Information published on 8 November 2021 in the UIC electronic newsletter "UIC eNews" Nr eNews.

Hungary: State grant for single wagon transport in Hungary

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Framework contracts for the Hungarian state grant for single wagon transport have been signed with several rail freight companies that have already submitted successful applications: CER Hungary Zrt., GYSEV Cargo Zrt., Floyd Zrt. and Rail Cargo Hungaria Zrt. The subsidy is granted by the Hungarian Ministry for Innovation and Technology and disbursed by MÁV Zrt. as subgrantor. The state contribution, totalling 26 billion Hungarian forints, will enhance the competitiveness of sustainable rail freight transport over the next five years. Maintaining such services provides a long-term workplace for almost 2,000 railway employees, facilitates better utilisation of railway track capacity and unburdens the roads of around 400,000 trucks.

Based on the decision of the Hungarian government and approved by the European Commission, Hungarian rail freight companies can apply in 2021 for an expected grant of 1 billion forints for maintenance of their single wagon transport services.

In the period between 2022 and 2025, the eligible budget is 6.4 billion Hungarian forints per year. An initiative of the Hungarian Railway Association (HUNGRAIL), the number one professional advocacy organisation in the Hungarian railway sector, the state grant for single wagon transport is an important milestone, thanks to which the railways can offer an environmentally friendly alternative for businesses that need to move volumes of goods only up to a few trucks at a time.

Tamás Schanda, Deputy Minister, Minister of State for Parliamentary and Strategic Affairs of the Hungarian Ministry for Innovation and Technology, stated: “The state grant stabilises the field and makes it predictable and brings an estimated 2-4 per cent increase in turnover in the medium term, thus also strengthening the sector’s GDP-generating capacity. Thanks to the intervention, we will be able to protect thousands of jobs. The preservation of capacity is essential for Hungary to become the freight, logistics and distribution centre of Central Europe in accordance with the goal set in the railway programme.”

Róbert Homolya, President-CEO of the MÁV-Volán Group and President of HUNGRAIL, highlighted that the grant can renew single wagon transport, stabilise its operations and replace development and investments, thus bringing the railway even closer to businesses. As a reliable service provider, MÁV provides the infrastructure, shunting operations and most of the traction, as well as traction current and the necessary IT conditions. HUNGRAIL will actively support its member companies with the grant, making suggestions for improving service quality and participating in the development of IT systems for measuring performance and accounting.

Imre Kovács, member of the Board of HUNGRAIL and Chairman of the Board of Rail Cargo Hungaria, said: “The signing of the agreements gives the Hungarian national economy a competitive advantage over those countries that do not help to maintain single wagon transport. With this railway logistics solution, rail freight companies carry out the export forwarding of products of Hungarian companies, for which road transport is not permitted by the authorities of several European countries. The contracts signed today will also bring us closer to meeting the climate targets, as the sustainable and clean single wagon transport replaces the traffic of hundreds of thousands of trucks on the road annually, preventing greenhouse gas emissions and reducing road safety risks.”

In single wagon transport, goods can be transported even in a single freight wagon directly from the company’s location when industrial sidings are available. These single wagons arrive at a pooling station where block trains are formed based on their target destinations. The single wagons are organised in trains in accordance with their target destinations. Offering numerous advantages and suitable for the transport of any kind of goods, single wagon transport is indispensable from an economic point of view. Its maintenance, enabled by the state grant, ensures continued raw material supply for 700 Hungarian companies, including large strategic groups and SMEs, and sees to it that their products reach the market.

Road transport of certain substances and products is prohibited by many European countries. Thus, single wagon transport is the only solution for many Hungarian companies producing goods for export. Single wagon transport services provided by rail freight companies will create safe conditions for transporting 2.3 million tonnes of hazardous materials to their destinations annually.

Maintaining these services provides a long-term workplace for almost 2,000 railway employees and supports greater utilisation of railway track capacity.

The grant helps rail freight companies to maintain the number of employees required for service provision, reduce their competitive disadvantage compared to road transport and increase flexibility in customer service.

Maintaining rail freight transport is also promoted by the European Union. Without the grant, the EU target of increasing rail’s share to 30% by 2030 and to 50% by 2050 on transport routes longer than 300 km cannot be achieved. Without the introduction of the grant for single wagon transport, with an annual transport capacity of 10-12 million tonnes and 1,500 million net tonne-kilometres, up to 400,000 trucks could flood onto Hungarian public roads this year.

The CO2 emissions of rail freight per transport unit are seven times less than road transport, and rail transport can also reduce noise pollution, prevent traffic jams and reduce accidents and their additional costs.

The Hungarian Rail Association (HUNGRAIL) was founded in 2006. It represents the Hungarian rail passenger traffic, cargo freight, infrastructure development and vehicle manufacturing industry and operates on the basis of committees, which participate actively with proposals on the promotion of railway regulatory law and legislation. As a member of foreign associations, HUNGRAIL ensures adequate international representation of the interests of Hungarian rail. The association represents 100% of the rail passenger market and 90% of the rail freight market in Hungary. The annual turnover of its members is close to 600 billion Hungarian forints. The performance of the rail freight companies is more than 50 million tonnes, and the railway undertakings that operate passenger services carry approximately 150 million passengers each year. The President of the association is Dr Róbert Homolya, President and CEO of the MÁV-Volán Group.

(Source: HUNGRAIL)