European Parliament. Photo: Wikipedia

Support for rail industry proving complicated and divisive

Germany, Britain and France are all finding support for their rail industries to be a complex matter. Competing interests have survived the coronavirus pandemic, and pleasing everyone is proving a headache for administrations across Europe.

Until the coronavirus pandemic monopolised the headlines, the health of German state railway operator, Deutsche Bahn and its DB Cargo subsidiary, was the nation’s hot topic of conversation. As SpoorPro, the Dutch-language cousin of RailFreight.com reported last week, DB Cargo saw its net loss increase by “a whopping” 43 per cent last year to 488 million euros (440 million British pounds), on a turnover of 3.36 billion euros (just over three billion British pounds).

Concern over dominant state owned operators

With five years of losses in a row, the German government was already preparing a rescue deal, before the pandemic struck. Now that package has been revised to support the whole business, and that is proving a bitter pill to swallow for independent players in the German market.

At the head of the queue is passenger operator FlixTrain, which plans to run competing services between major German cities. AllRail – the Alliance of Passenger Rail New Entrants, representing private European rail operators, says that the pandemic will provide an opportunity for state-owned operators like DB to solidify their position in the market.

Bail out an unwelcome precedent for Europe

“DB seems to be incessantly using crisis situations to strengthen its competitive advantage”, says the concerned CEO of FlixTrain’s parent FlixBus, André Schwämmlein. He has written to the European commissioner for competition, Ms Margrethe Vestager, calling for measures to balance competition in the German rail market. “Such a pattern could set a dangerous precedent in the European Union, turning back the clock on decades-long efforts and preventing other private rail services from launching competitive offers across Europe in the foreseeable future.”

DB Cargo supports German industry, but it is an influential part of government policy and many say that its position is too dominant

Meanwhile, concerns have been expressed about the dominant position of DB Cargo by the Berlin-based industry lobby group Netzwerk Europäischer Eisenbahnen (European Rail Network). They claim that state aid is eroding standards at the state operator, stifling innovation and costing the taxpayer. Ultimately, they say, that is stifling government policy to decarbonise the German economy.

Temporary rail nationalisation in UK

This may sound all too familiar to UK readers, where conflicting policy is blamed for slow progress towards a green, rail-based economy. However, the rail freight sector has been devolved from government ownership, since the privatisation of the UK network in the 1990s. In contrast to the German model, deregulation in the market has allowed many operators to take a stake in both passenger and freight operations – ironically including DB Cargo UK, a subsidiary of the German state player.

Under temporary emergency measures agreements (EMAs), the UK government effectively nationalised the passenger network in April. In a significant move this week, the Office for National Statistics (ONS) has reclassified passenger train operating companies as ‘public non-financial corporations’. This places their performance within the national balance sheet, and signifies a likely extension of the period of EMAs.

France waives access charges

Since the infrastructure manager, Network Rail, was brought back within the oversight of the government, that effectively leaves freight operations as the only significant commercial operation on the British network. It does not however mean that investment has stopped. In fact Britain has, at least, a stated intention to develop its network to a greater extent than most European neighbours.

SNFC Fret
Freight operations in France are to be relieved of track access charges for the rest of 2020, and rates will be halved for 2021 in a government effort to support the sector (SNCF Fret)

The closest fo those neighbours, France, has just sought to follow suit. After last week’s announcement by French President Macron, that a new investment programme would see the country’s regional railways boosted, our sister service RailTech.com reported that track access charges would be waived for the rest of 2020, and halved for 2021.

Following on from his President, recently appointed Prime Minister Jean Castex announced this new support measure on 27 July. He was speaking after touring the Valenton intermodal terminal at Bonneuil-sur-Marne in the southeastern suburbs of Paris. “The government is giving a really powerful signal which is the first step in what I will call the rail freight revival plan”, he said, perhaps sharing the limelight with his President.

Track Access Charges Summit 2020

Track access charges are the biggest talking point among operators, administrators and environmental activists. All these stakeholders say that charges mitigate against modal shift, making rail less competitive than road logistics. Many say trucks do not pay for their true impact on infrastructure and environment.

Taking up the argument, and as a forum for discussion, ProMedia is organising the Track Access Charges Summit 2020 to take place on 14-15 October in Riga, Latvia. The programme is available on the event website. Meanwhile response to the coronavirus pandemic continues to evolve.

Author: Simon Walton

Simon Walton is RailFreight's UK correspondent.

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