Roundtable

Efficiency in Railway Operations
and Infrastructure Management(18-19 November 2014, International Energy Agency, Paris)

Efficiency Indicators of Railways in France
Pr. Alain Bonnafous
Pr. Yves Crozet
Laboratoire d’Economie des Transports, Lyon

Contents• 1 – Introduction• 2 – Efficiency of rail transport services• 3 – Network efficiency

2

Strategic goals
Political relevancy
Operationalconsistency

Operational goals:
network, traffic

Operational
efficiency

Inputs : Capital,Labour, Energy...

Demand:P.km, T.km…

Productiveefficiency

Economic
efficiency
Supply : train.km
Laboratoire d'Economie desTransports32) Efficiency of rail transportservices

Economic efficiency

High Speed Trains Traffics in Europe(Billion of pass.km/year - 2012)
6050403020100FranceGermanySpainItaly

SwedenBelgium

United Kingdom

7

Rail passenger traffic
2013
Long distance- HSR- Intercity

Regional- TER-Paris region
Total
Total with Paris

2009

2010

2011

2012

2013 2013/2008

Rail Freight traffic Tkm
140.0

130.0
120.0
110.0
100.0
90.0
80.0
70.0

60.0
50.0

9EU27
DEFRSEUKFocus on rail freight traffic

 Competition on the market
 Germany saw liberalization as a way to support rail ≠ France Modal share rail Germany 2003-2008: + 1,6 pts, thereof 1,2 fromcompetitors
120
110

100

9090

Transport Minister:« Toward 100 Gtkm! »60

80

Billion t-km

70

- 29 %

50

60
50
40

30

30

20

20

10101996

1998

2000

2002

2004

2006

2008

Total rail traffic
National traffic+ 52 %

704001994

Germany

110

100

80

Billion t-km

120

France01994

1996

1998

2000

International traffic
Imports and Exports
Transit2002

2004

2006

2008

Sources : SOeS, SBA
Graphs S. Séguret, 2009

Productive efficiency

Main indicators (France)
180
160
154.8

140
138.0

120
100

122.4
110.5

121.3

Pass.km

104.4

Ton.km90.3
76.7

86.1

100
8060

Unit.km

Employees
Productivity

4042.6

2001996

2008

2013

Germany
250

200

Pass.km150

Ton.kmUnit.km100

Employees
Productivity

5001996

2008

2013

Switzlerland
250200
Pass.km150

Ton.kmUnit.km100

Employees
Productivity

5001996

2008

2013

Operational efficiency

Public subsidies to TER (France)
190.0
170.0
150.0
130.0
110.0
90.0
70.0
50.0
2002

2004

2006

2007

2008

2009

2010

Public contribution Index, base 100 : 2002
Per train-kilometre - Index, base 100 en 20022011

Public subsidies in Switzerland
120.0
110.0
100.0
90.0

80.0
70.0
60.0
50.01999

2000

2002

2004

2006

2007

2008

2009

Public contribution Index, base 100 : 2000
Per train-kilometre - Index, base 100 en 2002

2010

2011

Public subsidies to HSR
up to what extent?
Tours-Bordeaux
Public Subsidies
5 euros/passenger
during 50 years
Marseille-Nice
Public subsidies
30-35 euros/passduring 50 years.
183) Network efficiency- The efficiency of basic operations .

- The marginal capital efficiency .

Summary annual performance chart for 2012
(last year of the first performance contract, 2008-2012)
Strategic objective 1: Adapting to market liberalisation and increasing business revenue
6 sub-objectives: Mainly focused on customer
4 sub-objectives achieved, 2 partially achieved:
satisfaction
1) the quality of freight paths has not improved
as fast as expected; 2) costs are better reflectedin charges.
Strategic objective 2: Modernising infrastructure and improving network performance
13 sub-objectives: Maintenance, maintenance
7 sub-objectives achieved,management, safety
5 partially achieved: mainly concerning theelimination of level crossings (only half thetargeted number), the standard of programmingand ensuring that renewal investment iseffective.
One failure: the multiannual view of renewals.
Strategic objective 3: Breaking even and establishing sustainable financing
6 sub-objectives:
2 sub-objectives achieved,Improving the coverage of cost by revenue
One partially achieved: management control
adapted to the strategic segmentation of thenetwork;
3 sub-objectives not achieved because of thefreezing of €341m of the operating subsidy:
costs not fully covered by revenue (charges orbalancing subsidy); accounting targets
consequently missed.
Strategic objective 4: Dynamic steering and responsible governance
8 sub-objectives:
7 sub-objectives achieved,Improving governance design and control
One partially achieved, concerning the slowerthan-expected establishment of the liaison withregional authorities (regional transportorganising bodies).

Strategic objective 1 Examples of indicators
Adapting to market- Rate of satisfied customers.
liberalisation and- Rate of acceptance of the pricing.
increasing business- Number of paths affected by therevenuemaintenance.
- Rate of regularity in 5mn.

Strategic objective 2 Examples of indicators
Modernising- Track length renovated (with respect toinfrastructure andthe objective in 5 years).
improving- Number of turnouts renovated (id.).
network- Number of level crossings removed (id.).
performance- Cost of renewal of a km of track (id.).
- % of the network in poor condition.
- New centralized controls (with respect tothe program).
- PDCA for investments (Plan-Do-CheckAct).
- % of realized investment (with respect tothe program).
- % of investment without cost overruns.
- % of investment without exceeding
deadlines.

Strategic objective 3 Examples of indicators
Breaking even and- Revenue (with respect to the forecast ofestablishing
the business plan).
sustainable- Government subsidies (with respect tofinancing
its commitments).
- Ratio revenue/full cost.
- Accounting results with respect to thebusiness plan.
- Ex-post financial assessment of major
projects (1 year, 5 years, 10 years)

Network efficiency- The efficiency of basic operations .
- The marginal capital efficiency .

Optimal ranking under budget constraint
Improvement / ERR ranking
Ranking :NPV/public euroIRR (financial)
ERR (socio-econ.)< sub >

Decreasingbudget

First investments of RFF to promote rail freight(1997-1997)

Effectivenessof localpoliticians
TWO PORTTERMINALS

Valeur actualisée nette par euro deNet present value/subsidy
subvention
Source : RFF

If we consider the 40 candidate projects
between 1997 and 2007:

If the ten most profitable projects were selected
every billion subsidy would have generated
8 billion net present value.
If the ten less profitable projects were selected
every billion subsidy would have generated
0.5 billion net present value.

A global programme efficiency indicator(value-for-money criterion)
For a given time series of subsidies thevirtual optimal programme is ranked by
the decreasing NPV/public subsidy ratio.
This virtual optimal programme generates
the overall Net-Present-Value Wo.
The actual programme generated theoverall Net-Present-Value W.
The overall efficiency indicator: W/Wo

MERCI