Freight in Freefall: European Rail Cargo Sector Faces Crisis Amid Road Competition and Slow Digital Uptake

European rail freight is under unprecedented strain, losing ground to road transport even as overall cargo volumes climb. Experts warn that without swift support and accelerated digital upgrades, the sector risks further decline, threatening sustainability goals and supply chain resilience.

According to a new market analysis by SCI Rail, the share of rail freight transport in Europe fell to just 16.4% in 2023, continuing a long-term decline that stands in stark contrast to EU climate objectives and its stated commitment to shifting freight to more sustainable modes. Rail has lost nearly 2.5 percentage points of market share in recent years, and even the forecasted 1.3% annual growth by 2030 is now under threat due to unfavourable market conditions.

The report points out how former state-owned freight divisions across Europe are squeezed between underfunded infrastructure and intensive EU regulatory demands. Construction-related detours and disrupted network connectivity, especially in Germany, have made rail transport less predictable and less attractive compared to road freight.

Profitability Elusive for Most Operators

The economic picture is equally grim. In 2024, DB Cargo reported a loss of €0.52 per tonne-kilometre (tkm), while SBB Cargo posted -€0.44/tkm and PKP Cargo had the weakest performance at -€2.92/tkm. Only Rail Cargo Group came close to breaking even at -€0.04/tkm, and Rail Logistics Europe was the sole operator to post a profit of €0.60/tkm.

Despite overall stagnation, intermodal transport is showing signs of a rebound. After a 7.3% drop in 2023, a 4.7% increase is expected in 2024. Growth is driven by container flows from Eastern Europe and a rising volume of military shipments. Still, performance remains below the pre-decline average of 2% annual growth. Market dynamics are also shifting. Major logistics companies and retailers are increasingly launching their own rail services, bypassing traditional freight operators to build more resilient supply chains.

Digitalisation: Slow but Critical

While innovation is often promoted as the solution, experts stress that success depends on long-term strategic investment. Major undertakings like Digital Automatic Coupling (DAC) and the European Train Control System (ETCS) involve high costs and slow return on investment. By contrast, quicker digitalisation projects—such as terminal automation and personnel deployment optimisation systems—are already delivering efficiency gains, boosting capacity, and reducing resource use. These developments could play a crucial role in reviving competitiveness in the near future.

The SCI Verkehr study concludes that despite some resilient segments, the European rail freight sector remains under intense structural, financial, and operational pressure. Without targeted financial support and the swift deployment of practical digital tools, the industry risks further marginalisation in Europe's transport mix. If the EU’s goal of a climate-neutral, competitive, and integrated transport system is to be realised, rail freight must no longer be left behind.