Monday, November 18, 2013

Road, Rail and Freight Forwarding and Logistics Interests Unite and Sign Up to European Open Letter

Concerns That Politicians Will Get it Wrong (or Serve National Interests) Regarding 4th Railway Package Prompts Action from the Industry
Shipping News Feature

EUROPE – A heady mix of heavyweight names including freight forwarding and logistics representatives have written to the Members of the Transport and Tourism Committee of the European Parliament explaining, in no uncertain terms, their opinions on the Committee’s deliberations on the 4th Railway Package, which is to be put in front of the European Parliament and Council with six legislative reports being voted on later this month (November 26). The list of signatories to the open letter includes several private European rail interests, the Rail Freight Group (RFG) and even the International Road Transport Union (IRU), which might appear at first sight to be an unlikely bedfellow to the others.

This document however is a way that many in the industry, from freight forwarding associations such as Clecat, through to the Alliance for European Logistics (AEL), infrastructure groups such as COMSA EMTE to train, bus and coach operators, feel they can express concern about the way things are developing. The letter, which is published in full below, is a clear message to the politicians explaining that without proper rules and strict management to avoid vested state interests, rail freight and passenger traffic will founder on a lack of investment as potential stakeholders pull back, observing that certain governments are willing to subsidise national groups, or turn a blind eye to dubious accounting techniques, to the detriment of the open market.

In some ways the letter is a thinly veiled attack on the behaviour of the German (and presumably French) governments who have been accused of illegally supporting transport operations based in their territories, either directly, or by inaction when accusations of wrongdoing arise. Full details of the comprehensive case made in January by Lord Tony Berkeley, Chairman of the Rail Freight Group regarding double dealing in the industry are available to read in our story at the time. The Open Letter, dated November 15, reads in full:

4th Railway Package - Governance part

Full transparency is necessary to attract private investment

We write as companies and associations who are concerned about the progress of the 4th Railway Package in the European Parliament and Council. We know it is complicated, and we appreciate how much time you and your colleagues have spent debating rail issues in recent years. We very much hope that the EP will manage to make good progress on the package by mid-April’s final plenary session. 

We, who are interested in seeing rail passenger and freight traffic grow in a competitive market, are concerned about the risks to private investors of failing to complete the package and, in particular, if the Governance section of the Commission proposals fails to retain the full requirements of transparency in the ‘Chinese Wall’ part. Private investors are essential to the growth and efficiency of the rail sector, but there are unquantifiable ‘political’ risks if these investments are found to be subject to unfair competition.  

Fair competition between state owned companies and private ones can only be achieved if there is full transparency of financial flows between the RU and IM in both directions. Recently, the Commission challenged DB for alleged unfair financial transfers from DB Netz to their train operator, and there are similar concerns about lack of transparency in France and Austria which would seriously disadvantage new entrants and their investors without an effective Chinese Wall.   

So, after the original separation proposal (which we supported) from the European Commission was watered down, we believe that the only solution is to retain the full Chinese Walls as proposed by the Commission, ensuring that any financial flows between IM and RU, either directly or indirectly, are fully transparent and monitored by the regulatory body who must have full powers of enforcement. Without transparency, regulators cannot do their job to make sure cross-subsidisation does not exist. 

The retention of the full Chinese Walls will send a message to investors that the rail business is a good one, with known commercial risks but few unknown political ones. Without this, we foresee no competition and service quality improvement on rail market. It would result in a reversion to state owned companies having most, if not all, the rail business in the future; in fact reverting to before the First Railway Package in 1991! 

We are sure that you will wish to see the completion of the Single Market in rail before the end of this session of the EP. We therefore urge you to ensure that in the negotiations on amendments this important principle of transparency is retained. We are at your disposal for further discussions or explanations.

Apart from those mentioned above signatories include: mofair, National Express, the First Group, the Freight Transport Association (FTA), Netzwerk, HKX, Hector Rail and Westbahn.

Photo: Courtesy of Hector Rail