The state of Hungarian railways is outdated, hindering the country’s chances of playing a key role for the supply chain of Eastern Europe. Data shows that rail freight in Hungary has been almost constantly decreasing since 2020. Industry association Hungrail presented a plan to the government to try and save companies that “are struggling for survival”.
Bad infrastructure does not only affect transit through Hungary, but also domestic transport since Hungarian manufacturers cannot reach export markets and it is harder to import products. “The increase of speed restriction signals, insufficient axle load and the lack of modern track capacity make rail freight transport unpredictable and costly, forcing businesses to rely on road transport”, a spokesperson from Hungrail underlined.
Such a statement finds validation in the data provided by the Hungarian Central Statistical Office. Between 2020 and 2024, rail freight in Hungary lost volumes across the board: total tonnes transported via rail in the country dropped when it comes to transit, import, export and domestic services. In total, between the start of 2020 and the end of 2024, the industry transported almost two million tonnes.
‘Costs are too high, subsidies are too low’
“Last year, a nearly 18 per cent price increase would have been necessary according to the Railway Freight Transport Cost Index calculations, but railway companies were unable to pass this on to customers”. Some opportunities are there, including the launch of new industrial sites and the opening of the Belgrade-Budapest railway, scheduled for this year. Another chance to revive the Hungarian rail freight sector could come from an end to the war in Ukraine, but recent developments highlighted the uncertainty surrounding this conflict and its end.
Subsidies “are no longer sufficient to halt the continuous decline of railway freight transport performance.” According to Hungrail, the solutions would include “reducing track access charges, introducing state incentives, tax and fee exemptions, targeted grants and providing predictability through the regulatory environment”. Another significant issue is the increasing costs associated with non-implemented or missed measures. “If the government does not intervene in the short term and does not increase state involvement, international freight routes will bypass the country”, the spokesperson stressed.
The VÁGTA programme
In order to try and heal the sector, Hungrail compiled a 40-point plan and presented it to the government, with which negotiations will start soon. “We were pleased that State Secretary Responsible for Transportation, Mr Bálint Nagy, offered an alliance to the sector’s stakeholders at the event where the association presented the program”, the spokesperson said.
The programme is not yet publicly available, but Hungrail explained that it will touch upon eight different areas, mostly aimed at reducing rail freight costs. Among the main means to reduce costs are lower track access charges (which increased by 14 per cent last September) and higher subsidies for single wagonload. Moreover, Hungrail is proposing the refund of excise tax paid on traction electricity and reducing the VAT for rail freight forwarding activities.
The VÁGTA programme also contains measures to amend the inspection practices for the transport of dangerous goods or to mandate the redirection of certain cargo segments to rail. Other important aspects of the VÁGTA programme revolve around improving communication between the infrastructure manager and railway undertakings on track closures. Further proposals concern “ensuring sufficient railway professional workforce and digitalization”.
“We hope that we will soon receive substantive responses from the Ministry, as there is a government decree stating that by March 31, 2025, the Ministry of Construction and Transportation have to propose measures to improve railway competitiveness”, the spokesperson concluded.