TACs: ‘Era of charging based only on cost allocation is over’
Track Access Charges expert Justina Hudenko believes the era of charging based only on cost allocation is over. The Chair of LatRailNet, the allocation & charging subsidiary body of Latvian Railway, will be sharing her ideas when she speaks at the Track Access Charges summit from April 4-5.
An author of more than 200 scientific publications, many with a strong focus on access charges, Justina spoke to RailFreight to offer some observations of the current situation surrounding TACs in Europe, and the what future holds for stakeholders right across the supply chain.
How would you describe the current situation with Track Access Charges for rail freight in Europe – what are the priorities that need addressing now to help ensure competitiveness can thrive?
“In short, I would summarise that the era of charging based on the allocation of costs only is over, due to the increasing competition in the freight transportation market. Moreover, a broader formulation of competitive charge is required, meaning that the charge level is not the only conditioning factor of competitiveness. It requires at least demand (existence of the cargo suitable for rail transportation) and supply (so called 7R factors such as right time, right place, right quantity etc). But this is not all. Given that an infrastructure is a supporting sector of an economy, the competitiveness category must include additional factors such as national prosperity, the integration to the world processes of globalisation, the environmental impact, manufacturing and housing placement, and so on.
“The charges must be a part of the holistic transport system development. Therefore, the foremost tasks to ensure rail transport competitiveness is, firstly, the establishment of the effective negotiation platform where various economic entities (including but not only, commercial associations, related ministries and institutions) can officially lobby for the development of rail infrastructure and all related processes with a view of certain supply chains. Secondly, we must consider the failures of the railway service market, which will never be close to perfect competition, and the different periodicity of infrastructure development and transport service processes.
“Therefore, predictable funding of rail infrastructure must be introduced and harmonized between networks. Lastly, all additional costs that are caused by state requirements and would not appear in a commercial enterprise must be covered by state funding.”
Why, historically, has there been such a discrepancy in charging between the various EU member states?
“I would say that this is less historical and more a politically geographical question. For example, if the infrastructure was congested, it would contribute to applying simple charge parameters (like train km) to stimulate longer trains. If the landscape is not homogeneous within the country, the railway undertakings will require additional parameters to ensure that additional costs that appear in one part of the network do not appear in charges applied in the part of infrastructure used. A big share of international traffic causes willingness to charge more than in a case when domestic transportation can support the national economy. All these factors were and are very different in the member states.”
The new Dutch coalition government announced it would be ‘streamlining’ TACs in line with neighbours like Germany, which itself is due to halve TACs for freight operators as part of its Rail Freight Masterplan. With this in mind, are EU member states doing enough to make it a ‘level playing field’ for freight operators when compared to passenger services?
“I’m not sure that simple ‘streamlining’ of TAC is bound to produce fruitful results. For example, it may result in additional surpluses of railway undertakings but not in increasing competitiveness of rail. I have said before that the existence of a ‘Master Plan’ or better still an ‘EU Master Plan’, or at least ‘Rail Freight Corridor Master Plan’ with an adequate charging policy is preferable than automatic tracking of someone’s charge level.”
Given that access charges make up a significant, if not the bulk, of infrastructure managers’ income, are the charging & revenues structures for freight operators transparent enough? How can IMs and railway undertakings work better together?
“Good question. It is really a big problem of asymmetric information: on the one hand, the IM must publish the charging policy, levels of charges, list of market segments and a lot of other information, and have only advisory information from RUs. This is an unsolved problem. In my ideal world, it could be solved by creating an online market place, where freight forwarders could tender their applications to various logistic chains.
Why, historically, have freight services in western Europe tended to be marginalised in favour of passenger services when it comes to TACs – is it purely down to profitability? Do we perhaps need a ‘leap of faith, a long-term vision, to ensure freight becomes more relevant?
“You may be surprised that in the Baltics we have the opposite situation. The primary usage of the network is freight transportation, while passenger services is a marginal activity. This is because of the nature of rail economy – rail must be loaded with scale services. We don’t have a big density of population, like in western Europe, but we are in the way of the bulk freight flow. This feature of rail determines the ‘Master plan’ of long term vision – either to find scale cargo, or to unify existing cargo until homogenous base, e.g. containerisation.”
Do you think the Rastatt incident will prove to be a watershed moment for rail freight in Europe?
“I think that Rastatt was a litmus paper test which will help to indicate the consequences of the existing ‘Single European rail area’ policy, especially in freight. Hopefully, it will cause changes in the policy. First of all, by linking member states’ indicative development strategies and orientation to RUs’ global, not national, needs.”
If you could ask people visiting the Track Access Charges Summit to take away one important message from your presentation, what would it be?
“TACs are not the only competitiveness factor! Charges should be in line with the common rail marketing and development policy which in turn should encourage RUs and member states’ efforts which they are willing to pay for.”
Visit the website for details of the Track Access Charges Summit programme and how to book your place.