Is the (in)direct Economic Impact of Rail Freight Transport in Belgium Enough to Put This Sector on the Right Track, or Will It Be Pulled of the Rails?
Nominated for The Neil Mansfield Award
Frank Troch, University of Antwerp, Thierry Vanelslander, University of Antwerp, Christa Sys, University of Antwerp
The modal share of rail freight transport is still decreasing. In order to make a strong case for future development decisions on rail freight transport, this paper is studying its direct and indirect economic impact on the Belgian national economy.
For the past decade, intermodality has been a new buzzword with the objective to increase the use, and as such the modal share of sustainable modes of transport such as rail freight and inland waterways. Intermodal transport is defined by Grosso (2011) as “the movement of goods in one and the same loading unit or vehicle, which uses successfully several modes of transport without handling of the goods themselves in transhipment between the modes”. However, many years and financial efforts later, the EU failed to raise the respective market shares of intermodal transport and rail freight transport as a part of the intermodal chain. This raises the question if intermodality should be really considered a strength for rail freight transport development. In addition, data collection for rail freight transport within intermodal routes is limited, complex and sensitive due to the limited amount of market competition. This makes it difficult to understand the true benefit of rail freight transport within the intermodal chain and the economy as a whole.
The present paper focuses on the possible economic impact of rail freight transport development in Belgium, as a part of this intermodal transport chain. Economic value is often expressed by the physical and monetary effects of policy measures. Direct effects of transport decisions and investments are often calculated by a classical cost-benefit analysis approach. However, Mouter et al. (2012) and Beukers et al. (2012) indicate the weakness of such approach due to the absence or underestimation of the indirect economic effects. Therefore, also indirect effects should be taken into account, which exist because the national economic sectors are interrelated in terms of inputs and outputs required, due to which the change in output demand and the corresponding increase in input supplies in one sector, ignites a ripple effect or chain reaction throughout the rest of the economy (Coppens et al. 2005). As these economic effects of rail freight transport are currently unknown, the main research question in this paper is to determine a way to quantify these effects, as well as to use this method to approximate the existing effects on the Belgian economy.
The approach of the paper is to adapt the existing input-output methodology by distilling the rail freight sector from the existing general combined ‘public and freight land transport sector’ within the national calculations of the Belgian input-output table, performed by the Federal Planning Office every five years. The methodology is developed by adopting a set of assumptions, necessary to overcome data limitations, and with the collection of relevant customer and supplier data from the largest Belgian rail freight operator, holding a market share of over 85%.
The outcome of the research is an adapted input-output table with a detailed 'rail freight transport' sector, highlighting the different economic relationships with the original sectors of the national input-output table. It is no surprise that strong links with other transportation sectors exist. In addition, a Leontief multiplier is calculated, approximating the total economic effect in terms of monetary units, when the output demand in the investigated rail freight sector is increased by one of this monetary unit. The study reveals a potentially high total effect on the national economy, taking into account the set of assumptions. Based on these results, the degrees of dependency between different national sectors and rail freight transportation are calculated, and a link with employment and the added value generation is achieved to further analyse the true impact of rail freight transport development on the Belgian economy.
Acknowledgement: This research is part of an interdisciplinary project called 'BRAIN-TRAINS', which handles on intermodal rail freight transport in Belgium. The research and its results are subsidised by the federal science policy through contract number BR/132/A4/BRAIN-TRAINS. This project concentrates on five different topics affecting the development of intermodal rail freight transport in Belgium, being: (i) the optimal corridor and hub development, (ii) the macro-economic and (iii) sustainability impact of intermodality, and (iv) an effective market regulation and (v) governance for a well-functioning intermodality. The final objective of the research is to build an operational framework including a set of indicators, which helps decision makers in their process to quantify and to understand the possible effects of investigated future rail freight developments in Belgium.
Keywords: Rail freight, Input-output, Leontief, economic impact
Association for European Transport