Market reforms revitalise European rail freight

The author examines effects of separating infrastructure from operations and of introducing competition between open-access operators. He compares the impact of reforms on rail freight in Germany, Sweden and the UK. Customer benefits are assessed in terms of development of competition and traffic growth. The most notable feature of the German model is the retention of a vertically integrated organisation under a holding company structure. Sweden's position as the first country in the world to establish a separate state-owned rail infrastructure authority is examined. The government wanted to provide a level playing field between road and rail, and consequently financed the provision and maintenance of rail infrastructure in the same way as roads. This model has proved expensive for the government and therefore tax payers, but freight customers have benefited. The British model of reform took the form of a full vertical separation, triggering a complex restructuring. The full freight operations were sold rather than franchised. Evidence from these three countries shows that open access for rail freight has allowed new operators to win traffic by offering a better combination of services and rates. Governments considering reform as a means to encourage use of rail freight facilities are urged to consider their options carefully in the light of local conditions.