While passenger rail transport has been growing in recent years, freight operators across Europe face the opposite problem – declining demand for their services. We asked Chairman of the Board of ČD Cargo Tomáš Tóth about the situation of the largest Czech rail freight carrier.
Is the European market really doing that badly?
Unfortunately, yes. Most former national carriers across Europe are in trouble. DB Cargo carried even less freight in the first half of 2025 and is preparing to cut back its single-wagon system and lay off staff. PKP Cargo saw its transported volumes drop by about 5 percent between January and April 2025 and is now operating under a court-approved restructuring plan. In Hungary, rail freight volumes fell by 14.2 percent in the first quarter of this year. Romanian carrier CFR MARFA went bankrupt. Even Switzerland, often seen as a model for European railways, is facing difficulties – SBB Cargo Switzerland reported an annual deficit of 80 million CHF. Unfortunately, the list could go on.
What are the causes of this situation?
The decarbonization of the energy and heating sectors, along with high prices for emission allowances, has reduced the competitiveness of European industry. As a result, traditional commodities such as coal for energy and heating, iron ore, and steel products are vanishing from the rails. In the Czech Republic, timber is also disappearing from the tracks – volumes previously boosted by the bark beetle calamity are no longer there. But Europe isn’t only about the Green Deal – there are also other costly EU projects, such as quiet brake blocks or the digital automatic coupler. I dare say rail is one of the sectors burdened most heavily by regulatory and mandatory “Brussels” measures. The financial demands of these requirements and projects further undermine the competitiveness of rail compared to road.
What is the situation in the Czech Republic?
Not much better. In 2007, the year ČD Cargo was established, the total freight output of all rail operators on the network of the Railway Administration (RA) was 39,252 million gross tonne-kilometers. Last year, it was 31,213 million – a drop of more than 21 percent. The decline has accelerated in the last three years, reaching 11 percent. Across all operators, freight volumes on the RA network fell by 5 percent in the first half of this year.
Tomáš Tóth, Chairman of the Board of ČD Cargo.
Why is rail losing ground to trucks?
Rail is taking a double hit from the Green Deal and decarbonization. On one hand, it loses volumes of key commodities due to the decline in heavy industry. On the other, the costs of rail transport rise sharply because of electricity prices and emission allowances. As a zero-emission and energy-efficient mode of transport, rail has ironically become more of a victim of decarbonization efforts than a tool for achieving them. For example, ČD Cargo operates over 90 percent of its services under electric traction. Yet green transport policy is not working so far – environmentally friendly, energy-efficient rail cannot compete on costs with road haulage, which continues to rely on carbon-heavy fossil fuels. Between 2018 and 2023, diesel prices rose by 11 percent, while traction electricity jumped by 72 percent. The gap remains wide. In the winter months, electricity cost 4.25 CZK/kWh, now it is 3.67 CZK/kWh, averaging 3.93 CZK/kWh this year including regulated charges. Diesel prices are stable – in fact, they hit a two-year low this May. The main competitor to trucks is single-wagon shipments, but these are extremely demanding in terms of both capacity and costs. As demand for this service declines, profitability falls, forcing us to scale back this segment significantly.
How is ČD Cargo doing right now?
In the first half of 2025, ČD Cargo reported a pre-tax loss of 931 million CZK. This reflects ongoing restructuring in response to declining freight volumes. The company transported 29.9 million tons of goods – an increase in absolute volume, but with lower transport performance. We are carrying lighter goods over shorter distances. Growth has come in combined transport, automotive industry shipments, and fuel transport. Abroad, container traffic has risen significantly, especially in Germany. With around 50 percent market share, we remain the largest freight carrier operating on the RA network.
You mentioned restructuring. What does that involve?
There is only one path to stabilizing the company: we must reduce fixed costs – that means our resources, such as staff, locomotives, and wagons – to a sustainable level. We are downsizing to avoid ending up like some of the companies around us, which failed because they did not adjust continuously as we have. By the end of this year, another 700 employees will leave, bringing us closer to our target headcount of about 4,600. With wagons, we need to shed around 4,000 more – we are identifying long-term surplus stock and will begin tenders this year. Ultimately, ČD Cargo’s target is between 15,000 and 16,000 wagons. For locomotives, we are not only addressing excess capacity but also modernizing the fleet. All these numbers are based on annual transport volumes of about 45 million tonnes. If European industry does not recover and market conditions do not improve, we expect further declines in the coming years. Rail freight could end up playing a much smaller role than would be desirable from an environmental perspective – and once lost, it is hard to rebuild.
Do you see a light at the end of the tunnel?
There is no reason for excessive optimism at present. But I believe we still have much to offer our customers and that rail – even freight rail – is the transportation mode of the future. The growth of container transport proves it, and I am convinced cooperation between rail and road will deepen in the future. I also see potential in transporting products of the circular economy (municipal waste, biomass, scrap metal, etc.), and for ČD Cargo in expanding services abroad. We are trying to position rail as part of major construction projects, such as the Dukovany nuclear power plant or raw material extraction (like lithium mining). Both are long-term challenges, but they represent opportunities.
ČD Cargo
The joint-stock company ČD Cargo proudly continues nearly 200 years of rail freight tradition in Bohemia, Moravia, and Silesia. It is one of the largest freight rail carriers in Europe. Its services range from transporting raw materials to high-value goods, as well as container shipping and other supplementary services. ČD Cargo’s strategic goal is to maintain its leading position in the rail freight market. Other priorities include employee development, improvement of their professional and language skills, and cooperation with technical schools to recruit skilled young staff. The company also pays close attention to safety goals and to improving both working and safety conditions for employees.
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