Role of railways over the century, in the context of new economic and societal challenges discussed during a High-Level Round Table organised by UIC in the framework of its 90th anniversary

On the occasion of the 81st General Assembly of the UIC, held on 12 December in Paris, the biggest worldwide association dedicated to railways wanted to make this a very special moment by organising on 11 December in Paris a High-Level Round Table on the role of railways over the century, in the context of new economic and societal changes.
This Round Table, which was moderated by Simon Calder, Britain’s leading travel journalist and who knows from experience the potential of rail for progress and unity, grouped together Jean-Daniel Tordjman, Former Ambassador-at-Large, Special Representative of France for international investment, Professor Jose Manuel Viegas, Secretary-General of the OECD’s International Transport Forum (ITF), Sylvie Lemmet,Director of the United Nations Environment Programme’s Division of Technology, Industry and Economics (UNEP), Vladimir Yakunin, President of Russian Railways (RZD), Jozef Szabo, Federal Railroad Administration (FRA), at the US Department of Transportation in Washington, Dong-Woo Ha, Director, Transport Division UNESCAP – the United Nations Economic and Social Commission for Asia and the Pacific, Henry Marty-Gauquié, Director of the EIB Group Representative Office in Paris and Director of liaison with non EU International Organisations, Stéphane Witkowski, Chairman of the Board/Institute of Latin American Studies (Paris III-Sorbonne Nouvelle), to give their personal testimony to an audience composed of foreign Ambassadors based in Paris, high level representatives from the political and economical sectors as well as key actors of the transport community and railway leaders.

Two different sessions

Through two different sessions, an external vision of the railways presenting the main challenges as well as a “journey around the world” presenting the three key operational priorities in four key regions (Europe, Asia, North and Latin America) were given by high-level representatives from the diplomatic community, international and financial institutions as well as railway business leaders.

Jean-Daniel Tordjman, Former Ambassador-at-Large, Special Representative of France for international investment, gave the audience his input on “The evolution of the world economic situation and consequences on the railways”. In a rapidly-changing world, he highlighted first of all that “this world has changed through the development of new markets and the emergence of a new model fostering investment in new market industries. By referring to the underlying trends in international economic development linked to demographic growth, urbanisation, air pollution control and energy conservation, he underlined that competition would increase between the main stakeholders and newcomers on the market, but that essentially cost remained the factor to be taken into account when choosing integrated transport systems. He compared these trends to the development of railways by stressing the need to establish complex integrated transport systems. Investment in rail transport is generally long-term and substantial, requiring good coordination between those involved. He particularly stressed that in order to make the right choices in terms of investment in infrastructure and transport, it was necessary to use two types of analysis: a technical and a complementary, non-technical analysis, carried out by non-specialists in charge of large projects based on new approaches including PPPs, pricing techniques and new financing ideas. The idea is to integrate rail into the whole system, led by those with experience of large projects of a global, political, diplomatic and strategic nature, who ask for technical assistance from experts in the relevant fields when needed, to ensure that when large investments are made, no major factors are overlooked.”

Professor Jose Manuel Viegas, Secretary-General of the OECD’s International Transport Forum – the leading global transport policy think tank, presented the main current mobility challenges and the adequate response of the railways, such as accommodating a demand that is growing in quantity and distance, as well as in required quality (especially on freight), with

Increasingly scarce funding available from traditional sources
Increasing pressure for environmental preservation
Road sector showing quicker and wider deployment of ICT, in parallel with sustained reduction of consumptions and emissions

He highlighted the advantages of railways that can be summarised by

Getting maximum value out of available resources, focusing on exploiting comparative advantage
High-density demand over medium to long distance
Steering spatial distribution of demand to favour rail
Consolidating demand, also from other modes, improving productivity of modal transfers
Improving service quality in general, and reliability in particular, where there is potential demand to pay for the corresponding service
Avoiding straying from core business as this is socially costly and can undermine the financial viability of the sector e.g. pushing HSR on environmental grounds with reduced attention for underlying market potential and capacity needs

Sylvie Lemmet who has been for the past five years director of the United Nations Environment Programme’s Division of Technology, Industry and Economics, gave an overview of the sustainable development aspect in global transport. She highlighted among others the question of financing the green economy. “When we started looking at the green economy four or five years ago, we considered ways to use the investment packages that were being created by governments such as relaunch plans, and the essential idea was to use these in the right way, i.e. not to rebuild a brown economy, but to start a new green world. We looked at whether investing in the green economy would have a different output than investing in the brown one and at the magnitude of the investment that would be needed. There are only a few figures given for these needs, and two issues need to be considered to estimate them properly: firstly the scale of the entire economy, including agriculture, fisheries, forestry, etc., and secondly the difference in magnitude. The largest segment to work on would be energy supply, at EUR 360 billion per year, transports at EUR 200 billion, with slightly less for construction. Tourism is also an interesting sector, because it has quite a significant impact in terms of GDP outside the EU (especially in many developing countries), as well as in terms of job generation. 2% of GDP might sound like a huge figure, but it only represents 10% of global investments worldwide. Moreover, an investor has to look at the return, and not only at the amount invested. We looked at two scenarios, one where the world invested 2% in greener infrastructure and another where the world invested 2% in traditional infrastructure, to determine the impact on GDP, jobs and the environmental footprint. The results in terms of jobs were not very striking, because job destructions offset job creations. However, GDP is much higher on the long term in a green scenario, whereas the footprint is much lower”.

Vladimir Yakunin, President of Russian Railways since 2005, as representative of the international rail community and in quality of president and founder of the World Public Forum – Dialogue of Civilizations, an initiative to link people of different civilizations, traditions and religions, gave an overview of the social aspect of the railways. Mr Yakunin has always been a proponent of the social value of rail. “Russian Railways’ social policy is entirely in line with international principles of sustainable development, to which our company has been committed for many years. The company has adopted a Corporate Social Responsibility Code and is implementing a system of social support for staff as a most important factor in increasing efficiency. Providing subsidies for Russian Railway employees to improve their living conditions, discounted medical services, running a corporate pensions programme, and having a policy on leisure, healthcare and supplementary education – in our view this is the minimum requirement for creating a firm basis for confident forward progress. He added “In recent years we have succeeded in creating an effective youth policy aimed at attracting and retaining young employees in the company, involving them in fulfilling corporate objectives and increasing their personal and professional competencies. I would especially like to note that last year we signed a Memorandum with the UIC on developing youth cooperation, on the basis of which we are carrying out joint work to train young specialists who want to work internationally.”

Key operational priorities in three key regions

Dong-Woo Ha, Director, Transport Division UNESCAP – the United Nations Economic and Social Commission for Asia and the Pacific, set out the three operational priorities in Asia by video link from Bangkok, by reaffirming first the strong commitment of UNESCAP to promoting railway development in Asia in close collaboration with their member countries and partner organisations. “This commitment rests on the belief that efficient rail is crucial to our future sustainable development. Hence the work that the ESCAP secretariat intends to pursue under its Trans-Asian Railway activities in four broad areas. One area is to inscribe railway development within the framework of the outcome of the recent Rio+20 Conference in order to use rail effectively in our efforts to reduce the carbon footprint of the transport industry. We need to find ways to use our green assets to attract more investment into rail and more traffic onto tracks.
A second area of significance is the development of, access to and use of technology. The potential synergy between research and network development should be actively sought. Enormous benefits could be drawn from the definition of a cooperative framework between the railways of Asia and leading railway research institutes. It should be associated with all countries, even and maybe especially the poorest, to open the door to interconnections and interoperability serving well the development of new services. A third area is rail as a tool for social enhancement. The recent economic achievements of the Asia-Pacific region have not spread much beyond the catchment areas of its most active sea ports. This has led to unbalanced spatial development with widening inequalities between populations in coastal areas and those in the hinterlands. Rail, therefore, has a major role to play in bringing economic opportunities to the doorstep of many of our citizens. A fourth area is rail as a business enabler. Under globalisation, transport and logistics services have evolved to become an integral part of the production process of industry. In this respect, rail corridors will only reach their full potential if they are developed in conjunction with efficient intermodal and logistics facilities so that the Asia-Pacific region can fully exploit the potential of its internal market while enhancing existing linkages with Europe. In conclusion, we are of the opinion that efficient rail transport is crucial to sustainable development and regional economic integration. In this regard, related actions should include four main components, namely: the integration of national networks into regional and global transport systems, harmonisation of technical and facilitation standards, environment protection and the ability to develop efficient interfaces with other modes. In realising these objectives, international cooperation is more important than ever and we, at ESCAP, want to be a trusted partner in pushing the rail agenda forward,” said Mr Ha.

Henry Marty-Gauquié, Director of the EIB Group Representative Office in Paris and Director of liaison with non EU International Organisations addressed the three operational priorities in Europe. According to him, “railways in Europe are a top priority for the European Union and benefit from its political as well as financial support through the European budget and loans from the European Investment Bank.”
Over the coming decades, the three main challenges are:
– Completing the trans-European corridors (in particular the Alpine routes) and their extension to neighbouring countries
– The role of the train in the combat against climate change (in particular through promoting rail freight and collective urban transport systems
– Strengthening inter-modality
All this represents some 400 billion to be invested in the next 20 years. Taking into account the restrictions on public finances and economic changes brought about by the financial crisis, this effort will require greater recourse to private investors and the development of financial engineering to ensure their commitment to such projects is reinforced in the long-term.

Stéphane Witkowski, Chairman of the Board/Institute of Latin American Studies (Paris III-Sorbonne Nouvelle), involved in the partnership activities of the Institut des Amériques (Insitute of the Americas) in Paris as head of the development working group, presented the three operational priorities in Latin America. “There is in fact a large awareness that the mobility of goods and people by rail can use present railway infrastructures better even if they have been reduced and that a number of concessions granted since the 1990s now need to be redeveloped with new operators and that the networks need to be renovated, that new infrastructures need to be built and made more compatible with this patchwork of different systems inherited from the past. Brazil is by far the country where a specific business model for the development of rail has been very seriously studied. Demand is estimated to be more than 30 million passengers, which obviously creates a tremendous market for high speed between these two cities. In total we are talking about a line length of close to 520 km, developed of course with the UIC gauge, and which will also serve three airports on the line: Rio, Sao Paolo and the international airport of Campinas. This project is very current because the calls for tenders – having been suspended – were reopened very recently and we also have continuous political support for the development of this project from Lula to Dilma Rousseff at the moment. Complementing this high speed project – and there again the concept of the supply chain – not for goods this time but for passengers is part of the global plan for development and several new urban lines are envisaged both in Sao Paolo and Rio with several stations interconnecting with the high speed line itself. To conclude, the three operational priorities for this zone are: logistics, interoperability, development of a continental network.”

The added value of UIC

To conclude, Mr Jean-Pierre Loubinoux, UIC Director-General underlined the added value of UIC, by saying “UIC is obviously one of the oldest railway associations which is making significant developments at world level through the active participation of its Members. UIC can bring added value through its efforts, the projects it manages in the areas of safety, capacity, environment, and mobility of goods and people, and increasingly in accordance with modal complementarity – as today we are only discussing our role in the context of freight and passenger supply chains. For that we have Technical Platforms (Innovation, Standardisation), 700 leaflets used daily worldwide, we work on 200 projects. In this context we can bring added value through a cumulative approach in order to continue to develop railways. Also through the promotion and benchmarking vis-à-vis political, financial and economic institutions which need to use this data, leaflets, experiences...”.