KfW IPEX-Bank
The European Rail Freight Sector – An Outlook
This article first appeared in the Railway-News magazine Issue 5 2021.
KfW IPEX-Bank’s Director Origination & Structuring, Mobility & Transport Frank Hermandung on the technological developments within the European rail freight sector and its modal share.
Q: Mr Hermandung, what is KfW IPEX-Bank’s interest in European rail freight transport?
Frank Hermandung: Financing for environmentally friendly passenger and freight transport in Europe, but also around the world, is a core focus of KfW IPEX-Bank, which is responsible for commercial transport and infrastructure financing within KfW Group. We have been committed to the sector with a large team and portfolio for decades, financing both start-ups as well as established market operators. Railway lines, railcars, locomotives and signalling technology: our domain includes everything that requires financing in the wheel-rail system.
Q: What are the latest trends you’ve seen? Have railways entered the 21st century?
FH: Railways in Europe have a long history; many technical elements date back to the last two centuries. It has only been in recent years that freight cars, for example, have stopped using sheer force and extreme power to brake by pressing a steel block on to the freight car wheel tread – a technique from the 19th century.
To date, however, the only change made with tremendous effort by European railcar lessors and operators has been in the material used: the cast-iron block brake is now made of a more suitable material. It is interesting to note that it was not efficiency that led to this development but the need to limit noise emissions.
By its very nature, however, the rail system is slow moving; changes do not take effect on a small scale, as is the case with lorries, but require enormous investments in a huge integrated system with much more closely linked infrastructure and rolling stock. At the same time, the safety and regulatory requirements are much higher than for road transport. In addition, railways, in their capacity as public infrastructure, provide public services and are thus sometimes subject to requirements other than purely economic ones.
