‘Railway 2050’

The mobility of goods is an essential component of the EU internal market and has a substantial impact on economic growth and job creation. In 2011 the Commission set a target of shifting as much as 30% of road freight transported over distances greater than 300km to other modes of transport, such as rail, by 2030 and as much as 50% by 2050.

Swedish industry has a long tradition of global presence and has been able to maintain its position thanks to vast natural resources and innovations. Competition in the global market today is fierce and Sweden’s geographical location – the distances from our production to the end customer – is a competitive disadvantage. To bridge the distances, an efficient transport system is crucial. Freight transport is increasingly becoming an integral part of the industrial value chains. For portions of the basic industries, railway transportation is the only option; for example, shipments of iron ore and steel over long distances as well as for many paper mills. Other business areas rely on freight railway as an important part of the total logistical chain, alongside the use of ships and trucks.

In order for Swedish industry to maintain its position in the world market it requires a transport system that is world-class.

Climate and environment

The goals of the climate summit in Paris in November 2015 are clear: with a global agreement to reduce emissions, we are committed to take far-reaching measures. The transport sector accounts for one third of Sweden’s greenhouse emissions and the majority of these emissions come from road traffic – mainly cars and heavy vehicles. The technical development of energy – efficient motors and a larger proportion of renewable fuels are crucial elements that will help to reverse this trend, but we must also increase the proportion of goods that are transported by rail and sea in order for us to achieve our climate goals. Efforts to meet the environmental objectives of reducing greenhouse gas emissions from transport risk failure if we do not take the right action, both in the short and long-term. Sweden’s climate targets for the transport sector in 2050 means that the net emissions of greenhouse gases should be down to a level close to zero. It requires a change in our approach to transport and planning. Road traffic emissions need to be reduced, while transport must be made more efficient by increasing the proportion of goods needed to be transferred to rail and shipping in accordance with the objectives of the European Commission. However, today’s transportation system lacks the necessary conditions to allow for a greater shift towards sustainable transport.

Infrastructure debt

Maintenance and new investments have not kept pace with traffic development and the shortcomings of the rail system are becoming more apparent. The government’s ‘National Plan’ for transport infrastructure does not contain all the measures needed to meet future demand and handling the increasing operating and maintenance issues. The Swedish Transport Administration (Trafikverket) notes that the cost of restoring the railway’s functionality and eliminating the backlog of maintenance is so huge that it does not fit within the framework of the current national plan.

The railway is a large-scale and continuous system in which many functions and operators must cooperate. Today, however, it lacks both the strategic direction and a clear vision for development. The unclear conditions have resulted in the large and growing debts for maintenance, as well as a lack of new investments. Such conditions breed cautious behaviour where major investments are postponed.

Freight developments

According to Trafikverket’s forecasts, long-distance transport will increase by approximately 30% between 2015 and 2030 (measured in tonne-kilometers) and by about 60% by 2050. The segments with the strongest growth include iron ore and forest products. The forecast shows that the railway will lose market share due to the higher infrastructure charges and capacity problems. A decrease in rail’s market share is questionable from both the demand-side and objectives of sustainability.

Unfortunately, the transport system does not face up to the demands made on being a competitive and sustainable system. Huge quality and capacity gaps in the railway system lead to increased production costs for rail operators and higher costs for shippers (cargo owners). Ultimately, this threatens the climate, businesses and jobs.

To ensure a sustainable and competitive development of the Swedish industry, ASTOC – the Association of Swedish Train Operating Companies – has, together with a number of industrial partners and the consulting firms Sweco, developed a vision and a plan for the development of rail freight in Sweden: ‘Railway 2050 – Industry and Commerce Freight’.

With the right measures and investments – which are listed in Railway 2050 – we can create the necessary conditions for the railway to meet the demand for transport in the future. Our assessment is that the transport of goods by rail can increase by 100% by 2050. This means that rail’s share of total transport will increase from today’s 24% to 30%.

Railway 2050 – 10 steps toward the future

Steps to resolve the problems we see in rail today cannot be postponed. In Railway 2050, we propose a wide range of measures to rapidly increase rail’s reliability; it’s utilisation as well as improving the profitability of the operators. The freight operators need to achieve a level of sustainable profitability and thus create space for reinvestment and development of their business. With the implementation of these measures, the freight buyers’ confidence in the rail system can be restored. This increases the possibility that they will move more freight on to the railways. It is a comprehensive work that must be performed in a short time. To become successful, far-reaching cooperation must also be established between the government, industry and operators.

The areas for action – necessary to strengthen the development of the Swedish railways – include the need to increase reliability; the utilisation; and the profitability of the railway freight sector:

Increased reliability

National maintenance strategy

Maintenance of the railways has been neglected for a long time. Lack of knowledge regarding conditions and an understanding of how to maintain it has resulted in a rapidly growing maintenance debt that ultimately involves dismantling sections of railway tracks. Quality problems create additional costs for operators and industry by, among other things, causing delays and traffic disruptions. Trafikverket needs to establish a national maintenance strategy and urgently initiate the process to ensure a minimum level of rail maintenance. The strategy should be aimed at maintaining the functionality of the railway system, remedying backlog maintenance and ensuring that the long-term functionality can be restored.

National plan for the railway freight sector

The next step is to improve the conditions for the railway freight sector through implementing smaller, targeted action points that have significant effects. For example, it may be an extension of passing tracks, signalling measures or improved yards. This type of action is not included in the national plan but is decided from year-to-year. To create both foresight and flexibility of implementation, the sector needs clearer rules and conditions. Trafikverket should, together with the operators, set up a special national multi-annual plan for trimming and market measures in order to increase the reliability of freight transport.

Review of railway yards

The switch yards in Sweden and on the continent is of paramount importance for the functioning of the wagonload system. In railway yards, wagons are sorted and new trains are connected. In Sweden the railway yards are lagging in reinvestment and have large on-going maintenance requirements. To maintain and fix the neglected maintenance and the lagging reinvestments of today’s 13 railway yards, it is estimated that approximately six billion SEK is required during the next plan period. Meanwhile, over time the utilisation and volumes have changed and new freight train operators have established operations and created new needs. Trafikverket, together with the operators, need to develop a response strategy. The railway yards need to be reviewed and evaluated (the number, location, function and configuration) on how to best meet tomorrow’s demand and become an efficient tool for the transportation sector.

Increased utilisation

Effective capacity allocation

The capacity utilisation in the railway system during parts of the day, is high – especially in the metropolitan areas and on certain heavily trafficked stretches of single track in other parts of the railway system. There is a great need to run more trains and to meet more specific requirements from the operators. To day this is limited by foremost administrative barriers. It is related to the tools Trafikverket uses to construct timetables, procedures for the allocation of train paths, and rules for operation. Overall, it is an inflexible approach where the residual capacity of the system is difficult to use.

Trafikverket has started work to revise the process of allocation of capacity. Competition on the tracks is increasing in pace with traffic growth, but the need for sufficient time to maintain the railroads is also increasing. Trafikverket should accelerate the review of the process for the allocation of train paths and immediately implement simpler measures – for example, more efficient use of time during track maintenance, gradual capacity allocation, and limiting the prereservation of train paths.

International carriage by rail

Sweden is part of the TEN-T (Trans-Euro pean Network for Transport) and in the EU White Paper a ro admap for the future is presented. In order to increase the re source utilisation of the transport system and significantly reduce greenhouse gas emissions, the goal is that 30% of ro ad freight travelling over 300km should be transferred to rail and maritime transport by 2030, with 50% by 2050. Rail transport to and from Europe is being developed slowly compared to the increase in truck traffic. One explanation is that the European market opening for international rail freight is not fully implemented. In addition, the different rules and technical requirements are extensive and often very costly for the operators. The government should work toward increased coordination of the Scandinavian countries (Sweden, Norway and Denmark) and their national plans for investment in infrastructure. Trafikverket should work to adapt the Swedish railway network to adhere to the guidelines for TEN-T and the objectives for the development of rail transport as defined in the EU White Paper.

Coordinated transportation, horizontal cooperation

To day the knowledge of transport and freight flows is often limited to the indi vidual company’s own operations and, therefore, possible synergies are lost. There are numerous reasons to take a firm grasp of statistics and market data for freight transport inside Sweden, as well as to and from abroad. Increased coordination between cargo owners and transport companies will provide a better overview of the transport sector and from a systems perspective, more efficient use of the infrastructure.

High capacity trains (HCT)

From an infrastructure perspective, this implies trains with higher capacity – HCT trains (heavier, longer and/or wider rail) – and implies that the infrastructure can be utilised more efficiently. From an operator and commodity ownership perspective, it means that the transport costs per unit can be reduced and from a system perspective, the infrastructure can be used more efficiently.

Trafikverket should develop a comprehensive response strategy in order to meet the demand for high capacity trains. The strategy should harmonise with the EU rules and objectives and determine which standard to apply to the Swedish railway network and its rail yards and specify when the measures are to be implemented. The government should, in the infrastructure bill, point out particularly urgent measures for longer and heavier trains and demand that Trafikverket develop clear guidelines for braking tables and also address the bottlenecks that need to be fixed.

Adjusted power supply

Today there are limitations in the power supply system that determine how much load a freight train can move and therefore how heavy the freight trains can be. It is generally allowed that 2,000-3,000 tonne freight trains be equipped with double locomotives. However, modern engines have a capacity of over 4,000 tonnes with double locomotives. This means that the locomotives have excess capacity that is not utilised. Furthermore, approximately 10% of the rail facility is not electrified. Improved electrification would mean reduced costs for cargo owners (and thus also increased profitability) and thus allow more freight on the railways.

Load locations and industrial sidings

Rail freight is currently dependent on loading areas and also industrial lines in the so-called capillary network provided by infrastructure owners other than the state. The capillary network can be seen as a support function to the main network and enables access to industries, ports, side yards, production etc. The use of these tracks may vary from year-to-year, and the general trend, for a number of years, has been that the number of available tracks have declined. Also, the formal requirements and license fees demanded by the authorities have increased in recent years. Unlike the state-owned network, the main network is almost invariably owned by municipalities, industries or other organisations.

Increased profitability

Frozen track access charges

The purpose of the track access charges is to cover the marginal costs incurred for, for example, wear and tear on the railway. Today it does not cover the track access charges levied by operators, or the costs incurred for operation and maintenance. In order to achieve full cost recovery, Trafikverket implemented a gradual annual increase in track access charges for the period 2010 to 2021. Currently freight operators pay about SEK 500 million/year in track access charges and, until 2021, fees will be increased by another SEK 200 million/year. A key criticism of infrastructure charges is that a user fee must be related to the value of the service provided. With the quality defects the railways have today, it is not reasonable to continue to increase infrastructure charges. Infrastructure charges should be frozen until Trafikverket has cleared the backlog of maintenance and can deliver the intended functionality. The introduction of higher track access charges should be linked to the implementation of a national maintenance strategy.

Biography

Björn Westerberg is the CEO of ASTOC – the Association of Swedish Train Operating Companies. Previously, Björn was Head of Strategy at SJ AB. Björn is a former partner at a technology strategy advisory firm and has also held senior management positions at a listed IT professional service firm. Björn holds business degrees from Stanford University and the Stockholm School of Economics.