Back 31 March 2023 | News

DG COMP has published new E.CA study on State aid in the railway sector

The Directorate General for Competition of the European Commission (DG COMP) has published a new study conducted by a consortium led by E.CA Economics on State aid in the field of rail transport. The results of the study will support the Commission in the revision of the current Community Guidelines on State aid for railway undertakings. The consortium included E.CA Economics as lead partner as well as, LEAR, Sheppard Mullin and UEA and was supported by the Institute for Transport Studies at the University of Leeds.

In the context of the European Green Deal, the European Union aims at doubling rail freight traffic by 2050. The revision of the current Railway Guidelines is aimed at supporting this ambitious goal. It provides detailed market information, based on desk research and data collection.

Once at the frontier of freight transport logistics, rail lost its dominant position to road transport during the 20th century. Over the last two decades, the rail modal share in freight transport has stagnated at a low level across Europe. In the last pre-pandemic year 2019, the share of rail in the total freight transport was at 8.8% on average in Europe with some degree of regional variation: Rail freight is less important in Southern Europe and more important in Eastern Europe.

This low modal share of rail endangers important goals in environmental and transport policy. The European Green Deal, to which the European Union committed in 2020, aims to make Europe the first climate-neutral continent by 2050. Compared to highly polluting road transport by truck, rail freight is a safe and low-emission type of transport. A substantial rise in the rail modal share will require improvements at three different levels of the overall rail freight system:

  1. More, better and modern infrastructure. As of now, bottlenecks in rail network lead to congestion and slow and unreliable delivery times; outdated infrastructure makes cross-border transport tedious; facilities like intermodal terminals with outdated technology increase transport times and costs; private sidings are often missing to connect customers to the rail network.
  2. More and up-to-date rolling stock. The existing fleet of rolling stock will not suffice for a substantial increase of the rail modal share. Furthermore, a significant share of the rolling stock is outdated and not fit for future requirements, such as automated coupling etc.
  3. Rail freight must become competitive with road transport. Rail freight is often in close competition with road transport. This holds especially true for combined transport and single-wagon transport. Only if rail freight is overall cheaper, shippers will choose rail transport instead of road transport. At the moment, rail freight is not competitive in many cases – as the low modal share proves.

Public policies can improve this situation. One way – among others – is a modern State aid framework that encourages the modal share. One the one hand, the study provides market data on the rail freight market, such as the costs and revenues associated with rail freight. On the other hand, the study provides policy options, including examples of good practices, for the design of State aid for rail freight which can support and guide the revision of the Railway Guidelines.

 

Contact our experts:

Elżbieta Głowicka

Anselm Mattes

 

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