Lesson 7: Smarter investment in rail

The EU is investing more than €30 billion in rail between 2014 and 2020 (an increase from €28 billion between 2007-2013). This is just a fraction of what Europe as a whole invests in trains. Data for the EU 28 shows that annual rail infrastructure investment has increased from €29 billion in 2011 to €45 billion in 2014 (a 55% increase in three years). Over 50% of this €45 billion goes towards maintaining and renewing existing infrastructure. About 45% (over €20.4 billion) goes into building new railway lines.

The railway network in the EU amounts to about 216,000 km of lines. Freight and passenger trains share the tracks in Europe so it’s impossible to differentiate the overall infrastructure investment between both services. Passenger rail accounts for the majority of train-km in Europe and provides the biggest return on investment. Therefore, most investment goes to where there’s passenger demand. The question is whether passenger-oriented investment is benefiting freight – and whether there is a better way to invest in rail, in particular one that shifts more freight from road.

50% of rail freight is international in Europe, compared with about 6% for passenger rail. This shows why removing bottlenecks at borders will impact freight transport far more than passenger transport (in the short term). Across the EU, there are different track widths, different power standards and several pantograph profiles for electric power supply. These all result in bottlenecks at borders. This is part of the reason why average speeds on international freight trains remain at 18 km/h. Removing such bottlenecks is a costly matter so investment must be approached with caution. Investing in rail freight infrastructure should be demand-based and focus on routes where there is likely to be a consistent freight flow. This is the basis of the EU’s Ten-T corridors and the Rail Freight Corridors. It’s hard to justify EU spending on rail freight beyond these routes unless potential freight demand can be proven.

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The European Court of Auditors wrote a report on the conditions of rail freight that found how an investment of €36 million euros in the Czech Republic to save 5.5 minutes on a stretch of 39 km actually had no impact. In fact, the amount of goods transported fell from 358 million tonne-km in 2007 to 159 million tonne-km in 2013. This shows how speed alone will not get more freight volumes onto rail – also success should be measured in terms of modal shift rather than simple tonnage.

Where should investment be focused? Expansion should only be justified where there are densely used networks or clear demand recognised by other modes of transport. Furthermore, money could be made available for rolling stock (e.g. locomotives and wagons) if it is proven to reduce the environmental impact of rail. All of this points to the need for far more rigorous analysis before rail investments are given the green light – a point shown in the Court of Auditors report. Time and again the report outlines shortcomings in the assessment of freight demand – something that must be remedied if public support for investment is to be maintained.

A particularly-neglected issue the capacity freed-up on traditional lines after new high-speed tracks are laid on a new alignment. Once the high speed track opens to passengers, are the older lines used more for freight? Is capitalising on such released capacity for freight being factored into the planning process for new high speed projects, and – if not – why not?

Combined transport has grown in the last decades while other market segments have declined. Investment in terminals and loading infrastructure that is independently managed could further increase the use of rail for freight transport. Such investment would be best spent in densely industrialised areas where freight transport is strong. It also appears sensible to prioritise port-related investment – particularly on ports which have become central to the European / international supply chain.  Investing in cheaper ways to load and unload trains should also be prioritised. Technologies exist that greatly reduce transhipment costs and these should be deployed across Europe.

Digitalisation in railway infrastructure to boost capacity management and automation could mean that trains could be run safer, more frequently, and at greater speeds. This is the focus of some work in the Shift2Rail programme, a research initiative that is 50% EU-funded and 50% funded by the railway industry. Digitalisation will lead to the more efficient use of existing infrastructure, a vital tool for congested lines.

The EU and the EIB are moving towards a system whereby projects need to attract private investment in order to avail of EU funds. The rationale behind this approach is that there is a lack of public money available for infrastructure projects in Europe. However, the nature of railway infrastructure is such that it provides very slow and long-term returns on investment. There are few private investors in rail infrastructure unless the state has assured them that there will be a return on that investment. EU direct grants should continue to co-finance railway projects where private investment is not possible or desirable by member states provided that there is potential for increasing modal shift. In order to make the most of the limited resources available, the grants would focus on low-hanging fruit and areas where traffic can be proven to increase as a result of investment.

Infrastructure investment cannot deliver modal shift by itself, of course. There has to be better coordination between infrastructure managers, as well as better marketing of services to new customers. Smart investment can make sure that such steps are rewarded. All are needed if rail is to achieve its optimal share of the freight market.