The World Bank

Chemins de fer de L’Europe:Vue du Reste du Monde

Louis S. ThompsonRailways AdviserThe World Bank

5 Decembre 2001

The World Bank

Chemins de fer de L’Europe:Vue du Reste du Monde

? Comparisons of EU Railways with others? Railway change outside the EU? The Commission Orders – the shape of

change? Changes in the EU Railways: the clear, the

possible and the confused

The World Bank

Comparisons of E.U. Railways with others

? High Speed Technology is superb, and not equaled except in Japan. BUT:

? Not large compared with other major railways (Km, Pass, P-Km, Tons, T-Km)

? Physical productivities not high (traffic density, wagon, coach, labor), and labor productivity is not growing very fast

? Relatively short trip or haul shows urban impact and weakens competitive position. Effect of borders for freight

? EU Rail market shares are low and falling further

The World Bank

Rail Route Kilometers

0

40,000

80,000

120,000

160,000

200,000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

AK

OR

IND

JPNC

AN

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Passengers Originated (000)

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

AK

OR

IND

JPNC

AN

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Passenger-Km (000,000)

0

100,000

200,000

300,000

400,000

500,000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

AK

OR

IND

JPNC

AN

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Tons of Freight Originated (000,000)

0

200

400

600

800

1000

1200

1400

1600

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Ton-Km (000,000)

0

500,000

1,000,000

1,500,000

2,000,000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

AK

OR

IND

JPNC

AN

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Comparisons of E.U. Railways with others

? High Speed Technology is superb, and not equaled except in Japan. BUT:

? Not large compared with other major railways (Km, Pass, P-Km, Tons, T-Km)

? Physical productivities not high (traffic density, wagon, coach, labor), and labor productivity is not growing very fast

? Relatively short trip or haul shows urban impact and weakens competitive position. Effect of borders for freight

? EU Rail market shares are low and falling further

The World Bank

Rail Traffic Density(T-km+P-Km)/Km

0

5,000

10,000

15,000

20,000

25,000

30,000

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

AK

OR

IND

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Annual Rail T-Km/Wagon

0

500

1000

1500

2000

2500

3000

3500

4000

4500

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Coach Productivity(P-Km/Coach+MU)

0

3000

6000

9000

12000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

A

KO

RIN

DJPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Output/Employee(T-km+P-km)/Employee

0

10002000

30004000

5000

60007000

80009000

10000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

A

KO

RIN

DJPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Ratio of Rail Labor Productivity1999 to 1980

0

50

100

150

200

250

300

350

400

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

Note: Amtrak is 110

5 growth%

The World Bank

Comparisons of E.U. Railways with others

? High Speed Technology is superb, and not equaled except in Japan. BUT:

? Not large compared with other major railways (Km, Pass, P-Km, Tons, T-Km)

? Physical productivities not high (traffic density, wagon, coach, labor), and labor productivity is not growing very fast

? Relatively short trip or haul shows urban impact and weakens competitive position. Effect of borders for freight

? EU Rail market shares are low and falling further

The World Bank

Average Length of Rail Passenger Trip (Km)

0

100

200

300

400

500

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

Amtrak = 450

Commuter/regional Impact

The World Bank

Average Length of Rail Freight Haul (Km)

0

200

400

600

800

1000

1200

1400

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

All Truck Competitive

The World Bank

Comparisons of E.U. Railways with others

? High Speed Technology is superb, and not equaled except in Japan. BUT:

? Not large compared with other major railways (Km, Pass, P-Km, Tons, T-Km)

? Physical productivities not high (traffic density, wagon, coach, labor), and labor productivity is not growing very fast

? Relatively short trip or haul shows urban impact and weakens competitive position. Effect of borders for freight

? EU Rail market shares are low and falling further

The World Bank

Rail Ton-Km as Percent of All Surface ton-km

0

10

20

30

40

50

60

70

80

90

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

AK

OR

IND

JPN

CA

N

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail P-Km as Percent of All Passenger Transport and of Public Transport Only

0

10

20

30

40

50

60

70

CZ HU JPN

USA A B D DK E FIN

F EL IRL I NL P S UK

AllPublic

The World Bank

Ratio of 1998 Ton-Km to 1980 Ton-Km

0

50

100

150

200

250

USA A B D DK E FIN F EL IRL I NL P S UK

Truck Rail

The World Bank

Ratio of 1998 P-Kmto 1980 P-Km

0

50

100

150

200

250

USA A B D DK E FIN F EL IRL I NL P S UK

Auto+BusRail

The World Bank

Percent of Rail Passenger Traffic to Total Rail Traffic

P-Km/(P-km+T-Km)

0

1020

3040

50

6070

8090

100

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Railway change outside the EU

? The US case: trucks, rail air deregulated in 1981. Demand up, prices down, productivities up – along with industry concentration

? Latin America and Africa (passengers and freight): concessioning. Demand up, prices down, productivities up

? Japan (1987): privatization: Demand and productivities up.

? Broad model emerging with two dimensions and a question: structural change, private role, and competitive objectives

The World Bank

Ton-Km in the US By Mode(000,000 Ton-Km)

0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

29 34 39 44 49 54 59 64 69 74 79 84 89 94 99

Rail Truck

Lakes Canals

Pipelines Air

The World Bank

Freight Modal Shares (% T-Km) in the US

0

10

20

30

40

50

60

50 55 60 65 70 75 80 85 90 95

Rail Truck Lakes Rivers Pipelines Air

Deregulation

The World Bank

Modal Share (% P-Km) of Intercity Public Carriersin the US -- Autos Excluded

0102030405060708090

100

25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

RailBusAirWater

The World Bank

Productivity in US Railroads:Index: 1982=100

0

50

100

150

200

250

300

350

400

450

50 55 60 65 70 75 80 85 90 95

Locomotives:(Ton-km/horsepower)

Labor(Ton-km/employee)

Wagons(Ton-km/ton of wagon capacity)

The World Bank

US Rail Freight Revenue(US cents/ton-km)

0

0.5

1

1.5

2

2.5

3

3.5

1970 1975 1980 1985 1990 1995 2000

Constant 1988 dollars

Current dollars

The World Bank

Directions of Railway Change

Private InvolvementSt

ruct

ural

Cha

nge

Mixtures and partnerships are possible!

Public Ownership

Partnerships: Concessions or Franchises Awarded Private Ownership

Integral

China, Russia and India (ministries), MAV, SRT, MZ, others, (SOE's)

Argentina (13), Brazil (9), Mexico (5), Peru (3), Guatemala, Bolivia (2), Panama, Cote d'Ivoire/Burkina Faso, Cameroon, Congo (Brazzaville), Malawi, Madagascar, Jordan

New Zealand, Ferronor (Chile), CVRD (Brazil), A&B (Chile)

Dominant Integral, Separated Minority Operators

Amtrak, VIA, Japan Freight

Mexico City suburban, CONCOR (India)

US Class I, CN and CP, East/West/Central Japan Railways

SeparationE.U. and Chile passenger

Swedish suburban, FEPASA (Chile), LHS line (Poland)

U.K. franchises and EWS, Polish and Romanian freight

The World Bank

Competitive Objectives

? Dominant user, parallel tracks? Subdominant users? Competition on the same tracks? U.K. Paradox: little COMPETITION

The World Bank

The Commission Orders(and the White Paper)

? “Shake up”: promote competition across borders, clarify government policies (restrict subsidies). Market definition objectives not clear, private sector not mentioned (explicitly).

? Mandated accounting separation plus some liberalized access – but policies are evolving in favor of institutional separation and competition for as well as in markets

? Railway response: strong opposition, slow change.

? British and Swedish cases.

The World Bank

Percent of Rail Passenger Traffic to Total Rail Traffic

P-Km/(P-km+T-Km)

010

203040

50607080

90100

CA

N

USA

ES

RU

SLV

E

SLK

C

HA

FIN

CZ

PL

S A TU

R

RO

B

HU

D F IN

D

E I P UK

KO

R

DK

IR

L

NL

EL

JPN

FREIGHTDOMINANT

PASSENGERDOMINANT

“Balanced”

The World Bank

E.U. Railways Future?? Agreed policy needed on separation, access

charges, slot priorities and competition formarkets. Current conflict is the worst outcome.

? Assembling and selling slots – mechanism?? Freight competition and privatization

objectives?? Experience suggests:

? Competition for regional, urban and suburban passenger services clearly works

? Freight privatization must be considered? Intercity passenger services likely to be separated

with a mix of public private provision (for and in the market)

? Infrastructure likely to remain public, but management contracts are possible.

The World Bank

Rail Staff

0

500,000

1,000,000

1,500,000

2,000,000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

AK

OR

IND

JPNC

AN

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Locomotives

0

5,000

10,000

15,000

20,000

25,000

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

AK

OR

IND

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Multiple Unit Cars

0

2000

4000

6000

8000

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

A

KO

RIN

D

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Passenger Coaches

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

AK

OR

IND

JPN

CA

NU

SA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Freight Wagons

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000550,000600,000

CZ

SLK

HU

PL RO

TU

RSLV

ER

U

ES

CH

AK

OR

IND

JPNC

AN

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Rail Employees/Km

0

5

10

15

20

25

30

CZ

SLK

HU

PL RO

TU

R

SLVE

RU

ES

CH

AK

OR

IND

JPN

CA

N

USA

A B D DK

E FIN

F EL

IRL

I NL

P S UK

The World Bank

Employees of US Railroads

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

40 45 50 55 60 65 70 75 80 85 90 95

Class I Railroads

Because of scale, Regional and Local Railroads cannot be shown properly. In 1998 Regional Railroads had 10,995 employees and Local Railroads had 11,741 employees

Competition on Parallel Tracks:U.S. Class I Railroads

Competition on the Same Tracks:Multiple Use U.S. Freight Tracks

(Excluding Amtrak)

Amtrak: The Secondary User

Amtrak owns or controls

The Full Predominant/Secondary Model:Multiple Use U.S. Tracks Including Amtrak

U.S. Rail Line Traffic Density

UK Franchises: (not much) Competition