DIOMIS (Developing Infrastructure and Operating Models for Intermodal Shift)

DIOMIS (Developing Infrastructure and Operating Models for Intermodal Shift) Growth and Quality of Service : coping with a constrained Infrastructure The example of Combined Transport By Eric Peetermans SNCB Holding, Corporate International Affairs & Chairman of the UIC Combined Transport Group 1 Bratislava, May 4 th 2006

CTG Study on Capacity Reserves 2015 Combined Transport Group UIC (CTG): 21 UIC Railway Undertakings, dealing mainly with cooperation issues related to Combined Transport CTG commissioned an investigation to comprehensively examine if the capacity of rail network and intermodal terminals in Europe will be sufficient to absorb the growth of international combined transport by the year 2015. The full report can be downloaded from the UIC website www.uic.asso.fr The project has been initiated and financed by the UIC (Union Internationale des Chemins de Fer), with the participation of the UIRR (Union Internationale des Sociétés de Transport Combiné Rail- Route). This partnership reflects the joint concern for maintaining an optimum development of this exciting transport mode. The study was carried out by the following team of consultants: Kessel & Partner Transport Consultants, Freiburg KombiConsult GmbH, Frankfurt am Main MVA, Paris 2

International unaccompanied CT is a very concentrated business 80% of total traffic concentrated on approx. 100 intermodal intermodal links = services both ways 3

International unaccompanied CT is a very concentrated business 4

International unaccompanied CT is a very concentrated business 5

UIC Combined Transport Group (CTG) Study about Infrastructure Capacity Reserves 2015 : Growth Projections (International non accompanied Combined Transport) 6

UIC Combined Transport Group (CTG) Study about Infrastructure Capacity Reserves 2015 : Growth Projections (International non accompanied Combined Transport) 120 100 103,6 80 6,8 % average annual growth rate million tonnes 60 40 8,5 % average annual growth rate 44,1 20 14 0 1988 2002 2015 7

International unaccompanied CT is a very concentrated business 1.000 TEU 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 -> 10% of all services (195) cover 80% of the total volume -> 16% of all services (307) cover 90% of the total volume 1 251 501 751 1001 1251 1501 1751 Number of Relations 80% of total traffic concentrated on approx. 100 intermodal intermodal links = services both ways 8

Concentration of International CT expected in 2015 CT Trains per day 1 5 10 25 50 High concentration of ICT: primarily NorthSouth, but by 2015 all axes are involved 75 100 75% of the total transhipment volume of international CT handled at intermodal terminals located in 25 major European economic areas 9

Utilisation rate of the Railway Infrastructure in 2015 after consideration of planned enlargement investments 10

Main international rail axes with bottlenecks by 2015 Country Germany France Belgium Switzerland Spain Main axes with bottlenecks Hamburg Rhein / Main Köln Rhein / Main Saarbrücken - Stuttgart Metz - Dijon Lyon - Avignon Paris Orléans - Tours Freight corridors from / to Anvers Greater Basel area Barcelona - Tarragona 11

The Intermodal Terminals: selected representative transport areas Le Havre Rotterdam Antwerp Zeebrugge Paris Taulov Bremerhaven Genk Bremen Duisburg Neuss Köln Lübeck Nürnberg Ludwigshafen/ Mannheim Basel München Novara Milano Hamburg Villach Verona Bologna Poznan Praha Wien Wels Graz Ljubljana Warszawa Gliwice Budapest Madrid Valencia Barcelona Roma 25 largest areas 9 end-of-corridor transport areas 12

Main Basic Assumptions of the Study Sustained growth of International Combined Transport (ICT) on all corridors Growth differentiated per corridor but average growth for Unaccompanied ICT estimated at 6,8 % per year (less than historical growth of CT) Which means + 113% 2015/2002 (+ 134,92 % for Unaccompanied International Combined Transport and + 19% for Accompanied ICT) Increase of the number of Conventional Freight Trains by 25% Increase of 20% of the productivity in the use of the Infrastructure by Freight trains: 750 m/ 1 500 Gross Tons on all corridors studied 80% use of the available length Internationally integrated railway paths Return of quality of service to normal levels (85/90% punctuality) All identified Infrastructure projects have been implemented by 2015 Severe Railway Infrastructure saturation is shown, requiring far reaching boundary crossing actions in terms of investments in rail and terminal infrastructure, technical-operational improvements, working procedures between all stakeholders of CT 13

DIOMIS Key Actions and Objectives In 4 domains : - Railway Network Management - Railway Operations Management - Terminal Management - Accompanying Actions And an ultimate deliverable, resulting from those actions : the DIOMIS CT MASTER PLAN 2015 With the objective of : Achieving the productivity gains underlying the conclusions of the Study regarding the rate of utilisation of the available Infrastructure in 2015 Encouraging new types of cooperation between all stakeholders in CT : terminal operators, CT operators, shippers, railway undertakings, infrastructure managers, national and European authorities Describing and helping to implement optimal capacity management models at terminal level in order to use the available capacity in an optimal manner Adapting and improving more effective operating practices in terms of railway operation in order to relieve a saturated network and respond to future market requirements Describing the benefits of an international approach towards planning and production, and lay down the basic principles for a common approach towards improvement of intermodal services Learning to grow Rail Freight traffics on a saturated railway infrastructure The UIC Freight Commission confirmed repeatedly the importance of the project for Rail Freight in general, and mandated the CTG to carry it out. The Executive Committee of the UIC decided on Sept 16 th 2005 to finance it and it will be launched on January 1 st 2006 14

The ultimate deliverable of DIOMIS: CT MASTER PLAN 2015 The DIOMIS CT Master Plan 2015 will be a strategic document centralising the findings of all the work packages and consigning them in a document designed to help decision makers and stakeholders implement improved working procedures in all CT related fields The Master Plan will synthesise for all decision makers and CT stakeholders in clear and concrete terms the information made available by the work packages and will contribute to an adapted infrastructure able to cope with the anticipated modal shift CT terminals with an adapted infrastructure improved operational procedures improved business models between Railway Undertakings and CT Operators, matching the conditions of projected infrastructure and demand an international vision and coordination in terms of infrastructure and development of CT terminals a clear formulation addressed by the RUs to the IMs about their qualitative and quantitative needs in terms of Railway Infrastructure for their freight trains The target date for publishing the CT Master Plan is December 2007 15

DIOMIS Project : Positioning and inputs/outputs Approach Infra corridor Infra utilisation Quality of IM- Train Infra Technical Business approach capacities & operations RU operations interface approach Freight Time Horizon Long Term >10y Medium Term 5-10 y Short Term <5 y ERIM CTG Report June 2004 (incl. database) DIOMIS A2 DIOMIS A3 DIOMIS A6 DIOMIS A9 BMQS DIOMIS A5 EUROPTIRAILS Core of DIOMIS DIOMIS A 12 Master Plan 2015 DIOMIS A8 DIOMIS A7 DIOMIS A4 NEW OPERA DIOMIS A10 TREND DIOMIS A1 DIOMIS A11 16

DIOMIS Project : Modules Action Description The Railway Network Management Input/Output A 2 A 3 A 6 A 5 A 7 A 9 A 10 A 4 A 8 A 1 A 11 A 12 Assessment of main bottlenecks and Infra measures proposed Assessment of Cost of relieving Bottlenecks Harmonised procedures for planning train paths The Railway Operations Improving the use of the available train lenghts ICT Production systems, including Long & Heavy Trains Opportunity Costs Non Accompanied vs Accompanied CT Assessing New Technologies in the wagon field The Terminals Best Practices for the Management of CT Terminals, including Extension of the opening times of the CT terminals International coordination for the development of CT terminals The Accompanying Actions Trends in Domestic Combined Transport Periodical Report on CT in Europe The End Deliverable CT Master Plan 2015 From ERIM, to TREND, NEW OPERA Idem From Europtirails, RNE To ERIM, NEW OPERA To ERIM, TRENDS, NEW OPERA To NEW OPERA To NEW OPERA To ERIM, NEW OPERA To ERIM, NEW OPERA To ERIM, NEW OPERA To TREND, NEW OPERA Inputs from all modules Outputs to the all stakeholders 17

DIOMIS Project : the main Partners Action Description The Railway Network Management Main Partners A 2 A 3 A 6 A 5 A 7 A 9 A 10 A 4 A 8 A 1 A 11 A 12 Assessment of main bottlenecks and Infra measures proposed Assessment of Cost of relieving Bottlenecks Harmonised procedures for planning train paths The Railway Operations Improving the use of the available train lenghts ICT Production systems, including Long & Heavy Trains Opportunity Costs Non Accompanied vs Accompanied CT Assessing New Technologies in the wagon field The Terminals Best Practices for the Management of CT Terminals, including Extension of the opening times of the CT terminals International coordination for the development of CT terminals The Accompanying Actions Trends in Domestic Combined Transport Periodical Report on CT in Europe The End Deliverable CT Master Plan 2015 RUs, IMs Idem Idem (including RNE) RUs, IMs,CT Operators, Terminal Managers RUs, IMs, CT Operators RUs, IMs, CT Operators RUs, CT Operators RUs, Terminal Managers, CT Operators, Shippers RUs, Terminal Managers, CT Operators RUs, CT Operators RUs, CT Operators Inputs from all modules Outputs to the whole Railway Community 18

Quality Framework Commitment between the UIC Railway Undertakings (RUs) and the UIRR CT Operators : Common awareness Based on the common awareness and recognition of several points : It is mainly thanks to CT that the rail mode has managed to maintain its freight traffic volumes. And the main growth sector for rail freight will be CT CT must now tailor its product range to the qualitative needs of the market. The further development of CT requires that the railway undertakings and operators voluntarily set the different standards ensuring delivery of CT services that are competitive with road transport on quality. The specific requirements of CT in terms of quality are particularily sharp given that road transport is not only the benchmark but also the natural traffic source for CT. A degradation of quality in the CT service reduces product attractiveness, decreases the productivity of assets deployed, and increases costs for each of the stakeholders in the CT chain. Combined transport is a very low margin activity especially for the railways, the CT operators and the terminal operators. Therefore, increased costs due to slack resulting from inadequate quality of service cannot be tolerated. The expectations of the customers and the external stakeholders (the European and National Authorities and the public, mainly) are high, although sometimes incoherent and without adequate follow up, but they must be answered. Traffic growth on a severely constrained infrastructure will necessitate from all stakeholders lean production and operational methods and strict management. 19

Quality Framework Commitment RUs-UIRR : A sample of the General level of reliability of CT trains (@29 000 UIRR trains over 18 lines of route) 100,00 90,00 80,00 70,00 60,00 60,00 57,29 64,26 61,84 50,00 47,83 43,14 48,49 40,00 30,00 20,00 10,00 0,00 12,42 10,61 7,43 6,15 3,39 16,21 17,66 14,04 14,60 14,03 12,03 10,70 11,86 10,49 11,04 10,78 11,19 10,25 8,27 8,80 7,26 7,11 7,36,94 7,61 8,70 7,37 6,98 5,10 4,30 4,73 5,335,37 6,02 3,93 1999 2000 2001 2002 2003 2004 2005 (9 m.) Catégories de retards < 0,5 h 0,5 < 1h 1 < 3h 3 < 6 h > 6h > 24h 20

Quality Framework Commitment RUs-UIRR : Contractual Freedom and Scope signed on July 5 th 2005 between the Railway Undertakings, members of the UIC Freight Forum and the CT Operators, members of the UIRR, to develop and strengthen, by means of contracts, the quality of railway services provided in block train traffic in international combined transport, the framework lists the essential components to be developed in the practical and specific arrangements to be developed route-byroute and contract-by-contract, it does not impinge on the principle of contractual freedom of parties nor on the possibility to adopt specific arrangements required to cover some market segments and open certain opportunities, it applies only to non-accompanied international CT block train traffic, including the antennas, that are listed in the production programs agreed, on the different routes, between RUs and Operators, 21

Quality Framework Commitment RUs-UIRR : Commitments and signal effects with mutual and reciprocal commitments: the RUs are committed, within their field of responsibility, to deliver and maintain a quality-of-service level in line with specific and strict criteria flanked by suitable penalty provisions for non-compliance. the Operators - in the context of inclusive capacity purchases are committed to observe the quality criteria falling within their area of competence, and to pay, in circumstances and under forms/procedures to be foreseen in specific quality-related contracts, penalties for nonobservance of these criteria. the underlying objective is to operate as a signal that incites the defaulting RU to deliver the service package sold to the customer, and encourages the defaulting Operator to abide by the rules that have been agreed. to ensure that their quality-of-service contracts are as effective as possible, the parties signatory parties shall arrange for similar agreements to be signed with their respective suppliers and sub-contractors. results will be jointly evaluated from end 2006 22

Quality Framework Commitment RUs-UIRR : the main elements to be developed in the quality contracts the scheduling of the trains, meaning, among other things: the maximum gross tonnage, the maximum length, origin/departure points, in principle terminals, the itinerary, the timetable, in other words the days on which services are operated, the handover deadline (HLR),departure/arrival and placing at disposal (MAD), the appropriate procedures and communication circuits needed for implementing quality contracts, particularly in terms of operational and financial train monitoring, analysis of causes of malfunctioning, information feedback, technical adjustments, and reporting. updated train punctuality indicators in respect of the different routes and for the trains covered by the quality contracts. Other indicators may be agreed, especially ones related to causes of delays. reciprocal penalities, charged to the defective party, in case of : delays relative to MAD and/or HLR, possible agreed tolerances being taken into account, cancellation of trains at the initiative of one of the parties, outside the agreed exemptions or notices, the different penality rates shall be set at an appropriate level. This level shall be determined jointly and shall mainly take into account the requirements of the market segment concerned and the performance required as specified by the Operators, the characteristics of the route, and the specific features of the particular service. cases of exemption cases of capacity reduction the operational information to be supplied: by the RUs, by the Operators, the agreed penalties, in case of non compliance. the cases the RUs cannot avoid and which they are not required to cure (force majeure). 23

Quality Framework Commitment RUs-UIRR : the relationship with the Infrastructure Managers (IMs) Railway Undertakings shall pursue all appropriate efforts to ensure that IMs and Regulators : allocate paths that correspond to CT needs in terms of quality and quantity, which implies that they should accord higher priority to freight operations, accept full liability with respect to these operations should they be prevented from performing the service expected, and guarantee, jointly with the Railway Undertakings, operation of an adequate quota of CT trains in the event of sectoral strike. RUs shall take steps to secure, from the IMs, transparent information on the causes of operational delays, all corrective action within their field of competence and relevant to the overall quality-of-service improvement objective. Development and implementation of a European Performance Regime between IMs and RUs see further slide 24

Quality Framework Commitment : a similar framework agreement is under development with FIATA FIATA is the international association of Freight Forwarders Regular contacts take place between FIATA and UIC Considering the work done in Combined Transport with UIRR, the idea arised to establish "General Recommendations for Quality contracts for dedicated international block trains of the conventional rail freight traffic", That document is based largely on the CT one, and will be finalized by end of this year It concerns only block trains, the issue of quality for single wagons is much more complex and will be handled in the context of a broader UIC project, still to be outlined (Definition of an international high level offer in single wagon load traffic and implementing it in the framework of a pilot relation) Shippers must be involved in the further evolutions 25

Involving the IMs : The European Performance Regime project (EPR) between IMs and RUs While the described framework agreements concern mainly the relationship between RUs and Customers, the involvement of the IMs in the quality process through EPR will enhance the robustness of the system and the confidence of the stakeholderswioflof tl enhance the robustness of the system and the confidence of the stakeholders UIC is developing between IMs and RUs a system which: monitors the performance of the European railway services, stimulates a good behaviour of IMs and RUs in terms of service-quality, provides penalization to bad performances of IMs and RUs as well is consistent with contractual and business goals of IMs and RUs shall improve the quality of the railway transportation service An Advisory Group where the RUs are represented recommended to : adopt a model based on delays - minutes pursue a corridor based approach include secondary delays and an incentive to delay recovery limit penalties to a warning function foresee a single contract start with a test-run of at least one year on 2 lines of route, including Antwerp-Basel-Milan The end result will be, by end of 2006, a international contractual framework on performance, robustness and reliability of service between IMs and RUs 26

Process of corridor-based Quality Management : the necessary tools Monitoring the current performance Analysis Setting targets of punctuality Defining measures and responsibilities (IM, RU) Reporting system Quality Circle Data collection by IMs aggregation on a corridor level Total number of delays and incidents -> ranking current punctuality of corridor/ru Measurable, operational and reachable targets levels of targets: macro level micro level Purpose: improving quality stated on macro and micro level prioritisation of measures Standardised reporting process between parties documenting the QM process basis for penalization International analysing and improvement meetings programmed between RUs and IMs 27