Commercial public bus transport services in Germany: How a market in motion struggles with its regulatory framework

After decades of stagnation, the competitive market for commercial public bus transport services in Germany is beginning to move. Nevertheless, compared to the total market volume, the number of cases where competition is observable remains small. An empirical analysis of competition in the commercial services market as compared to competition in the non-commercial services market confirms that entry barriers do exist. These barriers clearly impede competitive developments in this embryonic market, which relies on the market initiatives of operators to develop. The paper identifies a key entry barrier in the institutional framework: for potential market entrants, the overall uncertainty regarding competitive procedures for commercial services is significantly higher than usual in tendering procedures. This high uncertainty poses the main disadvantage for newcomers as compared to incumbents.     

Adelaide bus service reform: Impacts, achievements and lessons

Adelaide's bus system has been transformed from a government monopoly operation to a competitively tendered system with services provided by private operators under contract. The ‘Adelaide model’ has unique features, and has been considered in several international reviews of urban bus service procurement. The paper reviews the experience in Adelaide up to 2006/07. It updates previous evidence that focused on technical efficiency impacts. It particularly examines the development of the system to address allocative efficiency, in terms of the quantity, quality and market orientation of the services provided, and the consequent effects on patronage.     

Regulation,trust and contractual incentives around transport contracts – Is there anything bus operators can learn from public air service contracts?

This paper compares recent experiences in contract negotiation and subsequent commitment in public air services with the bus industry. The heart of the paper is a survey of European and Australian regional airlines, which we mirror with revealed experiences of bus operators. We aim to identify a number of elements in the contracting regimes that have exposed ambiguity and significant gaps in what the principal (e.g., transport department) expected, and what the agent (airline or bus operator) believed they were obliged to deliver. Ultimately airline and bus services are similar in that public authorities procure transport services that are desirable for the society but would be unprofitable without government involvement. In both sectors (theoretically fairly similar) public transport contracts are used, and those usually include obligations and performance measurements. In terms of similarities, one of the surveyed contract details that had a perceived high clarity in both industries was “payment procedures” and amongst those with rather poor clarity was also in both industries “incentives to improve performance and grow patronage”. We also show differences between regional air services and bus operations with regard to performance measurement and pre-specified obligations. Because of the strong safety culture around air services we find that regulation and trusting partnerships are even more important to aviation than to the bus sector. Because of the high level of trust but also because of simpler and more complete contracts in aviation, there is much less (re-)negotiation going on compared to the bus operations.     

BRT and BHLS around the world: Explosive growth,large positive impacts and many issues outstanding

A survey of Bus Rapid Transit BRT and Bus of High Level of Service BHLS around the world indicates that there are about 120 cities with bus corridors, with 99 of the cities entering into the list in the last 12 years. The existing bus corridors comprise about 280 corridors, 4300 km, 6700 stations and use 30,000 buses, serving about 28 million passengers per day. In 2010–2011, 19 cities completed new systems − 16 in the developing world – and seven cities expanded their current systems. By late 2011, about 49 new cities were building systems, 16 cities were expanding their corridors, and 31 cities were in initial planning. This impressive growth may be attributed in part to the successes of Curitiba, Bogotá, México City, Istanbul, Ahmedabad and Guangzhou. These cities show low cost, rapid implementation and high performance BRTs, with significant positive externalities. Interesting trends are emerging, such as the implementation of citywide integrated bus systems, improved processes for private participation in operations, increased funding from national governments, and growth of bus manufacturers and technology providers. Despite the growth, there are some outstanding issues: BRT and BHLS do not have a single meaning and image and are often regarded as a “second best” as compared to rail alternatives. In addition several systems in the developing world suffer problems resulting from poor planning, implementation and operation, due to financial, institutional and regulatory constraints. The BRT and BHLS Industry are in their “infancy” and there is need for consolidation and concerted effort.     

Transantiago: A tale of two cities

The Chilean government decided to modernize Santiago's entire public transport system, integrating the underground and the private bus networks based on a structure of trunk and feeder services, and a fare-payment by touchless smart card. The new, integrated transit system, known as Transantiago, very soon ran into serious problems that alienated much of its user base and significantly lowered the government's approval ratings. This paper recounts how Transantiago was planned and designed and then discusses its evolution after implementation. It concludes with suggestions for the Transantiago authorities and lessons to be learned from this traumatic process.     

Overview of public transport policy developments in South Africa

Public transport in South Africa is one of the most burning issues in the transport sector. The government is faced with huge public pressure to improve public transport systems in the face of rising fuel costs, the pending implementation of expensive urban toll road systems in the Gauteng province, and elsewhere in urban environments, public transport safety issues, public transport fleet renewal, especially the commuter rail services, as well as limited resources to fund public transport. As a developing country, the South African Government has pressing funding issues such as funds needed to improve housing for the poor to improve schooling and public health services. Government is also faced with a vocal minibus taxi industry that transports an estimated 65% of all commuters in the country that is also insisting on subsidies for its services.     

Lessons in ownership, regulation and management from 100 years of bus transport in Sri Lanka

Sri Lanka observes 100 years of bus passenger transport in 2007. During this period the country has seen different forms of service providers ranging from private sector monopolies to state sector monopolies. It also has seen several changes in state policy ranging from welfare orientated service provision to entire market determined without any regulation. The existing regulated mixed competition is also characterized by poorly equipped regulators. In conclusion, the paper traces the different stages of failure that have led to the poor quality of bus transport services existing at present.     

Changing public transport governance in Dutch metropoles: To tender or not to tender

With winds of change from the European Commission reaching the Netherlands, the national government altered the Law on Passenger Transport in 2000 to best reflect European demands. This new law meant competitive tendering became obligatory. At first, the metropolitan transport authorities in the three largest cities (Amsterdam, The Hague, and Rotterdam) were granted an extended deadline for tendering. However, due to shifting winds from Brussels, in 2007 the Dutch national government dropped the obligation to tender for the three cities. Suddenly the authorities had to decide for themselves whether or not to tender. This article describes the different routes and outcomes of the three metropolitan authorities. Where the metropolitan authority in Rotterdam aimed at conservation of their existing model, the authorities of Amsterdam and The Hague embraced change. In The Hague conformation to the letter of the law seemed an important driver, whereas confrontation between different interests in the region was the starting point for change in Amsterdam.     

Impact of Transmilenio on density,land use,and land value in Bogotá

While urban sprawl has been the general growth pattern in most developing cities worldwide, the city of Bogotá has undergone a process of densification in specific areas in the past decade. Using a differences-in-differences methodology, we have shown that the bus rapid transit (BRT) network, Transmilenio, built in this period is one of the variables that account for this higher density. Areas served by Transmilenio, especially those in the periphery that have been provided with feeder bus routes, have a higher growth than zones without access to this system. Using a similar methodology for assessing the growth of newly built areas, we have not found a clear relation between the BRT and recent evolution of residential, commercial, or work areas. However, recent scientific literature confirms an impact of the BRT on land value.     

Overview of public transport policy developments in South Africa

In South Africa, a restructuring of the public transport system is currently under way. In the bus industry the tender for contract system is being implemented, the commuter rail sector is being recapitalised and the minibus taxi industry recapitalization programme is in its early stages. Progress with policy implementation across the modes of transport, modal split trends and issues that hamper the full development of the public transport industry are discussed in this paper. Medium to long term policy and strategy initiatives that will further inform the development of the industry are also highlighted in this chapter.     

Ten years after bus deregulation in Japan: An analysis of institutional changes and cost efficiency

The local bus market in Japan was deregulated in 2002. This study examines the impact of this deregulation on the market structure and the operators' cost efficiency over the last ten years. First, we perform a qualitative before-and-after-deregulation analysis of Japan's bus market, finding that there has been little change in the structure of the Japanese bus market so far. Second, we investigate the effectiveness of the deregulation and internal organisational factors by using a dataset of publicly owned (municipal) bus companies. We estimate the total cost frontier functions in order to examine their effects, showing that it is the internal organisational factors (i.e. governance structure) that affect the operator's efficiency, not deregulation. In fact, the coefficient of subsidies to companies is positive, with statistical significance, thereby suggesting that cost efficiency decreases as the subsidy ratio increases. The coefficient of the contracting-out (MCGL) dummy also obtains statistically significant results; thus, we provide an account of how contracting out clearly improves operators' cost efficiency. The deregulation variable did not show significant results.     

A journey from adversary to partnership bus reform in NSW

This paper continues to debate the importance of understanding in the NSW Bus reform process of the relationship between central agencies, service providers, the academic community, key consultants and contractors within the setting of the transport service organisation framework. Sydney is a modern city with heavy rail, light-rail, monorail and an extensive Harbour, with bus services owned by Government as well as private interests. The paper addresses the case for reforms, the approach taken, competition policy, the subsequent development of partnerships, performance of the regulator, passenger benefits, growth and the differences between Metropolitan/Outer Metropolitan and Regional and Rural bus services.     

Impact of regulation on the performances of long-distance transport services: A comparison of the different approaches in Sweden and Norway

Despite the many socio-economic similarities between Sweden and Norway, differences in jurisdiction, organisation, cooperation, and financing of long-distance passenger train and coach services have led to the development of four distinctively different ways of serving the markets. This paper describes how the train and coach markets have developed in the two countries, with emphasis on regulatory and industrial structure and a couple of performance variables.Looking at passenger rail, both countries separated infrastructure from operation over a decade ago. However, while Norwegian rail is characterised by an almost monopoly supplier, rail services in Sweden are partly decentralised to the responsibility of county authorities and are widely subjected to competitive tendering. The rest of the network is about to be opened up for on-the-track competition. Swedish Rail (SJ) has spent the last decades consolidating its core business (passenger rail) and sold out its other businesses. In contrast, the Norwegian state rail (NSB) has expanded its business to become a major bus operator and property owner, with extensions also into the Swedish market.The coach industry was more recently deregulated in both countries. The Swedish coach market is dominated by privately owned companies operating services to and from Stockholm. In Norway, state-owned NSB is a major coach operator on medium distance routes, and is also the largest partner of Nor-Way Bussekspress which totally dominates long-distance coach services. Further, the Norwegian coach market is characterised by cross-ownership and cooperation which has enabled an extensive route network which covers most of Norway.We find distinct differences in achievements in the two modes and in the two countries. Swedish rail services have succeeded in winning market shares and in renewing and developing both infrastructure and service levels to a greater extent than the Norwegian model. On the other hand, the Norwegian coach market seems to be more developed and efficient compared to its Swedish counterpart.The paper concludes with a discussion on the possible links between the different approaches and the performance observed, with the aim to stimulate further and more detailed research on some important issues.     

Comparisons of urban transport sustainability: Lessons from West and North Africa

The diagnosis for urban transport sustainability depends on the context of different regions worldwide. We focus in this paper on West and North Africa which reveal similarities but also structural differences which are explored further. The importance of paratransit in its various forms is strongly observed in sub-Saharan Africa and to a lesser extent in North Africa. The attempts to regulate and organise this sector have been difficult; one interesting experience in Dakar occurred during a programme of fleet renewal. In parallel it is observed that there are positive but insufficient experiences of public transport authorities in some cities (Dakar, Abidjan) and similar projects postponed in other cities because of the institutional problems. One also observes the constant difficulties of designing sustainable schemes for bus companies. An answer to this crisis has been found in North Africa, through investment in new mass transport systems. However, mass transport projects in West Africa are very weak in comparison. The gap between public transport costs and income levels there remains a major obstacle to sustainable mobility exacerbated by the poverty of a significant part of the urban population in West Africa. Two other critical factors are also identified affecting sustainable mobility requirements, namely, the urban sprawl and increasing energy costs. Finally the conclusion recommends the use of research and expertise networks in order to help the design and the implementation of suited solutions.     

Competition in Brazilian bus and coach services - The results of recent competitive tendering processes

This paper analyses the terms and the results of a sample of some recent Brazilian bidding processes for the concession of public passenger transport services: namely, urban and metropolitan bus or regional coach services. The analysis is based on selected issues relating to competitiveness and upon the legal framework that applies in this sector. It was concluded that, given the lack of bidding processes for concessions in the bus and coach sector in Brazil, the fact that some bidding processes have been carried out should be considered a sign of progress. However, these auctions have not necessarily prioritised competitiveness, since many barriers to entry into the systems were imposed by the bidding terms. Future competitive tendering processes should seek to abide by stricter principles of competitiveness, if they wish to avoid the entire effort expended on conducting such processes serving only to mask nothing more than formal obedience to the law and to discredit the bidding process in the eyes of Brazilian citizens.     

Effects of the ‘Belt and Road’ initiative on the wine import logistics of China

China’s Belt and Road (BR) initiative is expected to facilitate international trade between the countries involved. In this study, we review the special requirements of wine logistics and the market growth potential of wine consumption in China. A model minimizing generalized logistical costs is developed and applied to wine imports in China, so that the best candidate cities in which to locate transport gateways and distribution centers can be identified. Our analysis suggests that the most preferred gateways are Shanghai, Tianjin, Guangzhou, and Hong Kong, which all have similar delivery costs. In comparison, Beijing and Chongqing have much higher delivery costs, mainly because they do not have good access to marine transport and/or efficient domestic distribution networks. For long-distance intercontinental transport of large volumes of wine, marine shipping remains the only viable delivery mode. However, wine distribution within China extensively uses air, road, and water transport. Therefore, cities with excellent multi-modal transport services are better positioned to become wine logistics gateways. Our study also highlights the importance of value-added services and good government support, which are important factors that influence distribution costs and quality.     

The 2008 New Zealand public transport management act: Rationale, key provisions, and parallels with the United Kingdom

In January 2009, following a lengthy industry review and consultation process, the New Zealand Public Transport Management Act (PTMA) came into force. The Act allows Regional Transport Authorities, as the primary procurers of public transport services, to place either a control or a contracting requirement upon services that are registered as commercial requiring no subsidy. The imposition of either the control or the contracting requirement is designed to facilitate greater system integration, improve service continuity and enhance services to the customer, andallow the Authority to invest in key strategic projects, such as integrated fares and ticketing, so as to grow patronage.The PTMA’s other objective is to ensure improved value for public subsidies. Recent years have seen significant subsidy inflation for seemingly little commensurate benefits. The Act will allow the Regional Transport Authority to achieve greater value for money through improved farebox, a shift to longer, larger contracts to increase competition in the market, a more appropriate allocation of risk, and the removal of the ability of operators to ‘game’ the current system by using strategically placed commercial services as barriers to competition.Similar concerns have also stimulated new legislation in the UK and this paper illustrates the parallels in the environment and proposed response.     

Flexible transport services: A new market opportunity for public transport

The term Demand-Responsive Transport (DRT) has been increasingly applied in the last 10 years to a niche market that replaces or feeds (usually via small low floor buses or taxis) conventional transport where demand is low and often spread over a large area. More recently, the concept of DRT as a niche market has been broadened to include a wider range of flexible, demand-responsive transport services and is increasingly referred to as Flexible Transport Services (FTSs). The contention of this paper is that well-implemented FTS has the potential to revitalise bus-based public transport services which are traditionally based on fixed networks with variable geographical coverage and levels of service.     

Engaging paratransit on public transport reform initiatives in South Africa: A critique of policy and an investigation of appropriate engagement approaches

A number of South African cities are planning integrated public transport networks that rely on the introduction of Bus Rapid Transit (BRT), in line with similar trends to expand or upgrade public transport services in emerging and industrialised urban transport markets around the globe. In addition, BRT in South Africa is being used as a mechanism to drive reform in the dominant yet highly fragmented paratransit sector, inspired by similar processes particularly in Latin American cities such as Bogotá, Mexico City, and Santiago de Chile. Thousands of paratransit operators would have to formalise their businesses, or merge into new or existing operator entities in order to participate in the new systems. There is, however, an absence of accessible business plans and regulatory regime proposals around which paratransit can be engaged to convince it to alter its current modus operandi. A large number of national, regional and local paratransit groupings have furthermore indicated their resistance to the planned networks on the grounds of insufficient consultation, an unclear future role in the system and employee redundancies. Should this deadlock not be resolved, it seems unlikely that the planned networks will be realised in the proposed timeframes, if indeed at all. This paper investigates the South African passenger transport policy framework that has contributed to the current deadlock, and explores appropriate approaches to engaging paratransit operators on a system of contracting, competition and ownership that recognises the sector’s aspirations and fragmented nature, yet contributes towards improved passenger transport services. It is the authors’ view that paratransit reform is a highly context-specific process, even at the sub-city level, and that this could prevent transferring paratransit regulatory and integration approaches across countries, and even cities in the same country, without adaptation to local conditions.     

Urban transport lending by the World Bank: The last decade

Over the preceding decade, the World Bank committed about US$7.5bn in loans for urban transport projects in its client countries, involving total project costs of nearly US$13bn. Projects are designed by the client city/national governments and the World Bank in an interactive, give-and-take process. As is common in development finance, urban transport projects entail an investment program and a set of policy and institutional initiatives. A majority of Bank-funded operations in this period focused on public transport modes. A clear and overarching strategic thrust is evident, favoring private delivery of services with a strong public role through city-specific regulatory agencies. Depending on the context, projects involved efforts to introduce private operators and competition into an all-public set-up, or tighten up weakly regulated, “informal” public transport markets. A notable feature of many projects in the latter context is the use of investments in bus rapid transit infrastructure to reach multiple goals: improve transport services, maintain affordability for low-income passengers, attract new passengers, reduce negative environmental impacts, and leverage complementary reforms of policies and institutions. The Bank’s program in China, unique in its local context of a dynamic urban society moving away from a near-universal reliance on bicycles, initially did not focus on public transport but on urban roads and traffic management. Towards the end of the last decade, the motorization process and the outlook of decision makers entering a more mature stage, projects in China started to converge towards what the rest of the Bank’s program was doing – searching for a more sustainable path to urban transport development.