion of key current issues for regulatory reform of rail freight services. It addresses questions of improving quality of service, competition and consolidation, infrastructure access and charges, cross subsidies, ownership and financing of investment. In a context of progressive liberalisation of rail freight markets at international level, the debate in Prague revealed the following main points of agreement : – Revitalising railways will be an essential part of achieving more sustainable transport systems and for this a truly integrated rail network must develop across Europe. – Liberalisation is essential for an efficient operation of the railways. Ministers underlined the importance of ensuring day to day management freedom for railways which must have full com- mercial responsibility for developing their business and indeed for possible failure. – More seamless international services are vital, and this requires close co-operation both between train operators and between infrastructure managers. It also requires a greater degree of technical interoperability which is equally important for development of a single market in rail equipment. Whilst international co-operation is essential between rail companies, for example through alliances between operators, competition rules have to be respected and any abuses of dominant market powers curtailed by regulatory intervention. – For efficient transport important rail infrastructure investment will be required. Much of this needs to be focussed on eliminating bottlenecks – clear priorities in this respect must be identified. – Finally, Ministers underlined that ensuring safety is a primordial priority behind whole railway reform. The objective is to promote rail freight through development of successful businesses providing quality, safe and reliable services. The debate also revealed the importance of recognising the fundamental differences between national railways and the markets they operate in. For example, if the US Minister underlined the tre- mendous impact of deregulation in turning around US railways from decline to growth, he also identi- fied ownership of infrastructure by the train operating companies as a key factor in the success of the American reforms. On the other hand, the European Commissioner for Transport indicated that the European Union intends to focus on achieving an integrated transport system with a clear separation of railway services from infrastructure. In the end there was wide agreement that there should be room for some flexibility in the models followed for regulatory reform at national level in developing an efficient and truly pan-European railway market. 5 © ECMT 2001 TABLE OF CONTENTS EXECUTIVE SUMMARY: PRINCIPAL QUESTIONS FOR REGULATORY REFORM AND THE DEVELOPMENT OF RAIL FREIGHT MARKETS ............................................................................9 REGULATORY REFORM AND THE DEVELOPMENT OF RAIL FREIGHT MARKETS ...................................19 REGULATORY ISSUES .........................................................................................................................................21 Introduction ....................................................................................................................................................21 Trends in Regulatory Reform ................................................................................................................21 Economic Characteristics of the Railway Industry .............................................................................21 Objectives of Regulatory Reform .........................................................................................................22 Rail Industry Trends by Region....................................................................................................................22