Reliable Transportation Infrastructure as a Contribution to a Climate-Neutral and Competitive Industrial Hub

In hardly any other country is the link between prosperity on the one hand and efficient transportation infrastructure on the other more pronounced than in Germany, with its widely distributed centers of economic activity, strong integration into the global economy, and its geographical location as Europe’s most important logistics hub.

Germany’s transportation networks have been dramatically underfunded for decades. As a result, our infrastructure is increasingly in crisis mode, as evidenced by dilapidated bridges, locks, highways, and railways. Germany is living off its reserves. The funding needs particularly affect the core networks of federal highways, federal railways, and federal waterways.

To halt the deterioration of our roads, bridges, railways and waterways within this decade and to foster new economic momentum, we need not only a collective national effort to revitalize our transportation infrastructure but, above all, a rethinking of the current financing system and its inefficient mechanisms — investments in maintenance and expansion of transportation infrastructure must not be made solely based on the current cash position. The same applies to the proactive, needs-based, and comprehensive expansion and development of charging and refueling infrastructure for all modes of transportation, as well as for all alternative propulsion systems and fuels.

Addressing backlogs and future investments through special investment programs

With its “Investment Program for Infrastructure, Transformation, and Resilience to Strengthen Germany as a Business Location”[1], BDI has already presented solutions for the investments required over the next decade—including approximately 160 billion euros for transportation infrastructure. Provided that more efficient use of public funds is ensured, necessary structural reforms—particularly those aimed at reducing bureaucracy and increasing the labor supply—are undertaken, and investment spending is prioritized more strongly than before as part of budget consolidation, the German Bundestag and Bundesrat can establish special funds with precisely defined scope and timeframes by a constitutional majority. In BDI’s view, the debt brake enshrined in the constitution should not be abolished or weakened.

[1] BDI Position: Strengthening Germany as a Business Location Through Investment

Realigning the Financing Architecture

We need multi-year and long-term financing frameworks that are adequately resourced to meet needs. Not only to provide the planning and construction sectors with the planning security necessary for capacity expansion but also to serve as a strategic tool to enhance efficiency, transparency, and sustainability of investments in transportation infrastructure. The role played by improved infrastructure condition monitoring, financing agreements, and infrastructure development plans is explained below.

Improved Infrastructure Condition Monitoring as the Basis for Investment Decisions

To counteract structural underfunding in the future, the needs for maintaining transportation infrastructure must be regularly analyzed, reviewed, and communicated transparently. Only in this way can a sufficient level of investment be achieved on a long-term basis, updated in line with needs, and adjusted as necessary.

In this regard, BDI suggests significantly expanding the federal government’s existing 'Transportation Investment Report' to increase transparency for policymakers and the public and to create a better, objective basis for necessary maintenance investments. Regular, multimodal monitoring should be published more promptly than in the past and be more strongly aligned with the goals of “maintaining existing networks” and “expanding core networks.” This could be achieved largely by integrating and consolidating data that is already being collected today. An enhanced monitoring system should, in particular, provide information—based on current construction price trends—regarding the actual backlog in the existing networks as well as existing and foreseeable infrastructure capacity bottlenecks. In doing so, it should also break down, by mode of transport, how much of this backlog is attributable to the core network in each case. In addition, the federal government’s 'Multimodal Investment Framework Plan' (IRP), which expired in 2023, should be updated and published as soon as possible.

The infrastructure measures derived from this must also be based on clearly defined and economically sound criteria. The selection of individual measures should always be based on transparent principles—such as the target-timetable-based infrastructure development for rail under the Deutschlandtakt—to ensure that the limited available funds are used as effectively as possible and are not, for example, subject to regional political proportionality.

Stable, mode-specific financing agreements are the ideal model

Meeting the financing needs of all modes of transport is a public service obligation. The government must ensure that this financing is provided in accordance with actual needs and takes priority over supplementary financing through user fees.

Stable, multi-year financing agreements, in which user fees—such as the truck toll or fees for canals—are earmarked and used for transportation infrastructure on a mode-specific basis, and cannot be used to offset deficits in the general budget or plug other funding gaps, must be established in stages and finalized in the long term. The high level of investment required forbids the use of these funds for other purposes. Only in this way can acceptance of and trust in specific user charges be ensured, and their direct benefit to transportation infrastructure remain evident.

To establish stable, long-term financing arrangements that are secure against changes over multiple years, clearly defined, mode-specific solutions are generally recommended—solutions that combine both already collected, dedicated user fees as well as supplementary budgetary funds to cover the financing needs for the respective transportation infrastructure—on a long-term and earmarked basis.

Link multi-year infrastructure development plans to binding financing commitments

Since investment needs and the resulting tasks generally extend far beyond a single fiscal year or legislative term, a broader perspective is required when it comes to the strategic planning and financing of infrastructure. The past and the present teach us that it is a misconception to believe that sustainable, reliable, and network-wide infrastructure development and maintenance can be achieved solely through annual allocations of infrastructure funds.

The maintenance, modernization, and capacity expansion of transportation infrastructure should therefore be coordinated and structured on the basis of multi-year, rolling infrastructure development plans and implemented with a binding, multi-year financing framework. For the federal rail network, the 'Performance and Financing Agreement' (LuFV) already serves as a useful instrument that ensures the multi-year continuity of federal funding for replacement investments. The LuFV should also allow for the use of funds across fiscal years. For the maintenance of federal highways and federal waterways, agreements similar to the LuFV should be introduced as multi-year and cross-year funding cycles to ensure long-term and economically optimized planning and project implementation. Since the federal government cannot enter into LuFVs with subordinate authorities, a structural reform of the administration of federal waterways is necessary. The detailed allocation and use of funds should be structured on the basis of clear and binding strategic objectives for infrastructure development (see Infrastructure Condition Monitoring), regularly adjusted in light of cost trends, and would continue to be subject to public and parliamentary oversight.

The planning and implementation of infrastructure projects—which are often time-consuming even when maintenance measures are involved (e.g., due to EU requirements regarding closure periods and fauna protection) would benefit greatly from long-term funding security—regularly reviewed in light of actual needs—as well as increased transparency in the allocation and use of funds. This is because reliable, stable, and long-term planning and financing frameworks—accompanied by concrete implementation targets and financing milestones—are essential for both private and public investments, particularly when it comes to building up resources and capacities on the part of the companies entrusted with implementation, such as for investments in heavy machinery. Furthermore, ensuring the continuity of, for example, federal funds for investments in existing networks over multiple years would not only create greater planning security but also enable a more flexible, autonomous use of funds, thereby contributing to a more efficient allocation of resources. Furthermore, this increased flexibility would facilitate the bundling of construction projects, which would reduce construction-related closures and correspondingly increase the availability of the infrastructure.

Prerequisite: In addition to greater continuity in financing, there must also be greater speed and efficiency in implementation

While greater continuity is needed in financing, it is also essential to accelerate implementation: Excessively long planning and approval procedures for infrastructure projects, large-scale and heavy-haul transport (GST) required for them, and the worsening shortage of skilled workers will continue to pose an obstacle in the future if the available funds are to be actually spent on construction. Leverage points such as deadline for regulations or standards in the area of fauna protection are well known; what has been lacking so far is greater political courage to ensure consistent, multimodal implementation. In addition, there are numerous other non-legislative levers.

In particular, the IT budget must be increased—for example, to support the use of Building Information Modeling (BIM) and AI—and staffing levels at state planning and permitting agencies must be expanded, while planning and permitting processes must be consistently digitized. However, the full potential for efficiency gains offered by BIM and AI can only be realized if these digital methods are rapidly implemented by the federal government and state agencies.

For this reason as well, alternative procurement and contracting models—in which innovative construction expertise is incorporated into the planning process at an early stage—must be utilized to accelerate projects and increase their efficiency. In doing so, the appropriate model must be selected for projects of varying sizes and levels of complexity. In the area of roads and waterways, the public-private partnership (PPP) procurement method, in particular, could ensure both greater continuity in financing and faster implementation thanks to its life-cycle-oriented approach and stronger incentives for efficiency. In the rail sector, these effects should be achieved by making the rail partnership model—which has so far been limited to pilot projects—generally permissible under budgetary law.