Week 16 - April 2001

On the 3^rd of April, the freight business of the Swiss railway undertaking BLS Lötschbergbahn AG was separated into the BLS Cargo AG. The aim herewith is to ensure a focussed market position for the freight business. The aim with the new company is, according to Dr. Mathias Tromp, Chairman of the Board, to bring freight transport services on rail and combined transport, as well as logistic and forwarding services in the inland and abroad.

On the 1^st of July this year, the Swiss railway undertaking BLS Lötschberg through the subsidiary BLS Cargo AG will come on the market with an own alternative to the Swiss state owned SBB on the Alp traffic. The core business will mainly be the BLS-operated line Lötschberg – Simplon, but also other lines could be of interest. Until this summer, BLS will operate more than 30 own locomotives.

BLS Cargo AG is a 100% subsidiary of BLS Lötschbergbahn AG, they are however willing to sell shares to partners within the coming months. The first announced potential partner is the German state railway DB Cargo AG, where the negotiations are already ongoing. However, the Swiss state railway SBB AG, or their freight subsidiary SBB Cargo AG, are not foreseen as partners, as there already exists a Letter of Intend from the 3^rd of July 2000 on the forthcoming cooperation between the 2 railways, and a basis agreement is to be signed within the coming weeks.

Dr. Dirk Stahl will be in charge of the company - he has been the head of the BLS Freight Area since the 1^st of June 2000, where he came from DB Cargo (1995 – 2000), and the Board members are: Dr. Bernd Menzinger, Bruno Schaller, Hans Flury and Dr. Mathias Tromp.

Until 2003 the German infrastructure manager DB Netz AG, subsidiary to the Deutsche Bahn AG, will put some DEM 15 billion in the existing German rail network. Thereby the long queue of investments will be dismantled, according to the declaration of the DB AG-Manager Hartmut Mehdorn at the press conference in Berlin on the 9^th of April.

The base for the investments is a trilateral agreement, which was made between the Federal Government and the railway actors. Herein, an extra DEM 6 billion are put in the hands of DB Netz AG or all in all some DEM 15 billion for investments in the existing network.

A considerable means will be used for the building of electronic signal-boxes and bridges, as well as in the removal of railroad crossings. The building of some 200 modern electronic signal-boxes is foreseen until 2005 to a total investment of some DEM 11 billion.

Furthermore a Management Plan for optimum bundling of the building measures was presented and the managing director of DB Netz AG, Roland Heinisch pointed out, that already this year the number of “slow lines” - only to be passed at slow speed, will be reduced to the half.

The new organisational split-up in corridor management is, according to Dr. Thilo Sarrazin, Board Member Network Management by DB Netz AG, an important prerequisite for a network corresponding to the customer requirements and the business measures. The plans within each of the 22 corridors will be closed by this summer.

On the 4^th of April the Swiss companies SBB Cargo AG – state railway, Hupac Intermodal SA – intermodal operator within the UIRR-grouping and BLS Lötschbergbahn AG – railway undertaking, have founded the company RAlpin AG, with each 30%. The remaining 10% is reserved for the Italian state railway FS. The aim of the company is to operate the rolling highway between German Freiburg im Breisgau and Italian Novara.

The operational start-up of the rolling highway service is set to the 11^th of June as a milestone in the implementation of the Swiss transport policy. A large part of the Alp-crossing traffic is expected transferred from the road onto the rail on the Lötschberg – Simplon axis, whereby the heavy road traffic on the North – South axis through Switzerland is reduced. The RAlpin AG is a service provider, which neither has rolling stock as locomotives and wagons, nor locomotive drivers at their disposal. The company buys the single services, to create a high-value market service towards the road vehicles and their drivers. Ralpin AG will be lead by Carlo Degelo from BLS and Claudio Ghiringello from Hupac.

The new service will be available for trucks with a height of 4 meter, width of 2,50 meter and a weight of up to 42 tons as from the change of timetables in June. Starting with 4 train-sets of 19 vehicle positions each, the service will be extended to 7 departures per day and direction as from the beginning of September. The transit time between Freiburg and Novara is between 8 and 9 hours, and the price level is in average CHF 550,- per trip, whereas a night trip is set to CHF 750,-.

At the border regions between France and Spain, the requests for a new transit line through the Pyrenean Alps are now getting stronger. The border-crossing traffic on the 2 motorways in Hendaye and Perthus has quadrupled since 1985. Therefore 4 different alternatives for a central Pyreneean transit line have been elaborated. By the end of April French and Spanish requests will be discussed in Zaragoza, for the creation of a “pressure group”, where also the Portuguese region Centro will be invited to take part. However, the regions of Catalonia and Languedoc-Roussillon will not take part in the group, as they already work for the rail project Barcelona - Perpignan.

Hereby Paris will have a pendant to the Mont Blanc Tunnel discussion in the South, and whereas Paris do not promise anything in their structural plans running until 2020, Madrid find they have own projects to the limit already; for example the new freight and highspeed line Figueiras – Perpignan which will be operable until 2006 as well as the extension of the existing line Pau – Canfrancs.

On the 2^nd of April the Office of the Rail Regulator declared that a new five-year framework for Railtrack’s charges for the operation, maintenance and renewal of the rail network commences. For the first time there is an incentive-based regime which sets out what Railtrack is required to deliver for the money it receives from train operators and taxpayers, the arrangements for monitoring and incentivising delivery, and the mechanism for funding additional investment.

The Rail Regulator is responsible for monitoring and enforcing Railtrack's stewardship of the network and its relations with its customers. In the last 18 months, he has radically reformed the accountability of Railtrack to the public interest, to put right the weaknesses of the initial regime. His reform programme is nearing completion, and includes a financial framework, which is more soundly based, a stronger network licence and strengthened and simplified contracts with Railtrack's customers, the passenger and freight train operators.

The new network licence conditions are in relation to:

1. asset register - requirement for Railtrack to set up and maintain a reliable and comprehensive register of the condition, capacity and capability of its assets - licence condition comes into force April 2001;

2. network quality assessment - independent reporters assessing and investigating extent and nature of Railtrack's work, including the sufficiency of its maintenance and renewal of the network - new licence condition comes into force in April 2001 and process of appointing reporters is already under way;

3. dealings with dependent persons - binding obligation to deal with third parties fairly, in a timely, efficient and competent manner - new licence condition near to acceptance or Regulator will use compulsory licence amendment procedure;

4. annual return on performance and condition of network - report on the performance and condition of Railtrack's network over the previous year, to be verified by reporters - new licence condition comes into force in April 2001;

5. land disposal - to prevent Railtrack disposing of assets if to do so would be contrary to the public interest (e.g. land beside the railway needed for freight terminals, station car park extensions, etc.) - new licence condition near to acceptance and expected to come into force May 2001;

6. ring-fencing Railtrack's core business - to preserve, protect and defend its core assets for railway purposes, and ensure that they cannot be pledged for the purpose of non-core activities - accepted in principle subject to detailed discussions with Railtrack;

7. regulatory accounts - information on how the company is performing against the financial, economic and operational assumptions on which access charges have been based - new licence condition comes into force in April 2001.

8. Other measures for the strengthening of Railtrack's accountability include:

1. more specification in Railtrack's contracts with train operators in relation to what Railtrack must deliver in return for access charges, with better remedies if things go wrong;

2. new powers in relation to abuse of monopoly power, under the Competition Act 1998;

3. new powers under the Transport Act 2000 in relation to the right of the Regulator to order Railtrack to carry out upgrades on terms which the Regulator, not Railtrack, determines, and a strengthened enforcement regime.

new powers under the Transport Act 2000 in relation to the right of the Regulator to order Railtrack to carry out upgrades on terms which the Regulator, not Railtrack, determines, and a strengthened enforcement regime.

On the 5^th of April the Office of the Rail Regulator announced a significant contribution to the Government’s objective of achieving an 80% growth in rail freight traffic by 2010, by halving the access charges freight operators pay to Railtrack for use of its network.

The Regulator's provisional conclusions on the new regime for Railtrack's access charges to freight operators, published today, provide the necessary conditions for the strong and sustainable growth in rail freight.

Commenting on his proposals for freight charges, the Rail Regulator Tom Winsor said:

"My new regime brings an essential transparency to freight access charges. No longer will freight operators have to negotiate with Railtrack in the dark, with unpredictable outcomes and uncertainty about the quality of the deal they have been able to get. Under these proposals, Railtrack's costs and charges for freight traffic will be published and so will enable operators, potential operators and their customers to see what they are. This will bring about a much needed levelling of the playing field between freight operators.

"My proposals give Railtrack an incentive to grow the volume of freight traffic on its network. They also effect a very substantial reduction in freight access charges from current levels. The reduction in charges does not affect Railtrack because the lower revenues will be made up by higher subventions from public funds. At the least, this change is cost-neutral to Railtrack, and it has the upside of higher freight volumes and therefore higher revenues in the longer term. It is therefore good news for Railtrack."

• Brussels 25^th of April, European Railway Club, Seminar on rail and the environment, with speakers as for example Dr. Klaus Milz, Chairman of the European Railway Club, Roberto Salvarani of DG Transport and Energy and Peter Gammeltoft of DG Environment of the EU-Commission.

• München 15^th – 19^th of May - 8th International Trade Fair for Logistics, telematics, freight and passenger transport - Transport Logistic. Organised by the Messe Munchen GmbH.