A clear mandate for open access
Twenty UK parliamentarians and RFG members visited Cologne, Frankfurt and Ludwigshafen last month to observe rail freight in action, including post and parcel, intermodal and air services, as well as road, rail and river terminals and BASF's major operations. We also met DB Cargo, infrastructure provider DB Netz and two independent freight train operators, Connex and Rail4Chem.
We were particularly interested to see how rail freight was operating on the continent, the responses of customers, and the extent to which open access, officially starting in March 2003, had already brought competition for traction, and the effect this was having on customer attitudes.
On the way through Belgium, we heard about the restructuring of B Cargo, the freight division of state rail operator SNCB. A separate company will mean that B Cargo will have its own locomotives and drivers and increase its labour force from 400 to about 3,500.
Fifty-five percent of B Cargo's 60m tonnes a year cargo is international. Its 10-year plan is to achieve a 40% growth in traffic. New locos will haul 2,000 tonnes compared with 1,300 to 1,500 at present, and will operate internationally. A new train service will soon start from Antwerp to St Louis, near Basle, operated by B Cargo all the way.
There is only one independent operator in Belgium, Dillen Lejeune, which works closely with intermodal operator Hupac. Intercontainer has an operating licence in Belgium, but does not run trains at present, and there is clearly fear that allowing open access will offend French sensibilities.
In Germany, the infrastructure is owned and operated by DB Netz, which, like DB Cargo, is a subsidiary of Deutsche Bahn. The rail network comprises 36,000km of track, producing 1bn train km a year. DB Netz turnover is €3.5bn and annual investment t4.5bn.
The company's aim is to optimise the network and introduce segregation of fast and slow traffic, with 10,000km of segregated lines in the next 10 years.
DB Netz wants more freight traffic, particularly international. Its objectives are to increase traffic, improve competitiveness and performance, reduce costs and improve availability.
DB Cargo has a turnover of €3.4bn. Last year it hauled 277m tonnes – 74.5bn tonne km – equivalent to 100,000 lorries a day. DB Cargo has 29,000 employees, 115,000 wagons and 3,600 locomotives.
The German government wants DB Cargo to double its current traffic by 2015, but the operator believes this is not achievable and has its own target of a 63% increase to 110bn tonne km a year.
DB seeks to extend its operations downstream, and has bought Stinnes for €2.5bn, which includes Schenker, a major competitor of Danzas.
In Cologne, we visited the Deutsche Post/Danzas/DHL terminal, where one train takes both parcels and third-party logistics traffic by rail, nightly to Berlin.
One Danzas business unit was to be designated as the rail logistics (service specification and purchasing) unit for much, if not all Deutsche Post traffic, thus concentrating the group's rail purchasing power and allowing a series of "private" DP networks to be built up, with rail traction supplied on a competitive basis.
Danzas carries 2m loads a year, of which only 45,000 go by rail. DHL is working on highspeed rail services from Germany to the UK and elsewhere.
The HGK terminal in Cologne is the second largest inland terminal in Germany, handling 1,000 containers a day, as well as many other products, including bulk. It has three 400 metre tracks under cranes, and is open 24 hours a day, six days a week.
One train operates to Rotterdam daily by HGK/Short Lines, carrying 280,000 boxes a year. The West Terminal is only for rail/water interchange, with trains to Hamburg, Bremerhaven and Italy, with plans for another to Turkey.
HGK has 30km of track and 30 diesel locomotives, which can also operate over DB Netz tracks. They serve 70 local terminals, including handling 250,000 tonnes of domestic waste to incinerators.
Connex operates both passenger and freight services in Germany. It has 40 freight locomotives and 200 staff handling 3.5m tonnes a year.
At Frankfurt airport, we saw a sad sight – the rail freight terminal with no trains. It was built 10 years ago with two tracks, each 200 metres long, to be used by Cargo Sprinters.
Two services ran nightly to Hannover and beyond for a year, reliably, at speeds of 100120kph. Then, at the time of the Hannover Fair, DB Netz cancelled the paths since, it said, they were needed for extra passenger services.
The service never restarted.
The rolling stock is still said to be available, but it is alleged that DB does not want to operate it itself, but will not sell or lease to a potential competitor.
So the rail terminal is currently unused.
Frankfurt airport wants the service to restart and is in discussion with other airports over inter-airport services, adding other logistics cargo to make a longer train.
BASF is the largest global chemical company, and we spent a day at its headquarters and works at Ludwigshafen, a company town in all senses of the word.
The company works and thinks rail. The site has 220km of rail track, operates 600,000 tonnes of intermodal traffic by rail every year, as well as 6,000 barge movements averaging 700 tonnes each, with the largest being 2,000 tonnes.
BASF owns 3,100 rail wagons and operates 28 conventional trains a day, plus 12 intermodal. The company has 460 rail loading points and much of the transfer inside the vast plant is by rail. It moves 900 wagons a day and has a modern marshalling facility, as well as in-house maintenance for the rail equipment.
Rail4Chem – jointly owned by BASF, Hoyer, VTG Lehnkering and Bertsch – operates mixed tank wagons, tank containers on flats and conventional wagons, sometimes all in the same train.
BASF organises its rail freight purchases on an "open book" basis, with a mix of annual (and longer-term) and spot contracts.
Company traffic analysis confirmed that 60% of overall traffic, as measured in wagons (and 78% outbound traffic and 62% inbound traffic in tonnes) can be consolidated onto rail shuttles.
These are the basis of BASF's new rail logistics plans, with a goal of reducing costs by 2025%, using a range of competing traction providers, including Rhenish Rail, SBB, and Rail4Chem for long distance rail freight, in addition to DB.
BASF received a 50% state grant for the intermodal terminal, which must have open access. Rail4Chem uses Siemens 6.4kW/10k HP locomotives, technically able to operate in Austria and Switzerland, but not allowed into the latter. It is capable of handling 2bn tonne km a year.
In conclusion, customers like the new open access train operators, even though they have to put up with barriers to entry and operations which would turn people green if allowed in the UK:
they have to buy their diesel or electric current from their competitor at unregulated prices
they cannot operate into Hamburg or across frontiers, for example to Poland, since DB retains a ransom strip of the last kilometre of track
if they want to go into Belgium via Aachen, they have to change locos twice, since they are not allowed on the route which is continuously electrified
they sometimes have problems finding suitable insurance and finance, while DB, with a government guarantee, can get it cheaper
most private services are intermodal, because DB has a monopoly of conventional wagons.
Until recently, there was no commercial regulator in Germany, and they have alleged instances in which, when they sought a new train path from DB Netz for a customer, that customer mysteriously received an approach from DB a few days later, offering to provide the same service at a special cheap rate.
In spite of this and more, the customers say that the open access services are more reliable, and their charges up to 30% less than those of DB.
It is clear that open access, and the competition for service provision that can and should go alongside it, is what is encouraging existing customers and new ones to use rail and provide the growth in rail freight traffic that is in European and national transport policies.
However, they are few, and although this works for intermodal traffic, it is much more difficult for conventional wagonloads, since the national railways own most of the wagons, and, it seems, would rather let them rust in a siding than hire them to a competitor. Similar problems occur with traction, where the cost of new traction is a major barrier to entry. Again, national railways prefer to scrap surplus locomotives.
This is the result of 10 years of hard pressure from the EC, and equally hard resistance from some national railways and their governments to change.
The situation is improving, as it should when, in March next year, most of the main lines in Europe are opened up to any licensed train operator.
The message from the customers we met was clear: give us open access and competition, and we will use the resulting better services and lower prices more and more.
