1. © International Road Transport Union (IRU) 2008 Page 1 The Influence of Road Tolls for Trucks on the Modal Split Road – Rail in Transport of Goods Preliminary results

2. © International Road Transport Union (IRU) 2008 Page 2 1. Introduction  The decision to liberalise road transport was taken in 1985. Full intra-modal competition was in place by 1998.  The rail sector, when compared with road, was only liberalized by EU-Directives and on paper. In many European countries there is still hardly any effective intra-modal competition to be found in the rail sector and prices have even increased.  Only in the last couple of years has the share of rail freight transport increased a little, at least in Germany, where it has been decreasing over the latest 50 years.  The growth in the railways‘ share of the modal split over the last 2 years is entirely the result of the private players. The German State Railways have lost a further 6% of tonnage over the past 3 years.  European railway operators are now demanding an increase in the road tolls for trucks to the „Swiss Level“ of approx. EUR 0.60 per km. This request is supported by the McKinsey study „Future of the Rail Transport of Goods in Europe“.  An increase in tolls should help rail companies increase their share of the modal split by up to 3 percentage points (from 14% to 17% in France/Germany).  The decision to liberalise road transport was taken in 1985. Full intra-modal competition was in place by 1998.  The rail sector, when compared with road, was only liberalized by EU-Directives and on paper. In many European countries there is still hardly any effective intra-modal competition to be found in the rail sector and prices have even increased.  Only in the last couple of years has the share of rail freight transport increased a little, at least in Germany, where it has been decreasing over the latest 50 years.  The growth in the railways‘ share of the modal split over the last 2 years is entirely the result of the private players. The German State Railways have lost a further 6% of tonnage over the past 3 years.  European railway operators are now demanding an increase in the road tolls for trucks to the „Swiss Level“ of approx. EUR 0.60 per km. This request is supported by the McKinsey study „Future of the Rail Transport of Goods in Europe“.  An increase in tolls should help rail companies increase their share of the modal split by up to 3 percentage points (from 14% to 17% in France/Germany).

3. © International Road Transport Union (IRU) 2008 Page 3 2.1Cost Efficiency and Transport Policy Conditions Example transit from Germany – Italy, measures and ranking (full cost door-to-door)Example transit from Germany – Italy, measures and ranking (full cost door-to-door) 2.1Cost Efficiency and Transport Policy Conditions Example transit from Germany – Italy, measures and ranking (full cost door-to-door)Example transit from Germany – Italy, measures and ranking (full cost door-to-door) Figure 5: Measures and Ranking Source: TransCare (1995-97) 1) 1)Measures, which do not cost anything, but create competition: - total liberalization - separation of rail network and operations - harmonizing the energy prices of state and private rail 2) 2)Additional taxes and subsidies for combined traffic: - capital investment for terminals - sponsoring of equipment 3) 3)Rise in road prices - tolls and taxes - social policy controls - night driving bans cost level 2005 per km Enabling real competition in the rail market is far more efficient in increasing the attractiveness of rail 2. Road Tolls in Europe 1,50 € - 0,36 € - 0,09 € 1,05 € 1,00 € + 0,17 € 1,17 € Rail Road 1) 3)

4. © International Road Transport Union (IRU) 2008 Page 4 2.2 Determination of the Modal Shift Potential by Volume of Goods Transported by Road (1) 2. Road to Rail Modal Shift Potential Total volume of goods transported by road (by type of goods) Volume not suitable for rail transport (questioning of experts) too short transport distance economically no justifiable access to intermodal transport low quality offers Volume transferable by price

5. © International Road Transport Union (IRU) 2008 Page 5 2.2 Determination of the Rail Feasible Volume of Goods Transported by Road (2) Total Volume of Goods Transported by Road by Type of Goods (4,804,605,000 t or 100.0%) -Not rail feasible share of volume = Rail feasible volume transported by road (1,549,741,000 t or 32.3%) -Share with too short transport distance = Rail affine volume transported by road (195,931,000 t or 4.1%) -Share of containerisable volumes, where use of an intermodal transport system offers no economical justification (ratio road-based pre- and on-carriage to rail-based main carriage) -Share with low quality offers =Modal shift potential for rail (58,779,300 t or 1.22%) (Total quantity of volume transferable by price (price sensitive) if quality remains equal) 2.2 Determination of the Rail Feasible Volume of Goods Transported by Road (2) Total Volume of Goods Transported by Road by Type of Goods (4,804,605,000 t or 100.0%) -Not rail feasible share of volume = Rail feasible volume transported by road (1,549,741,000 t or 32.3%) -Share with too short transport distance = Rail affine volume transported by road (195,931,000 t or 4.1%) -Share of containerisable volumes, where use of an intermodal transport system offers no economical justification (ratio road-based pre- and on-carriage to rail-based main carriage) -Share with low quality offers =Modal shift potential for rail (58,779,300 t or 1.22%) (Total quantity of volume transferable by price (price sensitive) if quality remains equal) 2. Road to Rail Modal Shift Potential

6. © International Road Transport Union (IRU) 2008 Page 6 2.3 Modal Shift Potential for Rail Price Sensitive Volumes An increase in the cost of road freight transport would mean that inAn increase in the cost of road freight transport would mean that in » France25,659,000 t » Germany33,120,300 t consequently 58,779,300 t or consequently 58,779,300 t or would react to these prices and will therefore be shifted to rail. would react to these prices and will therefore be shifted to rail. 2.3 Modal Shift Potential for Rail Price Sensitive Volumes An increase in the cost of road freight transport would mean that inAn increase in the cost of road freight transport would mean that in » France25,659,000 t » Germany33,120,300 t consequently 58,779,300 t or consequently 58,779,300 t or would react to these prices and will therefore be shifted to rail. would react to these prices and will therefore be shifted to rail. This means an increase in the total rail freight traffic by 11% together with a change in the modal split by only 1.08%-points to rail. Modal Split by the example Germany Status Quo Case Study (1€/km Toll) Road 2,727 mil. t Road 2,694 mil. t Rail 310 mil. t (10,21%) Rail 343 mil. t (11,29%) 3,037 mil. t 3,037 mil. t 2. Road to Rail Modal Shift Potential

7. © International Road Transport Union (IRU) 2008 Page 7  A toll increase in Europe by 0.70 € as demanded by the European railway companies will have no measurable transfer effects! The toll has to reach a value of 1 € per truck-km to have marginal effects in the magnitude of a maximum 1.22 % (58.8 Mio. t).  The effects of a toll increase of this magnitude on the national and business economies are severe. Every increase of operational costs weakens the economy as well as the domestic trend and will lead to a reduced economic growth and finally to a higher unemployment rate.  Contrary to this a shift from road to rail of up to 4.1% could be achieved by improving the quality and structures in rail freight transport. And this would be an increase of rail freight of approx. 40%.  Ultimately a competitive price, a correspondingly required quality and a sufficient offer will foster a potential increase of efficiency driven by an escalating intra-modal competition.  A toll increase in Europe by 0.70 € as demanded by the European railway companies will have no measurable transfer effects! The toll has to reach a value of 1 € per truck-km to have marginal effects in the magnitude of a maximum 1.22 % (58.8 Mio. t).  The effects of a toll increase of this magnitude on the national and business economies are severe. Every increase of operational costs weakens the economy as well as the domestic trend and will lead to a reduced economic growth and finally to a higher unemployment rate.  Contrary to this a shift from road to rail of up to 4.1% could be achieved by improving the quality and structures in rail freight transport. And this would be an increase of rail freight of approx. 40%.  Ultimately a competitive price, a correspondingly required quality and a sufficient offer will foster a potential increase of efficiency driven by an escalating intra-modal competition. 3. Results and Summary Transfer of traceable quantities to rail can only be achieved by target oriented improvements in the offers of rail freight transport!