Supply and Demand Analysis

Technical, Socio-economic and Supply/Demand study regarding the transport of the FERRMED Great Rail Network (Scandinavia-Rhine- Rhône-Western Mediterranean) Supply and Demand Analysis Presented by Daniele Maroni - SENER www.wyg.com creative minds safe hands

Content 1. Scope of the S&D analysis 2. Simulation model (2005) 3. Future Scenarios 4. Forecasting (2020 and 2025) 5. Conclusions of the S&D analysis 2

Framework Data Collection FERRMED Global Study Supply/ Demand Technical CBA Environmental SUPPLY/DEMAND ANALYSIS FERRMED transport planning model building (base year 2005) Definition of 14 future scenarios (2020-2025) Simulation and traffic forecasting Administrative Legal 3

Trans-Tools Modelling Platform Developed under EU funding Originally for evaluation of TEN-T projects 4 step transport planning model (macroscopic) Models passenger and freight transport across Europe Database (2000) transport variables socioeconomic variables networks services Largest European transport model Trans-Tools provides a simulation tool for strategic analysis 4

Zoning System Passenger zoning system: NUTS III ~ 1,290 zones Freight zoning system: NUTS II ~ 295 zones Freight Passengers 0 SCOPE 2005 SCENARIOS FORECASTING CONCLUSIONS 5

Transport Networks (I) Roads Motorways Dual carriageways Regular roads Urban arterials Ferries 6

Transport Networks (II) Railways (freight) Mixed lines Dedicated lines 7

Transport Networks (III) Railways (passenger) High speed lines Conventional lines 8

Transport Networks (IV) Inland Waterways (IWW) Air Freight maritime transport 9

Methodology Data Collection Data Trans-Tools base year is 2000 Transport costs updated to 2005 values FERRMED Study calibrated model against 2005 data External models built Trans-Tools limitations Study requirements Intra Red Banana and export to EU-25 Demand Model FERRMED Freight O/D Matrix 2005 by NSTR Freight Modal Split NO NO Intra Country Demand model TransTools O/D Matrix 2000 by NSTR TransTools O/D Matrix Freight Ports Model Demand 2005 by NSTR Conversion to IWW vessels Freight Logistic Model NO Furness Algorhytm by NSTR O/D Matrix 2005 by NSTR and Mode Growth: Pop, GDP, Production, Consumption TransTools Freight Growth Model Road Rail IWW SSS EUROSTAT Data 2005 Assignment TransTools Model Trucks/day on Road Links Ton/day on rail links Ton/day on IWW by CEMT type NO NO OUTPUT Conversion to # Trains: Container Calibration Supply Country Network Single Wagon Block Rolling Motorway Traffic Calculations Final Calibration: Comparison with real traffic at link level for road, rail and IWW (main corridors and border crossings) Satisfactory? Freight OUTPUT Traffic on road, rail and IWW links TransTools Supply and Network 2000 Update by TransTools Supply and Network 2005 Road Rail Air Supply O/D Matrix 2005 by Mode and trip purpose Car/day on Road Links Pax/day on rail links Pax/day on air links OUTPUT Conversion to # Trains: Intercity High Speed Commuters NO Growth: Pop, GDP, Employment, Car ownership, travel costs Passenger TransTools Passenger Growth Model Demand TransTools O/D Matrix 2005 by trip Purpose NO Passenger Modal Split Pax TransTools Model NO Conversions NO NO YES Final Calibration Assignment Maps Road, Rail, IWW Bottlenecks Maps YES YES Results CBA vehicles-km speed TECHNICAL vehicle/day ENVIRONMENT vehicles-km Results 10

External models for freight demand 1. Intra Red Banana and export to EU 25 2. Internal Demand for Red Banana Countries At country level 4 production sectors Industry Agriculture Construction Energy Eurostat data 1 2 3. Port Flow Distribution Model 3 11

Port Flow Distribution Model 45 major European ports included 55% total European ports freight traffic 75% of intercontinental freight traffic in Europe Maritime and inland networks 4 models built in TransCAD containers Ro-Ro general cargo dry bulk 12

Traffic Assignment: Road 200000 Total Observed and Modelled Traffic (AADT) on Red Banana Roads 2005 (Motorways, Road Traffic Dual Carriageways) Calibration base year 2005 (41) 180000 Modeled Traffic (PCU) 160000 140000 120000 100000 80000 60000 40000 20000 y = 0.87x + 7600 R 2 = 0.82 y = 0,87x + 7600 R 2 = 0,82 0 0 20000 40000 60000 80000 100000 120000 140000 160000 180000 200000 Observed Traffic (PCU) Note Local traffic has been taken into account on the basis of Eurostat data Satisfactory calibration achieved for each country 13

Traffic Assignment: Rail Output in tonnes/day (freight) and pax/day (passengers) converted to traffic (trains/day) Model calibrated against observed rail traffic data for main lines Local traffic considered separately using different occupancy and loading factors Traffic split by train type Passenger: high speed, intercity, commuter Freight: block, wagon and container 2005 Rail Freight Traffic Calibration 2005 Rail Passenger Traffic Calibration 300 700 Modelled Calculated 250 200 150 100 50 y = 0.86x + 5.6 y = 0,86x + 5,64 R 2 = 0,88 R 2 = 0.88 Modelled Calculated 600 500 400 300 200 100 y = 0.94x + 6.3 y = 0,94x + 6,26 R 2 = 0,95 R 2 = 0.95 0 0 50 100 150 200 250 300 Observed 0 0 100 200 300 400 500 600 700 800 Observed 14

Freight Modal Split Freight Modal Split (2005) Road Rail IWW Sea Inland Freight Modal Split (2005) Road Rail IWW 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% EU25 Red Banana EU25 Red Banana (Measured in tonnes-km) 15

Passenger Modal Split Passenger Modal Split (2005) 100% Road Rail Air 80% 60% 40% 20% 0% EU25 Red Banana (Measured in passenger - km) 16

Year 2005 Traffic (I) Road Total (veh/day) 17

Year 2005 Traffic (II) Road Freight (HGV/day) 18

Year 2005 Traffic (III) Rail Freight (trains/day) 19

Year 2005 Traffic (IV) Rail Passenger (trains/day) 20

Scenarios Reference Medium FERRMED Full FERRMED Southern ports enhancement 27% to 35% FERRMED Objective achieved 2005 - - - - 2020 - - - 2025 21

Supply / Demand Scenario Building Traffic Supply CBA 1st Model run Traffic Traffic Validation Bottlenecks Reference Scenarios 2nd Model run Traffic Supply Solutions Costs Traffic IRR FERRMED Scenarios FERRMED Standards Modelling 1st Model run Traffic Traffic 2nd Model run Supply FERRMED Standards Bottlenecks Solutions Costs Traffic Costs IRR Traffic 22

Inland Demand Forecasting Growth Rate Forecasting for Main Socioeconomic Variables EU-25 [EUROSTAT] Base 100: 2005 160% 150% 140% 130% 120% 110% GDP (2005 constant price) Population 150% Growth Rates Forecasting for Inland Freight Demand (Intra-Country + Intra Red Banana and Export to EU-25 models) Base 100: 2005 1. Intra Red Banana - export to EU25 2. Intra-Country TOT Inland 100% 2005 2010 2015 2020 2025 140% Growth Rate Forecasting for Production by sector and Consumption EU-25 [EUROSTAT] Base 100: 2005 Consumption Total Production Construction Industry Agriculture Energy 130% 120% 110% 150% 140% 130% 100% 2005 2010 2015 2020 2025 120% 110% 100% 2005 2010 2015 2020 2025 23

Maritime Demand Forecasting Inputs GDP Port expansion plans Exports / imports OECD industrial performance Ro-Ro 2005-2025 Ref Growth Factor Containers 262% 106% Dry Bulk 41% General Cargo 24% Total 118% 160% 150% 140% 130% 120% 110% 100% Growth Rate Forecasting for GDP EU-25 [EUROSTAT] Base 100: 2005 GDP (2005 constant price) 2005 2010 2015 2020 2025 Share between Mediterranean Ports and Others Scenario 2005 Base year 2025 Reference Med. Ports 24% 27% Other European ports 76% 73% 24

Reference Scenario Network Planned and committed projects at 3 levels European National Regional New and upgraded infrastructure Rail Freight (127 projects) Rail Passenger (140 projects) Road (209 projects) Inland waterways (11 projects) Terminals Rail Freight Network (2025 Reference Scenario) 25

Reference Scenario Policies (I) Policy Action Scenario year Modelling Motorways of the sea 2020 Reduce sea shipping waiting time at ports by 10%. Freight intermodality and logistics Intermodal loading units (ILU) and freight integrators (Marco Polo Programme) 2020 Reduce cost at freight terminals by 30% viz: - fixed inventory (Euros/ton) - handling (Euro/m3) - storage (Euro/m3) Reduce waiting time at terminals by 10% Reduce travel time by 10% Road pricing (Eurovignette) for freight and passenger transportation 2020 Vehicle charges per country ( /veh-km) 26

Reference Scenario Policies (II) Policy Action Scenario year Modelling Liberalisation of transport markets and interoperability Simplify Sea/IWW custom formalities Adoption of common rules in rail sector to improve interoperability and enhance quality of services Rail sector liberalisation --full separation between infrastructure and operations- International passengers services deregulation Ports service liberalisation Airport slots liberalisation 2020 Reduce rail freight travel time by 10% Reduce rail freight travel cost by 10% ( /ton-km) 2020 Reduce rail freight travel time by 10% 2020 Reduce rail passenger travel cost by 5% ( /pax-km) 2020 Reduce sea shipping costs ( /load) by 10 % 2020 Reduce tariffs for airport connections by 20% 2020 Reduce sea and IWW port waiting times by 10% 27

Transport Costs Transport operating cost heavily dependant on fuel cost Operating cost calculation assumptions: Road freight transport fuel prices grow at 50% of crude oil rate IWW and Maritime Transport fuel prices grow at 80% of crude oil rate Rail electric power price grows at 30% of average energy rate Assumptions for crude oil and energy prices growth: Base year for prices: 2000 (Trans-Tools) Future trends: World Bank (2008) and STEPs project (EC, 2006) Freight Model Input Total freight transport cost growth 2000-2025 Road 18.6% Rail 1.7% IWW 21.5% Sea 16.9% 28

Modelling Scenarios (I) Year Name Demand Transport Costs Supply FERRMED Standards 2005 1. Base year 2005 2005 2005-2020 2. Reference 1st run Planned 2020-2020 3. Reference 2nd run Bottlenecks solution Reference 2020 Planned 2020 + Infrastructural Solutions - 2020 2020 4. MEDIUM FERRMED 1st run 5. MEDIUM FERRMED 2nd run Bottlenecks solution 2020 Forecasts Reference 2020 + MEDIUM Planned 2020 +MEDIUM Planned 2020 +MEDIUM+ Infrastructural Solutions MEDIUM MEDIUM 29

Modelling Scenarios (II) Year Name Demand 2025 6. Reference 1st run 2025 7. Reference 2nd run Bottlenecks solution Transport Costs Reference 2025 Supply FERRMED Standards Planned 2025 - Planned 2025 & Infrastructural Solutions - 2025 8. MEDIUM FERRMED 1st run 2025 9. MEDIUM FERRMED 2 nd run Bottlenecks solution 2025 Forecasts Reference 2025 + MEDIUM Planned 2025 & MEDIUM Planned 2025 & MEDIUM & Infrastructural Solutions MEDIUM MEDIUM 2025 10. FULL FERRMED 1st run 2025 11. FULL FERRMED 2nd run Bottlenecks solution Reference 2025 + FULL Planned 2025 & FULL Planned 2025 & FULL & Infrastructural Solutions FULL FULL 2025 12. Southern ports enhancement 27% to 35% North-South port share, assumed split 65-35% Reference 2025 + FULL Planned 2025 & FULL FULL 2025 13. FERRMED Objective achieved Long distance rail freight share assumed 35% Reference 2025 + FULL Planned 2025 & FULL FULL 2025 14. FERRMED FULL+ 2025 Forecasts Reference 2025 + FULL Planned 2025 & FULL+ FULL+ 30

FERRMED Standards Implementation FERRMED Standard FERRMED Scenarios 1st Run FERRMED Scenarios 2nd Run 1. Signalling Included Included 2. Train Length Included Included 3. New terminals and expansion Included Included 4. Maximum Axle Load Included New lines 5. Width of the tracks UIC 1435 mm Included Included 6. Liberalisation of the rail freight market Included (Ref. Scenario) Included (Ref. Scenario) 7. Reliability and Quality Included Included 8. Loading gauge UIC C As in Reference scenario For Upgraded and New lines 9. Two Parallel lines in core FERRMED rail network Included when justified Included when justified 10. Increase of Freight train priority As in Reference scenario Selected lines 11. Slope limitation to 12 As in Reference scenario Included when needed to solve slope bottlenecks 12. Homogenisation of Power type As in Reference scenario Included 13. Renewal of Rolling stock Indirect Effect Indirect effect 31

FERRMED Standards Modelling Modelling variables: Link Speed Line capacity Border crossing delays Loading capacity Operating costs Market prices Costs at freight terminals (handling, storage ) Times at terminals 32

FERRMED Standards Modelling Modelling variable FULL FERRMED Scenario MEDIUM FERRMED Scenario Link Speed + 15% + 0% Line capacity + 15% + 0% Border crossing delays Eliminated Eliminated Loading capacity +50% +45% Operating costs -25% -15% Market prices -25% -15% Costs at freight terminals (handling, storage ) -20% -15% Times at terminals -35% -25% 33

Freight Transport Performance Road Rail IWW Sea 5000 Billion ( 10 9 ) tonnes-km Billion ( 10 9 ) tons-km 4000 3000 2000 1000 0 1. 2005 Base Year 3. 2020 Reference 2nd run 5. 2020 Medium FERRMED 2nd run 7. 2025 Reference 2nd run 9. 2025 Medium FERRMED 2 nd run 11. 2025 Full FERRMED 2nd run 12. 2025 Southern Ports enhancement 13. 2025 Obj. achieved: RAIL 35% (>500Km) Sea 918 1374 1373 1510 1502 1499 1580 1499 IWW 148 246 245 265 262 260 264 260 Rail 265 409 453 453 491 524 527 574 Road 1481 2231 2191 2319 2286 2274 2284 2223 34

Freight Transport Growth Rates Period Scenario Rail Road IWW Total Inland Sea Total All 2005-2020 2005-2020 2005-2025 2005-2025 2005-2025 3. 2020 Reference 2nd Run Bottlenecks Solution 5. 2020 Medium FERRMED 2nd run Bottlenecks solution 7. 2025 Reference 2nd run Bottlenecks solution 9. 2025 Medium FERRMED 2nd run Botteleneck solutions 11. 2025 Full FERRMED 2nd run Bottlenecks solution 54% 51% 66% 52% 50% 52% 71% 48% 65% 52% 51% 52% 71% 57% 79% 60% 64% 62% 85% 54% 77% 60% 64% 62% 97% 54% 76% 61% 63% 62% 35

Freight Modal Split Road Rail IWW Sea 100% 80% 60% 40% 20% 0% 1. 2005 Base Year 3. 2020 Reference 2nd run 5. 2020 Medium FERRMED 2nd run 7. 2025 Reference 2nd run 9. 2025 Medium FERRMED 2 nd run 11. 2025 Full FERRMED 2nd run 12. 2025 Southern Ports enhancement 13. 2025 Obj. achieved: RAIL 35% (>500Km) Sea 32,6% 32,2% 32,2% 33,2% 33,1% 32,9% 34,0% 32,9% IWW 5,3% 5,8% 5,8% 5,8% 5,8% 5,7% 5,7% 5,7% Rail 9,4% 9,6% 10,6% 10,0% 10,8% 11,5% 11,3% 12,6% Road 52,7% 52,4% 51,4% 51,0% 50,3% 49,9% 49,0% 48,8% 36

Inland Freight Modal Split Road Rail IWW 100% 80% 60% 40% 20% 0% 1. 2005 Base Year 3. 2020 Reference 2nd run 7. 2025 Reference 2nd run 9. 2025 Medium FERRMED 2 nd run 11. 2025 Full FERRMED 2nd run 12. 2025 Southern Ports enhancement 27% to 35% 13. 2025 Obj. achieved: RAIL 35% (>500Km) IWW 7,8% 8,5% 8,7% 8,7% 8,5% 8,6% 8,5% Rail 14,0% 14,2% 14,9% 16,1% 17,1% 17,1% 18,8% Road 78,2% 77,3% 76,4% 75,2% 74,4% 74,3% 72,7% (Measured in tonnes-km) 37

Average Trip Distance Rail Road Trip Distance Distribution Trips < 500 km Trips [500, 750] km Trips [750, 1000] km Trips >1000 km Trips < 500 km Trips [500, 750] km Trips [750, 1000] km Trips >1000 km 1. 2005 Base Year 51% 16% 10% 23% 75% 11% 5% 9% 3. 2020 Reference 2nd run Bottlenecks Solution 51% 17% 11% 21% 74% 11% 5% 10% 5. 2020 Medium FERRMED 2nd Bottlenecks Solution 51% 17% 11% 21% 74% 11% 6% 9% 7. 2025 Reference 2nd run Bottlenecks Solution 50% 17% 12% 21% 74% 11% 5% 10% 9. 2025 Medium FERRMED 2nd run Bottlenecks Solution 50% 18% 11% 21% 74% 10% 6% 10% 11. 2025 Full FERRMED 2nd run Bottlenecks Solution 50% 18% 11% 21% 74% 10% 6% 10% 12. 2025 Southern ports enhancement 27% to 35% 50% 18% 11% 21% 74% 10% 6% 10% Average Rail trip distance around 300 km 38

Freight Modal Split Inland Long Distance (>500 km) Road Rail IWW 100% 80% 60% 40% 20% 0% 1. 2005 Base Year 3. 2020 Reference 2nd Run 5. 2020 Medium FERRMED 7. 2025 Reference 2nd run 9. 2025 Medium FERRMED 2 11. 2025 Full FERRMED 2 nd run 12. 2025 Southern ports enhancement 13. 2025 Obj. achieved: RAIL 35% (>500Km) IWW 19,6% 20,2% 19,8% 20,2% 19,9% 19,6% 19,9% 19,8% Rail 20,5% 20,7% 22,6% 21,4% 23,0% 24,3% 24,6% 35,0% Road 59,9% 59,1% 57,7% 58,4% 57,1% 56,1% 55,6% 45,1% (Measured in tonnes-km) 39

Freight Modal Split Inland Long Distance (>1000 km) Road Rail IWW 100% 80% 60% 40% 20% 0% 1. 2005 Base Year 3. 2020 Reference 2nd Run 5. 2020 Medium FERRMED 2nd 7. 2025 Reference 2nd run 9. 2025 Medium FERRMED 2 11. 2025 Full FERRMED 2 nd run 12. 2025 Southern ports enhancement 13. 2025 Obj. achieved: RAIL 35% (>500Km) IWW 14,4% 15,1% 14,7% 15,5% 15,1% 14,7% 15,1% 14,7% Rail 24,1% 24,7% 26,4% 25,2% 26,4% 28,2% 28,9% 39,8% Road 61,5% 60,2% 58,9% 59,3% 58,5% 57,1% 56,0% 45,4% (Measured in tonnes-km) 40

2025 REFERENCE Scenario Rail Freight Traffic (trains/day) 41

2025 FULL FERRMED Scenario Rail Freight Traffic (trains/day) 42

Passenger Modal Split Road Rail Air 100% 80% 60% 40% 20% 0% 1. 2005 Base Year 3. 2020 Reference 2nd run 5. 2020 Medium FERRMED 7. 2025 Reference 2nd run 9. 2025 Medium FERRMED 2 Air 9,6% 11,0% 11,0% 11,9% 11,9% 11,9% 11,9% 11,9% Rail 4,5% 6,1% 6,1% 6,6% 6,6% 6,6% 6,6% 6,6% Road 85,9% 82,9% 82,9% 81,5% 81,5% 81,5% 81,5% 81,5% (Measured in passenger - km) 11. 2025 Full FERRMED 2nd run 12. 2025 Southern Ports enhancement 13. 2025 Obj. achieved: RAIL 35% (>500Km) 43

FERRMED: Reversing the trend (I) Inland Freight Transport Performance 1995-2005: EUROSTAT PocketBook 2005-2025: FERRMED Forecasting 3000 2500 2000 1500 1000 500 0 221 15.5% 258 14.2% 453 14.9% 491 16.1% 524 17.1% 574 18.8% 1995 2000 2005 (1) 2005 Base Year (3) 2020 Reference 2nd Run (7) 2025 Ref. 2nd run Bottlenecks solution (1) 2005 Base Year (5) 2020 Medium FERRMED 2nd run (9) 2025 Medium FERRMED 2nd run (1) 2005 Base Year (11) 2025 Full FERRMED 2nd run (12) 2025 Southern ports enhancement 27% to 35% (13) 2025 Obj. achieved: RAIL 35% (>500Km) Billion ( 10 9 ) tonnes-km Total Road Rail IWW Total Ref. Road Ref. Rail Ref. IWW Ref. Total MEDIUM Road MEDIUM Rail MEDIUM IWW MEDIUM Total FULL Road FULL Rail FULL IWW FULL 44

FERRMED: Reversing the trend (II) Planned and committed projects plus European policies and global trends stop the trend of losing modal share by the freight rail sector, achieving also a slight increase in share (9.4% in 2005 to 10% in 2025) FERRMED Standards implementation REVERSES THE TREND with 16% growth in tonnes-km in rail market and 2% decrease by road in 2025 Railway (inland, +750 km trips) modal share increases from 22.6% (2005) to 23.1 (2025 Reference), while Full FERRMED further increases the share to 26.1%. 45