Improving the quality of Sweden’s rail freight rolling stock : The use of date envelopment analysis in benchmarking and pricing

Purpose The purpose of this paper is to provide a theoretical conceptualization of how data envelopment analysis (DEA) can be applied to rail freight rolling stock in order to develop a tariff for track access charges which is functionally dependent upon the derived relative benchmark values of performance. Design/methodology/approach It is posited that track access charges should be differentiated to reflect differences in the performance of rolling stock and that this can be achieved purely on the basis of technical and other characteristics. The performance benchmarking of rolling stock is proposed as the basis for formulating and justifying a performance-based tariff structure. Using DEA, relative index measures of rolling stock performance can be derived, benchmark performance can be identified and a tariff structure can be developed. Findings A workable approach to implementing the concept, utilizing existing in-house databases, is found to be feasible and a template for tariff setting is established. Research limitations/implications In the absence of access to in-house technical data on rolling stock, which is commercially sensitive, no empirical application of the concept is possible. Originality/value There are many ways to improve the efficiency of a railway system. Many are inherently long term and involve significant investment. Using Sweden as an example, this paper proposes the more immediate, simpler and cheaper approach of incentivising the use of better rolling stock through appropriate track access charging. Such an approach should reduce the number of problems arising on the rail network and the costs imposed on other rail users, the infrastructure providers and society. Ultimately, the implementation of this approach would support the objective of increasing long-term robustness and reducing disruptions to railways.