Reducing costs in the Single European Rail Area
Challenge
An integrated, standardized, competitive, digital, and automated railway is a crucial part of the European
transport network for passengers and for freight. However, the cost of managing and developing railway
infrastructure is reaching unsustainable levels, and in Denmark the associated infrastructure cost of moving a
person one kilometre is currently 10-25 times higher for railways than for roads. At the same time, ongoing
electrification of cars and heavy-duty vehicles makes road transport greener. As rail becomes more expensive
and road becomes greener, it is increasingly difficult to justify the considerable national and regional
investments required by railway infrastructure from a socio-economic point of view.
If we allow bureaucratic requirements, high barriers of entry, and expensive technologies to inhibit
competition and increase infrastructure costs, while passenger numbers and freight loads remain miniscule
vis-á-vis other modes of transport, railways will increasingly lose relevance. To keep railways competitive in
such an environment, we need
–
before anything else
–
to initiate an extensive assessment of the EU railway
acquis with the aim of simplifying it and identifying ways to reduce costs.
What drives costs?
One example of high costs is the approval processes for changes to rolling stock and infrastructure. The need
for complicated approval mechanisms and independent assessments
–
sometimes several assessments
–
increases complexity and drives up costs far beyond the direct costs associated with the paperwork. A recent
example is the fitment of Danish trains with ETCS, where more people at the infrastructure manager,
Banedanmark, were employed to keep track of procedures and paperwork than to actually work on installing
the ETCS equipment in the trains.
In the road sector, many companies enter the market, ensuring high competition and lower prices on both
infrastructure projects and the transport of goods and passengers. In rail, however, complicated rules and
procedures inhibit new players from entering. A profoundly high level of competence and sector knowledge
is required from new entrants. This is a significant market barrier, that effectively blocks healthy competition.
The prime example in Denmark is the market for ERTMS. Before the rollout of ERTMS, many companies were
able to participate in signal-related public tenders. Today, only a few players are qualified, and long-term
maintenance contracts in effect create monopolies, where companies to a large degree can decide the cost
and timing of projects. In the Copenhagen metropolitan area, the cost of relocating a railway signal before the
rollout of new signals was 40.000
–
175.000 EUR. After the rollout the cost grew to more than 2,1 million EUR
–
an increase of 1,000-5,000 percent.
Proposal
In short
Interoperability and safety are key to a well-functioning Single European Railway Area, but revisions
need to focus on standardising market with competitive prices and quick time-to-market instead of
monopolies and bureaucratic procedures. The examples above show complexity of the railway sector and its
acquis is a crucial element in driving up costs. New regulation and more demanding standards on top of the
existing ones will only worsen the situation. While evidently bringing improvements, such as needed
standardisation in some parts of the infrastructure, the current acquis is in risk of being a contributing factor
in a modal shift
away
from rail
–
the opposite of the goal set out in the TEN-T regulation and the European
Green Deal.
Examples from Denmark suggests that the current approach to railway regulation in the EU, including the
approach to interoperability, safety and opening of the national markets, could be counterproductive for a
competitive and cost-effective railway.