State plans to shift freight to rail by changing infrastructure charge

Various wagons.
Various wagons. Source: Operail

Because trains are more environmentally friendly than trucks, the state wants to transfer freight to rail, which will almost certainly result in higher infrastructure fees for road hauliers. At the moment goods are delivered mostly by road.

As rail transport emits fewer greenhouse gases, the European Union has set a target of 30 percent of freight being transported by rail by 2030. According to Minister of Climate Kristen Michal (Reform), this suggests that another objective for Estonia is to transfer freight to rail.

"According to our current knowledge, the share of rail freight transport will be roughly the same as it was last year," the minister said.

In 2020, it was 26 percent, which indicates that the objective has been missed due to the decline in Russian exports. By 2022, 39 percent of the products were transported via rail, compared to 61 percent via road. The numbers in 2021 were 45 percent and 55 percent.

Merle Kurvits, a member of Operail's management team, said that the Estonian railways are anticipated to transport five to six million tonnes of goods this year, whereas Operail transported the same amount in a single quarter a few years ago.

As volumes have decreased, the services of rail hauliers are no longer cost-effective, and they cannot compete with road hauliers in terms of price.

"We should try to ensure that these rail freight volumes can continue," Kurvits said, adding that this means that a so-called railway reform has to happen relatively quickly.

This implies two things. The first stage is to rearrange the entire rail logistics system so that products could be transported effectively north to south rather than east to west. A shared rail link between the Baltic States (Amber Train) that may transport commodities that would otherwise be delivered by truck, is an example of this. Last week, Kurvits met with her southern counterparts to discuss the introduction of a shared train link.

"All three nations acknowledged that low costs for road transport and a lack of freight capacity make it difficult for us to launch liner shipping as planned last year," she said. Currently, the price is not competitive with vehicle conveyance, Kurvits added, who cited this as the biggest obstacle.

In order for railroads to thrive, logisticians agree that infrastructure fees must be adjusted. This, according to Michal, means that haulage road user rates will most certainly increase.

"We have a variable property tax on large vehicles, as well as a road user levy. I understand that at the end of the previous administration there was already a debate on the road user charge, and that debate will likely continue with the new administration," the minister said, adding that "this road user charge should be dependent on the eco-friendliness of the vehicle and take into account the climate component."

Michal mentioned Rail Baltic to point out the importance of rail connection development.

Kurvits said that the Amber Train concept has not been abandoned in light of emission reduction goals, and that rail is the future of freight transportation.

Furthermore, Michal believes that Operail, a state-owned railway company, could be privatized.

"I am skeptical that this strategic infrastructure will be sold within a year and I believe the state should be the first owner." According to Michal, the infrastructure that does not constitute a core function for the state, could also be controlled by the private sector. "Only time will tell whether this occurs in a year or longer," he added.


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Editor: Mait Ots, Kristina Kersa

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