French run to catch EU freight train

Date: 29/04/1999

By Renée Cordes

ONE cannot help but notice the model of the TGV Est passenger train in the sparsely decorated office from which Louis Gallois, chief executive of SNCF, runs France's national railway company.

Construction of the €3.1-billion high-speed rail line, funded in part by the EU, is set to begin early next year. The line will nearly halve the travel time between Paris and Strasbourg to a little over two hours and will run through southern Germany, Switzerland and Luxembourg.

The company plans to expand international passenger traffic, which accounts for about 20% of revenues, by improving and building high-speed lines as well as investing in rolling stock and new tracks and forging partnerships with airlines to sell seats on one another's networks.

But, like an increasing number of European rail companies, SNCF is also turning its attention to a long-ignored market: international freight. So is Acting Transport Commissioner Neil Kinnock, whose package of proposals aimed at opening up the railways and improving cross-border freight is currently being debated by EU transport ministers.

" For passengers we are able to have one train go through borders," says Gallois. "For freight, we are late and we have to go fast now."

This is the aim of Kinnock's rail liberalisation package, which includes a proposal to put an independent body in charge of allocating train paths.

As part of his efforts to turn this pledge into a reality, Kinnock launched a programme two years ago to set up freight freeways, which involved creating pathways to make non-stop rail freight services throughout Europe possible. However, to date, only one freight freeway between Antwerp and Milan has actually begun operations, largely because of resistance to the idea among incumbent rail operators.

" There is nothing wrong with the basic economics of rail freight on a continent like Europe," says a spokeswoman for Rail Freight Group, a UK-based lobbying organisation. "The Commission has been taking the initiative and telling the rail companies to start giving priority to international freight."

She believes that freight freeways have failed to take off due to railways' reluctance to make them work. "By the time you add up the infrastructure costs, the costs of transporting freight across borders is not competitive," she says.

Soren Rasmussen, managing director of combined transport operator Intercontainer-Interfrigo, argues that freight freeways have not been a success because they were devised by infrastructure experts with a great deal of technical expertise but little knowledge of customer demands.

As a result, he told a recent railway conference in Brussels, the two essential requirements of reasonable price and quality of service have not been fulfilled.

Industry insiders complain it takes longer to transport goods via a freight freeway than before the concept was invented. Realising they are lagging behind, many railway companies have decided not to wait for EU policy-makers to introduce new laws before putting muscle into freight power.

Deutsche Bahn expects to complete the merger of its DB Cargo freight unit with the Netherlands' NS Cargo this summer to ensure access to Rotterdam, Europe's biggest port. According to many market analysts, European railways anxious to remain competitive in international freight will have to form alliances with other rail firms or even trucking or shipping companies to acquire new markets.

But SNCF is taking a markedly different approach, seeking loose partnerships rather than full mergers. As a result, some experts fear that Europe's rail freight market will be split in two, liberalised in northern Europe with a closed system in France, Spain and Portugal.

SNCF is talking to several railway operators in neighbouring countries about possible partnerships. It is also exploring the idea of building a freight corridor from Glasgow to Sopron in western Hungary; a possible new line between Portugal and Germany; and a combined transport operation with Belgium's national railway in addition to investing in rolling stock and railway cars.

" I am sure that in ten years, we will have four or five freight operators in Europe," says Gallois, adding that SNCF intends to be involved in one of them. "We want to have our share of the cake," he stresses, while acknowledging that this could provoke careful scrutiny from EU competition officials.

But building up a European freight system will not be all that easy. Significant hurdles which have yet to be overcome include overcrowded tracks, differing technical specifications for equipment such as signalling systems and varying track sizes from country to country.

This is a problem the industry is already grappling with in passenger

traffic. For example, the Thalys train from Paris to Brussels alone requires four voltages, two frequencies and seven signalling systems. Gallois estimates that it would take at least two decades to set up a uniform signalling system, requiring more than h1 billion worth of investment.

Argue as it might in favour of competition, SNCF appears to be caught between two worlds: the traditional public-service obligations of railways and the increasingly cut-throat world of international freight transport.

But experts warn that unless it puts resources into the latter, there may not be a public service left to defend.

EU Railways' Activities

Source: Community of European Railways