A level playing field is all Mr Clemens Först, CEO of Austrian Federal Railways (ÖBB) subsidiary Rail Cargo Group (RCG) wants.

The European freight sector is facing a crucial period. Operators are scrambling to boost market share to deliver ambitious modal shift targets set by the European Commission. This is happening in the context of a pandemic that has changed much about the rail industry, including traditional freight markets.

Then there is decarbonisation. Environmentally-friendly operation is rail’s strength against the lorry. However, operators such as RCG are grappling with huge increases in energy prices impacting every sector of the economy.

“It’s an extremely volatile situation,” Först says, citing the 40% year-on-year energy cost increases in in Germany and 55% in Poland as well as an expected 280% increase in Hungary. “That’s obviously hugely detrimental because revenue at the same point in time doesn’t go up by a large margin.”

Interoperability and standardisation are vital to the growth of rail freight across Europe, but problems remain. Different power and signalling systems mean locomotives and trains cannot seamlessly run on cross-border services, making rail freight inefficient and unpredictable, and uncompetitive with road.

The day after Först spoke to IRJ, the European Rail Freight Association (ERFA) said it was essential that measures to improve the efficiency of enabling rail freight are introduced to reach growth targets set for 2030. This call followed the EC’s proposal to revise the TEN-T guidelines, announced in December 2021, which is expected to have a direct result on freight’s ability to not only meet those 2030 deadlines, but to treble rail freight volumes by 2050, too.

It is pretty clear that for the next 10 to 15 years, rail is the only available sustainable mode of land transport.

Clemens Först

ERFA says provisions must be made for freight to continue to operate even when major infrastructure upgrades are underway across Europe. The association says this will require strong communication between freight operators and infrastructure managers.

Först highlights the situation in Germany. “They have under invested for many years, even decades,” he says. “Now they are playing catch up, and in that period, it’s extremely difficult to run reliable rail transport because of all the construction sites. That’s an imminent threat next to rising energy prices.”

But the rail freight sector is ambitious. RCG is a founding member of the Rail Freight Forward (RFF) coalition, which in 2017 set the target to increase rail’s share of European freight volumes from around 18% to 30% by 2030, three years before the EC’s pledge. RFF, which directly or indirectly represents almost every rail freight operator in Europe, says the 6 million lorries already on Europe’s roads emit 275 million tonnes of CO₂ per year and without intervention from operators, infrastructure managers and policy makers, another one million lorries will be on the road by 2030.

RFF highlights five technologies that it believes will help rail win the battle against the lorry:
• a single consolidated data system for all countries and companies that will allow seamless international transport and new, more competitive rail freight products
• introduction of ERTMS, which would grant consistent digital infrastructure and train systems across Europe, and create a “one train for Europe” vision
• Digital Capacity Management (DCM), which would create internationally standardised capacity planning which RFF says would enable instant and fully digitalised freight bookings
• the introduction of ATO, including in terminals and ports, which RFF says will open the way for more trains to operate simultaneously thereby enabling the transport of higher freight volumes, and
• the Digital Automatic Coupler (DAC) - replacing manually operated couplings with the digital solution will enable the operation of faster, longer and heavier freight trains.

The challenges are clearly significant. However, Först says there are positives. His perception is that the rail freight sector has managed to demonstrate its systemic relevance in Europe. “It is pretty clear that for the next 10 to 15 years, rail is the only available sustainable mode of land transport,” he says.

The European freight sector is facing a crucial period. Photo: Shutterstock.com/Photofex_AUT

This relevance was highlighted at the height of the pandemic in spring 2020, when rail continued to serve the supply chain even when traditional markets were seriously affected. He highlights the automotive industry and its supply chain as one such market. “It’s not just the finished cars, it’s also steel, steel coils, coal and iron-ore.”

Figures released by the Community of European Railway and Infrastructure Companies’ (CER) Covid Impact Tracker on February 14 revealed that European railways lost €50bn in revenue during the pandemic. Of this, freight lost €4bn, including a 12% contraction compared with 2019 in 2020 and 10% in 2021.

“It is pretty clear that for the next 10 to 15 years, rail is the only available sustainable mode of land transport.”

Clemens Först

The signs are especially promising for RCG. Following “healthy” growth in the fourth quarter of 2020, progress slowed in 2021, although performance remained positive and volumes wise, RCG is approaching pre-Covid levels. “Our customers are confident; our order books are full. It looks good,” Först says.

RCG‘s vision remained unchanged throughout the crisis to become the sustainable logistical backbone of the European economy.

The RCG network is centred on the domestic market of Austria and Hungary, but expands across four geographic directions: to the ports of Zeebrugge, Antwerp, Rotterdam, Amsterdam, and the Rhine-Ruhr area in the northwest; Poland and the connections to Russia and China in the northeast; the Balkans, Greece and Turkey with links to Iran in the southeast; and Slovenia and Italy in the southwest with connections to the ports of Koper, Rijeka, and Trieste.

Först says the network defines RCG to a larger extent as a logistics company rather than a carrier. He says outside the core Austria-Hungary market, it only carries 20-25% of the company’s transport volume on its own services with the rest purchased from other carriers. This enables RCG to conserve capital and drive its innovation programme for products, processes and assets.

There are approximately 60 international network transfer connections as well as numerous possible combinations, for both intermodal and conventional wagons, across Europe to Asia. This is a market RCG is expanding and follows the trend that the more finished or semi-finished goods that can be transported, then the fewer customers will require a full block train, which will instead drive demand for more shuttle-style trains which can then carry containers or single wagonload freight.

Först says the company’s intermodal business is on a very dynamic growth trajectory, which helped to compensate for the market decline caused by the pandemic. He adds that the rise of the infrastructure and logistics sectors during Covid is not a pandemic-related matter.

“What we see is that Europe is more and more de-industrialising,” Först says. “There are hardly any new iron-ore smelters being built. There are very few new refineries being built and so on. Typically, we are importing semi-finished goods, thereby reducing overall transport demand within Europe.”

The EC is pushing for modal shift to rail as the most sustainable mode to deliver the EU’s ambitious Green Deal targets for emissions reduction. Först says achieving this objective takes up a considerable amount of his time as he regularly makes the case for modal shift to rail in the European arena.

Först has identified three “levers” that will help, all of which are equally important. The first approach is to make access to the rail system as easy as possible for customers. Success here is dependent on achieving the second and third levers: creating an interoperable network enabling European trains to operate seamlessly across the continent; and levelling the playing field “so that you can really compare the true costs of both modes,” he says.


While Europe’s modal share for rail freight is 18%, it’s over 30% in Switzerland and about 28% in Austria. But how realistic is the goal of transporting 30% of Europe’s freight by rail by 2030? “I have reasonable confidence in the rail freight sector and RCG first and foremost,” Först says. “We have developed a lot, in terms of customer service, digitalisation and innovation. I think the sector is doing its job.

“Society is demanding sustainable solutions and politicians have responded by calling for climate neutrality by 2050 as part of the EU Green Deal. Shifting transport from road to rail has an immediate effect. In addition, European rail operators and the rail industry are now more united than ever before in working together to modernise the rail system in Europe.”

He highlights how in Austria an annual EU-notified subsidy of around €100m is enough to increase modal share of rail from the European average of 18% to 28%. He says that compared with penalty payments for missing climate goals in the order of €10bn, this figure is low.

Först says new technologies are aiding RCG’s efforts to improve the reliability of its rail freight services.

Sensors have been fitted to wagons to offer real-time updates on location to customers as well as monitoring conditions such as temperature and humidity, door opening and closing and the weight of the load. The TransANT wagon is now in use having been unveiled at InnoTrans in Berlin in September 2018. The wagon, created by ÖBB Technical services, a subsidiary of RCG, and Voestalpine Steel, is lightweight and designed to be modular, increase capacity and provide a flexible superstructure that can be customised to meet individual logistics requirements. The first wagons entered service with Voestalpine in autumn 2019 and are being used to transport domestic ore.

“European rail operators and the rail industry are now more united than ever before in working together to modernise the rail system in Europe.”

Clemens Först

Another key initiative is the adoption of DAC across the European wagon fleet. Demonstrations and tests of the pilot DAC are underway, including in Austria where automatic coupling and tests of performance in extreme temperatures were conducted in mid-February.

Först says the technology provides European operators with the chance to eliminate time-consuming manual coupling and to introduce power and data lines through the train. However, he warns of the timeframe required to get the technology right, acknowledging criticism of the apparent long lead times. “If you equip 500,000 wagons all over Europe, at a cost of €10bn, you don’t want to find a malfunction during the next winter,” he says.

DAC is a technology that could help RCG achieve Först’s ambition of operating trains seamlessly across Europe. However, for that to work all fleets would need to be equipped. And that will cost money. The rail freight sector will have to bear the burden for its introduction. However, Först prefers a combined approach of European money, national money and co-financing from infrastructure managers. He says the latter is significant because it allows the train capacity improvements to be realised without physical infrastructure works, which infrastructure managers are responsible for. Failure to find the funds for this means that rail could miss the Paris climate goals, he suggests.

Freight’s voice

In late 2018, Först told IRJ that the rail freight sector’s voice needed to be heard. He maintains this position in early 2022 referencing the sector’s relatively weak position compared with the automotive lobby. He says rail freight is making its case by fostering closer ties and regularly holding intensive discussions with commissioners and national governments. And it is reporting success. Germany has lowered track access charges by 50%, while subsidies are being made available in other countries that are trying to make rail freight more attractive. Först says the EC has recognised the importance of the situation too as emphasised in its ambitious modal shift targets. “Things are moving in the right direction,” he says.

The need to communicate to overcome interoperability issues is highlighted by Italy banning the use of silent brakes last November, an issue which saw Först, a prolific Twitter user, tweet his frustration.

He says the EU mandated the introduction of the equipment, forcing RCG to incur the cost of installation. The timeline was then shortened due to demands from Germany and Switzerland. “Then, one or two years later, Italy voices safety concerns for these silent brakes and imposes draconian measures like maximum speed limits,” he says. He adds that the EC doesn’t have the governance here, so the only way this can be resolved is to get the national infrastructure managers on board.

In December, Först, along with counterparts from Russian Railways (RZD) and CER Cargo Holding, Hungary, signed a trilateral agreement to establish a rail freight joint venture designed to make rail transport between Europe and Asia even more attractive.

Först says there was huge demand for services last year as shipping lines clogged up. However, constraints caused by rolling stock shortages and capacity issues have limited rail’s ability to fill the void. The aim of the agreement is to develop another route for traffic. Following Russia’s invasion of Ukraine on February 24, the the Southern Silk Route via Iran might now be more preferable despite the need to cross more countries.

As for the market itself, Först says trans-Eurasian freight still accounts for a very small digit proportion of total volumes, but it is still expected to double by 2030. Services are also getting faster. Journey times are on average 14 days door-to-door, which is competitive against sea freight.

The rail sector is emerging from the devastating impact of the pandemic with ambitious new targets around growth, reduction of emissions and seamless travel across Europe. However, these are currently still on paper. If Först’s ambitions for seamless travel across the continent, and further afield, are to be realised, actions need to speak louder than words.