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2. Intermodal road–rail transport in the European Union Johan Woxenius and Fredrik Bärthel

2.1 INTRODUCTION

An intermodal freight transport system is characterized by the subsequent use of different traffic modes for moving goods stowed into an intermodal loading unit (ILU) from the consignor to the consignee. It involves a wide variety of activities, actors and resources, which implies a certain degree of technological as well as organizational complexity. Other features are the derived demand, dependency on surrounding activity systems and in Europe a typical lack of formal systems management as well as of objec- tives shared by all actors.

European intermodal road–rail freight transport (EIT) is regarded by many as the universal solution to a wide range of problems related to road freight transport as well as to the financial problems of national railway freight operations. The European Commission estimates that external effects from road transport in the EU cost €250 billion annually, of which half relates to congestion. As an example, Van Schijndel and Dinwoodie (2000) claim that 10 per cent of lorry operating time in the Netherlands is spent in congested conditions. Supporting words have been abundant and a truly wide range of political instruments have been used for promoting EIT but they have still not created a truly level playing field for competition with road transport. On the contrary, political promises that were not delivered have caused disillusion within the indus- try although initiatives like the Marco Polo Programme, the German road toll (the LKW Maut) and the French subsidy to forwarders using EIT are promising.

The high expectations of increased EIT flows, in particular from polit- ical actors, have not been fulfilled although the industry has shown sub- stantial growth over a number of years. According to the European Commission (2002), EIT almost doubled from 33 to 64 billion metric tonnes-km between 1990 and 2000, accounting for 2.2 per cent of the total transport performance in the EU in the latter year. The transport markets

Konings, R., et al. The Future of Intermodal Freight Transport : Operations, Design and Policy, Edward Elgar Publishing, Incorporated, 2008. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=338815. Created from apus on 2019-04-05 14:38:44.

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that have been successfully penetrated are mostly related to Alpine crossings and transport between the main seaports and their hinterlands (Eurostat 2002).

There are many reasons for the unsatisfactory development (Bukold 1993 and 1996; Henstra and Woxenius 1999; Zapp 1999):

● time and cost handicap due to the transshipments; ● inferior frequency; ● lack of standardization of swap bodies; ● rigidity of government-owned railways; ● fear of internal competition with wagon-load transport within

railways; ● inadequate long-term stable access to rail capacity at strategic times;

and ● lack of realization of political promises.

In previous theoretical work (Woxenius 1994), the systems approach (Churchman 1979) and the actor approach (Gadde and Håkansson 1992) have been used to develop a three-element approach. The elements consist of actors, activities and resources, and they have been found useful as start- ing points for analyses of industrial structures with different purposes. This chapter deals with the whole transport chain although the focus is stronger on the core of EIT – terminal handling and rail haulage – and from the moment the ILU is filled to the moment it is emptied. The focus is also on the ‘conventional’ EIT industry with unaccompanied haulage of goods loaded in containers, swap bodies and semi-trailers offered to an open market. This limitation implies that ILUs are seen as part of the goods and not explicitly as a system resource. The focus is also restricted to transport chains including rail transport. Inland or short-sea shipping in combina- tion with road transport are intermodal transport chains which are not being discussed.

The empirical foundation for the description and analysis of the market is a study carried out in 1994 (Woxenius 1994) and an update and revision in 2002 (Woxenius and Bärthel 2002). The study in 1994 was based upon 20 structured interviews with officials of EIT companies, forwarders, terminal companies and shippers as well as upon scientific literature, public statistics, annual reports and brochures. The update was based upon information from journals, Internet sites and interviews with industry representatives along with continuous coverage of the industry while addressing related research questions.

14 Intermodal transport operations

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2.2 THE MARKET AND THE ACTORS

The EIT system may be described by its core activities: pre- and post- haulage by road (PPH), transshipment, rail haulage, coordination activities and, where applicable, sea transport. In addition, infrastructure and sup- porting activities such as lease of equipment, inspection, cleaning, mending and empty stacking of ILUs are needed for the system to work. Stuffing of goods in ILUs is performed by the shipper or by the forwarder if the goods are consolidated in its general cargo terminal and not included in the system model.

Although EIT by definition involves at least two traffic modes, the focus here is on the core of EIT, as shown in Figure 2.1, including rail haulage and transshipments. This is what distinguishes EIT from all-road transport and the road–sea combination. Most intermodal research implicitly takes this perspective, although studies on PPH by road have been published for instance by Morlok and Spasovic (1994), Niérat (1997) and Taylor et al. (2002).

The Demand Side of the Core of the EIT Market

The role of the shippers in the EIT system is largely determined by the size of their shipments. Shippers sending full ILUs (15–35 tonnes depending on type of ILU and country) obviously take an interest in the system, while customers sending general cargo typically do not know or care how their consignments are forwarded. Apart from stuffing and stripping and sup- plying the ILUs, the activities occasionally performed by shippers include transshipment at private sidings and PPH. Some large shippers arrange their own logistics, maintaining a forwarding role, and exceptionally, like IKEA, they coordinate the core of EIT.

The role of the forwarders, sometimes referred to as logistics service providers, is to act as an intermediary in the transaction of transport ser- vices between shippers and operators supplying physical transport and transshipment services. The definition of the market used here implies that

Intermodal road–rail transport in the European Union 15

Figure 2.1 A system model focusing on activities in the intermodal chain

pre-haulage

post-haulage rail haulage

transshipment transshipment

sea transport

coordination of intermodal transport

coordination of the core of intermodal transport

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forwarders, mediating the specific demands from a multitude of shippers, can be called ‘proxy customers’ (Ohnell and Woxenius 2003) and are thus part of the demand side.

Traditionally forwarders perform activities such as physical and admin- istrative consolidation of small consignments, documentation, warehous- ing and supplying ILUs. Ties to the hauliers have traditionally been very strong for the land transport segment, but increasingly they are traffic mode neutral. Many forwarders also operate lorries themselves and are thus both forwarders and hauliers. Exceptionally, like Hangartner (owned by German Railways, DB, since 2002), they operate intermodal terminals and coordinate the core of EIT.

Forwarders have a dominant position in the transport system, but their scale is often overestimated since they are wholesalers and they show large turnover figures, but figures of value added, number of employees or the balance sheet are not equivalent to, for instance, those of the railway com- panies. This is especially true for the much-hyped but still rather insignificant fourth-party logistics service providers or ‘non-asset-based operators’, such as Exel, GeoLogistics and Celexor, which take on a coordinating role only and subcontract all physical activities.

In EIT, forwarders act on different markets defined by size of consign- ments, geography or type of ILU. The traditional forwarders such as Schenker, DHL (mainly the former Danzas part) and Kühne and Nagel, have a history of close connections to road hauliers and use EIT as part of some regular services, as reserve capacity or on customers’ request. These large forwarders attempt to offer all types of transport between all geo- graphical areas. The wide range of transport on offer implies that the trad- itional forwarder covers the full-truckload, part-load and general cargo as well as parcel segments. Mergers and acquisitions to form players with larger geographical and service scope have created a new picture in which the German state maintains a very dominant position in Northern Europe.

Semi-trailer operators such as Euroute and GT Spedition usually own semi-trailers and buy the haulage services from small hauliers, short-sea shipping lines or intermodal operators. They have terminals for grouping shipments, however, on a smaller scale than the traditional forwarders since they primarily move part-loads and full loads. Geographically, they often specialize in transport between two countries and cooperate bilaterally with a similarly focused forwarder.

The business orientation of the swap body operators is to transport full loads directly between major industrial areas. The road haul costs of swap bodies is higher than for semi-trailers and they are less suitable for roll- on/roll-off shipping, which means that this segment is most tightly con- nected to EIT.

16 Intermodal transport operations

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Container shipping lines and their shipping agencies have shown a par- ticular interest in extending their control to port operations and hinterland transport. Consequently, Maersk-Sealand and P&O Nedlloyd are partners in intermodal train operators specializing in shuttles to and from the big ports.

It should be noted, though, that there are vast differences in the for- warding role between the national markets. In Germany, France and Sweden large traditional forwarders dominate, while Dutch forwarders, to a larger extent, have vehicles of their own, combining the forwarding and haulier roles. Italy and Spain have almost as many hauliers as lorries and lack a strong forwarding industry although the trend is to cooperate in different forms of alliances.

Beside information and communication technology (ICT) systems for controlling the flows, resources controlled by forwarders are mainly general cargo terminals and ILUs.

The size of hauliers varies widely between European countries. In Germany, Italy, Spain and Sweden the hauliers are of small or moderate size, while the French and Dutch road transport market is dominated by somewhat larger hauliers. In domestic transport, hauliers are often con- tracted for a long-distance haul and decide whether to subcontract an inter- modal operator. In international EIT, hauliers have a role of supplying the forwarder with one local road haulage, while another haulier is contracted for the other haul. Hauliers can hence be placed both on the demand and the supply side of the market.

The resources of the hauliers vary according to their size. Some hauliers have specialized in hauling one type of ILU, while other larger companies possess vehicles for all types of transport. Other activities performed are supplying ILUs and, occasionally, operating terminals. With horizontal transshipment systems like the Swiss–Austrian Mobiler and the French Modalohr, the hauliers will become more important for the transshipment activity.

The Supply Side of the Core of the EIT Market

The supply side of the EIT market is traditionally divided between com- panies based upon rail and road transport respectively. Considering regu- lated monopolies and the historic scope of concessions, the borderlines between market segments have been drawn according to types of ILU and geographical markets (Bukold 1996). Due to transport policy deregulation in the EU, this practice is now diminishing (Aastrup 2002).

The classic role of the rail operators has been to sell rail haulage between intermodal transshipment terminals. They also operate terminals

Intermodal road–rail transport in the European Union 17

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and supply rail wagons. In addition, the railway companies have owner interests in virtually all of the other actor categories needed for producing EIT services.

The intermodal operators are obviously of particular interest to this study. When the maritime or ISO container was introduced in the 1960s, the national railway companies founded container transport companies in order to offer complementary land transport. Intercontainer, later Intercontainer- Interfrigo (ICF), was founded for international transport and companies like Transfracht in Germany, Compagnie Nouvelle de Cadres (CNC) in France (founded in 1948 for moving smaller containers) and Italcontainer in Italy were founded for domestic transport. In Scandinavia, faced with less rigid transport regulations, the railways offer transport of all types of ILUs. The railways and the Norwegian intermodal operator CargoNet retail to ship- pers, while CargoNet’s Swedish subsidiary Rail Combi wholesales the core of EIT.

ICF and the national container companies have their base in the trans- port of maritime containers to and from seaports, but they also offer trans- port of containers, swap bodies and to some extent semi-trailers between European inland terminals. Deregulation implies that the intermodal oper- ators in the railway family are less restricted by national borders, and ICF now operates domestic trains, while container companies compete for border-crossing flows.

Forwarders and hauliers established their own national companies such as CEMAT (in 1953) in Italy, Trailstar (in 1964) in the Netherlands, TRW (in 1965) in Belgium, Novatrans (in 1966) in France, HUPAC (in 1967) in Switzerland and Kombiverkehr (in 1969) in Germany (Wenger 2001). The original purpose of these organizations was to organize the transport ser- vices for which the road-based transport companies had concessions. Now in the post-regulation days, they still coordinate the core of EIT, but due to the fact that most hauliers are small companies, their role as a strong coun- terpart to the railways in negotiations is more important. This goal is, however, rarely stated since the national railways usually hold at least a minority share of the companies. In the case of German Kombiverkehr, DB now owns 50 per cent of the company. Since 1970, the companies coor- dinate their international operations through the International Union of combined Road–Rail companies (UIRR). Earlier, the UIRR companies worked as pure intermediaries, but increasingly they carry the commercial risk of filling trains.

Many, not least the European Commission, entertain hopes that new intermodal operators will emerge onto the scene. However, high initial investments, large economies of scale, lack of clearly established market shares and the industry’s currently low profitability keep new entrants out

18 Intermodal transport operations

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of the picture. Also the lack of long-term transport policies and the strong market position of the national railways discourage private investments. One exception has been that American companies have tried unsuccess- fully to practise their domestic intermodal experiences in Europe. There are also some genuine new actors such as IKEA Rail, NeCoSS and Hafen und Güterverkehr Köln. The general trend, though, is that the already active European actors find new markets or extend their scope of services. The present actors have also formed alliances, such as Polzug, Metrans, Hansa Hungarian Container Express, TARES and European Rail Shuttle in order to get access to critical resources, knowledge or clearly established shipper contacts in line with the suggestions of Gifford and Stalebrink (2002).

In general, the new intermodal operators are found in the northern part of Europe and in particular in the large market for hinterland transport of maritime containers related to the ports of Hamburg, Bremerhaven, Rotterdam and Antwerp. The ports themselves have also demonstrated their interest in hinterland transport by rail. In the case of Germany, for instance, the port operator HHLA has bought 50 per cent of Transfracht from DB. These initiatives all aim at ‘cherry-picking’ EIT: they do not capture new market shares from road transport, but rather from existing intermodal services.

Most terminals are operated by actors that also maintain other roles, but increasingly by dedicated terminal operators. One category is con- tainer port operators such as PSA of Singapore, Hutchison of Hong Kong and American CSX World Terminals that build global networks. Another category is shipping lines that operate port terminals supporting their own shipping operations, but also as businesses in their own right in subsidiaries such as APM Terminals (Maersk), P&O Ports and Evergreen Ports. In line with the so-called dry-port concept, these port operators might expand to inland terminals on a large scale. Yet another category is local companies operating a single terminal, often with local authori- ties, rail or intermodal operators, hauliers and dominant shippers as co-owners.

So far most of the rolling stock has been supplied by the rail or inter- modal operators, but there is a clear tendency towards avoiding large investments by using leasing companies offering engines and wagons. A clearer actor role concerning rail traction is also distinguishable with many small rail companies, often with a short-line origin. The actor analysis is presented in the actor version of Figure 2.2.

In more detail, the actors and their activities are better presented in a table. As an example, the Swedish intermodal operators are presented in Table 2.1.

Intermodal road–rail transport in the European Union 19

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20 Intermodal transport operations

Figure 2.2 A system model focusing on actors in the intermodal chain

haulier haulier

rail operator and leasing company

terminal operator terminal operator

shipping line

intermodal operator forwarder or shipping agency

shipper

Table 2.1 The Swedish intermodal operators and their activities

Operator Activity

PPH D D D SD/SI SD D SI Transshipment D D D SD/SI D/I SD/SI SD I Terminal D D D/I

services Rail haulage D D D SD/SI SD/SI D SI D Market to D D D D/I D I shippers

Coordinate D D I D/I I EIT

Coord. EIT D D D D/I D/I D/I D I core

Supply ILUs D I Supply rail

wagons D D D I D/I SD/SI D I D/I Supply rail

engines D D D SD/SI SD/SI D SI D/I Launched, year 2002 1998 2000 1996 1993 1992 1990 1998 2001 Closed, year 2001 2000 2003 2004

Note: D: domestic, I: international, italics: exceptional cases, S: by subcontractor.

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The Marketplace

The way EIT providers approach the shippers varies depending on whether the service is domestic or international and also on the history and strategies of the intermodal operators. ICF, CNC and CargoNet offer their services to shippers or intermediaries, while the UIRR companies, Transfracht, Italcontainer, Rail Combi and most of the new entrants strictly limit their services to forwarders, shipping agencies and hauliers. On demand, the former operators offer PPH, while the latter ones leave this to their cus- tomers. The railways often maintain a forwarding role and offer door-to- door EIT.

On the way to the shippers the services are bundled in different ways. The principles for this bundling are shown in Figure 2.3, where dotted lines indi- cate occasional supplier relations.

2.3 THE PRODUCTION SYSTEM

The physical components of the European EIT system definitely qualify as mature technology. Lorries are either semi-trailer tractors, flatbed container lorries or swap body lorries equipped with air suspension. Rail engines are of standard freight design, occasionally capable of multi- current power supply, while rail wagons are either pocket wagons for semi-trailers or flatbed wagons for containers and swap bodies. In addition, rail wagons for special applications, mainly horizontal transshipment, have been developed, but except for turntable wagons (for example ACTS), bimodal boggies for trailers (for example Wabash’s RoadRailer as imple- mented by BTZ) and wagons for roll-on/roll-off (RoRo) loading (for example Modalohr), very few are in use. In case of sea transport a ship is obviously needed.

Intermodal road–rail transport in the European Union 21

Figure 2.3 A system model focusing on actors with typical supplier relations in the intermodal chain

haulier haulier

rail operator and leasing company

terminal operator terminal operator

shipping line

intermodal operator

forwarder or shipping agency

shipper

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The vast majority of terminals base their operations on gantry cranes and reach stackers. Many suggestions for new intermodal transshipment technologies have been presented (for overviews and evaluations, see Ballis and Golias 2002; Bontekoning and Kreutzberger 1999; Woxenius 1997), but very few have been commercially implemented. Most new technologies aim at either small-scale and low-cost operations or large-scale, automated and fast applications. For the mid-range terminals, say 50 000–200 000 transshipments a year, conventional technologies are sufficient for the current use with transshipments during some hours in the morning and in the late afternoon.

Beside transshipment technologies, ICT systems attract most attention. Railways were among the really early users of computers, but mainly of mainframes controlling their own production and administration. Electronic data interchange connections with customers are of rather recent date. Efficient ICT systems are vital to forwarders controlling huge numbers of small consignments for many shippers, but less crucial to hauliers, rail and intermodal operators which can move a single container or some 80 boxes in a shuttle train for a limited number of customers. The resource analysis is presented in Figure 2.4.

In addition to these physical resources, operations clearly depend on a large number of skilled employees, organizational know-how, brands, developed procedures and legal agreements as well as permissions and train slots from authorities. Road and rail infrastructure is needed to accomplish EIT, but as this is supplied by government in exchange for user charges and shared with passenger and other freight operations, it is not treated as a resource.

About 100 of the 2000 European intermodal terminals correspond to 90 per cent of the total freight volumes (Nelldal et al. 2000) and the chal- lenge is to offer services to smaller terminals. This underlines the impor- tance of fast train-forming, marshalling and handling techniques to facilitate market coverage and a high average speed (for example Siegmann and Tänzler 1996). In order to combine economies of scale and frequency in the rail haul and a dense terminal network, the EIT industry uses a

22 Intermodal transport operations

Figure 2.4 A system model focusing on resources in the intermodal chain

lorry lorryrail engine and wagons terminal terminal

ship

ICT system

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number of operational principles when they design their networks. The design principles are schematically illustrated in Figure 2.5.

The deregulation of the European rail network has entailed a separation of the production systems for passenger and freight, in order to specialize and to avoid cross-subsidy. In the rail freight industry, the co-production of wagon-load and intermodal services has continuously decreased, due to the mono-functional rail terminals, the focus on full trains and diverging service requirements. The flexibility, earlier maintained through a combi- nation of different wagon-load and intermodal services as well as a wide market coverage, are lost.

An operational design consisting of a hierarchic network (D1) forms the foundation in the conventional wagon-load network. The train sets are operated along routes with repeated shunting or marshalling operations. The trains stay at the terminals only briefly, requiring rapid handling or marshalling. The operator can choose among many different routes between the origin and destination terminal. The maximum degree of freedom is possible if the routes are dynamically allocated in real time as a function of actual demand.

Economies of scale are clearly present in rail transportation and since approximately 1990, EIT companies have abandoned their networks and focused on transport quality (primarily transport time and reliability), economies of scale and a high utilization rate for each train. Thereby the production philosophy has changed dramatically from conventional hier- archic networks towards a focus on shuttle trains or block trains between economic centres and ports.

The direct connection design (D2), aims at large flows transported directly between origin and destination terminals over relatively long

Intermodal road–rail transport in the European Union 23

Figure 2.5 Network designs for EIT: (D1) hierarchic network, (D2) direct connection, (D3) shuttle train, (D4) hub-and-spoke network and (D5) transport corridor

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distances. Direct connections require some 100 000 annual tonnes for daily departures, which limits this design to a small fraction of the total trans- port demand. The handling capacity requirements depend on how long the trains stay at the terminal and the conventional night-leap traffic reduces these requirements to a non-critical parameter.

The shuttle train design (D3) is a special application of D2 distinguished by the operation of fixed-formation train sets, operating specific origin– destination connections. This creates a base for reliable and cheap opera- tions, since neither cost- and time-consuming shunting of wagons, nor sophisticated information systems, are needed. The timetable is not depen- dent on other transports and can easily be tailor-made for the customers, that is, there is a high degree of flexibility regarding time planning. EIT shut- tles are used for: (1) transports of containers on high-volume connections between ports and their hinterland, for example the network operated by Transfracht and new entrants; (2) as infrastructure replacement, for example for rolling highway transit operations through the Alps and under the English Channel; and (3) as fixed-capacity trains in the railway net- works, for example by CargoNet in Norway.

In the hub-and-spoke (H&S) design (D4) a centrally situated terminal is selected as hub and all transports pass through this terminal, where wagons are marshalled or ILUs transshipped between the trains. The advantage is good market coverage despite insufficient volumes for direct trains between the different origin and destination terminals. Rational marshalling or handling at the hub is crucial as it compensates for longer transport distances.

One application is CNC’s network in France, in which Paris assumes the function as hub. The hub function, however, is not absolute since large parts of CNC’s flows relate to the region of Paris. The transport network operated by ICF is based on two H&S networks, the Quality Net and the X-net, operated by block trains. The Quality Net is operated with 60 trains six days a week and connects 12 countries via a hub in Metz. The recently developed Cargo Express system in Switzerland, serving the market for high-value products over medium distances in co-production with wagon- loads, is operated as a H&S system with fast day- and night-leaps through the Dänicken hub.

In the transport corridor design (D5), trains, sometimes called liner trains, make frequent stops along a corridor line and thus cover the inter- mediate markets and so enable PPH on shorter distances. Along the corri- dors, fixed train sets operate at a high frequency according to a tight and precise timetable. Transfer time must be kept at a minimum so as not to prolong the total transport time too much. Storage at the terminals is needed since road and rail operations must be detached. These trains are

24 Intermodal transport operations

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for dual transport markets – dispersed flows over long distances and dense flows over short distances – and by combining these markets, the service can attract enough flows for good resource utilization. Interconnected liner trains permit large areas to be covered at relatively low costs. The organ- ization of such services, however, is difficult and needs to be tailored to the business. Corridor services could perhaps be considered as supplementary to the network of direct links, serving the less busy corridors. Empirically, the Swedish Light-combi concept shows that long distances, 650 km, can be covered during the night-leap including four intermediate stops (Bärthel and Woxenius 2003).

2.4 THE SIZE AND CHARACTER OF THE FREIGHT FLOWS

The transport performance in Europe increased from 1.4 trillion metric tonnes in 1970 to 3.1 trillion metric tonnes in 2000, that is, by 119 per cent, or 2.6 per cent per year (European Commission 2002). Fifty per cent of this transport work regards distances between 150 and 500 km and 20 per cent distances over 500 km. The market share of unimodal road transport, mea- sured in metric tonnes, increased from 35 per cent in 1970 to 44 per cent in 2000 and also intra-European sea transport increased its market shares as shown in Figure 2.6. The transport performance of domestic sea transport, pipeline and rail transport and inland shipping was rather stable, implying significantly reduced market shares. In the case of rail transport, it decreased from 20 to 6 per cent.

The EIT flows have grown substantially and doubled in volume between 1990 and 2000 (European Commission 2002). Figure 2.7 shows the devel- opment between 1990 and 2002 for the largest operators in Europe. Notable are the large increase for the UIRR companies, the decreasing volumes for ICF and the large market share for the Swedish operator Rail Combi. Earlier estimates of the intermodal freight flows are often based on aggre- gated statistics of the UIRR companies and ICF. This was adequate until the beginning of the 1990s, but due to services by new intermodal opera- tors and the railways themselves, for example the large flows of automobile parts to and from Spain, statistics must be dealt with in more detail.

Besides the price–quality ratio of competing transport modes, the com- petitiveness of EIT depends on geographical and demographical condi- tions. Conventional EIT, characterized by transshipment of unit loads by use of gantry cranes and reach stackers, full train night-leaps directly between terminals and services offered to shippers through intermediaries, is generally competitive at distances above 500 km (Van Klink and Van den

Intermodal road–rail transport in the European Union 25

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26 Intermodal transport operations

Note: Data from Italcontainer are not available.

Source: Intermodal transport operators.

Figure 2.7 Transported volumes (in TEU) of the major European intermodal transport operators, 1990–2002

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

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E U

ERS Rail Combi Renfe/Transfesa Freightliner CNC Transfracht ICF UIRR

Source: Eurostat (2002).

Figure 2.6 Transport growth in the EU between 1970 and 2000 by transport mode (in billion metric tonnes)

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1000

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1970 1975 1980 1985 1990 1995 2000

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Intra EU sea

Railway

Inland waterways

Pipeline

Domestic sea

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Berg 1998). For container shuttles to and from ports, the distance is slightly shorter (Rutten 1998). The average distance for the largest EIT operator, ICF, was 784 km in 1991 and increased to 952 km in 2002. For domestic transport, the largest operator, Kombiverkehr, reported a break-even dis- tance of 350 km in 1998. The average transport distance for the UIRR com- panies was 550 km domestically and 760 km internationally.

Germany holds a dominant position with almost half of Europe’s domestic EIT, and even more so if EIT by inland waterways is included. In France domestic EIT operations are also substantial. Many countries, for example Belgium, the Netherlands and Denmark, are not large enough for competitive domestic EIT. Peripheral countries, like Italy, Spain, the UK and the Scandinavian countries, have rather substantial domestic networks with border crossings defined as gateways to other networks.

A few relations across the Alps dominate border-crossing EIT. Partly due to Swiss and Austrian regulation and tax policies, EIT has a large market share for the flows between Italy–Benelux and Italy–Germany, for example 50 per cent between Italy and Belgium. Other examples of large market shares for EIT are between Sweden and Italy with 60 per cent, Belgium and Spain with 30 per cent and Sweden and Belgium with 30 per cent (IQ 1998). A truly unexplored market is the triangle of France–Germany–Benelux, where the unimodal road flows are 100 times larger than the EIT flows (ibid.). The major EIT flows are presented in Figure 2.8.

It might be questioned whether this is a real network or some independ- ent direct connections. Figure 2.8 also reveals the previous trend regarding the east–west corridors connecting the accession countries in Eastern Europe with the economic centres and ports in Western EU.

The general trend regarding types of ILUs transported by the UIRR reveals an increasing share of rolling highway and swap bodies at the expense of semi-trailers. Between 1995 and 2000 the number of swap bodies transported by the UIRR increased by 27 per cent to 1 367 000, compared to a decrease in semi-trailers of 32 per cent to 152 000 units. The use of semi-trailers is more common in France and Germany. In Germany, the shorter class C (7.15–7.82 m length) almost universally prevails, but else- where there is a clear trend towards an increasing share for Class A swap bodies of semi-trailer length.

2.5 SYNTHESIS AND OUTLOOK

Comparing the studies of 1994 and 2002, it is obvious that due to deregu- lation, changes have taken place in the EIT industry. Some ‘cherry-pickers’ have entered, some of them have left, while others maintain and develop

Intermodal road–rail transport in the European Union 27

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their position in the market. Above all, however, the large players have changed strategies, entered new markets or formed alliances which give much faster and more dramatic changes as well as a more scattered picture than in the monopoly days. In general, the new intermodal operators are found in the northern part of Europe and in particular in the large market for hinterland transport of maritime containers related to the large ports. The comparison reveals that the national railways have widened their scope, that less intermodal operators sell directly to shippers and that the forwarders’ mediating role is strengthened.

Capital for intermodal equipment is found to be a major barrier for EIT operators (Golias and Yannis 1998). For a long time, rail wagons have been leased, but companies offering traction services, often with a short-line origin and leasing of locomotives, play a new and vital role in lowering the entry barriers for new entrants.

Moreover, a political discussion on whether terminals should be part of the infrastructure or of transport operations is initiated. This distinction

28 Intermodal transport operations

Source: Statistics from the operators and Eurostat (2002).

Figure 2.8 Major European intermodal transport flows in 1999 (flows exceeding 40 000 TEU/year), domestic flows (figures) and international bilateral flows (lines)

1350

900 (est.)

1000 (est.)

190

460

910

CH: 40

400

50 000 TEU

100 000 TEU

200 000 TEU

400 000 TEU

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is crucial under the current EU regulatory framework, in which infra- structure is a government concern while operations should be open for com- petition. It might well end in a situation where the fixed terminal installations are supplied by public infrastructure providers at a marginal social cost, while the terminal operation is up for tender and commercially charged.

The statement that ICT is most essential to forwarders is in line with con- temporary research by Patterson et al. (2003), who conclude that new ICT systems are more likely to be adopted by large and also by decentralized companies, rather than by small ones and hierarchies. It is then logical that the adaptation of ICT in the transportation sector is led by the large for- warders and neither by the small hailers nor by the hierarchic railways. Golob and Regan (2003) find that road transport companies operating large fleets are more likely to adapt ICT like EDI than, interestingly, those engaged in EIT.

Still, ICT systems are not unimportant to railways and hauliers. Applications making their own production and administrative processes more efficient, exchanging orders and billing information with the coordi- nating actors and supplying them with tracking and tracing data, are useful. Lack of tracking and tracing systems has often been argued to be the main competitive disadvantage for EIT, but just adding that capability will not solve all reliability issues. Tracking and tracing systems can only mitigate the consequences of reliability problems, not remove them.

The merger of Figures 2.1, 2.2 and 2.4 focusing on activities, actors and resources respectively results in the system model in Figure 2.9.

Concerning train operations, there is obviously no point in plying termi- nals when the train is already full with ILUs bound for a single terminal, but the question that arises is: how large are the flows needed for the shuttle

Intermodal road–rail transport in the European Union 29

Figure 2.9 Results of a system analysis of the intermodal transport system applying the network approach

pre-haulage haulier lorry

transshipment terminal operator

terminal

sea transport shipping line

ship

coordination of the core of intermodal transport intermodal operator

ICT system

coordination of intermodal transport forwarder or shipping agency

ICT system

rail haulage rail operator and leasing company

rail engine and wagons

transshipment terminal operator

terminal

post-haulage haulier lorry

Legend: activities, actors, resources

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train services and how are market coverage and train frequency affected? As a dedicated freight rail network emerges (European Commission 2001), ‘night-leaps only’ will be abandoned by sensible operators that do not allow trains to stand idle at terminals during the daytime. ICT improvements will facilitate flexible timetables for freight trains.

Attempts at lowering marginal costs by increasing train sizes are limited by the infrastructure, and increases must be matched against departure fre- quency and transshipment productivity gains (Ballis and Golias 2002). It is vital for the competitiveness of EIT that services with different character- istics can be co-produced (Trip and Bontekoning 2002) and the integration of different and flexible network designs can facilitate the utilization of economies of scale. For example, Liu et al. (2003) prove that hybrids of operating principles can save at least 10 per cent of the travel distance in consolidation networks, an issue also addressed by Houtman (2002).

Shippers usually argue that poor price and quality performance prevents them from using EIT (Ljungemyr 1995; Ludvigsen 1999), and that a sub- stantial cost and/or quality leap, primarily regarding frequency and relia- bility, is necessary to improve the competitiveness of EIT (Konings and Kreutzberger 2001). The cost components obviously differ between the countries and companies, but the high proportion of fixed costs compared to unimodal lorry transport implies a break-even distance of 400–500 km. The PPH often constitutes 40 per cent of the total cost and the transship- ment some additional 20 per cent (Persson 2003; Bergstrand 2001). The competitive disadvantages are particularly distinguished in border-crossing relations due to technical and organizational interoperability problems between the national rail systems. Substantial improvements have been achieved through the change towards shuttle and block train designs, but the most effective improvements have been obtained through an improved interorganizational cooperation between the European rail authorities (Vleugel et al. 2001; Hansson 2003).

From a supply-side perspective the main barriers for further growth of EIT are related to infrastructure, such as a lack of spatial coverage and ter- minals, insufficient infrastructural interoperability, some missing links and bad access to attractive slots. The lack of standardization of ILUs, infor- mation systems and administrative procedures are also hampering, as well as the remaining lack of competition for rail traction, despite EU efforts (Henstra and Woxenius 1999). The problems related to ILUs are acknowl- edged by the European Commission (2003) when proposing the European Intermodal Loading Unit, the EILU, combining the benefits of the ISO container with those of the swap body.

Demand for environment-friendly transport will affect the demand posi- tively, but EIT cannot solely rely on its ‘environmental friendliness’ (IFEU

30 Intermodal transport operations

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and SGKV 2002). Once lorry engines can be made more energy-efficient and the discharge of emissions lessens, their currently superior operational efficiency might actually also make them superior from an environmental perspective. Moreover, on a local level, neighbours to intermodal terminals protest against the increased local traffic and related disturbances (Slack 1999). This implies that some present terminals have to operate during restricted hours and others have to be relocalized. New terminals will be built outside city centres or be designed for less noise emissions.

Nevertheless, the key to a prosperous EIT sector actually lies in the com- peting unimodal road transport sector. Governments clearly state that investments in roads to cope with increasing vehicle flows will not be real- ized, and road hauliers threatened by congestion will turn to the tracks to fulfil their promises for fast and reliable service.

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