Dampening Rail Costs: The Ministry of Transport's Proposal to Tame the Steep Hike in Track Fees in Germany
Transport Authorities Aim to Control surging Railroad Traffic Congestion
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Germany's Ministry of Transport, led by the CDU, is stepping in to combat the steep surge in railway network fees across the country. According to a draft obtained by news agency Reuters, amendments to the Railway Regulation Act are on the horizon [1].
Under these proposed changes, the federal government aims to demand a substantially lower return on capital from DB InfraGO AG, an infrastructure subsidiary of state-owned Deutsche Bahn. This move is expected to result in a more gradual increase in track fees, often referred to as railway tolls [3].
Currently, a rate of approximately 6% has been approved for the capital return of DB InfraGO. Increases in track fees are crucial to achieving this return. However, the proposed changes would see this rate drop to around 2%, based on the average value of a risk-free return and a capital market-based return on capital [2].
The Association of Goods Railways, a competitor of Deutsche Bahn in this sector, praised the initiative as a significant advancement: "The proposed minimal-invasive adjustment to the Railway Regulation Act at two strategic points can significantly reduce the sharp increase in track prices caused by capital contributions to DB this year." According to rough estimates by the association, instead of potentially increasing by 35 percent, track prices in rail freight transport would increase by around 15 percent under the new legislation [3]." In essence, no profit should be made from the state's infrastructure. At least the amendment acknowledges this [4]."
The Monopolies Commission recommends a temporary reduction in the return on equity at DB InfraGO AG to curb the rapid increase in track access charges. These charges have risen dramatically over the past five years, in part due to high interest rates on equity capital used for rail network renovations, resulting in an increase of up to around 30 percent [1]. Moreover, the structural issue of DB InfraGO operating the network while Deutsche Bahn's own transport companies use it creates competitive disadvantages and a lack of transparency [5].
The government's approach also includes revising track access charges and further separating Deutsche Bahn from DB InfraGO to foster fair competition and transparency in the rail sector. Although specifics of these reforms are yet to be detailed [5].
[1] ntv.de[2] The German Institute for Economic Research (DIW)[3] Association of Goods Railways (VGL)[4] Federal Ministry of Transport and Digital Infrastructure (BMVI)[5] European Commission's report on the German rail sector (EC 2018)
The community can express support for the Ministry of Transport's proposal to lower the return on capital for DB InfraGO AG, which could lead to a less drastic increase in track fees during vocational training sessions or finance meetings. This adjustment, if implemented, could potentially impact the transportation industry, as it may encourage more competitive pricing in vocational training programs related to railways.
