01 September 2014

Freight Group and Unions Comment on Change of Network Rail Status  

As Track Returns to Public Ownership (Sort Of) Trains Remain Very Much a Private Affair

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UK – Today (1 September) saw the British government take on Network Rail’s current debt of £33 – 34 billion, effectively bringing the entire operation back into public ownership, a move which met with tacit approval from the Rail Freight Group (RFG) whose Executive Director, Maggie Simpson commented:

“We look forward to working with Network Rail and with Government to ensure that these changes support private sector rail freight operators, customers and suppliers as they seek grow their business and increase the amount of goods moved by rail.”

Unions took the opportunity to hold a protest at the group’s headquarters and campaigned for a full return of the railways to be renationalised. The RFG point out that rail freight has grown 60-70% in private hands over the past two decades with industry investing over £2 billion in that time. The effective nationalisation of the tracks will be a step for enough for the RFG whilst unions would have ‘wheels as well as steel’ back in public ownership.

This latest move however has not been brought about by any sudden change in Tory policy, it was arrived at as what many see as a fudged solution, Labour fell short of renationalisation over a decade ago and the hybrid, shareholder free company which resulted was finally deemed to be too closely linked with public debt to remain off the books.

In July, Lord Tony Berkeley, wrote an open letter to the CEO of German group Deutsche Bahn, Rüdiger Grube and Fondo Strategico Italiano (FSI) boss Michele Mario Elia, criticising the pair’s reported comments on opposition to the European Union’s proposal in the 4th Railway Package to separate infrastructure manager from railway undertaking and it is worth reviewing the views he expressed at that time in the light of the change of status of Network Rail.

Lord Berkeley pointed out that DB subsidiaries operated successfully in the UK and the increase in freight volumes since 1995, largely as a result of competition between operators and the resulting improved service quality and competitive pricing. Berkeley continued:

“I am also curious to know what is meant by the statements regarding France. I have many reports about freight services of DB and other operators being adversely affected because SNCF often gives its own services priority of access to the network. SNCF can do this since the tasks of managing the infrastructure and operating the trains are not actually separated. The infrastructure manager RFF is forced to use the incumbent operator SNCF for maintenance and renewals and for timetabling of train paths, which leads to the type of problems that other freight services encounter. In spite of this effectively integrated structure, SNCF’s freight volumes nave dropped by around 50%.

“We have many operators in the UK owned by national railway companies of other member states – including from Germany, France and the Netherlands. They would not be with us if they did not accept our structure and the ability not only to provide efficient and competitive services but also make a reasonable profit. Conversely, many of our UK operators would like to operate in many other member states, but fear the uncertainty caused by too close a relationship between infrastructure managers, incumbent operators and their governments.

“So can it be that DB, FS and many other incumbents fear that the EU proposals would lead to the type of open competitive market of which SNCF, NS and DB take advantage in the UK, but from which incumbents do not want others to benefit in their home markets? Why do incumbents fear competition on their home territories, when they take such good advantage of it in other Member States?

“The single European transport market should be accessible under the same conditions to all, be they private, public or new entrants. Only this way will we achieve seamless, fair and competitive rail transport across Europe, leading to real growth. It would be good if all operators and infrastructure managers supported this view!”

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