The railways have to be put in place, because they will not be able to meet the transport needs of industry 14/03/24

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Author: Hungarian Railways Online



The railways have to be put in place, because they will not be able to meet the transport needs of industry


If the current infrastructural and regulatory environment remains, there will be no rail response to the industry's needs. In the short term, discounts and subsidies as well as an appropriate regulatory environment can be serious breaking points in terms of the competitiveness of the rail freight sector. In order to do this, however, the cooperation between the actors of the railway sector and the ministries must be raised to an even higher level - it was said at the Hungarian Railways Meetup event organized by HUNGRAIL, at which the managers and specialists of the most decisive market companies discussed the current situation, challenges and prospects of rail freight transport.


Rail Freight Market Overview: Challenges and Opportunities

Rail freight traffic decreased significantly last year in Europe and Hungary as well. Economic development has started in the Central European region, but Hungary, Austria and Germany show quite low economic activity. This is especially true for industrial production, so the railway does not see the demand: it is not possible to transport goods that have not been produced.

The volume of rail freight transport shows a decreasing trend throughout Europe. This is especially true in single-car transport, in which the railway typically competes with road freight transport.

In 2022, there was a small jump in the performance of rail freight transport in Hungary after the Covid epidemic, in which the Russian war against Ukraine played a role, because the demand for land transport from the country increased.

In 2023, however, there was a significant decrease of around 10%, which was partly due to the fact that the energy costs in rail freight transport are higher than on public roads. In addition, the decline in iron production in Dunaújváros and the loss of iron ore and coal shipments from Ukraine have a noticeable effect.

Declining corporate dominance, difficult access

Imre Kovács , the professional supporter of the event, the general manager and chairman of the board of Rail Cargo Hungaria Zrt., also mentioned in his opening speech that there is a significant transformation in the European rail freight market . The integrated state railway company model has survived in two large countries, France and Germany.

Imre Kovács, CEO, Rail Cargo Hungaria

Due to the 5.3 billion euros of state aid so far, the operation of the SNCF had to be restructured in accordance with the rules of the European Union - as Magyar Vasút also reported. The other integrated incumbent railway is DB in Germany. DB Cargo's loss in 2022 was 0.5 billion euros, and the company is also being investigated by the European Union due to the continuous loss. As in the case of France, the outsourcing of traffic to railway companies is also considered here. However, it is a separate problem that the DB group of companies as a whole had to bear a loss of 2 billion euros in 2022. In the rail freight market, the role of traditional railway companies was the largest, and even today the share of incumbent railways is 50 percent - but it is constantly decreasing.

In addition to the transformation of the railway companies' market positions, the situation of the infrastructure is worth highlighting. Traffic is difficult during the renovations, which can discourage customers. On the other hand, in Austria, Germany, and most recently in Hungary, a new tariff system was introduced in passenger transport, which increases demand. Since the infrastructure does not change, rail freight transport is forced to suffer the excess traffic, freight trains are delayed even more, further worsening the competitiveness of the greenest mode of freight transport.

In Hungary, an important issue for the future is to continue the railway single-car subsidy, in order to maintain the railway's competitiveness.

Abolishing the HHD surcharge is another important step that can compensate for the high energy prices of previous years.

Imre Kovács also touched on the fact that the start-up of battery factories poses a very significant challenge for rail freight transport in Hungary: in addition to organizing traffic for railway companies and providing the necessary equipment, the readiness of the railway infrastructure can be just as problematic.

Nowadays, it takes days for trucks to cross all borders to Ukraine, this is a good starting point. However, there is no demand for bulk goods, which is why it is a more difficult task to transfer them, and it is better to build on semi-trailer and container traffic.

It is necessary to develop the infrastructure!

The biggest problem in Hungary is that most of the railway track network had no kind of renovation before 1990. Sixty years have passed since the last major reconstruction of one-third of the operated network. This is also important because Hungary can be avoided, as main line traffic cannot be fully guaranteed either. The amount of permanent and temporary speed restrictions on the domestic network is still very significant.

The branch lines have reached the end of their life cycles, it is not possible to improve the quality with normal maintenance. Therefore, a new strategic decision is necessary in relation to them

- emphasized Réka Németh , MÁV Zrt.'s Director of Traffic and Operations.

Réka Németh, General Director of Traffic and Operations, MÁV Zrt.

However, the change has begun: since 2019, maintenance and development resources on the domestic railway network have started to increase, reaching HUF 55 billion by 2024. In the future, track conditions are planned to be allocated based on uniform indicators in order to achieve the greatest impact.

Developmental gaps

András Nyíri, the operations director of Rail Cargo Hungaria Zrt., emphasized in his presentation that infrastructure development is also extremely important for rail freight transport, however, inadequate implementation can cause many problems. During some renovations, it is also a problem when track connection renovations are not completed, but also when they are not optimally constructed. During the renovation of Biatorbágy-Szárliget, it was also visible that although the track closure could have started at Biatorbágy, it already started at Budaörs due to the lack of track connections. He also highlighted that the one-legged stations created during the renovations due to cost-saving considerations can cause problems even decades later.

Less effective or non-existent coordination with neighboring countries is also a problem.

The railway line up to Sátoraljaújhely has been electrified, but the overhead line to Nové Mesto station is missing 800 meters away, so it is not possible to handle traffic efficiently with electric traction.

András Nyíri gave an example.

András Nyíri, Operations Director, Rail Cargo Hungaria

Since there is no possibility for freight trains to stand aside for up to 50-60 km, this greatly increases the sensitivity of the lines to disturbances, passenger and freight trains can also be delayed more.

In addition to several renovated railway lines, although industrial tracks are available, the axle load of 22.5 tons cannot be reached on them. The usage fees for sidings increased by 2-3 times, as a result of which several companies diverted their goods transport to public roads.

Vanya László , the managing director of V-Híd Cargo Zrt., pointed out that it is difficult to plan infrastructure constructions for the contractors, but also for the railway companies. As László Katona , CEO of MMV Magyar Magánvasút Zrt., emphasized, customers must be informed as soon as possible. For MÁV Zrt., it would be helpful if they knew several years in advance what kind of resources they have. This creates a similar situation not only in Hungary, but mainly in the regional countries as well.

European changes

Rail freight transport plays an important role in door-to-door carbon-free freight transport, without which the EU's green transport plans cannot be realized. The Greening of Goods Transport package was preceded by great anticipation, but it did not have a really impactful effect. Ákos Érsek, an expert from the UIRR (European Combined Transport Association), summarized the details of the combined freight transport directive, the directive on the weight and size of road vehicles, the railway infrastructure capacity management regulation and the new emission measurement regulation. What a good regulation can do is shown by the expansion of combined freight transport that started in the early 1990s, which has quadrupled after 22 years.

Half of the intermodal traffic is the rail leg, which is the fastest growing market within the railway.


Ákos Érsek, consultant, UIRR

Combined freight transport prospects: industry players indicate freight traffic of several million tons

Regarding the combined freight market, Attila Zalhalka , commercial director of Metrans Konténer Kft., drew attention to the fact that international processes have a great impact on intermodal traffic in the entire region. In the post-Covid normalized situation, the cost of shipping goods by sea between China and Europe has dropped to $700-800 per unit container. After the attacks in the 20s, this increased to 7,000-8,000 dollars, and today it has decreased to 3-4 thousand. Today, the traffic does not go through the Suez Canal, but bypasses Africa - but this means it goes to Northern Europe, Rotterdam and Hamburg, and not to the Mediterranean Sea.

In the longer term, large investments in Hungary will have a more significant impact. On the other hand, the difficulty is caused by the fact that Hungary has a headache in terms of terminals, three terminals in Budapest handle most of the traffic.

According to László Gubik , CEO of Záhony-Port Zrt., the situation of the transhipment area is very unpredictable and what effects can be expected. Chinese trains disappeared due to the Russian war against Ukraine, but the role of traffic in Ukraine increased. Even on the Red Sea, the attacks of the 20s can be felt in the border traffic. Currently, the battery factories located in Debrecen represent a new opportunity.

Ajtony Bíró Koppány , secretary general of the MLSZKSZ, highlighted that in 2023, 209 FDI projects worth 13 billion euros were realized. The automotive and battery industry companies indicate a turnover of several million tons, but it is not clear how they can be served either by rail or by road. The network cannot handle 30-40 extra freight trains per day, but the capacity of the terminals is not given either.


László Gubik (Záhony-Port), Zoltán Potvorszki (VTG), Attila Zahalka (Metrans), Ajtony Bíró Koppány (MLSZKSZ), Ákos Érsek (UIRR), Szilvia Mogyorósi (HUNGRAIL)

Zoltán Potvorszki , the managing director of VTG Rail Logisitcs Hungária Kft., believes that there are 4-4.5 million semi-trailers on the roads of Europe, of which 70-80 percent are owned by SMEs. 60 percent of them cover a distance of less than 600 km. A very significant increase in traffic can be achieved by diverting even one percent of the above to the railway. With many small solutions, new traffic can be found for intermodal traffic: together with Frigo, VTG developed an external energy source for refrigerated vehicles so that they can be transported by rail without an external power source. The main challenge in combined freight transport is for the railway to be able to provide scheduled transport.

In Hungary, combined freight transport basically means port traffic. However, this is no longer the case in Europe, traffic within the continent accounts for half of the total volume - pointed out Ákos Érsek , UIRR expert. In addition to the container terminal in the Záhony region, there are also developments in Western Romania. However, significant new traffic can only be organized east of Budapest if the Southern Ring Road is built. The development of intermodal traffic is also made more difficult by the fact that there are several years of process and significant costs involved in establishing each new traffic. The construction of V0 will also play a key role in terms of the competitiveness of freight transport.

Railway company expectations: cooperation between the railway company and the ministry may be the only solution to maintaining the competitiveness of the freight sector



It was important for the Hungarian railway companies that the HHD support became available, but this is only one of the many support options that are needed in order to maintain competitiveness. Border crossings are still a problem in everyday life: Gyöngyi Schubert , sales director of Train Hungary Kft., highlighted the case of the border crossing in Gyöyényes. Despite the fact that Croatia has entered the Schengen area, there are currently track closures for several weeks.

There would be a demand for 16-17 trains per day on the Serbian-Hungarian border, which the Röszke border connection cannot currently provide. Almost every possible mistake was made during traffic in Serbia - and everything has an impact on how many people choose the railway in this relation in the future.

Supplying the factories of the new industrial investments with raw materials and delivering the finished goods will be a big challenge, as traffic is expected to increase by nearly 40 trains per day, according to László Horváth, chairman of the board of CER Cargo Holding. In order to deal with this, it is important to involve the domestic railway companies more actively in the planning of track closures.

Gyöngyi Schubert (Train Hungary), László Katona (MMV Zrt.), Imre Kovács (RCH), László Horváth (CER Cargo), Lajos Hódosi (HUNGRAIL)

The price of traction electricity was a serious challenge for Hungarian railway companies during the energy crisis. László Katona , the CEO of MMV Magyar Magánvasút Zrt., said that there are still reservations about energy prices among customers. Railway companies have learned to build such external costs into their pricing. What will be a significant challenge in a few years is the aging of the professional staff. In addition to locomotive drivers, labor shortages will appear in more and more areas, especially for car inspectors. Imre Kovács said that the first female car inspector started working at RCH - according to him, there is significant potential in the involvement of female employees in the railway.

Adding to the challenges is the fact that maintenance costs are increasing – silent brake pads increase the costs of freight wagons. In addition, the maintenance costs of old locomotives are getting higher, as are the leasing costs of new ones.

The participants unanimously agreed that the necessary government subsidies and appropriate regulation could be one of the major breaking points in terms of the competitiveness of the freight sector. Of course, all this with the close cooperation of railway company actors and ministries. In this activity, the HUNGRAIL Hungarian Railway Association has and will have crucial tasks in the near future.