At the end of last year, Rail Baltica stated that 43% of the project was ‘construction ready’. Thinking that it is possible to go from that to 100% completion in five years may be a little naive, especially considering that expected costs skyrocketed from 5,8 to almost 24 billion euros. Malepszak argued that adding up the lack of funds paired with growing costs and the complicated technical requirements set by the EU made it impossible to finish the project in time.

Estonia’s pessimism and Latvia’s struggles

The Polish deputy minister of infrastructure is not the first politician from one of the countries involved raising red flags about Rail Baltica’s schedule. Last year, opposition party member of the Latvian Parliament and Rail Baltica Committee Head Andris Kulbergs shared similar worries, claiming that it would be delayed to 2035, especially for the Latvian section. Latvia is in fact struggling to secure the funds and already had to significantly downgrade the initiative.

What would change in terms of logistics for the Baltic States?

Rail Baltica would allow uninterrupted freight operations into Poland and further into Central and Western Europe improving reliability, reducing handling costs and shortening transit times for international cargo. Logistically, this creates the conditions for a stronger shift toward intermodal transport. New or upgraded terminals along the corridor would enable smoother transfers between rail, road and maritime transport.

Another important change is the diversification of trade routes. The Baltic freight system has historically depended heavily on transit flows linked to Russia and Belarus. Rail Baltica supports a strategic pivot toward European markets, strengthening north–south supply chains connecting Finland, the Baltic States and Poland with Germany and beyond. This enhances economic resilience by reducing geopolitical vulnerability and broadening market access. Over time, the improved connectivity will also influence business decisions. Companies will reorganize distribution networks, establish regional logistics hubs along the corridor, and integrate more deeply into EU value chains.

How important would the line be for rail freight? Can you explain which industries might benefit the most and which connections?

Rail Baltica will create a modern railway line using the European standard gauge that connects the Baltic States with Poland and the rest of Europe. This will remove the current rail gauge difference that makes freight transport difficult. As a result, Baltic railways will be able to connect directly with European freight corridors and rely less on the traditional east–west transit routes. According to the December 2024 Cost-Benefit Analysis (CBA), Rail Baltica is expected to significantly change rail freight in the Baltic States, even if freight volumes increase gradually over time.

By 2046, the first phase of Rail Baltica is expected to carry about 9,2 million tons of cargo per year. Most of this will be non-unitised (bulk) cargo, about 7,3 million tons, such as raw materials and large shipments. Unitised cargo, such as containers and semi-trailers, will account for about 1,9 million tons annually. Even though the volume is smaller, unitised cargo is expected to generate more revenue because it usually travels longer distances and consists of smaller but higher-value shipments. Although bulk goods make up most of the cargo volume in Baltic trade, unitised cargo remains very important for Rail Baltica. Businesses prefer unitised cargo because it is easier to handle, moves efficiently through ports, and supports the speed and flexibility needed in international trade.

The industries that will benefit the most are those involved in international trade and intermodal logistics. Container and semi-trailer transport will particularly benefit because they require reliable connections, compatible infrastructure, and competitive travel times across long distances. According to the CBA, sectors such as machinery manufacturing, automotive components, timber processing, and construction materials will gain better access to Central and Western European markets.

In practical logistics terms, the line would encourage a gradual shift from road to rail for long-haul freight, reduce bottlenecks at gauge-change points, and support the development of intermodal terminals along the corridor. Over time, this will lead companies to reorganize supply chains, establish new distribution centres, and deepen integration into European value chains. The CBA therefore presents Rail Baltica as strategically significant for freight not simply because of projected volumes, but because it reorients the Baltic States from a peripheral rail system tied to the eastern 1520 mm network toward full participation in the EU’s standard-gauge freight system.

Do you think that support for Rail Baltica might change if the priority currently given to military mobility should no longer be there?

The short answer is that military mobility adds geopolitical weight and accelerates decision-making. Without it, the project might face more scrutiny, slower funding negotiations or stronger pressure to limit scope, but the underlying economic and integration arguments would continue to provide a substantial basis for continued support.

More broadly speaking, since Russia’s invasion of Ukraine, military mobility has become a central argument for financing the Rail Baltica, as it would enable rapid movement of NATO forces and equipment across the alliance border countries – Baltics – and into Central Europe.

However, it’s necessary to point out that Rail Baltica’s core rationale does not depend solely on military mobility. Its economic objectives integrating the Baltic States into the European standard-gauge rail network, reducing logistical fragmentation, supporting intermodal freight, and enhancing regional connectivity remain structurally important. Even without a security imperative, the project would still represent a long-term strategic investment in market integration, supply-chain resilience and decarbonisation.

What are the latest estimations for costs and completion of the project?

For the first operational phase, which aims to create an initial standard-gauge rail connection across the Baltic States and link it to Poland, the estimated cost is around 15,3 euros billion and is planned to be completed by 2030. This phase includes foundational infrastructure and basic operational capability for the corridor. Rail Baltica is a priority TEN-T project connecting Poland, the Baltic States, and Finland indirectly, with links to Ukraine. Using the European standard gauge, it creates a new North–South rail corridor in the Baltic region, fully integrating it into the EU network. The project boosts regional travel, freight efficiency, sustainable transport, and supports EU-NATO military mobility.

Talking about the progress, we can say that Rail Baltica has reached an advanced level of technical and organisational readiness. Detailed designs have been completed for major sections, procurement processes are ongoing, and construction packages are being prepared. This ensures that works can be launched promptly as financing becomes available (construction readiness). In Estonia, contracts cover the full 213 km main line of the first phase of implementation, with more than 100 km already under active construction. In Latvia, works cover the entire main line, including the priority southern section and the development of Riga Central Station and Riga Airport. In Lithuania, 114 km of the main line is under construction, with track laying underway and significant progress being made on the Neris River bridge. At the system level, a major milestone was reached in September 2025 with the signing of the electrification design-and-build contract, which will create a unified system across the three countries.

What are your thoughts on the current Rail Baltica plan, which is much less ambitious than the initial one?

I don’t see it that way. From a strategic perspective, this shift toward a phased, more pragmatic plan makes sense because it allows the project to move forward. The 2030 target for the first phase remains our main operational reference point. However, it is based on specific assumptions: continuous EU and national financing, sufficient construction capacity, and stable implementation conditions. These assumptions leave limited margin for disruption. If they change, the schedule will also need to change. This reality is openly discussed with our partners and decision-makers.

Discussions at regional and European levels have confirmed that long-term funding predictability, particularly under the Connecting Europe Facility and the next Multiannual Financial Framework, will be decisive for meeting the agreed milestones. Without timely and sufficient financing, progress will inevitably slow, regardless of technical readiness.

The different implementation environments across the three Baltic states also need to be highlighted. Legal frameworks, contracting models, and financing arrangements vary, directly affecting risk profiles and delivery sequences. Managing these differences while maintaining overall system coherence remains one of our main practical challenges.

“The outlook in 2025 is worse than in 2020, and falls far short of what was initially envisaged”, the Court of Auditors writes. The covid pandemic and Russia’s war of aggression against Ukraine have led to cost increases in recent years. Compared to original estimates, costs have grown by an average of 82% for the eight examined transport megaprojects. In 2020, the cost increase was 47%.

Rail Baltica and Turin-Lyon

Two projects stand out for spiralling costs: Rail Baltica and the Turin-Lyon railway. They have, respectively, become four times and two times more expensive than was estimated initially. The growing costs could prove to be a problem for the implementing countries, since EU co-funding is “not directly linked to the total cost”. A case in point here is Latvia, which is struggling to find the funds to complete its section of Rail Baltica.

Clearly, money is an obstacle for TEN-T implementation. It is contributing to severe delays and missed deadlines. The EU auditors noted an average delay of 11 years in 2020 for TEN-T projects, but that has now escalated to 17 years.

Completely out of reach

The Court of Auditors is clear in their conclusion. There is no way that the EU will meet the 2030 deadline to complete the core TEN-T network. “EU transport flagship infrastructures are supposed to reshape Europe, bringing people closer together and facilitating economic activity”, said Annemie Turtelboom, the ECA Member who led this update report.

“But three decades after most of them were designed, we are still a long way from cutting the ribbon on these projects, and a long way from achieving the intended improvements in passenger and freight flows across Europe”, Turtelboom added.

The Auditors note that, interestingly, the EU Commission has only once employed its main legal tool to receive explanations for delays. They also expect that the recent TEN-T regulation revision will give the Commission more oversight over the completion of the network, but that the impact on currently ongoing projects will be limited.

Since this construction material is a by-product of the mining of oil shale, using it in construction contributes to a circular economy. Moreover, Estonia has an issue with its disposal, often leading to air, land and water pollution. Thus, finding ways to reutilise this material not only provides additional economic value but might also be good for the environment.

Rail Baltica

Rail Baltica is one of the most ambitious projects in the history of the European Union. A single railway network stretching for 870 kilometres connecting the three Baltic states: Estonia, Latvia and Lithuania, from Tallinn to Panevėžys. As expected, a project of this size does not come without challenges, especially when it comes to sticking to deadlines and finding the funds.

For example, the deadline for the completion of the first single-track line has been moved multiple times, from 2025 to 2030 and now rumours that it might not happen before 2035. Finding the funds is also a challenge. European institutions are contributing significantly, especially from the Connecting Europe Facility.

A cross-Baltic railway became even more relevant for the European Union with the beginning of Russia’s invasion of Ukraine. After this, the EU decided it is now time to rearm itself and place much more focus on military mobility, where rail has to play a prominent role, especially in Eastern Europe. The line should also benefit passenger transport across the Baltics, while ‘traditional’ rail freight might only remain a side note.

In the coming year, Estonia intends to announce tenders for projects beyond mainline construction. That includes a freight terminal in Muuga, a rolling stock depot at the far end of Rail Baltica in Ülemiste as well as a traffic management system. “These are the components that will turn the railway into a full-fledged transport system, linking it with the economy and the daily lives of people”, Salomets is cited as saying by Latvian media.

Timeliness is the challenge

Once completed, Rail Baltica should provide a continuous standard-gauge rail connection from Tallinn, across all Baltic states to Poland. Despite the numerous problems, the project is underway, and that is a win in itself. “Previously, the main question was whether the Rail Baltica project would ever be implemented. Now the challenge is its execution: the timely completion of the complex cross-border railway system and ensuring that all accompanying infrastructure is ready by the time train operations begin”, Anvar Salomets commented.

T&E’s report argues that the EU’s current rail funding model is imbalanced. Between 2021 and 2023, €6.6 billion in total was allocated to large-scale projects including Rail Baltica, the Brenner Base Tunnel, and the Fehmarnbelt tunnel — each with price tags over €1 billion and timelines stretching into the 2030s. In contrast, dozens of lower-cost but critical upgrades received far less support, ERTMS upgrades in particular, says T&E.

Big projects, big delays

According to the report, these megaprojects, though essential to completing the Trans-European Transport Network (TEN-T), are “capital-intensive” and slow to deliver benefits. Rail Baltica alone accounted for nearly one-fifth of all CEF rail funding in the period, yet its completion has now been pushed to 2035. The Brenner Base Tunnel has been delayed by close to 20 years and is now aiming to be completed in 2032.

In one recent funding round, demand for CEF transport funds was triple the available budget, underscoring the need for more strategic allocations. T&E argues that placing greater focus on short- and medium-term projects could accelerate connectivity and reduce emissions more quickly.

Carlos Rico, rail policy officer at T&E, said: “Megaprojects have helped give rail the boost it needs, but they’re draining resources from other vital parts of the network. The EU must address this imbalance and ensure that the Connecting Europe Facility supports all necessary upgrades.”

‘Key upgrades’, less money

Among non-megaproject initiatives, track electrification emerged as the top-funded upgrade, securing €3.1 billion (20% of CEF funds which went to rail), followed by line speed improvements with €2.8 billion (18%). However, most projects aiming to fill missing high-speed rail links are still at the study stage, with construction not yet underway.

The report identifies 84 projects as “key upgrades”, targeting goals such as boosting capacity, improving line speeds, and standardising track gauges. Yet the average funding per upgrade project was just €70 million, far below the nearly €1 billion average for each megaproject.

Signalling stuck in the slow lane

Perhaps most concerning to T&E is the lack of progress on rolling out the EU’s standardised signalling system, the European Rail Traffic Management System (ERTMS). Between 2021 and 2023, just €0.7 billion—or 3% of the CEF Transport envelope—was directed toward ERTMS deployment.

2024’s preliminary figures show a boost for ERTMS, which the NGO calls a “positive development that puts it on a hopeful path”. However, they state “ERTMS funding is still trailing behind other essential upgrades, as it received only close to a third of the funds directed to rail electrification”.  That is despite its role as a legal requirement on core TEN-T corridors by 2030 and a pillar of cross-border rail interoperability.

The report notes that countries such as Germany, France, and Poland continue to lag behind on ERTMS implementation. T&E recommends integrating the system into military mobility funding to enhance cyber resilience and dual-use potential.

The next EU budget

With more than three quarters of CEF funds having been spent in its first three years, it is currently unable to properly fund the adaptations needed to adapt the infrastructure to the challenges of today, says the report.  “While frontloading investments makes sense to effectively kick-start infrastructure projects, it leaves the CEF vulnerable to unexpected developments.”

Looking ahead to the next EU Multiannual Financial Framework (MFF) in July 2025, T&E is calling for a rebalanced approach. First of all, the next round of CEF should have a larger budget to reflect the higher ambition that resulted from the revision of the TEN-T regulation, argues T&E. The advocate group for clean transport and energy estimates that a 25% increase in the CEF rail budget could double funding for crucial upgrades, without cutting off support to necessary megaprojects.

The future of dedicated transport funding under CEF has been shaky recently, with the European Commission initially dubbing whether to instead go for national and regional investment plans and thus dissolve the fund into a broader pot. From recent leaked draft legislation outlining the next long-term budget strategy, reported by Euractiv and Politico, it appears that CEF Transport will still have its place, however.

In T&E’s view, CEF Transport is more important than ever, but the current model is oversubscribed, fragmented, and not delivering the rapid integration the EU needs.  Carlos Rico: “Boosting rail is vital for Europe’s economy and defence, but funding must match infrastructure goals. The EU budget, high-speed rail plan, and the Military Mobility strategy should prioritise key upgrades and dual-use projects.”

The future of CEF III remains quite uncertain, as the European Commission is considering terminating it to put more focus on national single plans. On the other hand, the European Parliament recently published a report which highlights the importance of maintaining the fund scheme in place.

Five demands from the four projects

The four cross-border projects came forward with five demands for the European Parliament and Commission. These include the preservation of CEF III with increased financial ambition; the prioritisation of European Transport Corridors; ensuring long-term financing for cross-border projects; easing the administrative burden and encouraging cooperation between the public sector and private entities.

They are calling for “a unified and well-funded European transport network by ensuring that the next Multiannual Financial Framework provides the financial foundation necessary for the completion of these vital projects.” Similar claims have already been made by other industry players such as UNIFE, which groups rail manufacturers and suppliers in Europe. What the future holds for CEF III is still undecided, but various segments of the industry have already spoken their minds.

“Leaders from the transport ministry explained to us a month ago that building to Salaspils within seven to eight years is not possible”, Kulbergs explained. Salaspils is a town right next to capital city Riga, still a long way from the Estonian border.

“Then the next stage – to Estonia. We still do not have documentation, a design. Well, and the financing, in Latvia it’s a minimum of 2,7 billion euros, we don’t have those resources”, the parliamentarian continued. There seems to be very little progress on a completed standard-gauge railway to Latvia’s northern neighbour.

Not even before 2035?

Moreover, Estonian politician and Head of the Anti-Corruption Committee Anastassia Kovalenko-Kõlvart also has a rather pessimistic view of the situation. “Currently, our colleagues from Latvia let us know that there will be no railway before 2035.” That would be a new worst-case scenario for Rail Baltica.

All the while, finishing the railway on time remains crucial. Around 85% of its funding comes from the EU, which wants to see the line completed by 2030. Otherwise, the project could lose out on one billion euros in European financing. That would be a setback for Rail Baltica, especially considering that Latvia’s primary obstacle to finishing its part on time mostly relates to a lack of funding.

Minor role for freight

Expectations are that freight will play only a minor role in a completed Rail Baltica. A cost-benefit analysis estimated the goods will contribute only 5% of the economic gains. However, it could provide a new livelihood for Baltic rail operators that have lost a big part of the business due to sanctions against Russia. The railway would also be highly important from a military perspective.

Military mobility is the new hot topic in transport and logistics. In order to get you up to speed, this explainer answers some key questions on what it means for rail. It explores why rail is important for security, which challenges are ahead of Europe, which possible solutions there are and what it all means for the rail freight sector. Lastly, there is a short history about European rail military mobility.

1. Why is rail suddenly so important for Europe’s security?

The deteriorating security situation in Europe has put rail centre stage as a key component in defense. Russia’s occupation and annexation of Crimea in 2014 revived the need to boost military capabilities among allied NATO countries – including logistical capabilities. With the full-scale invasion of Ukraine that started in 2022, that need has grown drastically.

That is because logistics can help deter aggression and prevent conflict, not to mention its role in an active conflict. In an interview with RailFreight.com, former commander of US Army Europe Ben Hodges explained that rail is key in deterrence. In his words, it is all about showing the adversary that you can move more troops and equipment faster than they can. If an adversary then concludes that a military operation is too risky of an affair, there won’t be one.

This is where rail comes in. Trains are crucial in moving a lot of freight quickly and over long distances. It is uniquely suitable to transport heavy and dangerous military equipment, such as vehicles, artillery systems and air defense units. A single train can replace an entire road convoy.

Moreover, roads are often not suitable for the heavy weight of military vehicles: for example, a German Leopard 2 tank can weigh up to 70 tonnes, whereas most European roads can handle a maximum weight of 40 tonnes.

2. What are the challenges for rail military mobility in Europe?

Experts have identified challenges in many different areas. First and foremost are infrastructure limitations: weak bridges, tunnels that are too small for military equipment, different rail gauges between countries and similar obstacles.

Then there are rolling stock constraints. Europe has far too few wagons adapted to military needs, and civilian rail companies typically do not reserve wagons for defense purposes. Moreover, legal and procedural issues remain an obstacle. Countries authorise transport, in particular when it comes to dangerous goods, in different ways. That complicates the issuance of permits and can delay transport.

Lastly, there is the question of expertise. Since the end of the Cold War, NATO has “forgotten” how to move troops and equipment on a large scale. Even moving a brigade (consisting of 3,000 to 5,000 troops) would prove to be a challenge, let alone a division (between 10,000 and 25,000). How does one even organise such movements across many countries?

3. Which steps can Europe take to boost its military capacity on rail?

There is an estimated 94% overlap between the civilian freight and military rail network. And fortunately, a lot of the measures that are good for civilian freight are also good for military mobility. In that sense, Europe can achieve a lot by simply continuing ongoing efforts to improve rail freight.

For example, implementation of the rail security and management system ERTMS could improve international compatibility and make cross-border traffic easier. And a robust infrastructure network with redundant capacity could ensure sufficient rail availability at all times. The (much-desired by the rail freight sector) 740-metre trains would boost transport capacity significantly for both military and civilian needs.

A notable mention is Rail Baltica. The Baltic states are perhaps Europe’s most vulnerable countries, connected to its allies only via the narrow Suwałki corridor. Only a railway, a highway and a provincial road connect Lithuania with Poland. That is not a lot, and when it comes to the railway, a gauge change is also needed. That demands very costly time.

Rail Baltica aims to resolve that problem by building a standard gauge railway all the way up to Tallinn, Estonia. However, the project is mired in financial problems, especially in Latvia. It remains unclear when Rail Baltica will reach completion. One thing is clear however: it is taking much too long.

When it comes to rolling stock, Europe simply needs more of it for military purposes. But Ben Hodges has also suggested a programme where rail operators would have to guarantee that they can show up with enough rolling stock to move two brigades on a 72-hour notice. In return, they can get preferential access to government contracts.

Moreover, Europe also needs a clear framework to coordinate defense movements, in order to make sure that the military can move quickly. Unfortunately, there is no clear picture on how agencies will work together for so-called Reception, Staging, and Onward Movement (RSOM, the various stages in moving troops and equipment around) and how movements would be prioritised according to operational needs.

NATO’s JSEC is supposed to help with that, but experts are unsure of the role it really plays in coordination. Either way, a functional governance structure is necessary, potentially with prioritised rail access for the military over civilian traffic.

This is not an exhaustive overview of all the ideas and suggestions that people have suggested, but it should give an idea of the sorts of things that experts are discussing.

4. What does all of this mean for the rail freight sector?

A focus on robust rail infrastructure and interoperability will make rail more competitive compared to other modes of transport – something that the sector keeps pushing for. In that sense, military mobility developments could be very promising for the civilian freight business.

Beyond that, it is likely that rail companies will be involved in military affairs more and more in the future. We are already seeing that happen: The German Bundeswehr has reached out to logistics companies, among which is DB Cargo, to see what they can contribute to the army’s logistics needs. The Polish operator PKP Cargo trained with the army to practice loading of military equipment, and Dutch infrastructure manager ProRail is researching what the military needs in terms of infrastructure.

5. How did we get where we are now with rail military mobility?

During the Cold War, NATO placed high priority on logistics in Europe. Once the Cold War was over, the alliance’s focus shifted from fighting a large war in Europe to expeditionary operations elsewhere. As a result, European logistics became less important. Rail infrastructure for defense needs and international coordination faded into the background.

Starting in the early 2000s, many Eastern European countries became NATO members. They brought with them different rail regulations and standards, and in the case of the Baltic states, a different rail gauge altogether. That complicates rail logistics if you need to move from west to east, but at the time, it was not yet a primary concern.

Russia’s 2014 annexation of Crimea changed the picture. NATO started thinking again about European logistics, and (some) money started to flow. The EU’s Connecting Europe Facility allocates financing to projects for military mobility, and the standard gauge Rail Baltica project was started. Within the framework of PESCO, European states also started coordinating military mobility regulations and policies.

“Considering the location and the shape of transferable properties, it is unlikely that an alternative use of these properties would have generated significant sales revenue in the long term”, the group said. In the context of Rail Baltica, a new intermodal terminal will be built in Muuga. Together with similar facilities in Salaspils (near Riga, Latvia) and Palemonas (near Kaunas, Lithuania) the terminal in Muuga will constitute the logistics backbone of the line.

Rail Baltica

The ongoing construction of the Rail Baltica line, which will cross Estonia, Latvia and Lithuania connecting the Baltics to the standard gauge rail network, is not always a smooth process. Most of the issues concern funding, as it is a multi-billion euros initiative. Latvia seems to be the country facing the most issues, with concern over the plan and even threats to abandon the project due to lack of funding.

However, the importance of the project is ever growing, especially considering the current geopolitical tensions regarding Russia and the European Union. Having an infrastructure which allows the quick movement of military assets has become a prerogative in the Old Continent, and the difference in gauge (1520 mm in the Baltics and 1435 in most of the rest of Europe) is a significant obstacle. With Rail Baltica, this obstacle should be removed, but the finish line still seems quite far.