New research: Europe’s big aspiration to reverse the decline of its rail freight industry

The European freight rail industry has seen a steady decline over the past 70 years—but the European Union has set a bold ambition to reverse this trend. It plans to double freight rail’s modal share by 2030, both to reduce the transport sector’s CO2 emissions and to ease the congestion of major road connections. Achieving this ambition would see freight rail volumes grow by around six percent a year in ton-kilometers (tkm).

This article explores the massive shift in trajectory required to achieve this ambition—and the role that regulators and operators could play in rethinking the regulatory model and reorienting the industry to become more customer focused and profitable.

Notable discussion points include:

• Doubling freight rail’s modal share requires major transformation: Truck transport is expected to gain a cost advantage of between 20 and 30 percent by 2050, given advances in driverless operations, flow optimization, and fuel efficiency. The rail industry would need to at least match these cost savings, if not exceed them, to gain market share.
• Freight rail in Western Europe has seen a steady decline, attributed to three key factors: A loss or decline of critical customer industries, the withdrawal of railways from providing various unprofitable services, and road transport improving its relative cost position compared to rail services.
• The three main elements a European rail freight transformation can focus on: Major transportation flows such as those between Spain and Central and Northern Europe; major connection points such as ports that handle a large proportion of the import and export flows; and new industries that could shift to rail and replace the volume lost by industries such as coal and steel.