Railway Market Opening and Organisational Reforms in Sweden Dr. Gunnar Alexandersson Senior Researcher, Stockholm School of Economics Institute for Research Senior Advisor Regulation and International Affairs, SJ AB Former Head of Government Committee reviewing the organisation of the railway sector gunnar.alexandersson@hhs.se gunnar.alexandersson@sj.se
Presentation outline Railway liberalisation milestones Overview of changes in regulatory framework Current organisation Experience and effects Conclusions and current issues
Pre-history 1960s-1980s A period of decline and increasing financial problems for the Swedish State Railways (SJ) - line closures - operating subsidies introduced - additional state grants needed 1985 New Railway Law: - SJ to separate its accounts - track access charges introduced 1986 SJ in severe financial crisis 1988 New Transport Policy Act
Swedish railway liberalisation some milestones 1988 Vertical separation of track infrastructure (Banverket) from operations (SJ) Decentralisation of responsibility and resources to regional public transport authorities 1990 First tenders for regional passenger services 1993 First tenders for interregional (long-distance) passenger services 1996 Deregulation of freight services
Swedish railway liberalisation some milestones (contd.) 2001 Separation and corporatisation of SJ s divisions, creating: SJ AB (passenger traffic) Green Cargo AB (freight traffic) Jernhusen AB (real estate) Euromaint AB (passenger rolling stock maintenance) Swemaint AB (freight rolling stock maintenance) Unigrid AB (IT services) Trafficare AB (cleaning services etc) Euromaint, Swemaint, Unigrid and Trafficare were later privatised
Swedish railway liberalisation some milestones (contd.) 2007 Market opening for night trains and chartered trains 2009 Swedish Transport Agency established, with multi-modal safety and regulatory responsibilities Market opening for weekend traffic and international passenger services 2010 Banverket is merged with the Road Administration to form the multi-modal infrastructure manager Swedish Transport Administration (Trafikverket) Market opening for domestic passenger services, with full effect from December 2011 2012 New law on public transport (affecting interface between tendered services and commercial services)
Overview of changes in regulatory structure (rail transport market access) Part of rail transport market 1988 2017 Passenger services Regional (non-profitable) SJ holds monopoly and receives subsidies Procurement by competitive tendering (competition for the tracks); since 1990 Open access (competition on the tracks); since 2011 Inter-regional (non-profitable) SJ holds monopoly and receives subsidies Inter-regional (profitable) SJ holds monopoly Procurement by competitive tendering (competition for the tracks); since 1993 Open access (competition on the tracks); since 2011 Open access (competition on the tracks); implemented step-by-step 2009-2011 Freight services SJ holds monopoly Open access on all lines (competition on the tracks); since 1996
Current organisation of the Swedish railway sector some characteristics Institutional vertical separation between infrastructure and train operations Mixed market access models (competition for and on the tracks) National multi-modal authority Trafikverket (Swedish Transport Administration) is the main (80%) rail infrastructure manager, with strong focus on procurement from external contractors Trafikverket also handles the annual path allocation, completely independent of any train operating company Decentralised responsibility for regional passenger services to 21 county public transport agencies (PTAs, controlled by municipalities and counties with their own taxation power) Train operating companies (or other organisers of train services) apply for paths and pay track access charges Railway stations owned/managed by several different actors; the most important ones by real-estate company Jernhusen
Experience and effects of reforms Increased investments in rail infrastructure Strong local and regional commitment to develop the supply of passenger services Strong growth in demand Improvements in (for example) productivity and safety Innovations, new pricing models Punctuality a recurrent issue of concern In recent years, a decrease in average speed of trains (mainly due to capacity constraints) Appearance of several new entrants, reducing the market share of the incumbents Tendering leading to reduced need for operating subsidies (initially 10-25%) but also strategic bidding Increased supply and falling prices following open access competition
Expenditure (billion SEK, 1989 prices) 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Trafikverket, and own calculations Rail infrastructure investments and maintenance 12,0 10,0 8,0 6,0 4,0 2,0 0,0 New investments Reinvestments Maintenance
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Passenger km and tonne km, index (1990=100) Development of demand (1) 200 12.9 billion passenger km 180 160 140 120 21.4 billion tonne km 100 80 Passenger transport Freight transport Source: Trafikanalys
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Passenger km and tonne km, index (1990=100) Development of demand (2) 300 250 200 150 100 50 0 Regional passenger Long-distance passenger Freight Source: Trafikanalys
Regional train systems 1990-2016 Nya regionala tågtrafiksystem 1 januari 1990 Nya regionala tågtrafiksystem 1 januari 2000 Nya regionala tågtrafiksystem 1 januari 2010 Nya regionala tågtrafiksystem 1 januari 2016 Luleå Umeå Sundsvall Sundsvall Sundsvall Gävle Gävle Gävle Uppsala Oslo Uppsala Uppsala Stockholm Stockholm Stockholm Stockholm Linköping Linköping Linköping Göteborg Nässjö Göteborg Göteborg Göteborg Halmstad Halmstad Kalmar Halmstad Växjö Kalmar Halmstad Växjö Kalmar Helsingborg Malmö Helsingborg Malmö Karlskrona Helsingborg Köpenhamn Malmö Karlskrona Helsingborg Köpenhamn Malmö Karlskrona Source: Oskar Fröidh, KTH
Market share of rail 1988 2014 Share of passenger km 6.1% 8.4% Short-distance 3.0% 6.0% Long-distance (>100 km) 15% 15%
Ticket price development CPTA monthly travel card SJ 2000 highest price SJ Night train SJ IC/Regional normal price SJ 2000 discounted price SJ 2000 lowest price Source: Nelldal et al (2015)
Punctuality, share (%) of passenger trains with maximum delay of 5 minutes Number of operated passenger trains reaching end destination Thousands Punctuality and operated trains 100% 1000 90% 900 80% 800 70% 700 60% 600 50% 500 40% 400 30% 300 20% 200 10% 100 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0 Operated trains Punctuality (5 min level) Source: Trafikanalys
Market entry in passenger services Tendered services 1990 BK Tåg new entrant for local/regional train services in Småland and Halland 1995 Sydtåg new entrant on single line in Skåne 1998 Linjebuss new operator on local line in Stockholm; CGEA (later Connex, Veolia) new owner 2000 Break-through for new entrants (Citypendeln [later Keolis], BSM Järnväg, Tågkompaniet, Sydvästen) following several important tenders 2006 NSB new majority owner in Tågkompaniet 2007 Arriva new entrant for Pågatågen commuter trains in Skåne 2009 DSB First new operator for Öresundstågen (early exit in 2011) 2016 MTR new contractor for Stockholm commuter trains
Market entry in passenger services Tendered services
Market entry in passenger services Open access 2008 For a couple of months (June-October), Unionsexpressen operates daily services between Stockholm and Oslo 2010 Veolia (later Transdev) starts daily services between Stockholm and Malmö (expansion of 2009 weekend service) 2011 Skandinaviska Jernbanor starts daily services Uppsala- Stockholm-Gothenburg (safety certificate withdrawn 2016; traffic overtaken by Hector Rail) Tågåkeriet starts new direct line between Gothenburg and Dalarna region 2013 Tågkompaniet starts weekend service Ludvika-Västerås- Stockholm 2015 MTR Express starts frequent daily services between Stockholm and Gothenburg, with all-new vehicles
Competition on the tracks Stockholm-Gothenburg MTR Express 8 departures per day since August 2015 New non-tilting Flirt trains from Stadler Travel time: 3h 30 min 1 ticket class and 3 types of flexibility/service level SJ 18 departures per day Refurbished tilting X2 trains from Bombardier Travel time: 3h 10 min 2 ticket classes and 3 types of flexibility On average 25 % cheaper than SJ (March 2015-June 2016) Punctuality (July-Sep 2016) (5 min): 88% (15 min): 95% Prices falling about 13 % Punctuality (July-Sep 2016) (5 min): 73 % (15 min): 88 % 7 % increase in passengers 2016
Conclusions and current issues 30 years of reforms in the Swedish railway sector (driven by internal needs and EU legislation) have resulted in a highly vertically and horizontally separated sector and a very open market A number of improvements in performance can be seen, but also a fair amount of issues to be handled: Capacity constraints and path allocation Growth of tendered services at the expense of commercial services Backlog of track infrastructure maintenance Division of roles and responsibilities; cooperation and coordination between actors Information and support to passengers, in particular during disruptions