The deregulation of Europe’s rail freight business is gaining momentum. In January 1998, the European Union plans to introduce trans-European rail freight freeways, a move that could be a turning point in introducing competition to railroads and winning back market share from road transport. The freeways may open the door to an entirely new rail business in which long-distance pan-European rail carriers run high-speed freight shuttles between major hubs while low-cost local railroads cover the regions.

Forming through-paths between international rail hubs, these freeways will be accessible to both existing railway enterprises and new licensed operators. Use of the freeways will be facilitated by "one-stop shop" infrastructure agencies that will allocate and charge for paths transparently and efficiently. Border delays will be minimized or eliminated. For rail customers long dissatisfied with cross-border services, freeways offer the prospect of better service at lower prices.

For railroads, they promise—or more likely threaten—sweeping change. State-owned, highly integrated railroads operating exclusively on national territory have held a monopoly on rail freight for many years. But the way they operate is ill suited to the international demands of today’s customers. Locomotive and crew changes at border crossings and misalignment of schedules mean that the...