Why Is It So Hard to Fix Freight Rail?
Key Takeaways
- Despite widespread policy commitments to freight rail growth for congestion relief and climate goals, most jurisdictions are failing to achieve a meaningful modal shift from road to rail.
- The commonly cited barriers: infrastructure constraints, regulatory fragmentation, passenger rail priority, and unequal competition with roads are symptoms of deeper institutional problems, not root causes.
- Four systemic issues create these persistent barriers: political leaders operating in road-dominated policy advice environments, transport departments with institutional bias toward roads, misaligned incentives from network operators and resistance to pooling powers and responsibilities into multi-jurisdictional bodies.
- Solving these problems requires institutional reform. Three key changes are needed: establishing a dedicated mutli-jurisdictional freight rail authority with real power and resources, separating network operations from service provision, and implementing ‘selective’ road pricing to create a level playing field for modal competition.
- Success requires moving beyond incremental policy adjustments toward fundamental changes in freight transport governance.
What Next?
Commission a review into the real underlying problems preventing the growth of freight rail and develop more comprehensive solutions to tackle them.
Introduction
Across the globe, transport planners have identified freight rail as a solution to several significant challenges: reducing road congestion, improving road safety, and cutting carbon emissions. The logic is compelling; trains can move massive amounts of cargo with far less environmental impact and road space than equivalent truck traffic and cause fewer accidents. Yet despite this clear advantage and widespread policy commitments, freight rail's share of the transport market continues to stagnate or decline in many regions.
This disconnect between aspiration and reality reveals something troubling about how we approach transport policy. We've become experts at diagnosing the symptoms: capacity constraints, regulatory fragmentation, passenger rail prioritisation, but we consistently fail to address why these problems persist despite a clear strategic intent to grow freight rail.
The real barriers to freight rail growth are institutional and political. The same governance structures and decision-making processes that created today's road-dominated freight system are the ones we're relying on to transform it. It is not surprising that progress is so slow.
This blog examines why our current approach to freight rail development is fundamentally flawed and what structural changes are necessary to move beyond endless strategic plans toward an actual modal shift. The solutions require political leaders to think differently about transport governance and to be willing to cede some control in favour of effectiveness.
Until we recognise why we keep failing at freight rail, we'll continue to produce the same disappointing results, no matter how many more strategies we devise.
The Usual Suspects
Ask any transport official why freight rail isn't growing, and you'll get a remarkably consistent list of explanations. These barriers are frequently mentioned in various strategy documents, consultant reports, and policy reviews. They're real problems, backed by solid evidence, and they genuinely constrain freight rail operations. But they're also red herrings.
Infrastructure bottlenecks and capacity crunches. Rail corridors are choked with conflicting demands, ageing infrastructure that can't handle modern freight volumes, and chronic underinvestment, leaving operators scrambling for reliable service windows.
Regulatory chaos across jurisdictions. A freight train crossing state or provincial boundaries faces a maze of different safety standards, operating rules, and administrative requirements. What should be a seamless journey becomes an expensive compliance exercise.
Passenger rail gets priority. In many areas, freight trains are a secondary priority to passenger services, reducing reliability and utilisation.
Roads get a free ride. Road freight often benefits from more direct government support, less stringent regulatory burdens, and more flexible operating conditions, making it difficult for rail to compete on price and service levels. Road freight operators often pay significantly less in taxes than the costs for providing the roads they use.
These problems are extensively documented, widely acknowledged, and frequently cited as justification for more investment. Yet many reports identifying these issues haven't translated into meaningful modal shift. The regulatory harmonisation working groups convene, the passenger-freight coordination committees meet, and freight rail's market share continues to slide.
The persistence of these "well-known" problems should tell us something important: they're not actually the root cause. They're the predictable outcome of a transport system designed around different priorities and governance structures. Treating them as isolated technical challenges misses the point entirely.
To understand why these barriers exist and persist, we need to look at the decision-makers, institutions, and incentives that create them in the first place.
The Real Problems
The barriers preventing freight rail growth are systemic. They emerge from how we structure transport decision-making, organise our institutions, and allocate political attention. Understanding these root causes explains why the "usual suspects" persist despite endless strategic commitments to address them.
Problem 1: Political leaders operate in a public-centric reality
Here is a very common scenario: a new transport political leader meets with the road freight industry. They complain about congestion on a key route and urge the political leader to fund a road expansion.
Meanwhile, drivers are also complaining about the congestion on the roads. No problem, the political leader thinks, I can kill two birds with one stone by approving the road expansion.
Of course, this road expansion solution suffers from a couple of problems.
Firstly, congestion will return, albeit on a larger road, thanks to induced demand.
Secondly, in the short term, this road expansion investment comes at the cost of a potential investment in the rail network that would have made rail freight more competitive and moved trucks off the road, reducing congestion.
The political calculus for road expansion might be offset if the political leader had high-quality policy advice about the unintended consequences. However, as we will see, that is not particularly forthcoming.
Poor policy is not the only political barrier for freight rail. Political leaders face numerous pressures that divert their attention away from freight rail, rendering it a low priority.
Problem 2: Transport departments are institutionally biased toward roads
Most transport departments were built around road construction and maintenance. A large part of their budget, staffing and relationships are road-focused. Even when they are focused on rail, it is usually overwhelmingly passenger rail.
Within freight divisions, this bias is even more pronounced. Staff spend most of their time managing road freight regulations, road freight routes, and road capacity issues. Rail freight becomes a specialised side interest rather than a core competency. When political leaders ask for advice on transport investments, the institutional knowledge and analytical capacity naturally flows toward road solutions.
This creates a feedback loop: roads receive more attention, which generates more road-focused expertise, which in turn produces more road-oriented policy recommendations, leading to increased road investments and even greater institutional focus on roads.
Problem 3: Network control creates perverse incentives
In most jurisdictions, freight rail operators don't control the infrastructure they depend on. They're customers of network operators who have different priorities, different revenue models, and often competing interests.
When passenger rail operators control the tracks, freight becomes a secondary consideration. Track maintenance favours passenger services. Network investments prioritise improvements in passenger capacity and speed. Freight operators find themselves with suboptimal service levels, making it nearly impossible to compete with road alternatives.
Problem 4: Jurisdictional control defeats network economics
Freight rail's economic advantage comes from long-distance, high-volume movements across extensive networks. But these networks typically span multiple political jurisdictions, each with its own priorities, regulations, and budget cycles.
Every jurisdiction is stuck in a prisoner’s dilemma, unwilling to let go of control, even at the expense of failing to meet their strategic freight rail objectives.
These four problems reinforce each other, creating a transport system that systematically underinvests in freight rail despite widespread policy commitments to modal shift. Addressing the symptoms, infrastructure, regulation, passenger priority, and cost competition requires first addressing these underlying governance failures.
A Potential Solution
Fixing freight rail requires dismantling the institutional arrangements that create the problems in the first place. This means moving beyond incremental reforms toward fundamental changes in how we govern freight rail transport. Three interconnected changes could break the current dysfunction.
Reform 1: Establish a dedicated multi-jurisdictional freight rail authority with real power
The solution isn't another coordinating committee or advisory body; it's an institution with the authority, expertise, and resources to act decisively on freight rail development. The Freight Rail Authority (FRA) would need four critical capabilities that current institutions lack.
Strategic advice. By consolidating freight rail expertise in a single institution, political leaders would have access to specialised advice that isn't filtered through road-biased transport departments.
Strategic freight rail planning. The FRA should develop integrated freight rail strategies that align infrastructure investments with operational improvements and market development, ensuring that planning decisions consider end-to-end freight competitiveness rather than isolated infrastructure projects.
Multi-jurisdictional coordination with teeth. Rather than relying on voluntary cooperation between jurisdictions, the authority would need a legal mandate and financial leverage to ensure coordinated action across freight corridors. This might require higher-level government (federal or supranational) support to incentivise binding agreements between participating jurisdictions.
Dedicated funding streams. The authority would control multi-year capital budgets specifically for freight rail infrastructure, insulating these investments from the prioritisation of road projects.
The governance challenge is to ensure that this institution maintains its legitimacy while maintaining sufficient independence to make good decisions. This likely requires a hybrid model of board representation from participating jurisdictions combined with professional management and clear performance mandates.
Reform 2: Separate network ownership from service provision
The fundamental conflict between network optimisation and service competition can only be resolved by institutional separation. An independent network operator would manage rail infrastructure as a strategic asset, with mandates to serve both passenger and freight markets effectively.
This network operator would be accountable for system-wide performance metrics. Key performance indicators would include freight journey times, network reliability, and modal shift targets.
The risk to passenger services is real and requires careful design. Service level agreements between the network operator and passenger rail providers would need to guarantee minimum service standards. Political oversight of these agreements is essential to maintain support.
A key focus of the FRA will be identifying investments to reduce conflicts between passenger and freight rail.
Reform 3: Implement selective road pricing to create genuine competition
Road pricing is the most direct way to level the playing field, but blanket road pricing on freight risks a political backlash. A more viable approach focuses on selective implementation, where road pricing on specific products can produce large modal shifts.
Target existing economically competitive freight segments first. Begin with products where rail and road costs are already closely matched. Even modest road charges can tip the economic balance in favour of rail without increasing total logistics costs.
Use revenue recycling to accelerate rail competitiveness. This freight road pricing revenue should fund freight rail infrastructure improvements, creating a virtuous cycle where road charges improve rail service, making rail competitive for additional freight segments, enabling broader road pricing implementation.
Coordinate pricing with infrastructure development. Road pricing should be timed with rail capacity improvements to ensure freight operators have viable alternatives before facing higher road costs.
The sequencing matters enormously. Pricing without alternatives creates political risk. Alternatives without pricing incentives fail to achieve modal shift. Success requires coordinated implementation across both reforms.
Conclusion
The path to growing freight rail is not as straightforward as building more tracks or harmonising regulations. While these infrastructure and policy challenges are real, they persist because of deeper structural problems in how we make transport decisions and organise our institutions.
Political leaders lack the specialised knowledge or the time to navigate the complex trade-offs between road and rail investments. Transport departments, dominated by road-focused staff and budgets, inadvertently reinforce the status quo. Fragmented ownership structures create conflicts of interest that undermine the competitiveness of freight rail. And jurisdictional boundaries prevent the coordinated approach that freight rail networks desperately need.
The solutions I've outlined, establishing a multi-jurisdictional Freight Rail Agency, creating independent network operators, and implementing tactical road pricing, are not just policy recommendations. They represent a fundamental shift in how we approach freight transport governance. They require political leaders to cede some control in favour of specialised expertise and cross-jurisdictional coordination.
This won't be easy. Entrenched interests, institutional inertia, and political risk-aversion all work against these changes. But the alternative is continuing to invest billions in road expansions that ultimately fail to solve congestion while missing opportunities to build truly sustainable freight systems.
The choice is clear: we can continue addressing symptoms with piecemeal solutions, or we can tackle the root causes with the structural reforms freight rail actually needs. The climate goals and congestion relief that drove us to prioritise freight rail in the first place depend on making the harder choice.
The question now is whether we have the political will to move beyond good intentions and create the institutional changes that will finally allow freight rail to fulfil its potential.