The symptoms are now plain to see: shrinking volumes, companies undergoing continuous restructuring, insufficient profitability, steadily rising operating costs, idle wagons and sometimes locomotives, and mounting pressure on balance sheets. Stopping at the symptoms, however, prevents us from recognising the origin of the problem. Rail freight is not merely going through a negative phase of the economic cycle. It is simultaneously paying the price for the transformation of Europe’s industrial base, a liberalisation process that remains incomplete, and a transport policy that set ambitious environmental targets without creating the economic conditions needed to achieve them.
The issue is more fundamental than an analysis of the individual symptoms:
Which political, industrial and regulatory principles must change for rail to become competitive again and regain its strategic role for Europe?
The purpose of this reflection is not to suggest where to invest or to defend one specific segment of the sector. It is instead to invite an act of courage that leads to a different approach to European freight transport policy.
1. The roots of the crisis in Europe’s industrial transformation
European industry is facing a gradual erosion of its competitiveness. This is particularly evident in energy-intensive sectors and in several supply chains that have traditionally been decisive for rail transport: steel, chemicals, automotive, paper, construction materials and raw-material processing.
For rail, this industrial transformation has a twofold effect.
The first concerns finished products. Some of the goods that were previously manufactured within Europe are now imported through global supply chains. The related transport does not necessarily disappear, but its flow of origin changes: what was once continental industrial traffic may become maritime and then inland traffic, often containerised.
The second effect concerns raw materials. The contraction or transformation of European production reduces the heavy, regular and relatively predictable flows on which conventional rail freight historically developed.
For many decades, traditional industrial supply chains generated relatively stable demand, large batches and repetitive connections between production sites. The new global chains are more exposed to trade volatility, geopolitical crises, changes in ocean freight rates and port capacity.
Europe’s energy dependence amplifies this instability. In 2023 the European Union produced approximately 42% of its available energy internally and imported 58%. That is a figure that skews every calculation. Oil and petroleum products accounted for 37.7% of the energy mix and natural gas for 20.4%. In 2024 Europe’s energy import bill fell to €427 billion, after peaking at €604 billion in 2022, but it remained a significant burden on European competitiveness — and above all a burden over which European countries have extremely limited control. Eurostat — Energy in Europe 2025 · European Commission — Energy prices and costs
Wholesale gas and electricity prices have fallen from the peaks of the 2021–2023 crisis, but they remain above historical averages. This is happening against a background of continuing industrial-production contraction, without an even distribution of the reduction in costs across Member States. European Commission — Energy prices and costs · European Commission — Market analysis
A brief aside, off topic. Europe’s short-sightedness is even more apparent when we consider electric cars. The fundamental question is not whether the electric car is the answer to pollution. Incidentally, as early as the 1990s my former professor of Economics of Local Authorities at the University of Genoa, Professor Fossati, correctly argued that an electric car merely moves the place where pollution is produced unless the way electricity is generated also changes. The real question is whether we control our energy sources sufficiently to justify a technologically non-neutral choice that exposes consumers to constrained and binding patterns of consumption.
Energy, which can easily account for as much as one third of total costs in manufacturing and steelmaking, has become a source of instability in investment planning and, indirectly, in the predictability of rail flows.
For freight transport, what is certain is the growing importance of maritime gateways and global supply chains that can normalise their costs because they control their energy sources. Future rail policy can therefore no longer be separated from industrial, energy, trade and port policy.
2. Liberalisation corrected some inefficiencies, but did not build a balanced market
Since the early 2000s, Europe has entrusted a considerable part of the process of making its rail system more efficient to liberalisation.
Numerous private railway undertakings entered the market. Independent operators developed in maintenance, fleet management and leasing. Large fleets previously controlled by incumbents were sold or reorganised. The separation of infrastructure from rail services made costs, responsibilities and financial results more transparent. These measures were not pointless.
Market opening introduced competition, specialisation and greater industrial discipline. It encouraged the growth of new operators and reduced the possibility of indefinitely concealing inefficiencies within integrated financial statements.
The problem was not the liberalisation of rail transport. It was hiding behind liberalisation and pretending that it alone would be enough to make rail competitive with other modes. Everyone miscalculated.
Europe opened competition within rail, but it did not establish equivalent conditions of competition between rail and road.
Road transport operates through a dense network, can change routes relatively quickly, normally requires fewer train-formation and shunting operations, and can adapt capacity to demand more easily.
Rail, by contrast, bears high fixed costs, depends on train-path availability, often requires terminals and sidings, must manage technical and operational interoperability, and needs high levels of asset utilisation to cover its costs.
The European Union Agency for Railways (ERA), an agency linked to DG MOVE, recognises that rail faces significant structural constraints: dependence on infrastructure, capacity shared with other services, high fixed costs and insufficient cross-border harmonisation. The same analysis concludes that European rail-freight growth targets are not currently on the trajectory required for them to be achieved. ERA — Fostering the railway sector through the European Green Deal
In their haste to free themselves from the operating costs of the incumbents, Europe and its Member States tried to treat rail freight as a self-sufficient market. They ignored the fact that it competes directly with a much broader and more flexible road system that can transfer part of its external costs to society.
The European Court of Auditors reached similar conclusions. The rail market was opened internally, but it was not rebalanced externally.
3. The promised modal shift did not happen
The most visible result is the absence of the shift from road to rail that accompanied European transport policy for years. I cannot count how many politicians I met during my years of active involvement in trade associations: dozens of members of parliament, ministers and commissioners. Most supported modal shift and were convinced that the right steps had actually been taken. Every effort to explain that freight does not look at environmental virtue but at the final cost of transport was in vain. So was every attempt to show the data that inhibited transport by rail.
Despite years of policy that was apparently favourable to rail, road transport did not lose its leadership role. On the contrary, it reinforced its central position in the global landscape by drawing on its unquestionable strengths in flexibility and cost.
In 2024, looking at inland freight transport, road accounted for approximately 78% of tonne-kilometres, rail for about 17%, and inland waterways for around 5%. In 2014, road’s share was close to 74%. Destatis — Freight transport · EEA — Use of collective transport modes
The combined share of rail and inland waterways peaked at 27% in 2012, before progressively falling to 22% in 2023. Over the same period, between 2010 and 2023, total demand for inland freight transport increased by 11%. EEA — Use of collective transport modes
We are therefore not looking at a market that failed to grow. We are looking at a market in which rail failed to capture the available growth and lost share in both relative and absolute terms.
According to an analysis by SCI Verkehr, rail’s share of the European market stood at 16.4% in 2023, after losing almost 2.5 percentage points in previous years. Even under a favourable economic scenario, average annual growth through 2030 is expected to be only 1.3%. SCI Verkehr — European rail freight market · Railmarket — Crisis in rail freight transport
The European Court of Auditors delivered an even more unequivocal assessment. In its 2023 special report on intermodal freight, it concluded that European regulatory and financial support had not been sufficiently effective and that intermodal transport still did not compete on equal terms with road because of regulatory and infrastructure barriers. The Court bluntly described the European targets as unrealistic and identified both the absence of coherent national targets and inadequate monitoring. European Court of Auditors — Intermodal freight transport · Special Report 08/2023
The failure therefore does not consist merely in having missed a quantitative target.
The real failure lies in asking rail to gain modal share while infrastructure, regulatory and operating conditions continued to favour road.
4. Environmental targets cannot replace industrial policy
The European Commission has stated that a significant part of the 75% of inland freight currently carried by road needs to be shifted to other modes, and it set the objective of doubling rail-freight traffic by 2050 compared with 2015. European Commission replies to Special Report 08/2023 · EEA — Use of collective transport modes
Watching rail lose relevance in transport dynamics probably keeps only railway professionals awake at night, but it also demonstrates that an environmental target is not yet an industrial policy. In a company, if you fail for many consecutive years to meet the budget you drew up, you are very likely to lose your job. In politics, as we know, that is not how it works.
Writing that a share of traffic must move from road to rail does not create the conditions in which a shipper can actually make that choice. The customer does not shift freight because a European target exists. The customer does so when the rail service is economically sustainable, reliable, available, sufficiently flexible, interoperable, integrated with the first and last mile, and protected from constant network disruption.
There is more. ERA also highlighted the historical divergence in infrastructure choices. Although acknowledging gaps in data availability, its analysis estimated that the countries considered had built approximately 53,000 kilometres of motorway while removing about 55,500 kilometres of railway lines. A political oxymoron. ERA — Modal shift report
It is difficult to ask the market to shift traffic to a mode whose network coverage has meanwhile been reduced, whose wagonload and distributed-traffic logic has been dismantled, and which has surrendered to regulatory hypertrophy.
Rail freight also suffers disproportionately from worksites, diversions and uncoordinated closures. Road can frequently find alternative routes. A train, by contrast, needs a compatible line, train paths, loading gauge, electrification, signalling systems, authorised staff, terminal capacity and many other things that readers probably know at least as well as I do.
In 2026, the European Rail Freight Association (ERFA) again warned that late changes to closures, a shortage of alternative routes, simultaneous works and weak cross-border coordination were making the network less resilient, less reliable and harder to use. According to the association, this is no longer merely an operational problem, but a threat to European supply chains and the single market. ERFA — European Rail Freight Association
In other words, warnings abound, but they go dramatically unheard.
5. The mistake of financing assets without ensuring system competitiveness
In recent years, part of public policy has focused on asset modernisation, technological innovation, digitalisation and, in some cases, support for rolling stock.
These measures may be necessary when modal use is on a path of stable growth, but not in a climate of empty-shelf panic: all it takes is a slight tightening in freight-wagon availability for a brief period — a few months after Covid, for example — for surgically targeted public funding to try to compensate for an apparent market shortage following a purely cyclical logic.
A newer, quieter or digital wagon does not automatically generate new traffic. Technology does not increase rail’s modal share when demand, reliable network access, efficient terminals, competitive transit times and seamless cross-border processes are lacking.
This is the very flaw in the Digital Automatic Coupling (DAC): a thousand theoretical benefits, no structural need to satisfy, and one certainty — prohibitive investment costs that, in this case, no European state is willing to subsidise.
In all fairness, these are not the only measures authorised by the European Commission in support of rail. Since 2008, around 75 aid measures for the rail sector have been declared compatible with the European framework, with a total budget exceeding €9 billion, particularly to encourage modal shift from road to rail. That is an average of approximately €500 million a year over the past sixteen years, distributed unevenly across Europe, which merely softened some of the falls experienced by several large players. European Commission — Railway Guidelines fitness check · European University Institute — State aid for railway undertakings
There have been a few sporadic steps forward, but the absence of a structural European dimension remains worrying. In 2024, for example, the European Commission authorised a German support scheme designed to cover part of the high operating costs of single-wagonload traffic and short-distance wagon groups. Its stated objective was to stabilise or strengthen the competitive position of these services and contribute to modal shift, in a European context in which railway undertakings have often demonised this traffic model because of the complexities it entails. European Commission — State aid SA.108800
When FS terminated wagonload traffic by letter in 2010, the impact was devastating for many industries, particularly the chemical sector. The country lost one third of its total rail-freight traffic; several industrial companies closed, while others moved entirely to road and promised never to return to rail. The problem, therefore, is not simply a lack of resources. It is their fragmentation and the difficulty of tying them to measurable results.
We have often financed components of the railway without financing the competitiveness of the rail chain as a whole.
The decisive question is not how many wagons to buy or how many technologies to install, but how many new flows can be won and retained over time.
6. From competition to the fragmentation of the cluster
Contraction, stagnant volumes and, more recently, stagflation are increasing economic pressure on every participant.
Incumbents are being asked to reduce enormous structural losses. Private undertakings must defend increasingly thin margins. Keepers must manage fleets with lower utilisation rates and steadily rising maintenance costs. Maintenance providers must bear higher costs and lower volumes. Intermodal operators face a rail service that is not always reliable and often gives up before even offering a new transport solution.
In this environment, competition over the existing “scrap of bread” intensifies.
Having lost all hope of increasing modal share, each participant tries to rebalance its own profit and loss account by transferring costs, risks, responsibilities and administrative burdens to another party in the same chain. This is no longer simply healthy competition among rivals; it is an attempt to disperse one’s own inefficiency along the supply chain.
This is what I would call a weakness-targeted strategy: a strategy through which an operator, unable to expand the market, tries to restore profitability by targeting the segment that is contractually, financially or institutionally weaker.
Such a strategy may produce an apparent short-term advantage. But the cost does not disappear; it changes form.
The party receiving a new responsibility will incorporate it into prices, insurance coverage, contractual reserves, and administrative and management processes. Because that party does not possess the operational control needed to manage the risk, the system’s total cost will rise. The first participant believes it has solved its own problems, only to discover that its operations have become more vulnerable.
When a contracting sector tries to recover margin merely by redistributing costs and responsibilities internally, it is not becoming more efficient. It is consuming its own industrial base.
This dynamic also produces a systemic effect. Disputes increase, national interpretations multiply, contracts become more rigid, and willingness to cooperate declines. Combine this picture with the complexity inherent in rail freight — where at least five or six different participants coexist — and the comparison with all-road transport, involving a single operator, is sobering.
The result is, and increasingly will be, the gradual fragmentation of the single European railway area that liberalisation was supposed to unify.
7. Responsibility and operational control must remain aligned
One of the areas where this tension is most evident concerns the allocation of responsibilities among railway undertakings, keepers and other participants in the chain.
Any revision of contractual and regulatory balances can legitimately be discussed. But it should respect at least three principles.
The first is consistency with the civil, criminal and railway legal framework.
The second is assigning responsibility to the party that has operational control over the risk.
The third is assessing the economic impact on the entire chain, not only on the balance sheet of the party proposing the transfer.
Responsibility should not be assigned to the party that is easiest to identify, financially strongest or most exposed contractually. It should rest with the party that:
- controls the process;
- possesses the necessary information;
- can prevent the event;
- can intervene in the operation;
- can insure the risk at the lowest systemic cost.
Transferring responsibility to a party without operational control does not eliminate the risk. It makes the risk more expensive and harder to manage.
The criterion should be simple:
Responsibility, the ability to exercise control, and the capacity for prevention must remain aligned.
Misaligning them may — perhaps — temporarily improve one participant’s profit and loss account, but it reduces the competitiveness of the entire sector.
8. How to emerge from the crisis
The answer is not to suspend competition or return to national monopolies. Nor is it to inject resources without conditions or indiscriminately finance new capacity. The logic of European policy must change, from the lobbyist through to the decision-maker.
8.1 Govern freight transport as one intermodal system
a. Rail must be planned together with ports, terminals, road, inland waterways, industry and energy; it must no longer be assessed as an isolated mode. The total cost of the chain must be measured, including externalities, resilience and energy dependence.
b. Public aid should more effectively reward modal shift by developing stable, integrated mechanisms over time. This means creating a consistent framework of public support across modes, without punitive mechanisms that ultimately increase transport costs. The Emissions Trading System (ETS) is a case in point: a taxation mechanism that penalises the entire intermodal transport chain.
8.2 Protect the single European railway area
The European rail market must be protected from the re-emergence of technical, operational and contractual borders. Cross-border works must be coordinated; viable alternative routes guaranteed; duplicated tests and requirements reduced; digital systems made interoperable; administrative processes harmonised; adequate capacity preserved for freight; and, above all, national solutions prevented from compromising European interoperability.
8.3 Rebuild an industrial pact for the rail cluster
The sector has failed to present itself as a unified cluster centred on common interests. Railway undertakings, keepers, wagon owners, intermodal operators, terminals, maintenance providers, infrastructure managers, ports and shippers have different needs. But they share one fundamental interest: increasing the market accessible to rail.
Former incumbents have a particular responsibility. Given their scale, knowledge and institutional influence, they should provide leadership capable of turning their industrial plans into a proposal for the system. They should avoid strategies that protect one balance sheet at the expense of the rail market as a whole, and above all avoid creating divisions whose operational consequences they ignore or underestimate.
9. Cooperation is not idealism
We need rail.
We need it to reduce emissions, strengthen the resilience of supply chains, connect ports to industry, contain road congestion and limit the transport sector’s energy dependence.
To date, we have failed to turn this collective need into a coherent industrial proposition.
We trusted liberalisation without completing the market. We set modal targets without assigning responsibility for achieving them. We financed poorly and without coordination, without measuring the quality of the effects. We multiplied rules without removing operational barriers. And when volumes began to decline, we sought margins at one another’s expense.
This direction must be reversed.
Cooperation within the cluster does not mean suspending competition. It means understanding one’s role within the transport chain.
The real competition facing rail is not between keepers and railway undertakings, incumbents and new entrants, or terminals and operators. The real competition is between logistics chains — and today the road chain continues to prevail in flexibility, reliability and ease of use.
European rail will not emerge from the crisis by redistributing apparent costs. It will do so only by rebuilding its capacity to create value for customers and the European economy.
The issue is not to save every company or protect every existing model. The issue is to decide whether the rail cluster still regards itself as a strategic component of Europe’s industrial and logistics autonomy.
If the answer is yes, new targets, new wagons and new technologies are not enough.
We need political action capable of reconnecting demand, infrastructure, competition, responsibility and the collective interest. Only then can modal shift cease to be a statement of intent and become a concrete industrial possibility.