Railway Markets

Freight Transport

The European freight transport sector enjoyed vigorous growth in the last decade. The traffic performance rose by roughly 2,5% per annum outstripping growth in GDP by approximately 0,5 percentage points and thereby underlining the very high freight transport intensity of economic growth. In the European Union of 25 Member States rail freight transport amounts to 379 billion tonne-km in 2004 which corresponds to a modal share of 10%. Graph 1 shows that the market has remained essentially flat since the mid-1990s. Traffic performance picked up recently, however. Between 2003 and 2004 it rose by 5,8% in the old Member States (EU15) and by 4,4% in the enlarged Union (EU25).

Graph 1

Source: European Commission (2005)

Rail freight transport is increasingly becoming a European business. Currently, some 50% of rail freight services in the EU are international (imports, exports or transit). The share of international services varies greatly between smaller countries, where it is higher, and bigger Member States, where it is lower due to the relatively higher importance of the domestic freight market. On some major European rail corridors such as the one between Rotterdam and Genoa, traffic performance has increased in recent years from around 5% to 10%[1]. This growth has been realised mainly due to block train/shuttle train activities where the new entry of railway undertakings has so far been the strongest. 

The opening of rail freight markets, based either on Community legislation or national initiatives, has resulted in increased market entry in recent years, although at a very modest scale. In 2003, new entrants had an estimated market share of around 3%-4% in terms of turnover in the Community of 25. Market entry was particularly strong in Germany, Sweden, the UK, the Netherlands, Italy, Poland and the Czech Republic. Many new entrants are small and operate in only one Member State. An analysis of national markets shows that there remains a clearly dominant operator on every network (see figure 2).

 Graph 2               Rail freight market shares of largest operators

Source: Steer Davies Gleave (2005) analysis

Since market opening some rail freight operators have developed a European business strategy and have become present in several national markets, for example the Railion group (in Germany, Netherlands, Denmark and Italy), Trenitalia in Italy and Germany (through acquiring a majority share in the private German undertakings TX Logistik) and the Swiss SBB Cargo by setting up subsidiaries in Germany and Italy. Should the recent trend of historical operators entering into competition with each other be confirmed then this would have a significant impact on the level of competition on the European rail freight market. For instance, since December 2003, Railion and its Swiss partner BLS Cargo compete with SBB Cargo and its subsidiaries on the North-South corridor through Switzerland.

By entering into new alliances, new entrants are now in a position to provide competitive international services and to compete with national incumbents for such services. The ’European Bulls’ alliance set up by five new entrants in January 2005 is one example for this new trend. Faced with the high market share and relatively strong capital base of the national incumbents, new entrants often fight an uphill battle to establish a significant position on the market. They clearly require favourable market regulation and transparent, non-discriminatory framework conditions to succeed.

1    The use of freight wagons

The availability of suitable wagons is paramount to ensuring competitive rail freight transport services. In the European Union there are about 600.000 wagons in commercial use of which ca. 200.000 are owned by private wagon keepers, the remaining 400.000 wagons are owned by the railway undertakings.

The rules for the use of these wagons are changing due to new Community legislation such as in the field of rail freight market opening,  rail interoperability and safety as well as the revision of the Convention on International Carriage by Rail (COTIF) whose new protocol is likely to inter into force in 2006. In October 2005, the European Commission has organised a workshop with the stakeholders to explore the problems and discuss possible solutions, including both regulatory and non-regulatory ones. The workshop concluded, that it is important to ensure a maximum adherence of parties (railway undertakings, wagon keepers) to the new General Conditions of Use (CGU), the new wagon use agreement replacing RIV. The need for developing guidelines on rules related to wagon registration, placing into service, maintenance and operation for the transition period between phasing out the old RIV agreement, the coming into force of the Technical Specifications of Interoperability (TSI) and the practical implementation of the rail safety Directive 2004/49/EC was underlined, too.

Freight statistics: Development of ton-kilometers per Member State and per year.

Freight statistics: average annual growth per Member State and per year; indices.

Data for the Czech Republic and Slovakia only available since 1993.

Share of international traffic in freight transport by rail.

Sources :Union Internationale des Chemins de Fer, European Conference of Ministers of Transport, Eurostat and national statistics. Data on the lifted tonnes not available.

Working Papers and Presentations (see also 'overview-articles' section)

Date	Title	Event	Author	File
Nov. 2005	Creating an integrated rail freight market in the EU: Assessing the progress so far	The Adam Smith Institute’s inaugural conference « The future of rail freight in Europe », Amsterdam, Netherlands	Jan SCHERP
Oct. 2005	Summary and conclusions of the Commission workshop on wagon use on 26 October 2005 in Brussels.	Workshop on wagon use	Jan SCHERP