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Are things improving for EU Rail?

June 2006

The freight yards of Metz in eastern France, and Mannheim in Germany, are linked by a 223mile railway, an umbilical cord between continental Europe's core economies. Until recently, it took trains six hours to run the 138-mile track, requiring three locomotives and as many drivers to navigate incompatible technical systems along the cross-border route.

But since August last year, a service of 60 trains a day has been introduced on the line, using just one locomotive and one driver for each train, and cutting the journey time in half, said Tatjana Luther-Engelmann, deputy spokeswoman at Deutsche Bahn's rail freight company, Railion. To reach that point, on just one line, required more than two years of negotiations, beginning in February 2002, when Deutsche Bahn and the French rail company SNCF signed a cross-border rail freight pact.

Economic growth and integration have sent freight traffic soaring in the European Union, but railroads have failed to keep pace. In the past 30 years, the railroads' share of all freight transport in the EU has dropped to less than 8 percent from 21 percent - compared with 40 percent of all freight in the United States - EU transportation officials say.

Still, that trend may be starting to reverse. Europe's roads are increasingly saturated and environmental concerns are putting pressure on road haulage. EU transport ministers intend to review the road haulage market amid calls for a more level playing field among different forms of transportation. Rail freight, measured in metric ton-kilometers, rose 2 percent EU-wide in 2004, with the most solid growth in Germany and the Netherlands. But it continued to fall in France, where a three-year restructuring plan, started in 2003, is shedding marginal clients in a bid to cut losses, which had reached 15 percent of turnover.

"We see some encouraging signs, but there is still a lot of work to do," said Stefaan De Rynck, the European Commission transport spokesman. High-speed trains have revived passenger services and over the next decade will connect more major cities in Europe, with the opening of new lines. But high-speed track and rolling stock is also high cost, and for freight traffic, it is something of a distraction.

Delays are the major deterrent. According to EU data, in 2001 less than 48 percent of trains ran on time. That rose to 65 percent in 2004, but 7 percent were delayed for as long as 24 hours.

"When you compare this to the 95 percent-98 percent punctuality record of road transport, there is a lot of catching up to do," said an EU transportation official who spoke on condition of anonymity because of his involvement in delicate cross-border negotiations. Stephen Perkins, an administrator with the European Conference of Ministers of Transport, an intergovernmental advisory agency, said speed was less important for freight operators than on-time delivery. Reliability is key.

Crossing borders is the biggest source of delays, involving different voltage systems, signaling systems, rules on permissible loads, safety and working practices. Railroad tracks in the Baltic states, Spain and Portugal are wider than those in the rest of Europe and locomotives have to be changed for different networks. That all takes time.

Railroads could be safer, less polluting and more suitable than trucks for transporting large quantities of goods over long distances. But Europe's problem is that its freight services were designed to serve domestic markets. "The European dimension is missing," Perkins said.

In the hopes of creating an integrated European railway system by 2010, the EU Commission is promoting technical harmonization and open markets to encourage competition and development. It has pioneered a new Europe-wide signaling system and is providing funds to railroad companies to help cover the costs of conversion from old equipment.

Rail-freight officials now are starting to look eastward as manufacturers shift production to central and eastern Europe. Railroads in the new EU member states require investment to modernize aging infrastructure and renew rolling stock.

International rail freight in the EU was opened to competition in 2003. From January 2007, domestic freight services must also be open. EU member states in the past year have agreed on a common certification system for train drivers, and are working towards harmonizing safety rules.

But restructuring has been opposed by entrenched national monopolies and by unions fearful of job losses. French government reform attempts in 1995 were quickly abandoned after a three-week strike caused widespread disruption.

Opponents say reform is a mask for creeping privatization, an accusation rejected by the commission. "We are neutral about ownership," De Rynck said. Public-private partnerships could provide much-needed cash for modernization, but so far there have been few offers, and commission officials say it is difficult to envisage a strong private role in infrastructure because of the many uncertainties still to be resolved.

"It's a long process to overcome individual barriers which have to be beaten down one by one," Perkins said.