Development of rail freight in Europe: what regulation can and cannot do - Policy Paper

The development of rail freight is central to the European Union's transportation policy. The EU objective regarding rail freight development is mainly driven by energy-related and environmental concerns (e.g. improving road safety and reducing pollution, greenhouse gas emissions and other adverse environmental impacts of road freight transport). As it has been the case for road and air transport and for other network industries (e.g. energy and telecommunications), deregulation and market opening have been the main policy options chosen by the European Union to promote sustainable development in rail freight. The European Union’s focus on competition and market opening is paramount, as it is a pre-condition for enhanced efficiency in the rail sector in general, and in the freight sector in particular. However, progress in the area of competition and market opening has been uneven across member states. This might be seen as an explanation of the remaining low modal share of rail freight in Europe. The issue of how to develop rail freight is not usually addressed from the angle of regulation. CERRE has chosen to do so, not solely because regulation is one of its key concerns but also because identifying what regulation can or cannot do amounts to assessing both the objectives of the EU (developing rail freight) and the means to achieve them (market opening). Based on national case studies from Belgium, France, Germany, Italy and the United Kingdom, this paper shows that measures to establish competition are slowly but profoundly transforming the landscape of European rail freight operators. The “competitive solution” proposed by the EU, already tried and tested in many network industries, leads to significant changes.