Noise – an operational and economical challenge for wagon keepers BeWag & UIP Workshop, April 28, 2014, Brussels Markus Vaerst Chairman UIP Topical Committee „Economic Evaluation“

Conflict of objectives: Freight traffic growth – Noise exposure WHO Revision «ENVIRONMENTAL NOISE GUIDELINES» (2015) EU Commission Roadmap / «Cowi-Study» Dir 2012/34/EU (Article 31 (5)) Connecting Europe Facility Germany NDTAC since December 2012 Coalition Agreement 2013 «Kramer-Report» 2013 Switzerland Amendment «Federal Law on Rail Nosie» (2014) – Ban of Cast Iron Brake Blocks by 2021 Source: AT Kearney, 03.2014 (Study Europ. Tank- & Freightwagons) Source: BAV (CH), 11.2013 20.04.2019 2

Retrofitting existing wagons – the costs “Europe Train” – Cast Iron (CI) vs. LL Source: UIC, Europe Train, 2013 Cost Calculation “Germany” Source: BMVI (MoT DE), March 2014 Retrofitting CI to LL – Consequences: Monitoring: more frequent (i.e. check of the wheel flange height every 50’000km) Unit price: 3-4x higher Durability: 1.75x better Wheel wear: 2x higher Retrofitting CI to LL Assumptions: Number of axles/ wagon: 4 Brake type: Bgu / s Mileage per year: 30’000 km (DE) / 45’000 km (EU) Additional operating costs for LL (compared to CI) / WITHOUT cost for retrofitting : 0,0068 € / axle km 20.04.2019 3

Retrofitting existing wagons – the impact Examples Daily cost CI: 40 € 30 € 25 € 20 € Mileage per year (km) 45’000 / 100’000 Cost increase LL (%) 8,4% 9,6% 13,4% 16,8% (without cost for retrofitting) 18,7% 21,3% 29,8% 37,3% Increase (%) total cost rail 1,7% 1,9% 2,7% 3,4% freight transport 3,7% 4,3% 6,0% 7,5% Assumption: daily cost for wagons approx. 20% of total cost for transport 20.04.2019 4

Retrofitting existing wagons – «carrot and stick»? 100% Compensation of costs for retrofitting wagons with K brake blocks (paid by Government). Compensation of higher operational costs for all TSI NOISE compliant wagons (approx. 0,17 €/axle km) – Beneficiary is RU (and not the Wagon Keeper). Maximum 50% compensation of cost for retrofitting paid by the Government (i.e. 211 € / axle) – Beneficiary is the Wagon Keeper; the operating RU may claim the same maximum for a retrofitted wagon – but, these 50% are „self financed“ by the system: track access charges for trains with less than 80% TSI NOISE compliant wagons are higher (1,5% at present). Higher operational costs are not considered in the German NDTAC System. Maximum of 4‘800 € per retrofitted wagon on Dutch infrastructure – Beneficiary is the RU (and not the Wagon Keeper). Measures are possible according «Kramer-Report» But: Appropriateness and proportionality must be considered (interests of Rail Freight vs. Interests of population) Possible impact on rail freight will be evaluated in a study commissioned by the VDV (DE) – to be published in September 2014. Source: DB Schenker 20.04.2019 5

Retrofitting existing wagons – main «?» Period until 31.12.2020 (2022) Until when will a harmonized European NDTAC System be developed? Which EU MS (apart from DE and NL) will implement such a voluntary harmonized scheme and when? Will such NDTAC scheme sufficiently incentivize the Wagon Keeper (being the entity carrying the cost for retrofitting)? EU and/or MS subsidies for retrofitting and higher operational costs and to which amount? Beneficiary? Transaction costs? Willingness of Lessors / Customers to pay for higher wagon costs? Which measures can be taken by Keepers / RUs to partly reduce higher costs? Which regulatory measures will be taken by which MS and when before 2020 (2022)?? EU COM to submit a proposal by end of 2014 / beginning of 2015. AT, BE, CZ, FR, IT, PL signalled to be interested. Political will and European / national aid laws Expectation of the sector: minimum 50% Wagon Keeper Reasonable Inter- and Intramodal competition (Road and CI vs. LL) Monitoring wheel sets by mobile teams Train composition (only wagons with composite brake blocks) Germany announced regulatory measures (Coalition agreement) 20.04.2019 6

Thank you! NVPG (NL) Marklus Vaerst Chairman Topical Committee “Economic Evaluation” vaerst@cargorail.ch