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Weekly UpdatesRail Freight Technical Elements
Rail freight as a mode of transport is technology- and safety-driven and consists of technical, organizational, and institutional elements such as the availability of a rail infrastructure and the dependency on capital-intensive assets (e.g., Affuso 2004; Cantos 1999; Jensen 2003). The condition and quality of these elements is crucial for operating freight trains efficiently.
Figure 1 and Appendix A exemplify the current lack of harmonization among the European rail infrastructure and corresponding equipment. Each country has instituted its own safety system, which will eventually be replaced by a European-wide system called the European Train Control System (ETCS) and the overall system European Railway Traffic Management System (ERTMS). The acronyms in the figure indicate the systems operated.
The rail infrastructure of European countries differs with respect to track conditions, gauge, signalling system, type of current, and facilities, which has implications for the development of a pan-European rail freight network.
These different infrastructures impede efficient domestic and cross-border rail operations, such as the level of maintenance, construction projects, or the upgrading requirements for interoperability. Infrastructure projects require considerable investments. New rolling stock is slowly becoming available to deal with the technical impediments. Appendix B shows a list of new locomotive configurations with adaptations to comply with multiple systems, enabling uninterrupted cross-border, cross-system operation.
RFTCs are likely dependent on the other stakeholders in the rail freight industry to alter the pace of asset development, infrastructure projects, or legislation issues. Most of these projects are considered long-term, and RFTC initiatives in this area will be unlikely to alter the pace in the short term. These elements, however, are considered factors that affect service levels in rail freight as they may impede the ability of rail freight companies to operate trains efficiently.
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Research question 1: How can rail freight elements contribute to improved rail freight services?
Road Transport
Road transportation represents a highly competitive industry with low concentration, low barriers to entry, intense price and service competition, and adequate returns on assets. Productive resources are efficiently used within the industry, and are free to flow between a certain industry and other industries in the economy (Dennis 1991). Major strengths of road transport include the ability to deliver door-to-door, which emphasizes the flexibility in routing and diversion, and the ample availability of standardized load units that are not capital-intensive, contributing to low unit costs (Affuso et al. 2003; Janic 2007). The road transportation industry is primarily comprised of small national and regional carriers that can be divided into truckload (TL) and less-than-truckload (LTL) firms. LTL firms carry many small shipments from many origins to many destinations. They collect many small shipments at the origin, sort them, transport them to the destination, and resort them for final delivery. LTL firms dominate the market for road transport and, in contrast to RFTCs, appear to have already made the transition to an integrated pan-European network. Road carriers are represented by various lobby groups in public and government circles, where transport issues are debated. Currently, issues such as the introduction of larger vehicles (introduction of three bottoms instead of two bottoms), the relaxation of restrictions on driving hours, and the construction of more highways are being debated (DBLogistics/Railion Germany 2006; Mercer Management Consulting 2005).
In spite of the advantages of road transportation, important negative externalities are generated in terms of environmental and social costs (Ribbink et al. 2005). Road transportation increases the use and over-use of motorway networks, worsening congestion problems in some areas. Initiatives to limit traffic growth in towns are favorite arguments put forward by environmentalists, motorists, and local residents because two-thirds of motor vehicle and truck emissions take place in urban areas. In Europe, heavy-duty vehicle emissions are said to be more than eight times higher than rail freight, while road transport as a whole accounts for one-third of the total energy use (OECD 2005; Miller 2007).
The situation in which one or more road carriers provide the short haul pick-up and delivery service part of the trip and one or more RFTCs provide the long haul or line-haul service is called intermodal rail-truck service (Harper and Evers 1993). More specifically, intermodal services mean the movement of goods in one and the same load carrying unit, which successively uses several transport modes without the handling of goods under transit. The structure of freight solutions consists of single modal (i.e., road carrier or RFTC) and intermodal transit (i.e., road carrier and RFTC, short sea ferry and RFTC, ocean shipping liner and RFTC, and ocean shipping liner, RFTC, and road) (Ludvigsen 1999). The development of intermodal services is viewed as a major solution for solving the congestion and environmental issues of road transportation. Without the willingness of multiple modes to look for cooperation, the development of intermodal services may remain limited. Successful intermodal transport in Europe involving rail can be characterized as "niche" markets, mostly consisting of long-distance traffic (at least 1,000 km to 1,200 km), specialized or concentrated flows, or services with particular challenges such as Alpine routes and the transportation of dangerous goods (Lewis et al. 2002). Hence, research question 2.
Research question 2: How can road carriers contribute to improved rail freight services ?
The Role of Government
In the United Kingdom (UK), the first market that liberalized its national railway, a lack of political will and funds to promote efficient and effective freight systems were seen as important reasons for rail freight not evolving in the expected ways (Haywood 2003). Operations were perceived as inflexible due to fixed capacity constraints on the infrastructure and the business being capital-intensive (Casson 2004). Due to underinvestment in the rail infrastructure in the past, economic growth in Central and East Europe is expected to cause a significant increase in road transport, prompting significant investments in the road infrastructure. There appears to be no consensus among EU countries about the way the infrastructure for rail and road transportation should be further developed. Most countries agree that the development of rail should get priority, but newcomers like Poland and the Czech Republic invested in road rather than rail (Lewis 2000; Stehmann and Zellhofer 2004). Innovative policies and technologies promote integrated transport chains (Arnold 2004).
Projects that have gained special attention within the EU include the development of intermodal/combined transport, the construction of dedicated railways, and the establishment of a European rail regulator with the responsibility to oversee revised EU policies. Efficient intermodal transport so far has proven to require commitment from all parties involved.
Problems on commercial, technical, and operational levels have contributed to marginal progress on intermodal transport (Ballis and Golias 2004). A structural commitment for the development of dedicated railways is difficult to achieve. A recent example of the dedicated rail freight corridor is the so-called "Betuwe" line in the Netherlands, with a length of 99.4 miles, connecting the port of Rotterdam to the Dutch-German border (Van Ierland et al. 2000; Ribbink et al. 2005) and the construction of some intermodal terminals with rail access in Germany, Switzerland, and Italy (Wiegmans et al. 2007; Gouvernal et al. 2005). The actual EC policies and directives that stimulate the use of rail freight or the measures that further reduce road transport do not indicate major changes in the near future. The role of government and public opinion is therefore considered a factor that may affect the service levels in rail freight as the production of acceptable service levels may depend on political commitment and mutual understanding to increase the use of freight rail (Bontekoning et al. 2004; Miller 2007). These factors lead to research question 3.
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Research question 3: How can government policies and practices contribute to improved rail freight service?
Customer Orientation
Detailed understanding of the quality structures demanded by customers, groups of customers, and market segments is required to develop effective strategies for quality enhancement (Ludvigsen 1999). In such ongoing processes, intelligence about the modal choice process, supply chain management, and relationship marketing should be gathered and the outcomes should be used for strategy selection and service development. Market segmentation is considered key to pricing and revenue, with different market sectors in a position to pay differing amounts for a very similar service (Harris 1999). Linking services to market segments allow carriers to differentiate themselves from other transport providers and enables it to position the company in the market with respect to competition, covering costs, and maximizing net revenue for each individual activity (McGinnis 1990).
The increase in cross-border traffic is expected to result in growing demands for protection against theft and damage. Both are difficult to insure and may lead to a situation in which only providers who can monitor all security requirements are selected. Intelligence about customer's market requirements such as the position of the hub (one central, a number of regional, or a combination of both), the required delivery times, the origin of goods, handling of the goods, or phase in the product lifecycle, would give RFTCs a better understanding of customers' perceptions and about influential factors that are of importance for managing the entire supply chain.
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