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Commission approves €1.7 billion German State aid scheme to support rail freight transport

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The Commission says the measure will contribute to ensuring that the rail freight sector remains competitive while preserving the environmental performance of rail, in line with the objectives of the Commission’s Sustainable and Smart Mobility Strategy and of the European Green Deal.

The aim of the scheme, says The Commission, 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,” states The Commission, in its statement regarding the decision.

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