European investment in the rail freight market and intermodality: is Europe betting on the wrong (iron) horse?

On the other hand, the service provided by railway operators is less flexible since it is scheduled and not door-to-door. Additionally, the infrastructure required for rail transport is more complex and expensive, and not homogeneous across European countries. In fact, there are differences from a technical perspective in electrification standards, in signaling systems and railway gauges, and from an administrative point of view, given that every country has its own Infrastructure Manager. All these shortcomings increase the complexity of interoperability among EU countries. Comparing costs, intermodal transport is 56% more expensive than road transport for shippers, based on European Commission data from 2017.

EUROPEAN POLICIES AND GOALS

To promote the railway sector, the European Union is financing, through loans and grants, projects for improving the railway network in Europe. These investments will help to undercome the barriers and bottlenecks highlighted above. 

The EU regulation 1315/2013 sets the Trans-European Transport Network (TEN-T) policy with the aim of creating an instrument useful for the development of transport infrastructure among EU countries, comprising all means of transport. The TEN-T network is composed of nine corridors that form the Core network and in addition, there are two horizonal priorities: the Motorways of the Seas (MoS) and the European Rail Traffic Management System (ERTMS).

Furthermore, in Europe there are eleven Rail Freight Corridors (RFCs) created to increase the competitiveness of freight rail transport. The challenges of the RFCs are:

• Strengthening cooperation among infrastructure managers to increase interoperability and infrastructure development.
• Striking the right balance between passenger and freight traffic along the RFCs, to guarantee a better service for freight traffic in terms of punctuality.
• Promoting intermodality through the integration of terminals in the corridor management and development.

In the White Paper “Roadmap to a Single European Transport Area-Towards a competitive and resource efficient transport system” published in 2011 by the EU, the European goals for reducing the transport impacts were set. Regarding freight transport, the goal is to shift 30% of road freight traffic over long distance (over 300 kilometers) to more sustainable solutions, such as inland waterways or railways by 2030. Looking towards 2050, the objective is to achieve a 50% shift. 

The European Union has invested a huge amount of funds in the transport sector in recent years. The Connecting Europe Facility (CEF) program, managed by the European Climate, Infrastructure and Environment Executive Agency (CINEA), allocated €23.2 billion in grants for supporting transport projects in the period between 2014-2020. 

The CEF for transport aims to finance projects for modernising and completing the TEN-T. To achieve this goal, 88% of the total amount was allocated to the development of the Core Network. Given the importance of reducing the environmental footprint of the transport sector, 70 % of the CEF’s grants were assigned to railway projects, both for freight and passengers. To achieve the Green Deal goals another €25.8 billion are available for the period 2021-2027. 

In addition to these funds, for recovering the pandemic crisis effects the Europe provided additional funds with the Recovery and Resilience Facility policy, that Member States can allocate also to transport sector.

Moreover, the European Investment Bank (EIB) has invested in the modal shift to railways in supporting projects for an amount of €40 billion in the decade 2011-2020, contributing to infrastructure development, both for tracks and stations and in the purchase of new rolling stock.

THE RESULTS OF EU INVESTMENT IN THE RAIL FREIGHT SECTOR

Despite the promotion and the capital investment of the European Union in this sector, the railway modal share of inland freight transport, since 2010 has slightly decreased, in favor of the road sector as shown in Figure 2.

Looking more closely at the data, when we examine a sample of European Countries in the same time window, the rail freight modal share is stable in all cases as we can see in Figure 3, apart from in Poland, where it drops. In Spain, the Netherlands, France, and Germany the share holds constant, while Italy and Croatia show a slight increase, even if it is not sufficient.

WHAT ABOUT INTERMODALITY?

Intermodal freight transport is a method for moving goods in Intermodal Transport Units (ITUs), which can be a container, semi-trailer, or swap-body and employ various means of transport such as trucks, rail, and ships. 

In the period 2014-2020, Europe through the European Regional and Development Fund (ERDF), the Cohesion Fund (CF) and the Connecting Europe Facility (CEF), has invested €1.1 billion in projects concerning intermodal transport, as stated in “Intermodal freight report” of the European Court of Auditors (ECA) of 2023. This report summarizes the budget allocated for intermodality projects from the funds of the Recovery and Resilience Facility, by a sample of EU Member States. While significant differences exist, as illustrated in Figure 4, it is essential to consider that the funding amounts received vary among different EU countries.