This publication sets out the report of the 125th meeting on transport economics, held in Paris in November 2002, which focused on developments in the rail freight market in Europe. Despite an increase in freight traffic generally, the rail sector has experienced a continuing decline in its market share since the 1970s, losing out to the road haulage sector. The report explores how the European railway landscape is being reshaped, and topics discussed include: the modal split problem in European freight transport; European integration of rail freight transport; the impact of EU enlargement; and market liberalisation developments. It includes a report on rail privatisation in the UK and considers lessons for the rail freight industry.