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A Balanced Scorecard forRailway System Efficiency?
OECD/ITF Railway Efficiency Roundtable
Lou Thompson / Heiner Bente
November 18/19, 2014
Paris

What IS “Efficiency”?
• Like porn: we know it when we see it?
• Basically, outputs vs inputs: net difference orratio• Unusually complex for railways– Multi-product: many types of both passenger andfreight service, infrastructure access– Multiple inputs (labor, track, trains), most notdifferentiated by output product– Varying attitudes toward reporting

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Measures of Efficiency• Technical: physical outputs and inputs.
– Outputs: e.g. tonnes, passengers, tonne-km, train-km– Consumed inputs: labor, materials, energy– Asset inputs: ROW, Rolling Stock• Financial: measured in currency (€ or $)– Cost: e.g. value of output/value of labor– Market/Customer: prices (€/tonne-km) or modal share• Economic: Social outputs (urban form, improved safety,green energy) versus social inputs (increased noise orpollution)

civityManagementConsultantsDimensions of Efficiency Measures• Cross-Section – comparisons at one point
in time– Can’t use a single index as railways are quite different
in many ways, always argue “we’re different”– Better with multiple indices – not just temperature,also blood pressure, Xrays, Blood tests, etc.

• Time-series also critical – improvement
versus deterioration• Benchmark(s) always neededcivity

Management
ConsultantsIssues with Indices• Defining the indices – what are we trying to dowith them?
– Analysis or research– Investment– Public policy and budgeting– Regulation (e.g. US STB uses R/VC)• Availability and public use of data
• Data quality – accuracy, consistency andcompleteness limit number and value of indices• Feedback: cut sails according to clothcivity

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Data Collected(81 railways, 26 countries, 41 years)• Data on inputs and assets*: Staff, Line Km,locomotives, coaches, MUs, wagons• Data on Outputs:– Passengers: pax, pax-km, revenue, gross tonne-km,train-km– Freight: tonnes, tonne-km, freight revenue, grosstonne-km, train-km– Total operating cost and total operating revenue– Modal shares– Copy of all data available on request

civityManagementConsultants* Note: Asset values not available.

Indices Developed••••••••

Basic use characteristics: Scope and Scale. Staff, Km of line,
Passenger-km and Tonne-km, average length of trip and haul andpassenger share of TU*, GT-Km and Train-km
Productivity ratios of line density. TU/Km, GT-Km/Km and Train-Km/Km
Productivity ratios of rolling stock. Pax-Km/(Coach+MU), TonneKm/Wagon and TU/(Locomotive+adjusted MU)
Productivity ratios of staff. TU/staff, GT-Km/staff and Train-Km/staff
Financial: Operating Ratio (revenue/operating cost)
Average revenues: Avg. passenger fare and Avg. freight tariff in 2011 PPP
US $/pax-km and 2011 PPP US$/per tonne-km
Rail modal share of surface pax-km and surface tonne-km (all surface andrail versus truck only)
Time series presented: in report Pax-km, tonne-km, Operating Ratio,TU/employee, avg. pax and frt revenue, market shares. Available for all
indices

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Consultants* TU is sum of Pax-Km + Tonne-Km

What about the data?
• Data quality has real problems: accuracy, comparability,completeness, enforcement, “confidentiality” restrictions• US STB (“Statistics of Class I Railroads” and “Carload WaybillSample”) good model. Clear specification, long time frame, filingmandatory and sworn to be accurate• Industry sources (AAR, RAC) are useful. ORR data useful, butdoesn’t cover freight operators. Franchise changes complicated• UIC data format is good but has gaps (waybill needed) and railways
often do not comply.
• EU has no central source of data, does not enforce reporting
mandates to support policy. Not a new problem: see Thompson
2007 “Railway Accounts for Effective Regulation” Analysis also
hindered by changes in system and national railway structure

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What Did This Tell Us, Step 1?
• There are very efficient freight railways: US Class I,
Canada, China. High volumes, high indices, low prices,
strong modal share trends. Note that Amtrak and VIA
are very different.
• There are very efficient passenger railways: Japan• Mixed traffic railways are in the middle. SBB(Switzerland) relatively strong in most areas• OSE (Greece) and CIE (Ireland) at the bottom of mostindices• Nothing in the time trends that would foster optimism
about most EU railways

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Can Efficiency be Changed?
• Deregulation of US freight• Privatization of CN (and US deregulation)
in Canada• Breakup and privatization in Japan• Restructuring and franchising in UK• EU results mixed: UK had clearest results.
Not clear whether EU Directives haveactually been implemented (Kirchner)

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Consultants

US Class I Railroads
All Commodity Average Revenue/Ton-Mile(cents/ton-mile) and Operating Ratio,10.000120Deregulation,9.000Operating Ratio

100,8.000,7.000

80,6.000
Constant 2010 $,5.000

60,4.000
40

Current $,3.000,2.000

20,1.000,0.000

01960

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1980

1990

2000

2010

Source: Analysis of Class I Railroads and Bureau of Economic Analysis (GDP Deflator)

Canadian Freight Railways(Tariff Index and Labor Productivity Index 1995=100)

250
200

120

Tariff Index
Labor Productivity Index

100

Operating Ratio (RightAxis)

80

150
60
100
4050
US Deregulation

01970

20CN Privatization

01980

Source: Railway Association of Canada

1990

2000

2010

Japanese National Railways Breakup and Privatization
2500

180

Breakup andPrivatization(1987)

160

2000

140120

1500

100
80

1000
Labor (000 TU/Empl)

40500
Operating Ratio (rightaxis)

0
1960

60
2001970

1980

1990

Source: Author’s analysis and UIC, Railway Time Series 1970-2000

20002010

Rail Traffic in the U.K.
(000,000 passenger-km and tonne-km)

60000
50000
Breakup and franchising

40000
30000
20000
100000UK BR Passenger
UK TOCs
UK BR FreightUK Freight Operators

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: SRA 2002c and SRA, 2003a, WDI, UIC, ORR

UK Passenger-Km, Tonne-Km and GDP(Index, 1994=100, GDP index constant £1994-1995)

200

Passenger-Km

180

Tonne-Km

160

GDP (1994/1995)

140120100

80
6040
19631973

1983

Source: SRA, ORR, U.K. Treasury website and World Bank.

19932003

Has EU Rail Reform Actually Been Implemented?
Rail Liberalization Index for EU Railways>800
600 to 800
300 to 600<300

Advanced
On Schedule
DelayedPending Departure
No data

Overall Liberalization*Country 2002 2004 2007 2011
UK805 781 827 865
DE760 728 826 842
SE760 729 825 872
NL
720 695 809 817
AT430 579 788 806
DK720 693 788 825
CH650 677 757 741
PL549 739 737
CZ549 738 738
RO722 726PT
380 668 707 737
SK458 700 738
NO390 589 698 729
EE257 691 729
LT222 684 592
IT560 688 676 737
SI326 665 672
BG
652 718LV
516 650 587
BE395 461 649 753
HU366 637 658
FI410 542 636 672
ES195 148 630 583
LU
280 467 581 585
FR340 305 574 612
GR210 162 559 592
IE
295 149 333 467
Sample172527272007
Frt. Pass.
848 798
844 809908 742887 732852 727
811 757
848 662786 692
798 679797 650797 619756 643836 574727 667744 624734 617743 585
761 557
733 576780 518740 533
732 540785 486
688 474
727 431690 429458 206
2727

2011
Frt. Pass.
862 852875 814896 855884 779873 761851 808
850 680
826 699783 705
834 650847 676793 702861 652781 701
703 530
809 706
799 590806 668
747 500
881 663780 592
753 661
770 485742 508
772 521698 559
603 399
2727LEX
2002 2004 2007 2011
960 940 969 980
840 750 905 935
800 680 857 960
760 670 865 887
680 530 819 895860 790 821 925
600 605 670 678
600 783 803
530 839 786
822 783
700 820 829 884
535 853 857
580 570 777 769
380 728 840
260 820 730
660 740 819 795
550 622 655
722 839
580 683 780
380 425 740 820
485 731 822
620 640 732 729
300 250 711 701
520 530 551 669
340 360 595 650
260 305 619 859
520 180 332 414
17252727

ACCESS
2002 2004 2007 2011
740 715 791 837
840 720 807 819
760 760 817 850
820 710 795 799
410 600 781 784
770 650 780 800
770 710 778 756
530 728 720
560 713 726
697 711290 605 676 701
430 662 708
410 595 679 719
205 680 702
210 650 558
680 670 640 722
230 675 676
635 688
485 642 539
500 475 626 737
320 613 616
440 505 612 657
180 105 610 554
220 440 588 564
430 280 568 602
240 100 544 525
280 130 338 481
17252727COM
2002 2004 2007 2011
780 580 793 866
520 505 555 615
720 510 633 577
460 455 509 680
240 232 349 575
480 390 498 655
440 495 459 509
175 490 518
215 279 422
440 487
220 190 200 434
260 381 381
140 135 274 482
245 704 629
165 184 120
240 225 293 470
120 153 337
241 421225 313 411
180 180 201 424
125 275 522
160 140 145 156
140 110 151 333
152 120 115 104
152 130 178 334
100 100 133 136
100 100 115 120
1725
2727

EU 15
EU 10
EU 25

769
759
765

808
785
799

613
-

507
-

310
-

484
-

520
405
480

681
688
683

718
690
706

592
621
604

670
634
655

Source: Kirchner 2002,2004,2007 and 2011

574
490
545

744
760
751

807
790
800

498
371
454

665
670
667

695
664
683

264
191
239

325
346
333

432
425
429

UK
DE
NL
DKEE

FR

What Did This Tell Us Step 2?
• Broad indices can be developed and are useful
but detailed analysis needed for individual
countries• Results are indicative, not dispositive• MUST HAVE BETTER DATA. Define objectives
more clearly, complete and mandatory reporting.
• Add socioeconomic data?
• EU mandated data with/without UIC?

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