Europe’s Rail Freight Crisis: Can Combined Transport Recover?

The European combined transport (CT) sector, a crucial element of sustainable freight logistics, is currently facing significant challenges. This article will delve into the recent decline in road-rail CT volumes, analyzing the contributing factors and exploring potential solutions to revitalize this vital mode of transportation. The analysis will cover the economic climate impacting freight demand, the competitive landscape between rail and road, and the crucial need for targeted governmental support to ensure the long-term viability of combined transport within the European Union (EU). Understanding the complexities of this issue is paramount, as the future of efficient and environmentally friendly freight movement across Europe hinges on the health and growth of the combined transport sector. This analysis will provide a comprehensive overview of the current situation, the underlying causes, and potential avenues for recovery, fostering a critical discussion among industry stakeholders and policymakers.

The Decline of European Combined Transport

The International Union for Road-Rail Combined Transport (UIRR) recently reported a concerning 14% drop in combined transport volumes during the April-June 2023 quarter. This marks the third consecutive quarterly decline, mirroring the significant drop experienced in the second quarter of 2020 at the onset of the COVID-19 pandemic. This substantial decrease underscores a severe downturn in the sector’s performance, highlighting the urgent need for intervention and strategic planning.

Economic Headwinds and Market Competition

The current economic climate in Europe plays a significant role in the decline. High inflation, sluggish consumer confidence, and the end of readily available and inexpensive energy have all contributed to a reduction in overall freight demand. Furthermore, the competitive landscape between rail and road freight is increasingly tilted towards road transport. While rail faces rising track access charges and electricity prices for traction, road transport benefits from relatively static tolls and declining diesel fuel prices, making it a more financially attractive option for many freight operators. This price discrepancy directly impacts the competitiveness of combined transport, impacting its market share.

The Need for Governmental Support

The UIRR president, Ralf-Charley Schultze, has stressed the urgent need for targeted support from EU governments to mitigate the downturn. He argues that the negative trend is likely to persist at least until 2024. Mr. Schultze advocates for a range of policy interventions, including reduced track access charges and price caps on traction electricity. These measures aim to level the playing field between rail and road, making combined transport a more financially viable option for freight operators. Without such intervention, the long-term viability of this environmentally responsible mode of freight transport is jeopardized.

Policy Recommendations and Sustainable Solutions

To reverse the decline in combined transport, a multifaceted approach is necessary. This includes not only financial incentives, such as reduced track access charges and subsidized electricity, but also investments in infrastructure improvements to enhance the efficiency and capacity of rail networks. Furthermore, promoting the environmental benefits of combined transport through targeted marketing campaigns and regulatory frameworks that prioritize sustainable freight solutions is crucial. Incentivizing the adoption of more fuel-efficient locomotives and wagons will also reduce the operating costs of rail, improving its competitiveness. Collaboration between governments, freight operators, and infrastructure providers is essential for developing and implementing effective solutions.

Conclusions

The significant decline in European combined transport volumes presents a serious challenge to the sustainable development of the freight sector. The convergence of economic headwinds, increased rail operational costs, and the relative affordability of road transport has created a perfect storm that threatens the viability of this crucial mode of transportation. The near-15% drop in volume during the second quarter of 2023 echoes the historic decline seen at the beginning of the COVID-19 pandemic, highlighting the fragility of the sector. The lack of competitiveness of rail compared to road, caused mainly by the increase in track access charges and traction electricity prices, necessitates immediate and decisive action.

The UIRR’s call for targeted governmental support is crucial. Subsidies such as reduced track access charges and electricity price caps are essential to re-establish the cost-effectiveness of rail freight, encouraging its increased adoption. However, financial incentives alone are insufficient. A holistic approach is required, encompassing infrastructure upgrades, promotion of environmental benefits, and regulatory changes that favor sustainable freight options. Investing in fuel-efficient rolling stock can further enhance cost-competitiveness. This collaborative effort among governments, industry stakeholders, and infrastructure providers is imperative for the long-term sustainability and success of combined transport in Europe. Without decisive action, the current downturn threatens not only the future of combined transport but also Europe’s broader environmental and economic goals.