Source: https://mediarail.wordpress.com/when-norway-helps-rail-freight-even-private-companies/

When Norway helps rail freight, even private companies

Four freight train operators will receive state aid totaling NOK 60 million (EUR 5.94 million) to transport more goods by rail. The incumbent carrier CargoNet AS and the three Swedish competitors Green Cargo AB, Hector Rail AB and Tågåkeriet i Bergslagen AB (TÅGAB), all active in Norway, will also receive support. What’s interesting is that Norway is not part of the European Union but subscribes largely to certain parts of its policy. The railway is liberalized at all levels, including regional.

The Norwegian Railway Directorate, (‘Jernbanedirektoratet’ in norwegian), is not a company, but a State Department created in February 2016 which is a part of the Ministry of Transport and which drives the strategic development of train services, studies the future needs in transport and coordinates the national rail needs with other modes of transport, in a country very long with barely 5.33 million inhabitants. It is this Railway Directorate that has entered into agreements with railway undertakings to ensure the traffic of passenger trains in the context of traffic packets defined for periods of 8 to 10 years.

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‘Jernbanedirektoratet‘ is part of a national working group that has designed the rail freight schemes and is responsible for distribution of subsidies after receiving requests from all freight train operators, without any shareholder distinction. For Norway, this support will be used to offset the so-called “special” costs that rail freight operators must bear but it is also a measure to preserve the current volume and to move more goods by rail.

The vision must also to save the norwegian rail freight by preserving the existing traffic and especially by boosting them by any means possible. Freight traffic is indeed regularly threatened with the former incumbent NSB Gods, now CargoNet, which accumulates a lot of debt in a country with long routes and very few industrialization. CargoNet is struggling to operate efficient and cost-effective rail freight traffic, and is regularly putting pressure on politicians to avoid closures of rail services, much needed by such cities as far away as Bergen, Trondheim and Bodø. Erik Røhne, CargoNet’s CEO, says it is difficult to operate freight and rail in a free and efficient way: « Our service is affected by the infrastructure, which affects our deliveries and the trust of our customers that we can offer them an adequate offer », he explains.

The arrival of new operators should in principle get good volumes back on the train services, and that is the whole equation of Norwegian railway policy. Nevertheless, we must not expect everything from liberalization: it has become inevitable to tackle the problem of infrastructure, managed there by the state-owned company Bane Nor. But we can see that the country, at least, is trying to multiply the solutions rather than to maintain a chronicall ill company as we see it in other States.

This rail freight assistance scheme in Norway was introduced last June in the revised state budget for 2019 as an interim arrangement with a maximum duration of three years. In the state budget for 2020, the government proposed a maximum of NOK 87.9 million for the support of freight train operators. The objective is to strengthen the competitiveness of the railway in anticipation of the entry into force of the measures provided in the freight package of the National Transport Plan 2018-2029.

This support is a measure to move more goods to the railways by strengthening companies working with combined transport and wagonload traffic. The objective is to strengthen rail competitiveness until the implementation of the National Transportation Plan (NTP) 2018-2029. « Companies need a robust and efficient railroad and need large freight flows, provided if the solutions are competitive, » repeat Elisabeth Enger, CEO of Jernbanedirektoratet in an official document.

Altogether, four operators, including three competing Swedes, claimed NOK 83.5 million (EUR 8.27 million), more than the maximum of NOK 60 million. The distribution among the four enterprises will be based on their market shares.

The Swedish company Green Cargo has a subsidiary in Norway and receives subsidies from the Norwegian state (photo Green Cargo Norge)

« Support program strengthens railway companies that compete directly with road traffic », says Erik Røhne, CargoNet’s CEO, one of the companies that received support. « This support gives us a break in a difficult race and allows us to increase our services on our routes »,  adds M. Røhne. He explains that support programs are in high demand in the sector, which is not a surprise. « We find that the support program has contributed to a shift in the perspective of freight train operators, which is important to take advantage of the major environmental benefits of rail freight », explains Hanne Bertnes Norli, director ‘Market’ at Jernbanedirektoratet.

Ecology, energy and vision for the future

Support is paid annually in arrears. The amount paid is calculated according to the traffic levels declared by the operators in their their requests to the Railway Directorate. Candidates must also provide the proportion of transportation powered by electric traction and that powered by diesel traction. The Railway Directorate carries out the final calculation.

Norway has a National Transport Plan 2022-2033. The Railway Directorate is responsible for its strategy, with particular themas as infrastructure, terminals and train length for combined transport. This work also focused on innovation, technology and framework conditions for freight transport by rail. « The freight strategy has been developed in close cooperation with the business community, both those who work in the railways and those who are forwarders », reports Elisabeth Enger.

It will be interesting to evaluate the results of this policy.

CargoNet, deficit maker but essential in a sparsely populated country (photo Jernbanedirektoratet)