The new SNCF Geodis group will comprise no less than 10 European freight companies, all controlled by the same board, including; SNCF Fret Benelux, SNCF Fret Deutschland, SNCF Fret Italia, Veolia Cargo Belgium, Veolia Cargo Deutschland, Veolia Cargo Italia, Veolia Cargo Nederland, Freight Europe UK, VFLI Romania and ITL Benelux.
There are also reports of SNCF Geodis sniffing around independent operators, such as Arriva in Germany and CTL in Poland.
While you can see the logic of moving as much freight as the trade unions will allow out of SNCF in France, sadly, the latest casualty of this is Luc Nadal whose tenure as directeur of SNCF freight was far too short.
DB Schenker is creating a similar European network with part- or wholly-owned subsidiaries in the UK, the Netherlands, Denmark, Italy, Spain, Poland and Romania, has close links with companies in Austria and Hungary and there were reports last month of a tie-up with SNCB in Belgium. SBB in Switzerland has so far rejected the advances of either group.
The huge SNCF shake-up and DB Schenker preparing its responding move has got privately-owned freight operators worried.
But the key question is what impact will it have on freight cutomers?
If only it was possible to be certain that the creation of two Europe-wide networks of train operations and intermodal logistics providers would provide better service quality Europe-wide, and at more competitive prices, thereby increasing the volume of freight carried by rail. But of course, things are never quite so simple, and experience has proved again and again that competition is the only driving force to achieve this.
The problem with this model is that both SNCF Geodis and DB Schenker complain bitterly about the unfair access arrangements, priorities and charges of the other in their ‘home territories’, and of other monopolies in third countries, while doing absolutely nothing to encourage the opening-up of their ‘own’ networks, terminals and the related commercial and legal regimes to rival third-parties.
To compare it to the road freight transport sector, it would be as if two large nationally-owned and state-supported logistics providers had priority access to major road networks, with exclusive use or preferential charges and priorities of loading and unloading terminals and preferential or exclusive use of frontier crossing points. It would also have the advantage of being owned by the same state holding company which owned the major roads, and which could, therefore, subsidise its own logistics operators without anyone knowing.
Other operators might be tolerated if they ‘behaved themselves’, meaning that they did not complain to governments or regulators about the bear in the room.
If they did, they would find that the incumbents might start getting a little predatory on pricing, especially on the routes on which the other operators are providing alternative services.
Freight customers, from bulk users to the retail sector, all say they want to reduce their carbon footprint, and would use rail if the price and service quality was competitive.
They also know that, if they can get competitive prices and service offers on rail, experience shows that it often works well. With two European monopolies, customers might get a few months of low, and possibly predatory, prices, but in the long term the outlook will be grim.
Experience shows customers do not like monopolies in their suppliers.
So why do freight customers not complain, to their national governments or the European Commission, about this duopoly being created right under their noses?
If they do not stand up to be counted at the critical time, there will be little choice of rail freight operators in the future.
Rail freight monopolies may say that they will reduce the carbon content of their freight flows by 70%, but customers will not stand for the service quality that has lost SNCF around half of its business in the last decade.
In the UK, with the largest operator down to 60% of an expanding market, rail freight grew 60% overall in the same timescale.
Those shippers with the largest volumes to move have the loudest voices in the sector, and those with the loudest voices have the greatest responsibility to use them.
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