Proposal for a Regulation of the European Parliament and of the Council on compensation in cases of non-compliance with contractual quality requirements for rail freight services
Date: 2004-03-03
Institutions: European Commission
Subjects: common transport policy, freight rate, indemnification, provision of services, rail transport

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 3.3.2004 
COM(2004) 144 final 

2004/0050 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on compensation in cases of non-compliance with contractual quality requirements for 
rail freight services  

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

Recent  transport  policy  documents  such  as  the  Transport  White  paper  of  2001  and  the 
Commission Communication “Towards an integrated European railway area” of January 2002 
underline the overriding importance of improving the performance of rail freight services in 
Europe in order to foster the development of rail freight and to contribute to more balanced 
modal  shares  in  the  European  transport  system.  The  Commission  considers  that  the  most 
important  means  of  improving  the  performance  of  rail  freight  operations  is  the  market 
integration policy that has been launched in the EU. The opening of rail freight markets and 
increased  competition,  coupled  with  common  rules  on  rail  safety  and  measures  to  promote 
interoperability  between  the  fragmented  national  rail  systems,  is  expected  to  bring 
improvement in performance. However, the rate of increasing competition is likely to be slow 
and gradual; hence service improvements will also materialise only gradually.  However, it is 
important that performance enhancements are realised swiftly in order to convince rail freight 
customers  of  the  benefits  of  continued  use  of  rail  transport,  or  of  changing  their  logistical 
processes  to  favour  rail  transport.  Therefore,  the  Commission  is  convinced  that  specific 
measures  are  needed  to  convince  customers  of  the  reliability  of  rail  freight  services.  In  the 
2001  White  Paper  on  transport  and  in  the  Communication  of  2002  the  Commission 
consequently announced their intention to propose a Regulation on compensations in case of 
non-compliance with contractual service requirements. 

Since 15 March 2003 Member States have been obliged to enable open access to the trans-
European rail freight network for railway undertakings that intend to provide international rail 
freight services. Some Member States have already opened up their rail freight markets on the 
basis  of  existing  national  legislation.  For  instance,  in  Sweden,  Denmark,  the  UK,  the 
Netherlands,  Germany,  Austria  and  Italy  rail  freight  operators  compete  with  the  traditional 
railway  undertakings.  Some  national  rail  freight  markets  experience  quite  respectable  levels 
of  competition.  However,  in  other  Member  States,  either  the  lack  of  an  appropriate  legal 
framework or the missing practical implementation of the framework have hindered any new 
market entry so far. 

The  overall  traffic  performance  of  rail  freight  in  the  EU  is  rather  disparate.    In  the  1990ies 
transport  volume  grew  slightly  by  0,7%  per  annum  after  it  fell  in  the  1980ies  by  1,2%  p.a. 
However,  with  a  background  of  very  dynamic  growth  in  the  overall  transport  market,  the 
performance of rail compared to competing transport modes is very modest. In some Member 
States  the  traffic  performance  has  been  more  dynamic,  such  as  in  the  UK  where  the 
transported volume by rail has risen by 50% since 1994. This growth of rail freight traffic has 
been aided, amongst other things, by a strong increase in maritime container transport by rail 
through UK ports, in total 56% between 1992 and 2001.  

The  overall  development  in  the  service  quality  of  international  rail  freight  services  is 
alarming. I Indicators for the punctuality of international combined transport trains, compiled 
by  UIRR  and  covering  all  major  European  freight  corridors,  show  that  the  level  of 
performance  is  unacceptable.  In  1999,  40%  of  combined  transport  trains  were  delayed  by 
more than 30 minutes. Three years later in 2002, 52% of the trains were not on time; 7% were 
even delayed more than 24 hours. The major causes for the delays were missing locomotives 
or staff at hand-over points. Although there seem to be a slight amelioration in performance in 
the  most  recent  months,  the  picture  remains  very  disparate  according  to  the  corridor 
considered. The operation between Germany/Belgium to Spain through France via Port Bou 
registers particularly low punctuality rates. The same is true for the operations from Germany 
into Eastern Europe and from The Netherlands/Germany to Italy via the Gotthard route. On 

2 

 
 
  
 
the contrary, the punctuality of combined transport trains to Spain via Irun and the trains on 
the Brenner route is improving in the last months. 

The  cost  impacts  of  poor  service  quality  for  the  railway  sector  are  considerable.  Railway 
undertakings  and  combined  transport  operators  cannot  acquire  new  rail  freight  transport 
contracts and may even lose traffic to other modes. The possible consequences of poor service 
performance  are  lost  revenues,  inefficient  staff  and  asset  utilisation  as  well  as  increased 
compensation  claims  from  customers.  In  2000,  the  UIRR  estimated  that  the  overall  annual 
cost of non-quality in rail freight to combined transport operators is €41 million, representing 
ca. 6% of total international revenues for UIRR member companies. 

The current framework of compensations to customers in international rail freight transport is 
defined in the CIM annex to the COTIF1. The CIM of 1980, currently in force, as well as the 
new CIM (corresponding to the text of the Protocol of Vilnius2 not yet in force) stipulate that 
the  railway  undertaking  must  pay  compensation  in  the  case  of  loss,  damage  of  the  goods 
transported or the non-fulfilment of a maximum transport time. The CIM defines a reference 
transport time for a full wagon load of 24 hours for every 400 km run. This corresponds to a 
minimum average transport speed of 17 km/h which does not match with the expectations of 
today’s customers anymore. In the road haulage sector a similar international framework, the 
CMR (“Convention relative au contrat de transport international de merchandise par route”) 
defines  the  obligations  in  terms  of  transport  time  in  a  more  appropriate,  up-to-date  manner 
referring to the time a diligent transport company needs for the shipping. Thus, the provisions 
in the CIM annex to the COTIF are not suitable in their current form in the transport market 
of today. Contractual quality requirements, including provisions for compensation in case of 
non-  conformance  to  agreed  arrival  times  in  rail  freight,  exist  today  mainly  for  domestic 
traffic only. There are very few examples of such quality contracts in international transport. 
They are limited to trains of combined transport or block trains of high value goods such as 
automobiles  ordered  by  powerful  industrial  clients  such  as  car  manufacturers.  Effective 
compensation  clauses  are  rarely  proposed  by  traditional  rail  freight  carriers,  due  to  their 
dominant position in the market. New entrant railway undertakings generally conclude quality 
contracts with their clients. 

The  proposed  Regulation  creates  an  EU  framework  for  compensations  in  rail  freight  which 
starts from the basic principles of the CIM provisions but tries to reflect better the realities of 
today’s  rail  freight  transport  markets.  It  is  characterised  by  a  “light”  regulatory  approach, 
appropriate  for  a  business-to-business  market  context.  It  provides  market  actors  with 
contractual freedom whilst defining certain fall back rules for responsibilities of both carriers 
and customers, as well as compensation levels. A more detailed, prescriptive legal framework 
would not work as it would be impossible to develop rules in accordance with the numerous, 
specific needs of the rail freight market. 

The basic parameters of the proposed EU Regulation on compensations are: the definitions of 
liability,  quality  criteria  related  to  rail  freight  transport,  compensation  levels,  a  quality 
monitoring  scheme,  liability  limitations  and  the  responsibilities  of  rail  infrastructure 
managers.  The  contracting  railway  undertaking,  which  has  accepted  goods  for  transport,  is 
responsible  for  the  transport  over  the  entire  route  up  to  the  point  of  delivery.  Appropriate 

1  
2  

COTIF/CIV-CIM, Convention relative aux transports internationaux ferroviaire of 9 May 1980 
Protocol of 3 June 1999 « portant modification de la Convention relative aux transports internationaux 
ferroviaires (COTIF ») of 9 May 1980 

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quality  criteria  today  are:  the  achievement  of  an  agreed  delivery  time,  information  to  the 
customers in case of a delivery problem and certain flexibility related to the transport order.  

The  compensation  level  for  loss  of  and  damage  to  the  goods  transported  is  set  at  €  75  per 
kilogramme of gross mass damaged. The tripling of this value compared to the one introduced 
by  the  CIM  of  COTIF  1980  is  justified  by  the  increase  of  the  average  value  of  goods 
transported in the last 25 years. The levels of compensation for the cancellation of trains by 
the railway undertaking and by the freight customer can depend on the period of notice given 
in relation to the date of transport departure. Thiss corresponds to current market practice in 
national rail freight traffic.  

The  compensation  levels  for  delays  could  be  adapted,  according  to  the  severity  of  the 
observed  delay  in  transport  and  dependant  on  the  type  of  rail  freight  transport,  i.e.  block 
trains, wagon load traffic and transport organised around a central hub such as a terminal or a 
marshalling yard. However, for block trains the Regulation stipulates a compensation level of 
at least 5% and at most 25% of the transport price. These values are currently negotiated in 
practice,  notably  in  international  combined  transport.    In  comparison,  the  CIM  foresee  no 
minimum compensation level in case of delays but rather a maximum level of up to four times 
the transport price.  

Contractual parties have to agree on implementing an appropriate monitoring system allowing 
the  unambiguous  documentation  of  any  possible  non-respect  of  contractual  requirements. 
Liability  for  normally  standard  conditions  such  as  fault,  force  majeure  or  unavoidable 
circumstances is excluded. In the event that the rail infrastructure manger is responsible for a 
disturbance  of  traffic  that  leads  to  a  delay  in  transport  time,  he  is  liable  to  the  railway 
undertaking(s). 

The  Commission  expects  that  the  application  of  the  proposed  compensation  scheme  will 
provide effective incentives to railway undertakings to enhance the efficiency and flexibility 
of  their  production  processes  for  rail  freight  services.  In  order  to  have  a  positive  effect  on 
quality  performances,  compensation  schemes  shall  not  be  unduly  subsidised  by  State  aid 
measures and, to this end, the Commission is determined to ensure a level playing field in the 
rail  freight  market.  A  better  organisation  of  staff  and  wagon  use,  the  application  of  modern 
information  tools  allowing  a  real  time  tracking  and  tracing  of  trains  and  wagons  on 
international routes and ensuring increased flexibility of the process to better meet the needs 
of  the  customers  while  ensuring  a  reasonably  high  level  of  safety  can  bring  about  cost 
reductions that the railway undertakings can account for as benefits of the proposed scheme. 
At  the  same  time,  the  changes  triggered  by  the  compensation  scheme  will  lead  to  quality 
improvements  to  customers,  who  may  be  incited  to  increase  their  demand  for  rail  freight 
services.  The  overall  economic  benefits  of  the  scheme  have  been  estimated  to  amount  to 
roughly €70 million per annum in an EU-15 context. 

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2004/0050 (COD) 

Proposal for a 

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on compensation in cases of non-compliance with contractual quality requirements for 
rail freight services  

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Community,  and  in  particular 
Article 71 (1) thereof, 

Having regard to the proposal from the Commission3, 

Having regard to the opinion of the European Economic and Social Committee4, 

Having regard to the opinion of the Committee of the Regions5, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty6, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

3 
4 
5 
6 
7 

It  is  important  for  the  achievement  of  Common  Transport  Policy  objectives  that  rail 
freight services improve their competitiveness such that the modal shifts, needed for a 
more balanced transport system, are enabled. 

Lack of service quality is currently a major barrier to the development of rail freight 
services  in  the  Community,  as  is  shown  by  quality  indicators  and  market  share 
developments.  

A  lack  of  economic  and  contractual  incentives  is  a  significant  cause  of  low  quality 
performance  in  rail  freight.  The  existing  provisions  for  compensation  to  rail  freight 
customers in the CIM Appendix to the COTIF7 do not provide effective incentives for 
quality.  Specific  regulatory  measures  to  increase  the  quality  of  service  are  therefore 
needed to restore the confidence of rail freight customers in rail freight services. 

The opening of network access for international rail freight services and a subsequent 
increase of competition could provide the incentives to market actors to improve their 
performance in terms of price and quality of service.  

OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
OJ C , , p. . 
COTIF/CIV-CIM, Convention relative aux transports internationaux ferroviaire of 9 May 1980 

5 

 
 
  
 
                                                 
(5) 

(6) 

(7) 

(8) 

(9) 

However,  the  increase  of  competition  is  likely  to  be  slow  and  only  gradual,  hence 
preserving the dominant market position of existing national rail freight operators for 
years.  The  dominant  market  position  of  national  rail  freight  undertakings  renders  it 
impossible for most rail freight customers to conclude transport contracts on fair and 
satisfactory  terms.  It  is  therefore  necessary  to  provide  for  mandatory  minimum 
requirements and a compensation scheme to be applied to transport contracts. 

The  compensation  regime  should  cover  losses  and  damage  to  transported  goods, 
delays in delivery and cancellations as well as compensation for breaching any other 
quality  requirements  laid  down  in  the  transport  contract.  The  compensation  regime 
should also take into account the scope of the transport contract. A transport contract 
involving a complete train (block train) should therefore be treated differently from a 
contract involving a place in a train (wagonload) due to the level of risk assumed by 
the client in the case of block trains and because of the difficulties of establishing the 
initial liability for any delay in the case of wagonload. 

A  railway  undertaking,  committed  to  providing  particular  service  quality  levels, 
should  be  able  to  take  recourse  against  rail  infrastructure  managers  if  the  latter  are 
responsible  for  events  that  negatively  impact  on  the  railway  undertaking’s  ability  to 
deliver its level of service quality. 

The  effects  of  this  Regulation  should  be  reviewed,  in  particular  in  relation  to 
developments in the levels of competition on the relevant rail freight markets. 

Since  the  objectives  of  this  Regulation,  namely  to  improve  the  quality  of  the 
Community's  rail  freight  services,  cannot  be  sufficiently  achieved  by  the  Member 
States  in  view  of  the  significant  international  dimensions  involved  in  rail  freight 
operations  and  can  therefore,  by  reason  of  the  need  for  co-ordinated  trans-national 
action be better achieved at Community level, the Community may adopt measures, in 
accordance with the principle of subsidiarity as set out in Article 5 of the Treaty.  In 
accordance  with  the  principle  of  proportionality,  as  set  out  in  that  Article,  this 
Regulation does not go beyond what is necessary in order to achieve those objectives. 

HAVE ADOPTED THIS REGULATION: 

Article 1  
Subject matter and scope 

This Regulation lays down the obligation of railway undertakings and rail freight customers 
to define quality requirements for rail freight services, and subsequent compensations in the 
case of non-compliance with the quality requirements in the transport contract. 

This  Regulation  shall  apply  to  all  national  and  international  rail  freight  services  in  the 
Community. Services to, from and through third countries are included if the Community has 
concluded an agreement on the subject matter of this Regulation with the third country. 

6 

 
 
  
 
Article 2 
Definitions 

For the purposes of this Regulation the following definitions shall apply: 

(a) 

(b) 

(c) 

(d) 

(e) 

(f) 

"railway undertaking" means any public or private undertaking licensed according to 
applicable  Community  legislation,  the  principal  business  of  which  is  to  provide 
services for the transport of goods and/or passengers by rail with a requirement that 
the  undertaking  must  ensure  traction;  this  includes  undertakings  which  provide 
traction only; 

“rail freight customer” means any public or private undertaking that contracts with a 
railway undertaking for the provision of any kind of rail freight transport service; 

“block  train“  means  a  rail  transport  service  in  which  the  customer  buys  from  the 
railway  undertaking  the  traction  for  at  least  one  train  established  by  the  client, 
specifically scheduled for him and subject to a specific invoice; 

“wagonload” means a rail transport service in which the client buys from the railway 
undertaking  the  transport  of  at  least  one  wagon  within  a  train  established  by  the 
railway undertaking, scheduled by the railway undertaking and proposed to several 
clients and invoiced by the railway undertaking to each of them; 

“infrastructure manager” means any body or undertaking responsible in particular for 
establishing  and  maintaining  railway  infrastructure.  This  may  also  include  the 
management of infrastructure control and safety systems;  

“transport  contract”  means  a  contract  between  a  railway  undertaking  and  a  rail 
freight customer for the provision of rail freight services. 

Article 3 
Contractual quality requirements  

Quality  requirements  for  rail  freight  services  shall  be  based  on  an  agreement  between  the 
parties, resulting in rights and obligations and taking into account the specific circumstances 
of the transport contract. 

The  transport  contract  shall  define  in  a  detailed  manner  all  quality  requirements  of  the 
services  concerned.  The  following  quality  requirements  shall  be  included,  otherwise  the 
transport contract shall be void: 

(a) 

agreed  times  of  hand-over  of  goods  or  wagons  or  trains  between  the  railway 
undertaking and the rail freight customer; 

(b) 

arrival time and compensation for delays; 

(c) 

compensation in the event of losses or damage of goods; 

(d) 

compensation in the event of cancellation of a train by the railway undertaking; 

(e) 

compensation in the event of cancellation of a train by the rail freight customer; 

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(f) 

a quality monitoring system defined by the parties. 

Article 4 
Principles of compensation in cases of non-compliance with contractual quality requirements 
by the railway undertaking 

If the railway undertaking does not meet the contractual quality requirements according to the 
quality monitoring system defined in the transport contract, it shall pay compensation to the 
rail freight customer.  

In particular, the railway undertaking shall be liable for: 

(a) 

losses or damages of the goods transported; 

(b) 

non-respect of agreed times of arrival; 

(c) 

cancellation of a train by the railway undertaking; 

(d) 

any  other  non-compliance  with  contractual  quality  requirements  defined  on  mutual 
agreement by the parties in the transport contract. 

Article 5 
Principles of compensation in cases of non-compliance with contractual quality requirements 
by the rail freight customer 

If the rail freight customer does not meet the contractual quality requirements according to the 
quality monitoring system defined in the transport contract, the rail freight customer shall pay 
compensation to the railway undertaking. 

In particular, the rail freight customer shall be liable for: 

(a) 

non-respect of agreed hand-over times; 

(b) 

cancellation of a train by the rail freight customer. 

Article 6 
Compensation for loss of the goods transported 

In  the  event  of  total  or  partial  loss  of  the  goods,  the  railway  undertaking  shall  pay 
compensation calculated according to the market price at the place and at the moment of the 
take-over of goods. 

Compensation for loss shall not exceed 75 euros per kilogramme of gross mass short, except 
where  a  declaration  of  interest  or  a  declaration  of  value  has  been  made  in  the  transport 
contract.  In  such  cases,  the  value  or  interest  declared  shall  be  the  maximum  level  of 
compensation.  

8 

 
 
  
 
Article 7 
Compensation for damage of the goods transported 

In  the  event  of  total  or  partial  damage  of  the  goods,  the  railway  undertaking  shall  pay 
compensation  calculated  according  to  the  loss  of  value  of  the  goods  defined  in  accordance 
with the market price at the place and at the moment of the take-over of goods. 

Compensation  for  damage  of  the  goods  shall  not  exceed  75  euros  per  kilogramme  of  gross 
mass damaged, except in the case a declaration of interest or a declaration of value has been 
made  in  the  transport  contract.  In  such  cases,  the  value  or  interest  declared  shall  be  the 
maximum level of compensation. 

Article 8 
Compensation for delays 

1. 

In the event of delays in relation to the arrival time agreed in the transport contract, 
the railway undertaking shall pay compensation determined by mutual agreement of 
the parties laid down in the transport contract.  

For  block  trains,  the  amount  of  the  compensation  shall  not  be  lower  than  5%  or 
exceed 25% of the transport price.  

For  wagonload,  the  amount  of  the  compensation  shall  be  determined  by  mutual 
agreement of the parties in the transport contract taking into account the specificities 
of wagonload transport. 

2. 

3. 

In the case of a system of block trains organised around a central hub, the system of 
compensation  mentioned  in  paragraph  1  shall  apply  to  individual  wagons  on  the 
basis of the transport price for a wagon. 

If  the  rail  freight  customer  does  not  fulfil  the  contractual  requirements  as  to  the 
agreed  hand-over  times  for  goods,  wagons  or  trains,  the  rail  freight  customer  shall 
pay  a  fair  and  appropriate  compensation  determined  by  mutual  agreement  of  the 
parties in the transport contract. 

Article 9 
Compensation for lack of information about delays 

If  the  railway  undertaking  does  not  make  appropriate  efforts  and  does  not  exercise  due 
diligence to inform the rail freight customer about  possible delays in  advance  of the agreed 
time  of  arrival,  the  railway  undertaking  shall  pay  a  compensation  determined  by  mutual 
agreement of the parties in the transport contract.  

The amount of the compensation shall not be lower than 5 % of the transport price.  

Article 10 
Compensation for consequential damages 

If loss or damages result from the arrival time agreed in the transport contract being exceeded, 
the railway undertaking shall pay compensation not exceeding four times the transport price, 
based on evidence of such losses or damages. 

9 

 
 
  
 
The compensation shall be payable in addition to the compensation provided for in article 8. 

Article 11 
Compensation for cancellation of trains by the railway undertaking 

The  parties  shall  define  in  the  transport  contract  the  amount  of  compensation  by  mutual 
agreement in case of the cancellation of a train by the railway undertaking.  

Article 12 
Compensation for cancellation of trains by the rail freight customer 

The  parties  shall  define  in  the  transport  contract  the  amount  of  compensation  by  mutual 
agreement in case of the cancellation of a train by the rail freight customer.  

Article 13 
Compensation in the case of a declaration of value of the goods transported 

The railway undertaking and the rail freight customer may agree in the transport contract that 
the  rail  freight  customer  shall  declare  a  value  of  the  goods  transported  exceeding  the  limit 
provided for in article 6. In such a case the amount declared shall be substituted for the limit 
provided for in article 6. 

Article 14 
Compensation in the case of interest in delivery 

The railway undertaking and the rail freight customer may agree in the transport contract that 
the rail freight customer declares an interest in delivery, in case of loss, damage or delays. In 
case of a declaration of interest in delivery further compensation for loss or damages proved 
may be claimed, in addition to the compensation provided for in articles 6, 7, 8 and 10, up to 
the amount declared. 

Article 15 
Exclusions of liability 

Under the following conditions compensation shall not be applicable: 

(a) 

Fault of the rail freight customer, respectively the railway undertaking 

(b) 

Fault or any other act of a third person 

(c) 

Force majeure 

(d) 

Circumstances  that  the  railway  undertaking,  respectively  the  rail  freight  customer, 
could  not  avoid  and  whose  consequences  he  was  unable  to  prevent,  even  with  the 
provision of timely information on the occurrence of the circumstances. 

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Article 16 
Responsibility of the railway undertakings 

The  contracting  railway  undertaking,  which  has  accepted  goods  for  transport,  shall  be 
responsible  for  the  transport  over  the  entire  route  up  to  arrival,  including  handling  and/or 
transhipments of the wagons or the trains. 

Whatever the organisation of the transport service by the railway undertakings involved, the 
contractual  quality  requirements  defined  in  the  transport  contract  shall  bind  all  the  railway 
undertakings factually and legally involved in the service. 

Article 17 
Liability of the railway undertaking for its servants 

The  railway  undertaking  shall  be  liable  for  its  servants  and  other  persons,  including 
infrastructure managers, whose services it makes use of for the performance of the transport 
service, when these servants and other persons are acting within the scope of their functions. 

Article 18 
Actions against the infrastructure manager 

In  the  event  of  a  pecuniary  loss  to  the  railway  undertaking  resulting  from  compensation 
payable  under  this  Regulation  and  falling  under  the  responsibility  of  the  infrastructure 
manager,  the  railway  undertaking  shall  pay  the  appropriate  compensation  to  the  rail  freight 
customer.  

The  railway  undertaking  shall  have  the  right  to  claim  compensation  from  the  infrastructure 
manager  to  recover  the  compensation  the  railway  undertaking  has  paid  to  the  rail  freight 
customer. This infrastructure manager’s liability shall be without prejudice to the application 
of the performance scheme laid down in Article 11 of Directive 2001/14/EC of the European 
Parliament and of the Council8. 

Article 19 
Monitoring compliance with quality commitments 

The  transport  contract  shall  include  provisions  on  an  appropriate  mechanism  to  monitor 
compliance  with  the  contractual  quality  commitments  related  to  the  services  subject  to  this 
Regulation. 

Article 20 
Report 

The Commission shall report to the European Parliament and the Council by January 2009 on 
the  application  and  the  effects  of  this  Regulation  in  particular  on  the  performance  of  rail 
freight services. The report shall be accompanied where necessary by legislative proposals. 

8 

OJ L 75, 15.3.2001, p. 29. 

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Article 21 
Entry into force 

This Regulation shall enter into force 20days following its publication in the Official Journal 
of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

12 

 
 
  
 
 
 
IMPACT ASSESSMENT FORM 

THE IMPACT OF THE PROPOSAL ON BUSINESS WITH SPECIAL REFERENCE 
TO SMALL AND MEDIUM-SIZED ENTERPRISES( SMEs) 

TITLE OF PROPOSAL 

Compensations  in  the  case  of  non-compliance  with  contractual  quality  requirements  for  rail 
freight services 

DOCUMENT REFERENCE NUMBER 

Number 

THE PROPOSAL 

1. 

Taking  account  of  the  principle  of  subsidiarity,  why  is  Community  legislation 
necessary in this area and what are its main aims? 

One of the Community rail policy objectives is the improvement of rail freight performance. 
The Commission considers that the most important means to improve the performance of rail 
freight  operations  is  the  market  integration  policy  that  has  been  launched  in  the  EU.  The 
opening  of  rail  freight  markets  and  rising  competition  coupled  with  common  rules  on  rail 
safety and measures to promote interoperability between the fragmented national rail systems 
will bring about the expected improvement of performance. However, the pace of increasing 
competition  is  likely  to  be  gradual  and  hence  the  effects  in  terms  of  quality  of  service 
improvements  will  materialise  gradually  as  well.  It  is  however  important  to  realise 
performance  enhancement  swiftly  to  convince  rail  freight  customers  of  the  benefits  of 
continuing  requesting  rail  transport  or  changing  their  logistical  processes  in  favour  of  rail 
transport.  Therefore,  the  Commission  is  convinced  that  specific  measures  to  convince 
customers  of  the  reliability  of  rail  freight  services  are  needed.  The  Commission  considers  a 
in  case  of  non-compliance  with  contractual  service 
Regulation  on  compensations 
requirements as an appropriate instrument to achieve the objective. 

In the case of compensation schemes for rail freight EU action is needed as Member States 
have not come up with national legislation so far. Even if Member States would legislate at 
their  level,  there  would  be  a  high  risk  that  the  regimes  would  differ  and  submit  railway 
undertakings  to  diverging  business  conditions  that  could  lead  to  substantial  distortions  of 
competition  in  the  case  of  competing  international  transport  routes.  EU  rules  on 
compensations  should  cover  international  and  national  services  as  both  types  of  traffic  are 
intimately intertwined and separate regimes for both types of traffic are not feasible. 

THE IMPACT ON BUSINESS 

2. 

Who will be affected by the proposal? 

–  which sectors of business 

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The proposal will affect all railway undertakings that provide rail freight services in 
the  EU  as  well  as  their  customers  (e.g.  shippers,  forwarders,  combined  transport 
operators,  etc).  It  will  also  have  impacts  on  rail  infrastructure  managers  providing 
infrastructure capacity for the services of these railway undertakings. 

–  which  sizes  of  business  (what  is  the  concentration  of  small  and  medium-sized 

firms) 

The  proposal  concerns  mainly  the  dominant  traditional  rail  freight  undertaking  in 
each  Member  State  as  well  as  the  national  rail  infrastructure  managers  who  are 
normally  in  a  monopoly  position.  However,  the  provisions  of  the  Regulation  also 
concern  small  and  medium  sized  railway  undertakings  that  operate  on  rail  freight 
markets in some Member States. 

–  are there particular geographical areas of the Community where these businesses 

are found 

The proposal affects all geographical areas of the Community with rail infrastructure 
and where rail freight services are provided. 

3. 

What will business have to do to comply with the proposal? 

The  concerned  railway  undertakings  will  have  to  commit  to  contractual  service 
quality  arrangements  with  their  customers,  set  up  a  quality  monitoring  system 
together  with  the  clients  and  undertake  possibly  necessary  adaptations  of  the 
production  process  to  comply  with  the  contracted  quality  requirements.  Rail 
infrastructure  managers  will  have  to  enter  into  contractual  quality  agreements  with 
railway undertakings using their infrastructure. 

4. 

What economic effects is the proposal likely to have? 

The Commission expects that the application of the proposed compensation scheme 
will  provide  effective  incentives  to  railway  undertakings  to  enhance  the  efficiency 
and  flexibility  of  their  production  process  for  rail  freight  services.  A  better 
organisation  of  staff  and  wagon  use,  the  application  of  modern  information  tools 
allowing a real time tracking and tracing of trains and wagons on international routes 
and  ensuring  increased  flexibility  of  the  process  meeting  better  the  needs  of  the 
customers  while  ensuring  a  reasonably  high  level  of  safety  can  bring  about  cost 
reductions that the railway undertakings can account for as benefits of the proposed 
scheme.  At  the  same  time,  the  changes  triggered  by  the  compensation  scheme  will 
lead  to  quality  improvements  to  customers  who  may  be  incited  to  increase  their 
demand for rail freight services. 

The  Commission  has  commissioned  a  study  on  conceptual,  legal  and  economic 
aspects of compensation schemes in rail freight. The consultant estimates the overall 
net economic benefits of the scheme to roughly €70 million per annum in the EU-15 
context. 

–  on employment 

The  effect  on  employment  is  likely  to  be  neutral.  The  implementation  of 
compensation schemes in rail freight will incentivise railway undertakings to a more 
efficient  use  of  their  staff  which  could  lead  to  lower  employment  levels.  However, 

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the  expected  growth  in  demand  for  rail  freight  services  induced  by  higher  service 
quality  could  lead  to  additional  recruitment  which  would  offset  the  negative 
employment effect of productivity increases. 

–  on investment and the creation of new businesses 

The  proposal  is  likely  to  lead  to  some  investment,  for  instance,  in  new  and  better 
performing rolling stock. 

–  on the competitiveness of businesses 

The Commission expects an overall positive effect on business competitiveness. 

5. 

Does the proposal contain measures to take account of the specific situation of small 
and medium-sized firms (reduced or different requirements etc)? 

The proposal does not contain measures that take account of the specific situation of 
small  and  medium-sized  firms  as  the  smaller  railway  undertakings  usually  have 
already now a better quality of service performance and would hence not be affected 
directly in many cases. 

CONSULTATION 

6. 

List  the  organisations,  which  have  been  consulted  about  the  proposal  and  outline 
their main views. 

There have been consultations of European associations of rail freight market actors 
(such  as  CER,  ERFA,  UIRR,  UIP,  ERFCP,  EIM)  on  the  basic  parameters  of  the 
Commission’s proposal and of all actors including Member States on the findings of 
the  study  commissioned  by  the  Commission  on  conceptual,  legal  and  economic 
aspects of compensation schemes in rail freight. 

The  positions  of  the  stakeholders  are  rather  varied.  Customer  representatives  are 
generally  in  favour  of  the  basic  parameters  of  the  proposal  whereas  CER 
representing the interests of the traditional railway undertakings are strongly opposed 
to  the  draft  Regulation.  Whereas  the  former  expect  to  gain  from  the  initiative,  the 
latter  focus  on  the  perceived  cost  impacts  of  the  implementation  of  compensation 
schemes.  ERFA  and  EIM  take  a  rather  neutral  position.  Judging  on  a  legislative 
proposal  all  stakeholders  including  Member  States  recommend  a  light  regulatory 
approach  leaving  a  maximum  of  contractual  freedom  to  rail  freight  market  actors 
within a business-to-business environment. 

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