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Veronika Petrová's Comment: Questions about the Financing of Fleet Inventories by the European Union in Connection with the DAC

Veronika Petrová's Comment: Questions about the Financing of Fleet Inventories by the European Union in Connection with the DAC
photo: Veronika Petrová/Veronika Petrová's Comment: Questions about the Financing of Fleet Inventories by the European Union in Connection with the DAC
06 / 11 / 2023

As part of the Polish railway trade fair TRAKO in September of this year, Giorgio Travaini, head of Europe's Rail, confirmed in an interview that subsidies will be issued for obtaining data on the vehicle fleet of individual carriers within the European Union. The purpose should be to obtain technical data on wagons and locomotives, which are essential from the point of view of the overall planning of the DAC automatic coupler system implementation project. Although the date for the listing of this subsidized title is not yet known, it is certainly the right step, for reasons that I will explain in this comment.

When will DAC be introduced? What percentage of wagons are not eligible for DAC conversion at all? Will the workshops that will convert the wagons to DAC have sufficient capacity? Will they have enough human capital for retrofits? How are European locomotives doing? What other changes will need to be made to make the transition to DAC smooth? These are questions that the entire European Union is now asking. Of course, any relevant conclusions require data, specifically data on the existing fleets of individual carriers. This data is still missing from Europe's Rail, it is not available to a sufficient extent even at the national railway authorities, and sometimes it is not fully available for DAC purposes even by individual carriers.

The European Union has therefore decided to announce a subsidy title for the inventory project, the basic purpose of which is the acquisition of technical data on wagons and locomotives throughout Europe. This project, the parameters of which are still not fully known, is now awaiting approval. As part of the project, each carrier should receive payment for reporting its vehicle fleet to a pre-dedicated cloud. The project should last for 24 months and should include all the preparatory work starting with the processing of data on wagons and locomotives, their use, technical condition, and their ability to retrofit / retrofit DAC.

The result, in addition to knowing which wagons are capable of installing the DAC, should also be the determination of which locomotives will be able to have a hybrid coupler (shunting locomotives) and what will be the possibility of installing a hybrid coupler on them or, conversely, only DAC. The project will also differentiate wagons by mode of transport (Core Wagonload System (CWS), intermodal transport), TSI compliance, and safety. Furthermore, the project is to create a DAC retrofit plan, determine the necessary capacity of workshops and their distribution across Europe, the qualification of workers and establish optimal work procedures, and the location of workshops for DAC and sidings/terminals in Europe. Furthermore, a comprehensive capacity modernization plan should be drawn up, including operational and technical recommendations over time for individual types of transport (integrated trains, single-car sets) and a plan for infrastructure modernization (changes needed at marshaling yards) and requirements for cars for operation at marshaling yards (e.g. DAC manual disconnect button/lever on the side).

The project should therefore bring a basic set of information about what we will actually be working with in the European Union when implementing the DAC system. But what we lack now is knowledge, for example, of what costs will be compensated and to what extent. This question is crucial for all carriers. It is not that the carriers do not have the data that Europe's Rail will need (after all, every ECM holder must have this data), but the question is whether they have all the data, whether they have the data up-to-date and in a format that will be compatible for a possible migration to the data cloud.

I will stop at the cloud for a moment. The idea of ​​the whole project, among other things, is that part of the information about the vehicle fleet should be available to everyone, and part of the data, on the other hand, should only be seen by the carrier whose data is in question. Leaving aside the question of cyber security, i.e. ensuring the protection of this data and preventing unauthorized access, which Europe's Rail must certainly have primarily in mind when creating a cloud solution, then the question is whether carriers will even be willing to provide data about their fleets. I can imagine a situation where comprehensive information about the state of the vehicle fleet of that particular carrier could have a clear business value. This is not normally publicly known information. I could even speculate here that, for example, the age and technical condition of the fleet can also be a trade secret of which carrier, when it comes to this data it can affect their good business name. Carriers will want clear guarantees that there will be no misuse of their data. And in case of leakage of such data, Europe's Rail must be prepared for legal disputes and possible sanctions.

Last but not least, carriers will also want sufficient compensation for the provision of their data and for the administrative and technical costs they will incur in adapting their systems to the migration. The European Union will therefore have to motivate the carrier a lot. For now, however, the program is being prepared and no one doubts its necessity. However, behind the scenes, there is information that up to 100% of the costs incurred by carriers in connection with this project should be covered. And that is certainly good and increases the chances of the sector's involvement in this project.

We at Spider Concept have already started alerting our clients to the upcoming project. Of course, we will only be able to start preparing potential subsidy requests when Europe's Rail issues the subsidy title. Only then will we know how to calculate the costs that will be associated with it and for which we will demand compensation. We are already preparing our clients for the eventuality that a physical inventory of a part of their fleet may be necessary, for which the data will be unclear or if data from internal systems will have to be verified at the location of the wagons. It is certainly right that Europe's Rail anticipates a project duration of 24 months, as what may now appear to be a quick and simple migration to a cloud solution can bring with it several practical problems and challenges.

Of course, we continue to monitor the situation and will inform you about current developments.

Dr. Veronika Petrová, LL.M., is a Czech lawyer and manager. Since 2007, she has worked at the Office for the Protection of Competition, since 2012 at the Energy Regulatory Office, and subsequently, since 2017, she has been working in the field of rail transport. She currently works in the consulting companies Spider Concept and VP Rail Consult. Among other things, these companies provide consulting services to carriers, including in the area of ​​DAC.