Land Transport sets the course for the future

The European transport system connects people, goods and markets across the continent. However, as demand has grown over recent years, so has the sector's carbon footprint. Today, the transport sector is responsible for up to a quarter of Europe's greenhouse gas emissions.[1]

Of all modes of transport, be it people or freight, rail is amongst the least carbon intensive. And while trucks and buses don’t come first to mind on zero-emission, electrification has changed their profile and new distribution networks require reliable last mile delivery. It is clear to all market participants that Land Transport has a key role to play in the decarbonization of the European transport sector.

Persistent growth for land transport

European rail freight transport benefits form a persistent long-term growth trend. Covid related border closings as well the following supply chain disruption had only a temporary effect on the market. Over the last 20 years, negative growth rates have never persisted for more than 2 years. SCI Verkehr expects rail freight to achieve a CAGR of 1.3% from 2022 – 27 and c. 1.6% until 2030 in Continental Europe.

On the passenger side, Covid left heavy mark not only on the number of passengers, but also changing travel patterns. Overall, volume in the rail segment is only now reaching pre-Covid level, while for many individual public transport markets it is still lagging. Nevertheless, the segment demonstrates resilience and its importance to overall society was acknowledged by governments during Covid, which not only supported the state-owned incumbents but also private actors. On the continent, passenger rail is expected to grow with a CAGR of 3.9% by 2030 according to SCI.  

One of the key drivers of this overall positive outlook for the sector is the decarbonization of the European transport sector. In recent years, political actions as well as the desire of private individuals to reduce their carbon footprint and companies to decarbonize their supply chains have greatly intensified. The EU has set out in its Green Deal to cut transport-related CO2 emissions by a total of 90% by 2050. In 2023, the European Commission further sharpened this target: by 2030, high-speed rail traffic is to be doubled and rail freight traffic increased by 50%. Market liberalization and digitalization are also driving up competition and increases efficiency. Private passenger benefit from new providers on high-speed routes or night trains in countries such as Austria, Belgium, France, Germany, or Spain. This expands the range of services available and can offer an attractive alternative to flying. On the rail freight side, the intermodal segment is viewed as a strong driver for long term growth.        

The strong long-term growth trend, resilience of business models, public support and sustainability profile have attracted banks as well as institutional investors with a long-term view to provide capital to the market. In times of ever more tight public budgets, the role of private capital to support the push to a cleaner mode of transport is becoming more important.  

Banks and industry together for more sustainability

For many years, ING has been supporting the land transport sector in Europe, the USA, and Australia, providing tailor-made financings and a full range of bank solutions available. Customers include well-known state-owned companies such as Deutsche Bahn, SNCF, ÖBB or NS as well as many private companies such as the Italian high-speed rail company Italo, OEMs, and the leading rolling stock lessors.

ING is actively supporting the land transport sector in their sustainability journey. We provide and arrange green loans for the acquisition of green asset, offer electric bus leasing, and are a trusted sustainability advisor to the market.

ING is also actively supporting the dialogue on structural solutions for the mid and for the long term. ING supported the initiative by the “Association of European Rail Rolling Stock Lessors”. This initiative resulted in a report on how the rail sector can switch even faster from fossil propulsion technologies to sustainable alternatives.

For the transition to a more sustainable transport sector, ING will continue to stand by its customers as a reliable partner with in-depth market expertise and a leader in providing green financing solutions.  

[1] Höchste Zeit für eine Umstellung im Verkehrssektor — Europäische Umweltagentur (europa.eu)