Revolutionise faster, or rail will hit the buffers

Date: 27/02/1997

By Tim Jones

Railways in Europe need to revolutionise the way they operate or their slow death at the hands of the roads will continue.

Governments know that changes have to be made and are making them but, says Klaus Milz of Europe's biggest rail equipment-maker Adtranz, they do not yet realise how profound these reforms will be.

Milz believes that 15 years from now, European railways will be just one part of a huge freight transport market. Like civil aviation, this will be dominated by a handful of regional operators competing with specialist niche carriers.

“Let us not talk about railways, but instead about big logistics companies serving customers and competition between them,” says the president of Adtranz Europe. “But for this to happen, they must all have free access to the infrastructure.”

Already, American private sector operators have started to appear on Europe's tracks, including Wisconsin Rail, which operates a freight concession in the UK, and CSX in Germany and the Netherlands.

This is the shape of things to come and will require an overarching organisation to allocate slots on the tracks. “There should be a body with the power to look at the total network,” he says.

This may all sound logical, but it will not be achieved without a complete revolution in the thinking of railway companies and their workers.

While some governments, such as the UK, Germany and the Netherlands, have begun major reforms of their railways to prepare them for the future, many others have been slow to change.

Most are still state-owned and are incurring huge losses. Railway operators must overhaul the way they work. Their management know-how in dealing with customers - including big freight clients - has been underdeveloped for too long, says Milz.

Although all of the railways have profitable routes, many lack basic business sense and are having to import marketing and traffic-management expertise from the private sector.

“We want an acceleration of this process so that the railways really take advantage of their potential as quickly as possible,” says Milz. “If it does not happen quickly enough, the situation in overall transport will become more and more critical.”

Adtranz, which was formed two years ago by the merger of the railway systems businesses of Daimler-Benz with those of Swiss-Swedish electrical engineering group ABB, has long taken an interest in the future of rail freight, for obvious reasons. The more the railway companies invest in new equipment, the more Adtranz is likely to benefit.

The company commissioned a former executive, Åke Nilsson, to investigate the decline of rail freight.

“When I began the work, I was struck by two figures,” says Nilsson. “One was the cost of the environmental impact of congestion and accidents in the EU-15 in a year - the external cost of road use - which comes to 200 billion ecu. At the same time, overall traffic is expected to grow more than 60&percent; between now and 2010; and in Germany it will almost double.”

When traffic volumes have grown over the past 30 years, this has tended to go mostly on to roads rather than rail or water. “Even if we broke this trend and the increase were shared by road, air, water and rail, it would still mean that railway traffic would have to double in volume in Europe by 2010,” says Nilsson.

But this will be very difficult, partly because the European rail network is still fragmented.

The European Commission is trying to address this by persuading member states to remove administrative obstacles and open their networks to all-comers so long as they have a valid licence.

In the meantime, Transport Commissioner Neil Kinnock is pressing for the creation of trans-European freight freeways as a short-term answer to the decline of the sector.

The longer-term solutions will be more difficult, warns Milz.

“One obstacle is that infrastructural investment takes a long time and, in the past, people have forgotten to invest in railways,” he says. “Look at the last 15 years, when very little was invested in new lines. There was a lot of modernisation and electrification, but basic investment in new lines on the rail did not take place as it did on the highways.”

Things are changing. In Germany, for example, Deutsche Bahn has announced a programme to invest 40 billion ecu by the end of the century.

“It is not all doom and gloom,” admits Milz. “Things are happening, but are they not happening fast enough.”