Competitive Tendering of Rail Services

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Competitive tendering provides a way to introduce competition to railways whilst preserving an integrated network of services. It has been used for freight railways in some countries but is particularly attractive for passenger networks when subsidised services make competition between trains serving the same routes difficult or impossible to organise. This report examines experience to date from around the world in competitively tendering rail services. It seeks to draw lessons for effective design of concessions and regulation from both the successful and less successful cases examined. The work is based on detailed examinations by leading experts of the experience of passenger rail concessions in the United Kingdom, Australia, Germany, Sweden and the Netherlands.  It also draws on examples of freight rail concessions in Latin America.

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Competitive tendering of regional and interregional

European Conference of Ministers of Transport

The Transport Policy Act of 1988, with its ground-breaking split of railway infrastructure from operations, is commonly considered the starting point for the transformation of the Swedish railway system – from a vertically and horizontally integrated monopoly to a market characterised by decentralisation and intra-modal competition. In this paper, we focus on the reforms and experiences related to the introduction and development of competitive tendering of passenger rail services in Sweden. Competitive tendering was first introduced in 1989 on some regional lines, but since then this practice has become more and more widespread, and now encompasses the majority of both regional and interregional lines. The different types of tendered contracts for these services are described in some detail in the paper. Despite a general lack of bidders participating in most tenders, some important new entries have taken place, from national as well as international firms. For the procuring authorities, it has been a rather long period of learning over time how to improve the tendering process, also affected by Sweden’s entry to the European Union in 1995. Although there are several positive effects to highlight, such as innovation and reduced subsidies, there is also reason to consider problems like unfulfilled bids, the predatory behaviour of some bidders, and sometimes worsened possibilities for passengers to find connecting journeys involving several operators. Moreover, SJ’s (the state-owned operator) remaining monopoly on its so-called profitable lines affects the general competitive situation and prospects for sector development. The paper also includes some general statistical data reflecting the development of the Swedish railways in recent years.

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