Policy Initiatives Policy Initiatives for Land Transportfor Land TransportPolicy Initiatives Policy Initiatives

for Land Transportfor Land Transport

1010thth International Conference International Conference Chartered Institute of Logistics & Transport Chartered Institute of Logistics & Transport

AmalAmal S. KumarageS. KumarageProfessor, Department of Civil Engineering, Professor, Department of Civil Engineering,

University of University of MoratuwaMoratuwa20042004

Overview of Land Transport & the Economy- 2003

• GDP – Rs 1,400 billion

• Value Addition to Economy Rs 178 billion (12%)

• Employment Direct 700,000 (11% of national)

• Government Capital Allocation Rs 300 bn

• Government Expenditure on Transport Sector – Highways Rs 13.5 bn (4.5%)– Transport Rs 6.5 bn (2%)

Understanding what ails the sector?- myths & realities

• Poor Country cannot improve quality X– But even rural sector seek higher quality and are prepared to pay higher

fare/cost for it

• Insufficient Government Investment ?– Past Investments without targeted outcomes have not improved services

• Insufficient Private Investment X– Unregulated and unplanned Private Investments yield poor returns

• There is Institutional Capacity to Manage X– Resistance to use of Professionals &*se of Modern Methods

• Decision Makers Represent User Needs X– More interested in the welfare of suppliers

Priorities in Land Transport

• Reduce Total Transport & Externality Cost for Economy.

• Improve Quality/Service Levels of Public Transport.

• Reduce Financial Burden of Public Transport on Treasury through Strategic Reform of SLR and Cluster Cos.

• Reduce Financial Burden of Public Transport on Treasury through Strategic Reform of SLR and Cluster Cos.

• Managing Road Space & Traffic Flowby Levying charges to recover actual cost of Road Use

• Reduce the burden from road accidents

Economic Cost of Transport 2003

Direct Operating Costs

• Railways Rs 4,700 mn

• Buses Rs 36,288 mn

• Three Wheelers Rs 13,230 mn

• Private Vehicles Rs 71,875 mn

• Goods Transport Rs 61,000 mn • Goods Transport Rs 61,000 mn

• TOTAL Rs 178,393 mn

Cost of Externalities

• Time Value > 30 km/hr Rs 77,500 mn

• Time Value <30km/hr Rs 16,250 mn

• Unpaid Accident Costs Rs 10,000 mn

• Environmental Rs 2,000 mn

• TOTAL Rs. 105,750 mn

Fuel Consumption-2003

• Diesel 2,700 mn litres – Rs. 91,000 mn• Petrol 400 mn litres – Rs. 12,000 mn

• Fuel Cost for railways - Rs 3,500 mn• Fuel Cost for buses - Rs. 3,000 mn • Fuel Cost for buses - Rs. 3,000 mn

• 10% of fuel for railways/buses – but they carry 73% of passengers.

• Over the last few months all these costs have increased by around 60%.

Transport Modal Shares: Sri Lanka (2003) [1]

Mode Passenger Kms Carried (mn)

%

Bus 49,112 (66.82%)

Railways [2] 4,258 (05.79%)

Private Vehicles 17,784 (24.20%)

Three Wheelers 1,328 (01.81%)Three Wheelers 1,328 (01.81%)

Lorry/Land Vehicle 1,019 (01.39%)

Total 73,499

[1] Source: University of Moratuwa, Moratuwa, Sri Lanka

[2] Source: Sri Lanka Railway Department

Economic Direct Costs in Land Transport (2003)

PASSENGER Vehicles Veh Kms Pax Kms Cost Rs. Cost per Pax Km

Railways - - 4,258 6,500 1.53

Buses 25,000 1,296 49,112 36,288 0.73

3Wheeler-Taxi 167,764 1,890 1,328 13,230 9.963Wheeler-Taxi 167,764 1,890 1,328 13,230 9.96

Private Vehs. 880,034 10,125 17,784 71,875 2.73 MC

5.26 C/V

FREIGHT Vehicles Veh Kms Ton Kms Cost Rs.

Railway - - 128

Trucks/Vans 173,643 3,000 5286

Can the Bus & Train be made obsolete in Sri Lanka????

Sri Lanka is a country with a high population density.

Such countries are ideally suited to make public transport (bus and rail) the primary provider of passenger transport services.

At present only 4% of households own a car or van.

Even if this were to double or treble our roads would not be able to Even if this were to double or treble our roads would not be able to handle the traffic.

Region

Vehicle

Ownership

Level

Share of

Public

Transport

Population

Density

(per/ha)

Road

Density

(m/person) CMC

262

50%

174

0.2

Colombo

District

141

55%

30

1.8

District

CMR

97

60%

13

2.8

Sri

Lanka

74

65%

3

5.5

Vehicle Ownership and Available Resources

75 to 65%

5 to 20%

15 to 5%

5 to 10%

The deteriorating quality of service offered by public transport as against increasing comfort of private transport has seen increasing numbers use private vehicles.

Impact of Bus Transport on Sri Lankan Society & Economy

• 50 billion passenger kms per year � 65% of all travel

• 30 billion Rupees in economic value � 3% of GDP

• 10 million trips per day �2 trips per household per day

• 80 % households use the bus at least 1 time per week

• Also 84,000 persons directly employed

What are the basic problems facing the industry?

• Inadequate fares ����Inadequate investment in buses?• Weak regulation ���� Lack of Enforcement• Weak Market Structure���� Unmanageable number of

operators• Abandonment of professional practices ���� poorly • Abandonment of professional practices ���� poorly

managed industry

Although regulated fares, and the single bus ownership have been the most quoted reasons for this state of affairs, recent study and documentation reveals that a host of regulatory lapses are in fact the primary cause of this situation.

10 Essential Steps for Improving the Bus Sector in

Sri Lanka.• A clear regulatory framework• Data to understand passenger demand and needs• A Route and Service structure based on passenger requirements• A mechanism for costing of services• Ability to design the route and service requirements• Ability to design the route and service requirements• An effective competition policy • A manageable system of procuring bus services through real

competition. • Modern Tools for monitoring of services & passenger feedback• A Criteria for consideration of affordability and subsidies• Opportunity for application of Professional practices

Competition- Policy• Competition in the Route or For the Route?• Partition of market

– Competition between fare and time– Competition by stop pattern– Competition between special services (AC

Reservation) vs regularReservation) vs regularTypes/Levels

– Regular (all stop)– Collector- Distributor (limited stop)– Express (non-stop)– Air Conditioned– Reserved/Guaranteed Seating

Possible Models for Developing Bus Operations

• Permit System: (which is the practice in Sri Lanka)

• Supervised Competition through Route Associations: (Buenos Aires, Caracas, Istanbul, Associations: (Buenos Aires, Caracas, Istanbul, Manila.)

• Route Franchising (UK, Costa Rica, New Zealand.

• Market Partitioning (Dakar, Hong Kong, Bangkok)

Route #182: Operational Comparison Before & After

Before After

Trips per Day 3.6 4.5

Round Trip Time 220 mts 96 mts

Crew Hours 13 to 14 hrs 5 to 9 hrs

Off days per month None 5

Passenger Satisfaction 20-40% 60-92%

Expenditure on State Operators -2003

Railways• Cost Rs 4,994• Revenue Rs 1,361• Govt. Subsidy Rs 3,634 (73%)• Govt. Subsidy Rs 3,634 (73%)

Buses • Cost – Rs 11,800• Revenue – Rs 9,000• Fare Subsidy- Rs 400• Govt. Subsidy Rs 2,400• Depreciation Rs 1,000 (30%)

Other Govt. Subsidies

Season Tickets• Services 350,000 school &

university/technical students

• Rs 225 million per year• Rs 225 million per year

Rural Routes • Annual Subsidy Rs 200 million

• Services 2100 routes island-wide

Capital Contribution to State Bus Sector (Rs Million in 2004 Prices)

1994-1999 2000-todate

Total (1994-Todate)

New Buses

(5,374 buses) (897 buses) (6,272 buses)

New Buses11,288 1,834 13,122

Salary/EPF Tires/Kits/spares etc 8,947 14,593 23,540

TOTAL 20,235 16,427 36,662

Present Bus Fleet Resources

• Fleet -7,300 buses• Operational 4,100 buses • Operating around 3,600 buses

– Non Operational 3,200 buses– Non Operational 3,200 buses• Without Tires/batteries 631 (new tires ordered,

batteries received)• Awaiting minor repairs 1100 (buses identified, cost

estimates completed, spare for Rs 92 million approved, awaiting tender finalisation)

• Awaiting major repairs 700• Not serviceable – 800 approx

• New Bus Requirement for 250 to 500 buses (especially for long distance services)

Steps to Recovery• Human Resources Management

– (discipline, performance based)

• Cost Management – (cost centres, cost norms)– (cost centres, cost norms)

• Revenue Management – (revenue leakages, revenue norms, subsidy

rationalization)

• Procurement Management – (centralized procurement, quality guarantee,

outsource services?)

Present Problems of the Railways

• Demand for Services (especially urban) but unable to provide supply. Carries only around 10% in Colombo.

• Trains Over crowded, reliability of long distance services decreased by 40% compared to year 2001. Excessive number of speed cautions. Particularly due to neglect of maintenance of track & rolling stock.

• Present financial position very poor– Revenues =Rs 1,750 mn p.a.– Operating Costs =Rs. 4,000 mn p.a.– Operating Costs =Rs. 4,000 mn p.a.– Operating Subsidy Rs 200 mn per month = Rs 2,400 mn p.a.– Capital Cost Rs 2,300 p.a.– Total Financial Subsidy Rs 4,700 mn p.a.

• Strategy for the Railway– Increase passenger travel in Colombo suburbs by 20%� Revenue = Net Rs. 200 mn– Contribution to decongestion on main roads in Colombo = Rs 800 mn– Long Distance goods haulage (less damage on roads, decongestion = Rs 300 mn– Other rail-related business initiatives, increased revenue = Rs 500 mn? – Cost reduction initiatives recurrent (10%) = Rs 400 mn– Cost ceiling on capital Rs 1,000 mn p.a. � reduction = Rs 600 mn – Total Economic Subsidy = Rs 1,100 mn– Total Financial Subsidy = Rs 2,300 mn

Need for Traffic Management

• Cost of Lost Resources – Rs 20 bn p.a.

• Air Quality and health hazards

• Spiraling land values

• Collapse of city centres

Government Expenditure 2003

Expenditure• Roads – National Rs.11,300 mn • Roads – Provincial Rs. 2,151 mn • Railways Rs 3,500 mn• Buses Rs 3,000 mnTOTAL Rs 20,000 mnTOTAL Rs 20,000 mn

Income• Vehicle taxes etc. Rs 12,000 mn• Import Taxes Rs 5,000 mn• Taxes on Fuel Rs 5,000 mn• Registration/Annual License Rs 2,000 mn TOTAL Rs 24,000 mn

Vehicles/Traffic in Colombo City

• 191,000 vehicle enter the city daily

• 876,212 passengers enter the city daily

• 64% arrive by bus (takes 25% of road space)

• 10% arrive by railway

• 26% arrive by private transport (takes 65% of road space)

Passengers & vehicles Entering Colombo City (1995 vs. 2004)

1995 2004

Vehicles Paxs Vehicles Paxs

Buses 13,542 476,873 9,373 479,895Buses 13,542 476,873 9,373 479,895

Private Vehs.

101,603 208,088 182,246 396,317

TOTAL 115,145 756,961 191,619 876,212

• =

Change in # of Vehicles

Change in # of Passengers

Entry to CMC: Changes in Vehicles & Passengers (1995-2004

Private Vehicles

80,643 116,229

Buses (4,169) 3,022

Three Pronged Strategyfor Solving Urban Congestion

• Managing the Demand for Transport (peak spreading, tolls & taxes…)

• Develop the appropriate modes of Transport Supply (subsidies space efficient modes, new modes..)

• Develop the appropriate modes of Transport Supply (subsidies space efficient modes, new modes..)

• Getting the Maximum from available transport infrastructure (traffic management- parking control, one ways…)

The Problems of Road Safety

• Costs 2200+ lives, disables 4,000+, injures a further 12,000.– Damage only accidents 38,848.– Total accidents 57,618

• Only 700 (4%) receive any compensation.

• Economic Cost of accidents Rs. 10 billion ++

• Risk of death due to road accident has risen from 1 in 115 (1977) to 1 in 51 (2002)

Tasks for the Road Safety (Presently Implemented by Committee under Secretary)

• Task 1: Awaiting Cabinet Approval for National Road Safety Strategic Plan • To Set up Secretariat, Commence Road Safety Fund, Approve Road Safety

Strategic Plan. This will enable to obtain donor funds & private sector funding for projects � make agencies responsible for implementation�implementation can start immediately with visible results within 6 months

• Task 2: Revised Road Traffic Act Ready, Table in Parliament– Enforcement by Police will be more effective (3 to 6 months). – Plan an Implementation Strategy

• Task 3: Commence Implementation of Road Safety Fund• Task 3: Commence Implementation of Road Safety Fund– Funds can be obtained for sustaining Road Safety work, pay compensation to

victims, start legal aid system (3 months)

• Task 4: Implement De-merit Point System– Develop island wide computer software for system. Computer already on

order.– Start with new equipment enforcement Police are to receive shortly.– Commence with those who commit offences.

Restores Public Confidence that a government cares for life and law & order.

New Motor Traffic Act• Introduce new rules & remove outdated laws

• Bus drivers & heavy vehicles will need experience from motor car/van level 3 years for light lorries and 3 more years to buses. for light lorries and 3 more years to buses. Heavy vehicles a further 3 years.

• Demerit point system incorporated.

• Public service vehicles & emergency service vehicles require special endorsement.

• Penalties have been increased for all violations.

THANK YOU