Collaboration the Key to Intermodal Growth in Europe?

By Dr. Milos Milenkovic

In Europe, shifting freight away from road and towards rail transportation is seen as a way to reduce the carbon footprint of logistics operations and ease chronic traffic congestion problems.

Using rail as a component of intermodal transportation is especially promising as a carbon-reduction mechanism – but the mode has a reputation for being less attractive than road. The Smart-Rail project (Smart Supply Chain Oriented Rail Freight Services) is addressing the problem by improving information flows and promoting cooperation between intermodal stakeholders, and developing a more holistic approach to evaluating intermodal.

The project is partly funded by the European Union’s Horizon 2020 research program. The Zaragoza Logistics Center, Zaragoza, Spain, is a lead organization in a work package that is exploring innovative ways to achieve more cooperation among rail and non-rail supply chain actors.

Perceptual issues

Promoting growth in rail transportation – and hence intermodal moves that include rail – is hampered by negative perceptions of the mode.

Shippers often perceive rail as inflexible and unreliable; opinions that are reinforced by the fragmented nature of rail systems in Europe. These systems range from small, independent operators to large-scale, state-owned networks, with different business and operating models. The involvement of many public and private stakeholders such as infrastructure managers, rail operators, terminal operators and freight forwarders, compounds this complexity. A tendency for relationships between carriers and shippers to be adversarial exacerbates rail’s poor reputation.

Resistance to change within the rail industry also makes shippers less supportive of the mode. This is particularly true for large networks owned and/or operated by state entities, that are generally less flexible and opportunistic than smaller commercial operators.

In addition, the way intermodal transportation is evaluated by commercial users is often flawed. Intermodal transportation integrates different modes of transportation to provide the optimal logistics solution. Arriving at the best solution requires stakeholders to assess the efficiency and cost-effectiveness of the entire freight move. However, it can be challenging to develop such a systematic view, owing to a lack of communication between participant parties. In too many cases, shippers and logistics service providers (LSPs) base their decisions on a partial view of intermodal when choosing a transportation option for their freight.

Coordinator role

The Smart Rail project is tackling these issues on several fronts. The project’s overall objectives are fourfold:

• To promote a mindset within the rail sector that is oriented towards the customer and the supply chain.
• To create working business models that provide a platform for more cooperation between stakeholders.
• To develop both a methodology and an architecture for the exchange of data and information that help stakeholders to optimize their transportation choices. This work will make use of existing initiatives as far as possible.
• To establish three continuous improvement strategies in different markets and implement the associated tools, methodologies and concepts. Fulfilling this goal will involve the development of dedicated business models, information systems and rail services.

Improving the sharing of data and information is essential if these goals are to be met. Stakeholders that collaborate more closely are better informed about the pros and cons of intermodal, and better able to review this type of transportation systematically rather than in a piecemeal fashion.

A powerful way to foster such collaboration is to use the services of an orchestrator to facilitate inter-party communications. Such a role requires an objective enterprise with an intimate knowledge of rail and intermodal transportation, has an end-to-end supply chain view, and can promote the use of intermodal solutions through education. Fourth-party logistics service providers (4PLs) can fit this profile.

In the Smart-Rail project the role is fulfilled by Seacon Logistics, a European 4PL that operates a logistics control tower. The control tower functionality greatly enhances Seacon’s ability to function as an orchestrator, and to encourage vertical integration in the intermodal supply chain.

Service analyses

The orchestrator concept is the focus of LL2 - Control Tower, the living lab that is exploring the use of control towers in long distance rail freight transportation. The concept’s successful implementation also will benefit the other two living labs, which are looking at wagonload rail services (door-to-door delivery using specialized rail wagons), and how to maintain a reliable service when disruptions occur.

The latter living lab is researching transportation services in the Rhine-Alpine freight corridor, with an initial focus on freight movements between Rotterdam in the Netherlands and the Ruhr region in Germany. Three pilots are analysing service performance, the concept of using a hub in Rotterdam to for the exchange of freight containers, and short-term slot allocation in Germany. Reliability and flexibility are measured in terms of how data is exchanged, analysed and used.

There also are plans for a more in-depth analysis of key performance indicators (KPIs) in relation to the reliability and flexibility of rail transportation. The analysis will look at KPIs such as lead time and cost.

Pointing the way

The Smart-Rail project is scheduled for completion in April 2018.

One of the key deliverables is a model for governance and cooperation that connects rail operators, terminal operators, shippers and LSPs via an orchestrator 4PL empowered by an information sharing platform.

The project also will deliver a set of reports that provides guidelines for government agencies and other stakeholders on developing a framework for building collaborative relationships in intermodal logistics operations.

It is hoped that such a framework will provide a platform for the growth of intermodal freight transportation Europe – and more carbon-efficient supply chains.