by Victoria Svedberg, SICS Swedish ICT
New rules call for new methods. The deregularisation of the railway market in Sweden has not only opened the market for new railway operators, but also posed challenges to the old methods. SICS Swedish ICT is developing a process to make timetabling transparent, easy and fair, while still satisfying societal needs.
A project at SICS investigates how track time can be distributed between competing companies and needs in a deregulated railway market (Photo: Skånetrafiken).
How can track time be distributed between competing companies and needs in a deregulated railway market? The basic rule is to squeeze in as many trains as possible while at the same time maintaining the quality of the traffic for society as a whole. But what to do when the railway network is already heavily congested and many trains need the same track time? The European Union advocates a fair market on the tracks by the EU-railway directive (2001/14/EC). For a well-functioning competition on the tracks, the decision about which competing railway operator or maintenance entrepreneur will obtain a specific track time has to be fully transparent and non-discriminatory. There is currently no method for this, but SICS, together with the Swedish Transport Administration, is developing one.
The project “Cost-benefit efficient track allocation” investigates a new timetabling approach in which track time is sold to an operator at a market based price, which mirrors the highest price the operator is willing to pay for it. Giving the track time to the operator who values it the most provides transparent competition. The operator wants to maximize the amount of passengers and/or transported goods, and this ensures that societal service is maximized. The only trick is how to get the operators to reveal how much they are willing to pay for track time.
The solution is a timetabling process consisting of three parts: framework agreements, auctions, and a spot market. The auctions take place one year in advance and only very sought-after track timeslots are included. The resulting prices of the auction become the foundation of the pricing mechanism in the spot market. The prices in the spot market are set by a kind of revenue management and the operators can apply for their desired track timeslots and pay the price. The auctions and the spot market will provide an opportunity for the operators themselves to settle disputes over track time. The goal is to develop a fully functional, transparent method to rule out competitors on the same market segments and to add flexibility in an otherwise long process.
Non-commercial traffic, which is subsidised by the state and thus financially stronger will not take part in the auction and the slot market. Instead the non-commercial traffic enters framework agreements which last for a longer time period, typically five years. These framework agreements should contract capacity utilization rather than a fixed timetable. As an example, a regional operator can sign a framework agreement where the infrastructure planner (the Swedish Transport Administration) agrees to set up the timetable so that trains of the regional operator can depart from a station every 15 minutes daily.
How do we then make sure that neither too much nor too little capacity is booked in the framework agreements during the negotiation?
To compare the possible other trains and the non-commercial traffic we intend to use a cost-benefit analysis. The basis is the generalized cost and operating cost of the non-commercial traffic. By linearizing the expression for the costs, modelling it as an MIP problem and solving it, the minimum cost is found. Since the timetable is not known yet, the minimum value is an estimation of the best possible timetable. The resulting timetable will work as an input to calculate a consumer and producer surplus when conducting a cost-benefit analysis [1].
This work is still at an early stage. In the near future we will further investigate the slot market and its combined operational and economic issues.
Link: http://www.sics.se/projects/sameff-trackallocation
Reference:
[1] V. Svedberg, M. Aronsson, M. Joborn: “Timetabling based on generalised cost”, SICS Technical report T2015:05.
Please contact:
Victoria Svedberg, Martin Joborn,
SICS Swedish ICT
