Rail transport fears losing share and attractiveness due to energy prices 14/01/22

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Source: https://elmercantil.com/2022/01/14/el-transporte-ferroviario-teme-perder-cuota-y-atractivo-por-los-precios-de-la-energia/


Rail transport fears losing share and attractiveness due to energy prices

The production costs of railway companies, public and private, have skyrocketed by over 25% in the last quarter of 2021
January 14, 2022

The railway freight players face a new situation of tension due to the high energy prices that entail an increase in the prices of services . The Union of Comodal Transport Operators (UOTC) has sent a letter to the Ministry of Transport, Mobility and Urban Agenda requesting its urgent intervention to avoid loss of up to 500,000 tons in intermodal transport. The members of said association have expressed their disagreement with the rates announced by Renfe Mercancías for 2022, which have been raised due to the "increase in operating costs, derived mainly from the increase in the cost of energy", explained the railway operator.

“Rail freight needs exquisite treatment and we are not here for experiments”
Antonio Pérez Millán President of the Union of Comodal Transport Operators (UOTC)

Among the new tariff conditions that Renfe Mercancías has established for multi-client trains, the charging of all containers as loaded, even if they return empty, stands out, with which the empty container tariff will disappear, something that “does not happen in any European country” , as reported by the UOTC. Also noteworthy is the increase of between 15% and 68% in net final prices for loaded outbound traffic and empty return traffic. The UOTC, which makes up the intermodal division of the International Road Transport Association (Astic), recalls that, in 2007, they experienced a similar situation that is now being repeated. "The merchandise needs an exquisite treatment and we are not here for experiments", assures its president, Antonio Pérez Millán.

Renfe defends the increase in rates to adapt them to the energy cost and "achieve an economic balance"

The public rail operator has recalled that the rate changes planned for 2022 respond, in addition to the adjustment of prices to the rise in energy costs, to the need to "achieve an economic balance". They also remind Renfe that there is now a liberalized market and "the customer can choose the operator they want to work with", but the price increase will be generalized among the main traction players present in Spain, because they all have to face the increase in prices. production costs and payment to Adif of the energy consumed.

"Shippers are scared and the railway is unable to respond to the rise in energy"
Juan Diego Pedrero President of the Association of Private Railway Companies

As the Association of Private Railway Companies (AEFP) recalls, "the supply of energy to companies that, with their trains, circulate on the railway network is not liberalized". In this regard, they have pointed out that "it is a supply in the hands of Adif, which enjoys a monopoly and sets the price of energy without the railway companies that use it being able to go directly to the market and without visibility or medium-term commitment ”. For this reason, neither private traction companies nor Renfe Mercancías "can compare offers, establish long-term plans and risk or not in fixed or variable price contracts that allow not only to obtain the best price, but to cushion market fluctuations" .

From the Association of Private Railway Companies (AEFP)report that rail transport services, both public and private, have suffered increases of between 25% and 40% of total production costs in the last quarter of the year. Its president, Juan Diego Pedrero, describes this situation as "aberrant" due to the losses it entails: "The shippers are scared and the railway is incapable of responding, which could lead to the absolute collapse of the sector." For this reason, they request the immediate intervention of the Government and question the message that is transferred from the Administration. However, he clarifies that the associations should request subsidies to alleviate the tension due to energy costs. "The ministry must take responsibility so that rail transport does not disappear for this reason," says Pedrero, that insists on transferring the support of the AEFP to Renfe in the face of the demands of the UOTC. "I don't think it would be a pleasure to increase the prices of the service by two digits."

The situation has reached such a point that “the cost of operating a freight train with an electric locomotive has grown by 25% in one year”. This rise has caused, according to data provided by private rail operators, that it is now between "10% and 15% more expensive" to use electric models than "a polluting diesel locomotive". Currently, "of the rail freight transport services in our country, approximately 50% are carried out by electric traction", they have recalled from AEFP.

In this context, the main demand of the UOTC to the ministry and to Renfe Mercancías is to start a negotiation on the tariff framework proposed for this year. According to Antonio Pérez Millán, for the time being the entry into force of the new rates has been delayed until January 15, instead of being implemented on January 1, the date initially planned by the public railway company. “There are other ways of looking for solutions that are not notifying clients of changes without deadlines, without time, without discussion and with irreversible consequences”, lamented the president of the UOTC. These consequences would affect, as reported by the association, 500,000 tons of merchandise that would be left out of land intermodality. Among these goods, cites as the most affecteddangerous goods and tanks, "typical railway product between Spain and Germany, Belgium or Italy".

500,000 tons

The loss of price competitiveness puts 500,000 tons of intermodal transport at risk, according to UOTC

Millán describes this movement of Renfe Mercancías as a "commercial occurrence" that adds to the increases caused by the pressure of energy prices and that sends a contradictory message about promoting the use of intermodal transport . "The customer will resort to the road again because the service will rise from 1,000 to 1,400 euros," he says. Yesterday, the UOTC sent its request to the Ministry of Transport to initiate three-way talks and, if no response is received, the association does not rule out legal action or railway initiatives such as using full trains for cargo, although Antonio Pérez Millán points out that this measure is still under study.