Transportation is essential for European competitiveness. While the transportation system guarantees location quality for the economy and citizens, the transportation industry provides jobs and strengthens the economy in general. Recently, the transportation sector has had to face challenges arising from new developments. Investments had to be limited due to the financial and economic crisis, new competitors are arising on the global market, climate change requires action affecting transportation and European regional disparities need to be overcome, especially when it comes to transportation. The change requires new strategies to be adopted to and also to actively shape the process. The European Commission aims to support the transportation sector by promoting innovation on a regional level. To ensure successful effects of funding, financial support should not be spread but be focused on regions of highest innovation potential in transportation. The project METRIC, funded by the 7th Framework Programme of the European Union, has developed a method to measure innovation potential in transportation, applying it to the regions in Europe. The results should be served as a basis for funding distribution and should also identify certain types of regional innovation patterns. An analytical approach to measuring the innovation potential in the transportation sector has been developed. Based on this, empirical analysis has been done. Results show different principles of innovation, a strong dependency on both the historical path of economic development of regions and countries and the recent economic situation. While innovation potential in the transport industries could be analysed, transport service is different. As this sector bears a huge potential for process innovation, which could increase energy efficiency and reduce emissions, there is a need of further research in services innovation.