Published on October 15, 2007
Slide1: Brussels, March 7, 2007 The Corridor Approach: Business-focused analysis Slide2: Genova Milano Basel Cologne Aachen Rotterdam Bellinzola Brugg Venlo Emmerich Domodossola Bern Novara Stransbourg Metz Mulhouse Namur Mannheim Mainz Karlsrure Koblenz Antwerp Bettembourg Brussels Olten Luino Zurich Frankfourt Definition of the CORRIDOR Slide3: Business Modelling Approach Identification of strategic service Cost accounting analysis for each strategic service Profitability assessment Market analysis to identify potential / actual demand segments Definition of the rail service characteristics (O, D, route, type of train) Check of infrastructure constraints Calculation of cost / revenues for producing the service, by actor: Infrastructure Managers Railway Undertakings Terminal Operators Calculation of the revenue / cost ratio (total and by actor) In case of ratio >1, assessment of potential traffic increase for the same segment APPROACH Slide4: Comparison of level of service by mode 1. Analysis of the transport demand and supply Demand segment (O, D, commodity, tons / week) Total O-D rail time Value of time per ton & per hour Generalized rail transport cost Calculation of RU train price to shipper / pass. (distance related) Calculation of TO price to shipper* * Freight segments only Estimation of the rail level of service Rail Supply Analysis Total O-D time Estimate of RU price to shipper / pass. Generalized transport cost of competing modes Verification of rail competitiveness LoS index = Cgen (other mode) Cgen (rail) Slide5: Economic data collection: drivers of rail cost / revenue 2. General approach to business modelling IM Costs Revenues Renewal Other costs €/trkm €/trkm €/trkm Infrastructure charge €/trkm Price Single Wagon €/wagonkm Pax/ Freight Item Driver Item Driver Infrastructure charge €/trkm RU Train staff costs €/htr Electricity charge €/ gross tkm Depreciacion €/wagonkm Maintenance Other costs % €/locokm €/wagonkm €/locokm Operational mgt Price BT e CT €/trainkm Price Pax €/paxkm Shunting (Marshalling) Transshipment Road delivery Final rail delivery Handling Storage Terminal Operator Shunting (Marshalling) Transshipment Road delivery Final rail delivery Handling Storage €/LU €/ LU or €/ ton €/ Wagon €/ LU or €/ ton €/ LU or €/ ton €/ Wagon €/ LU €/ LU or €/ ton €/ Wagon €/ LU or €/ ton €/ LU or €/ ton € / Wagon LU = Loading Unit Electricity charge €/gross tkm Depreciation (paid by IM) €/trkm Maintenance €/trkm Public contributes Other IM revenues €/trkm €/trkm Slide6: Short Term Business Modelling Marginal effect analysis Identification of interesting market segments (profitable for both IMs and RUs) Identification of LoS constraints New paths to be proposed to the market Identification of new path to be proposed to the market will be carried out through the following actions: Identification of interesting market segments for more paths, such segments shall be characterized by: Rail modal share is not negligible, but other modes are take a significant share of traffic Profitable for both IMs and RUs Good rail LoS compared to road (equal or better) Evaluation of marginal effect produced by adding one path / week Identification of LoS / capacity constraints for producing the additional path Proposal a set of new paths allowing to increase market share over the segments Demand and Market analysis Supply analysis 2. General approach to business modelling Slide7: BASE SCENARIO Approach for 2020 business modelling (1/2) Identification of interesting market segments (rail profitable and competitive) Demand and Market analysis Business modeling Losses / profits of each segment, by operator Rail LoS Supply analysis LoS of competing modes Calculation of BM to-be with additional trains to transport additional demand Capacity constraints ALTERNATIVE SCENARIOS Identification of interesting market segments (rail profitable and competitive) Updated business modeling Considering the effect of the investments (basis traffic) Calculation of BM to-be with additional trains to transport additional demand Investment list for the given scenario Updated capacity constraints COMPARISON Investment costs Business Performance Var. Rail Traffic 2. General approach to business modelling Slide8: Profitability and LoS comparison Profitability is calculated as ratio between total revenues (including public contributes) and total costs. combined transport segments profitable or close to profitability, and with LoS slightly worst than the one of road block trains segments profitable and competitive (or close to be competitive) with road single wagon segments, unprofitable and highly uncompetitive with road block trains segments unprofitable but competitive or highly competitive to road 3. Corridor results for 2005 Slide9: Overall results 3. Corridor results for 2005 Rail freight demand can be basically subdivided in three clusters: block trains segments are competitive or highly competitive to road and IWW; most of the proposed services are profitable (all become profitable in case of averaged RU prices); combined transport segments show approximately an equilibrium between costs and revenues, and a LoS slightly worst than the road one; single wagon services appear to be unprofitable and highly uncompetitive with road. Characteristics of potentially profitable segments (for which rail is competitive with other modes) Slide10: Conclusions 3. Corridor results for 2005 Conclusion of the BM 2005 Proposed action Railway transport shows a general lengthening of journey times, mainly due to waiting time at facilities and a consequential reduction of overall commercial speed. This occurrence depends significantly by the uncoordinated preparation of the timetable by the different countries of the corridor. Preparation of an offer of catalogue paths (i.e. paths “dedicated” to performing vehicles), harmonized between the networks, with a meaning in terms of O/D, journey times and time bands, and integrated with access to terminals Another element that has been often pointed out by the customers, concerns the low level of reliability/punctuality of the service on the corridor. Once recognized a low level of regularity, corrective actions by both IMs and RUs to reduce the delays are recommended. Establishing a more effective information chain with the customer (e.g. Europtirails) Effective implementation of a Performance Regime Slide11: Base and Investment scenarios 4. Corridor results for 2020 Base (actual rail network + investments on-going) Minimum intervention strategy n.1: Technological (implementation of ERTMS + other technological actions for interoperability) Minimum intervention strategy n.3: Train size (harmonise max train length at 750m) Minimum intervention strategy n.4: Axle loads (harmonise max axle loads at 25 tonnes) Capacity strategy: includes capacity improvements planned by IM to eliminate bottlenecks (i.e upgrading single track to double track, new double tracks) and not included in the 2020 base scenario the strategy implies the technological improvements as in scenario 2 MINIMUM INTERVENTION MAXIMUM INTERVENTION BASE Investments needs along the corridor will be evaluated through the characterization of 5 scenarios: Slide12: Characteristics of potentially profitable segments (for which rail is competitive with other modes) 2005 2020 Conclusions for the base scenario (1/2) 4. Corridor results for 2020 Slide13: Conclusions for the base scenario (2/2) 4. Corridor results for 2020 Conclusion of the BM 2020 – Base scenario Proposed action The 2020 base scenario is characterized by a substantially inertial situation in terms of infrastructure with respect to 2005. The capacity constraints impose significant limits to the development of traffic on profitable segments. Strategic choices on the selection of services to be operated on the overall capacity shall be made e.g. the night period could be better exploited by dedicating it mainly to freight traffic; accurate selection in the daytime period, based on profitability Overall results and conclusions for the BM 2005 are confirmed at 2020 horizon Same as BM 2005 Rail-related terminal operations of single wagon services remain highly unprofitable Rationalization and integration with infrastructure management (joint sale of paths and terminal operations, possibly including also logistic services) Combined transport services remain slightly unprofitable in several case Paths’ price differentiation Slide14: Overall conclusions of the study 4. Corridor results for 2020 The vocation of the corridor for specific freight & passenger segments / O-D has been found out. For 2020, the technological solution combining ERTMS and improved interoperability at border crossings results as the most advantageous investment strategy (in terms of the comparison between investment costs and economic benefits for rail). An harmonization of axle load limits at 25 t does not seem a priority in that perspective. Average total contributions to freight transport amount at 0,28-0,30 €cent / tkm. From a general policy point of view, it is important to highlight that those contributions are much lower than the difference in external costs between road and rail (estimated at 5,3 €cent / tkm in IWW/INFRAS study 2004). Actions are required to improve rail level-of-service, in terms of both programmed timetables and reliability of them.