Macro-level determinants of rail freight demand and implications for sustainable transport: evidence from Sri Lanka

Purpose This article empirically examines the macro-level determinants of rail freight demand in Sri Lanka, given the persistent decline in rail modal share and the need to support sustainable transport objectives. Design/methodology/approach Rail freight tonne-kilometres are used as a measure of rail freight demand, and the relationships with rail freight rates, fuel prices, gross domestic product growth and trade intensity are examined. The autoregressive distributed lag bounds-testing approach and the error-correction model (ECM) are employed to estimate long-run relationships and short-run dynamics among the variables, complemented by the Toda–Yamamoto Granger causality test. Findings Rail freight rates and trade intensity are identified as significant long-run determinants of rail freight demand. In the short run, the ECM indicates significant lagged adjustments and a negative, statistically significant error-correction term. The Toda–Yamamoto analysis shows no evidence of predictive Granger causality from the selected macroeconomic variables to rail freight demand. The findings suggest that macroeconomic growth and price-based measures alone are unlikely to generate a sustained recovery in rail freight demand, highlighting the need to consider service quality, infrastructure capacity, multimodal connectivity and institutional constraints when developing sustainable transport policies to improve rail competitiveness and support modal shift. Originality/value This study provides empirical evidence on the long-run and short-run effects of selected macro-level determinants of rail freight demand within Sri Lanka's regulated pricing and transport market context. This article presents the first dynamic time-series econometric analysis of rail freight demand in Sri Lanka.