32-41 Garcia Feature

ITE JOURNAL / SEPTEMBER 2003 RAIL FREIGHT TRANSPORT IN EUROPE—TIME FOR A CHANGE While transport in Europe has grown at an annual rate of 2.5 to 3 percent over the last 20 years, rail transport has experienced a significant decline. This process may be appreciated by comparing figures from 1970 and 1999: In 1970, railway market share in the European Union (EU) was registered at 21 percent. By 1999, it had fallen to just 8 percent. This may be explained, to a large extent, by the significant shift toward road transportation, which increased in market share from 30.8 percent to 44.5 percent in the same period. According to the European Commission, the shift in equilibrium between the two transport modes—toward road transport—has been due mainly to the better adaptation of road transport to the logistical requirements of customers but also, to some extent, to the lack of control over external costs generated by road transport, especially those related to social and environmental costs. It is in these aspects of environment and security that rail transport demonstrates clear advantages. Together with the urgent need to resolve the problem of road congestion, this has led the EU to designate rail transport as one of the key elements in the development of the TransEuropean Transport Network. To revitalize rail transport, the European Commission is taking up measures along two lines: investment in railway projects (for the improvement of infrastructure and research and development) and the liberalization of the railway sector. For the latter, a significant step was the December 2000 resolution of the Council of Ministers, which fixed the year 2008 as the deadline for the complete liberalization of the railway sector in the EU. This liberalization process, which began in the early 1990s, likely will have a great influence on the railway sector across the EU in the near future because it will introduce substantial changes in competition. First, EU legislation has provoked structural changes in the national railway companies that traditionally have dominated this sector, to the point of separating the management of infrastructure and operations into two different organizations in various EU countries. Second, under the regulation of Directives 91/440/EEC and 95/18/EC, private companies are allowed to compete at various levels with traditional companies. Third, domestic markets will be opened to international competition in the EU, which will permit foreign companies to provide both international and domestic transport services. Companies within the sector will have to carry out careful strategic analyses to ensure the most favorable use of the new market opportunities and, in the case of national railway companies, will have to face much stronger competitive pressure and develop new decision-aid tools specifically adapted to the characteristics of this new scenario of competition.