The word ”coopetition” is increasingly heard in connection with the organisation of the rail sector.
Coopetition is a neologism, coined to describe cooperation in a competitive environment. It stems from economic game theory. In relation to the rail sector, ”coopetition” means that the railway undertakings must work together despite competition in some areas, in order to increase their own competitiveness against other modes of transport, and thus to raise profitability. Cooperation enables higher values to be achieved than when each Railway Undertaking is working for itself alone. International goods and passenger transport have always been characterised by a high degree of cooperation. Wagonload transport can simply not be operated efficiently and profitably across national frontiers without cooperation. Further this is why, despite liberalisation, over 90% of today’s international passenger traffic is handled through cooperation agreements.
European rail transport policy aims to create a single European railway area. As part of the opening up of the sector to competition that began with Directive 91/440/EEC, four Railway Packages have been adopted over the last 25 years. The fourth package, which will complete the liberalisation of rail transport, was approved by the European Parliament last December.
Of course, ”coopetition” must not be misused to legitimise the continuation of outdated and inefficient production structures. Conversely, regulatory and antitrust authorities should not automatically disapprove of railways cooperating, or even sanction them for doing so. Rail’s urgently needed competitive advantages over road transport, which are generated by cooperation, can be destroyed in no time by a fine that leads to shift from proven business models. Self-evidently, the provisions of competition law must be observed in individual cases, and technical cooperation within the framework of Council Regulation (EC) No 169/2009 must apply the rules of competition to transport by rail.
In which situations is cooperation meaningful and desirable in a competitive environment? There are many possibilities. Some cooperations are brought about by the regulations or by policy. I will name here just the implementation of passengers’ rights in international traffic, where customer-friendly solutions are possible only through a cooperative, multilateral approach. High front-office quality can be achieved only if there is cooperation between railways in the background. A further example is digitisation: unless functionalities and technical specifications – such as for transport documents for international goods and passenger transport – are established in a systemic, common approach, there will be no good solutions for the railways or their customers, and the competitiveness of the service overall will suffer.
If the Railways fail to find simple and cost-effective solutions, the foreseeable response will be to call for regulation. The risks here are obvious: complex solutions that are business unfriendly and driven by politics, in which the cost-(customer-)benefit relationship is not prioritised, and which places additional burdens on a sector already suffering from overregulation.
Many good approaches to multilateral sector solutions are in place, and platforms such as the CIT function well. But an understanding of the need for cooperation is unevenly distributed among the Railways, all the more so since cooperation represents an investment of human and financial resources in the future.
My wish for 2017 is for well-designed solutions and equally well-implemented solutions in the rail sector. Only by this means can we make optimal use of the rail system advantages, improving rail’s competitiveness over other modes of transport – and thus improving the customer benefits and profitability of railways, particularly in international transport, at the same time.
As Henry Ford said: Coming together is the beginning. Keeping together is progress. Working together is success.
Contribution
Cesare Brand
General Secretary of the International Rail Transport Committee (CIT)
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