Railway Market Opening

and Organisational

Reforms in Sweden

Dr. Gunnar Alexandersson

Senior Researcher

Stockholm School of Economics Institute for Research

gunnar.alexandersson@hhs.se

Presentation outline

• Railway liberalisation milestones

• Overview of changes in regulatory framework

• Current organisation

• Experience and effects

• Conclusions and current issues

Swedish railway liberalisation

– some milestones

1988 Vertical separation of track infrastructure

(Banverket) from operations (SJ)

Decentralisation of responsibility and

resources to regional public transport authorities

1990 First tenders for regional passenger services

1993 First tenders for interregional (long-distance)

passenger services

1996 Deregulation of freight services

2001 Separation and corporatisation of SJ’s divisions

Swedish railway liberalisation

– some milestones (contd.)

2007 Market opening for night trains and chartered trains

2009 Swedish Transport Agency established, with

multi-modal safety and regulatory responsibilities

Market opening for weekend traffic and international

passenger services

2010 Multi-modal infrastructure manager Swedish Transport

Administration (Trafikverket) established (merger

between Banverket and the Road Administration)

2011 Market opening for domestic passenger services, with

full effect from December 2011

2012 New law on public transport (affecting interface

between tendered services and commercial services)

Rolling stock

manufacturing

SJ ASEA

Railway

operation

Swedish railway market 1988P

as

sen

gers

Fre

igh

t

Source: Ole Kjörrefjord and own development

SL Järnvägar

TGOJ

Swedish railway market 2019

Source: Ole Kjörrefjord and own development

Pa

ss

ag

era

reG

od

sk

un

der

Real estate

management

Rolling stock

manufacturing

Rolling stock

management

Licenses, safety.

market monitoring

Infrastructure

management

EuroMaint Rail

Mantena

Bombardier

Alstom

Jernhusen

TrainAlliance

A-train

SL

SJ AB

Transdev

Arriva

MTR Express

A-train

NSB/Tågkomp.

EuroMaint Rail

Bombardier

Motala Trains

Bombardier

Alstom

Stadler

Siemens

Ansaldo

Transitio

SL

SJ AB

DSB

Swedish

Transport

Administration

Swedish Transport

Agency

Green Cargo

Hector Rail

TÅGAB

Real Rail

AlphaTrains

Mitsui

Railpool

Hector Rail

Green Cargo

InfraNord Infratek

Strukton VR Track

NCC

Infrastructure

construction and

maintenance

Planning and

tendering of

public transport

Train operation

A-train

IBAB

Swedish Competition Authority

Swedish Consumer Agency

DSB Vedligehold

Midwaggon

Motala Trains

mgw Service

IT services

Cleaning

Rolling stock

maintenance

Financing

Consultancy services

Rolling stock

refurbishment

DSB Vedligehold

MiTrans

Regional

public

transport

authorities

Overview of changes in regulatory

structure (rail transport market access)

Part of rail transport market 1988 2019

Passenger services

Regional (non-profitable) SJ holds monopoly and receives subsidies

Procurement by competitive tendering (competition for the tracks); since 1990

Open access (competition on the tracks); since 2011

Inter-regional (non-profitable) SJ holds monopoly and receives subsidies

Procurement by competitive tendering (competition for the tracks); since 1993

Open access (competition on the tracks); since 2011

Inter-regional (profitable) SJ holds monopoly Open access (competition on the tracks); implemented step-by-step 2009-2011

Freight services SJ holds monopoly Open access on all lines (competition on the tracks); since 1996

Current organisation of the Swedish railway

sector – some characteristics

• Institutional vertical separation between infrastructure and train

operations (since 1988)

• Mixed market access models (competition for and on the tracks)

• National multi-modal authority Trafikverket (Swedish Transport

Administration) is the main (80%) rail infrastructure manager, with

strong focus on procurement from external contractors

• Trafikverket also handles the annual path allocation, completely

independent of any train operating company

• Train operating companies (and other organisers of train services)

apply for paths and pay track access charges

• Decentralised responsibility for regional passenger train services to 21

county public transport agencies (PTAs, controlled by municipalities

and counties with their own taxation power)

• Railway stations owned/managed by several different actors; the

most important ones by real-estate company Jernhusen

• Increased investments in rail infrastructure and rolling stock

• Strong local and regional commitment to develop the

supply of passenger services

• Strong growth in demand

• Improvements in (for example) productivity and safety

• Innovations, new pricing models

• Punctuality a recurrent issue of concern

• In recent years, a decrease in average speed of trains

(mainly due to capacity constraints)

• Appearance of several new entrants, reducing the market

share of the incumbents

• Tendering leading to reduced need for operating subsidies

(initially 10-25%) but also strategic and faulty bids

• Increased supply and falling prices following open access

competition

Experience and effects of reforms

Rail infrastructure investments and

maintenance

Source: Trafikverket, and own calculations

0,0

2,0

4,0

6,0

8,0

10,0

12,0

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

Exp

en

dit

ure

(b

illio

n S

EK, 1

98

9 p

rice

s)

New investments Reinvestments Maintenance

Source: Trafikanalys

Safety

0

20

40

60

80

100

120

140

160

180

200

Accidents, total

Derailments

Development of demand (1)

Source: Trafikanalys

80

100

120

140

160

180

200

220

Pas

sen

ger

km a

nd

to

nn

e k

m, i

nd

ex (

19

90

=10

0)

Passenger transport Freight transport

13.8 billion

passenger km

21.7 billion

tonne km

Source: Trafikanalys

0

50

100

150

200

250

300

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

Pas

sen

ger

km a

nd

to

nn

e k

m, i

nd

ex (

19

90

=10

0)

Regional passenger Long-distance passenger Freight

Development of demand (2)

Regional train systems 1990-2016Nya regionala

tågtrafiksystem

1 januari 2000

Stockholm

Göteborg

Uppsala

Gävle

Sundsvall

Kalmar

Linköping

Karlskrona

Halmstad

Helsingborg

Malmö

Nya regionala

tågtrafiksystem

1 januari 1990

Stockholm

Göteborg

Halmstad

Nässjö

Helsingborg

Malmö

Nya regionala

tågtrafiksystem

1 januari 2010

Stockholm

Göteborg

Uppsala

Gävle

Sundsvall

Kalmar

Oslo

Linköping

Helsingborg

HalmstadVäxjö

KarlskronaMalmöKöpenhamn

Nya regionala

tågtrafiksystem

1 januari 2016

Umeå

Stockholm

Göteborg

Malmö

Uppsala

Gävle

Sundsvall

Kalmar

Köpenhamn

Linköping

Luleå

HelsingborgKarlskrona

HalmstadVäxjö

Source: Oskar Fröidh, KTH

Punctuality and operated trains

Source: Trafikanalys

0

100

200

300

400

500

600

700

800

900

1000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Nu

mb

er

of

op

era

ted

pas

sen

ger

trai

ns

reac

hin

g e

nd

d

est

inat

ion

Tho

usa

nd

s

Pu

nct

ual

ity,

sh

are

(%

) o

f p

asse

nge

r tr

ain

s w

ith

m

axim

um

de

lay

of

5 m

inu

tes

Operated trains Punctuality (5 min level)

0

25

50

75

100

125

150

1990 1995 2000 2005 2010

Ave

rag

esp

ee

d,

km

/h

Source: Nelldal et al (2013)

Speed of passenger trains

Fastest train

All connections

Source: Nelldal et al (2015)

CPTA monthly

travel card

SJ 2000

highest price

SJ 2000

lowest price

SJ IC/Regional

normal price

SJ 2000

discounted

price

Ticket price development

SJ Night train

Market entry in passenger services

Tendered services

MTR Express

• 8 departures per day since

August 2015

• New non-tilting Flirt trains

from Stadler

• Travel time: 3h 30 min

• 1 ticket class and 3 types of

flexibility/service level

• On average 25 % cheaper

than SJ (March 2015-June 2016)

• Punctuality (July-Sep 2016)

(5 min): 88%

(15 min): 95%

• 18 departures per day

• Refurbished tilting X2 trains

from Bombardier

• Travel time: 3h 10 min

• 2 ticket classes and 3 types

of flexibility

• Prices falling about 13 %

• Punctuality (July-Sep 2016)

(5 min): 73 %

(15 min): 88 %

• 7 % increase in passengers

2016

SJ

Competition on the tracks Stockholm-Gothenburg

Conclusions and current issues

• 30 years of reforms in the Swedish railway sector

(driven by internal needs and EU legislation) have

resulted in a highly vertically and horizontally

separated sector and a very open market

• A number of improvements in performance can be

seen, but also a fair amount of issues to be handled:

➢ Capacity constraints and path allocation

➢ Growth of tendered services sometimes at the

expense of commercial services

➢ Backlog of track infrastructure maintenance

➢ Division of roles and responsibilities; cooperation and

coordination between actors

➢ Information and support to passengers, in particular

during disruptions