EPRS. The Cost of Non-Europe in Transport. Rail: a fragmented market and infrastructure. 2.7 bn. Direct quanti ied gains. 1 bn
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1 Briefing infographic - March 2015 Transport is a vital component of the EU economy with huge untapped potential. The sector suffers however from remaining barriers, gaps and market inefficiencies that create substantial costs and that could be addressed through further action at EU level. Potential annual savings and efficiency gains in transport: at least 8.6 billion 3.5 bn Clarifying vehicle standards and rules on road charging Liberalisation of port services and transparency of port charges Ensuring shipping competition Reducing administration and reporting formalities 1.9 bn The gains that could be achieved from addressing the identified issues in the four modes of transport - rail, road, air and maritime - are estimated to amount to at least 8.6 billion euro annually. While the four sectors show similarities in terms of market fragmentation and lack of competitiveness, each sector requires its own approach to reform. This document summarises the main elements that constitute the Cost of Non-Europe in the transport sector. Air traffic management Harmonising social legislation and enforcing rules 1.3 bn Airport planning Opening sky to 3rd countries Improving road safety Reducing environmental externalities Completing market opening Network integration for improved modal inter-operability Clarifying access charges Addressing technical barriers 1.9 bn Harmonising vehicle authorisation and safety certification EPRS European Parliamentary Research Service Authors: Monika Nogaj, Eulalia Claros Members Research Service and European Added Value Unit PE
2 Rail: a fragmented market and infrastructure Cautious scenario 1 2 Direct quanti ied gains Vehicle & safety certi ication Passenger rights Optimal scenario 2.7 bn Different electri ication systems across Europe 3 Unrestricted access to commercial services 6 1 bn 4.2 Standardisation of rolling stock 7.3 per year Access to infrastructure Open tendering to Public service contracts per year Freight transport within the EU Further gains from making the EU rail fully inter-operable The historical development of rail systems within national borders results in many differences in Europe s railway networks, including different track and loading gauges, electri ication and signalling systems, and train designs. These remain the main obstacle to a single market in the rail sector, since the availability of trains that can cross borders is limited. There are huge constraints to upgrading rail infrastructure to remove borders for trains, and so the process must therefore be implemented in steps. However, the long-term bene its of a truly European rail market could be up to 10 times those quanti ied here, i.e. between 10 and 27 billion euros annually, taking into account the cost of upgrading rail infrastructure. Road Sea Rail Air 47% 40% 12% <1% Passenger and freight rail transport in the EU27 Billion 450 Tonne-km 350 Passenger-km Members Research Service and European Added Value Unit Page 2 of 8
3 Road: an integrated market with a lot of potential Direct quanti ied gains 2.5 bn Further potential gains Improving road safety Adressing the environmental impact Promo ng modal shi Harmonisa on of social legisla on Enforcement of rules Freight transport market opening Passenger transport within the EU-27 Modal distribu on Road deaths per million inhabitants 4.5 bn Road Rail Air Sea 83% 8% 8% 1% Further challenges for road transport Differences in transport labour costs in 2013 Wages and salaries index GR PT CY IE SI FI LT HR ES SK NL DE DK FR PL CZ MT UK BE EE SE IT LV HU AT LU RO BG = 100 The Single Market in the road transport sector is relatively advanced. Nevertheless concerns remain due to the lack of suf icient market opening, incomplete harmonisation of social and employment standards and enforcement rules. Addressing these gaps would bring quanti- iable bene its of between 2.5 and 4.5 billion euros a year. The promotion of cleaner and safer vehicles and the achievement of road safety targets are further challenges which remain. Additional gains have been estimated at between 10 and 12 billion euros per year. Members Research Service and European Added Value Unit Page 3 of 8
4 Different types of intervention: Different road and types railof intervention: road and train The gaps identi ied for the road and rail sectors would require different types of intervention: while some issues can be better dealt with by soft coordination of Member States policies and actions, the EU should not shy away from the necessary speci ic regulation. ROAD Approval of new legislation under discussion at EU level Approval of new legislation at EU level Other measures at EU level (guidelines, soft measures, etc.) Industry coordination or action RAIL Lack of complete market opening in the freight transport Harmonisation of social legislation Enforcement of rules Inefficient vehicle design and standard Cleaner vehicles Lack of complete market opening in the freight transport Lack of competition for public service contracts National specific vehicle authorisation and safety Ensuring non-discriminatory access to infrastructure Single signalling system Intelligent vehicles Passenger rights Road charging: setting the price Varied access charges Road charging: EETS technologies Road safety Different technical standards accross Europe Legacy of rail system Envionmental sustainability User rights - transport information Not harmonised road infrastructure design Standard technical parts and rolling stock and on bord signalling Single operating language Missing links at borders Members Research Service and European Added Value Unit Page 4 of 8
5 Air transport: preparing the market for the challenges of globalisation Direct quanti ied gains Bene its of completing the single market in air Complete Single Market Market opening and harmonisa on Internalisa on of environmental externali es Improved infrastructure and cross-border links Geographical balance Improved ef iciency Lower opera onal costs, travel me and fuel consump on Expected annual savings between 0.9 and 1.8 bn A liberalised and integrated European market in air transport would improve the organisation of transport services and lead to a more balanced distribution of entry and exit of intercontinental lows. This would mean lower fares and better service for passengers and more competitive carriers. The ef iciency gains have been estimated between 0.9 and 1.8 billion euros. Top airports in the EU28 (passengers carried in 2013) Enhanced compe on Shorter travel length through North-South rebalancing Reduced environmental impact Members Research Service and European Added Value Unit Page 5 of 8
6 Maritime transport: geographical rebalancing of flows Direct quanti ied gains Distribution of partner ports % in North America 38% in Asia 15% in Africa Complete Single Market Improved ef iciency 28% in Central and South America 4% in Middle East Market opening and harmonisa on Internalisa on of environmental externali es Improved infrastructure and cross-border links Geographical balance Enhanced inter con nental compe on Shorter travel length through North-South rebalancing Lower opera onal costs, travel me and fuel consump on Expected annual savings between 1.3 and 2.6 bn Reduced environmental impact Bene it of completing the single market in maritime transport Emerging Asian economies have rede ined world maritime trade, and today Europe's trade with Asia is four times bigger than the traf ic to and from North America. However, northern European ports still hold the largest market share in Europe, despite the shorter routes to southern European ports. The completion of the single market in maritime transport, including the internalisation of environmental costs, would lead to a gradual rebalancing of trade among northern and southern ports, based on minimising costs. This in turn would make European maritime transport more ef icient in terms of operational costs and energy consumption. Gains would be in the range of 1.3 and 2.6 billion euros. Members Research Service and European Added Value Unit Page 6 of 8
7 Results from other assesments Missing integration and harmonisation of air transport system: European operating costs 2 to 3 bn higher than those of the USA 1 Full port competition with elimination of customs and other administrative 3 procedures CO2 7.8 million 2 Single European Sky would have saved in 2012 alone 4.5 bn and 7.8 million tonnes CO2 Savings to be generated by the simplification of administrative procedures 70 million per year Savings in port costs to be generated by full port competition 1 billion per year 1 EUROCONTROL (2012) US/Europe comparison of ATM_Related Operationnal Performance Commission Staff Working Document SWD(2013)206final 3 Commission Staff Working Document SWD(2013)181 Members Research Service and European Added Value Unit Page 7 of 8
8 The transport sector is a vital component of the EU economy and an important generator of employment, but it also faces difficulties, namely in terms of competitiveness and environmental sustainability, exacerbated by the recent economic crisis. Since its inception, transport policy has pursued the aim of integration and removal of barriers, be they technical, administrative or regulatory, in view of creating a Single Market for transport. It is indisputable that substantial progress has been achieved. However, issues associated with the implementation of new legislation in the Member States, stakeholders opposition and vested interests have meant that 20 years of regulatory actions have not created a sufficiently open market. The transport sector still has significant potential that can be tapped through further action at EU level. In the rail sector, the main barriers identified include non-transparent public procurement, problems with non-discriminatory access to infrastructure for new entrants, a multiplicity of authorisation and certification regimes across the EU, insufficient separation between infrastructure and service management, differences in access charges and enormous diversity in technical standards both for trains and rail infrastructure. The road transport sector is significantly more advanced. Nevertheless, concerns remain due to the lack of sufficient market opening, incomplete harmonisation of social and employment standards and enforcement rules, as well as differences in the promotion of cleaner and safer vehicles and in the achievement of road safety targets. Notes Country codes: Austria (AT), Belgium (BE), Bulgaria (BG), Croatia (HR), Cyprus (CY), Czech Republic (CZ), Denmark (DK), Estonia (EE), Finland (FI), France (FR), Germany (DE), Greece (GR), Hungary (HU), Ireland (IE), Italy (IT), Latvia (LV), Lithuania (LT), Luxembourg (LU), Malta (MT), Netherlands (NL), Poland (PL), Portugal (PT), Romania (RO), Slovakia (SK), Slovenia (SI), Spain (ES), Sweden (SE), United Kingdom (UK), European Union (EU28). Sources: Map on page 2 from Railway Technology. Chart on page 3 from ETSC. All other statistics from Eurostat. This document updates an earlier one published in January 2015 (PE ). In the air and maritime transport sectors, new policies and legislative initiatives are needed to prevent discriminatory access to infrastructure, to clarify public service obligations, to prevent stateaid and cross-subsidies creating unjustified market distortion, and to make progress on integrated traffic management. At a more strategic level, there is a need to advance in the overall regulation of ports and airports, the internalisation of environmental externalities for maritime and air transport, and to ensure the consistency of decentralised and privatised infrastructure investments. The gains that can be achieved from enhanced actions to fill the gaps and create a fully integrated and more efficient transport sector have been estimated at 8.6 billion euros annually. The calculations of the costs and benefits rely on conservative assumptions. While the exact extent of final benefits is not possible to assess as it will depend on a multitude of various factors, it will be somewhere between the minimum and maximum impact estimated for each sector. For the purpose of this study, the mid-point values are retained for further computations. Disclaimer and Copyright The content of this document is the sole responsibility of the author and any opinions expressed therein do not necessarily represent the official position of the European Parliament. It is addressed to the Members and staff of the EP for their parliamentary work. Reproduction and translation for non-commercial purposes are authorised, provided the source is acknowledged and the European Parliament is given prior notice and sent a copy. European Union, eprs@ep.europa.eu (intranet) (internet) (blog) Members Research Service and European Added Value Unit Page 8 of 8
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