Preparing multiyear railway investment plans : a market-oriented approach

With the emergence of a powerful trucking industry and the deregulation of transport, most of the once-powerful developing country railways are facing a struggle for survival. Traditional traffic is shifting to trucking and pipelines, governments are increasingly reluctant to write blank checks to cover deficits, and the falling morale of railroaders is harming productivity and reliability. Railway managements know they must introduce institutional and organizational changes that make railways market-oriented. Governments must support legislation that creates an enabling environment that supports the railway's autonomy and allows it to compete. Young planners and not-so-young railroaders struggling with multiyear investment plans tend to concentrate only on investing in infrastructure and acquiring equipment (bricks and mortar). They tend to ignore or underestimate essential institutional reform, without which the revival of the railways cannot be sustained. The author's practical and detailed paper will help railway planners prepare profit-oriented multiyear investment plans. He describes the steps of a plan, and within each step, lists basic issues and questions relevant to that step. He highlights the importance of marketing and sales in the modern railway, and shows how to screen proposed projects and package them into meaningful corridors, where the level of service can benefit substantially from the proposed investment. Long-term objectives for modernizing a railway, according to the author, would include achieving complete autonomy from the government, supporting ongoing economic rehabilitation programs, maximizing profits, signing contract plans for government-imposed services, and developing railway real estate. Medium-term objectives would include increasing the railway's commercial orientation, continuing the rehabilitation of plant and equipment, searching for and developing new markets, lobbying for approval of an enabling plan, and achieving an acceptable tonnage/staff ratio. Short-term objectives would include supporting an ongoing economic rehabilitation program; maximizing profits; removing bottlenecks when an investment is not necessary to do so; starting the rehabilitation of plant and equipment; preparing a plan for developing an enabling environment; strengthening marketing and sales, accounting, and railway costing; and starting a manpower development and retraining program.