OPTIONS FOR RESHAPING THE RAILWAY.

In many countries the mismatch between what the railways offer and what the customers want has caused significant economic inefficiency and severe financial strains for the railways and their government owners. The concept of the railway as a monolithic entity is so strong in many countries as to be a roadblock against reshaping the railway. The authors explore four options which can be used to reshape the railways. First is the lines of business option which improves accountability and responsiveness to markets. The second is the competitive access option which introduces intramodal competition in selected markets, while maintaining unitary control over most railway operations. The third is the"wholesaler"option which would accomplish an excellent marketing job, but the actual operation would remain in monolithic hands. Finally there is the"toll rail enterprise"option which comes closest to reflecting a theoretical model of marketing effectiveness, however it would generate potential operating conflicts and higher transaction costs. The authors show that one generalization holds true in all circumstances: a monolithic railway does not function well in a market economy in competition with privately owned, properly regulated competitors - especially trucking. The authors point out that solutions will vary, but the universal objective as an economy becomes more market driven is to make the railway more market sensitive.