Germany accused of playing favourites with €1.7 billion support for freight rail

Private competitors have reacted against a European Commission-approved €1.7 billion German subsidy scheme to support shorter freight trains, which is expected to mainly benefit state-owned DB Cargo.

As Germany struggles to reduce its greenhouse gas emissions from transport, the shift from freight transport via trucks to trains is seen as crucial. The share of goods transported via train stood at 19.8% in 2022, well below the EU’s target for 2030 of 25%.

On Tuesday (21 May), the European Commission gave its green light for a new scheme that should boost single and group wagon transport, which are freight trains consisting of smaller units from multiple customers combined in one train. This practice boosts the flexibility of rail freight, making it a more viable alternative to road.

The scheme is expected to mainly benefit state-owned operator DB Cargo, which has a market share of 85-90% in the segment of single wagon transport.

Trade association NEE, which represents private competitors of DB Cargo, argues that the scheme sets the wrong priorities, as the German government has recently, as part of its budget deal, decided to reduce the subsidy for the use of the rail network.

“This new subsidy for single wagon transport, which is strongly influenced by the desolate situation at DB Cargo, cannot be a substitute for the recently massively reduced track access charge subsidy, which benefits all rail freight transport providers,” a NEE spokesperson told Euractiv.

As part of the government’s budget deal reached earlier this year, the annual support for track charges was reduced from €377 million to only €230 million this year.

Infrastructure company DB InfraGO – another subsidiary of state-owned railway company Deutsche Bahn (DB), which since the turn of the year is officially working for the “common good” – has also increased prices for the use of the rail network, sparking criticism from private DB competitors.

DB Cargo welcomed the greenlight from Brussels, calling it “good news for single wagon transport in Germany and the entire rail freight sector”.

Boosting rail freight versus road

Single wagon transport allows for bundling freight from multiple smaller-volume orders. While this practice provides greater flexibility to customers, the trains are shorter and must spread their costs across fewer goods. This means that they struggle to compete on price with truck transport.

The new €1.7 billion scheme, rolled out over a period of five years – with a maximum of €320 million paid out per year – aims to support operators of single wagon and wagon group transport trains, which otherwise often “struggle to reach economic viability,” according to the Commission.

“This €1.7 billion scheme will enable Germany to support important segments of rail freight transport, which is a more environmental-friendly mode of freight transport compared to road,” Margrethe Vestager, executive vice-president of the European Commission, said in a statement.

The green light from Brussels was also praised by liberal German Transport Minister Volker Wissing, who stated that “with our billion-euro support for single wagonload transport, we are sending a clear signal in favour of strengthening climate-friendly transport by rail and thus also relieving our roads of freight traffic”.

[Edited by Donagh Cagney/Alice Taylor]

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