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Transport Business Summit

"Connect to Compete"

A conference organised by the European Commission, Vice-President Siim Kallas and the Directorate-General for Mobility and Transport

The Egg, Brussels, 27 November 2012

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The first Transport Business Summit held on 27 November 2012 in Brussels brought together various industry representatives from Europe and around the world to discuss how transport as business and for business contribute to Europe's 2020 goals for jobs and growth and promote a competitive industry.

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Siim Kallas@SiimKallasEU

"A creative economy can only be created by a market economy not by governments working from top down."

"Faced with major #transport barriers, why should we always be diluting and compromising? That is my concern."

"Transport still has major obstacles in #rail markets, #port services and road #transport ."

Opening speech by Vice-President Siim Kallas

Vice-President Siim Kallas in his introductory speech, highlighted the achievements but also main shortcomings of the European transport sector: administrative and regulatory barriers, strong vested interests and a certain conservatism towards the Commission's proposals, notably those aimed at reinforcing market principles – all this hampering the much needed change for increasing competitiveness and market opening.

Kallas opening speech

A lively discussion followed, organised around three topics and in three high level panels: (1) transport that serves business needs in a competitive internal market, (2) green and innovative transport to reduce Europe's dependency on oil and (3) keeping European industry competitive on a global scale.

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Jürgen Thumann: "We are far away from having completed internal market in all #transport modes. Removing barriers is key."

Jacqueline Tammenoms-Bakker: "20 years ago you could not have flown the way you do today. Many #transport achievements taken for granted."

Fernando Pinto: "We cannot accept opening aviation markets but you don't give it space to grow. You don't build airports."

Mauro Moretti: "If you know that the Italian state subsidises roads at 1bn per year, it's difficult for rail to compete."

Thierry Déau: "It is important to think of #transport as multimodal subject not a competition between modes."

Jim Barber: "In USA every package over 500 miles goes by rail. We love the cost, sustainability, would love it to come to Europe."

Thierry Déau: "Co-investment from the Commission is necessary, like #cef , where private sector can't go alone."

Roundtable 1: Transport that serves business needs in a competitive internal market

  • Moderator - Alex Puissant

Speakers:

  • Jacqueline Tammenoms-Bakker, former Director General for Transport, non-executive Director of Tesco, Vivendi and Fiat Industrial
  • Mauro Moretti, Chief Executive Officer, Ferrovie dello Stato Italiane
  • Jürgen Thumann, President, Business Europe
  • Fernando Pinto, Chief Executive Officer, TAP
  • Jim Barber, President, UPS Europe
  • Thierry Déau, Chief Executive Officer, Meridiam Infrastructure

The first roundtable discussed whether transport meets business needs in a competitive internal market. Business Europe President Mr Thumann started off by saying that the transport sector is a key player in creating more growth. He urged, as did other panelists later in the discussion, for the Single European Sky to be completed rapidly. The non-executive Director of Tesco, Vivendi and Fiat, Mrs Tammenoms-Bakker thought the EU is generally effective in creating the necessary framework but has trouble confronting businesses with conflicting objectives. Transport is at the node of the environmental, social and economic objectives. In her opinion, Europe is the most effective when businesses are given enough freedom in their actions. The CEO of TAP Mr Pinto welcomed progress made in air transport competitiveness in the past 20 years but underlined the need to give businesses place to grow. For Mr Moretti, the CEO of Ferrovie dello Stato Italiane, national regulatory barriers need to be removed in order to have a competitive and free EU market. For Meridiam Infrastructure CEO Mr Déau infrastructure is key for the economy and investments are needed as it is ageing. He insisted on the importance of keeping up European competitive advantage and confirmed the private sector's readiness to invest in infrastructure project and assumed that funds can be mobilised on the financial markets. The President of UPS Europe Mr Barber underlined the need to invest in Europe and believes in its potential for growth. Businesses are becoming interdependent across disciplines, making regulation a real challenge.

Panel 1

When asked where they see the main opportunities and the major obstacles for the European transport sector, many different points were brought out. Mr Pinto thought the economic crisis has been an opportunity for Europe to unite. EU needs to improve, in his view, the currently unsatisfactory passengers' rights regulation. Mr Moretti called for more transparency and a level playing field among the different modes of transport. Mrs Tammenoms-Bakker mentioned that opening markets has led to a lot of innovation for reducing CO2 emissions and transport costs. She also drew the attention to the lack of openness in the European rail freight transport system. In her opinion, the EU should provide a shared database of rail path owners and have a deep understanding of the impacts its regulation might have to anticipate problems. Similarly, Mr Thumann insisted on the need to undertake impact assessments. He stressed the need for mobility not only inside but also outside the EU and the huge capacity of inland waterways. For Mr Déau, transport should be looked at as a multimodal subject instead of focusing on competition between different modes. He remains convinced that all transport modes can attract public and private financing. Capital is floating and it needs good projects to invest in. Mr Déau underlined the need for the EU to "invest, invest and invest" in its infrastructure. Mrs Tammenoms-Bakker emphasised the need to take into account the geographical differences between Member States and to focus on optimising each mode and creating real competition between all modes. In this light, Mr Thumann underlined the urgency to complete the internal market for increased competition.

The audience raised the issue of the lack of political determination by Member States as the reason for not achieving objectively good legislation. Mr Thumann insisted on the need for the business community to express their opinions more loudly and consistently.

Roundtable 2: Green and innovative transport to reduce Europe's dependency on oil

  • Moderator: Jacki Davis

Speakers:

  • Jos Dings, Director, Transport and environment
  • Thomas Wrangdahl, First Vice-President, Nordic Investment Bank
  • Hans Smits, Chief Executive Officer, Port of Rotterdam
  • Jürgen Loos, Vice-President Solutions and Integration, Siemens Global Cities Center of Competence
  • Lloyd D. Brown, Communications Director, American Association of State Highway and Transportation Officials
  • Mika Rytkönen, Director, Industry Operations Location and Commerce, Nokia

The second roundtable was dedicated to green and innovative transport as a means to reduce Europe's dependency on oil. The moderator Jacki Davis launched the discussion by asking the panellists' views on the EU could develop green and innovative transport without curbing mobility. She invited the panelists to outline how the European transport system will look like in 20 years.

Panel 2

Transport & Environment Director Mr Dings recommended reducing consumption of carbon energy. Mobility should be optimised not maximised. The First Vice-President of Nordic Investment Bank Mr Wrangdahl underlined the importance of technical and economic interoperability between modes and called to always think about improving connections when building new infrastructure. By providing finance to such important projects, banks can help steer the action in the right direction. Port of Rotterdam CEO Mr Smits emphasised the need to continue investing especially in rail and waterways, to encourage R&D as well as standardise LNG facilities in ports as it encourages sustainable growth. This should be done in small steps to allow gradual adaptation. Vice-President Mr Loos referred to three mega-trends of the future – urbanisation, ageing and increase of population and change in climate – which can be dealt with and alleviated by further investments and innovation in this field. A change in behavior is much needed to develop a more sustainable transport system and it should be triggered by the relevant regulatory decision and incentives. American Association of State Highway and Transportation Officials Communications Director Mr Brown believed that 20 years from now the US transport system will resemble the European transport system of today. There will probably be a lot of young people moving to city centres and giving up their cars. Mr Rytkönen, Director of Nokia Industry Operations Location and Commerce considered that in view of the problems created by urbanisation and congestion, intelligent transport systems (ITS) are needed, as the traditional transport system cannot continue to grow any longer. The EU can encourage this evolution by ensuring exchange of best practices for example by means of a platform.

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Jürgen Loos: "Biggest #transport challenges are investment and changing user behaviour."

Lloyd Brown: "Targeted investment and tax incentives can help change behavior."

Lloyd Brown: "#transport users in US buy electric cars more to help wean off fossil fuels than for concerns about climate change."

Thomas Wrangdahl: "It is important that we try to steer the development in the right direction by always looking at the green side."

Mika Rytkonen: "It is time to add intelligence to the transport system."

Thomas Wrangdahl: "There needs to be a closer connection between the politicians and industrial leaders."

Hans Smits: "Social innovation is as important as technical innovation."

When asked on what policy makers could do for them and what the key drivers for innovation are, the panelists expressed a number of ideas. Mr Wrangdahl thought the strongest incentive would be binding legislation (e.g. binding targets) for a longer period of time. Mr Smits and Mr Loos underlined the need for intelligent regulation setting sustainable norms and standards. Mr Dings stressed, however, that innovation cannot only be imposed by regulation. Mr Rytkönen underlined the importance of providing consumers with education, more choices and correct information for them to make more eco-friendly choices. Mr Brown believed carbon emissions do already influence people's decisions and buying attitudes. In his opinion, the main driver for change is current limitations on fossil fuels, and not so much climate change.

Panelists agreed that one needs to remain technology neutral, there is no point in choosing one new technology on which to concentrate all support. In view of the decreasing availability of fossil fuels, coordinated action (Mr Loos) is required to reduce the uncertainty regarding the future (Wrangdahl). The EU needs to carefully consider any regulation, both in terms of timing and in terms of substance. Mr Brown expressed his conviction that smart systems will bring a big change and make driving and parking more efficient. Teleworking will probably gain importance, alleviating congestion during rush hours. For Mr Rytkönen, it is essential to provide guidance for consumers on public transport use in different countries. This can be done via innovative tools such as intelligent tracking that use location technologies, connectivity and traffic data licences.

The audience raised issues such as co-financing, truck driver shortages and driverless trucks. The question of whether people are ready for a driverless world was raised. When developing regulation, administration and industry need to work closely together (Mr Loos). Mr Brown explained the current insufficient cooperation in the US between the two due to the lack of time. Mr Smits believed social and technological innovation would allow squeezing more out of existing infrastructure. People need to be convinced of change and only then can there be action. R&D costs do not affect only businesses but also consumers (Mr Dings). In order for a change to occur, people must want it themselves (Mr Dings). Mr Loos found it encouraging to see that the new generation already has a different mind-set, as they use more public transport and less individual cars. Prices can also influence mind-sets. Mr Smits thought that rewarding companies that stay out of peak hours and congested areas could be a useful tool, as would green taxation (provided it is simple) (Mr Dings, Mr Loos).

When asked what the industry needs to do, the panellists underlined the need to join forces, to create Europe-wide guidelines for operating data (Mr Rytkönen) and to invest in R&D (Mr Wrangdahl).

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Jean-Cyril Spinetta: "Connectivity means economic growth."

José Ramon Fernandez Barrero: "10-15% of cost of finished bottle of wine due to #transport & logistics. Wine sector needs efficient, reliable #transport ."

Tim Clark: "#Aviation is a huge generator of economic wealth: logistics, jobs, manufacturing. Industry must be encouraged not trashed."

Jean-Cyril Spinetta: "If Europe is incapable of renewing airports, the situation will be very difficult. I am concerned about future of infrastructure."

Tim Clark: "Asian economies have power through labour; Europe has knowhow, innovation and a lot to give if they get out and engage."

Roundtable 3: Keeping European industry competitive on a global scale

  • Moderator: Dan Michaels

Speakers:

  • Jose Ramon Fernandez Barrero, Secretary General, European Committee of Wine Companies
  • Frank Appel, Chief Executive Officer, Deutsche Post DHL
  • Martin Lundstedt, Chief Executive Officer, Scania
  • Tim Clark, Chief Executive Officer, Emirates
  • Jean-Cyril Spinetta, Chairman and CEO, Air France KLM

The third roundtable focused on keeping European industry competitive on a global scale. The moderator Dan Michaels started off by asking the panelists' views on possible EU's shortcomings in this respect. CEO of Deutsche Post DHL Mr Appel saw some weaknesses of the EU, mainly due to the fragmentation of the transport industry and other inefficiencies that logistics can help reduce. While Europe is strong in infrastructure, this will not last forever. For Mr Spinetta, the Chairman and CEO of Air France KLM, the support from the National governments and the European Commission is important to secure and restore competitiveness of EU. Increased connectivity leads to more growth and can be achieved through better infrastructure, including notably the creation of the Single European Sky. In the view of the CEO of Emirates Mr Clark, Europe is used to be too concentrated on the internal market and misses out on important opportunities at a global scale. The aviation sector is a very important source of growth, wealth and jobs. Mr Clark and Mr Spinetta agreed on the need for a level playing field between competitors at a global scale, with the EU encouraging the industry instead of imposing taxation and regulation.

Panel 3

All panelists agreed that Europe has its strong sides. For CEO of Scania Mr Lundstedt, the EU performs well regarding sustainability and social and economic profitability. For Mr Appel it does well in keeping EU infrastructure in good shape and is a good role model on how to connect countries.

Mr Spinetta expressed his concerns on the future of infrastructure, notably on aviation (airports). In Asia, the level of investment is much higher than in the EU. Europe is losing its competitive advantage. In order for Europe to remain competitive, further investments in innovative solutions are needed. Also, the existing infrastructure needs to be used to a maximum extent. As there is little capacity left (especially for building), there is a risk of increased costs and businesses leaving Europe. Furthermore, he said, Europe needs to influence developments in Asia by using its know-how.

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Frank Appel: "Europe will not have money for new infastructure. Need to maximise use of existing; if not we lose competitiveness."

Martin Lundstedt: "Every time people take public transport, it's a win for sustainability, congestion. But what do passengers want?"

Frank Appel: "We still have no full road cabotage. It means 20-25% empty capacity; we have to reduce inefficiencies."

Jean-Cyril Spinetta: "Airlines are absolutely ready to pay passengers' rights for delays, cancellations etc. but we're not general insurance company."

Frank Appel: "Logistics has been neglected as important industry and employer but the situation is improving. There is now better understanding of its importance."

Speakers felt that a regulatory framework at EU level is not per se positive because it can either constitute an advantage or a disadvantage, thereby either strengthening or weakening EU competitiveness. For Mr Fernandez Barrero, Secretary General of European Committee of Wine Companies, currently overregulation hampers the creation of new capacities, Rules are not always clear or easy to apply. For Mr Lundstedt, the EU's framework is not flexible enough. Regarding the Emissions Trading System, Mr Spinetta said that he was in favour of intra-European ETS. Concerning the rules on passengers' rights, the current trend is to have the airline pay for everything. There is a need for clear allocation of responsibility between the carriers and the airports, as well as a level playing field between European airlines, for instance in terms of differences in subsidisation. Mr Clark called for further efforts on common legislation on safety and security.

The EU is seen to be very open to needs of aviation industry and is willing to adapt. In Mr Clark's view, the aviation industry puts too much effort in national lobbying instead of EU-level lobbying, missing out on the opportunity to influence European policy making. According to Mr Fernandez Barrero, EU legislation is often not the problem but the implementation at national level, which frequently leads to complicated legislation by adding rules. He praised fora for stakeholders the Commission has set up to receive input for policy making.

The audience raised the question of whether more Europe and less national legislation would in the end of the day not lead to a more efficient system.

Closing remarks by Vice-President Siim Kallas

In his closing remarks, Vice-President Kallas expressed his satisfaction with the outcome of the First Transport Business Summit and said it might be a good idea to make it a tradition. He stressed that Europe has always been successful in taking down barriers and refraining from unnecessary regulation. One of the key messages he noted was the need to invest. Legal stability as well as avoiding political interference is much needed. High-level safety is the EU's trademark. As regards the quality of regulation, he recalled that there is often substantial resistance to simplification of legislation. Transport should be seen as a an important source of growth and employment.

AVS photos: Vice-President Kallas at the Transport Business Summit

AVS video: Vice-President Kallas speaking at the Transport Business Summit

Vice-president of the EC Siim Kallas, responsible for Transport after the Business summit