movements. Examples of high-speed rail and airport integration already exist in Europe, in the form of co-operative agreements between airlines and rail transport operators.24

Freight rail

As in the case of passenger transport, using rail to transport freight can usually be justified in Page | 122 economic terms only in areas and directions where freight volumes are high. A prerequisite for freight rail infrastructure investment is, therefore, an understanding of existing freight flows,

and the specific characteristics and customer needs of various market segments (Box 3.5).

For freight rail, a key opportunity is to closely connect with other transport modes and to well integrate within the logistics supply chain (i.e. intermodal integration). Containerisation, or the standardisation of the size of freight transport units, is essential to facilitate door-to-door (intermodal) solutions in conjunction with road. Rail can also benefit significantly from the presence of third-partly logistic operators which offer integrated and seamless solutions for goods transport.25

In North America, large intermodal companies, logistics service providers and railways have created large freight terminals (super-hubs). From 2000 to 2017, the number of domestic containers transported in the United States tripled, while international container traffic grew 60% (a 50% faster growth than the US economy). Domestic container transport even continued growing even during the recession of 2008-09 (Figure 3.26).

In Europe many rail freight terminals were developed by local municipalities (or were supported by them) acting together with intermodal companies, and often driven by sustainability concerns. In emerging economies, this market is completely underdeveloped, as neither the private sector nor regional governments have had much success with central planning for railways. The reason is that the economies of scale of freight rail usually favour long distances that cross municipal, district and provincial boundaries. Overcoming the resulting barriers requires planning driven by regional entities and national governments (and involving inter-ministerial collaboration).26 One obstacle in emerging economies is that the type of intervention required (such as logistics hubs) usually depends upon private sector inputs, but many countries are not well-disposed or geared towards public-private partnerships. Pro-active policy development in finance ministries on how to structure public-private partnerships is recommended.

24 For example, the AIRail Service provided by Lufthansa and Deutsche Bahn has connected Frankfurt airport with Stuttgart since 2001, and with Cologne since 2003. In France, Air France and SNCF launched TGV AIR in 1994, under which the intermodal passenger transportation between Paris’ Charles de Gaulle airport (CDG) and Lille is exclusively operated by TGV. Similarly, Thalys International has co-operated with several airlines (Air France, KLM, American Airlines, Lufthansa and SN Brussels) to provide intermodal services to passengers on three Thalys links, namely, Brussels-CDG, Anvers-Schiphol, and Paris (Nord)-Brussels National Airport (Jiang and Zhang, 2014).

25 Relevant businesses are classified as firstand second-party logistics service providers, providing basic transport and warehousing services, typically including railway companies and third party logistics contractors, who integrate services to provide a seamless solution, acting as intermediaries between clients and first and second class service providers. The presence of these intermediaries can lead to effective exploitation of the advantages of railways over other modes of

Better understanding freight flows at the national level and understanding spatial and sectoral quantification of market segments is important. With an accurate model, the ideal rail markets can be accurately identified and rail infrastructure investments and delivery services appropriately targeted. An example of such quantified freight flows in two emerging market economies (India and South Africa) is provided in Figure 3.25. For both countries, domestic intermodal flows of manufactured and fast-moving consumer goods (column 4 in Table 3.2) are highlighted to showcase rail potential.

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Figure 3.25 Examples of freight-flow modelling to inform rail potential and infrastructure investments

(not to scale)

Source: Simpson, Havenga and Aritua (2016).

Key message • Corridors with high density of goods movements and relevant market segmentation have the greatest relevance for investments in freight rail infrastructure.

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