2025.06.02

The Rise of Rail Freight in Europe and the Asia-Europe

In the race to decarbonize, rail freight can help companies build low-carbon supply chains

 

With sustainability for many firmly high on the business agenda, companies are exploring more carbon-efficient ways to move goods. Amid persistently high fuel prices, congested road networks, and increasingly stringent climate regulations, rail freight is an efficient and sustainable alternative. In Europe and along key Asia–Europe corridors, it offers a lower-emission solution that supports long-term climate goals. While recent growth has been modest, ongoing investments and policy support across the region are laying the foundation for rail to gain momentum as a key part of the future logistics landscape.

This article explores the evolution and great potential of rail freight in Europe, its benefits, and the strategies to overcome its challenges. It also examines the latest developments in the Asia-Europe corridor (excluding routes via Russia), where increasing investment and transformative projects have the potential to enhance transit times, capacity, and the overall experience for the shippers.

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    A Brief Look at the History

    Rail freight has been a cornerstone of European logistics since the 19th century, initially moving coal, steel, and raw materials. In the 1950s, it held a dominant position with approximately 60% of the freight volume. However, this share gradually decreased to around 30% by the 1970s. 

     

    The liberalization of the European rail freight market began in the mid-1990s, aiming to introduce competition and foster innovation. This led to new entrants capturing nearly half the market. Rail freight has seen modest but consistent positive growth in market share over the past decade, supported by factors such as efficiency, cost-effectiveness, and sustainability. Like any major transport mode, it faces infrastructure and regulatory challenges, but ongoing efforts and investments are paving the way for continued progress (ERFA, 2022).
     

    A Proven Solution for Shippers

    When selecting a transport mode, shippers weigh multiple factors: transit time, cost, reliability, and environmental impact. Rail freight provides a scalable and sustainable solution, offering key benefits such as:

    • High Capacity and Efficiency: A key advantage of rail freight is its ability to transport substantial volumes in a single trip. On average a full freight train can replace over 300 trucks on the road. This capacity not only alleviates highway congestion but also reduces per-unit handling costs, making rail a particularly viable option for long-haul shipments where economies of scale are crucial (Union Pacific, 2022).
    • Cost Efficiency for Long-Distance Shipments: Rail freight often offers cost advantages in Europe, particularly for long-distance and high-volume shipments, due to economies of scale and energy efficiency. Furthermore, a recent study by the European Commission indicates that increased competition within the EU rail market has led to reductions in freight transportation costs, making it an even more economically attractive option for businesses (European Commission, 2024). However, recent increases in electricity prices have placed growing financial pressure on rail freight operators, emphasizing the need for stable and affordable clean energy to support rail’s long-term cost-efficiency and environmental benefits (UIRR, 2024).
    • Cutting Emissions per TEU: Rail freight significantly reduces emissions on key corridors. On the route from Rotterdam to Lyon via the North Sea–Mediterranean Rail Corridor, switching from diesel trucks to electric rail cuts CO₂ equivalent emissions (well-to-wheel) by approximately 90% according to EcoTransIT World calculation. This makes rail a compelling option for companies aiming to decarbonize their logistics while maintaining reliability and performance.
    CO₂e tonnes (WTW) per TEU.png
    Rail (blue) vs Road (orange) from Rotterdam to Lyon via the North Sea–Mediterranean Corridor..png

    Rail (blue) vs Road (orange) from Rotterdam to Lyon via the North Sea–Mediterranean Corridor.

    Key Challenges in Adoption

    Rail freight faces challenges limiting its continued adoption, primarily stemming from technical interoperability barriers such as differing track gauges, electrification systems, and signaling systems between countries, alongside regulatory interoperability barriers resulting from non-harmonized operational rules and procedures across borders, which, according to the European Union Agency for Railways' "Cross-border Rail Transport Potential" report, creates operational issues such as slower transport operations and increased operating costs for railway undertakings (European Union Agency for Railways, 2022).

    On the constructive side, ongoing infrastructure upgrades, regulatory harmonization, and digital innovations actively address these challenges, making it an increasingly attractive option for shippers.

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    The Future of Rail Freight: Infrastructure Projects and EU

    The future of rail freight in Europe is promising despite the challenges above, thanks to investments and policy initiatives aimed at addressing current challenges.

     

    Major Infrastructure Projects

    The European Union is investing in its Trans-European Transport Network (TEN-T) corridors to enhance cross-border connectivity and boost capacity. Projects like the Brenner Base Tunnel - set for completion after 2030 - will enable longer, heavier trains to traverse bottlenecks such as the Alps more efficiently, helping to reduce transit times between Northern and Southern Europe (CINEA, 2024).

    Similarly, the Rail Baltica project is designed to connect the Baltic States with the rest of Europe, opening new intermodal opportunities and improving north-south freight flow. Once operational around 2030, it will become a key component of the North Sea–Baltic Corridor (European Commission, n.d.).

     

    Digitalization and Technological Innovations

    The deployment of the European Rail Traffic Management System (ERTMS) represents a crucial technological step towards harmonizing diverse national signalling and train control systems across borders. By establishing this unified standard, ERTMS facilitates seamless international rail traffic, fundamentally enabling greater service speed, enhanced flexibility, and improved capacity throughout the European network (European Union Agency for Railways, n.d.).
     

    Supportive EU Policies and Financial Incentives

    The EU's Sustainable and Smart Mobility Strategy, aligned with the European green deal, aims to increase rail freight's modal share by 2030 through various policy measures and financial incentives. Policy initiatives include revamping the intermodal transport framework, considering economic incentives for intermodal operations and infrastructure, addressing infrastructure scarcity, and revising rail freight corridor regulations. Financial support involves funding under the Connecting Europe Facility (CEF) for upgrading rail infrastructure and promoting fleet modernization with low and zero-emission technologies, ultimately levelling the playing field between rail and road transport (European Commission, 2021).

    Key Developments in Asia–Europe Corridor 

    Current Trade Volumes and Trends

    In 2024, the Trans-Caspian International Transport Route (TITR), known as the Middle Corridor, achieved record-high freight volumes. Cargo on this route reached approximately 4.1 million tons, a 63% year-on-year increase (The Astana Times, 2024a).

    Azerbaijan Railways reported that over 27,000 TEUs from China were transported via the Middle Corridor (Trans-Caspian International Transport Route, TITR) in 2024, representing a 25-fold increase compared to 2023. This surge reflects a strategic shift by shippers to bypass Russian territory due to ongoing geopolitical tensions and sanctions related to the war in Ukraine. The TITR, which connects China to Europe via Central Asia, the Caspian Sea, the South Caucasus, and Türkiye, has rapidly emerged as the most promising alternative to the northern route through Russia. Its growth is aligned with China’s Belt and Road Initiative and has been recognized by both the European Union and the World Bank for its long-term strategic value in boosting regional connectivity and reducing transport times between Asia and Europe (Daly, 2025).

    GEODIS and the Middle Corridor in Action: A Sweden-to-Beijing Shipment Showcase

    A recent GEODIS shipment from the heart of Sweden to Beijing highlights the growing viability of the Middle Corridor as a practical alternative to Russian transit routes. The cargo, two containers of heavy raw materials for manufacturing, departed Sweden and was routed through Hamburg, beginning its overland journey on January 25.
    Taking a path via Hamburg—Burgas—Batumi—Baku—Aktau—Dostyk—Altynkol/Alashankou—Xi’an—and finally Beijing, the shipment successfully bypassed Russian territory. This milestone demonstrates the operational reality of the Middle Corridor. 

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    Future Volume Growth and Logistics Developments

    The Middle Corridor is projected to triple in volume by 2030, though with uncertainty, reaching up to 11 million tonnes, primarily driven by regional trade among Kazakhstan, Azerbaijan, and Georgia. While it is expected to remain a minor player in intercontinental trade compared to deep-sea routes, the corridor’s role in diversifying and strengthening connectivity is poised to grow significantly. Continued improvements in efficiency and infrastructure could support a 1.5-fold increase in container traffic and a shift toward higher value-added goods (World Bank, 2023).

     

    Major Infrastructure Projects

    Several high-profile projects are enhancing the corridor:

    • Baku–Tbilisi–Kars (BTK) Railway Expansion: Completed in phases in 2024, this upgrade increased BTK’s capacity five-fold, reducing China–Europe transit times (Karimli, 2024). 
    • China–Kyrgyzstan–Uzbekistan (CKU) Railway: The China–Kyrgyzstan–Uzbekistan (CKU) Railway is a long-anticipated Belt and Road Initiative project aimed at enhancing connectivity between China and Central Asia. An official groundbreaking ceremony took place in December 2024, marking a symbolic launch, although substantial construction is not expected to begin until at least mid-2025. The project holds strategic importance for diversifying trade routes between China and Europe by offering an alternative to those passing through Kazakhstan and Russia. Once operational, the CKU Railway is expected to reduce transport times and costs, contributing to increased trade and economic integration across the region. Construction of the Kyrgyz section is expected to span six years, with completion targeted for 2031 (Eurasianet, 2024; The Diplomat, 2024).
    • Kazakhstan Upgrades: Kazakhstan is investing in double-tracking, modernizing key routes such as the Dostyk–Moyinty line, and building new bypasses to alleviate congestion. These upgrades are critical for accommodating the projected surge in China–European traffic (The Astana Times, 2024b).
    • Caspian Sea Port and Ferry Investments: Upgrades at Baku’s Alat port and expansions in Aktau and Kuryk are designed to improve the sea–rail interface, thereby reducing delays in the Caspian Sea crossing (Ali, 2024). 

       

    Building a Smarter and Resilient Supply Chain

    Rail freight is expanding across Europe and the Asia–Europe corridor, yet challenges like multimodal transfers, customs bottlenecks, and infrastructure gaps remain. However, ongoing investments in infrastructure, border streamlining, and digital innovations are improving transit times, making rail freight a faster and cost-efficient alternative to ocean and air freight while strengthening supply chain resilience.

     

    Europe’s rail networks, supported by EU-led modernization, are evolving to meet growing demand, while the Asia–Europe corridor, particularly non-Russian routes like the Middle Corridor, is emerging as a potential key trade route. Investments in infrastructure, digitalization, and intermodal integration are enhancing capacity and efficiency, making it a sustainable, long-term logistics solution.

     

    For businesses looking to optimize supply chains and meet sustainability targets, rail offers a competitive edge. 

     

    Connect with our expert today to discover how rail freight can transform your operations.

    Contact an expert

    Frequently asked questions

    Rail freight refers to the transportation of goods and cargo via trains over dedicated railway networks. It is commonly used for long-distance shipments of bulk commodities, containers, and heavy industrial goods, offering an efficient, cost-effective, and sustainable alternative to road and ocean transport.

    Rail freight is generally categorized into three main types:

    • Intermodal Rail Freight – The transportation of shipping containers or swap bodies that can be transferred between trains, trucks, and ships without unloading the cargo. This enables seamless multimodal transport.
    • Bulk Rail Freight – The movement of large quantities of loose commodities such as coal, grain, minerals, and chemicals, typically transported in specialized wagons.
    • Break-Bulk Rail Freight – The transportation of goods that are not containerized but instead loaded individually, such as heavy machinery, steel, timber, or automobiles.

    This classification helps shippers choose the most efficient rail freight option based on cargo type, distance, and supply chain needs. 

    Pros:

    • High Capacity – Trains can carry large volumes, reducing congestion on highways.
    • Cost-Effective for Long Distances – More economical than road transport for shipments exceeding 300 km.
    • Low-carbon solution – Produces significantly lower CO₂ emissions than trucking.
    • Reliable Scheduling – Operates on fixed schedules, reducing delays caused by traffic congestion.

    Cons:

    • Limited Flexibility – Requires intermodal connections for first- and last-mile delivery.
    • Infrastructure Dependence – Cross-border differences in rail gauges, electrification, and regulations can create logistical challenges.
    • Longer Lead Times – Compared to air freight, transit times may be slower for urgent shipments.

    Rail freight refers specifically to the movement of cargo by trains, while intermodal transport involves using multiple modes of transportation—such as rail, trucking, and shipping—within a single supply chain. Intermodal freight often includes containers that can seamlessly transfer between trains, trucks, and ships, allowing greater flexibility and efficiency.

    Rail freight is used for its efficiency, cost-effectiveness, and sustainability. It is ideal for long-haul shipments, helping reduce fuel costs, lower emissions, and provide reliable transit times. Businesses rely on rail to optimize supply chains, move bulk goods efficiently, and meet environmental targets, especially in Europe and the Asia–Europe corridor, where infrastructure investments are making rail transport an increasingly strategic choice.

    Reference list

    ERFA, 2022. The European rail freight market: Competitive analysis and recommendations – Study on behalf of the European Rail Freight Association. [pdf] Brussels: ERFA. Available at: https://www.erfarail.eu/uploads/The%20European%20Rail%20Freight%20Market%20-%20Competitive%20Analysis%20and%20Recommendations-1649762289.pdf [Accessed 10 Apr. 2025].

    Union Pacific, 2022. 12 Train Facts You Might Not Know. [online] Union Pacific. Available at: https://www.up.com/customers/track-record/tr030822-12-train-facts-you-might-not-know.htm [Accessed 5 May. 2025].

    European Commission, 2024. Rail market opening: competition leads to lower ticket prices, EU study finds. [online] Mobility and Transport. Available at: https://transport.ec.europa.eu/news-events/news/rail-market-opening-competition-leads-lower-ticket-prices-eu-study-finds-2024-09-23_en [Accessed 10 Apr. 2025].

    International Union for Road-Rail Combined Transport (UIRR), 2024. Rail freight competes with long-distance trucks. [online] Available at: https://www.uirr.com/media-centre/press-releases-and-position-papers/2024/mediacentre/2370.html [Accessed 5 May 2025].

    European Union Agency for Railways, 2022. Cross-border rail transport potential. [pdf] Luxembourg: Publications Office of the European Union. Available at: https://www.era.europa.eu/system/files/2022-12/20225455_PDFA2A_TR0522377ENA_002.pdf [Accessed 10 Apr. 2025].

    CINEA, 2024. The Brenner Base Tunnel: shifting Alpine traffic from road to rail. [online] European Climate, Infrastructure and Environment Executive Agency. Available at: https://cinea.ec.europa.eu/news-events/news/brenner-base-tunnel-shifting-alpine-traffic-road-rail-2024-09-18_en [Accessed 10 Apr. 2025].

    European Commission, n.d. North Sea – Baltic Corridor. [online] Directorate-General for Mobility and Transport. Available at: https://transport.ec.europa.eu/transport-modes/rail/ertms/who-involved-ertms-deployment/corridors/north-sea-baltic-corridor_en [Accessed 10 Apr. 2025].

    European Union Agency for Railways, n.d. European Rail Traffic Management System (ERTMS). [online] Available at: https://www.era.europa.eu/domains/infrastructure/european-rail-traffic-management-system-ertms_en [Accessed 10 April 2025].

    European Commission, 2021. Sustainable and smart mobility strategy – putting European transport on track for the future. [pdf] Brussels: Directorate-General for Mobility and Transport. Available at: https://transport.ec.europa.eu/document/download/be22d311-4a07-4c29-8b72-d6d255846069_en?filename=2021-mobility-strategy-and-action-plan.pdf [Accessed 10 Apr. 2025].

    The Astana Times, 2024a. Cargo transport via Middle Corridor surges to 4.1 million tons in 11 months. [online] The Astana Times, 12 Dec. Available at: https://astanatimes.com/2024/12/cargo-transport-via-middle-corridor-surges-to-4-1-million-tons-in-11-months/ [Accessed 10 Apr. 2025].

    Daly, J.C.K., 2025. Trade Along Trans-Caspian International Transport Route Surges. [online] Eurasia Daily Monitor, 28 Jan. Available at: https://jamestown.org/program/trade-along-trans-caspian-international-transport-route-surges/ [Accessed 10 Apr. 2025].

    World Bank, 2023. Middle Trade and Transport Corridor – Policies and Investments to Triple Freight Volumes and Halve Travel Time by 2030. [pdf] Washington, DC: World Bank. Available at: https://thedocs.worldbank.org/en/doc/6248f697aed4be0f770d319dcaa4ca52-0080062023/original/Middle-Trade-and-Transport-Corridor-World-Bank-FINAL.pdf [Accessed 10 Apr. 2025].

    Karimli, I., 2024. Baku-Tbilisi-Kars Railway Expansion Completed, Boosting Cargo Volume to 5 Million Tons. [online] Caspian News, 7 May. Available at: https://caspiannews.com/news-detail/baku-tbilisi-kars-railway-expansion-completed-boosting-cargo-volume-to-5-million-tons-2024-5-7-0/ [Accessed 10 Apr. 2025].

    Eurasianet (2024) China-Kyrgyzstan-Uzbekistan railway officially launched – but sidetracked at least until summer. Available at: https://eurasianet.org/china-kyrgyzstan-uzbekistan-railway-officially-launched-but-sidetracked-at-least-until-summer (Accessed: 11 April 2025).

    The Diplomat, 2024. A Ceremonial Start to Construction of the China–Kyrgyzstan–Uzbekistan Railway. [online] Available at: https://thediplomat.com/2024/12/a-ceremonial-start-to-construction-of-the-china-kyrgyzstan-uzbekistan-railway/ [Accessed 5 May 2025].

    The Astana Times, 2024b. Railway upgrades to bolster Kazakhstan’s role in global logistics. [online] The Astana Times, 20 Nov. Available at: https://astanatimes.com/2024/11/railway-upgrades-to-bolster-kazakhstans-role-in-global-logistics [Accessed 10 Apr. 2025].

    Ali, T., 2024. Azerbaijan, Kazakhstan, and China Announce New Cargo Terminal in Baku. [online] Caspian Policy Center, 15 Nov. Available at: https://caspianpolicy.org/research/middle-corridor/azerbaijan-kazakhstan-and-china-announce-new-cargo-terminal-in-baku [Accessed 10 Apr. 2025].

    Alexander Hoglund.jpg

    Alexander Höglund

    Head of Sustainability, GEODIS Freight Forwarding

    Alexander joined GEODIS in 2010 and has been instrumental in developing the company's sustainability strategy. He is an expert in carbon-efficient logistics, emission reporting, and climate advisory.
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