Freight transport scheme founders in seaports battle

Date: 04/09/1997

By Bruce Barnard

RENEWED hostilities between North European seaports are undermining the Union's high-profile effort to shift freight off its congested highways and on to underused rail tracks.

Meanwhile, a swing in trade to southern European ports has sparked doubts about the rationale of the EU's road-to-rail campaign.

These problems have resurfaced just as the Union prepares to launch the first of its revolutionary rail freight 'freeways' in January next year linking Rotterdam, Hamburg and Bremerhaven with Milan, Verona and the southern Italian ports of Brindisi and Gioia Tauro.

While publicly welcoming the freeways, executives in the Le Havre-Hamburg port range are privately engaged in a whispering campaign, claiming their rivals use subsidies to 'steal' cargoes and pressing their governments to suck the European Commission into their disputes.

In a landmark decision, the Commission fined the Deutsche Bahn (DB) 11 million ecu in 1994 for 'rigging' its rates to ensure containers were shipped through Bremerhaven and Hamburg rather than Rotterdam and Antwerp even when they were closer than the German ports.

The ruling, which is subject to an appeal, has had little impact on the market. The DB dropped its rates, but cargoes from southern Germany still pass through Bremerhaven and Hamburg. Indeed, NDX Intermodel - a joint venture between CSX, the biggest US railway company and D-Bahn and NS Cargo of the Netherlands - shaved the frequency of a Rotterdam-Munich service only weeks after it was launched earlier this year because of a lack of business.

The German ports have stepped up hostilities against Rotterdam claiming it gets an unfair competitive edge because the Dutch government will not charge freight trains track fees until 2000. The issue was politicised when the transport committee of the Bundestag, Germany's lower chamber, issued a report in July repeating allegations of Dutch 'cheating'.

The Commission agrees in principle with these claims, but it is treading in a grey area. While subsidies are illegal, they can be used to promote the shift of freight from road to rail. The Commission itself has part-financed a transAlpine rail service between Munich and Verona which is pioneering US technology.

With applications for subsidies to launch combined transport services flooding in, a clash between the institution's competition and transport directorates-general is inevitable.

The situation has become even more complicated as newcomers are challenging the state rail monopolies for the first time, but want subsidies to get started.

Benthemier Eisenbahn AG, an independent German rail operator, has won permission from the Dutch government to operate services within the Netherlands in direct competition with NS and wants cash from the Pact programme to pay for alterations to its locomotives to use the Dutch track.

These relatively small operations have a disproportionate impact because access to rail services will be a key factor in deciding the outcome of the power struggle in the Le Havre-Hamburg range. Rotterdam, the world's largest port, has a key weakness: poor hinterland rail connections. Hamburg, its closest competitor, has unrivalled rail links.

The EU's pioneering freeways have escalated the dispute because Hamburg did not make it to the original starting line with Rotterdam.

France helped out by refusing to allow a debut freeway between Antwerp and Italy to cross its territory bringing Hamburg into the frame. Its refusal to allow newcomers to use its planned freeway between France, Luxembourg and Belgium is a serious set-back to the concept because it will prevent the optimum exploitation of one of the most promising routes, between Germany and northern Spain.

The freeway routings have been overtaken by developments in the market-place, notably a dramatic rise in the volume of freight which used to pass through Le Havre-Hamburg but is now being handled by new ports in the Mediterranean. Gioia Tauro has come from nowhere in two years to handle a forecast 1 million containers in 1997.

The forthcoming ports policy paper from the Commission in the autumn is not likely to reflect these changes.