An important step in European rail liberalisation was taken on 15 March 2003 with the implementation of the EU’s first rail infrastructure package. From that date, EU countries must permit any cross-border freight trains from a member state to operate on any track within the Trans-European Rail Freight Network (TERFN).
First rail infrastructure package
The EU’s first rail infrastructure package consists of three directives relating to open access, allocation of and charging for infrastructure capacity, and licensing:
1. Open access
Directive 2001/12/EC (amending Directive 91/440/EEC), on the development of the European Community’s railways, provides for a right of access for all licensed cross-border rail freight operators to the TERFN, a Europewide rail network of some 50,000 kilometres. The directive provides that, as of March 2008, the TERFN open access rights for licensed international freight traffic will be extended to the entire European rail freight network (although the European Parliament and EU Transport Commissioner Loyola de Palacio now support an acceleration of this timetable).
In addition, the recent Article 6(3) provides that member states must ensure that the body determining access to the infrastructure does not also provide rail transport services. This is likely to require legal separation between these two functions (although a vertically integrated railway operator will not be affected if the access determination and granting functions are carried out by a third party, such as an independent infrastructure manager). The continuation of Article 6(3) in its present form is, however, subject to the submission of a report by the European Commission by 15 March 2006.
2. Allocation of railway infrastructure capacity, charges and safety certification
Directive 2001/14/EC (amending Directive 95/19/EC) concerns the principles and procedures to be applied with regard to the setting and charging of railway infrastructure charges and the allocation of railway infrastructure capacity. The directive requires there to be transparency in both charging and allocation, the setting of tariffs by the infrastructure manager (or by its member state), the publication of a network statement (including information on the capacity allocation rules, tariff structure and priority rules), and the setting up of a regulatory body to which appeals can be made in the case of discriminatory treatment. These provisions are intended to allow the infrastructure manager to market and make optimum effective use of the available infrastructure capacity.
3. Licensing of railway undertakings
Finally, the first rail infrastructure package sets out in Directive 2001/13/EC (amending Directive 95/18/EC) the criteria railway companies must meet in order to obtain, review or amend a licence to run rail freight services over the TERFN. Companies must comply with financial, economic and safety conditions in order to obtain a licence. Licences will be issued by a licensing authority, and once issued will be valid throughout Europe.
Second rail infrastructure package
The second package was adopted by the Commission on 23 January 2002 and by the European Parliament on 14 January 2003. Its aim is to improve safety, facilitate interoperability and to speed up the establishment of an integrated railway area.
The Commission has proposed:
– the establishment in 2004 or 2005 of the European Rail Agency to steer the technical work on safety and interoperability.
– a directive on safety, laying down a clear procedure for granting safety certificates.
– amending the current directives on interoperability and speeding up the timeframe within which technical interoperability can be achieved.
– joining the Intergovernmental Organisation for International Carriage by Rail (Otif), which drafts regulations on, for example, the carriage of dangerous goods by rail.
– extending and speeding up the opening of the rail freight market.
In relation to such a wider and faster opening of the market, EU Transport Commissioner has suggested that the liberalisation of the international rail freight network could not wait until 2008 as initially envisaged in the first rail infrastructure package, and that the new measures ought to come into force in 2006. Indeed, the European Parliament, in approving the first rail infrastructure package, voted for a complete liberalisation of the international network for goods and passengers by 1 January 2006. It is expected that the Commission will now put forward proposals to further liberalise both freight and passenger rail transport.
The key issues which need to be addressed if the TERFN is to be a success include:
– Speed of implementation. The speed at which the member states have taken steps to implement the new directives into their own national law has varied greatly across the EU. This lack of cooperation among member states will inevitably cause delay and reduce the TERFN’s chances of success.
– Drivers, languages and communication systems. The majority of the members of the European Parliament are in favour of the introduction of a European driving licence and the harmonisation of driving times and rest periods. With regard to languages, it is the Commission’s wish that a single working language for operational communications in the European railway industry should be introduced. This working language would not necessarily be English or French and could depend on local circumstances.
– Capacity and charging. If the TERFN is to be a success, capacity on the network must be allocated on a non-discriminatory basis between the various train operators wanting to provide services on the network. There will therefore need to be (in reality and not just in form) a degree of separation between the companies actually running services on the network and those allocating capacity. This will facilitate there being no discrimination against particular operators wanting to run services outside their own national network.
– Consistent treatment of licence applications. Licence applications must be treated consistently and once granted be mutually recognised. Some applicants have alleged excessive delay and frustration of the process at the hands of national operators.
– Interoperability. Two major directives have been introduced in order to try to bring about technical interoperability across the TERFN. The first is Directive 96/48/EC, which deals with interoperability on the high-speed networks. This directive was meant to be implemented into national law by 2002. The second is Directive 2001/16/EC, which relates to the conventional rather than the high-speed networks, and should have been implemented into national law by April 2003. One of the main aims of the interoperability directives is to assist manufacturers of trains through the adoption of common standards for equipment. However, interoperability’s main issue is cost: it is now estimated that interoperability on the high-speed networks alone will cost billions of euros.
– A new mindset. Delays at frontiers, lack of forward-thinking, communication failures, operational problems and ‘passive resistance’ by some national operators damage the cause of freight rail as a whole. A new customer-focused attitude is needed.
– Intermodal competitiveness. A mech-anism (if properly implemented) for genuine competition between freight train operators is only part of the equation. Liberalisation will only be a success if rail’s price and performance is competitive to road and inland waterway freight. The efficiency gains and cost savings to be achieved through interoperability, open practices and a new mindset will assist.
Raymond Beven is head of Ashurst Morris Crisp’s transport practice