Communication from the Commission to the Council and the European Parliament on monitoring development of the rail market {SEC(2007)1323}
Date: 2007-10-18
Institutions: European Commission
Subjects: EU Member State, carriage of goods, carriage of passengers, common transport policy, rail transport, transport infrastructure, transport market

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 18.10.2007 
COM(2007) 609 final 

COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

on monitoring development of the rail market 

{SEC(2007)1323} 

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COMMUNICATION FROM THE COMMISSION TO THE COUNCIL AND THE 
EUROPEAN PARLIAMENT 

on monitoring development of the rail market 

INTRODUCTION 

In recent years railways in the European Union have undergone significant changes, 
triggered  to  a  large  extent  by  initiatives  undertaken  at  European  level.  Starting  in 
2001, three packages of measures have been adopted with the aim of progressively 
opening up the rail market and increasing technical and operational harmonisation in 
the  fields  of  rail  interoperability  and  safety  in  order  to  create  a  European  Railway 
Area (see Annex 11). 

A  detailed  description  of  the  regulatory  and  institutional  framework  established  by 
the first of these packages, along with an analysis of its impact on the rail transport 
market, were  provided in the May 2006 report from the Commission2. This  further 
review of development of the rail market builds on the findings of that report. 

Continuous monitoring of the rail market is needed in order to assess the influence 
which the whole range of European policy measures are exerting on the rail market 
and to help to design new policy measures responding to the current and future needs 
of the rail sector. 

In 2001 the Community rail legislation3 already required the European Commission 
to monitor the technical and economic conditions on the rail transport market in the 
EU. It also imposed a duty on the Commission to report to the European Parliament 
and the Council on, amongst other things, development of the internal market in rail 
services, the framework conditions, the state of the infrastructure and use of access 
rights. 

Finally, the need to monitor the rail market in the form of a scoreboard of the most 
relevant indicators on the internal market for rail transport services, in particular on 
its progressive opening-up to national and international competition, was reaffirmed 
in the 2006 Mid-Term Review of the Transport White Paper4.  

This Communication on monitoring development of the rail market responds to this 
need. It provides a first statistical analysis of development of the rail market and lays 
the foundation for regular reporting. 

This Communication on monitoring development of the rail market is accompanied by a Commission 
Staff Working Paper containing 23 annexes. 
COM(2006) 189 final, 3 May 2006.  
Section Va of Directive 2001/12/EC.  
COM(2006) 314 final, 22 June 2006. 

I. 

1. 

2. 

3. 

4. 

5. 

6. 

1 

2 
3 
4 

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II. 

7. 

8. 

9. 

RAIL MARKET MONITORING SCHEME 

To meet the monitoring requirements, in 2001 the Commission set up a Rail Market 
Monitoring  Scheme  (RMMS)  consisting  of  publishing  information  on  different 
aspects of the railway markets on the website5 of the Directorate-General for Energy 
and  Transport.  This  information  is  regularly  updated  and  extended  in  order  to 
encompass an even broader range of market development indicators. 

The Commission is assisted in its monitoring tasks by a Working Group made up of 
experts  from  the  national  ministries  and  the  rail  industry.  Between  2001  and  2007 
eighteen meetings of the RMMS Working Group were held.  

This  review  is  based  on  the  analysis  submitted  by  the  members  of  the  RMMS 
Working  Group,  statistical  sources  available  to  the  European  Commission,  recent 
studies6 and the report on implementation of the first railway package (see above). 

10. 

It focuses in particular on: 

–  the regulatory and institutional framework created with a view to liberalising the 
the  position  of  railways  as  a  safe  and 

rail  market  and  strengthening 
environmentally friendly mode of transport; 

–  development  of  the  rail  market  in  terms  of  freight  and  passenger  transport 

performance, intermodal comparison and market-opening indicators; 

–  the  financial  performance  of  the  sector,  including  information  on  the  capacity, 
state of  play and utilisation rate of rail infrastructure and on development of the 
supply industry.  

11. 

It has to be recognised that, for lack of quantitative data, this review of the market 
conditions cannot cover certain specific aspects of rail markets, such as the asset base 
of railway undertakings (rolling stock) or soft factors such as staff training. 

III. 

IMPLEMENTATION OF THE LEGAL AND INSTITUTIONAL FRAMEWORK 

12. 

13. 

5 
6 

7 

All the Member States with rail networks have formally implemented the Directives 
in  the  first  railway  package  (see  Annexes  2a  and  2c).  However,  delays  in 
transposition  forced  the  Commission  to  open  56  infringement  procedures,  12  of 
which resulted in court rulings (see Annex 3a). The national implementing measures 
for certain key provisions of the package are currently being examined7. 

As some Member States have only partly transposed the second railway package in 
their  national  law  (see  Annexes  2b  and  2c),  the  Commission  started  a  further  55 
infringement procedures, 18 of which ended with referral to the Court. Five of these 

http://ec.europa.eu/transport/rail/market/index_en.htm. 
The studies can be found on the following website: 
http://ec.europa.eu/transport/rail/studies/index_en.htm. 
This exercise will lay the foundations for, among other things, the recasting of the Directives in the first 
railway package which is planned in 2008. 

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cases  have  already  been  withdrawn  due 
implementation measures, but the other 13 are still pending (see Annex 3b). 

the  final  notification  of 

to 

the 

14. 

15. 

16. 

All  the  institutions  required  by  the  first  and  second  railway  packages  have  already 
been established in the Member States. They include national companies and bodies 
in charge of capacity allocation, entities responsible  for issuing licenses, regulatory 
bodies,  national  safety  authorities,  investigation  bodies  and  notified  bodies  (see 
Annexes 4, 5, 6 and 7). 

It has to be said that, in the case of regulatory bodies, the data on the number of staff 
dealing  with  regulatory  issues  and  the  number  of  complaints  handled  in  2005  cast 
some doubt over their administrative capacity.  

An  in-depth  analysis  of  transposition  of  the  legislation  on  rail  interoperability  and 
safety  is  being  carried  out.  According  to  its  initial  findings,  implementation  of  the 
Safety  and  Interoperability  Directives  appears  incomplete  in  some  countries  which 
have  already  formally  transposed  them.  Moreover,  delays  in  transposition  of  the 
second railway package are resulting in lack of legal certainty for players on the rail 
market.  Even  though  the  institutions  required  by  this  package  have  already  been 
established  in  the  countries  concerned,  the  lack  of  a  legal  base  for  their  activities 
appears to constitute a serious obstacle to proper functioning of the rail market. 

IV. 

PERFORMANCE OF THE EU RAIL TRANSPORT MARKET 

IV.1.  Position of rail transport in comparison with other modes  

17. 

18. 

Since 1970 rail has seen a steady decline in its share of the freight transport market, 
from  20%  in  1970  (EU-15)  to  8%  in  2003  (EU-15)  and  10%  for  EU-25  in  2005 
(based  on  tonne-kilometres).  Over  the  last  decade  this  downward  trend  has  slowed 
down,  with  just  a  2%  decrease  in  rail's  market  share  between  1995  and  2005  (see 
Annex 8a).  

Out  of  all  modes  of  inland  transport,  rail  took  17.4%  of  the  EU  freight  market  in 
2005, with the figure in the "new" Member States more than twice as high as in EU-
15 (30.9% v. 14%) (see Figure 1 and Annex 8c).  

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Figure 1: Share of rail in the inland freight transport markets in EU-25, EU-15 and 
EU-10 (1995-2005) 

%
n

i

50

45

40

35

30

25

20

15

10

5

0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

EU-25

EU-15

EU-10

19. 

20. 

Source: Eurostat, UIC, EU Energy and Transport in Figures Statistical Pocketbook 2006, DG TREN 
estimates and national statistics 

Likewise, in the case of passenger transport a decline has been observed over the last 
three  decades,  though  less  dramatic  than  for  freight.  Rail's  share  of  the  total 
passenger transport market decreased from 10.2% in 1970 to 6.3% in 2003 for EU-15 
(in  terms  of  passenger-kilometres).  For  EU-25  it  stood  at  5.8%  in  2004  (see 
Annex 8b).  

Taking  into  account  only  land  transport  modes,  in  2004  passenger  transport  by  rail 
accounted for 6.5% of the EU market. In EU-15 rail's market share has held steady at 
over 6% for the last decade. By contrast, in EU-10 it has fallen sharply, from 11.2% 
in 1995 to 7.5% in 2004 (see Figure 2 and Annex 8d).  

Figure  2:  Share  of  rail  in  land  passenger  transport  markets  in  EU-25,  EU-15  and 
EU-10 (1995-2004) 

%
n
i

12

10

8

6

4

2

0

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

EU-25

EU-15

EU-10

Source: Eurostat, UIC, DG TREN estimates and national statistics 

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21. 

22. 

The analyses of the relative share of rail freight in the transport market disregard the 
fact  that  rail  cannot,  by  nature,  provide  short-distance  door-to-door  services. 
Consequently,  current  methods  of  assessing  the  contribution  of  different  modes  to 
provision  of  transport  services  show  only  part  of  the  picture  as  regards  the  market 
share  of  rail  transport.  Commission  staff  are  examining  the  feasibility  of  gathering 
data on the performance of various modes by distance class. 

A  pilot  study  on  rail  freight  performance  by  distance  conducted  in  2006  by  the 
Community  of  European  Railways  (CER)  and  the  International  Union  of  Railways 
(UIC)  on  a  group  of  railway  undertakings  holding  20%  of  the  rail  freight  market 
showed  that the market  share  of rail compared with road is significantly  higher for 
longer  distances  (>  150  km  =  22%,  > 300/325  km  =  26%  and  > 500  km  =  30% 
compared with 19% of the total traffic). On distances exceeding 150 km the average 
costs of moving goods by rail are usually lower than for transporting them by road 
(see Annex 22e). 

IV.2.  Trends in rail transport volumes and performance8 

23. 

After  years  of  steady  decline,  rail  freight  performance  stopped  to  decrease  in  2003 
(see Figure 3)9. In the same year the first step to open the market for international rail 
freight services came into force. 

Figure 3: Trends in rail freight transport performance in EU-25, EU-15 and EU-10 
(1970-2005) 

m
k
t
m
0
0
0
1
n

i

600

500

400

300

200

100

0

1970

1980

1990

2000

2003

2004

2005

EU25

EU15

EU10

Source: EU Energy and Transport in Figures Statistical Pocketbook 2006, Table 3.2.5, Eurostat 

Between  2000  and  2005  the  EU  witnessed  a  significant  increase  in  rail  freight 
performance in Member States where non-incumbent railway undertakings took the 
highest market shares (see Annex 9 and Figure 4 where those countries are marked 
dark).  

"Rail  transport  performance"  means  rail  transport  expressed  in  tonne-kilometres  or  passenger-
kilometres. 
As Cyprus and Malta do not have railway networks on their territory, all references to EU-10 or “new” 
Member States in the chapters IVa-VIII are to be understood as excluding these two countries. 

24. 

8 

9 

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6 

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Figure 4: Change in rail freight transport performance 2000-2005 

60%

50%

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

-50%

50%

49%

40%

31%

23%

15%14% 11% 11%10% 9%

5% 3% 1% 0% 0% 0%

EL LV  LT EE UK  DE AT SE NL SI PT BE HU RO DK ES IT FI BG PL CZ SK FR LU IE

-4% -5%

-8%

-15%-15%

-26%

-33%

-40%

25. 

26. 

27. 

Source: EU Energy and Transport in Figures Statistical Pocketbook 2006, Table 3.2.5, Eurostat 

In  2005  the  goods  most  commonly  transported  by  rail  (expressed  in  tonne-
kilometres) were solid mineral fuels (mostly carried by railway undertakings in EU-
15),  metals  and  petroleum  products  (transported,  in  particular,  by  EU-10  railways) 
(see Annex 11).  

In 2006 rail freight transport performance in EU-25 increased by 3.7% as a result of 
growth in the "old" Member States (average increase of 5.7%), especially in Finland, 
Luxembourg  and  Germany,  all  of  which  recorded  rises  of  over  10%.  The  biggest 
increase in tonne-kilometre terms was in the first quarter of 2006 compared with the 
same period of the previous year. In EU-10 an overall decrease of -0.5% in transport 
performance  was  observed  during  2006.  However,  in  Hungary  (13.3%)  and  in  the 
Slovak  Republic  (7.3%)  the  rail  freight  market  developed  dynamically  (see 
Annex 10).  

In the passenger sector, after a steady increase in rail transport performance between 
1970 and 1990, in the following decade (1990-2000) a sharp rise was observed in the 
EU-15  countries accompanied by a heavy fall in EU-10 (see Figure 5). Since  then, 
passenger  transport  performance  has  stabilised  for  EU-10  and  has  been  increasing 
slowly but steadily in EU-15.  

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Figure 5: Trends in rail passenger transport performance in EU-25, EU-15 and  EU-
10 (1970-2005) 

m
k
p
m
0
0
0
1
n
i

400

350

300

250

200

150

100

50

0

1970

1980

1990

2000

2004

2005

EU25

EU15

EU10

Source: EU Energy and Transport in Figures Statistical Pocketbook 2006, Table 3.3.7, Eurostat 

Between 2000 and 2005 the highest increases in rail passenger transport performance 
were observed in Latvia (29%), Ireland (29%) and Belgium (20%). By contrast, the 
sharpest  falls  were  seen  in  Lithuania  (-33%),  Estonia  (-33%),  Bulgaria  (-31%)  and 
Romania (-31%) (see Annex 9).  

In  2006  both  EU-15  and  EU-10  showed  comparable  increases  in  rail  passenger 
transport performance, averaging 3.3% for the whole EU. The most positive results 
were achieved during the second quarter of 2006 compared with the same period in 
2005.  The  highest  growth  in  passenger  transport  performance  during  2006  was 
observed in Latvia (10.8%), Luxembourg (9.2%) and Sweden (7.3%). Rail passenger 
transport  performance  decreased  in  Lithuania  (-4.3%)  and  Greece  (-1.8%)  (see 
Annex 10).  

In 2005 the highest shares of international traffic out of total freight traffic (in terms 
of tonne-kilometres) were observed in Estonia (93%), Latvia (88%) and the Slovak 
Republic  (86.5%).  For  passenger  transport,  international  traffic  took  the  highest 
shares  in  Luxembourg  (24%  of  passenger-kilometres),  Austria  (17%)  and  Belgium 
(15%)  (see  Annex  12b  which  also  presents  information  on  the  changes  in  rail 
transport  performance  over  the  period  2003-2005  for  national  and  international 
services). 

OPENING OF THE RAIL MARKET 

Over  700  licensed  railway  undertakings  are  operating  on  the  EU  railway  market, 
about half of them in Germany (355), followed by 62 in Poland and 56 in the UK. 
Annex  14  gives  an  overview  of  the  number  of  valid  railway  licences  and  safety 
certificates per Member State. 

28. 

29. 

30. 

V. 

31. 

32. 

Figure  6  shows  the  total  market  shares  of  non-incumbent  railway  undertakings 
providing  freight  services.  In  terms  of  tonne-kilometres,  non-incumbents  took  the 

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biggest  market  shares  in  Sweden  (32.5%),  Estonia  (30.6%),  Romania  (26.7%),  the 
Netherlands (18%), Poland (16.9%) and Germany (16.4%). In the case of passenger 
transport, non-incumbents gained the highest share of the market in Estonia (40%), 
Sweden (35.8%) and Latvia (10.1%)*. Annex 13 shows the distribution of the market 
shares between the individual companies for EU-27.  

Figure 6: Total market shares of non-incumbent rail freight operators in 2006 

%
n

i

35

30

25

20

15

10

5

0

32,5

30,6

26,7

18

16,9 16,4

11,5

10,6 10

9

4,9

3,18 3 2,9

SE EE RO NL PL DE IT LV  AT HU ES BG BE SK EL FI

IE LT LU PT

0

0

0

0

0

0

33. 

34. 

* Data for CZ, DK, FR and UK not available; ES and PT: data for 2005; NL: data for 2003. 

Source: 2007 RMMS questionnaire filled in by Member States in May/June 2007 

As a proxy for measuring market opening, the Herfindahl-Hirschman Index (HHI)10 
estimates  the  degree  of  concentration  in  an  industry  and  indicates  the  level  of 
competition on the relevant market. The index can range from 0 if there are a large 
number of firms, indicating effective competition, to 1 for a single monopoly-holder.  

Figure 7 presents the HHI for the rail freight and rail passenger transport markets in 
the  EU  Member  States.  For  freight,  the  most  open  markets  are  in  Estonia  (0.53), 
Romania  (0.55),  Poland  (0.7)  and  Latvia  (0.8)*.  Monopolies  are  still  holding  on  to 
the rail freight markets in Greece, Finland, France, Lithuania, Luxembourg, Portugal 
and  Slovenia.  It  was  not  possible  to  calculate  the  HHI  i.a.  for  Sweden,  the 
Netherlands and Germany (which show a high market share for non-incumbent rail 
freight undertakings) because the data needed were not available. On the passenger 
side  Estonia  (0.48),  Latvia  (0.82),  Poland  (0.83)  and  Portugal  (0.84)  have  the  most 
open rail markets.  

10 

HHI is defined as the sum of squares of the market shares of each individual firm in the sector. 

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Figure 7: Herfindahl-Hirschmann-Index for the national rail markets 

0,94 0,94 0,94 1

1

1

1

1

1

1

0,91

0,81 0,82 0,83

0,70

0,53 0,55

1,00
0,90

0,80

0,70

0,60

0,50

0,40
0,30

0,20

0,10

0,00

EE RO PL LV  AT HU ES BG SK BE EL FI

IE LT LU PT SI

* Data for CZ, DE, DK, FR, IT, NL, SE and UK not available. 

Source: 2007 RMMS questionnaire filled in by Member States in May/June 2007 

VI. 

PERFORMANCE OF RAILWAY UNDERTAKINGS 

35. 

36. 

According to a study conducted, under the auspices of the RMMS Working Group, 
by the Community of European Railways (CER) on its 17 members11, between 1995 
and  2004  employment  in  railway  undertakings  fell  constantly  with  labour 
productivity increasing simultaneously. Over the last few years, however, the pace of 
reduction  in  the  number  of  staff  employed  in  the  rail  sector  has  slowed  down.  Job 
losses in the incumbents have been partly offset by job creation in newly established 
railway companies, even if no information is available yet on the quality of the new 
positions.12  The  numbers  of  staff  employed  in  2006  by  the  individual  EU  railway 
undertakings and infrastructure managers are shown in Annex 15.  

Furthermore,  the  CER  study  shows  a  marked  difference  in  the  performance  of 
railway undertakings in EU-15 and EU-10. In the "old" Member States, since 1995 
the average debt-equity ratio of the railway companies has fallen below 1, meaning 
that their assets are predominantly financed by equity and not by debt. By contrast, in 
EU-10 the average debt-equity ratio has risen sharply from about 0.11 to 2.52. The 
weak  financial  situation  of  railway  undertakings  in  the  "new"  Member  States  is 
mostly  due  to  under-compensation  for  provision  of  public  services,  persisting 
liabilities of the companies to the State and economically unsustainable investments 
by some operators in recent years. 

11 

12 

CFL,  CIE,  CP,  DB,  FS,  NSB,  ÖBB,  SNCF,  VR,  SBB  (excluding  ATOC/EWS  and  ASTOC),  BDZ, 
CFR, CD, LG, MAV, PKP and SZ. 
Annexes to Report COM(2006) 189 final of 3 May 2006, p. 91. 

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37. 

38. 

Another study13, this time on the financial performance of railway undertakings and 
infrastructure managers with an annual turnover of at least €50 million, conducted at 
the  request  of  the  European  Commission,  showed  that,  in  2004,  61%  of  the  74 
railway undertakings analysed14 had a viability ratio higher than 1 which means that 
their  operations  were  in  principle  generating  profit.  24%  of  the  railway  companies 
had a negative return on equity, i.e. negative results from operations in relation to the 
equity capital of the undertaking. Out of the ten infrastructure managers, five had a 
viability ratio higher than 1 and five a negative return on equity (see Annex 16). 

Quality  of  service  remains  rather  disappointing,  in  particular  for  intermodal  traffic. 
Punctuality statistics for international combined transport trains on  major European 
corridors,  compiled  by  the  International  Union  of  combined  Road-Rail  transport 
companies (UIRR), show a low level of punctuality in rail freight services (53% of 
trains had less than a 30-minute delay over their scheduled arrival time in 2006) plus 
instability over the last few years (see Annex 17). 

VII. 

RAIL TRANSPORT INFRASTRUCTURE: CAPACITY, FINANCING AND SUPPLY INDUSTRY 

39. 

40. 

41. 

42. 

The  total  length  of  railway  lines  in  the  EU  is  approximately  215  000  km15.  The 
Member States with the longest railway networks are Germany (34 122 km), France 
(29 246  km)16  and  Poland  (22  156  km).  The  shortest  networks  are  in  Luxembourg 
(275 km) and Estonia (971 km of public network) (see Annex 18). Malta and Cyprus 
have no railway lines. Belgium and Luxembourg have the highest density of railway 
lines (122 and 106 m/km² respectively).  

In  2006  the  most  intensive  use  of  the  network  for  freight  transport  (expressed  as 
number of tonne-kilometres per kilometre of railway lines) was in the Baltic States 
(10.8  in  Estonia,  7.4  in  Latvia  and  7.3  in  Lithuania).  In  the  case  of  passenger 
transport, the network was used most intensively in the Netherlands (5.3), UK (3.0) 
and Belgium (2.8) (see Annex 18). 

In 2006 the European network included 4 919 km of high-speed railway lines located 
in Italy, France, Spain, Germany, Belgium and the UK. By 2009, 1 485 km of new 
lines allowing trains to travel faster than 250 km/h will be built on EU territory (see 
Annex 19). 

In 2006 expenditure on infrastructure maintenance, in euro per kilometre of railway 
lines, was highest in the Netherlands (446 000), Luxembourg (173 000) and the UK 
(108 000).  Renewal  of  the  existing  infrastructure  was  most  intensive  in  the  UK 
(260 000),  Luxembourg  (159  000)  and  Germany  (117  000).  New  construction  took 
the most resources per kilometre of lines in the Netherlands (464 000), Belgium (259 
000), Luxembourg (245 000) and Greece (124 000). In general, the above-mentioned 
countries also plan heavy investment over the period 2007-2010 (see Annex 20).  

13 

14 
15 
16 

ECORYS study: "Analysis of the financial situation of railway undertakings in the European Union", 
February 2006, http://ec.europa.eu/transport/rail/studies/index_en.htm. 
Including consolidated railway undertakings also performing infrastructure management functions. 
Single-track and double-track lines combined. 
The data for France are for 2004 and those for other countries are for 2006. 

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43. 

44. 

45. 

46. 

Systems  for  charging  for  use  of  rail  infrastructure  differ  considerably  between 
Member  States.  The  share  of  infrastructure  costs  recouped  from  infrastructure 
charges ranges from 5% in Sweden to 100% in the Baltic States (see Annex 22). This 
depends  mostly  on  the  financial  contributions  by  governments  to  infrastructure 
provision  and  on  the  efficiency  of  the  infrastructure  manager.  The  complexity  and 
intensity  of  network  use  play  a  major  role  as  well.  In  2006  State  contributions  to 
infrastructure  operation,  maintenance,  renewal  and  construction  in  EU-25  totalled 
about €14 billion, with the EU-10 countries adding up to only 3.6% of this sum (see 
Annex 21).  

The  design  of  some  of  the  systems  for  charging  for  use  of  rail  infrastructure 
allowing,  for  example,  cross-transfers  to  passenger  transport  is  endangering  the 
competitiveness of rail services. The cross-transfer problem is most urgent in some 
of  the  "new"  Member  States,  where  high  track  access  charges  are  accompanied  by 
low infrastructure quality.  

The  current  value  of  the  rail  supply  market  in  western  and  eastern  Europe17  totals 
about  €40 000  million  (see  Annex  23).  75%  of  the  market  is  open  to  outside 
suppliers, i.e. is not served exclusively by railways' in-house capabilities. Access to 
the  market  is  most  limited  in  the  fields  of  services  and  maintenance  (51%)  and 
infrastructure  supply  in  eastern  Europe  (58%).  By  contrast,  the  markets  for  rail 
control and rolling stock are fully open to outside suppliers (100%). 

In  eastern  Europe  the  market  for  rolling  stock  supply  is  expected  to  develop 
dynamically over the next decade (+8.2% per annum until 2015). Services related to 
infrastructure  maintenance  show  the  strongest  growth  potential  in  western  Europe 
(2.6% per year over the same period) (see Annex 23). 

VIII.  CONCLUSIONS  

47. 

48. 

This  report  describes  the  main  trends  observed  over  the  last  few  years  on  the  rail 
market  in  the  EU.  The  current  state  of  reform  of  the  European  rail  sector  shows 
mixed  results.  However,  this  report  confirms  that  the  efforts  to  revitalise  rail  by 
developing a European Railway Area and increasing competition on the market are 
producing positive results. 

The  process  of  formally  transposing  the  Community  railway  legislation  has  almost 
been  completed.  The  institutions  required  by  this  legislation  already  exist  in  the 
Member States. Rail freight transport performance stopped declining in 2003, since 
when  it  has  remained  relatively  stable.  Good  prospects  are  revealed  by  the  latest 
(2006) data. Analysis of trends in rail transport performance over the last six years 
highlights  that  the  countries  with  the  highest  scores  on  market  opening  are 
performing significantly better than those where the markets are fully dominated by 
incumbent  railway  undertakings.  Although  the  conventional  modal  split  data  still 
indicate a slight decrease in rail's share of the freight market, initial estimates of the 
contribution  by  railways  to  goods  transport  over  medium  and  long  distances  show 

17 

Western  Europe  =  Austria,  Belgium,  Denmark,  France,  Germany,  Greece,  Italy,  Netherlands,  Spain, 
Sweden,  Switzerland,  UK;  Eastern  Europe  =  Czech  Republic,  Hungary,  Poland,  Romania,  Turkey 
(2007 UNIFE study, see Annex 23). 

EN 

12 

   EN 

 
                                                 
49. 

50. 

high potential for the rail sector in this market segment. The process of reform is also 
creating  new  job  opportunities  with  the  potential  of  counteracting  the  steady 
contraction  of  the  workforce  of  railway  undertakings.  Last  but  not  least,  the  high 
demand for rolling stock forecast in eastern European countries over the next decade 
is creating favourable conditions for development of the rail supply industry.  

On the other  hand,  a  number  of difficulties are still hampering development  of  rail 
services in the EU. The level of implementation of the regulatory framework differs 
considerably from one Member State to another. Some institutions are not yet fully 
operational. The problems may be due to a lack of staff or, as far as national Safety 
Authorities are concerned, be caused by the lack of a legal base for their activities, 
pending the transposition of the second railway package. 

the 

regulatory 

framework 

for  non-discriminatory  access 

The  degree  of  competition  on  the  European  rail  market  is  still  low,  but  steadily 
increasing  as 
to 
infrastructure  and  for  opening  national  and  international  rail  freight  services  to 
competition  is  maturing.  Nevertheless,  there  are  still  significant  barriers  to  market 
integration  at  European  level.  These  are,  in  particular,  the  lack  of  full  technical 
interoperability  and  of  a  common  approach  to  rail  safety  between  the  national 
railway  networks,  the  relatively  weak  financial  situation  of  railway  undertakings, 
which  is  especially  acute  in  the  "new"  Member  States,  and  the  high  market  entry 
costs  in  the  rail  sector  related  to  the  high  fixed  costs  of  market  operations  and 
significant  administrative  expenses 
licensing 
for 
procedures,  etc.  Furthermore,  some  Member  States  show  an  insufficient  level  of 
investment  in  the  rail  sector,  particularly  in  maintenance  and  upgrading  of  rail 
infrastructure.  Because  until  a  few  years  ago  almost  all  the  rail  markets  in  the  EU 
were still dominated by national monopolies, sufficient incentives have not yet been 
introduced to increase quality of service considerably in the rail sector. 

rolling  stock  acceptance, 

51. 

The  Commission  considers  that  regular  updating  of  this  report  would  allow 
continuous monitoring of the railway market based on comparable data. A number of 
issues  not  dealt  with  sufficiently  in  this  report  will  be  considered  in  future  issues. 
Stronger support will be needed from the rail industry and national authorities, in the 
form of making data available, in order to make the analysis of development of the 
rail market as comprehensive as possible. 

EN 

13 

   EN