The railway sector will be central to how Southeast Asia (SEA) will move goods in the coming decades. The International Transport Forum’s (ITF) global freight transport model suggests that freight demand in the region will almost double by 2050, putting heavy pressure on existing infrastructure and increasing emissions if current policies continue. Today, road freight dominates surface transport and will remain the main mode if current policies continue, leading to congestion, high logistics costs and a large carbon footprint. The report by ITF shows that a different path is possible, if countries expand investment in rail, improve multimodal connections and combine this with decarbonisation measures such as electrification and meeting efficiency standards. Together, it can cut the carbon intensity of freight, lower average transport costs and build a more resilient, multimodal freight system.
Opportunity for railways in freight transition
Railways as a mode of transport balances all three key principles of freight policy: connectivity, decarbonisation and resilience. On connectivity, the study highlights that rail is currently underused compared to road, even though it is already relatively cost efficient in many corridors. In the model, railway’s share in surface transport is essentially the same at 4 per cent between 2025 and 2050 in the baseline scenario. Under higher policy ambition, with targeted rail investments and incentives, the share of the railways is expected to rise to about 20 per cent of surface freight by 2050.
On decarbonisation, the regional recommendations explicitly call for prioritising rail and inland waterway freight expansion, particularly in Vietnam’s Mekong delta, Sumatra in Indonesia and rail-served corridors in Thailand.
Moreover, rail is seen as a way to diversify routes and provide alternatives to existing systems that currently depend heavily on road transport. The report notes that many ASEAN corridors operate close to capacity and are exposed to climate hazards such as floods, landslides and typhoons. Building secondary, inland corridors and rail networks reduces volume-to-capacity ratios by up to 30 per cent in vulnerable areas in the high-ambition scenario, improving the ability to reroute freight movement during disruptions.
Region-wise overview and recommendations
The regional overview underlines that SEA’s rail network is still fragmented and that substantial investment is required for better integration.
Indonesia
Indonesia’s freight system is highly road-dependent, with trucks carrying around 90 per cent of surface freight. Rail networks in Java and Sumatra already move coal, palm oil and containerised goods; however, utilisation rates are below 60 per cent and integration with ports and industrial areas is limited. The report’s recommendations, therefore, put rail at the centre of Indonesia’s strategy. It proposes expanding rail freight corridors in Java and Sumatra, including electrifying the Trans-Sumatra Railway and targeting high-traffic industrial zones for early investment. Modelling indicates that by 2050, these two islands will carry most of Indonesia’s freight volume. Prioritising rail here cuts excess transport costs by over 15 per cent in high-ambition scenarios and supports more cost-effective access to global markets. Enhanced connections between upgraded rail corridors and key ports such as Makassar, Belawan and Tanjung Priok are seen as essential to capture these benefits. Linking ports to rail-served industrial parks and logistics zones would support more seamless multimodal movements and relieve pressure on congested highways.
Philippines
In the Philippines, the existing freight system relies on roads for last-mile connectivity, maritime links and the roll-on/roll-off ferry network for inter-island traffic. Rail freight is currently limited, with rail assets focused mainly on passenger services. The government’s Build Better More programme, opens a path for rail to play a bigger logistics role. A central element is the North-South Commuter Railway (NSCR), which is expected to introduce new freight services and dry ports. These inland nodes can act as gateways, allowing containers and bulk cargo to shift between rail and road closer to production centres rather than only at seaports. Over time, the study suggests that using the NSCR as a freight spine, supported by better road access, upgraded ports and modern customs systems could help reduce logistics costs, cut emissions and provide more reliable hinterland connections for Manila and Central Luzon. The Philippines’ broader policies on clean air and biofuels are also positioned to support low-carbon rail operations as the network grows.
Thailand
Thailand already has one of the more extensive rail networks in the region, spanning about 4,815 km under the State Railway of Thailand. This network links manufacturing hubs to major ports such as Laem Chabang, Bangkok and Map Ta Phut. However, freight still relies mainly on roads, and there are constraints in multimodal integration and cross-border connections. The report identifies the Bangkok-Nong Khai and Bangkok-Chiang Mai corridors as priority routes for rail freight upgrade. These are among Thailand’s highest volume domestic and regional freight routes. The model shows that improving capacity and service levels on these lines, under the high-ambition connectivity scenario, can reduce excess transport costs by more than 10 per cent and improve the directness of freight routing.
On decarbonisation, Thailand is encouraged to expand rail electrification on key freight routes, again prioritising the Bangkok-Chiang Mai and Bangkok-Nong Khai lines. In the combined connectivity and decarbonisation scenario, rail electrification and modal shift together deliver a 19-21 per cent reduction in carbon dioxide intensity by 2050, illustrating how rail investment can anchor the country’s wider climate strategy for freight.
Rail as a driver of cost efficiency, lower emissions and resilience
The analysis records a consistent reduction in cost across SEA under the high-ambition scenario, with rail already relatively cost-efficient and still improving, particularly in countries such as Malaysia and Singapore. On emissions, the combination of rail expansion, electrification and stricter fuel efficiency regulations for road vehicles plays a central role in cutting the carbon intensity of freight.
The report notes that surface transport connectivity improvements alone can draw some freight away from sea to road and rail, which would risk pushing emissions up. However, a combined focus on reducing emissions along with network expansion can solve both efficiency and climate requirements. Further, upgrading and extending rail corridors provides alternative options when roads are flooded, ports are damaged or fuel prices spike. Robust railways can keep freight moving during climate shocks while offering a lower-carbon alternative to long-haul trucking.
The way forward
The evidence from the ITF study is clear – railway is not just one mode among many, but a central pillar for a more connected, low-carbon and resilient freight system in SEA. Unlocking this potential will require significant investments on new lines, electrification and intermodal terminals, along with soft measures such as regulatory reform, digital trade facilitation and regional coordination. If governments follow through on the rail-focused measures outlined in the high-ambition scenario, the region can move away from a road-heavy freight system to a more competitive, less carbon-intensive system that is able to better withstand disruptions.
Extracts from the report titled “Enhancing the Connectivity, Sustainability, and Resilience of Regional Freight Transport in Southeast Asia” by the International Transport Forum.
