Hungary foresees 25-30% freight rate rise due to high energy prices

The Hungarian railway association Hungrail is fearing rising rail freight costs in 2022 due to the spike in energy prices. It foresees an increase of 25-30 per cent in rail freight rates and a reversed modal shift. It is therefore asking the Hungarian government to step in.

Hungrail will initiate a special consultation with the ministry of Innovation and Technology, in which it will request “immediate decisions taken on compensation for towing energy prices planned for 2022. Without state intervention, even more traffic could fall onto the road”, the organisation says.

HUF 19 billion in additional costs

“Rail freight companies can prepare for a nearly 300 per cent increase in the price of traction energy from January 2022, without immediate government intervention”, the industry group says. “According to the information issued by MÁV Zrt (the national railway company) in the last few days, we calculate that nearly HUF 19 billion (51.8 million euros) in additional costs could hit market participants in 2022, which, based on the feedback of our member companies, could force them to increase freight rates by up to 25-30 per cent.”.

“Hungrail Magyar Vasúti Egyesület will take decisive action against all factors affecting the competitiveness of the rail transport subsector, including the negative effects of the drastic increase in electricity prices on the rail sector”, the group said, adding that this would have the “completely opposite effects in terms of achieving climate protection goals. With this increase, railway companies operating on the infrastructure of MÁV Zrt. must provide services at the most expensive traction energy price in Europe.”

Hungary not alone in this

The Hungarian rail freight market is not the only one concerned with the price hike. In a recent article, railway companies in other countries explained the impact the energy crisis has had on them so far. The conclusion: prices are skyrocketing, and depending on the type of cargo and way of purchasing energy, the impact will be felt a little less or a little more. But in any case, the impact is felt.

However, this is a side effect of the transition to a more sustainable transport modality, explained Hans-Willem Vroon from the Dutch industry group RailGood. “Moving forward from traditional means of energy production, like nuclear power, is costly. Greener sources require money, and transportation will become more expensive unavoidably. This is the reality. We need to go with it if we want to reach our green goals and move to sustainable mobility. We can’t buy the cheapest fuels and be sustainable at the same time,” he concluded.

Author: Majorie van Leijen

Majorie van Leijen is editor of RailFreight.com, online magazine for rail freight professionals.

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