Francisco Manuel Bastos Andrade Furtado

U.S. and European Freight Railways: The Differences That Matter

Introduction

U.s. And european freight railways: the differences that matter. Uncover key differences in US and European freight railways, analyzing modal share, productivity, and costs. Structural factors explain disparities; Europe must prioritize cost reduction & larger trains.

Abstract

This paper examines the differences between the United States (U.S.) and European (EU27) freight railways. The inherent or structural factors influencing the railways modal share will be evaluated. It was found that nearly all of the disparity in modal share can be explained by structural or inherent differences, like the competitiveness of non-surface modes, shipment distances (both influenced by geography), and commodity mix (namely, coal). More striking are the differences in productivity, to move the same number of tons seven times, more trains are required in Europe compared with the U.S.. Operational revenues per ton-mile are around two times higher in Europe, while the operational expenses in the U.S. are four times lower than in Europe. It is argued that setting a goal for modal share similar to the U.S. is not realistic for the EU27. A key concern for European freight railways should be the reduction of operational costs, by increasing the trains’ sizes.Distinct policy answers were given to the railroads’ crisis in the post WWII years. Soon after 1980 when reforms were introduced in the U.S. there was a revival of the sector. The same has not happened in Europe, where questions regarding infrastructure financing or the coordination of network investments and operational needs remain.

Review

This paper provides a compelling comparative analysis of U.S. and European (EU27) freight railway systems, meticulously identifying the structural and inherent differences that underpin their divergent performances. The central finding that nearly all disparity in modal share can be attributed to factors such as geographical influence on non-surface mode competitiveness, shipment distances, and commodity mix (particularly coal), offers a robust explanation for existing patterns. Furthermore, the paper strikingly highlights profound differences in operational efficiency, revealing that Europe requires seven times more trains to transport the same tonnage as the U.S., alongside significantly higher operational revenues and expenses per ton-mile in Europe. These findings lay a strong foundation for understanding the fundamental drivers behind the current state of freight rail in both regions. The analysis effectively leverages these structural insights to argue that setting U.S.-like modal share goals for the EU27 is unrealistic, a crucial policy implication. Instead, the paper cogently suggests that European freight railways should prioritize operational cost reduction, specifically through increasing train sizes. This pragmatic recommendation is underpinned by a historical perspective, tracing the distinct policy responses to post-WWII railroad crises in both regions. The paper notes the successful sector revival in the U.S. following 1980 reforms, contrasting it with persistent challenges in Europe concerning infrastructure financing and the coordination of network investments with operational needs. This historical context adds significant depth to the policy recommendations. Overall, this paper makes a valuable contribution to the literature on transport economics and policy. By systematically dissecting the factors that differentiate U.S. and European freight railways, it offers clear insights into the limitations of direct policy transplantation and underscores the necessity of context-specific strategies. The emphasis on productivity disparities and cost reduction for Europe provides a clear direction for policymakers grappling with the future of freight rail. This work is highly relevant for researchers and practitioners alike, offering a nuanced understanding of why these systems operate so differently and what strategic levers might be most effective for their future development.

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