The European Court of Auditors report found that the EU's goal of increasing rail freight's share of the overall transportation volume has not been met, with road haulage still preferred at 75% of the market share. While billions of euros have been invested in rail development, infrastructure issues like a lack of competition, low speeds averaging 20-30 kph, and dominant incumbent operators blocking access have prevented rail from becoming more competitive with trucking. The report concludes that further regulatory reforms, targeted funding, and improved cross-border cooperation would be needed to achieve the EU's aim of shifting more freight onto rail.

1. 46 | Baltic Transport Journal | 5/2016
In the past few years transport
performance in the EU remained at a
stable level of 2.3 bln tonne-kilometres
per year, out of which road haulage
holds 75% of the market (73.7% back in
2000). Such a result is contradictory
to what the European Commission
declared in 2001 as a goal set for 2010.
Policy off the rails
by Maciej Kniter
This year’s report Rail freight transport in the EU: Still not on the right track produced by the European Court of
AuditorsontheconditionofrailwaytransportintheEUstressesthatthegoalofincreasingitsshareintheoverall
transportation volume has not been met. Trucking is still a lot more flexible and competitive, hence preferred
by customers, despite billions of euros injected in rail development (EUR 28 bln just in the years 2007-2013).
T
he aim of the European Court of
Auditors’ inspection was to exam-
ine whether the EU had supported
rail transportation correctly. The
Court has especially checked the regulations
implemented both by the Commission, as
well as by the EU Member States, and what’s
more, it has also analysed whether funds
were spent appropriately on the major rail
infrastructure needs.
The audit was conducted in five countries
– Czechia, Germany, Spain, France, and
Poland – within the period of mid-2014-
mid-2015, including a review of 18 rail infra-
structure projects intended to benefit, at
least partly, rail freight transport. In the
end, two major themes stand out. First, a
diagnosis of today’s rail ill-health, while
the second one hints at future remedies.
The condition of rail freight transport in the EU
few years transport performance in the EU
remained at a stable level of 2.3 bln tonne-
kilometres per year, out of which road haul-
age holds 75% of the market (73.7% back
in 2000). Such a result is contradictory to
what the European Commission declared
in 2001 as a goal set for 2010, namely that
in Central and Eastern Europe rail was sup-
posed to have 35% of the overall share by
that year. As such, this plan was modified
five years ago, and now aims at moving 30%
of road volume carried more than 300 km
onto other modes of transport (i.e. rail or
inland navigation) till 2030. Furthermore,
the Commission wants this percentage to
grow to more than 50% in 2050.
Figure 2 makes us doubt whether the 2030
EU goal will be achieved, state the paper’s
authors. The tendency is rather obvious, as
roadcontinuestodominate,followingaseries
of rail-related factors, including the lack of
competition, faulty procedures of managing
rail traffic, administrative and technical bar-
riers,oldandneglectedinfrastructure,aswell
as investing most of the funds in providing
high-speed rail for passenger flows.
However, while the EU level of rail freight
volume is both unsatisfactory and goes down
(the average is now 17.8%), there are some
countries that have managed to increase
their overall rail share against other modes.
And so within the years 2000-2013, railway
was on the rise in as much as ten Member
States, four of which are located in the Baltic
Sea region – Sweden on the top (although
in 2014 its share decreased to 33.7%), then
Finland, Germany, and Denmark. In con-
trast, other BSR states went in the opposite
direction – Latvia, Estonia, Lithuania, and
Poland (Fig. 3).
(Not) fast and (not) furious
The Polish and Czech (20.3% of rail
freight share) examples show that the condi-
tion of rail infrastructure leads to such poor
results. After the 1989-1991 breakthrough,
rail infra (already not in its best shape) was
put aside, with money injected first and fore-
most into roads, clearly privileging trucking
in the short- and long-runs.
Infrastructure clearly impacts speed,
and this is what the Court’s report clearly
stresses, namely that the average speed of
cargo train sets has not risen within the
last decade. “On some international routes
freight trains run at an average speed of only
around 18 km/h. This is also due to weak
cooperation between the national infra-
structure managers. In Central and Eastern
European Member States, the average speed
is between 20 and 30 km/h. For example, in
Poland our audit found that in 2014 the aver-
age commercial speed of freight trains was
22.7 km/h,” the report reads. Only in some
of the rail strips trains are moving faster,
e.g. approx. 50 km/h on the Rhine-Alpine
corridor (yet, slower than the average speed
of a truck, 60 km/h).
All about the percentages
Free movement of capital and goods posi-
tively impacts the economy, contributing
to the creation of jobs and new business
opportunities, among others. In the past
Fig. 1. Inland freight transport in the EU [billion tonne‑kilometres] Fig. 4. Rail freight market shares of the incumbent freight operator and
new entrants in 2013
Source for figs. 1,2, and 4: European Court of Auditors' Rail freight transport in the EU: Still not on the right track

2. 5/2016 | Baltic Transport Journal | 47
Focus
Nevertheless, one of the most important
obstacles for making rail freight
transport more competitive is the
position of the so-called incumbent
freight operator.
Bully issues
The legislation has also failed when it
comes to creating a single European rail-
way area. A big part of the market is still
closed, procedures are not simplified, while
funding is not properly targeted. Still we
have at least one dominant infrastructure
supervisor per one state, which implies dif-
ferentiated regulations, also regarding route
assignment, fees, etc. Nevertheless, one of
the most important obstacles for making
rail freight transport more competitive is the
position of the so-called incumbent freight
operator, an “operator with a historically
dominant position in the national market,
deriving from a single integrated company
which used to be responsible for the man-
agement of the rail infrastructure and provi-
sion of transport services.” Such companies
are responsible for monopolistic practices.
management are also reasons why forward-
ers prefer trucks. There are problems with
port-rail interfaces, too, Gdynia portrayed
as a regretful example, where it happens
For instance, they impede access to termi-
nals, repair facilities, or route allocation.
What is more, nowadays we can
observe a trend of further strengthen-
ing of the position of incumbent freight
operators, namely expansion by acquisi-
tion. The report lists one example from
Germany, which gained the leading
position in Denmark, the Netherlands,
and the United Kingdom by overtaking
smaller companies. Figure 4 shows that
despite market liberalization, the German
incumbent operator has a stronger posi-
tion than e.g. its Polish counterpart.
But there’s much more behind railways’
deficiencies. Faulty procedures (or rather
the lack thereof), low priority of railway
freight transportation, combined with
the administrative barriers and inefficient
that trains sometimes must wait as long as
10 hours before entering the port.
Nevertheless, the rail market isn’t solely
painted in murky colours. On the passenger
side, the volumes have been more or less
stable. Another old truth is still valid – rail
is safer than roads. Then again, this is hardly
comforting from a commercial point of
view, economic attractiveness (price, speed,
and reliability) being the undisputed king.
This can be achieved by proper pricing and
its relation to a service’s quality, backed
up infrastructure investments and better
cross-border EU-wide cooperation. On the
other hand, the decision makers have to
keep in mind that a better market position
shouldn’t come by creating a false competi-
tion, i.e. making truck drivers unemployed
by taxes or fees. ‚
Fig. 2. Comparison of some of the challenges faced by rail freight transport compared to road
Source: Rail freight transport in the EU:
Still not on the right track
Fig. 3. Rail's share in BSR countries overall freight
transports [%]
Source: Eurostat