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Volume of freight (tonne-kms, millions) and passenger transport (passenger-kms, millions) in the US railways during the period 1975-2003
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A decade ago, the European Union decided that railways should be privatised and deregulated (effective from 2007 onwards). Due to the recent enlargements of the EU and the risk of failures in the decision-making process, it is important to examine early adopters of deregulation policies. We analyse literature and use second-hand quantitative materi...
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This paper aims to reconstruct the total amount of public expenditure on railways in key European Countries. The analysis bases on data referring to: Italy, Great Britain, Germany, France and Sweden. The main objective is to evaluate the appropriateness of transfers granted in view of containing and rationalizing public expenditure, improving overa...
Citations
... In the case of the US where infrastructure and operations are not segregated, private ownership is a better working model. Sweden so far has been one of the most encouraging instances from point of decision making for infrastructure policy based on European Union regulations (Hilmola & Szekely, 2006). ...
The chapter addresses the progress of the development of passenger railways in India from being a privatized model until 1951 and nationalized thereafter until recent developments and rising needs to privatize the system. Drawing experiences from privatized railway systems from across the globe, the chapter concludes that, taking into consideration the social stresses that the industry bears, the potential productive efficiency gains ensuing to Indian Railways from privatization shall be prevailed over by losses incurred due to allocative efficiency. Thus, any proposal to privatize Indian Railways must carefully look into its effects on productive efficiency along with the government’s objectives related to equity-allocation.
... For instance, New Zealand, Mexico and Japan have vertically integrated rail management and operational systems while Sweden, UK and Germany have vertically separated railway systems. Rail liberalization and reshaping of the organizational structure have been carried out in many countries with several steps involved (Hilmola, Ujvari and Szekely, 2007). A review of these reforms and the post reform performances contribute to identify the steps, processes, the resulting governance structure concerning operational ownership, infrastructure ownership, land management, subsidization, regulatory level, labour management and evaluate the success of the reforms. ...
Growing of the automobile industry and the demand for personal car use and chronic financial deficits in the balance sheets of rail operators have significantly affected the rail industry deterioration since 1970. However, gradual rail reforms were carried out by many countries to eliminate financial and operational issues and to develop their rail transportation systems. Sri Lanka has more than 150 years of history in railway operations, yet it is still in a weak position in terms of the operational efficiency and the financial position. The main purpose of this paper is to explore the key issues and root causes for the operational and financial deficiencies of Sri Lanka Railways and identify the best reform model in the light of world rail reform experiences and rail industry experts’ opinion. A semi-structured questionnaire was employed to interview twelve railway industry experts. Content analysis, Analytical Hierarchy Process (AHP) Method, and Policy Delphi Method were the main analytical techniques employed in the study. The results of the analysis showed that the vertical separation of the ownership between rail service operation and rail infrastructure provision is suitable for Sri Lanka Railways and, given the existing operational and financial characteristics, the reform steps should mostly be designed as in the case of the German- Sweden hybrid model of rail reforms.
... In the case of the US where infrastructure and operations are not segregated, private ownership is a better working model. Sweden so far has been one of the most encouraging instances from point of decision making for infrastructure policy based on European Union regulations (Hilmola & Szekely, 2006). ...
This book discusses policy instruments for sustainable infrastructure developments. Railways are one of the most important developmental instruments of a region, province, or country. They play a crucial role in economic development, urban growth, urban mobility, regional susceptibility, market integration, and world trade. Railways are an integral part of regional and urban development, both in terms of freight and passenger transport.
By offering case studies from various regions and cities in South Asia, this book examines the evolution of railway transportation and the impact of these infrastructure projects on regional and urban development. It examines the interactions between evolving infrastructures and competing demands and considers the negative and positive externalities of railway transportation for people, places, and locations. The contributions analyze issues such as network infrastructure planning and technological development, passenger mobility and satisfaction, vulnerability to environmental impacts, and cross-border trade.
... Rest of the paper organizes as follows; section 2 deals with previous studies have concentrated with privatisation policy in railway sector, section 3 gives the materials and methods of research work adopted in the present study and section 4 provides the discussion section in respect with prospects and consequences of adopting privatisation in Indian railways, finally section 5 delivers the concluding remarks of the study. Hilmola, O. P. et al (2007) studied the deregulation of railroads and future development in Europe based on the quantitative materials which contains three different countries like USA, UK and Sweden. This study found that deregulation of policies has brought positive performance in long term as well as short term perspective in all the regions except UK which gives negative effects in short term manner. ...
The baseline of the research work tries to explore the effect of privatisation on Indian railways. Adoption of any policy may have both positive and negative effect. Considering this perspective, the present study explores the prospective measures as well as consequence effect while adopting privatization policy in the Railway sector. The study found that efficiency, quality of services, lesser accidents, fewer political intervene, shareholders value and technological innovation as the prospective measures while adopting privatisation concepts. The study also found that limited coverage, higher fares, accountability and impact on economy as the consequences measures while adopting the privatisation policy in Indian Railways. Therefore, adopting the privatisation policy in the railway sector consideration must be given to the above said factors for future development.
... A target of the European transport policy in the form of a common transport market (freedom of transport services and the opening of transport markets) has been largely achieved, except for railway transport, where the common market has so far only been partially developed. As the EU has decided to separate operations from actual infrastructure, the market entry for new companies is relatively low, as compared to, e.g., the US, where this sector is vertically integrated (Hilmola and Szekely 2006). These authors also proposed normative instructions for the EU member states, which were in the process of taking their first steps in the deregulation process. ...
The passenger railway transport system in Slovakia, during the last almost thirty years, has undergone many changes and it has faced many problems and new challenges. The change of the socio-economic system, the splitting of Czechoslovakia, the process of accession to the EU and membership of Slovakia have influenced transport system in Slovakia. The main aim of this article is to identify main changes, problems and challenges of passenger railway transport in Slovakia after 1989. Attention is paid to the changing position of railway transport in the transport of persons in Slovakia. Article is also focused on the changes of organisation of railway transport in Slovakia and its deregulation, liberalisation, and starting of competition in passenger railway transport with the example of comparison of the operation of the state and the private carriers. The specific governmental measure, a zero-fare public railway transport services for selected groups of passengers, has significantly influenced a passenger railway transport in Slovakia since 2014.
... Vertical integration can increase transaction costs (Panayides, 2002), but will at the same time lead to increased efficiency due to competitive pressure (Jensen & Stelling, 2007). Although there are many differences, a comparison can also be made with the deregulation of the UK rail freight market that in many studies has been seen as a failure, largely blamed on the high level of defragmentation in the market (Hilmola & Szekely, 2006). Below, the changes in the market is analysed based on the classical Five forces framework (Porter, 1985). ...
Based on interviews and two workshops with the main stakeholders as well as media coverage, this article analyses the changes in the market from the deregulation leading up to the Swedish market exit of CargoNet, the former monopolist provider of intermodal freight transport, and the events that followed. The analysis applies business model theory. When CargoNet left the Swedish market in April 2012, some of the traffic was absorbed by other intermodal providers and the wagon load rail system. The routes to the far north of Sweden, however, were assuming an infrastructure role for the main forwarders and road hauliers, who formed the joint venture Real Rail with CargoNet to continue traffic. The business model applied by Real Rail differed from CargoNet's and other intermodal providers, mainly by the tight connection to the customers, who guaranteed volumes.
... Most railroad experts agree that US deregulation was a major success after its introduction. Both companies as well as customers have benefited (see for instance Hilmola and Szekely 2006 for a summary of US railway deregulation literature). Since the passage of the Staggers Act, Class I Railroads experienced significant improvements in performance. ...
... The new regulation generated entirely new roles in the railway sector which resulted in the fact that nowadays lots of companies with very different business models are active in it. (Hilmola et al., 2007, Weidmann and Nash, 2008). These companies cover different parts of the value chain and have internal as well as external interfaces. ...
Up to the 2000s, European railway undertakings were integrated companies covering all elements of the railway system. As a result of the European railway packages these incumbent companies were subdivided into infrastructure managers and railway undertakings. The competition in the rail sector and the changing markets encouraged new companies with completely new business models to enter the railway market. New regulations generated entirely new roles and this is why nowadays a lot of companies with very different business models are active in the railway sector. These companies cover different parts of the value chain and have internal as well as external interfaces. Thus, a new model to evaluate funding models under these changing boundary conditions is essential. The authors developed a new role model to describe internal and external financial flows in the rail sector focusing on the financial issues of innovation. Initially all roles in the railway sector were defined and described. A role is the smallest not further divisible function in the railway system. Each role assigns to one field of the railway sector (infrastructure, service provider, operations and rolling stock) or to the external field called environment. A single company can cover multiple roles within the railway system and the former state railways with their wide product portfolio now cover numerous roles in the new railway system. The next step was to evaluate the relationships between the stakeholders within the system and to show the resulting financial flows within the railway system. The role model allows to illustrate the internal flows of a company (e.g. within integrated railway companies) as well as external flows between different undertakings. The model does not differentiate between the supply of rolling stock by internal divisions or by rolling stock leasing companies for example. As innovations usually tackle the economics of more than one role in the system, the model clearly allocates the qualitative economic effects of the innovations. The illustration of the financial flows allows to derive compensation models between the roles gaining profit from an innovation and the roles which lose profitability. The model also allows a rough estimation of the transaction effort for the compensation models. Finally the authors proofed the applicability of the model in three case studies. These case studies demonstrated that one of the mayor obstacles for innovation in the railway system are the missing direct financial flows between infrastructure and rolling stock.
... Vertical integration can increase transaction costs (Panayides, 2002), but will at the same time lead to increased efficiency due to competitive pressure (Jensen and Stelling, 2007). Although there are many differences, a comparison can also be made with the deregulation of the UK rail freight market that in many studies has been seen as a failure, largely blamed on the high level of defragmentation in the market (Hilmola and Szekely, 2006). The changes in the market can be analysed based on the classical Five forces framework (Porter, 1985). ...
Based on interviews and two workshops with the main stakeholders as well as media coverage, this article analyses the changes in the market from the deregulation leading up to the Swedish market exit of CargoNet, the former monopolist provider of intermodal freight transport, and the events that followed. The analysis applies business model theory. When CargoNet left the Swedish market in April 2012, some of the traffic was absorbed by other intermodal providers and the wagon load rail system. The routes to the far north of Sweden, however, were assuming an infrastructure role for the main forwarders and road hauliers, who formed the joint venture Real Rail with CargoNet to continue traffic. The business model applied by Real Rail differed from CargoNet's and other intermodal providers, mainly by the tight connection to the customers, who guaranteed volumes.
... Most railroad experts agree that the US deregulation was a major success after its introduction. Both companies and customers have benefitted (see, for instance, Hilmola and Bulcsu, 2006, for a summary of the US railway deregulation literature). ...
After deregulation in 1980, competitive pressures forced the large US freight railroads to reduce costs and restructure, resulting in an economic renaissance of the US railroad companies after years of poor financial conditions. The most striking restructuring measure receiving much attention was dramatic labour downsizing: until 2004 employment was reduced by 60%. But other overlooked measures are the significant restructuring of workforce composition, and important changes in railroads’ workplace organization practices and corporate culture. To better understand this successful occupational restructuring, I investigate labour inputs substitutional relationships by using a translog variable cost model. Labour is decomposed into six employee categories rather than traditional production–nonproduction breakdown to estimate inputs elasticities of substitution. The data investigated is a unique firm-level dataset on the US freight Class I Railroads, covering a 22-year period, which allows this fine-grained analysis. I also document railroad workplace organization practices relating to results and reflecting changes in railroads corporate culture. I find strong substitutability between managerial positions and transportation employees, pointing to achievement of better command and control of operations; a high degree of complementarity between the most skilled employee categories and the strongest substitute relationship between transportation and maintenance of Ways&Structures groups.
