EC approves German scheme for rail freight operators

rail freight operatorsThe European Commission has approved under EU State aid rules EUR 1.7 billion German scheme to support rail freight operators in single and group wagon transport.

Germany notified the Commission of its intention to introduce a EUR 1.7 billion scheme to support rail freight operators of single and group wagon transport services. The aim of the scheme is to help rail operators cover part of the high operating cost. In doing so, the scheme aims to support and preserve the modal shift from road to rail transport, thus promoting a greener means of transport.

In single wagon load transport, individual wagons or groups of wagons from different consignors are bundled together to form one train. On the contrary, wagon group transport keeps the same composition from the origin to the destination and is eligible under the scheme for journeys up to a maximum distance of 300 km if operated by short block trains with up to 15 wagons.

Both types of transport struggle to reach economic viability. Single wagon load transport entails high costs due to its complex and multi-step nature resulting from the switching and shunting of wagons. Wagon group transport operated by short block trains does not benefit from economies of scale due to the lower number of wagons and the short distances they serve.

Under the German scheme, the aid will take the form of direct grants. The maximum annual budget amounts to EUR 320 million, with an overall budget of EUR 1.7 billion over the five-year duration of the scheme. The scheme will run until 2029.

The 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. It will help Germany meet its Green Deal objectives, while reducing the burden of rising costs for transport operators, to the benefit of industrial freight customers,” Margrethe Vestager, Executive Vice-President in charge of competition policy said.

The Commission found that the scheme is beneficial for the environment and mobility, is necessary and appropriate to achieve modal shift from road to rail transport, is proportionate, and the aid is limited to reducing the competitive disadvantages faced by rail freight transport compared to road transport.



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