Egypt’s ambition to modernize its logistics relies on shifting some freight capacity away from roads and onto its extensive, yet underutilized, railway network. The recent launch of a privately operated fixed rail freight service can serve as a blueprint for how to move more cargo on tracks, moving away from the current ad-hoc, customer-specific model towards predictable rail services.

This shift is currently being led by the private sector: G3A, a company founded in 2023 after a merger involving Gharably Integrated Engineering Company and 3A International, secured a 15-year concession to operate all cargo rail services to support the government in achieving its rail freight targets, G3A’s Chief Operating Officer Noha Awad told EnterpriseAM.

Egypt’s first fixed-schedule rail freight service was launched by G3A and our friends at regional multimodal logistics firm Transmar in the summer, featuring two weekly trips at a total capacity of 200 TEUs. The service connects Al Robaiky Industrial City to Adabiya Port, where Transmar and its sister company, Transcargo International, have a well-established operational presence.

In perspective: Despite boasting over 10k km of tracks, the rail system currently handles only around 6% of the country’s inland freight, leaving supply chains highly dependent on trucking via riskier and less reliable road networks. To address this gap, the government is plotting to boost rail freight capacity by some 63% to transport 13 million tons by 2030 — a significant surge from the reported 2024 figures, though sharply down from an initial 30 million ton target.

But G3A is hopeful they can go beyond these targets: When G3A took over the cargo sector from the Egyptian National Railways (ENR), rail handled around 3 mn tons per year, Awad told us. Over a single year, the company was able to double this figure to 6 mn tons in 2024, and it is now targeting 12 mn tons of handled cargo by the end of 2025. “We expect the cargo we handle to be duplicated every year throughout the 15-contract,” she added.

Achieving this target does not rely solely on laying new tracks — it requires a shift in the customers’ mindset to view rail as more reliable and make the switch, Awad told EnterpriseAM. Historically, the governmental operator (ENR) had not promoted the cargo service, with its usage limited primarily to military services and the transit of empty containers between ports, Awad said. Unfamiliar with the service, customers are “worried that if they put their container on the train, it would arrive after a week, while trucks would arrive within six or seven hours,” she added.

Changing the mindset would also require a fundamental shift in the operational model from an ad-hoc system to reliable, fixed-schedule rail services, Transmar’s General Manager Ahmed Al Ahwal told EnterpriseAM. Historically, the traditional rail freight system has operated based on customers having to request and fill an entire train. A customer who only needs to move a few containers a week must either wait until they have enough cargo to fill a whole train or pay for the entire reserved capacity, including the costly empty return trip.

But a fixed-schedule service helps remove this major cost constraint. The financial commitment required to book an entire train, plus the necessity of coordinating that train’s return journey, meant that small-to-medium shippers historically avoided rail altogether, Al Ahwal explained. Fixed-schedule services eliminate the need to book an entire train, plus the necessity of coordinating that train’s return journey, he added.

Beyond reliability and fixed scheduling, the subsequent hikes of fuel prices in Egypt are also making rail freight a more affordable option, Awad told us. This is largely because trucking is more sensitive to fuel prices, rising by 15%-20% on average with every hike, she explained. This dynamic translates into inherent cost savings for rail, which now costs 20% to 30% less than trucking, Awad added.

International studies agree with Awad on this. Rail operations are generally less exposed to fluctuating global fuel prices because fuel accounts for approximately 15% of rail haulage costs — compared to roughly 30-40% of the cost base for road transport, according to a 2019 study (pdf) conducted by Menarail Transport Consultants (MTS) and commissioned by the World Bank and ENR.

REMEMBER- Rail services generally also offer concrete benefits that directly counter the challenges and unpredictability inherent in road transport. Rail can offer long-term contracts lasting a year or more, providing shippers with predictable costs, according to the 2019 MTS study. It can provide 24/7 operations, whereas truck movements can be constrained by local restrictions. It also allows for higher legal weight limits per container compared to road, which mitigates the risk of fines associated with overloaded trucks.

Sustainability is another benefit: “[Another] major reason to shift to rail is to have a more environmentally friendly method to move stuff, which has now become attractive for most international players,” Awad said.

While fixed-scheduling and fuel prices are key for the shift, training workers and proper management and investments in the sector’s infrastructure are equally important, Awad explained. So far, G3A has established four multimodal stations across Egypt in major industrial areas. The government is also ramping up its investments in the sector, with plans for developing four multimodal logistics corridors across the nation.

The government is also actively pursuing the localization of locomotives and wagon manufacturing, Al Ahwal told EnterpriseAM, adding that this governmental localization plan will be pivotal for the country’s rail freight targets, as it would eliminate the need to depend on imports to ramp up the sector’s handling capacity as more customers turn to it for shipping.

REFRESHER- French rolling stock company Alstom is jump-starting a railway manufacturing complex in Borg El Arab, with two EUR 80 mn plants. The National Egyptian Railway Industries Company (Neric) is also developing an industrial complex for railway manufacturing in the East Port Said industrial zone. The complex will feature two production lines — one for metro cars with 35-40% local components and another for railway cars with 65% local content — with output planned to serve both the domestic market and export to regional markets, particularly in Africa.

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