Last week, the European Court of Justice (ECJ) ruled against Germany’s existing track access charge (TAC) system. Berlin finds itself forced to rethink its approach to pricing on the railways. This comes with a number of challenges, especially for rail freight, which is hoping for clarity in the short term and a better pricing system.
The issue concerns an ECJ ruling against an effective cap on TACs for local passenger rail. This has led to long-distance passenger rail and rail freight having to compensate for the loss of TAC income at infrastructure manager DB InfraGO. An unfair system, according to those disadvantaged.
Following the ECJ ruling, Germany now needs to reform its TAC system. This is proving to be a politically sensitive task: the German states, who fund local passenger rail, fear that they will no longer be able to so if prices go up. Under the existing pricing system, charges for local passenger rail are tied to funds given to states for the local rail operations.
The transport ministry is aiming for a renewed system by 2027: “Our goal is and remains to present a new track access charge system by the timetable change in 2027”, minister Schnieder said earlier.
That timeline does not satisfy the rail freight sector. These companies are hoping for short-term clarity for their own financial planning. Without knowing what’s coming, such planning becomes guesswork. If they plan ahead with a price that’s too high, they could lose customers. If they calculate with a price that is too low, they might have to compensate for additional costs later, writes German publication DVZ.
Full-cost or marginal-cost?
Lastly, there is the question of the TAC model. Currently, Germany charges infrastructure usage fees on the basis of the full-cost principle. The rail freight industry has spoken out in favour of a marginal-cost pricing system, where companies pay only for the infrastructure costs added by an additional train and a possible efficiency markup. A study by INFRAS, commissioned by rail freight association Die Güterbahnen, has shown that this could reduce TACs by 54% for freight operations.
The marginal-cost system is the standard pricing model in Europe. However, the German transport minister has expressed concerns that its implementation in Germany would lead to a major financing shortage for the railways.
Die Güterbahnen claims otherwise: “Contrary to repeated claims by the Federal Ministry of Transport, such a switch would not create a funding gap, and therefore there would be no additional burden on the federal budget if three existing federal funding streams were consolidated simultaneously”, the association wrote.
Supposedly, the eight billion missing euros are already provided for indirectly. The German government provinces retroactive TAC subsidies, the local public transport funds and planned maintenance subsidies.
“Track charges based on marginal costs lead to more traffic and thus higher revenues. The current full-cost system, on the other hand, stifles traffic and makes the network operator sluggish. The figures show: The alleged funding gap is a political scare tactic – nothing more”, Die Güterbahnen’s Managing Director Peter Westenberger commented earlier.