Is the Capacity Management Directive taking the wrong turn?

Image: Shutterstock. Alexandros Michailidis.

The Greening Freight Transport Package (GFTP) seemed to be a sign of EU-wide political will to bring significant changes and improve the transport sector in the continent. The Regulation on the Use of Railway Infrastructure Capacity was supposed to be the flagship of this Package, which is why it was received with the most optimism out of GFTP’s three directives. However, the more hands the Package passes through, benefits seem to disappear, especially for the rail sector.

The EU Council is currently revising the Regulation draft approved by the European Parliament Committee on Transport and Tourism (TRAN) at the beginning of March. The changes proposed by the Council, however, seem to be damaging for the various sectors of the rail freight industry, especially Railway Undertakings (RUs). A meeting was held on 14 May 2024, which was the last opportunity to propose amendments to the Regulation before the voting process could start.

From hero to zero?

Initially, the Capacity Management Directive, as its informal title is, received the most positive feedback from the rail freight industry. This is because it was expected to pave the way for smoother operations based on efficient capacity allocation and better coordination of different IMs. One of the fundamental changes the rail freight industry expected from it concerned path allocation and the creation of beneficial financial conditions for RUs that would be compensated in case of cancellations.

However, the general feeling is that if the version of the Regulation amended by the EU Council gets approved, the situation will definitely not improve and might even get worse. Various sources within the industry confirmed this. Originally drafted by the European Commission (EC) in July, the purpose of the Regulation was to create more “flexible train runs adapted to just-in-time supply chains for freight shippers”. As many agree, the problem does not lie with capacity itself but with how (not) efficiently it is allocated.

The draft delivered by the EC stated that RUs would have been able to request capacity at any time and would be safeguarded in case of Temporary Capacity Restrictions (TCRs). These initiatives aspired to reduce the power exercised by Infrastructure Managers (IMs). Once the EC’s draft reached the European Parliament, more amendments aimed at containing the strength of IMs.

However, such provisions seem to be gradually disappearing from the Directive. Several sources indicated that these new changes are being implemented under pressure from some IMs. The same sources identified several problematic points with the Directive, but some stand out from the rest. For example, deadlines concerning the entry into force of the Regulation and transitional provisions are significantly delayed.

Articles 35 and 40

To begin with, it is essential to mention Article 35 of the Directive. This Article touches upon capacity restrictions and initially aimed at creating fair reciprocal conditions between RUs and IMs in case of train path changes and cancellations.

When approved by the EU Parliament’s TRAN Committee, the Directive had two aims: first, in case of capacity restrictions that would result in capacity changes, the concerned IM should come up with a financially viable alternative for the concerned RU. Second, in case of capacity restrictions that would result in economically unviable capacity changes and/or cancellations, the concerned IM should compensate the concerned RU via a penalty.

According to several industry sources who ring the alarm bell while the EU Council reviews the document, some conditions seem to worsen. Specifically, after some proposed amendments, IMs will probably not be obliged anymore to provide financially viable alternatives as described initially in Article 35. At the same time, the provided possibility of financial compensation in case of capacity changes is also ruled out. However, the possibility of compensation in case of cancellation remains in place.

The changes in capacity envisioned in Article 35 are enabled by Article 40 and Annex I. Article 40 clearly states that when either an IM or RU cannot respect an allocated capacity right, whoever initiates the change shall pay a penalty to the other party. In other words, if an IM cancels a slot it needs to pay a fee to the RU and vice versa. However, the EU Council is now adding a clause exempting IMs from paying the penalty if capacity restrictions comply with Annex I, which some sources define as insufficient.

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Author: RF Editorial

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