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European Framework for the Internal Market in the Railway Sector

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European Framework for the Internal Market in the Railway Sector A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Jarzembowski, Georg Article — Published Version European framework for the internal market in the railway sector Intereconomics Suggested Citation: Jarzembowski, Georg (2006) : European framework for the internal market in the railway sector, Intereconomics, ISSN 0020-5346, Springer, Heidelberg, Vol. 41, Iss. 6, pp. 299-303, http://dx.doi.org/10.1007/s10272-006-0200-9 This Version is available at: http://hdl.handle.net/10419/41888 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu DOI: 10.1007/s10272-006-0200-9 FORUM The Liberalisation of Rail Transport in the EU On 1 January 2007 the European rail freight market, which has long suffered from fragmentation and a declining share of total transport services, will be fully opened to competition. What will be the consequences for the transport sector and the economy as a whole? What further measures are needed to stabilise or increase the railways’ share in the freight market? Alexander Eisenkopf* Opening the Rail Freight Market in Europe – an Economic Assessment n 1 January 2007 we shall see the full opening of lative initiatives to liberalise the rail service markets in Othe European rail freight market – a crucial mile- Europe and to develop a common European railway stone in the history of railway transport in Europe at area. The “First Railway Package” was released in least in the perception of offi cial observers. For many 2001. It consisted of three Directives regarding infra- decades national railway markets have been closed structure access (2001/12/EC on the development of monopolies – served by stated-owned companies European railways amending Directive 91/440/EEC, which were unable to respond adequately to the 2001/13/EC on railway licensing amending Directive challenges of the market. The rail freight sector was 95/18/EC and Directive 2001/14/EC on capacity al- therefore unable to participate in the strong growth of location, railway infrastructure charging and safety the freight markets and to defend its market position certifi cation) and the directive 2001/16/EC on the in- in the passenger market. In consequence the market teroperability of rail systems. share of rail transport fell with regard to both passen- ger and freight transport. The fi nancial performance of The Directives providing access rights to the infra- railway fi rms also declined signifi cantly and EU Mem- structure (2001/12-2001/14) require the separation and ber States had to subsidise their national railways with independence of functions that are essential for ensur- considerable payments to keep them viable. ing non-discriminatory access, especially track ca- pacity allocation and setting of track access charges. Since the end of the 1980s the European Commu- They also include the various conditions to be fulfi lled nity and the Member States have launched initiatives by the railway fi rms to make use of the access rights to stop the decline of the railway sector. The fi rst es- for international freight services on the TERN network sential initiative of the European Commission was the and cover the principles of slot allocation and infra- White Paper on “a Strategy for Revitalising the Com- structure charging. Directive 2001/16/EC is dedicated munity’s Railways” in 1996. It was followed by the to the implementation of common technical specifi ca- White Paper on Transport Policy for 2010 released in tions to achieve the interoperability of rail services in 2001. This White Paper included ambitious political Europe. targets for the development of the European railway sector. Railway fi rms should compete successfully in In May 2006 the European Commission adopted the growing European transport markets and reach a report on the implementation of the First Railway their former market (modal) share of 1998 by the year Package. The report concludes that the legal imple- 2010. To reach the goals defi ned in the 2001 White Pa- mentation of the First Railway Package is completed per the European Commission launched several legis- – three years after the deadline to transpose the Euro- pean Directives into national law (!) – but efforts have * Professor of Economics, Zeppelin University, Friedrichshafen, Ger- to be increased in some Member States to ensure an many. effective regulatory framework and the satisfactory 292 Intereconomics, November/December 2006 FORUM functioning of the rail service markets. The assess- term review of the 2001 White Paper on Transport in ment of the “Second Railway Package” adopted in 2006 the European Commission was forced to con- April 2004 has to be done against this background. cede that until now the targets of its transportation The “Second Railway Package” provides instructions policy have not been met. Especially rail freight traffi c on rail safety, an amendment of the interoperability Di- only stabilised at a lower level. On the other hand, rail rectives 96/46/EC and 2001/16/EC in order to gradu- freight transport in those Member States that opened ally extend the scope of interoperability to cover the up the rail market early shows a bigger increase com- entire rail network and the setting up of a European pared to the other countries. The (partial) opening of Railway Agency (ERA). The ERA is supposed to pro- rail freight markets led to increased market entry in vide technical support for the work on interoperability recent years. Entry of new rail freight fi rms was espe- and safety of the European railway sector. More im- cially strong in countries with liberalised markets like portant in the context of this paper is the extension the United Kingdom, Germany, Sweden and the Neth- of the access rights for freight services to the whole erlands. infrastructure. The core message of the “Second Rail- It can be observed that new entrants are relatively way Package” is the free access to infrastructure for small compared to the existing railway fi rms but work international rail freight services by January 2006 and more effi ciently and provide attractive services for the liberalisation of cabotage by 2007. Apart from the their customers – especially in the block train market. fact that the “Second Railway Package” has not been In the past, this market has been quite profi table for transposed into national law in every Member State railway operators because there was little competition until now, it shall provide the full opening of the Euro- by trucks. Open access to infrastructure has changed pean rail freight market. Every European railway fi rm this situation for the incumbent railway fi rms because will be able to offer freight services around Europe the entrance of new competitors has driven down without legislative or institutional barriers. prices. Meanwhile, a “Third Railway Package” has been On the other hand, we have seen a slight general presented by the European Commission and dis- upwards trend in rail traffi c for two or three years now cussed intensively. The proposal would allow open – especially in countries with open rail freight mar- competition in cross-border passenger rail transport by 2010. Additionally, it covers the issue of passenger kets. But we have also to accept that some national rights and the certifi cation of railway staff. An agree- rail freight markets are still closed shops with a market ment on the “Third Railway Package” is expected in share of the dominating railway fi rm of up to 100%. the course of the year 2007. If we look at France, Denmark or Spain, we see that the incumbent rail freight operators reach a market An economic assessment of the opening of the rail share of 100%. But also in markets with a higher de- freight market has to answer the question of the con- gree of liberalisation the market share of the dominant sequences of the liberalisation of the rail freight market operator reaches at least 70% (e.g. United Kingdom). for the rail freight sector and the economy as a whole. Some observers of the market take the relatively large The main topics to be addressed are the effi ciency and number of (new) operators in the European market competitiveness of the future rail freight sector and the as an indicator of an increased intensity of competi- question whether liberalisation will be able to stabilise tion. This observation, however, may be misleading or increase the market share of railways in the freight because we have to bear in mind the distribution of market. A better market performance of rail freight market shares between incumbents and entrants. The should give the Member States an additional chance market share of the new entrants is much more impor- to cope with the future growth of the transport markets tant for the assessment of the balance of power and in Europe. The future of rail freight is also a key factor the competitive strength of the new entrants than the for the sustainability of the transport markets and the number of operators itself.
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