What are the biggest barriers for new entrants on the international train market?
Gaining access to the rail infrastructure and finding suitable equipment. These are the biggest stumbling blocks for private carriers to start an international connection, at least, between the Netherlands and other European cities. “The risks to enter the market are considered too high”, conclude researchers from consultancy firms Arcadis and Berenschot, who are working on a market exploration for open access for rail carriers on behalf of the Dutch Ministry of Infrastructure.
How to get to more international trains? This was the topic of a meetup of Dutch knowledge sharing network Railforum. Erik Schuurmans, senior consultant at Arcadis outlined what a fictitious private company would encounter when starting a new high-speed connection between Amsterdam and Berlin. “This does knock down your morale”, sighed Railforum director Corina de Jongh after the presentation.
“The most important things that need to be arranged are: infrastructure access (in addition to the infrastructure itself having to be ready for it), suitable equipment, the operational side, passenger information and service provision.” According to Schuurmans, the first two in particular are a big hurdle. “In the first instance, rail infrastructure is mainly geared towards domestic transport. Although there is residual capacity on the route sections of the HSL South, the track on the east side between Amsterdam, Utrecht, Arnhem and the border is very busy. In addition, international trains are in third place in allocating train paths after regional and national traffic. And night trains come only after freight trains”
Then there is the rolling stock. “Internationally deployable equipment is expensive and its availability is limited. Particularly suitable carriages are scarce and often old. HSL equipment is only available new. This is mainly because demolition is sometimes preferred by carriers from a competitive point of view.” A small bright spot is that the lease costs of equipment have decreased due to the growth of this market. “But it is very difficult to be dependent on the specifications and admission procedures, which still differ from country to country. Unfortunately, the one-stop-shop of the European rail agency ERA is not quite doing what it should.”
Instead of reducing the admission of new equipment in Europe to a single one-stop-shop, according to Schuurmans, it is currently more like providing an extra stop. This is because there are still many country-specific additional requirements. For this, ERA still refers to the various national authorities.
In short, the market is open, but the threshold is high. In the Netherlands, there is limited capacity on corridors, stations and yards. Also, there is tension with the ambitions of a High Frequency Rail Programme (PHS), with more trains to the East of the country. One of the participants in the Railforum meetup wondered whether they could reverse the choice in capacity allocation to first international and then national.
Someone else suggests that Dutch travellers and national carriers may have to accept that the ‘ten-minute trains’, which Dutch Railways NS is introducing, will not be there. According to another participant, there should be no contradiction between international and domestic travellers. “They can also be on the same train together.” “Leave it to the customer and market forces”, suggests another. According to Schuurmans, it is however mainly up to the Ministry of Infrastructure and Water Management and the sector itself what the preferred solution is.
Kaj Mook, senior managing consultant at Berenschot, is involved in the same investigation for the ministry. He discussed the opportunities for new entrants. According to Mook, the market for international trains is attractive towards the east. “Market size and potential, that’s where it starts. It is no coincidence that a lot of attention is paid to a fast train connection to Berlin. There is a strong economic relationship between the Netherlands and Germany. The market is already large, but the potential for an international train in that direction is even greater.”
“Germany is also the gateway to many other destinations. But the offer is limited. Less than fifteen trains a day, versus thirty southbound. The market is interesting, because the number of transport movements to Germany is large, but not by train.” Limiting the risks for new entrants could lead to much improvement. According to Mook, there are plenty of opportunities for that. Reducing VAT on train tickets, for example. Or making a consistent and predictable policy and the choice of market organisation. “For years there was no policy in the Netherlands for long-distance connections to the east. So it starts there.”
200 km / h is enough
Building faster or smarter infrastructure makes it more attractive to travellers, but also lowers costs, says Mook. “That does not necessarily have to be for 300 kilometers per hour, but an average of 200 kilometers per hour should be possible. Investing in an international corridor from Amsterdam via Utrecht to Germany is a must. And structurally bring the costs more in line with the capacity of the market parties.”
The Berenschot researcher also argues for faster harmonisation of equipment specifications. This allows ERA’s one-stop-shop to do what it is intended for: a central European body for the approval of rolling stock. It is not yet known when Berenschot, Arcadis and TÜV will complete their market survey and what exactly the ministry will do with it, but judging from the presentations by Schuurmans and Mook, the possibilities and difficulties are clear.