Frank Troch, Thierry Vanelslander, Christa Sys BRAIN-TRAINS Economic impact of rail freight in Belgium Is the sector on the right track? Frank Troch, Thierry Vanelslander, Christa Sys BELSPO project 06/10/2017 – ETC, Barcelona

Agenda Introduction Part 1: Methodology Part 2: Data & framework Part 3: Results Conclusion and further research Part 1 Part 2 Part 3 Conclusion 2/15

Introduction – Problem statement VISION Part 1 European Commission White Paper 2011: Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system Goal: 30% of road transport over 300 km towards rail and inland waterways by 2030 (50% by 2050) In a context of growing transport demand With a 60% emission reduction target Part 2 Part 3 Conclusion 1 2/15

Introduction – Problem statement VISION Part 1 How? Providing an efficient core network for multimodal / intermodal transport Standardization Interoperability FLEXIBILITY One-stop-shop Establish a level-playing field for cross-border freight Part 2 Part 3 Flexibility = increased attractiveness & service-level => critical conditions for rail freight transport development Conclusion 2 2/15

Introduction – Problem statement FIGURES Part 1 Intermodal data? Part 2 Part 3 Intermodal data  companies are not keeping track + confidentiality Long way to go Source: Eurostat Conclusion AVERAGE YEARLY GROWTH (1990 – 2011) ROAD RAIL INLAND WATERWAYS 2,63% 0,48% 4,23% 3 Source: Meersman et. al. (2012) 2/15

Introduction – Problem statement LITERATURE Part 1 Limited quantitative research Focus on single mode of transport Lack of cooperation Uncoordinated policy documentation Part 2 Part 3 …without taking the full logistics chain perspective and also the intermodal concept into account Conclusion “I’ve read every last one of them.” 4 2/15

Introduction – Project context Literature Figures Vision Introduction Part 1 Part 2 Part 3 Conclusion BRAIN-BE 5 2/15

Introduction – Project context Optimal corridor and hub development Economic impact Sustainability impact Market regulation Public adminstration and governance Introduction Scenario's & SWOT Part 1 Part 2 Part 3 BRAIN-BE European context also taken into account necessary conditions and criteria for an effective and attractive rail freight transport Effect of possible rail freight transport developments Operational framework with indicators Define strategies to create success story Conclusion 6 2/15

Introduction – Project context Part 1 Part 2 Part 3 Conclusion 7 2/15

Introduction – Economic impact Context (Rail) freight transport Rest of the economy Direct Indirect Economic value Strategic significance Research objective Develop a methodology to quantify direct and indirect economic impact of rail freight transport in Belgium Research approach Input-Output analysis (Coppens et al., 2007) Part 1 Part 2 Part 3 Double link but decoupling (altough still positive correlation) Chain reaction ‘ripple effects’ Why active in a certain regio  creating added value for this region/economy incorporated into national accountings in many developed countries. used as a tool to study regional economies within a nation, and for economic planning as it can indicate key industries within an economy. Conclusion 8 2/15

Methodology Starting point: supply & demand tables Introduction Starting point: supply & demand tables Example supply table (OUTPUT) Example demand table (INPUT) Part 1 Part 2 Part 3 Conclusion 9 2/15

Methodology Step 1: correct demand table Introduction Step 1: correct demand table Supply table = basic prices (product value) Demand table = commercial prices (incl. taxes, subsidies, transport margins, handling margins) Step 2: Combine tables (sector – sector) Compare supplies and demands Calculate ratios: (Supply of each product made by sector A) x (Relative use of each product by sector B) Part 1 Part 2 Part 3 Conclusion 10 2/15

Methodology OUTPUT INPUT Introduction CHEMICALS – PLASTICS 100 PVC supplied by CHEMICALS * 20 out of 100 PVC used by PLASTICS = 20 50 Plastics supplied by CHEMICALS * 25 out of 250 plastics used by PLASTICS = 5 20 + 5 = 25 Part 1 Part 2 INPUT Part 3 Conclusion 11 2/15

Methodology How to read the INPUT-OUTPUT table? Introduction How to read the INPUT-OUTPUT table? Top – bottom = INPUT reading: Column sector is using x from row sector Left – right = OUTPUT reading: Row sector is supplying x to column sector Part 1 Part 2 Part 3 Conclusion 12 2/15

F.ex. Leontief multiplier 1,06 for Car Industry: Methodology Introduction Step 3: calculate Leontief multiplier Direct + indirect economic impact of a sector Leontief = impact of ∆ final demand F.ex. Leontief multiplier 1,06 for Car Industry: “For each additional EUR (input) of final demand in the car industry, the total output of the economy will increase by 1,06 EUR” Part 1 Part 2 Part 3 Conclusion 13 2/15

Data & framework Every 5 years national input output table Introduction Every 5 years national input output table NBB + Federal Planning Office Rail freight = incl. in NACE 49 “ Land transportation” and NACE 52 “Transport support activities” Confidentiality of data (privacy issues) Cross-border sales (European transport) Data approach Direct data from the national incumbent operator Filter “Rail freight transport” (NACE 49’ + 52’) out of national data Integration in national supply – demand tables of 2010 (pub. 2015) Part 1 Part 2 Part 3 Conclusion 14 2/15

Context for interpretation of the first results Data & framework Introduction Data assumptions Context for interpretation of the first results The incumbent rail freight operator is representing the rail freight sector in Belgium (Market share = 85 %) Companies are only buying and selling products or services linked to their primary NACE classification The activities and structure of B Logistics have not shifted significantly from 2010 to 2011 There is no final rail freight demand from households and the government B Logistics is not applying handling margins within selling prices and no direct subsidies are received  Leontief approximation (overestimation) Part 1 Part 2 Part 3 Conclusion 15 2/15

Land excl. rail freight: 49* Transport support excl. Rail freight: 52* Data & framework Introduction Framework INPUT (demand) 1 … 48 (sectors) Land excl. rail freight: 49* Rail freight: 49’ + 52’ Transport support excl. Rail freight: 52* 50 … 97 (sectors) 1 … 48 (products) No change National DATA Land transport Rail freight transport CUSTOMER Supporting services SUPPLIER 50 … 97 (products) Part 1 Part 2 Part 3 Conclusion 16 2/15

Land excl. rail freight: 49* Transport support excl. Rail freight: 52* Data & framework Introduction Framework OUTPUT (supply) 1 … 48 (sectors) Land excl. rail freight: 49* Rail freight: 49’ + 52’ Transport support excl. Rail freight: 52* 50 … 97 (sectors) 1 … 48 (products) No change Land transport National Rail freight transport CUSTOMER DATA Supporting services 50 … 97 (products) Part 1 Part 2 Part 3 Conclusion 17 2/15

Results – Input-output table Introduction SECTORS LAND (excl. rail) RAIL WATER AIR SUPPORT (excl. rail) 1231 265 59 33 608 69 39 18 75 4 1 71 2095 94 910 198 2034 Part 1 Part 2 Part 3 Main input & output from and to ‘land transport’ & ‘transport support’ Low absolute values (1% of ‘land transport’) Conclusion 18 2/15

Results – Leontief multiplier approximation Introduction Sector Multiplier 2005 (national) Multiplier 2010 (national) Multiplier 2010 (data analysis) Land transport (49) * excl. rail freight 1,73 1,66 1,65* Transport services (52) * excl. rail freight 1,67 1,70* Rail freight transport (49’ + 52’) - 2,99 Inland waterways (50) 1,91 1,63 1,57 Air transport (51) 1,82 1,72 1,74 Construction industry (41 – 43) 2,14 2,06 2,07 Car industry (29) 1,38 1,33 1,36 Part 1 Part 2 Part 3 Conclusion 19 2/15

Results – Sector relationships Introduction Input-output table: Multipliers: Strongest input links Land transport (excl. Rail) Storage and transport services Business supporting activities Strongest output links Land transport (excl. Rail) Metal industry Construction industry Part 1 Part 2 Part 3 Strongest links Weakest links Land transport (excl. rail) Fishery and forest farming Storage and transport services Furniture manufacturing Legal and accounting services Art and amusement sector 0,44 < 0,01 Conclusion 0,22 < 0,01 0,05 < 0,01 20 2/15

Conclusion Ambitious goals, but a long way to go Introduction Ambitious goals, but a long way to go Rail Freight might have high indirect economic effects Multiple connections with all national sectors. Main economic link with land transport and supporting activities. Data = challenge ! Further research: Employment analysis (∆ required jobs for additional output) Sensitivity analysis 2018 update Part 1 Part 2 Part 3 Conclusion 21 2/15

Thank you for your attention. Questions? http://www.brain-trains.be BRAIN-TRAINS BELSPO project