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ORIGINAL PAPERA dapted cost-benefit analysis methodology for innovativerailway servicesGiuseppe Siciliano1&Francesco Barontini1&Dewan Md Zahurul Islam2&Thomas H. Zunder2&Stefan Mahler3&Ilaria Grossoni4 Received: 22 December 2015 /Accepted: 14 July 2016 /Published online: 7 September 2016#The Author(s) 2016. This article is published with open access at paper reviews and adapts the methodologyBGuide on the methodology for carrying out cost-benefitanalysis^prepared by the European Commission (EC). It isspecifically tailored to the assessment of an innovative railfreight service, and its application in the context of a numberof potential service areas (principally pan European) in SPECTRUM service is an innovative rail freight conceptfor the transport of low density high value (LDHV) methodology is pri

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1 ORIGINAL PAPERA dapted cost-benefit analysis methodology for innovativerailway servicesGiuseppe Siciliano1&Francesco Barontini1&Dewan Md Zahurul Islam2&Thomas H. Zunder2&Stefan Mahler3&Ilaria Grossoni4 Received: 22 December 2015 /Accepted: 14 July 2016 /Published online: 7 September 2016#The Author(s) 2016. This article is published with open access at paper reviews and adapts the methodologyBGuide on the methodology for carrying out cost-benefitanalysis^prepared by the European Commission (EC). It isspecifically tailored to the assessment of an innovative railfreight service, and its application in the context of a numberof potential service areas (principally pan European) in SPECTRUM service is an innovative rail freight conceptfor the transport of low density high value (LDHV) methodology is primarily based on theBGuideto cost-benefit analysis of investment projects^of theEuropean Commission.

2 The cost definition takes input froma Life Cycle Cost analysis and applies a series of conversionfactors. The benefits have been estimated considering theuser s surplus, the difference between GeneralisedLogistic Costs (GLC) borne by transport/logistics operators(and more in general freight transport service users) whenusing the SPECTRUM service and GLC connected toBpre-shift^mode, road or traditional rail ; and the difference inexternal costs generated by freight transport activities connect-ed to externalities such as air pollution and climate change,noise, accidents, and other externalities (up- and down-streamprocesses, nature and landscape, biodiversity losses, soil andwater pollution, congestion).

3 ResultsThe Adapted methodology has proven capable ofrepresenting the multiple effects resulting from the theoreticalintroduction of an innovative rail service in the freight transportsector - accounting for the differential impacts compared to thebaseline scenario solutions. The logical articulation of theanalysis is flexible; two specific estimation schemes (the estima-tion of ad hoc unit parameters for the external costs and ad hocapproach for using GLC as proxies of users surplus in a scenariowhere the introduction of the innovative service modifies themodal split of freight transport between different solutions) canbe applied to other territorial contexts.

4 It may also be used toevaluate other types of freight transport services, provided thatsome unit data can be retrieved, which pertain to site-specific costof infrastructures, average speeds and rates of different transportsolutions, costs of personnel and other operating IntroductionOver the last few decades there has been a significant growthin freight transport, most of which is served by road freighttransport in Europe. In contrast, the share of rail freight trans-port has either declined or remained stagnant with an excep-tion in a few countries where there is a slight growth in railfreight transport.

5 Apart from the dynamic nature of the roadservice offering, an important reason of the dominance of roadhauliers in the freight transport sector is linked to their abilityto deliver certain types of cargo. Types of cargo which havesignificantly changed from manufacturing inputs, to finishedand semi-finished products. These types of cargo requireThis article is part of Topical Collection on The Future of rail freighttransport and logistics*Giuseppe Bocconi, Milan, Italy2 NewRail - Newcastle Centre for Railway Research, NewcastleUniversity, Newcastle upon Tyne, NE1 7RU, UK3 Railistics GmbH, Wiesbaden, DE, Germany4 University of Huddersfield, Huddersfield, UKEur.

6 Transp. Res. Rev. (2016) 8: 23 DOI , more reliable, door-to-door services and where rail tra-ditionally has an unfavourable position. Road freight transportis the major source of greenhouse gas (ghg) emission, in con-trast rail freight transport is seen as an environment friendlytransport mode option. The European Commission (EC) at thecentral level and many member states ( France, Germany,and the UK) at the national level have been trying to encour-age the higher usage of rail freight transport ( modal shift infavour of rail ) to reduce the environmental effects from thetransport sector and reduce road congestion, in particular peakhours [11].

7 This is demonstrated through the funding of vari-ousprojectssuchas;RETRACK-BRETRACK: REorganisation of Transport networks by advanced RAilfreight Concepts.^[22]; CREAM BTechnical and operation-al innovations implemented on a European rail freight corri-dor) [14], under the sixth Framework Programme [7], andSPECTRUM -BSolutions and Processes to Enhance theCompetitiveness of freight Transport by rail in UnexploitedMarkets^under seventh Framework Programme [24]. Thescope of the research and demonstration under theRETRACK and CREAM projects concerned all cargo contrast the scope of the research and demonstration in theSPECTRUM project focused specifically on the market oflow-density high value (LDHV) goods.

8 The research inSPECTRUM project realised at the outset that to achievemodal shift from road it is important to offer a comparableservice to road in terms of cost and transhipment time. This iscrucial in the sense that the European rail freight market isostensibly a free market where, since 1 January 2007 andcompetition in a competitive environment is an indisputableneed for the building of an efficient freight transport sector [5].With this context in mind, the research in the SPECTRUM project explored four service areas in Europe. It is a fact that tomeet the continuous growth, the volume of freight transportand its external costs are rising [4].

9 The external costs varysignificantly between modes. It is important that the full-socio-environmental costs of competing transport mode op-tions are accounted for [25].This research paper firstly explores the currently acceptedand widely applied method of assessing the benefits of a pro-ject against its associated costs, known as Cost-BenefitAnalysis (CBA). By reviewing theBGuide to Cost BenefitAnalysis of Investment Projects^prepared by the EuropeanCommission (EC), the paper presents an adaptation of thismethodology, specifically tailored to the assessment of an in-novative rail freight service, and its application in the contextof a number of potential service areas (principally panEuropean)

10 In EC Guideline was developed for the Commission ser-vices in late 1990s to help them judge the quality of projectsproposed for financing by Member State, and it rapidlyachieved a wide circulation so that later versions were aimednot only at EC services but also at staff of financialinstitutions, consultants and analysts. The Guide is thereforea contribution to a shared European-wide evaluation culture inthe field of project methods in this paper, and some additional parameters,are presented as options to implement the current EC methodof CBA for a specific type of project.


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