Railway Restructuring in the Americas--
Implications for the Former Soviet Union

International Railway Seminar  |  Moscow  |  October 2000  
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  Conclusions

Under Open Access, the primary focus has been political, and in particular, the de-monopolization thrust.  The secondary focus has been about the customer. Operational control is in the hands of a third party – the Regulator. And the company that actually provides the service to the customer, who we are trying to convince to use rail instead of trucks, has no control over the infrastructure (Table G).

In contrast, with the Exclusive Franchise model (which in European terms would be considered a "monopoly"), the primary focus is on the customer. The secondary focus is on the investor. In order to have a successful business there has to be capital and so there is an accommodation for the needs of the investor to earn a reasonable return.

 
 

Table G

 

OPEN ACCESS EXCLUSIVE FRANCHISE
PRIMARY FOCUS POLITICAL CUSTOMER
SECONDARY FOCUS CUSTOMER INVESTOR
OPERATIONAL CONTROL REGULATOR OWNER
INVESTMENT IN INFRASTRUCTURE NO YES
 
 

The Iowa Interstate may be the weakest of the four railways between Chicago and Omaha, but it is in control of its fate and can decide whether to put money into the track or into the equipment to expand capacity or increase the speed. Control of the infrastructure means that the customers’ needs translate directly to the type and configuration of infrastructure provided.

 
 

"Because of its lack of focus on the Investor,
and its secondary focus on the Customer,
the financial and transportation marketplaces
have repudiated (meaning rejected)
Open Access"

 
 
The railways in the Former Soviet Union have half of the world's railway traffic and a very high market share (estimated at above 80%) for the freight business.  Thus, when the FSU considers options to restructure its railways, its countries should consider the various models and look at what is happening around the world.  The FSU can benefit from some of the very expensive mistakes that other countries and other continents have made when figuring out what is best for their environment.

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RDC takes pride in its cultural adaptability -- essential when doing business overseas, taking inspiration from diverse sources.  A good example of this is our frequent use of a slogan of Samora Machel, the first President of Mozambique after independence:  “A luta continua!” which translates as “The struggle continues!” 

"A LUTA CONTINUA!"
"The struggle continues!"
(click on photo to enlarge)

 
  In the case of Guatemala, the most appropriate inspiration is a quote from Che Guevara, "The only struggle which is lost is that which is abandoned."  Surely Guatemala's abandoned railway, now restored to commercial operation to the Atlantic (see Guatemala Case Study), is an example of this and proof that RDC is willing to go anyplace in the world and take on these transactions if we are able to harvest the fruits of our labors, and if we can develop the types of franchises where, if we are successful, we get to keep our business as opposed to having our own customers turn against us.


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