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.     

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.     

Incompleteness and clarity in bus contracts: Identifying the nature of the ex ante and ex post perceptual divide

In the transport sector, many types of contracts exist. Some are very precise, and strive for completeness; others are very ‘light-weight’ and are incomplete. Bus and coach contracts, won through competitive tendering or negotiation, are typically incomplete in the sense of an inability to verify all the relevant obligations, as articulated through a set of deliverables. This paper draws on recent experiences in contract negotiation, and subsequent commitment in the bus sector, to identify what elements of the contracting regime have exposed ambiguity and significant gaps in what the principal expected, and what the agent believed they were obliged to deliver. We develop a series of regression models to investigate the extent of discrepancy between the principal and the agents perceived ‘understanding’ of contract obligations. The empirical evidence, from a sample of bus operators, is used to identify the extent of perceived incompleteness and clarity across a sample of bus contracts. A noteworthy finding is the important role that a trusting partnership plays in reducing the barriers to establishing greater clarity of contract specification and obligations, and in recognition of the degree of contract completeness.     

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.     

Is the bus transport contracting system in South Africa leading to trusting relationships between contracted parties? An analysis of funding issues and the impact on relations between government and operators

The 1996 South African White Paper on National Transport policy provided the guidelines for the restructuring of the commuter bus industry. The restructuring objectives were based on improving the competitiveness of and service levels within the industry through a competitive tendering regime, the selective implementation of negotiated contracts and the general transformation of the industry to also include improved transparency in the funding arrangements between government and operators.In order to set the context of the paper, a brief overview is provided of the progress made with policy implementation and the background to funding issues that are experienced in the bus transport sector. To gauge the impact of the funding issues on the relationship between government and operators, a survey of the largest contracted operators was undertaken to determine, amongst other, how these funding issues have potentially impacted on trusting relationships between contracted parties.     

A simulation of the simple Mohring model to predict patronage and value of resources consumed for enhanced bus services

Choosing between the competing approaches to providing enhanced bus services requires the ability to predict the effects on patronage and overall benefits to society in terms of Value of Resources Consumed (VRC) of any proposed change. One common approach uses the Mohring model of 1972 and its successors to optimise one or more aspects of the supply of transit services given various level of demand. This paper simulates the operation of a simple circular bus route using the equations of a basic Mohring type model and a Decision Support System (DSS) to endogenise demand under the assumption that there is a fixed demand for travel but commuters can choose between the bus and private vehicle. The selected approach recognises that demand for a particular mode of travel is predicated on the speed of the vehicle in service which is itself determined by the demand for that vehicle (in this model or boarding and alighting time) rather than being determined exogenously. This creates an iterative feedback mechanism whereby changes to the attributes of the bus and car alter mode choice and the speed in service of the bus which, in turn, alters mode choice. The simulation is used to predict changes to patronage and VRC under scenarios regarding changes to the transport network (in terms of fares and running costs, frequency and spacing of bus stops) using parameters from both a Multinomial Logit (MNL) and a Mixed Multinomial Logit (MMNL). The results demonstrate that there are large differences in the size and, in some cases, direction of predicted changes to patronage, VRC and revenue, depending on whether the parameters of the MNL or MMNL model are used.     

The conflict between competition policy and the wider role of the local bus industry in Britain

Since the Transport Act of 1985, the local bus industry in Britain (outside London and Northern Ireland) has been subject to deregulation, removing previous restrictions on routes, service levels and fares. This also marked a reversal of the previous emphasis on co-ordination of services provided by different operators, and introduced competition law as applying to other industries to the local bus sector. This has been in conflict with other policy objectives aimed at stimulating greater use of public transport, such as harmonisation of ticketing systems. The underlying issues are examined, and recent changes in policy. The Local Transport Act of 2008 offers an opportunity to resolve some of these problems, and its application in Oxford is discussed as the first substantial example to date. However, a strong conflict remains between the role of competition agencies and other aspects of policy.     

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.     

The effect of governmental subsidies and the contractual model on the publicly-owned bus sector in Japan

The publicly-owned municipal bus sector that provides local transport in Japan is in a difficult situation because of operating deficits, inefficient operations and management, and budgetary constraints of expanding subsidies, and thus, it needs to be restructured to improve efficiency. This paper investigates the impact of subsidies and contractual settings on the cost structure of the publicly-owned bus sector in Japan. A trans-log cost function has been estimated by pooling cross-sectional data of 527 observations over the time period of 1990-2006 for a cross-section of 31 publicly-owned transport companies in Japan. Our analytical results confirm that governmental subsidies to this sector negatively affect the cost structure, while the contractual model may have a positive impact. We also discuss the implications of these results for Japan’s public transport policy.     

Activities,resources and inter-organizational relationships: key factors in port competitiveness

In the last decade, the port economics literature has given great emphasis to the Supply Chain Management approach as the new paradigm for the definition of port competitiveness. SCM supports the development of partnerships between the actors of the supply chain and considers the integration of activities and resources along business processes as source of competitive advantage. Nevertheless, the application of SCM approach to the port is particularly compiex given the traditional hostile relationships between port actors. In the effort to overcome such complexity, some authors have considered ports as Logistics Service Providers and interpreted their role within supply chains through the integrative practices undertaken by Global Players–mainly Shipping Companies and Terminal Operators–in the supply of integrated logistics services. Even tough these actors are crucial for the port competitiveness, they determine a passive role of port in the new competitive scenario. The definition of a potential and pro-active role of port in the supply chains is the objective of this paper that presents, through a literature review on SCM and port competitiveness, a new framework for port competitiveness. According to this framework, that is based on the value constellation concept value is generated by joint effort of port actors in the satisfaction of clients' needs, through the exploitation of different I mterdependencies (serial, pooled and reciprocal) between supply chains. In this context, Port Authority has a I fundamental role in identifying those resources–the so called critical assets–that encourage the development of inter-organisational relationships between port actors in the value generation process.     

Market role and regulation of extensive urban minibus services as large bus service capacity is restored - Case studies from Ghana, Georgia and Kazakhstan

In some cities, the degeneration and collapse of formal bus services has allowed large-scale minibus operations to become established but, over time, city authorities and municipal bus operators regain at least part of their operating capacity and seek to regain their market share. This paper examines and compares three case studies: Accra, Tbilisi, and cities of Kazakhstan. It examines the development of the urban minibus services market as conventional bus services went into decline, the gradual re-emergence of large buses, how the authorities have viewed the minibuses as circumstances change, and market and regulatory strategies followed by city authorities.     

Logistics and supply chain management

In this paper an introduction to the principles and methods used in logistics and supply chain management is presented. It begins by a discussion on fundamentals and explains the relevant terms. Next policy and practice associated with logistics and freight services are regarded with a focus on the EU policy for the sector which greatly influences the development of logistics chains and services. Mathematical formulation of typical transport and logistics-related problems is also presented followed by a discussion on the concept of sustainability.     

European rail reform and passenger services - the next steps

Whilst the emphasis of European Union rail legislation to date has been on freight, measures such as separation of infrastructure from operations, infrastructure charging regimes and regulation have major implications for the passenger sector. But implementation of these measures in many countries has been inadequate. Crucial to overcoming these problems is the establishment of strong independent regulators in all member states. There is currently no requirement for competition in the passenger sector except for international services, but there is experience both of open access for commercial services and of competitive franchising. However, even where permitted open access competition has been very limited and there is evidence that undesirable cream skimming may be a problem. Experience of franchising has generally been positive, but in some cases it has failed to drive down costs. It is concluded that a combination of more sensible risk sharing, a determination not to renegotiate, longer franchises and limited open access competition where justified by benefits is likely to be the best way forward.     

Competition in cargo-handling: some comments

This article offers some comments on a paper by R. O. Goss appearing in No. 1, Vol.9 of this journal. Goss outlined therein the activites of a small number of competing private sector cargo-handling companies suggesting than the prevalent inefficiencies and excessive costs associated with these firms may be linked to a lack of real competition. The present author, whilst conceding that increased competitiveness may be linked to a lack of real competition. The present author, whilst conceding that increased competitiveness may ameliorate this, argues that other factors-the organizational structure of the company and the market in which it must operate-may in fact work against the proper functioning of a competitive system, and that concentration may not only be inevitable but even desirable.     

Competition in cargo-handling: some comments

This article offers some comments on a paper by R. O. Goss appearing in No. 1, Vol.9 of this journal. Goss outlined therein the activites of a small number of competing private sector cargo-handling companies suggesting than the prevalent inefficiencies and excessive costs associated with these firms may be linked to a lack of real competition. The present author, whilst conceding that increased competitiveness may be linked to a lack of real competition. The present author, whilst conceding that increased competitiveness may ameliorate this, argues that other factors-the organizational structure of the company and the market in which it must operate-may in fact work against the proper functioning of a competitive system, and that concentration may not only be inevitable but even desirable.     

Contracting regimes for bus services: What have we learnt after 20 years?

This paper reviews a number of themes that have played a crucial role in the debate on alternative contracting regimes for the provision of urban bus services. We have selected four crucial issues to reflect on: (i) contractual regimes (in particular competitive tendering as compared to negotiated performance-based contracts, as means to award the rights to provide service); (ii) contract completeness (focussing on ex ante and ex post elements); (iii) building trust through partnership; and (iv) tactical or system level planning for bus services. Experience in these areas suggests that competitive tendering has frequently not lived up to expectations and that negotiation is likely in many circumstances to deliver better value for money.     

Port competition between Shanghai and Ningbo

The objective of this paper is to analyse the relative competitiveness of the neighbouring container ports of Shanghai and Ningbo in China and to develop a view of the likely future outcome of the competition between them. After assessing the demand for their services within what is hypothesized as a shared hinterland, current supply and future expansion plans are detailed and considered within the two ports' wider development strategies. The relative competitiveness of the two ports is then evaluated on the basis of price and quality of service, as embodied within the concept of generalized cost as incurred by customers. A critical political dimension is a necessary element of this analysis. It is concluded that continued economic development in the hinterland, central government policies on regional development and China's accession to the World Trade Organization (WTO) will all contribute to growing demand for port services. However, Ningbo will continue to gain greater market share as the result of advantages in its natural endowments (particularly depth of water), price (especially in terms of recovering the cost of capacity expansions) and quality of service improvements that are predicted to emerge as the result of currently planned enhancements to inland transport infrastructure and logistical systems.     

Economic policies and seaports: The diversity of port policies

This paper contrasts the economic policies adopted towards seaports by different countries in terms of their approaches to national, regional or local control. Various examples are presented and described, together with some of the difficulties that have been encountered. Examples are cited where national, regional and local governments have become involved, even though constitutional provisions appeared to present this. It is argued that national, regional and local governments all have interests in the efficiency of ports from various points of view; hence all should be involved. The arguments for and difficulties experienced in centralized planning and co-ordination are also discussed.

The variety of activities directly undertaken by port authorities is discussed, with the extreme positions labelled 'landlord' and 'comprehensive'. The remarkable variety of intermediate positions is also described. Whilst oversimplification is dangerous, the opportunities for expanding the private sector are analysed, even to the extent of wondering whether public sector port authorities are needed at all. This, therefore is the subject of the next paper.     

Port competition between Shanghai and Ningbo

The objective of this paper is to analyse the relative competitiveness of the neighbouring container ports of Shanghai and Ningbo in China and to develop a view of the likely future outcome of the competition between them. After assessing the demand for their services within what is hypothesized as a shared hinterland, current supply and future expansion plans are detailed and considered within the two ports’ wider development strategies. The relative competitiveness of the two ports is then evaluated on the basis of price and quality of service, as embodied within the concept of generalized cost as incurred by customers. A critical political dimension is a necessary element of this analysis. It is concluded that continued economic development in the hinterland, central government policies on regional development and China's accession to the World Trade Organization (WTO) will all contribute to growing demand for port services. However, Ningbo will continue to gain greater market share as the result of advantages in its natural endowments (particularly depth of water), price (especially in terms of recovering the cost of capacity expansions) and quality of service improvements that are predicted to emerge as the result of currently planned enhancements to inland transport infrastructure and logistical systems.     

Port reform in Australia: issues in the ownership debate

Australia port reform initiatives have taken on a variety of forms — from out-right sale and transfer of ownership, to the sale of particular assets of infrastructure or services, or to long-term lease arrangements; or in some cases state governments, unable to relinquish control, have opted for corporatization or commercialization strategies. Reform is driven by the belief that ownership impacts on efficiency and efficiency is perceived to suffer if governments either retain ownership or direct control. As a result a major aim of reform is to either remove or distance governments from day to day port operations. The sale of ports removes government control outright and privatized ports are subject to identical regulatory constraints as any company in the private sector. But corporatization strategies are such that government ownership is retained and ports have been transformed into statutory state owned corporations. Effectiveness of this strategy requires legislation to be such that port corporations are free to operate like their private sector counterparts. To date this has not occurred and some serious impediments are emerging which are embedded in legislation and which, rather than reduce, have indeed, increased government control.