Opinion Delivering the goods Chris MacRae
Eurotunnel’s scheme to help develop new rail freight operations through the Channel Tunnel is a good news story says Chris MacRae, but there is a bigger picture
urotunnel announced on 30 May the launch of its ETICA (Eurotunnel Incentive for Capacity Additions) scheme to help develop intermodal rail freight. ETICA is a system of financial support for railway operators launching new intermodal rail freight services through the Channel Tunnel. Eurotunnel’s press release states that: ‘It considers that one of its
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principal missions is to develop railway traffic between the United Kingdom and continental Europe,’ and goes on to say that having introduced several previous measures (quoting Open Access for non- incumbent operators, European Interoperability Standards – TSI Technical Standards for Interoperability), Eurotunnel is now launching ETICA as a system of financial support for railway operators launching new intermodal rail freight services through the Channel Tunnel. Controversially for FTA, Eurotunnel’s statement goes on to say that
the ‘difficulty with opening new services through the Channel Tunnel is not, contrary to some views, due to the level of access charges, which are very competitive, but due to the marketing and service start-up costs and the controls at Frethun,’ (the freight yard on the French side of the Tunnel). FTA and its members may well have some issues with that statement about competitiveness of access charges, as explained below. The ETICA mechanism, which will be available to all railway
operators, will provide a one-off financial support for start-up investments, for one year. ETICA, ‘which will be fully funded by Eurotunnel, with no public subsidy,’ the statement says, is based on the Marco Polo (EU) aid system, and conforms to European Directives and does not change the access charges set out in the Eurotunnel Network Statement. Eurotunnel believes that its, ‘intrinsic strengths of efficiency and respect for the environment mean there is potential to further develop rail freight through the Tunnel.’
This all sounds like good news and certainly anything that helps develop cross Channel through rail freight traffic should be welcomed as far as FTA is concerned. However, there is a bigger picture to this, FTA would contend. While the Channel Tunnel certainly is increasingly representing an opportunity for cross-border intermodal rail logistics opportunities, the comparatively high cost of usage by freight trains reportedly deters usage. Following discussion at the FTA’s Rail Freight Council of members involved in rail freight as shippers, logistics service providers and carriers, FTA has decided to pursue policy and campaigning options to seek to reduce Channel Tunnel rail freight access costs and thereby promote its usage.
Costs
The cost for rail freight trains using the Channel Tunnel has compared unfavourably with that for a freight train on Network Rail in Britain.
Governance The Channel Tunnel is regulated by the Inter Governmental Commission (IGC) which has a joint French – UK secretariat, the UK part of which is part of the UK’s Office of Rail Regulation, UK’s economic and safety regulator of the railways.
Charging regime EC Directive 2001/14 on Access Charging specifies that freight traffic
shall pay the marginal cost of track damage directly imposed and also potentially a mark up that the market can bear. This is the basis upon which Network Rail charges for access to the GB rail network. The Channel tunnel though predates the EC Access Charging Directive. It remains to be tested or examined how the pre EC/2001/14 arrangements such as usage and back-to-back contracts are affected by this.
Freight concerns
There is low current freight train usage of the Channel Tunnel against forecasts for that when the Tunnel was built. The Channel Tunnel rail freight usage charges therefore would appear to represent an impediment to growth of cross European traffic particularly to the south of the Rhur. Certainly FTA members report this. Traffic to the north European coast would appear to be less of a potential market due to proximity to sea ferries.
Issues for resolution Essentially there are two key questions:
1. To clarify the basis upon which Eurotunnel charges for freight train access: a. marginal cost of track damage directly imposed and a mark up that the market can bear (as per EC Access Charging Directive 2001/14)? or b. on the basis of seeking a return on the capital cost of the Tunnel?
The difference with the charging model for lorry shuttles is stark with those shuttle prices much lower and effectively historically appearing to be set by competition from and over capacity in the competing ferry market. Arguably the market cannot bear the freight train charges as evidenced by the low volume of trains against forecast.
2. The role of the Inter Governmental Commission as safety and economic regulator?
The Tunnel and its contractual arrangements predate the EC Access Charging Directive. In France an independent economic regulator is only now being established, so the situation is not the same as in UK. In 2011, FTA wrote to EC on the subject of the access charges levied on through freight trains using the Channel Tunnel between the UK and France. FTA had and still has serious concerns about the charges levied against members for access to the Tunnel; FTA believing that the current rates dissuade growth of rail freight using this particular infrastructure. FTA presented to EC and also to Eurotunnel a study commissioned
by it that described this situation as at 2011 and presented modelling that indicated that if the tolls were reduced there would be a significant increase in the amount of freight traffic that would switch to rail and make use of the Tunnel for international movements. Now, seems an interesting time to review this, if the full potential of
the Tunnel for cross-channel rail freight is to be realised. Chris MacRae is rail freight policy manager at the Freight Transport Association
July/August 2013 Page 43
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