ETCS Report

8/13/2019 ETCS Report

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Implementingthe European Train Control System

Cost/Benefit analysis

ETCS migration strategies oncorridors and at national level


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Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Executive summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

1. Objectives and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2. Data available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

3. Methodology to assess Traction Units associated with

corresponding Corridors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

4. International Rail Corridor analysis . . . . . . . . . . . . . . . . . . . . . . . . . . 17

5. Analysis of Results in the context of an accelerated

programme on International corridors . . . . . . . . . . . . . . . . . . . . . . . 23

6. National Migration Strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

7. Global Assessment of Cost of Migration . . . . . . . . . . . . . . . . . . . . . 28

8. Other Economic Global Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

9. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Appendix A: SWOT analysis from the document prepared

in connection with UIC ERTMS Conference Leipzig 10-11 December 2003. . . . . . . . . . . . . . . . . . . . . . . . . 35

Appendix B: Corridor analysis of additional costs for faster ETCS

migration and associated on-board savings . . . . . . . . . . . . . . . . 39

Appendix C: ETCS migration from a practical perspective . . . . . . . . . . . . . 53

Appendix D: Global assessment of cost of migration . . . . . . . . . . . . . . . . . . 59

Acronymes and Abbreviations: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79


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Foreword

The theme of this years UIC ERTMS Conference, Managing the Migration, has been chosen because it

serves to highlight that the progressive introduction of ERTMS over the coming years in Europe will need to be

effectively managed to ensure that optimum benefits are realised from the sizeable investment, at the earliest

opportunity. It also focuses attention on the national and international aspects of achieving an interoperable

European railway network, within a reasonable time horizon, which will facilitate an expansion of rail traffic.

At last years Conference at Leipzig, UIC presented participants with a report and survey of current ETCS

implementation plans in Europe in order to stimulate the decisionmaking process for the future (entitled:

Implementing the European Train Control System Opportunities for European rail Corridors).This years

Conference report, prepared during the course of 2004, builds on the previous work and further explores the

business cost/benefits of ETCS Migration strategies, from the perspective of the railway organisations within theUIC. In this respect, it is complementary to the macro-economic perspective undertaken in the recent cost/benefit

analysis carried out by AEIF, as part of the economic appraisal accompanying the control, command and signalling

elements of the Technical Standard for Interoperability for Conventional Rail.The UIC report has been prepared

with the assistance of a number of its Members and the input of CER and EIM.

From the railway actors perspective, it is generally accepted that ETCS is the right long term technical solution,

but that the migration from existing national systems will be difficult and costly. Its implementation will necessitate

sizeable financial assistance from Member states and the European Union to enable this transition to be made

without overburdening the debt on the railway operators and infrastructure managers, who will have to bear the

burden of the costs in the medium term before the long term benefits from a standardised signalling system are

realised.The UIC study has examined five differential cost scenarios, using four different financial discounting rates,

over a forty year period covering an expanded Trans European Network area, inclusive of New Members States

and pending accession countries.The most probable scenario postulates that the net extra cost to the railways,

expressed in Net Present Value, could be 12.5 billion Euros.While this is a substantial additional sum, on top of

other investment priorities, it has to be viewed within the context of other macro-economic parameters and

decisions that embrace future transport sustainability, quality of life and connectivity within a rapidly changing

European landscape.

Another aspect of this report is its analysis of the strategy of migration, based on unifying the signalling systems

along important corridors. In this respect the relationship between trackside and on-board investment is examined.

The conclusion, of this part of the report, is that there is a need to be selective in the choice of corridors and in

the concentration of investment to ensure the earliest realisation of track-side and on-board savings.This arises

from the fact that, to achieve a reduction in the number of signalling systems along any particular corridor, there

must be a long-term co-ordinated parallel strategy of trackside and on-board investment, starting as early as

possible, to reap the benefits in 10 - 20 years time. It is clear that such a long range investment commitment


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from the railway actors will only be achieved if the vision is shared and confidently underpinned by the character

of decision making at Member State and European level. It is also necessary to correlate other investment

requirements with the decision making process relating to ERTMS, as part of a full analysis of corridor

development needs.

It is therefore satisfying to report that in the period between the last UIC Conference in Leipzig and todays

conference in Rome we have experienced a positive engagement between the Member States, the European

Commission, the railway actors and the supply industry to plan a realistic course for ERTMS deployment on a

backbone of important economic corridors, which will, in time, link each Member state and new accession

countries along an interoperable railway network. Reaching final agreement, to commonly aspire to this vision, will

facilitate development at national level and stimulate the prospect of new business ventures based on the

exploitation of the potential of the international rail business.The fruits of this engagement should result in thesigning of a Memorandum of Understanding between the parties to constructively develop an ERTMS migration

approach based on a sound business perspective, underpinned by solid commitments on funding.

UIC will continue to contribute to the development of such a comprehensive approach and will actively assist in

promoting a wider understanding of the technical issues involved. It is anticipated that by the time of our next

ERTMS Conference, planned for the spring of 2006, we will be able to offer further insights into this challenging

project.

In parallel with this exciting opportunity in Europe, UIC has, through its activities at a World level, engaged in a

broadening of the horizon toward the East and West through its promotion of new freight transit corridors,

reinforcing Europes links with North America and Asia. It is indeed a welcome addition to our Conference that we

will have speakers on the platform from India and China, which demonstrates the broadening interest in ERTMS

beyond the borders of the European Community.

The location of the 2004 UIC ERTMS Conference in Rome and the enthusiasm, pride and generosity shown by

our host Rete Ferroviaria Italiana (RFI), in making the experience of 300km/h running with ETCS Level 2 on the

new high speed line between Rome and Naples an attractive part of the conference programme, attests to their

confidence in this new technology.

I hope that you enjoy the Conference and find the subject matter of this report stimulating.

Philippe Roumegure

UIC Chief Executive

15 December 2004


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Executive summary

The TSIs for High speed and Conventional rail (pending) prescribe the implementation

of ETCS as a common signalling system in Europe to enhance interoperability between

rail networks in the future.

It is generally accepted that ETCS is the right long term technical solution, but that the

migration from existing national systems will be difficult and costly and many networks

are questioning whether the net commercial result will be positive.

This study takes, as its starting point, the assumption that the force of the EU

Directives precludes any consideration of non-compliance while, at the same time,

appreciating the position held by certain railways with regard to economic viability.

Accordingly, the assessment is limited to the following boundary conditions: Establishing whether there are benefits (or less cost) involved in proceeding with a

more co-ordinated and integrated approach along particular international corridors

to mitigate system wide costs and reduce operational hindrance.

Examining whether there is a financial/economic case for justifying a faster rate than

might be otherwise planned or required by minimalist compliance with the Directives.

Assessing the appropriate combination of on-board and track-side migration towards

ETCS having regard to the normal pattern of replacement of life-expired assets which

must, in any event, be planned to maintain the integrity of the rail system.

Quantifying the order of magnitude of the costs involved in the migration process as

a basis of a case for special EU support during the transition period.

The report starts by examining 10 corridors covering 30,563 equivalent single track km

and representing about 12% of the overall combined total network length of the

countries covered by the corridors.These corridors represent a correspondingly higher

proportion of the TEN network, of the order of 20%, and thus provides a good cross-

section of the entire pan-European network.

The additional cost of installing ETCS, in an accelerated programme, in parallel to

existing national systems, is quantified.This strategy would close many of the gaps in the

10 selected corridors, where some ETCS is already planned for completion by the end

of 2008.The study reveals that the cost would be of the order of 638 M on the

track-side. This cost is over and above the cost of the investment, in the current

national (or bilateral) plans that have already been approved, or are on the point of

approval.This extra cost works out at an average of 46.6 k per additional equivalent

single track km (93.2 k per double track km) for the sections studied.

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The cost of converting on-board equipment, in such an accelerated programme, would

be of the order of 8.8 billion for the entire fleet using the 10 corridors

studied. This would equip about 13,650 traction units (28% of the national fleet in the

same networks). It is estimated that approximately 1500 of these (11%) would be

involved in international cross border operations.The cost of only converting this

reduced fleet would be 1 bil lion .

The conclusion drawn from this part of the study is that, in general, the cost of

accelerating the ETCS Programme, by parallel installation on the track-side, will not be

covered by the savings on international on-board systems.Therefore the pace of

migration, in the immediate future, will more likely be dictated by national perspectives

based on life expiry rates of assets and considerations of safety and capacity

improvement.A global cost benefit analysis, based on a phased programme of ETCS Migration,

synchronised with replacement of life expired assets and traction overhaul intervals, is

then carried out.This analysis assesses the difference in the costs and benefits which

would result from a decision to unilaterally implement ETCS over the entire TEN

network.The potential global impact on the railway infrastructure Managers and

Undertakings (i.e. the internal railway system) is determined in Net Present Value

terms.The analysis restricts itself to the potential direct impact of ETCS and does not

include general macro-economic and societal benefits, which might ensue from

interoperability and modal shift.The latter are more speculative and could not be

attributed to ETCS alone.Therefore the report quantifies the net cost of migration to

the railway companies so as to determine the funding support that would be required

to flow from Members States and the EU towards the rail system.

A number of scenarios are projected over a 40-year time horizon.The probable

scenario suggests that the implementation of ETCS would result in a negative Net

Present Value (NPV at 6%) of 12.5 billion . On this basis, the railways within an

expanded European network of 27 Member State, plus neighbouring networks, would

need an injection (funding) of this amount of money purely to maintain commercial

equilibrium with to-days position.

Taking the broader economic factors into consideration, the study considers that the

greatest benefits (or least cost) are likely to arise from an integrated strategy involving:

no further development of national systems;

focusing on the busiest corridors and the laying of ETCS in parallel to national

systems on the sections of smallest extent;

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7

systematically reducing of the number of on-board systems;

creating a mass market for ETCS and enhancing rail safety through replacement of

life expired or obsolete national systems;

setting a realistic programme of traction fleet conversions to the ETCS C/C system.

Acknowledging that each network is in the process of elaborating its own national

rollout out strategy for ETCS migration, the report suggests that the following

provisions may be considered as a prudent approach to migration:

order new rolling stock equipped with ETCS or at least prepared for ease of fitment,

and equip or prepare existing fleet at major overhaul;

roll out an ETCS programme for track side migration at least in line with the life

expiry of the signalling system.

However, it is unlikely that this approach will be sufficient, both on track-side and on-board, for the highly integrated networks, or portions of networks, and a faster path

will be appropriate.

The report concludes by observing that the cost of accelerating the ETCS programme,

by parallel installation on the track-side, will not generally be covered by the savings on

international on-board systems and so other considerations need to be taken into

account. However, it considers that the strategy of migration to ETCS is correct from a

business and technical perspective as it unlocks individual networks from the technical

perpetuation of bespoke systems and lays the basis for a common safety signalling

standard for the future.

It also concludes that the broader economic benefits will not be maximised by an

apathetic uncoordinated approach to ETCS and that the railway companies must review

the current situation constructively and prepare, in a united fashion, for the appropriate

engagement with industry and the EC in relation to the ETCS migration programme,

system specification and interchangeability issues and cost.


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1. Objectives and Scope

The Technical Standards for Interoperability (TSIs) for High speed and Conventional rail,

have, as an objective, the implementation of ETCS (European Train Control System) as a

common signalling system in Europe to enhance interoperability between rail networks

in the future. It is also anticipated that wider benefits will include reduced specification

cost, speedier cross acceptance and economies of scale in procurement.The increased

safety and capacity potential of ETCS will also be an important factor, especially for

networks with less modern signalling systems.

It is generally accepted that ETCS is the right long term technical solution, especially

where an effective cost relationship to route benefit can be demonstrated. However,

the migration from existing national systems will be difficult and costly and many

networks are questioning whether the net commercial result will be positive.The speedwith which networks progress towards ETCS implementation will be conditioned by

the persuasiveness of the financial appraisal for their respective businesses.

This study takes, as its starting point, the assumption that the force of the EU

Directives precludes any consideration of non-compliance while, at the same time,

appreciating the position held by certain railways.Accordingly, the assessment is limited

to the following boundary conditions:

Establishing whether there are benefits (or less cost) involved in proceeding with a

more co-ordinated and integrated approach along particular international corridors

to mitigate system wide costs and reduce operational hindrance.

Examining whether there is a financial/economic case for justifying a faster rate than

might be otherwise planned or required by minimalist compliance with the Directives.

Assessing the appropriate combination of on-board and track-side migration towards

ETCS having regard to the normal pattern of replacement of life-expired assets which

must, in any event, be planned to maintain the integrity of the rail system.

Quantifying the order of magnitude of the costs involved in the migration process asa basis of a case for special EU support during the transition period.

To achieve these aims it has been considered appropriate to:

Examine a fast/integrated ETCS migration scenario.

Analyse the cost implications of the fast/integrated migration.

Substantiate the corridor philosophy and identify corridors where a faster ETCS

migration strategy could be the correct decision on the balance of financial cost.

Examine the least cost/disruptive opportunities for national migration towards ETCS,

afforded by the replacement of assets and the upgrading of the traction fleet at major

overhaul.

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10

Table A

Control/Command Systems overview per country


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11

Table Asuite


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12

3. Methodology to assess Traction Units

associated with corresponding Corridors

Detailed data is currently unavailable to accurately determine the total amount of

traction units, which would be affected by a decision to introduce a new signalling

system (such as ETCS), on a particular corridor.Therefore it has been necessary to

devise a methodology to calculate this figure with sufficient accuracy and confidence for

use in a global business case scenario.The following approach has been taken:

a) The total number of traction units per equivalent single-track km has been calculated

for each country.This ratio (last column in table A)

] combined with a global perspective of the network

concerned, offers an empirical indication of the overall network characteristic.

A low value of indicates: peripheral/dedicated network traffic (0.05< 0.15).

A medium value of indicates: intermediate network traffic (0.15< 0.25).

A high value of indicates: highly integrated network traffic (0.25< 0.36).

The following table B has been created on this basis:

Table B

total number traction units

total length single track=[


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13

It should be noted that large networks, such as in Germany, France, Great Britain and

Italy will display all three characteristics in different parts of their networks, however

their national averages tend to be consistently in the low to medium range.

b) It is then necessary to assess how the systematic introduction of a new signalling

system influences the amount of traction units, which have to be converted, in

relation to the national average per km.The general assumption is that the

introduction of ETCS will have the same repercussion on rolling stock (in terms of

number of traction units to be equipped) as the systematic introduction of new

signalling systems in the network had in the recent past.To determine this general

relationship for ETCS, the amount of actual conversions made in a sample of

representative railways, associated with their own national signalling systems, hasbeen reviewed in order to derive the multiple factor - (above the national

average) for the three types of network characteristics outlined above at each stage

of track conversion.Therefore actual figures, for other systems, have been used to

plot a range of curves, which are utilised in the ETCS study.

In this way the graph multiple factor vs.% of track converted to ETCS has been

created as a best fit compromise using selected information from table A (see

Graph 1 below).

In accordance with the multiple factor definition, the percentage of traction units

converted is calculated with respect to the percentage of track converted for each

multiple factor curve.

In this way the graph percentage of traction units converted to ETCS vs.% of track

converted to ETCS has been created (see Graph 2 below).

For a given percentage of track converted to ETCS three different percentages of

traction unit conversion is reported depending on which type of network is being

considered.


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14

Graph 1

Multiple Factor

Graph 2

ETCS Conversion


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Graph n. 1 is consistent with intuitive understanding. It shows that at the early stage of

a new signalling system (ETCS in this case) a higher number of traction units per km

needs to be converted than the national average.This reduces towards the national

average figure as more of the system is converted.The actual multiple is significantly

affected by the network traffic characteristic and so three curves are drawn, which can

then be appropriately utilised for the analysis on each specific corridor.

For obvious and intuitive reasons when plotting the three best fit curves an asymptote,

whose equation is the line =1, has been imposed. In fact the multiple factor cannot

assume values less that 1.

Graph n. 2 is derived in correspondence with Graph n. 1 by calculating the % of total

fleet converted, resulting from the application of the multiple factor.This also offers abalancing check on the appropriateness of the multiple factor curves since the inverse

graphs of cumulative fleet conversion display a characteristic, which is again consistent

with intuition.

In this case, also, some restrictions have been placed on the best fit curves.The three

curves are bounded by the horizontal asymptote line v=100 and they start from the

point v0 (0;7); that is to say that a minimum of 7% of traction units is necessary from

the very beginning (track length tending to zero).

It is important to point out that the two graphs represent a distillation of information

drawn from a number of networks, with different levels of advancement of national C/C

systems.This has been used to plot a common set of curves for use in studying the

migration of the on-board C/C system in a broad economic business case scenario for

ETCS. It is accepted that, in the case of a stand alone national project involving, say, the

first 100 km of ETCS, a specific analysis of the percentage of the fleet to be converted

would be necessary. In this regard it can be speculated that the first step towards ETCS

on the trackside will necessitate a certain proportion of fleet conversion, possibly of

the order of 5-10%. However, this specific national aspect has no significant impact on

the global model in this analysis.

c) A third step in determining the cost/benefits associated with the timing of the ETCS

trackside installation and on-board equipment is to estimate the proportion of the

fleet which operates on the corridor and crosses national boundaries. Potential

savings in the cost of future on-board C/C equipment could be anticipated on the

international fleet arising from a unified signalling system.

To assess this figure, in the absence of specific data, it has been necessary to examine

national and international traffic-kms (passenger and freight) in each network and

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16

propose a relationship between the traction units utilised for freight and passenger

traffic.The data have been extrapolated from UIC statistics using certain assumptions

as to fleet distribution.The resulting table C is shown below.

Table C

Network international traffic factor

Note: Network International Traffic Factor = 0.25 Freight ratio + 0.75 Passenger ratio


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4. International Rail Corridor analysis

The 10 corridors outlined in the document: Implementing the European Train Control

System - Opportunities for European Corridors, presented at the UIC ERTMS

Conference held in Leipzig on 10-11 December 2003, have been taken as the basis of

this analysis.The ETCS projects on those corridors, where decisions have already been

made, or are in the process of been taken, have been noted.The financial cost/benefits

of implementing an accelerated track side programme over and above these plans has

been examined.The 10 corridors cover 30,563 equivalent single track km and thus

represent about 12% of the overall combined total network length of the countries

covered by the corridors.They represent a correspondingly higher proportion of the

TEN network, of the order of 20%, and thus provide a good cross-section of the entire

pan-European network.For each corridor a spreadsheet has been produced showing information on

infrastructure and estimates of ETCS track-side and on-board costs.These costs have

been mainly obtained by UIC either directly from members or from AEIF.Where

neither was available an estimate has been made within the range of the figures that

have been supplied.This has allowed an overall estimate to be made of the additional

financing cost of advancing the track-side migration in comparison with the potential

on-board savings on C/C equipment on the international fleet.

The investment cost of rolling out a GSM-R network has been largely excluded from

the analysis for the following reasons:

a) Modern Telecommunications systems are, today, considered as an essential part of

the basic infrastructure of many railways. Future reliance on such systems will

transcend ETCS applications.

b) The additional investment to support data transmission for ETCS levels 2 and 3

should be somewhat off-set, in the future, by reduced track-side equipment, such as

the elimination of line-side signalling. However, the exact relationship between the

costs and benefits will be a function of the extent of commercial exploitation of

GSM-R and the actual reduction in the signalling equipment.

c) Many networks intend to use their GSM-R platform to leverage safety and

productivity gains in other non-signalling related area.

Accordingly, having regard to the complexity of assigning an appropriate proportion of

GSM-R investment cost to ETCS, it has been decided to avoid a discussion on the relative

merits and savings of various levels of ETCS and their dependency or otherwise on GSM-R.

The results of all the individual corridor sheets (see Appendix B to this document) are

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18

brought forward to two summary tables D1 and E1 where a complete analysis has

been performed per corridor and per country respectively. Each spreadsheet was

mutually electronically connected forming a unique tool described in figure 1. A

reduced subset,

involving a re-analysis

of four corridors,

which offer the most

potential, is also

shown in tables D2

and E2.These latter

corridors were first

examined as part ofglobal proportion

(20%) of the TEN

network and later re-viewed on a specific individual corridor basis.

A higher proportion of rolling stock (i.e. highly integrated network traffic multiple

factors) has been assigned in the re-analysis to assess the sensitivity of this on the

results.

The working method was iterative: hypotheses agreed at the ETCS migration strategy

group meetings were implemented in the model, the

model run and the results evaluated until a final and

definitive agreement was reached (see the

following figure 2).

Fig.1The migration tool

Fig.2


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19

Table

D

1

Corr

idorsanalysisofadditionalcostsforfas

terETCS

migrationand

associatedon-board

savings


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20

Table

E

1

PerCountry

analysisofaddition

alcosts

forfasterETCSm

igration


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21

Table

D

2

4-Corrido

rre-analysisofadd

itionalcostsforfasterETCS

migrationandassociatedon-board

savings


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22

Table

E

2

PerCo

untry(relatedtoth

e4corridors)re-analysisof

additionalcos

tsforfasterETCSm

igration


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no financial benefits from an accelerated programme purely on the basis of savings of

on-board equipment of the international fleet.This means that, as a general

philosophy, unilateral premature replacement or parallel installation of track-side

equipment will not be an optimum financial choice.

b) Corridor 3:PBKAL (fig. 4) displays the most immediate potential for considering an

accelerated migration programme, especially if the figures estimated for the number

of international traction units and

on/board cost savings are

substantiated. It should be noted that

the European Commission has also

expressed an interest in examining thiscorridor.They have sought to establish

the cost of closing all remaining gaps

(including TVM areas, which were not

considered in the UIC study to date).

A more detailed analysis of the rolling

stock savings need to be made,

especially the specific units operating

between Brussels and Paris.

c) Three other corridors should be further evaluated in more detail as the international

component may still represent a strong factor when considered in conjunction with

any other national benefits.A co-ordinated strategy along all, or part, of these routes

in the future could present the opportunity to reduce the overall cost of ETCS

migration for each of the adjoining networks,

especially if additional national projects result in

increasing the length of ETCS installed in each

network, thus reducing the cost of closing the

remaining gaps.These corridors are (fig. 5):

Paris-Mannheim-Zurich (corridor 2)

Rotterdam-Milan-Genoa (corridor 5)

Antwerp-Bettembourg-Metz-Basle (corridor 6).

Two general observations support this

contention.

Firstly, it can be seen from the summary table

24

Fig. 53 promising corridors

Fig. 4PBKAL corridor


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of the 10 corridors, aggregated on a national basis (Table E1), that countries such as

Belgium, Luxembourg and The Netherlands could benefit from an integrated

approach. Secondly, the results of the market study of the Eurailinfra project (UIC

Infrastructure Commission) indicate strong future international traffic relationships

between the countries involved, which offer the prospect to increase the amount of

international traffic on the corridors in question.

d) The remaining corridors do not appear to offer an immediate benefit from an

accelerated integrated ETCS programme along the entire length of the corridor.The

reason for this is due to insufficient international traction units operating over the

entire corridor and/or the absence of existing national plans, at this point in time,

which would provide a sufficient foundation to make the additional filling ofoutstanding gaps an attractive financial proposition.Therefore, there is a need to re-

examine whether a less extensive proposal on a bilateral or tri-lateral basis between

some networks, covering a smaller extent of the corridor, would offer a better

proposition.

6. National Migration Strategies

The analysis in the previous section strongly indicates that the pace of ETCS migration

will be driven more by national perspectives and the age and condition of current

infrastructure and traction units, than by the attraction of reduced on- board costs of

the international fleet. Each network is currently in the process of elaborating their

national rollout strategies for ETCS Migration.These strategies will be influenced by the

factors outlined in section 1 and in the SWOT analysis in Appendix A.

It is worth observing that the on-going requirement to replace assets offers an

opportunity to consider an optimised transition path towards ETCS. In such

circumstances, the decision is not whether there is financial case for pre-mature

replacement or parallel installation of equipment, but more a question of assessing how

ETCS can be introduced instead of like for like replacement of existing systems.

Compliance with the European Directives has also to be factored into this decision.The

tables in Appendix C approach the migration to ETCS from this practical perspective.

Table C1.1 demonstrates that, based on a conservative assessment of the life cycle of

signalling equipment, there should be a need to replace 4,000 equivalent single track

kms on the TEN network of an enlarged European Union on an annual basis.This figure

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26

rises to 6,400 km per year if one takes the entire enlarged European rail network into

account. In simple terms this means that there is an opportunity to make progress

towards ETCS at a regular rate each year.The following steps appear to represent a

prudent approach to migration:

1) Define a roll out programme for track side migration at least in line with life expiry

of the existing signalling systems. Based on an average life of forty years this suggests

that the European network should be at least 35% converted to ETCS on the track-

side by 2020. Based on the analysis in section 2 (see Graph 2, in particular) this

track-side renewal would necessitate an associated proportion of the national fleet

to be fitted with a compatible on-board ETCS system.The minimum percentage of

the national fleet to be converted can be estimated from Graph 2, depending on thenetwork characteristic. Knowing the injection of annual new fleet enables one to

calculate the balance of fleet conversions to be carried on the existing fleet (see

Table C1.2).

2) Order new rolling stock equipped with ETCS or at least prepared for ease of

fitment subsequently for ETCS (Eurocabs, DMI, Odometry etc.) and equip or carry

out remaining preparation of existing fleet at major overhaul.This would represent

the least disruptive on-board conversion programme and should minimise or

eliminate the additional out of service cost for workshop fitment at other non-

scheduled times. Even at a steady replacement rate of traction units on a forty year

cycle (average of TEN network fleet assumed to be 30 years in this exercise) and a

10 year overhaul frequency (fitting only the 10 and 20 year old fleet each year) this

should see the European fleet pre-fitted by 2020 (see Table C1.3).

3) In overall terms the above strategy may be sufficient to cover the networks which

have been described as peripheral or intermediate in this report.The likelihood is

that some initial injection of fleet conversion will be necessary before settling into a

national pattern.This is likely to be about 5-10% of current fleet size and is displayed

at an average of 7% on the curves in Graph 2. However, it is unlikely that the above

minimalist approach will be sufficient, both on track-side and on-board, for the highly

integrated networks, or sections of networks around busy hubs, and a faster path

will be necessary.The aspect can be seen from a comparison of the required

programme suggested by Table C1.2 and the least disruptive programme suggested

by Table C1.3.These two tables are combined and shown in Graph 3 (below and in

appendix C).This shows that while the overall rate of conversion by 2020 should be


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adequate in all cases there would be a need for more accelerated fitment

programme in the earlier years on the highly integrated networks, which could be

compensated by a reduced programme in later years.

4) The difference in cost between the selected ETCS Migration programme and the

normal steady state replacement and upgrading of assets can be quantified.This

amount should represent the additional funding support sought from the EU towards

ETCS Migration.A global cost benefit analysis has been carried out to assess the

order of magnitude of the total cost difference for UIC member railways in an

expanded EU of 27 Member states, plus the neighbouring networks.This is discussed

in the next Section.

Graph 3

Traction fleet conversion to E TCS per network type

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7. Global Assessment of Cost of Migration

The study of the 10 selected corridors has revealed that, the cost of closing many of

the gaps in the overall corridor length, by overlaying ETCS in parallel to existing

national systems, would be of the order of 638 M.This cost is over and above the

cost of the investment, in the current national (or bilateral) plans that have already

been approved, or are on the point of approval.This extra cost works out at an average

of 46.6 k per additional equivalent single track km (93.2 k per double track km) for

the sections studied.This serves as a useful global indicator of the extra cost provision

that would have to be made in the future to roll out a faster strategy on the TEN

network, than appears to be covered by current national priorities or the needs to

replace life expired equipment.The global study also reveals that the cost of the on-board Eurocab equipment would

be of the order of 8.8 billion for the entire fleet using the 10 corridors

studied. This is to equip about 13,650 traction units (28% of the national fleet in the

same networks). It is estimated that approximately 1500 of these (11%) would be

involved in international cross border operations.The cost of only equipping this

reduced fleet would be 1 bil lion .

If one adopts the slower migration

approach, in line with the replacement

rate of lifeexpired assets, it will be

possible to optimise the financial costs

by avoiding the overlay costs of ETCS in

areas where there is no obvious

financial benefits from saving of on-

board equipment. It will also be possible

to consider a migration of the on-board

equipment based on an injection of new

fleet in combination with a less disruptive

conversion programme of the existing fleet, in accordance with planned overall

schedules. Such a scenario has been chosen as the basis for a global cost benefit

analysis to establish the order of magnitude of the total differential cost of migration

for an expanded Trans European Network area, inclusive of New Members States and

pending accession countries (fig. 6) , taking the following expenditure elements into

account:

a) The difference in signalling replacement cost, and subsequent maintenance, between

28

Fig. 6Trans European rail network in a EU of 27 Member

States


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ETCS and like for like replacement.

b) The difference in fleet replacement cost and maintenance, including the on-board

equipment, with a European ETCS programme compared with continuing with

installation of national C/C systems.

c) The cost of converting the on-board systems of a proportion of the existing fleet

until 2020 to keep pace with the track-side installation of ETCS.

The differential cost of migration to ETCS for the European Railways Companies

concerned (Infrastructure Managers and Railway Undertakings) has been calculated.This

is based on a 40 year time horizon, applying a range of discount factors (0%, 4%, 6% and

8%) to the annual estimated difference in anticipated expenditure in order to arrive at a

Net Present Value (NPV). In addition to assessing the difference in investment cost and

savings, an attempt has been made to place a monetary value on other potentialincremental benefits arising from the uniform adoption of ETCS - such as gain in track

capacity and savings arising from a reduction in rail fatalities and injuries.The analysis,

however, does not consider other more general macro-economic and societal benefits,

which might ensue from interoperability and modal shift.The latter are more

speculative and could not be attributed to ETCS alone.Therefore the study

concentrates on quantifying the net cost of migration to the railway companies so as to

determine the funding support that would be required to flow from Member States and

the EU towards the rail system.

Furthermore, at this stage of early development of ETCS, and without a strong

indication and commitment of industry, it is not possible to attribute potential benefits

or cost savings in spare parts or other procurement benefits due to economies of

scale. It might also be reasonable to anticipate savings related to reduced training for

drivers, maintenance and operational staff due to the adoption of a unique CC system

in the long term. However, the study considered that the cost/benefit would be broadly

neutral during the time horizon of the analysis due to higher potential costs in the early

stage being compensated by benefits of the unique system in the long term.

The full calculations are contained in Appendix D, and a summary of the results is

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30

shown below.

Differential cost of migration to E TCS(Billion )

The probable scenario suggests that the implementation of ETCS would result in a

negative Net Present Value (NPV at 6%) of 12.5 billion . On this basis, the railways

within an expanded European network of 27 Member State, plus neighbouring

networks, would need an injection (funding) of this amount of money purely to

maintain commercial equilibrium with to-days position.

This figure correlates well with the cost elements (both on-board and track side)

calculated in a separate AEIF study, taking into account the fact that the study is based

on migration costs within the EU 15 member states.

8. Other Economic Global Factors

Overall, this analysis has been concerned with the optimisation, mainly in terms of

financial cost/benefit, of the ETCS migration strategy. However, assuming that the

financial imbalances are addressed in discussions with the EC and Member States, and

taking the broader economic horizon into account, the greatest benefits are likely to

arise from the following strategy:

1) No further development of national systems so as to:

effectively concentrate the attention of the signalling industry to the more rapid

development and support of ETCS, to include finalisation of specifications and

progress on interchangeable supplier equipment;

begin to gain benefits through economies of scale procurement and reduced cross

acceptance costs;

de-risk the transfer of specialist signalling system principles and knowledge to


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31

manufacturers and outside industry, having regard to the trend of reducing in-house

expertise within many networks.

2) The least cost route to an accelerated migration at international level, and towards

meeting the goal of interoperability, will be achieved by focussing on the busiest

corridors and considering laying ETCS in parallel to national systems on the sections

of smallest extent.

3) Systematically reducing the number of on-board systems will bring benefits for train

operators in time. In this regard there are over twenty European signalling systems.

By 2010, ETCS will be, at least, the fifth most extensive signalling system with over

16,000 equivalent single track kms installed, based on current commitments alone

(see table F below for plans to 2008).

Table FThis will establish it as a dominant system and will leave only PZB, Crocodile, KVB,


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ATP/TPWS systems with a greater coverage, predominantly in Germany, France & UK

(see Table G).

Table GThe extent of such systems means that on-board parallel equipment will still be

required on many international routes crossing these networks for many years.This

study shows that there is a weak financial case for accelerating the migration of track

side equipment. However, if it can be shown that there are wider economic or practical

technical benefits, by minimising the amount of international foreign trains requiring

such additional on-board equipment, an accelerated programme of ETCS implemented

in important transit corridors such as from Belgium,The Netherlands, crossing North

and Eastern France and South-Western and Eastern Germany to Switzerland, Italy and

Austria would seem to be the best place to start.

4) As a general observation it may be stated that the installation of ETCS in peripheral

networks, outside of the central European corridor areas, is unlikely to be financially

justifiable based purely on interoperability benefits. However, the installation of

ETCS, consistent with national plans, will be an important contributor to enhancing

rail safety and will create the mass market for ETCS through replacement of life

expired or less modern national systems.

5) The underlying rate at which existing national systems can be eliminated will be

largely determined by the pace of traction fleet conversion to ETCS C/C system.

While the parallel fitting of ETCS on the track-side can reduce pressure on national

fleet conversions, this will not be a substitute for a well organised long term strategy

for on-board equipment. Failure to recognise this could result in severe restrictions

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on fleet operations and high out-of-service time if programmes have to be

implemented at short notice due to sudden obsolescence, unsustainable maintenance

cost or life expiry of the predominant national system. It is important to recognise

that it can take up to forty years of gradual replacement, in normal steady state

conditions, to replace/upgrade an entire national system or fleet. It is also evident

that by about 2015, few of the existing systems may be supported by the

manufacturers.

9. Conclusions

This report has examined the cost/benefits of ETCS Migration strategies from a

financial, economic and organisational perspective. It is clear that the cost ofaccelerating the ETCS Programme, by parallel installation on the track-side, will not be

covered by the savings on international on-board systems.Therefore the pace of

migration, in the immediate future, will be dictated by national perspectives based on

life expiry rates and considerations of safety and capacity improvement.

Nevertheless the broader economic benefits, outlined in the report, will not be

maximised by an apathetic uncoordinated approach to ETCS.There is technical

consensus around the ETCS solution for the long-term and the force of EC Directives

will ensure the future evolution in this direction. It is reasonable to assume that a

unified signalling system will bring economies of scale in an area which is fragmented

and specialised.

Therefore, for the long-term, the strategy of migration to ETCS is correct from a

business and technical perspective as it unlocks individual networks from the technical

perpetuation of bespoke systems and lays the basis for a common safety signalling

standard for the future.These are important issues for companies with aspirations

towards commercialisation and public accountability.

Accordingly, there is a need to consider ETCS as the next generation signalling system

and in accordance with any replacement strategy, railways will need to plan in such a

manner so as to ensure the continuity of their future operations in the light of future

signalling market conditions.

Ambiguity will only be a feeding ground for indecision and will result in a lack of real

commitment from industry to make the necessary steps to advance rapidly with

reliable, safe and economical solutions, including interfacing with existing systems and

inter-change between supplier products.

Therefore the railway companies must consider ETCS in the context of a more global

economic perspective and prepare, in a united fashion, for the appropriate engagement

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with industry and the EC in relation to the migration programme and the practical

resolution of concerns such as the stabilisation of specifications, interchangeability of

supplier equipment, funding and cost.

It is reassuring to report that such discussions have commenced and should shortly

Fig. 7Relevant corridors

Documents

ETCS Report