Privatisation and Expansion

In many regions worldwide, rail traffic is still highly regulated and organised by state-owned entities. This is partly due to the pre-eminent significance for the mobility of people, and partly to the enormous investment needs associated with railway infrastructure. In Europe, on the other hand, the railway industry has undergone a massive structural change during the past two decades. State-owned incumbents have been transformed into private sector enterprises, competing with privately owned rail operators. Profit orientation came on top of safety and quality goals, resulting in growing competition, but also economic failure in certain countries. In the course of the second wave of privatisation, a sustainable competition has been established in major parts of Central and Western Europe, particularly in mass transit and rail cargo.

  • Long-haul rail traffic offers little room for more than one full-scale provider, even in large countries. Most private rail companies try to penetrate the regional traffic segment first, before they offer selected long-haul connections. On the other hand, state-owned incumbents strive for long-haul synergies through cross-border alliances.
  • In the short-haul segment (mass transit, etc.), public tenders have become mandatory, weakening the position of the large incumbents. As a counter draw, the latter expand into foreign markets to unleash new growth potentials.
  • In rail cargo, pan-European collaboration has been common for many years. Challenges lie in the poor profitability of rail groupage systems, or in the competition created by independent, industry-specific alliances.