Introduction

European rail freight is at a crossroads. Once a dominant mode of transporting goods across the continent, its role has diminished over recent decades due to a rise in road freight, regulatory fragmentation, and underinvestment. Today, however, rail freight is receiving renewed attention — not only as a key player in decarbonising transport but also for its potential to bolster supply chain resilience and competitiveness.

As Europe races to meet its climate targets and ease the environmental burden of road congestion, revitalising rail freight has become a policy and industry imperative. But achieving this shift is not without obstacles. This article explores the current state of European rail freight, the opportunities that can reignite its growth, and the multifaceted challenges that must be overcome.

European Rail Freight Market Today

Historically, rail was central to freight logistics across Europe. However, the past half-century has seen a steep decline in its modal share, with road haulage dominating the sector due to its flexibility, cost-efficiency, and extensive infrastructure.

Today, rail freight accounts for only around 17-18% of inland freight transport in the EU — a figure that has stagnated despite policy efforts. While countries like Austria and Switzerland perform relatively well, others like Spain, Italy, and France lag behind. Intermodal freight — especially containerised cargo moved by rail — is the bright spot, growing steadily as part of broader logistics chains.

The European Union has recognized the strategic importance of rail freight through regulations like (EU) No 913/2010, promoting rail freight corridors, and initiatives under the European Green Deal and Sustainable and Smart Mobility Strategy.

Why Revitalise European Rail Freight?

Environmental Imperative

Rail is significantly more environmentally friendly than road or air freight. On average, rail emits up to 75% less CO₂ per tonne-kilometre than trucks. As Europe aims to reduce transport emissions by 90% by 2050, increasing the modal share of rail freight is essential.

Reducing Road Congestion and Externalities

Heavy reliance on road freight contributes to congestion, road wear, noise pollution, and accidents. Shifting freight to rail, particularly for long-haul corridors, can alleviate these impacts.

Resilience and Efficiency

Rail offers a reliable and efficient alternative, especially for bulk and containerised goods. In the context of growing supply chain complexity and the need for cross-border logistics, rail can serve as a backbone for resilient and sustainable networks.

Economic and Strategic Importance

A revitalised rail freight sector enhances Europe’s industrial competitiveness, particularly in manufacturing and trade-heavy regions. It also supports strategic autonomy in logistics, reducing dependency on fuel-import-heavy road haulage.

Key Opportunities for European Rail Freight

Growth in Intermodal and Logistics-Oriented Rail Freight

Intermodal freight — which involves moving goods in containers or trailers using multiple transport modes — is gaining traction in Europe. This model allows rail to handle the high-volume trunk leg, while trucks manage the first and last mile. With digital logistics platforms and improved terminal throughput, rail freight can now better serve time-sensitive and high-frequency shipments.

The rise in e-commerce and demand for just-in-time delivery has spurred logistics companies to re-evaluate modal options, with rail offering a scalable and sustainable solution.

Infrastructure and Corridor Development

Significant investments are being made in upgrading rail infrastructure. Projects like the Brenner Base Tunnel (Austria-Italy), Fehmarnbelt Fixed Link (Germany-Denmark), and Baltic-Adriatic and Rhine-Danube corridors under TEN-T exemplify a growing commitment to long-distance, high-capacity rail freight.

Dedicated freight corridors can remove key bottlenecks, improve travel times, and enable longer, heavier trains. Port connections and inland terminals are also improving, fostering greater modal integration.

Technology, Digitalisation, and Innovation

Digital transformation is reshaping rail freight. Tools like real-time tracking, predictive maintenance, and automatic train operation increase reliability and lower costs. Innovations such as digital coupling, smart signalling (ERTMS), and AI-driven logistics coordination make rail more attractive for shippers.

Electrification, battery-assisted locomotives, and hydrogen-powered trains also support the decarbonisation agenda.

Liberalisation and Market Opening

The opening of national rail freight markets to competition has stimulated service innovation and price competitiveness. New entrants have brought agile business models and customer-oriented services, challenging legacy operators and increasing efficiency.

EU support through funding mechanisms, state aid frameworks, and rail freight alliances adds momentum to this transformation.

Obstacles and Challenges for Rail Freight in Europe

Infrastructure Bottlenecks and Limited Capacity

Many freight corridors suffer from aging infrastructure, single-track sections, or lack of passing loops. This limits throughput, causes delays, and constrains operational flexibility. Terminal congestion and outdated handling facilities further reduce efficiency.

Passenger trains often take precedence on mixed-use lines, leaving freight operators with suboptimal scheduling.

Technical and Interoperability Barriers

Europe’s fragmented rail systems — differing gauges, electrification standards, signalling systems, and operational rules — hinder seamless cross-border freight operations. While ERTMS aims to standardise signalling across the EU, progress is uneven.

Locomotive and crew changes at borders, language requirements, and incompatible safety systems raise operational costs and transit times.

Administrative and Regulatory Complexities

Track access charges vary widely between countries, often penalising freight operators. The path allocation process can be non-transparent and favour incumbent passenger services. Bureaucratic delays at borders and customs procedures — even within the Schengen area — persist.

Complex licensing requirements, opaque cost structures, and limited support for combined transport further constrain competitiveness.

Competition from Road Haulage

Road freight remains cost-competitive, flexible, and responsive — especially over short distances. It benefits from subsidised infrastructure and externalised environmental costs, distorting the playing field.

Many shippers prefer the simplicity of door-to-door trucking unless rail offers clear advantages in price, speed, or service quality.

Investment and Financial Constraints

Modernising infrastructure, acquiring rolling stock, and building new terminals require massive capital investments. Securing long-term funding is challenging given demand uncertainty and fluctuating freight volumes.

Private investment is often deterred by regulatory risks, low margins, and slow returns.

Strategic Pathways to Revitalisation

To overcome these obstacles and realise the opportunities, Europe must pursue a coordinated and long-term strategy. Key focus areas include:

• Upgrading corridors and terminals: Prioritising freight capacity, electrification, and handling capabilities.

• Promoting standardisation: Accelerating ERTMS deployment and harmonising cross-border operations.

• Incentivising modal shift: Reforming track charges, offering subsidies for intermodal transport, and internalising road externalities.

• Fostering innovation: Supporting R&D in digital logistics, automated operations, and alternative traction.

• Improving governance and cooperation: Encouraging collaboration between infrastructure managers, logistics firms, rail operators, and governments.

Case Studies and Success Stories

• Combined Transport Growth: According to the 2024 UIC/UIRR report, intermodal volumes have increased over 5% annually since 2018. Switzerland and Austria lead in combined transport penetration due to supportive policies and efficient terminals.

• Cross-border Progress: The Rhine-Alpine Corridor, connecting the Netherlands, Germany, and Italy, has benefited from harmonised traffic management and capacity upgrades, boosting rail’s modal share.

• Market Liberalisation: In Poland and Romania, open access has led to the rapid growth of private freight operators, capturing significant market share from state incumbents.

Future Outlook

By 2030, the EU aims to double rail freight traffic from 2015 levels. Achieving this will require aggressive action across infrastructure, regulation, and market structures. If done right, rail could claim up to 30% of inland freight, significantly reducing transport emissions.

Emerging technologies — such as digital twins, autonomous shunting, and smart energy systems — will redefine operational efficiency. However, risks remain: underfunding, delayed reforms, and road haulage’s continued dominance could derail progress.

Policy Recommendations and Stakeholder Actions

• EU and National Governments:

  • Set clear modal shift targets.

  • Align funding mechanisms and reduce administrative burdens.

  • Encourage interoperability and support smaller operators.

• Infrastructure Managers:

  • Improve capacity, reliability, and maintenance responsiveness.

  • Allocate fair and transparent path priority for freight.

• Rail Freight Operators:

  • Invest in modern rolling stock and digital solutions.

  • Strengthen intermodal offerings and customer service.

• Shippers and Logistics Providers:

  • Reconsider modal choices in procurement.

  • Partner with rail operators to co-develop services.

Frequently Asked Questions (FAQs)

Q: What is the current modal share of rail freight in Europe?
A: Rail freight accounts for approximately 17-18% of inland freight in the EU, with significant variation among member states.

Q: What are the main obstacles facing rail freight growth?
A: Key issues include infrastructure bottlenecks, cross-border technical barriers, administrative complexity, and competition from road haulage.

Q: Why is intermodal rail freight considered a growth area?
A: It combines the efficiency and sustainability of rail with the flexibility of road transport, and is supported by growing digital logistics networks.

Q: How can cross-border freight be improved?
A: Harmonising technical standards, simplifying border procedures, and investing in international corridors are crucial.

Q: What role does digitalisation play in revitalising rail freight?
A: It enhances efficiency, reliability, and customer experience through real-time tracking, automation, and better network management.

Conclusion

Revitalising European rail freight is both an environmental necessity and an economic opportunity. While the road ahead is marked by structural, technical, and financial hurdles, the potential benefits — reduced emissions, enhanced resilience, and strategic autonomy — are compelling.

By aligning policy, investment, and innovation, stakeholders can unlock a new era for European rail freight. The journey won’t be easy, but with decisive action and collaboration, the tracks are in place for a sustainable freight future.