Public funds running out for rail operators

European rail operators might soon have to raise freight rates to pay for key infrastructure upgrades as public coffers have run dry.

Addressing members of the steel industry at a conference in Brussels, Johannes Ludewig, executive director of the community of European Railway and Infrastructure Companies (CER), said that "elephant-sized" operators such as DB and SNCF had to "wake up" and realise that there was "simply no public budget to pay for all the necessary upgrades".

The former CEO of DB said: "There’s always the fundamental problem of infrastructure and nobody really knows how to provide the necessary investment.

"We are discussing trans-European networks and other projects - we have wonderful projects and plans - but at the end the financial resources to do it are really limited." Reinhard Klimmt, former federal minister of transport for Germany agreed that there was now a declining level of financial support but said the sector had to get better at using the resources it already had.

"We all agree that there is a lack of financial resources, but we need to improve everything we have already, " he said.

He added that better logistics management and IT systems that helped increase efficiency had to be adopted.

Ludewig said spending on transport infrastructure had fallen across Europe. "If you look at what is spent on road and rail infrastructure in relation to GDP, you will see this is either flat or decreasing. There is a fundamental contradiction in policy.

"The infrastructure determines to a large extent what the railway company can offer to its customers in terms of quality and reliability. What is really irritating is that the financial resources to develop the infrastructure to remove bottlenecks and extend the networks are simply not there." Increasing rates was the only realistic option left he said: "What the transport sector has to realise is that what it can expect from public budgets in the future will be limited.

Those using the infrastructure will have to pay more.

"The price of transport is too low in Europe to finance what we need for the future. The state will not be in a position as in the past to finance the infrastructure for road and rail.

This is not popular but it is the reality, and the quicker we wake up and realise this, the better for all of us."