Trends and developments

This chapter describes the demographic, economic, socio-cultural, ecological, technological and political developments that influence NS. For our response to these developments, see the chapter entitled Our strategy.

Labour market shortages

The Dutch labour market has been exceptionally tight for more than a year. Shortages peaked in the summer of 2022, with 143 vacancies for every 100 job seekers. Many companies and organisations, including NS, had not anticipated the extent of the problem. Since then, staff shortages have decreased somewhat - but not in all sectors. In healthcare, transport and education the shortages actually slightly worsened in the second half of the year. This had major consequences for NS. During 2022, the shortage of main guards and train drivers, combined with persistently high levels of work pressure and sickness absence, made it necessary for us to scale down the timetable. Despite the huge effort we made to minimise the impact of the shortages on our passengers and colleagues, they did suffer considerable inconvenience. In 2023 we will continue to do everything we can to reduce staff shortages.

Economic developments and rising prices

Several inflation rate records were broken over the past year. In September 2022, the inflation rate even reached 14.5%. In 2022, negotiated wages increased by an average of 3.2% relative to 2021. This was the largest rise since 2008, but inflation rates were much higher and difficult to compensate in full for most companies. Prices of raw materials and energy also increased considerably, driven by the war in Ukraine.
These economic developments could potentially jeopardise the affordability of our passenger products. On average, train fares in 2023 are already up 4.3% compared with 2022. The price of separate tickets has gone up by 5.5%, while the price of season tickets for unlimited travel across the country or on specific routes has fallen by 2.4%. In addition, contraction of the economy as a whole could result in fewer passengers.

The impact of COVID-19 on travel patterns and finances

After the end of the lockdown in April 2022, the Netherlands 'reopened’. However, many of the effects of the pandemic have proved to be permanent, including its impact on how people travel. While we have seen passengers return to our trains, their numbers are smaller than before and their travel patterns have also changed. While passenger numbers in the weekends have almost returned to pre-COVID figures, on working days we only transport about 75% of the passenger numbers in 2019. NS has noticed that commuters tend to work at the office on Tuesdays and Thursdays and choose to travel during super-peak hours on those days. This means that the challenge of spreading passengers has become even greater than before the crisis.
The COVID-19 crisis has severely hit NS financially as well. In 2020 and 2021, we suffered a significant negative underlying result and we did so again in 2022. Until the end of 2022, these losses were compensated in part by the availability payment we received from the government. In 2023, these payments have been replaced by a transition scheme funded by the Ministry of Infrastructure and Water Management. This scheme provides for a cap on compensation for carriers and, as such, offers less protection than the availability payment scheme. NS is well aware of the possibility that the transition scheme will not cover all our financial losses in 2023, and that we may have to close the year with negative figures.

Contribution of sustainable transport to the climate targets

Despite a range of measures, the efforts under way to reach the Dutch climate targets have so far remained insufficient, as observed in last year's Climate and Energy Foresight Study published by the Netherlands Environmental Assessment Agency. The time available to make the right decisions is running out. If we manage to approximately halve worldwide CO₂ emissions by 2030, we have a chance to limit global warming to 1.5 degrees Celsius. However, if emissions continue to rise in the next few years, they will set the world on course towards global warming of 3 degrees or more. Given the relatively low CO₂ emissions from sustainable means of transport, it is evident that every effort should be made to make mobility more sustainable. Train travel is part of the solution, and NS is eager to contribute to plans to green the mobility sector.

Population growth, composition of the population and travel behaviour

By 2025, the Dutch population is expected to reach almost 19 million - over 1 million more than in early 2022. Nearly 70% of that growth will take place in municipalities with 100,000 or more inhabitants. This will be accompanied by demographic changes. As the average life expectancy will continue to increase, the share of people over 70 will grow: in 2040, nearly 20% of the population will be at least 70 years old. While the working population is still increasing slightly, it will begin to fall after 2030. These developments will also have an impact on the size and composition of demand for mobility. Urban areas will see an increase in demand, and one of the possible effects of the ageing population is a higher share of social-recreational travel.
The growth of the population has also generated a housing construction challenge: in the period up to and including 2030, we will need to build 100,000 new homes every year to meet housing demand. This housing construction task is accompanied by a mobility challenge, to ensure that all these new homes are easily accessible. To that end, the government has added another €7.5 billion to the Mobility Fund. A large part of these funds will be spent on improvements to the public transport system.

Developments in the mobility market

Many parties, including the government and new players on the mobility market, have expressed considerable interest in Mobility as a Service (MaaS) and the rise of forms of shared transport (such as e-bikes, bicycles, scooters, cars and perhaps, in future, electric scooters). We are witnessing developments on different fronts: the growing popularity and availability of these forms of transport at the local level, and more and more apps to make them more user-friendly. At the same time, local authorities are aware of the nuisance caused by illegal parking, while private car ownership has hardly decreased and the popularity of shared transport has so far remained modest.
At the international level, too, interest in travelling by rail is increasing. Last year, as a result of the increasing demand for sustainable travel, reinforced by excessive crowding at Amsterdam Airport Schiphol and an ever wider range on offer from tour operators, the number of people who opted for the train on international journeys was higher than before the COVID-19 pandemic.

Technological developments in and around trains

We are also witnessing a multitude of technological innovations in and around trains that have an impact on NS and our partners in the railway sector. NS permanently evaluates the opportunities offered by six relevant technological developments: artificial intelligence, 3D printing, 5G, sensorics, extended reality and process mining. For example, these developments can potentially accelerate and enrich decision-making processes, while increasing train speeds and accelerating train maintenance work. In addition, ERTMS and Automatic Train Operation (ATO) potentially create scope for even more trains on the already busy Dutch rail network, as well as for shorter travel times and higher levels of safety.

Major threats and opportunities for NS

Current trends and developments offer several major opportunities for NS, but also pose a number of threats. Below is an overview of those we consider the most important:

Opportunities:

• The urgency of clean and sustainable transport – The consequences of climate change have shown how important it is to be even more ambitious and take real and meaningful action. We need to make mobility more sustainable: the urgency of that is indisputable. The train is the most sustainable means of transport for long-distance travel. NS wants to be, and is able to be, part of the solution to the climate problem.

• Investments in public transport and (railway) infrastructure – The national government has announced major investments to ensure good connections for the many new houses to be built. This investment programme can bring about huge improvements in the accessibility of public transport. Over the next few years, major housing construction projects will be launched in areas around railway stations. The new residents will all have easy access to the train and other sustainable means of transport.

• Technological develpments in and around trains - Technology evolves extremely fast. Innovations can improve our services and internal processes to make travel by train even more attractive.

Threats:

• Labour market shortages - The number of vacancies exceeds the number of job-seekers in the Netherlands. In this tight labour market, we are facing the dual challenge of finding sufficient numbers of staff to operate our trains and retaining our existing people.

• Change in travel behaviour post-COVID - Travel patterns have changed since the COVID-19 crisis. People - commuters in particular - are travelling less, and when they do travel it is often on Tuesdays and Thursdays. People are also more likely to perceive trains as (over)crowded. These changes have an impact on our income, force us to focus on costs and are at odds with our ambition to always offer passengers a suitable timetable.

• Affordability - High inflation rates and energy prices mean that people have less money to spend, while it is also becoming more expensive for NS to operate our trains. This is making it more difficult to keep train fares affordable.