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            october 20, 2019

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Shaken by crisis, rail freight companies ask for more support


In a joint declaration, the chief executives of private and state-owned European rail freight companies are demanding public support to cope with the effects of the crisis on their business. The declaration urges the European Union and national governments to introduce concrete measures supporting the railways’ own efforts. It argues that only combined action will allow rail freight companies to use the present crisis as a short-term opportunity for the industry’s long-term structural benefit. The call was made at the CER/UIC High Level Freight Meeting in Vienna on 24 April by more than 20 chief executives.
The economic downturn is having a major impact on railways, the companies said. There has been a progressive decline in rail freight traffic throughout Europe since mid-2008: economic data collected by the Community of European Railway and Infrastructure Companies (CER), shows that the economic crisis is affecting rail freight transport in particular since the last quarter of 2008. In December 2008, it declined in Central and Eastern European countries by 22% - a dramatic figure that worsened to 34% in January 2009 compared to the previous year. In the western EU countries, the same data shows a decrease of 18% in December 2008 and 36% in January 2009.
“The crisis is clearly impacting rail freight business throughout Europe,“ warned Johannes Ludewig, CER Executive Director. “Railways are already responding to the downturn by cutting or postponing investment and trying new ways of financing investment,” he said. “However, some railways have only limited investment programmes to cut and are poorly placed to find new sources of funding. They are therefore laying off staff, making further cuts to already inadequate maintenance programmes or accumulating more debts. This could accelerate the vicious circle of decline that railways, particularly in Central and Eastern Europe, have experienced over the past few years.”
Desirable measures to counter such developments were outlined in the declaration. They include a moratorium on increases of energy prices and track access charges compared to 2008. These costs represent up to 30% of the rail freight companies’ operating costs. Furthermore, investment in modern and interoperable infrastructure should be strengthened to speed up the removal of bottlenecks and to enhance the infrastructure capacity for freight. Rail infrastructure could thus be ready to accommodate an expected post-crisis demand pick-up.
To reduce rail noise emissions as demanded by EU legislation, public support would be needed in the form of full compensation of costs for retrofitting freight wagons. But the European Commission should also consider a moratorium of at least one year on the implementation of cost-increasing EU legislation including the European Rail Traffic Management System (ERTMS), the Technical Specifications for Interoperability (TAF TSI) and noise reduction. Last but not least, any new EU legislation which may translate into additional costs for the rail freight industry should clearly be avoided in the current situation.
“The railways are not asking for yet another bail-out plan or short-term solutions,“ Johannes Ludewig emphasised. “With the declaration CER and chief executives of private and state-owned European rail freight companies rather ask for immediate but sustainable measures, allowing the industry to restart business quicker and better once the crisis is over.” Economic growth must be anchored in sustainable transport solutions, capitalising on the strengths of different modes. Governments need to take urgent action by creating a more level playing field, and by providing the railways with more resources and a clearer direction on priorities.
So far the response of the European Union to the problems of the railways has been limited. “The various European recovery plans focus too much on retaining the current unsustainable structure of the transport sector, and give too little thought to restructuring the sector for a more sustainable future,” Johannes Ludewig said. “This runs contrary to the EU’s efforts to meet long-term greenhouse gas emission reduction targets because several railways might collapse or experience an irreversible loss of traffic.” Yet there are notable exceptions outside Europe: China plans to invest USD 90 billion in railways in 2009, much of this in infrastructure and, in the United States, the stimulus package includes USD 8 billion of government support for rail investment over 2009 and 2010.
In addition to the declaration on the impact of the crisis, the CEOs of rail freight companies also expressed concern about the intention of the European Railway Agency (ERA) to recommend implementation of the new wagon numbering scheme from 2010. Whilst not challenging the principle of the new numbering scheme, they oppose such early application. This would necessitate an accelerated adaptation of IT systems, create confusion because of the unequal pace of the adaptation among railway undertakings and inflict additional costs. In the present economic context, the imposition of such an additional burden, resulting from the new regulation, cannot be reasonably justified.
The chief executives and CER wrote a letter to the European Commission following the declaration, repeating their demand for a transitional period through 2013, to allow an orderly and coordinated adaptation of the IT systems. “We regret the lack of consideration shown to the present economic situation of the railway undertakings and the disregarding of the realities in the field,” explained Johannes Ludewig. The request is supported by the National Safety Authorities of Germany, Belgium, Austria, Germany, France and the UK. The International Union of Private Wagon Owners (UIP), supports this position as long as it has no negative effect (e.g. on costs of re-registration).

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