Even if the terms foreseen for the beginning of tender procedures are quite close to date, there are two regions in Italy, according to a survey conducted in the first half of 2002, which are closer to the announcement of tenders. They are Liguria and Lombardy, which have chosen different ways of carrying out service privatisation. Liguria, in fact, is going to call for only one tender for the whole regional railway service, whereas Lombardy has “broken” the railway network into different basins which will be entrusted through tenders during the period 2004-2008.
The choice of Lombardy is based on the fact that the time necessary to a company to complete rolling-stock is extremely long, different than in the LPT for road25.
Moreover we have to consider that, following the LPT reform in Italy, the railway industry can acquire rolling stock property even if it has been financed by the state or by the regions (or other local authorities), highlighting the difficulty that other non-incumbent bodies face in participating in the tenders, unless the tenders are announced in advance (years before).
This problem is reduced in case of non-electric railway lines because the delivery time of diesel trains and tractors are shorter (so the times for the birth of new rolling stock
M U S S O - F E R R A R I
companies are reduced) and because the lack of an electrified railway line with the same voltage remains one of the main barriers for the entrance of foreign companies.26
These facts point out that one of the obstacles to the realisation of LPT target reform is the lack of an independent body (an agency for instance27) to whom it is possible to
entrust the property of the rolling stock, with the subsequently exclusive task of giving railway systems management to public service concessionaires through leasing contracts. All this lets us think that the first tender session should end up with the confirmation of the present service transport managers, but this doesn’t mean that there will not be improvement in the service quality and a reduction on its cost.
Consequently, tenders should set off a new interest in enterprises which already have the railway licence and safety certificate, that’s to say the ones which manage the railway lines in administrative concession and which could be soon interested in acquisitions, joint-ventures, and co- partnerships.28
This leaves open questions of future chances of having multimodal public transport services. This solution would allow the creation of real tariff coordination for the different transport modalities involved, avoiding possible competition among different transport systems29. This seems feasible in
some regions – such as Lombardy, where it will be probably applied to the Brescia-Edolo line – but isn’t considered as a valid solution in other Italian Regions.
10. Concluding remarks
Railway transport is experiencing a difficult transition from public production and centralisation in planning and management of service and infrastructure to open-market service management and regionalisation of a great part of transport planning (that is to say everything not considered of national or international interest, implementing subsidiarity). In Italy (with significative analogies with France and Germany and partially with the United Kingdom) the first feature of this new order is based on the implementation of the EU regulations to separate infrastructure management and service production (de-verticalisation) and on the contemporary liberalisation of the latter by means of competition for the market. The second feature is obtained by delegating to the regions (Bassanini reform) the planning of regional and local public transport (regional plan for transport, triennial program for local public transport service), the definition of transport service in order to satisfy citizens’ request for mobility (minimum service standard), the regulating function by means of the choice of service manager (as mentioned, by means of competitive procedures), and the control of the manager’s activity (by means of the service contract).
This system, based on the principles of liberalisation (and potential liberalisation) and regionalisation seems to be apt, at least theoretically, to increase both production, by reintroducing competitive and market mechanisms, and
service efficiency with regard to the needs of the local community, by empowering regional government.
Consequently, railway transport is going to play an important role in urban and metropolitan mobility. In particular, it is fundamental for government strategies in big metropolitan areas, because it allows the simultaneous increase of effectiveness, efficiency, and sustainability of transport, while other kinds of strategies present some trade-offs for the achievement of the different goals.
However, if we consider the liberalisation processes in transport of the last 25 years as a whole, the introduction of competitive principles has met more difficulties in the area of local transport.
Avoiding any consideration of de-verticalisation in general (the question has already be examined in other chapters of this special issue), the possible dangers for the implementation of the global project for regional railway transport represent the items on the policy makers’ agenda. They can be defined in this way:
1. Role confusion and consequent conflicts or collusion. The outlined scenario presents a complex system with many actors. For this reason it is fundamental that the roles of the region (regional mobility planner and institutional service claimant), of the infrastructure manager, and of the service manager are well defined. The complexity of the situation and the attempt to protect pre-existing interests can, on the contrary, lead to a partial clash of functions, as we have seen for the constitution of regional railway companies. This leads to many possible conflicts of interests and/or collusion, as we have already mentioned: between region and tender winner, between infrastructure manager and railway transport companies (for train tracks30), or between region and
incumbent, if the latter is the favourite service trustee for political, social or labour reasons.
2. Advantages for the incumbent. These derive from the potentially different access to inputs (the mentioned problems concerning the assignment of tracks, the property of rolling stocks, the training of personnel), from the dimension of other operators (if the pre-existing operators are too few or too little), from political and labour pressure (as partially mentioned in point 1, caused by the preference to maintain the status quo).
3. Planning difficulties. In addition to a frequent technical insufficiency in planning capabilities by regional authorities, a more important aspect is the real definition of minimum service standards. In fact, they risk coinciding with those which obtained with the existing “historically” determined state transfers that are. This would thwart the concept of the reform in terms of the response of regional requests to the real needs of the users.
4. Difficulties connected with competitive procedures. The problems mentioned, particularly in § 3, can allow tenders to become tenders for management, maintaining unchanged the situation rents, the entity and the cost of personnel, and the existing service, thwarting the possibility of increasing service efficiency and effectiveness.
5. Difficulties connected with service contract. There are many problems deriving from the implementation of the service contracts between regions and railway companies. In particular they are due to:
- the definition of the kind of contract (art.19 c.1 of decree n.422/1997) and, in particular, the opportunity to sign net cost contracts, in order to stimulate service trustees not only to reduce costs, but also to increase revenues;
- the definition of the kind of incentive for the improvement of efficiency by the service manager (art.19 c.4 of decree n.422/1997);
- the evaluation by the region of the real fulfillment of contract commitments and the real possibility of punishing possible breaches;
- the evaluation of service quality standards;
- the difficulty of feed-back as far as the fulfillment of the goals and the final request needs by the service producer are concerned.
6. Difficulties deriving from the generalised use of competitive procedures to increase functional and tariff integration with the transport on wheels and, in general, with the urban and metropolitan transport, which is produced by other companies.
7. Difficulties in activating construction and management concessions (project finance), since the service production must be delegated with a competitive procedure.
8. The insufficient financial and taxation autonomy of the regions. This is a “transversal” problem which involves many sectors of the economy and which influences many of the above-mentioned points.
Apart from the above-outlined difficulties, this reform could lead to deep changes in regional rail transport and, plausibly, also in supply (cost reduction, reorganization and rationalization of the network, increased labour unrest), in the market (bilateral monopoly situations where the distinction of roles and a real liberalisation, followed by a possible privatisation, seem to be fundamental), and in the cost for users (increased tariffs, greater attention to the final client by companies which, up to now, were mainly production oriented).
On the other hand, we can say, without exaggerating, that keeping regional socio-economic systems depends on the sustainability of the short-range transport system and that railway transport plays a fundamental role, at least in some kinds of “urban systems”. In fact, the suitability of local public transport is strongly linked to the typology of metropolitan growth. Railway transport could be the right choice in a monocentric radial urban system (cities belonging to the “industrial triangle”, but also some big cities of Southern Italy), but even more in polycentric diffuse systems (such as, for example, those of Veneto and Tuscany), while those urban fabrics reproducing ad infinitum the same “module” around elevated service standards are, inevitably, based on individual road transport (but they are not very diffuse in Italy and in Europe).
With regionalization, the region becomes the centre of
transport networks according to a logic which foresees the inter-connection of international networks (such as Trans- European Networks), national high speed/capacity networks and local transport on rails and road. From this point of view, the regional governance of request definition is fundamental in order to optimise the interface with national (railway) transport and with local transport (road, collective and individual).
Railway transport planning and management can become one of the linchpins of competition among territorial economic systems and could regain, at least partially, that role of localizing factor that it had during the industrial revolution between the last half of the 19th and the first decades of the 20th century, when it was essentially a freight transport mode.
Acknowledgements
The entire paper is a product of the strict co-operation of the authors, nevertheless §§ 1, 2, 3 and 10 are by E. Musso and §§ 4, 5, 6, 7, 8 and 9 are by C. Ferrari.
M U S S O - F E R R A R I
NO T E S
1In Italy the number of people transported has inverted the increasing
trend at the end of the ‘70s, going from 6 millions 150 thousands passengers in 1978 to less than 3 and a half million in the last years, while there has been a growth of people transported by underground and a much more evident decrease in bus transport. Musso, E., and C., Burlando, (1999), Economia della mobilità urbana, Utet, Torino, cap. 4.
2Demsetz, H., (1968), “Why Regulate Utilities?”, Journal of Law and
Economics, Vol. 11, pp. 55-65.
3See articles 81, 82 e 86.
4The fees, calculated on costs base (circulation, energy, general
expenses and indirect expenses), must grant the balance account to the infrastructure manager, Zucchetti, R., and M., Ravasio, (2001), Trasporti e concorrenza: dal monopolio pubblico al libero mercato, EGEA, Milano. The time paths entrusting considers first of all the mobility need of the citizens, relations ruled by service contracts (regional and local), high skilled services and freight services and, in the end, national passengers’ services.
5The first new operators obtained permission in 2001.
6As we will mention in the next paragraph, the real definition of
minimum service standards is one of the most difficult aspects of the implementation of the reform.
7As regional implementation rules are quite different, regional railway
management includes different disciplines such as the creation of regional companies and the call for bids and, in some cases, regional laws do not arrange mechanisms for entrusting services. Zucchetti, R., and M., Ravasio, (2001), op. cit.
8It is not by chance that railway transport had greater and longer
success in centralized economies. It is symptomatic that the German Democratic Republic’s reunion to Germany and its conversion to a market system implied a collapse of railway market segments in that country.
9In parallel, the transposition of the same mechanism between Region
and local authorities, as far as municipal and provincial transport on wheels is concerned, lets “minimum service standards” correspond to regional subventions, which, usually, correspond to a service standard that is much lower than the present one and create serious financial difficulties to local authorities. Theoretically, they could integrate regional subventions in order to enhance their service standard with regard to the minimum one, but this is almost impossible because of their financial situation. In this way public transport risk overstuffing overmanned with regard to the service quantity which is possible to tender. This stresses labour opposition and risks making calls for bids meaningless.
10Demsetz, H., (1968), op. cit.
11Even existing rolling-stocks should be given to these societies in order
to avoid any advantage for the incumbent.
12Paradoxically, this conditions the difficulty existing for municipal
road transport companies which compete with others in tenders which have been called by their own owners!
13Boitani, A., and C., Cambini, (2002), “Il Trasporto Pubblico Locale in
Italia”, Mercato Concorrenza Regole, Vol. 4, n° 1.
14In a gross-cost contract, supply corresponds to the estimated and
agreed management costs, independent of the revenues taken by the granting authority.
15For a more detailed treatment, Musso, E., C., Burlando, (1999), op.
cit., chapter 8.
16Service Chart 2002. 17Table 3.
18Taking into consideration subjects charged with industrial risk (linked
to management costs), and commercial risk (linked to the revenue trend), literature usually distinguishes: management contracts, where
the client is charged with the two kinds of risk, gross-cost contracts where the operator is charged with industrial risk and the client with commercial risk and net-cost contracts where the operator is charged of both the risks.
19Since so many elements weigh on the evaluation, it is necessary to
establish a test specimen among these criteria.
20As far as LPT by road is concerned, in one case the incumbent was
forbidden to take part in the tender, in order to diminish the informative asymmetry between competitors and the “auctioneer”, but this solution cannot be applied to LPT on rail, as we will see later.
21Think, for example, that an urban railway network can transport up to
70 thousand passengers per hour on one single rail at a speed of about 30-35 Km/h, while in case of a bus transport the transport capacity is reduced to 10-15 thousand passengers per hour.
22 Whose value is equal to the highest between the 10% of the economic
value of the contract and its economical value referred to the month of greatest supply by the infrastructure manager (art. 10 “The Criteria and Operating Procedures for railways capacity allocation” and art. 1 “General Access Conditions” to the railways infrastructure).
23It is evident that the lack of chances for new concessionaires to
succeed in the patrimonial management of rolling-stock and equipment leads the railway industry towards insuperable barriers in market entry and exit.
24Boitani, A., and C., Cambini, (2001), “La riforma del trasporto
pubblico locale: problemi e prospettive”, Workshop Antitrust, Milano, 22 giugno.
25The Regione Lombardia has estimated the average time between the
order and the delivery of a train of about three years.
26It is known that the EU countries have electrified lines with different
voltages, so interchangeability is guaranteed only thanks to tractors able to adapt themselves to different voltages (much more expensive than the ones used in the single national lines).
27Regarding independent authorities in the transport field, see also
Boitani, A., (2000), “Un’Autorità indipendente per i trasporti?”, L’Industria, Vol. 24, pp. 821-832.
28Regarding co-partnerships see Torbianelli’s article in this volume. For
an economic analysis of the regional railways lines see Canali, C., (1988), Le Ferrovie Regionali in Italia, Step,Parma.
29Regarding competition among alternative transport modalities see also
Marchese, U., (2000), Lineamenti e problemi di Economia dei Trasporti, ECIG, Genova.
30It is necessary to mention that another difficulty could be arise from a
recent EU attitude tending to divide the use of the network into “nodes” and “arches”, in order to let the use of the former pay more than the latter. For local transport, which is based on nodes, this would mean that it should pay most of the use of the infrastructure network.
BI B L I O G R A P H I C RE F E R E N C E S
BOITANI, A., (2000), “Un’Autorità indipendente per i trasporti?”, L’Industria, Vol. 24, pp. 821-832.
BOITANI, A., AND C., CAMBINI, (2001), “La riforma del trasporto pubblico locale: problemi e prospettive”, Workshop Antitrust, Milano, 22 giugno.
BOITANI, A., ANDC., CAMBINI, (2002), “Il Trasporto Pubblico Locale in Italia”, Mercato Concorrenza Regole, Vol. 4, n° 1.
BURLANDO, C., (2001), “La riforma del trasporto pubblico locale a livello regionale: stato di attuazione e problemi aperti”, Quaderni Regionali, anno XX, n° 2.
CANALI, C., (1988), Le Ferrovie Regionali in Italia, Step, Parma. DEMSETZ, H., (1968), “Why Regulate Utilities?”, Journal of Law and Economics, Vol. 11, pp. 55-65.
Directive 2001/14/EC of the European Parliament and of the Council of 26 February 2001 on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification, Brussels.
European Community Commission, (2002), Proposta modificata di regolamento relativo all’azione degli Stati membri in tema di obblighi di servizio pubblico e di aggiudicazione di contratti di servizio pubblico nel settore del trasporto di passeggeri per ferrovia, su strada e per via navigabile interna, Brussels.
Federtrasporto, (2001), Monitoraggio del TPL, n° 2, luglio.
MARCHESE, U., (2000), Lineamenti e problemi di Economia dei Trasporti, ECIG, Genova.
MARTINEZ, M., (2002), “La differenziazione e la contendibilità dei mercati regionali e locali dei servizi di trasporto pubblico in Italia”, Ingegneria Ferroviaria, anno LVII, n° 8.
MUSSO, E., ANDC., BURLANDO, (1999), Economia della mobilità urbana, Utet, Torino.
Rete Ferroviaria Italiana, (2001), “General Access Conditions”, RFI, Rome.
Rete Ferroviaria Italiana, (2001), “The Criteria and Operating Procedures for the Railway Capacity Allocation”, RFI, Rome.
TIROLE, J., (1999), ”The Institutional Infrastructure of Competition Policy”, Roundtable on New Comparative Economic Systems, World Bank-CAE, Paris, Vol. 21, June.
ZUCCHETTI, R., ANDM., RAVASIO, (2001), Trasporti e concorrenza: dal monopolio pubblico al libero mercato, EGEA, Milano.
1. Introduction
Other articles featured in this edition illustrate the main characteristics and the most remarkable themes of railway reform in Italy, as regards urban and local transport. They clearly point out that the issue of de-verticalising the railway system in Italy is strongly linked to a general reform of competencies. As high- lighted, for example, by Musso and Ferrari: “…the
regionalisation of a railway
transport inclined to de-verticalisation outlines a new institutional picture, combining regulations aimed at efficiency (separation of infrastructure management from service production in which competition is promoted) with the territorialisation of skills, based on subsidiarity, which aims at increasing transport effectiveness through a close relationship between requirements planning and collectivity
requirements”1.
This article features an in-depth analysis of the most significant issues in the regionalisation process of railway competencies. This analysis is carried out through the observation of the actual situation in a specific geographic area: the north-eastern part of Italy (comprising the regions of Veneto, Friuli-Venezia Giulia, and Trentino Alto Adige,