In 1991 the European Commission (EC), the legislative body in the
European Union, initiated the liberalization process of the European
railways (EC 2001). Its aim was to promote and develop rail freight and
intermodal services as an alternative for and in addition to road
transport, to cope with growing environmental and congestion problems
(Wiegmans and Donders 2007). One of the EU Council Directives (91/440)
requires separate accounting systems for the fixed infrastructure and
rail operating equipment. In the years following, many European railways
were split into track operating companies (e.g., NetRail in the U.K.,
ProRail in the Netherlands, and DBNetz in Germany), and separate
passenger and rail freight transport companies (Haywood 2003). With
liberalization, new rail-based transportation companies could enter the
European rail freight market and start competing with incumbent RFTCs
and other modes of transport, allowing in higher rail freight volumes
and decreasing costs (EC 2001, Holvad et al. 2003).
However, in spite of EC policies and directives, the share of rail
freight in the total volume of goods transported seems to have
deteriorated. In 2002, nearly 44 percent of the freight flows in Europe
were transported over road, 41 percent over sea, 8 percent over rail,
and 4 percent over inland water. Road carriers transported over 80
percent of the total volume of goods over land, while rail carried 13
percent, versus 18 percent in 1999. In 2003, the share of rail cargo had
further diminished to 8 percent. Although the absolute rail freight
volume is increasing slightly, the modal share is still declining (EC
2001, EC 2006). The EC has since stressed the urgency to alleviate
national impediments to ensure uninterrupted cross-border trade
movements (EC 2005).
Recent studies about European rail freight transport addressed
efficiency, productivity, and benchmarking (e.g., Hilmola 2006, Wiegmans
and Donders 2007), and intermodal opportunities (e.g., Tsamboulas et al.
2006). Our study includes perceptions of different stakeholders on
European rail freight transport services and also the challenges faced
by new operators. These services include not only transporting goods
from point A to B by employing shuttle trains, mixed and unit trains
(Wiegmans and Donders 2007), but also the handling and storage of rail
freight and various value-added distribution services (Hesse 2006).
RAIL FREIGHT TRANSPORT IN EUROPE
The Role of Incumbents
Trains must run on a variety of infrastructures in Europe. In port
zones, industrial zones, or around bigger cities, spatial planning is
not in line with the efficiency of terminals (Ballis and Golias 2004).
Insufficient availability of assets impedes the efficient running of
freight trains. Train operations require assets such as locomotives,
freight cars, and loading/ unloading facilities. The availability of
locomotives is considered particularly problematic. Traditionally,
incumbent RFTCs have been the owners of rolling stock and are considered
the specialists in the areas of production, operations, and maintenance
(Rosen 2004). The liberalization process urged incumbents to adapt to a
new role, competing with new entrants including foreign incumbents. In
that new role, the incumbents have been reluctant to lease, rent, or
sell their country-specific assets to new entrants (Debrie and Gouvernal
2006). New entrants face a situation where the availability of rolling
stock is scarce due to country-specific requirements, thus hindering the
efficient operations of freight trains. Operating trains in different
countries also requires the modification of rolling stock; locomotives
for domestic traffic are not automatically suitable for cross-border
traffic. Until recently, only a few diesel or electric locomotive types
have been available for purchase or lease, and few entrants had the
financial strength to invest in new rolling stock.
The Role of Manufacturers
Rolling stock manufacturers face difficulties in adapting to their
new role as asset suppliers in a liberalized rail freight market (Rosen
2004). Manufacturers were used to dealing with only a few European
incumbent national rail companies, often from the same cultural
background (Holvard et al. 2004). National rail companies placed large
orders. Designs were made in close cooperation with incumbents. These
incumbent-specific assets were employed mainly in domestic traffic. The
new situation required doing business with more and different players:
new entrants, leasing companies, or incumbents, requiring that the
assets could operate under at least one but preferably under four
different systems (Cantos 2002). The assets should be delivered faster
than the customary twelve to eighteen months, and maintenance packages
and other relevant services were expected to be included in the
purchase. These changes in demand, with the requirement of cross-border
operations, have put considerable strain on manufacturers (Stehmann and
Zellhofer 2006).
Availability of Resources
New entrants typically lack a number of rail-freight-specific
attributes (e.g., maintenance facilities, experience, assets, and
specialized personnel). A critical issue has been the availability of
specialized personnel such as loc-drivers, operators, and maintenance
people who were required to operate trains efficiently. Initially, new
entrants found it difficult to attract qualified personnel since people
working for incumbents were reluctant to leave their secure jobs (often
for the national rail systems, with many benefits). Another example of
insufficient resources are rolling stock manufacturers that failed to
deliver the rail wagons at the agreed date and DB Netz, the German
infrastructure manager, repeatedly failed to upgrade the track on time
(Schnell 2002). Few RFTCs had received capital guarantees from their
parent companies, which would prefer to let the RFTCs go bankrupt rather
than "throw good money after bad" into rail freight (Casson
2004).
Influence of Government Policies
Elements impeding the efficient operation of freight trains include
the priority of passenger trains over freight trains on existing
corridors and the lack of dedicated rail freight corridors. There are
also government imposed limits to the length of freight trains as to
pulling a maximum number of freight cars. Different track charges exist
and there are different regulations between domestic and international
networks (Rosen 2004). Carriers' legal liability for accidents or
noncompliance with national regulations or standards are still in need
of clarification (Stehmann and Zellhofer 2004).
The government itself needs to adapt to the changing circumstances.
An illustrative example is the German regional rail passenger market
after regionalization. Authorities on different levels are without
experience and need to acquire knowledge about these new entrants. New
entrants require formerly government-regulated resources and
capabilities such as rolling stock and trained staff (Schnell 2002).
Marketing Strategies
Customers appear unconvinced about the advantages of rail for their
transport requirements (Ribbink et al. 2005). Also, rail freight
carriers are still in the process of becoming viable transportation
partners. RFTCs appear to have difficulties in all matters involving
relationships with customers and competing modes. Demand for and the
supply of rail freight is in the hands of a limited number of dominant
companies, resulting in a high potential for conflict (Taylor and
Jackson 2000).
New entrants into the rail freight market, while contributing to
increased competition, may have negatively affected the marketing of
rail freight services with an emphasis on freight rates instead of
improved service levels. In their start-up phase, entrants rely on
freight from shareholders or from unique market niches, while incumbents
that have already obtained economies of scale carry freight that has
always been transported by rail (Harris 1999).
RESEARCH OBJECTIVES
The following problem statement is formulated:
How can European RFTCs improve rail service levels and ensure their
long-term viability?
Based on a review of literature and supported by insights of recent
European conferences on the topic, i.e., DBLogistics/Railion Germany
(2006) and Mercer Management Consulting (2005), four areas of improving
rail service levels have been identified: the rail freight technical,
the road dominance, the role of governments, and the customer
orientation.
The first area is technical. Rail freight is technology-driven,
capital-intensive, and dependent on a rail infrastructure, which makes
its use complex and the barrier to entry high (Casson 2004). The second
area relates to the dominant position of road transport, as its
flexibility (e.g., door-to-door transport) usually attracts larger
freight volumes, except for specific cargos (Arnold et al. 2004: Nijkamp
1994). The third area relates to the priority of rail freight in local,
regional, national, or European governmental policy. More commitment or
understanding from governments for rail freight may have a positive
effect on public opinion that will help to better represent the
interests of rail freight (Arnold et al. 2004). The fourth area involves
the customer orientation of RFTCs and customer willingness to see rail
as a viable partner in freight transport.
APPROACH
The four areas--rail freight technical elements, road (dominance),
the role of government, and customer orientation--are first discussed in
detail, and research questions are formulated. The methodology is then
explained, which consists of a survey of both RFTCs and other logistics
service providers (LSPs), augmented by additional interviews with other
stakeholders such as shippers and government officials. Then, the
findings are discussed and conclusions and recommendations are
presented. Finally, limitations and suggestions for further research are
provided.
Rail 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.
[FIGURE 1 OMITTED]
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.
[FIGURE 2 OMITTED]
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.
Relationship marketing is considered a people business; the
intention to jointly solve problems and to be concerned about the other
party's success is likely to improve the buying organization's
service rates by increasing on-time deliveries and shortening lead times
(Morris et al. 2005). As RFTCs move towards longer-term relationships
with shippers, LSPs, or other modes, the strengthening of (potential)
customers' confidence in their services is important. Firms that
focus on providing logistical services that satisfy customers will
nurture long-term commitment and repurchase intentions (Daugherty et al.
1998). RFTCs will likely focus on reducing uncertainty (unpredictability
of processes) and increasing cooperation (goal alignment aimed at
improving relationships) in their relational exchanges, rather than
attempting to reduce the propensity to leave (likely continuity of the
relationship) or increase supplier acquiescence (willingness to
accommodate to changing needs) (Evers and Johnson 2000).
RFTCs' initiatives aimed at a better understanding of their
customers' modal choice processes, supply chains, or relationships
with (potential) customers may affect service levels in the short term.
These factors lead to research question 4.
Research question 4: How can more customers benefit from improved
rail freight services?
[FIGURE 3 OMITTED]
METHODOLOGY
Questionnaire Design
A two-part questionnaire was developed for this exploratory study.
The first part contained twenty-five questions assessing perceptions of
RFTCs regarding the service levels offered, the perception of their
customers, and the effect that their own initiatives might have on
service levels in the short term. The second part contained twenty-five
questions assessing RFTCs service levels on their most serviced/high
frequency routes.
The questionnaire was mailed to 138 principal executives (managing
directors, commercial directors, or fleet managers) of an estimated 250
European major RFTCs (HIDC/ NFIA 2003). This group consisted of traction
providers and traction providers that offered logistics services
(rail-asset based LSPs), incumbents as well as new entrants. The number
of usable responses was 42, obtained from 31 RFTCs (of which three were
incumbents), for an effective response rate of 30 percent. Eleven
respondents answered the second part of the questionnaire. Respondents
not having answered the questionnaire received an e-mail reminder three
times and a one-time telephone reminder. The questionnaire was sent out
in April 2006.
An adapted version of the questionnaire was also sent to 113
truck-asset LSPs and non-asset LSPs to assess their views on rail
freight, and if they made use of rail freight, assessing what RFFCs
should do to increase their use of rail. Twenty-six of thirty-three
respondents indicated that they had no experience with rail freight or
had no intention to use rail freight operations in the short term.
To complement the survey, in-depth interviews were held with
principal executives from five road carriers, five LSPs (three
truck-asset-based LSPs and two non-asset-based LSPs), five shippers who
were considered potential customers of rail freight services, and with
three officials from governments (one national, one regional, and one
local). The interviews were held between April and July 2006. FINDINGS
Differences among Stakeholders
RFTCs appear satisfied with their own performance and specifically
with their service levels. On a 5-point Likert scale with scores ranging
from "excellent" to "poor," the majority of RFTCs
evaluate all items as "good" and market knowledge and
flexibility/adaptability as "excellent." Nevertheless, they
admit that a variety of issues cause problems that affect their service
levels; they were reluctant to divulge relevant information, such as key
performance indicators like train productivity or tonnage carried,
claiming confidentiality. Confirmation of what constitutes
"acceptable levels" was difficult to obtain during the
additional interviews.
Within the group of RFTCs, traction providers were generally more
positive about their service punctuality, damage handling, project
capability, innovation ability, and cost perception than rail-asset
LSPs. Most respondents were satisfied about the service levels that are
achieved on their high volume routes, which usually include
international connections with Germany as important points of departure
and/ or destination. A few traction providers and non-asset-based LSPs
were critical of the levels of service punctuality, reliability, and
cost perception.
Contrary to the rail-bound RFTCs, truck-asset-based LSPs indicate
that they have only a limited understanding of rail freight, but confirm
that the future of road is likely to change. They fear the position of
rail as it may take business away from them. Some have taken action to
start or at least study the possibility of cooperating with rail. The
position of non-asset-based LSPs is similar, but they appear to have
more experience with rail freight. Those with significant rail freight
volumes appear to be more satisfied than those without.
The shippers that deal directly with RFTCs claim to be satisfied
with the performance of these rail freight companies. The shippers
managing in-house logistics have no opinion about rail freight, but seem
to be open for alternative modes of transport.
Rail-asset-based LSPs emphasize efficiency with respect to specific
rail issues, cooperation with other modes, and a flexible attitude of
the RFTCs towards the interfaces of these modes, image building and
awareness towards the government and the public at large, and improved
customer fulfillment.
The responding regional and local government officials seemed
unaware of the ongoing harmonization of EU efforts and developments that
concern rail freight and communication issues to promulgate policy
initiatives to all levels of government.
Rail Freight Technical Elements
How can rail technical elements contribute to improved rail freight
services?
Many issues seem related to assets and other equipment that
significantly affect the service levels of RFTCs. In the area of
information technology, obtaining more and better information and
improvement of communication capabilities are considered important
initiatives that could affect service levels. Increases in equipment
productivity are the most important initiative in the area of
productivity and operations for RFTCs.
RFTCs tend to emphasize a "corridor strategy" on the
development of long trains, the construction of large terminals or
shunting infrastructures, with the aim to bundle transport flows on a
few corridors and terminals, where economies of scale can be achieved.
Traction providers favor the establishment of new partnerships because
company size is considered a major condition for continuity and
reliability.
According to respondents, RFTCs could start a number of initiatives
that may affect the service levels in the short term. Initiatives in the
area of marketing include improvements in personal selling with a focus
on expansion to new markets and on the definition of target customers.
RFTCs indicate that more specific, internal training programs, a change
in management style and labor relations, and professionalism in
frontline supervision may improve service levels.
By carefully selecting a number of strategies that are aimed at
revenue and cost efficiencies, RFTCs may be able to increase service
levels (Mancuso and Reverberi 2003). Strategies that help a company to
achieve its objectives usually consist of a network of relationships,
including customers, suppliers, communities, government, and businesses,
who interact with and give meaning to it (Henscher and Brewer 2001).
Strategies that support a differentiated approach may enable RFTCs to
standardize certain processes in one or more defined market segments,
resulting in acceptable service levels.
Road Transport
How can road carriers contribute to improved rail freight service?
RFTCs perceive freight rates and to a lesser extent available
capacity, reliability, and total journey time as typical strengths of
road transport, in addition to the ability to deliver goods door-to-door
(or the flexibility) of road transport. To compete with road transport,
respondents emphasized that further development of frequent
point-to-point services, guaranteed delivery times, one-stop-shopping
facilities, and uninterrupted (international) services are necessary for
reaching acceptable service levels. Offering additional logistics
services are required, especially network facilities and feeder
services. Handling services and loading/ unloading services are
considered less important (Stank and Stephenson 1995). LSPs consider
development of integrated logistics concepts more useful to affect the
service levels than traction providers, who consider shuttle and haul
operations as their core businesses.
Traction providers seem hesitant to become involved in services
other than transportation. However, RFTCs are generally interested in
cooperating with road carriers or truck-asset-based LSPs as they
recognize the strengths of road transport and admit that combining both
modes may affect the service levels in the short term. Cooperation such
that rail freight is responsible for the line/circle haul function and
road for the feeder function is an example.
The Role of Government
How can government policies and practices contribute to improved
rail freight services?
Respondents expect that further EU regulations to reduce road
transport will only lead to a marginal increase in rail freight. New
entrants primarily indicate that they will probably not be able to
handle a considerable increase in volume due to a variety of reasons.
These reasons include the scarcity of suitable assets, the state of the
infrastructure, and the severe competition between RFTCs and between
other modes, resulting in difficulties to achieve adequate performance
(Miller 2007). Incumbents and larger new entrants appear more
comfortable with handling a considerable growth in volume.
Two situations were mentioned by respondents, in which local and
regional governments could have facilitated rail but failed to do so.
The first situation relates to three multinationals that would like to
have access to an inland water terminal to be constructed. Public
discussion evolved around a new road to be constructed to provide access
to an inland terminal (Bergen op Zoom--Netherlands). A rail track that
is dormant, but readily available, was hardly considered in the
discussion. Government officials involved in this project appeared
unaware that rail could be an alternative. The multinationals, some of
which had earlier experiences with rail freight, appeared not to
consider rail for this project as well. A second situation involved a
major connection between a significant port in one country, Belgium, and
an economic center in another country, Germany, that can be reached only
through a third country, the Netherlands, the so-called Iron Rhine near
Roermond in the Netherlands (Etienne et al. 2003). The Netherlands
appears unwilling to modernize the infrastructure, since it would affect
the competitive position of the main Dutch Sea Port Rotterdam and
benefit its primary competitor the Port of Antwerp, Belgium.
The general public appears to be ignorant about projects until
political decisions are made and various media sources pick up the news.
Customer Orientation
How can more customers benefit from improved rail freight services
?
RFTCs use a combination of communication tools such as personal
selling, Web portals, conferences, advertising, direct marketing, and
exhibitions to inform the market about rail freight services. In spite
of these tools, most RFTCs think that within a distance of 25 km from
the most frequented route only few potential customers have knowledge
about RFTC transportation services. On average between 1 percent and 5
percent of the company's turnover is allocated for sales and
marketing activities. Most RFTCs indicate that they have one employee
dedicated to commercial tasks like gaining new freight contracts or
keeping current ones, while the larger RFTCs have four persons dedicated
to these commercial activities. RFFCs generally are of the opinion that
their customer base is large enough to achieve the company objectives
and to operate freight trains as efficiently as possible. RFTCs on the
most frequented routes serve fewer than five customers and traction
providers fewer than three. The customers that are served on the most
frequented routes represent a mix of shippers, asset-based LSPs,
non-asset-based LSPs, road carriers, and other RFTCs.
The management of information flows, customer relations, and
supplier relations are considered important initiatives in the
improvement of current processes and flows in the supply chain (Evers
and Johnson 2000). Respondents perceive focus on reliability,
development of strategic alliances, initiating commercial activities,
effective communication, marketing planning, increases in capacity,
attractive freight rates, industrial containerization, and the ability
to combine freight flows as pragmatic initiatives for developing new
business (Stank and Roath 1998).
Table 1 summarizes the results for each of the major categories of
investigation.
Observed Inertia
RFTCs appear generally satisfied with their own performance and
believe that their own initiatives affect service levels. They tend to
offer undifferentiated services based on a traditional market approach.
Substantial growth in the volumes of rail freight is seen as
problematic. Truck-asset-based or non-asset-based LSPs have no or
limited understanding of rail freight opportunities. Small and
medium-sized road carriers believe that rail cargo may endanger their
very existence. As long as road is the most popular mode of transport,
initiatives to include rail in freight movements are not likely. Some
shippers still seem to think that rail freight is controlled by
state-owned rail companies.
However, the different stakeholders appear to agree on a need for
door-to-door focus, cooperation between modes, and increased
efficiencies. Government policies can promote rail freight through
improved infrastructure projects and awareness building. Better
understanding of customers and their supply chains and utilizing road
and rail capabilities will likely benefit more customers.
CONCLUSIONS
How can European RFTCs improve rail freight service levels and
ensure their long-term viability?
RFTCs have started various initiatives to improve service levels in
the short term. These initiatives mainly cover rail freight elements.
Optimizing the utilization of assets and the preparedness to start or to
intensify cooperation with road carriers are most frequently mentioned.
Other initiatives include increasing flexibility and management
capabilities, focusing on personal selling or other communication
methods to increase sales, and developing intermodal concepts as well as
other routes.
The most preferred strategy by RFTCs involves a mix of cooperation
and competition. An RFTC cooperates with another RFTC on certain
destinations, but competes with the same RFTC on other destinations.
Most incumbents and larger new entrants still prefer a stand-alone
strategy, although some indicate that cooperation is needed eventually.
Smaller new entrants must become financially stronger to survive and
become viable partners (Stehmann and Zellhofer 2004). New entrants are
considered key in improving rail freight competitiveness.
The study revealed that synergies were created by close cooperation
among shippers, LSPs, and RFTCs, enabling the transfer of a larger
quantity of freight to rail, including the involvement of road. Traction
providers seem reluctant to focus on understanding the customer supply
chains.
Further restrictions on road transport will lead to increasing
pressure on rail freight and will likely affect service levels
negatively. Most RFTCs are not yet ready to handle a considerable
increase in freight volumes. The largest freight volumes involve road
transport. Increasing rail freight volume will most likely not be
achieved by competing, but by cooperating with road carriers.
RECOMMENDATIONS
All projects related to the development of assets, infrastructure,
and other rail freight elements should be continued. The availability of
cross-border assets, extension and improvement of the infrastructure,
and pan-European arrangements in rail freight will help RFTCs improve
their service levels. RFTCs must take more responsibility for improving
service levels.
RFTCs should begin stronger lobbying efforts for rail freight on
local, regional, national, and international levels. They should also
start using market segmentation and strategy techniques to differentiate
their services from other providers and should deliver these services to
selected target groups. Communications with these target groups should
be intensified, as substantial numbers of potential customers are still
unaware of the strengths of rail freight. Road firms appear to be
unaware of the strengths of rail freight and in many aspects perceive
rail as a threat. Initiatives in this field will certainly create
awareness and may lead to initiatives that result in serving the final
customer instead of focusing on competition. European initiatives should
be communicated to national, regional, and local governments, and
different levels of government should link up to make the various
isolated rail projects a success. Better communication would likely
foster awareness.
LIMITATIONS AND FURTHER RESEARCH
This study was exploratory in nature, comparing the perceptions of
a diverse group of stakeholders on how rail service can be improved. The
majority of the RFTC respondents surveyed can be considered new
entrants. These RFTCs are more likely to focus on service levels than on
efficiency, in contrast to studies that are primarily incumbent-focused
(e.g., Wiegmans and Donders 2007).
Most respondents appeared hesitant in providing information about
both perceived value, such as customer satisfaction surveys, and
financial value, such as operational effectiveness, customer growth, and
financial results. The use of dedicated rail freight corridors is still
limited in Europe, but steadily increasing. In the future, RFTCs will
likely gain in importance compared to other transport modes in
exploiting these corridors, and with it the perceptions about the role
of RFTCs.
Further research may examine the range of customer-focused services
desired, and the facilities required for rail transport to provide such
service. Another avenue for further research could be the extent to
which developments such as new train configurations support the shift
from raw materials to (semi)finished products transport, in line with
Hilmola (2006). Also, the effect of growing intermodal transport on the
acquisitions and mergers of transport companies, as well as the role of
venture capitalists in the strategies of the FTCs, is an interesting
topic for further research (Hilmola 2006; Tyrrall 2003). The procurement
of rolling stock, time-to-build aspects, and the role of supplier
development in a liberalized market also warrant further research
(Debrie and Gouvernal 2006; Stehmann and Zellhofer 2004).
Appendix A. Rail Freight Elements in Europe
Technical elements
5 major DC
Line voltages 0.75kV 1.5kV 3kV
UK (south) NL B
F (south) CZ (north)
E
I
NE Europe
PL
Slow (south)
Many Automatic A B CH
Train Protection Indusi, LZB TBL, RPS Signum, ZUB
Systems (ATP)
DK E F
ZUB 123 Ebicab 900 TVM, KVB
Lux N NL
Indusi pzb/lzb Ebicab 700 ATB eg/ng
S Slow SU
Ebicab 700 Mirelle Ebicab 900
Nr of different 8
catenaries
Nr of different 4
Loading gauges
Technical elements
5 major AC
Line voltages 15kV 25kV
A CZ (south)
CH DK
D F (north)
N H
S P
SE Europe
Slow (south)
SU
UK (centr