d6.1 v1.0 choice of corridor and design of wagonload concept · smart-rail-d6.1-v1.0 smart supply...

Smart-Rail-D6.1-v1.0

Smart Supply Chain Oriented Rail Freight Services

GA No. 636071

Deliverable No. D6.1

Deliverable Title Choice of corridor and design of wagonload concept

Document ID


Dissemination level Public

Main Author Paul Melia - Railistics GmbH

Issue date

31 May 2016


Page | 2

BD rail services

Disclaimer and acknowledgement

This project has received funding from the European Union's Horizon 2020 Programme Research and Innovation action under grant agreement No 636071

Disclaimer

This document reflects the views of the author(s) and does not necessarily reflect the views or policy of the European Commission. Whilst efforts have been made to ensure the accuracy and completeness of this document, the Smart-Rail consortium shall not be liable for any errors or omissions, however caused.

Smart-Rail consortium


Page | 3

Document information Additional author(s) and contributing partners

Name Organisation

Udo Sauerbrey Railistics

Wolf-Dietrich Geitz Railistics

Matic Prosen Railistics

Olav Eidhammer TOI

Johanna Ludwigsen TOI

Joshua van Buuren Panteia

Petko Dimitrov ITC

Eric Demonsant BD Rail Services

David Krásenský ABIRAIL CZ s.r.o.

Michael Roggenkamp ederlog

Philipp Stoebke TankMatch Rail

Document Change Log

Version Date Comments

v0.1 4 Nov. 2015 First draft of document

v0.2 1 Mar. 2016 Revised version based on the input of WP6 Partners

V0.3 14 Apr. 2016 Revised version based on comments from Reviewers (ederlog, TankMatch Rail)

v1.0 17 May 2016 First final version, approved by Executive Board, (will be) submitted to EC.


Page | 4

Document Distribution Log

Version Date Distributed to

v0.1 4 Nov. 2015 WP6 Partners

v0.2 4 Apr. 2016 Reviewers for TOC Review (Michael Roggenkamp - ederlog, Philipp Stoebke - TankMatch Rail)

V0.3 6 May 2016 Reviewers for document review (Michael Roggenkamp - ederlog, Philipp Stoebke - TankMatch Rail)

V1.0 20 May 2016 Executive Board

Verification and approval

Name Date

Verification Final Draft by WP leader Mr. Udo Sauerbrey 20 May 2016

Approval Final Deliverable by coordinator

Mr. Paul Tilanus 23 May 2016


Page | 5

Executive summary

Based on the EU targets of shifting volumes to rail transport, this project aims to develop and to strengthen a Single Wagon Load (SWL) transport concept. The existing (classic) SWL services, represented mainly by the incumbent railway companies, have withdrawn from such type of services in many areas in Europe.

The intermodal transport as one of the drivers in railways has also replaced a lot of transport concepts in SWL and uses trucking for the distribution of goods in standardised boxes.

On the other hand several projects in recent years, supported by the EU and some member states as well as private initiatives have shown that railway transport is not necessarily limited to block train operations. Some of them, such as RETRACK are still existing and in operation and providing economically sustainable services.

One major background for this project is the still existing demand for rail transport services “smaller than block trains”. Only few industries are capable of filling frequently complete block trains. This leads to a steady demand for SWL services which is only partly fulfilled.

The “third-party” railways in Europe currently have almost no SWL offers as they face several general challenges.

- Areal coverage - International aspects - Fleet monitoring - ICT solutions - Production quality - Economies of scale, required critical mass

These aspects can be overcome if the services concentrate on certain commodities or corridors. Existing ICT solutions and well known marketing strategies can provide benchmarks for such opportunities.

The Work Package’s overall content is based on a transport corridor served by one of the consortium partners in France, from Marseille to Sélestat (Alsace). With this corridor as a basis, extensions into Germany, Belgium, and Switzerland will be developed and the overall transport “concept” communicated to shippers and interested cooperation partners. Case studies and marketing initiatives show the general feasibility of such services in operations and economies.


Page | 6

Table of contents

Executive summary ............................................................................................... 5

Table of contents ................................................................................................... 6

List of Figures ....................................................................................................... 8

List of Tables ........................................................................................................ 8

Definitions & Abbreviations ..................................................................................... 9

1 Introduction ...................................................................................................10

1.1 Background Smart-Rail .............................................................................10

1.2 Purpose of the document...........................................................................12

1.3 Document Structure .................................................................................12

1.4 Deviations from original DoW .....................................................................12

1.4.1 Description of work related to deliverable as given in DoW ......................12

1.4.2 Time deviations from original DoW .......................................................13

1.4.3 Content deviations from original DoW ...................................................13

2 Problem Analysis – The challenges that exist in SWL ...........................................14

2.1 Current state of SWL in Europe ..................................................................14

2.1.1 Introduction to SWL ...........................................................................14

2.1.2 The workings of SWL ..........................................................................15

2.1.3 The State of Play in European SWL Market ............................................17

2.2 EU Policy for SWL .....................................................................................19

2.3 The Potential for growth and improvement in SWL transport ..........................20

3 Literature Review ...........................................................................................23

3.1 Previous projects - Positive outcomes and failings ........................................23

3.1.1 ECOPMS (2013 – 2017) ......................................................................24

3.1.2 RETRACK (2007 – 2012) .....................................................................25

3.1.3 ViWas (FP7, 2012 – 2015) ...................................................................28

3.1.4 CREAM ..............................................................................................30

3.1.5 REORIENT .........................................................................................32

3.1.6 VEL-WAGON ......................................................................................33

3.2 Issues with SWL operations .......................................................................34

3.2.1 Operating capacity .............................................................................34

3.2.2 Fleet Management ..............................................................................34

3.2.3 International Aspect ...........................................................................35

3.2.4 Fleet Monitoring .................................................................................35

3.2.5 ICT Standards for SWL and Rail Freight ................................................37

3.2.6 Production Pattern ..............................................................................39

3.2.7 Costss and (dis)Economies of Scale ......................................................39


Page | 7

3.2.8 SWL Modernisation .............................................................................39

3.2.9 Customer’s choice ..............................................................................40

3.2.10 Access to Capital ................................................................................40

4 Corridor selection ...........................................................................................44

4.1 Current routes and frequencies ..................................................................44

4.2 Current Marketing Tools ............................................................................45

4.3 Existing IT ...............................................................................................46

5 Concept Extension ..........................................................................................46

5.1 Potential expansion routes and frequencies .................................................46

5.1.1 Extensions in 2016 .............................................................................48

5.1.2 Extensions in 2017 .............................................................................49

5.1.3 Connection with other potential networks ..............................................49

5.2 Case Study: Germany ...............................................................................52

5.3 Case Study: Switzerland ...........................................................................56

5.4 Case Study: Europewide ...........................................................................60

5.5 Potential markets and commodities ............................................................63

5.6 IT developments to account for the higher demand ......................................63

5.6.1 Data requirements on CT-Rail ..............................................................63

5.6.2 Communication between an IM and a RU ..............................................63

5.6.3 Inter-relation of WP5 to other WP within Smart-Rail ...............................64

5.7 Proposed Marketing Tools ..........................................................................65

6 Conclusions and recommendations ...................................................................66

6.1 Development of SWL services and options for expansion ...............................66

6.2 Policy Options for SWL Revitalisation ..........................................................66

7 References ....................................................................................................68


Page | 8

List of Figures

Figure 2-1: SWL vs Combined Transport .................................................................15

Figure 2-2: A graphical representation of a SWL service ............................................16

Figure 2-3: Share of SWL traffic in Total Volumes Carried by Rail in 12 National Markets ..........................................................................................................................17

Figure 2-4: International Share of SWL Traffic and Commodities Carried .....................18

Figure 2-5: SWL Market Share (2004-2011) Source Eurostat data for DE, IT, Pl, SL, SK, FL SE. (Data on SWL transit traffic not included) ......................................................18

Figure 3-1: European rail freight industry system’s analyses ......................................43

Figure 4-1: Service as of the commencement of Smart-Rail .......................................45

Figure 5-1: The Smart-Rail interaction ....................................................................47

Figure 5-2: Extensions in 2016 ...............................................................................48

Figure 5-3: Extensions in 2017 ...............................................................................50

Figure 5-4: Future Expansions and interactions with other networks ...........................51

Figure 5-5: Freight moved by rail in Germany ..........................................................53

Figure 5-6: Rail freight transport performance in Germany ........................................54

Figure 5-7: Average rail transport distance in Germany .............................................55

Figure 5-8: Freight moved by rail in Switzerland.......................................................57

Figure 5-9: Rail freight transport performance in Switzerland .....................................57

Figure 5-10: Average rail transport distance in Switzerland .......................................59

Figure 5-11: Freight moved by rail Europewide ........................................................61

Figure 5-12: Freight moved by rail Europewide ........................................................61

Figure 5-13: Average rail transport distance Europewide ...........................................62

Figure 5-14: Interdependencies (interaction) of WP5 with other WPs, mostly CITs ........64

List of Tables

Table 3-1: Involved Stakeholders ...........................................................................29

Table 4-1: Interaction of BDRS and its partners .......................................................44

Table 5-1: Extended service with terminal type, commodities and routings ..................49

Table 5-2: Division of rail freight in Germany (Tonnage) ...........................................52

Table 5-3: Division of rail freight in Germany (Tkm) .................................................54

Table 5-4: Division of rail freight in Switzerland (Tonnage) ........................................56

Table 5-5: Division of rail freight in Switzerland (Tkm) ..............................................58

Table 5-6: Division of rail freight in Europewide (Tonnage) ........................................60

Table 5-7: Division of rail freight in Europewide (Tkm) ..............................................62


Page | 9

Definitions & Abbreviations

CT Combined Transport

CIT Continuous Improvement Track

ERA European Railway Agency

ETA Estimated Time of Arrival

ETD Estimated Time of Departure

GNSS Global navigation satellite system

ICT Information and Communication Technology

ILU Intermodal loading units

IM Infrastructure Manager

IWW Inland waterways

CIT Continuous Improvement Track

LSP Logistics Service Provider

OCR Optical Character Recognition

RFID Radio frequency identification

ROIC Return on Invested Capital

RTLS Real time locating systems

RU Railway Undertaking

SWL Single Wagon Load

TAF Telematics Applications for Freight Services

Tkm Tonne Kilometres

TRS Total Return to Shareholders

TSI Technical Specifications for Interoperability

WP Work Package


Page | 10

1 Introduction

1.1 Background Smart-Rail

The aim of the European Railway Agency (ERA) is to construct a safe, modern integrated railway network with the overall target that railways must become more competitive to other transport modes and seek and offer high-quality, end-to-end services without being restricted by national borders.

To achieve the necessary modal shift from road to rail, the rail sector faces an unprecedented challenge of providing the capacity for affordable and attractive services required to enable this modal shift. The current European rail freight market is a complex system involving a great number of different public and private stakeholders, such as infrastructure managers, rail operators, terminal operators and freight forwarders who jointly manage the operation of running trains from A to B. The Smart-Rail project is aligned with the objectives of SHIFT2RAIL and will ensure that the results can be used in further research in this programme.

The objectives of Smart-Rail are:

- to contribute to a mental shift of the rail sector toward a client oriented and supply chain focus;

- to develop working business models for cooperation of different stake-holders; - to develop a methodology and architecture for exchange of data/information

required for the optimisation process, between stake-holders, making use of existing initiatives where available (for instance the European Corridor Management and national logistical information centres;

- To establish three Continuous Improvement Tracks (CIT) that each focus on different aspects and markets and implement the developed tools, methodologies and concepts. The purpose of the Living Labs is to test and improve the innovative measures in a real life situation. Specific and more dedicated business models, information systems and new rail services will be tested

This CIT will address the issue of efficient and lucrative single wagonload (SWL) services in Europe and in doing so bring the missing piece to the Common European Rail System by taking its place among the other projects contributing to the vision of an open market in which trains can cross borders without stopping.

The existing single wagon load services of the traditional incumbent Railway Undertakings (RU) have been reporting a proportional decrease in volumes and losses (varying across Europe). This has led to the resulting modal shift from rail to road as has been witnessed across Europe. This is accompanied and further worsened by a reduction of specific wagon load infrastructure such as sidings and marshalling yards. This trend runs counter to European policy as stated in the 2011 White Paper where modal shift to rail for freight over 300km is planned to be 30% by 2030 and 50% by 2050. To achieve these modal split targets, efficient single load forwarding services by rail will be needed to feed the green corridors. To reverse the current negative trend a radically different and competitive approach is needed. Incumbent and new entrant RUs will greatly benefit from the increasing attractiveness of services if a genuine and transparent competitive approach is employed.

Shippers and Industries are still interested in reliable, flexible and costs effective services by rail supported by modern technological and operational solutions as evidenced in research projects such as ECOPMS, CREAM, and REORIENT, and demonstrated in projects such as RETRACK, ViWas, and VEL-WAGON. The success of


Page | 11

the liberalised European railway freight transport market (trainload) has shown that railway companies, including the incumbents are able to provide high quality logistics. Unfortunately, SWL has not been part of this success story.

Nevertheless the transport of units smaller than block trains is one of the largest potential markets for rail in Europe in the future. The demand for this type of transport is increasing steadily with a relatively small percentage a year. With the growth of lean manufacturing and the reduction of stock in the supply chain, shipments have become smaller and, the working unit for goods today is the trailer or swap body, or even smaller such as pallets or boxes, all of which are suitable for use with the rail wagon.

This CIT will demonstrate measures to stop the current negative trend and to significantly enhance the attractiveness of this sustainable transport mode. This requires a major change of SWL‘s organisation, management and marketing. The approach of this CIT will be based on the existing, promising example of a successful SWL operation (of which partners are included in the consortium) to create a European network solution to follow up and expand on these practices.

Successful and new technological and operational solutions will be analysed and their market feasibility evaluated in detail. The costss and the benefits of all the innovations analysed and the potential improvement for operations and marketability will be examined.

Through this CIT, Smart-Rail will integrate existing monitoring and information systems to address ICT rail freight standardisation issues where each wagon is seen as a component of a European network and needs to be tracked and monitored in terms of location, technical condition, load condition and security through the whole transit including any road involvement in pre and end haulage.

Various single load operation schemes on rail will be assessed and innovative approaches identified alongside various different measures that result in enhanced efficiency in resource utilisation. Accurate costs structures for SWL services will be developed and form part of a financial support system that will enable pricing to be transparent and the contribution of individual traffic flows to be clearly identified.


Page | 12

1.2 Purpose of the document

The purpose of this document is to give an initial overview of SWL as a service, its development in a European context as well as it strengths and weaknesses. Previous studies will be investigated and their outcomes analysed with regards to their relationship to Smart-Rail.

The initial corridor selection will be discussed and the reasoning behind this and potential routes for expansion and markets will be analysed. This will be carried out in this deliverable at a high-level as the route choices are set to develop as the project progresses.

1.3 Document Structure

Problem Analysis: This chapter looks at the current state of SWL in Europe including how SWL operations function. Further to this, it builds on what has been put forward in Work Package 2 (WP2), further defining the problems encountered with SWL transport and make a selection on which problems will be tackled over the lifetime of the CIT.

Literature Review: Numerous reports and studies into SWL transport systems have been carried out over previous years. This chapter will look at the most pertinent studies and projects with regards to Smart-Rail and SWL and will analyse the outcomes and proposals from these.

Corridor Selection: This chapter is dedicated to the existing SWL service currently in place and onto which Smart-Rail will build. It will look at the existing routes, frequencies, and commodities etc. as well as offer an overview of the IT systems currently in place.

Concept Design: Under Smart-Rail the existing service will be extended to encompass new routes, customers, and commodities. This chapter will look at the development of these extensions over the lifetime of the project and will further investigate potential markets. Marketing tools and IT developments will be further developed in this chapter.

Conclusions and Recommendations: This final chapter will look at what lessons have been learned during the implementation of this project and make recommendations that can be put in place for future SWL services.

1.4 Deviations from original DoW

1.4.1 Description of work related to deliverable as given in DoW

In this task the problem analyses and the challenge of organising a successful wagonload concept is analysed in detail. This will be done in close cooperation with the general problem analysis of the overall project carried out in WP 2. In addition to this, an inventory will be made of other relevant studies that are relevant for this Living Lab. As a minimum, the results and experience from the previous EU project RETRACK and the French project ECOPMS will be used. In particular, a close link will be organised with the ECOPMS project where a wagonload concept has been designed and is implemented.

Furthermore, the scope of the Living Lab will be defined in more detail: based on a market survey (interviews with shippers associations and large shippers) one specific corridor will be selected for the validation of the wagonload concept in this Living Lab. The wagonload concept will focus on the main markets of chemistry, automotive, steel and paper. Important aspects for the selection of the corridor are criteria for successful implementation of the wagonload concept: amongst others potential impact, possibilities to solve barriers and willingness of stakeholders to participate in the innovative wagonload concept. Furthermore, possible marketing instruments are assessed and a marketing brochure is prepared in this task. Once the corridor has been selected, the


Page | 13

wagonload concept will be designed in more detail using results from the problem analysis, outcomes of relevant studies and possible specific characteristics on the selected corridor.

1.4.2 Time deviations from original DoW

None.

1.4.3 Content deviations from original DoW

As per the DoW: “The wagonload concept will focus on the main markets of chemistry,

automotive, steel and paper.”

This has been changed to accept all forms of freight so that the maximum number of customers can be reached. The corridor definition has been based on the existing BD Rail Services (BDRS) corridor as this is already in place and will be used as a baseline for expansion.


Page | 14

2 Problem Analysis – The challenges that exist in SWL

2.1 Current state of SWL in Europe

2.1.1 Introduction to SWL

The advances made by road transport during the decades following World War II was partially attributable to the changes in the economy, which materialised in ever smaller units of freight being forwarded in a single shipment. Efforts to minimise inventory, introduction of just-in-time manufacturing, the continuously shrinking unit size of manufactured (consumption) goods demanded previously unseen flexibility from freight transport. This trend accelerated in countries that progressively deregulated road freight in the 1970s (e.g. the UK) and the spread of lean manufacturing across the world following the Toyota Production System in the 1980s. With the Single European Market and the accelerated deregulation of road freight the process has meant that freight transport growth has been largely based on road freight. Whilst member‘s states and the EU have made similar legislative liberalisations of the rail sector, its nature as a predominantly state owned enterprise in many countries has delayed the process and the concomitant efficiency gains. Single loads have represented the largest share of the European freight market, and it has made up nearly 60 percent of tonne-kilometres performed by rail freight. Today, single loads by rail are performed using two different productions systems (see Figure 2-1):

• Single Wagonload “Classic” (SWL): unimodal (door-to-door) rail freight service performed using specialised freight wagons whose superstructure is inseparably affixed to its chassis, starting out and terminating on (industrial) sidings which connect the shipper to the main rail lines, and extensively using marshalling/shunting yards for train formation (trainload consolidation);

• Combined Transport (CT): multimodal production system based on the use of Intermodal Loading Units1 (ILUs) to hold the cargo to be shipped, in case of forwarding by rail freight using standardised flat- or pocket-wagons, positioning and the long distance forwarding of cargo units may utilise different modes of transport, trans-shipment terminals are used for cargo consolidation (train formation) and transfer between different modes of transport.

While SWL is suited to transport chemicals, grain, steel, paper, pulp, and similar commodities, CT is also appropriate to efficiently forward high(er) value manufactured goods and consumer goods such as spare parts, components, machinery, and a complete range of finished products. The consistent reduction of rail freight‘s modal share reflects the lack of competitive SWL services, effecting especially the SWL production system (about 60% of rail freight ton-kilometres), which could not be offset by the dynamic expansion of CT (making up about 28% of rail freight ton-kilometres).

1 ILU: swap-bodies – including ISO containers – and semi-trailers


Page | 15

Figure 2-1: SWL vs Combined Transport2

The existing SWL production scheme in Europe – predominantly performed by incumbent freight-railway operators – has been facing a gradual decline (differentiated over Europe). Significant volumes of transport assignments have been shifted to road transport as a consequence, ultimately leading to the closure of many sidings and other elements of rail infrastructure, while also constraining network and marshalling capacity utilisation. This trend does not correspond with the European policy aim of creating a sustainable transport system. Competitive and market conform measures must therefore be researched that will lead to the reversal of this unwanted development. This CIT will investigate what is required to deliver these measures and where possible introduce them.

2.1.2 The workings of SWL

SWL freight currently tends to have more frequent but smaller and lighter consignments. Shipments tend to be more sensitive to time, consistency and reliability, requiring rapid and precise delivery and costs competitive service. It has to fulfil all of these requirements if SWL is to be comparable to competing road transport services. SWL in Europe has the potential to grow more rapidly than block-train but it will require more fundamentally reliable, efficient and costs-effective operational and business structures to make them as attractive to shippers as the road freight alternative. The advantages of SWL service have been identified as follows:

2 Source: Railistics


Page | 16

• A reliable system which can be easily integrated into logistics concepts and the individual supply chains of the customers;

• Short-term availability; • Area-wide networks in Europe; • High degree of safety and suitability for the transport of dangerous goods in bulk; • Environmental efficiency; • Characterised by comparably flexible loading and unloading processes for

customer; • If customers do not operate their own sidings, open access loading tracks spread

over the network can be used (in German rail jargon these facilities are known as “Railports”);

• Integration with intermodal transport is possible.

Figure 2-2: A graphical representation of a SWL service3

The SWL pattern is mostly operated in the so-called node system as shown in Figure 2-2. The node system differentiates various types of nodes which take over specific tasks in the transport system. Satellite stations provide loading facilities for direct transhipment of goods to rail. Track infrastructure is provided for siding operations, the collection of wagons from sidings and the formation of local freight trains. Node stations are needed for the collection of wagons from local freight trains and block trains. The wagons directed to long distance destinations and short distance destinations are regrouped in the node stations to either block trains (long distance) or local freight trains (short distance). Marshalling (shunting) yards handle block trains which come from different node stations. Within the marshalling yard these block trains are split up and the single wagons are again reformed to block trains where the whole set of wagons has the same destination node. In addition to the necessary static and dynamic resources to fulfil SWL services, the complexity of the system is seen in a set of complex traffic rules and procedures such as:

3 Source: Railistics


Page | 17

• Each marshalling (shunting) yard has an assigned area to serve: the extension of this area is dependent on the freight volumes to be served by rail in the given area and the number of yards serving this area;

• The final deliveries by rail within a given area are managed by the closest marshalling yard to final customer;

• The route of service a given freight wagon takes is predefined and it is unlikely to be modified;

• International traffic is concentrated at assigned marshalling yards with sufficient processing capacity to ensure a smooth train formation and timely departure without delays;

• Exceptions are unlikely to occur, only big shippers with special agreement can influence the production system;

To a certain extent SWLs in Europe are still nationally-based and therefore the service is further bounded by national rules and procedures.

2.1.3 The State of Play in European SWL Market

Figure 2-3, Figure 2-4, and Figure 2-5 illustrate the current share of SWL in the European market.

Figure 2-3: Share of SWL traffic in Total Volumes Carried by Rail in 12 National

Markets4

4 Source: PWC, 2014


Page | 18

Figure 2-4: International Share of SWL Traffic and Commodities Carried5

Figure 2-5: SWL Market Share (2004-2011) Source Eurostat data for DE, IT, Pl,

SL, SK, FL SE. (Data on SWL transit traffic not included)6

The above visualised decrease in SWL market had multiple causes. Some of which could relate to:

1) Long-term internationalisation of the European manufacturing industry, globalisation of value chains and reduction of intra-European trade in bulk commodities,

2) Liberalisation of rail freight market; higher pressures on national carriers for operational efficiency and Return on Investment Capital (ROIC),

5 Source: PWC, 2014 6 Source: PWC, 2014


Page | 19

3) Market entry of private RUs with lower operations costss, which won intermodal shippers

4) Competition from truck hauliers for lower service costss and streamlining of operations patterns, and

5) Phasing out of unproductive rail shunting yards and loss-making SWL service by incumbents

Rail liberalisation and higher competitive pressures on national carriers required that many of them had to rationalise their service portfolio (e.g., in Norway and partly Sweden). High fixed and variable costss of SWL “first mile” (collection of wagons), intermediate and final marshalling, shunting of trainloads and “last mile” distribution caused that the share of SWL in the total service offering was downscaled. In addition, high infrastructure charges undercut shunting yards’ operational efficiency. Next, rationalisation of network operations by the state incumbents who concentrated their traffic on trunk corridors also contributed to phasing out of many rail interchanges and classification yards. Furthermore, the economic crisis of 2008-2009 which considerably reduced industrial output in France, Romania, the Czech Republic and Germany, and the volumes of traditional rail transport have also reduced demand for shunting operations.

In addition to this, the rapid building of modern logistics facilities in the vicinity of newly constructed roads and highways in Central and South-Eastern Europe rendered many shunting yards and sidings geographically inaccessible and functionally obsolete. Moreover, the existing shunting yards might not be suitable for the traditional SWL traffic which needs to be offered together with intermodal service.

2.2 EU Policy for SWL

EU rail transport policy main goals are towards the creation of a single European railway area. Three packages and a recast were adopted within a period of ten years following the opening-up of the sector to competition in 1991. A fourth package, designed to liberalise rail services, was adopted at first reading by the European Parliament in 2013. It was believed that market liberalisation would create a credible environment for the European railways to grow but due to a number of existing market barriers imposed by different permit requirements of the single EU member countries, the inadequate utilisation of existing rail freight system capacity, non-implementation of new technologies, as well as because of obstacles to market entry hampering competition and innovation rail freight volumes continue to remain unstable.

EU Rail policy and legislation has been guided by the following key guidelines:

• Creating an open/free market for rail services, reducing the role of the state and providing safeguards against anti-competitive and monopolistic trends;

• By separating infrastructure management and operations, passenger from freight; • Allowing private owned rail undertakings to compete for services with open access

across borders and networks; • Reducing the various forms of state subsidising incumbents; • Transforming national markets into a European Market, forcing states to allow

European companies to tender for services in their national networks, creation of a European Market;

• Creation of a single inter-operable European rail network;

The Member States have still not fully completed the implementation of European rail legislation. Progress towards interoperability is slow, and the difficulties at the borders remain. Consequently, some major problems concerning the quality of rail freight also


Page | 20

persist. It could be concluded that the results are more favourable available at national level than at transnational level. EU initiatives have not yet made it possible to reduce the fragmentation of the European rail market sufficiently7.

By implementing the above measures, in order to create a single European market in railways the following actions have been implemented;

• Investing in High Speed Rail for passengers; • Creation of ERA (European Rail Agency) mainly focused on promoting common

safety rules and interoperability (publishing Technical Specifications for interoperability and to harmonize technical standards);

• Promoting European level certificates for driver licenses and vehicles • Fostering harmonisation of technical standards for all technical subsystems

(energy, control-command and signalling, rolling stock) or functional (operation and traffic management, maintenance and telematics applications

• Implementation of ERTMS in order to overcome signalling and control differences between the national networks;

• Implementation of corridors for rail freight (Regulation 913/2010).

For the improvement of the economic sustainability and competitiveness of wagonload services the following shall be taken into consideration:

• High quality and capacity of rail infrastructure - national authorities should provide sufficient and reliable long-term funding for rail infrastructure, including last-mile infrastructure, which is crucial for wagonload traffic;

• Track access charges – implementation of track access charging regimes reflecting path quality and speed.

• Technical innovation – the European Commission should foster innovation within the framework of Horizon 2020 and the Shift2Rail Joint Undertaking initiative, and in particular IP5, in order to optimise rail freight technologies and services. These programmes will support the implementation of telematics applications, increase capacity bundling and help improve the use of available infrastructure.

• Last-mile infrastructure - for revitalising wagonload services, a non-discriminatory access to all last-mile infrastructures and in particular marshalling yards is essential. The European Commission should allow and encourage the provision of public funds or the offer of attractive loans for investment in last-mile infrastructure and in any related rail freight equipment aimed at improving efficiency and reducing last-mile costss.

• Development of new industrial areas near rail networks - the Commission together with the sector should consider sharing and promoting best practices with Member States, port authorities, regions and local authorities

• Rail service facilities for wagonload - in addition to public measures and financial support, all stakeholders must find feasible commercial solutions for revitalising wagonload traffic.

2.3 The Potential for growth and improvement in SWL transport

Through the financing of various projects the European Commission aims to:

7 Communication from the Commission to the Council and the European Parliament - Towards a

rail network giving priority to freight


Page | 21

• understand the importance of SWL to EU Industry; • understand the relevance of SWL to EU industry; • identify shortcomings in current legislations; • promote new legislative initiatives; • Identify new business models and develop new production schemes for SWL low-

costs services; • identify and research adequate last mile solutions – “door to door”; • promote automation and increased efficiency through the implementation of

innovative processes and technologies in rail freight; • propose, specify and design new technologies that enable an increase in

operational efficiency, including modern freight wagon design, identification, tracking and communications with the wagons, and optimised operation/process ICT applications;

• Improve conditions and reassess the meaning of capillary infrastructure for reliable and seamless SWL operations.

Over the course of this CIT, Smart-Rail will identify and develop the necessary measures to promote SWL in Europe by:

• Advising on the importance of SWL for EU rail freight and shippers; • Identifying and developing new business models for efficient SWL services in

Europe; • Identifying, developing and advising on new production schemes for lucrative SWL

operations; • Advising on the role of the static resources such as: yards, terminals, ports,

industrial sidings, spurs; • Identifying shortcomings in current EU legislation related to SWL; • Advising on the need for new legislative initiatives.

As a service improves, this improvement needs to be matched by improvements in technology. A part of this includes ICT issues relating to booking services and track and trace systems. In order to address this issue we plan to review knowledge from the American railroads, operations, practice and policy as brokerage systems in American railroads are much further developed than EU railways. It is worth motioning that many systems exist in the US including ShurTrack a web based railcar tracking and management system, Lat-Lon which provides wireless monitoring and a web based management system. A UK example is Freight Arranger® which is designed to make rail freight services more visible and user friendly by providing access to schedules, timings, routings, space availability (for inter-modal trains) and a composite pricing offer based on pre/end haulage, line haul price and any terminal handling. In D6.3 an overview of CIT best practices from the road haulage sector will be given and suggestions made as to which lessons can be learned and implemented into the rail freight sector. The market opportunities for new services have to compete directly with existing transport offers (road and/or rail). Therefore the costss of the overall transport chain have to meet the market demand and have to be competitive to lead to a successful market implementation. The costss of such services are fixed costss. Additional technical, organisation, ICT or management aspects can be integrated in the calculation to evaluate their specific impact. Through this LL, a direct evaluation of benefits and/or costss of each aspect will be targeted. Competitive pricing structures and tools for SWL services need to be developed to better understand costs structures and costs responsibilities within different production systems such as single wagonload, combined traffic, trainload, and road transport. Special focus needs to be placed on the train formation and door to door processes. External costss and possibilities for costs reductions in terms of infrastructure, operations


Page | 22

and planning as well as administration have to be calculated. The new solutions proposed and technologies developed by the Smart-Rail consortium will be fully evaluated. In D6.2, a costs assessment and analysis of rail freight operations will be carried out. Based on the experience of consortium members a broad database will be developed and will be used in Smart-Rail to give the basis for an efficient and realistic model setup for accurate costs analysis. This will be covered in more detail in D6.2.


Page | 23

3 Literature Review

The challenge of organising a successful wagonload system has been the topic for different H2020 studies in the past. In this chapter a brief overview will be given of relevant studies and other policy documents regarding SWL systems. This will be carried out in close cooperation with the general problem analysis of the overall project carried out in WP 2. In addition to this, an inventory will be made of other relevant studies that are relevant for this Living Lab. As a minimum, the results and experience from the previous EU project RETRACK and the French project ECOPMS will be used. In particular, a close link will be organised with the ECOPMS project where a wagonload concept has been designed and is implemented.

3.1 Previous projects - Positive outcomes and failings

The Smart-Rail project started with a horizontal work package, namely the project initialisation. Main objective of this task was to set the scene, but more specifically, to have a preliminary analysis of existing projects and the problems identified in these as well as the best practices derived from these projects. This was achieved by means of desk-research (existing studies) in combination with market intelligence (internal stakeholder consultation). In the problem analysis stage, problems were clustered according to four problem types. The following four clusters were identified:

• Operational, related to interoperability, network capacity and resource utilisation as well as reliability in transfer times (punctuality),

• Financial, related to all types of door-to-door costss (network, equipment, services), integrated transportation and information exchange issues. This set affects reliability (delayed freight due to for instance coordination issues or flexibility issues), flexibility and the costss of services,

• Interaction with users/customers involving information transparency and delivery delays and

• Interaction between stakeholders addressing standardisation of data and transferability issues.

The project team clustered the available solutions and best practices into four main categories. The following clusters were identified:

• data-based solutions; solutions using cooperative, ICT tools, • synchro-modal solutions aimed to increase the rail share in day-to-day logistics

operations, • technical/logistics solutions improving the flexibility and efficiency of

equipment usage and • Capacity-related solutions, optimising railway capacity and resource utilisation.

Since WP2 problem analysis was addressing general problems, not all problems are relevant to this Living Lab. In regard to Single Wagonload Transport, only a preliminary scan of existing projects was carried out in WP2. With this said, over 50 projects and policy documents were identified and analysed. With regards to the topic of SWL the focus in WP2 was mainly on ViWaS and RETRACK. It is therefore decided to further elaborate the outcome from WP2 in WP6. Regarding the ViWaS project two main issues were identified in WP2 that are most relevant for Single Wagonload Traffic:


Page | 24

(1) A viable SWL system is highly dependent on the critical mass. Thereby all options have to be considered to secure a high utilisation of the trains operated on the trunk lines, including a combined production with intermodal loads.

(2) Only comprehensive and complementary measures are able to sustainably improve and preserve the European SWL systems in accordance with increasingly demanding market requirements.

The objective of the RETRACK project was to develop of a successful and sustainable privately operated rail freight service. The result was a sustainable modal shift to rail as well as the achievement of environmental gains. Furthermore, the project demonstrated that collaboration between multiple private railway stakeholders is feasible and showed that consolidated transport flows on major corridors can feasibly meet the flexibility requirements, as set by cargo owners (shippers).

Different Single Wagonload Systems have been the topic for different studies. The main reason for this is that, in most European countries, especially in countries with the largest rail freight markets, wagonload transport still forms the backbone of rail freight. However, the concept on Single Wagonload traffic faces in many countries in Europe quality issues.

According to PWC8, the SWL traffic share of total rail traffic dropped from 50% to 30% in less than 10 years (2004 – 2012). The same study reported four main factors for this decrease in SWL transport.

1. Decrease in the trade of some specific “captive” commodities 2. SWL supply “rightsizing” or abandonment by RUs in some countries (due to

budget constraints) 3. Increased competition by road freight transport 4. Quality to customers perceived as not sufficient, particularly for international

flows.

Although the share of SWL transport in rail transport is diminishing, the European Commission has been intent on supporting such SWL network developments for the last decade, e.g. as performed under the RETRACK and ViWaS projects. In addition, multimodal solutions are developed, as demonstrated under the ECOPMS project.

The following projects were identified with regard to SWL services:

3.1.1 ECOPMS (2013 – 2017)

The ECOPMS project aims to develop innovative approaches for supporting multimodal logistic systems. The project starts by focussing on a road-rail corridor, and will during the program extend to other modes of transport such as inland waterways (IWW). The ECOPMS program focusses on promoting sustainable transport solutions, aiming to reduce greenhouse gas emissions. In order to achieve this, the project stresses the need for redesigning the current supply chains.

The ECOPMS project aims to increase the share of multimodal transport, in order to do so, different stakeholders types are involved in this project:

• Rail operators • Port authorities • IT service providers • freight forwarders

8 Source: PWC, 2014


Page | 25

The stakeholders can be distinguished in two group types; users and developers.

In light of WP 6, the solution, as already developed under the ECOPMS project, can form the basis for further development to be also implemented in the area of Single Wagonload transport. The Smart-Rail project, particularly WP 6, will be able to learn from the experience of ECOPMS.

The project includes establishment of a shared services platform that manages the physical flows of goods, and flows of information. The shared platform ECOPMS will be implemented as a “cloud” offer, deployed with the help of Orange Business Services which can assemble different logistical offers constituting a true “ecosystem”. The Cloud or cloud computing gives access to digital services via different channels (from internet access, to mobile accessibility through phone and tablet) with a high level of availability and security, and immediate, wide geographical coverage.

The project consists of three stages and is currently in the design phase.

1. Defining the offer and the corresponding methods of production with the participation of major logistics players who will help the process evolve in relation to the innovative technologies available.

2. Putting in place the shared platform of services in the form of a “Cloud” and its logistic services in collaboration with Orange Business Services,

3. Developing a logistics demonstrator and an optimized rail message service that is virtuous in regards to the environment and the emission of greenhouse gases. Also, putting into place points 1 and 2 and installing a demonstrator of traceability and dematerialization of logistical flows on the multimodal site of le Havre’s main seaport.

3.1.2 RETRACK (2007 – 2012)

RETRACK (Reorganization of Transport networks by advanced Rail freight

Concepts)

RETRACK has introduced a new rail freight service on the corridor between Cologne and Hegyeshalom Hungary. Supplementing this service were further feeder services from the Benelux countries and the Ruhr Valley area. This service is a SWL offered by private RU’s.

The initial development of this service focused on operating block trains of agricultural goods, however at a later stage these were added to with all types of commodities. With Transpetrol as the coordinator of this service a focus was however placed on liquid bulk transport.

The SWL service has secured premium revenue and has demonstrated that SWL traffic can be carried profitably which is in contrast to many industry views.

A goal for the project was to identify hindrances for private RU to compete efficiently in rail markets. The main problems recorded were related to SWL services in specific corridors. The revealed bottlenecks and problems connected to goals of European Commission rail policy that hindered the development of SWL services in RETRACK project were9:

• In a few, yet important railway countries, the EU policy regarding organisational separation between the train operating companies and the infrastructure management has not been fully implemented. These integrated national railway

9 Source: RETRACK Final Report, T. van Rooijen et. al., 2012


Page | 26

companies continue to receive non-market conform support from their respective governments

• Lack of independence of infrastructure managers from incumbents • Infrastructure charges may be discriminatory or favouring dominant railway

undertakings • Lack of fully independent regulatory authorities working to a common model • Limited and variable arrangements for regulation of infrastructure managers • Limited arrangements for regulation of rolling stock providers • Lack of equal level playing ground for the incumbent rail operators and the

newcomers, which preserves the dominant positions of national railway companies • High level of infrastructure charges and/or predatory pricing by some railway

undertakings • Slow and expensive procedures regarding appeals for charging and capacity

allocation • Lack of robust independent appeals bodies • Skewed and non-transparent rules for infrastructure pricing and for granting

discount rates • Appropriate insurance for external railway undertakings is expensive • Lack of routine access to competent train drivers with complications on language

capabilities • Lengthy and non-harmonised certification process for rolling stock • Lengthy and non-harmonised licensing procedures • Lack of independent safety certification organisations • Constraints on obtaining safety certificates for foreign railway undertakings • Constraints on infrastructure access for foreign railway undertakings • Disparate calculation principles and levels of infrastructure charges applying to

different stretches of trans-European rail corridors.

Other problems observed in the RETRACK project was that the productivity of the rolling stock employed is low and there is an increasing shortage of wagons. Low productivity is related to the fact that many wagons used for SWL are nearing end of life.

The RETRACK services were SWL and wagon group traffic on a main run corridor between two nodes for traffic aggregation and dispersal. With this service there were no important problems connected to use of terminals and cargo handling.

To offer services in the RETRACK corridor there were two main barriers that must be overcome:

1) The lack of a uniform international railway language and, 2) The absence of an international driving licence for train drivers.

These two barriers reduce the efficiency of cross border rail traffic.

In the RETRACK project two service constraints related to safety and security were identified. The first identified problem was related to the lack of independent safety certification organisations. The other problem focused on in RETRACK was the constraints on obtaining safety certificates for foreign railway undertakings.

The move towards interoperability has been driven by the railway reform measures and other directives. From the RETRACK project it is found that the reality is that some of the processes, systems and methods for securing train paths have proven to be weak, complex and not user-friendly. These processes have to be made more acceptable to potential operators if the goal of securing more international trains and competitive services has to be realised. The single wagon load product and service has to be much


Page | 27

more closely aligned in terms of quality, service levels, reliability and accessibility together with the sort of product norms provided by road transport.

IT-challenges relate mainly to the complete order process, that is, from purchasing/invoicing to delivery. The planning & rescheduling of resources, international tracking & tracing, optimisation of the used rolling stock and improved asset management are also IT challenges that needed to be solved. RETRACK addressed this by developing IT infrastructure for RETRACK partners.

Despite varying, but well-established standards for infrastructure, it should be noted that an overall standard for the order and cash process does not yet exist as part of an integrated system. Interviews showed that the existing IT infrastructure among RETRACK operators was weak.

The RETRACK consortium developed a methodology for the training of operations staff in cross border services, both for the RETRACK pilot and for future RETRACK developments.

A common language for the communication of rail freight operation does not exist. With this in mind the RETRACK project developed a standardised code of language to be used by operations personnel while running freight trains abroad. The code of language aimed to improve communications between dispatchers, drivers and traffic managers during daily operation. The code consisted of 8 categories covering: staff, incidents, location, orders, velocity, train, network and delays. Subsets of these categories allow the efficient communication between many key personnel.

The RETRACK pilot service started with one grain cargo train rotation per week with a small customer base from the East to the West. Over the months the service frequency improved gradually to a higher level in terms of frequency towards the final three rotations per week. The customer number has increased significantly, while the cargo types (hazardous and liquid bulk, automobile) and direction (from West to East) have changed positively as well. This was possible by offering a flexible, pragmatic and adaptive customer oriented service, for example the single wagon load service. The development of SWL traffic, particularly hazardous and liquid tanker, has secured premium revenue and demonstrated that SWL traffic can be carried out profitably which is contra to many industry views.

RETRACK represents a service and business model that has been proven in the context of available traffic, service times and route options. Responding to the market demand, the train has been operated at levels of traffic ranging from very low levels of traffic and short trains (a single wagon) to full length trains with weight restrictions. The business model demonstrates adaptability to varying loads. The development of a satellite (or hub-and-spoke) concept enabled RETRACK to add additional nodes to its network. This also demonstrates pragmatism, adaptability and flexibility in terms of commercial and operational response.

Over the first two years of the RETRACK train service, scores on several indicators indicated positive progress. The number of regular customers had increased and several shipments for one-time customers were continued in the second year.

Comparing the first year (Feb 2010 – Feb 2011) with second year (Mar 2011-Feb 2012), there was growth in all transport indicators:

• Train departures (115%) • Freight volumes (81%) • Transport (tkm) on feeder lines (60%) • Transport (tkm) on distribution lines (111%) • Total transport (tkm) on feeder and distribution (80%) • Transport (tkm), feeder and distribution, Cologne (71%) • Transport (tkm), feeder and distribution, eastern hubs (85%)


Page | 28

The rail freight business does not have an established track record of commercial and operational consortium arrangements involving capacity, costs and revenue sharing models. Until the emergence of a strong, non-traction based leader (Transpetrol), key partners were reluctant to adopt structured and defined roles that would essentially ensure that competitors were able to co-operate.

The RETRACK international rail service was faced with common, endemic, problems related with lack of standardization of document formats, scrutiny and compliance, data entry into national systems, technical inspections, checks, national technical rulings, interpretation of safety issues, train weight and length limits.

An important technical barrier, traversing multiple power supply systems was bypassed by using modern, but relatively costsly multi-voltage locomotives. This helped to mitigate the time lost in border crossing procedures. The increasing service frequency was another factor that helped to improve the productivity of resources like rolling stock.

A remaining issue is driver related. Different languages and lack of cross border driver skills and international competence recognition still reduce inter-operability.

Among the conclusions from the RETRACK project to be taken into account we find that: • Private rail operators are capable of providing a successful Pan-European rail

freight service for single wagon and wagon groups • Pan-European services like RETRACK , where private operators co-operate , need

European support for the start-up phase • Customers of RETRACK appreciate the services and quality offered

The RETRACK business model can be successfully applied elsewhere

Recommendations from the RETRACK project are among others that: • At least one partner should be 3 Party Logistic Provider (3PLP), preferably as a

leading company. • It is a clear requirement for any new service to have open access to terminals and

infrastructure • There must be a clear agreement on costs and benefit sharing among the major

partners

3.1.3 ViWas (FP7, 2012 – 2015)

Freight Transport in Europe has been increasing. However, due change in production strategies and the introduction of international free trade agreements, this increase has not been translated into an increase in rail freight transport. The opposite has been observed. At the same time a shift from SWL traffic to block-trains and combined transport is seen.

While there are always ideas to substitute containerised systems for SWL, there are still market segments such as steel, automotive and forestry that are highly dependent on SWL. Furthermore, a working SWL system remains necessary to fulfil the logistics requirements of many other shippers, even if they only ship a small share of their goods via SWL. In short, the SWL business remains important for European transport, but significant improvements are needed to enhance the competitiveness of SWL in respect of the current market trends.

The ViWaS project consisted of different stakeholders as summarised in

Table 3-1.


Page | 29

Table 3-1: Involved Stakeholders

Stakeholder type Stakeholders role

Railway operators - Demonstration of pilot business cases

Infrastructure providers - Support to demonstration of pilot business cases

Technology partners - Adaptation of SWL specific technologies - Training for demonstration of pilot business cases

Consulting/ scientific partners

- Project management, technical coordination, - Dissemination & knowledge transfer, - Development of strategies and success criteria,

business models and production systems

The ViWaS project is a research and development project that searches for solutions to strengthen and increase the competitiveness of single wagonload and wagon group transport by focussing on Increasing quality and reliability, reducing lead time and costs and increasing flexibility and efficiency.

Through this CIT, Smart-Rail will integrate existing monitoring and information systems to address ICT rail freight standardisation issues where each wagon is seen as a component of a European network and needs to be tracked and monitored in terms of location, technical condition, load condition and security through the whole transit including any road involvement in pre and end haulage. Innovative solutions – as designed under the ViWaS project – may contribute to the objective of Smart-Rail.

The ViWaS project follows a comprehensive approach aiming at the development of:

• Market driven business models and production systems to secure the critical mass needed for SWL operations,

• New ways for “Last mile” infrastructure design and organisation to raise costs efficiency,

• Adapted SWL technologies to improve flexibility and equipment utilisation,

• Advanced SWL management procedures & ICT to raise quality, reliability and costs efficiency

The applicability of these solutions and their effects will be proved on the basis of pilot business cases (by demonstrations). Thereby important findings will be gained for a European wide implementation of developed solutions. In total three Prototypes have been developed under the ViWaS program:

1) Container wagons for loading and unloading of ISO containers in rail sidings

Currently, SBB Cargo mainly uses flat wagons (type Re(s) and K(s)) for the Swiss Split operations. Because these types of wagons are not equipped with spigots, terminal employees have to nail wooden blocks around the container into the wagon floor to secure the containers on the wagon. These wagons are at the end of their economic lifetime.

Two wagon concepts were developed taking into consideration the requirements by different stakeholders i.e. gap between the ramp and wagon should be easily bridgeable, wagon should be equipped with spigots and has be drivable by forklifts.


Page | 30

2) Timber cassette with foldable stanchions

The efficiency of non-containerised single wagon rail freight often suffers from empty car transports: the needed wagon type for the transportation of goods differs depending on the respective origin/destination relation.

Because of this, freight wagons in single wagon load production schemes run a lot of their mileage empty, without payload. If the amount of empty mileage could be reduced by more flexible wagons able to carry different cargo, single wagon load freight traffic could be much more efficient.

For timber transport on rail, usually special wagon types are used. Due to their maximum axle load of 20 tonnes, the majority of these wagons in Europe can only be used for timber. The multifunctional car is based on two elements: a core platform and a superstructure solution; a range of removable, swappable and stackable bodies for a wide variety of cargo. The core platform is a full-featured 60' light container car that can be used without restrictions for transporting a variety of containers in intermodal traffic.

3) Intelligent telematics devices.

Unlike road transport, load tracking and tracing is still not widely used in single wagonload traffic. ViWaS seeks to accelerate the introduction of communication technology in rail freight.

Intelligent telematics are developed to enable real-time wagon tracking (better quality) and automatically depicted wagon mileage information (costs reduction). A first step to quality improvement is the implementation of some quality measurement. The telematics data service will automatically generate the information which is necessary for a reliable quality recording.

3.1.4 CREAM

CREAM-Technical and operational innovations implemented on a European rail

freight corridor

The CREAM project was set up to respond to the increasing demand for rail-based logistic systems and to support the implementation of change in the European railway area, initiated by the European legislation10. The CREAM project has analysed the operational and logistic prerequisites for developing, setting up and demonstrating seamless rail freight and intermodal services on a Trans-European corridor between Benelux countries and Turkey/Greece. Innovative corridor-related freight service business cases are developed, with respect to:

• Innovative rail-based supply chains including intelligent rail and multimodal operation models

• A quality management system • Interoperability and border crossing • Integrated telematics solutions for train control , tracking and tracing of

shipments and customer information • Rail logistics for temperature – controlled cargo • New technologies for the transport of unaccompanied semi-trailers in intermodal

transport

10 Source: Behrends V, et. al., 2012


Page | 31

The CREAM corridor stretches across Benelux – Germany – Austria – Italy – Hungary – Romania – Bulgaria – Serbia – Turkey/Greece and links most relevant highly dense industrial and rural areas. Analysis targeted points which had influence on performance and success of rail freight services:

• Market requirements with respect to different commodities and market segments; • Mechanisms of cross border collaboration according to the cooperation or

competition model; • Operating procedures and agreements between infrastructure managers and

railway undertakings, in particular with respect to border crossing; • The quality of service defined as total transit time, punctuality and reliability; • The availability of appropriate resources such as locomotives , wagons and staff; • Integration with other modes of transport.

The market demand on the corridor required different (intermodal) freight service offers with respect to time and costs and thus alternative routings on the corridor.

The most important attributes for a service are the maximum train length and weight allowances, the allowed speed as well as the route electrification.

The CREAM corridor has high potential for rail based transport solutions. To extract and use such potentials it is important to show the right path for improvements. All actors, like national governments, the European Commission and also the involved stakeholders have to work continuously on the improvement of the framework conditions.

The project indicated that putting interoperability into practice in the CREAM corridors was often hampered by long border station stopping times; long and inefficient turn-around times of locomotives due to low frequency of transports, insufficient availability of interoperable locomotives, long lasting homologation procedures for locomotives and inappropriate market conditions in some countries. Also it turned out, that the current conditions are in general not appropriate to operate long-distance train services with just one locomotive.

The experience of CREAM also shows that it is favourable to reduce the number of operational interfaces and to introduce interoperability section wise. Locomotive changes shall be concentrated at operational points of interests such as shunting yards, terminals, maintenance workshops and/or locomotive depots. Locomotive changes at legal and administrative interfaces such as border stations shall be minimised.

Border crossing processing time is a critical factor for the performance of customer-driven rail production systems. Therefore specifically improved border processing procedures are expected to lay foundations for an improved quality standard of rail freight in the rail corridor, considered in the CREAM project. The main strategic starting point for improvement measures at borders are operational and organisational issues, since these effects are often not caused by exogenous impacts but “home-made” and therefore under the responsibility of the railway undertakings involved. The focus should be on

1) streamlining processes, 2) pre-information and 3) Electronic data exchange.

In line with increasing information needs in the logistics sector, rail transport customers call for efficient tracking and tracing solutions. A long standing deficit in rail transport is the availability of status information to smoothly integrate rail transport into today’s logistic processes. To improve the information level needed for ensuring high quality rail transport on international transport links, a new IT system “Train Monitor” has been developed and implemented. The system is composed of the three modules: Real Time


Page | 32

(tracing current train movements), HIM (exchange of information on irregularities and wagon detachments) and File & View (train run data storage & statistics). Besides this, the system enables a multi-client access, backs on a sophisticated user access management for keeping secured data confidential and supports a number of languages.

3.1.5 REORIENT

REORIENT - Implementing Change in the European Railway System

The REORIENT mission was to assess the progress in implementation of the new rail legislation, and the impacts that this legislation has on the market behaviour of the European rail freight industry. Both the incumbent railway operators and the promising new rail start-ups were in the REORIENT analytical focus.

The REORIENT analysis was concentrated to rail shuttle services in the following corridors:

1) Swinoujscie - Bratislava/Vienna-Budapest, 2) Trelleborg – Swinoujscie - Bratislava/Vienna, 3) Gdansk/Gdynia-Bratislava/Vienna – Budapest – Beograd - Thessaloniki and 4) Bratislava-Budapest – Bucharest - Constanza.

Results from interviews in REORIENT indicate there is no lack of stakeholder support that would hamper implementation of railway directives along the REORIENT Corridors.

To improve support for rail reforms, both distributional and pedagogical challenges must be met. In REORIENT it was found that participation of all stakeholders in discussions at a sector level can increase the understanding of the needs for reforms, the content of the reforms and way of implementing and refining the legislation. New RU’s should be included in discussions by law where applicable. However, facilitation of social dialogue must be country specific. Whereas tripartite and bipartite negotiations are subject to formal regulations in some countries, it is tradition and mutual confidence between the parties that is the basis for dialogue in others.

Essential factors for increasing rail-share suggested from the REORIENT project are that the EC and national governments should encourage a market structure with several large shippers. These have the competence, access to equipment and wagons allowing a larger share of the shipments to go by rail. Another recommendation is to reduce entry costss for small companies by providing them access to flat cars for transporting semitrailers. Logistic Service Providers should be stimulated to manage medium and small shippers’ small shipments by offering costs effective rail-based consolidation/bulk breaking logistic services.

If only the requirements related to the transport network are taken into account when implementing new services, financial barriers are then dominant. The main financial barriers are the potential of both the railway sector and the national government to accommodate required investments and the willingness of the railway sector to invest in technological improvements and new business concepts. Other barriers for improving the transport network are inadequate organisational structures, skills and knowledge of rail institutions, and technical barriers.

Among the other barriers the REORIENT project focuses on are:

• Administrative. There is still too much red tape in various countries; this is

navigable, but not seamless. Information is not widely available; but this varies considerably by countries.

• Technology. The infrastructure quality is uneven, especially in new Member States, resulting in slower speeds. Analysis of higher speed scenarios suggest


Page | 33

greater potential market share for rail. Intermodal still hampered by terminal processing times due to technological limitations.

• Management practice. While nominally open, current slot allocation processes reflect biases that hamper the ability of new entrants to provide new intermodal rail-based freight services. Existing processes are partly inefficient and not freight –friendly.

• Political. Rail freight does not receive sufficiently high visibility on the national or European agendas. As such, improvements are left primarily to administrative processes that move slowly and are largely dominated by national rail undertakings.

3.1.6 VEL-WAGON

VEL-WAGON - Versatile, efficient and longer wagon for European transportation.

The basic idea of the VEL-WAGON project is that in the future, longer loading surfaces without interruptions, as well as more capable platforms with higher axle loads and with lower loading heights will be necessary to increase the capacity of the freight railway transportation11. This can be understood as a follow-up to the current trend of enlarging the vehicles of other means of transportation like the Giga-liners trucks or the container vessels.

One of the objectives of this project is to pursue the knowledge expansion on the future wagonload transportation market in Europe, especially when it comes to conventional wagonloads and freight wagons utilisation.

The use of conventional wagons involves both individual wagonloads and unit trains, as well as in some cases hybrids between these. Single wagonload, in contrast, competing with highway-and-rail intermodal transportation, as well as with direct highway transportation, is generally declining in Europe, although a reversal can also be seen in some cases. The decline is manifested in fewer shipments being sent as wagonload, but also in a falling availability of the facilities needed for wagonload handling, such as sidings and publicly accessible loading areas at local stations.

Several nations have abandoned single wagonload service. Key factors for wagonload to be able to sustain or even improve its competitiveness are accessibility and transit times as well as costs. Costs can be cut by raising the capacity of the individual wagon through larger loading gauges and higher axle loads. A particular segment where single wagonload can be competitive is the transportation of those items whose dimensions or mass exceed the normal limits on the highway, such as long pipes, plate, poles, masts, beams, house sections and heavy machinery, but this depends on loading and unloading facilities being available at both the origin and the destination.

Current limitations for single wagonload services in northern Europe are up to (approximately) 13 m2 loading gauge rectangular cross section above floor level (1.2 m ATOR), 5.3 m high intermodal gauge at 2.6 m width (P/C 497), 25.1 m loading length, and for iron ore 12 tons / m and 30 tons axle load, while the current design standards for new bridges in northern Sweden are for 14 tons / m and 40 tons axle load.

A recent trend is coordinated transports from nearby production plants over long distances to the market. This may consolidate products from even competing producers to gain the economy of scale of unit trains, and bypass the traditional marshalling yards to achieve short transit times and high equipment and staff utilisation, but near the end

11 Source: Silke H, 2013


Page | 34

of the flow disperse to many individually small consignees. It thus has characteristics of both unit train and single wagonload handling, and competes on costss and transit time as well as service frequency and reliability. The competitiveness can be enhanced if backhauls can be found for a large share of the wagons. This is a growing pattern with potential to grow further. With continued internationalisation in trade patterns follows longer transport distances, resulting in a larger share of shipments taking longer than over-night, thus an increasing share of freight trains travelling also during daytime, for which high travel speeds are required to travel interspaced between faster passenger trains on the same track. In summary, some trends that are likely to be continued further, and that will help shape the competitiveness of the unit train and wagonload transportation segments (and to some extent intermodal):

• bigger trains and wagons; • higher speeds; • simpler handling, one-man switch crews, possibly automated brake tests; • information sharing and responsiveness to shifting shipment demands; • terminal availability, cheap multi-use terminals.

3.2 Issues with SWL operations

3.2.1 Operating capacity

SWL services are dependent on the seamless execution of interconnected processes, meaning human factors play a very important role to provide a service of good quality. It is Imperative that as in any process that consists of multiple participants and stages, the opportunity for enhancing the management of any rail-related logistics chain is high. The capacity and the seamless operation of the entire logistics chain relies on interconnected processes working well together. Therefore a management system for SWL service in Europe is needed to function in a way that ensures:

• Utilisation of existing capacity in terms of train slots available and axle loads per train-set;

• Utilisation of existing capacity of shunting facilities, sidings, marshalling yards, etc.;

• Delivery of empty and loaded wagons in such a way to reduce congestion and increase punctuality;

• Fast loading and unloading to shorten the whole service time per wagon, or per train-set;

• Seamless communications between client and rail undertaking provided by advanced information technology;

• Complete transparency and collaboration throughout the entire service.

3.2.2 Fleet Management

The slow and semi-random movement of wagons and their dispersal over many small terminals and over very large areas where they cannot be collected or delivered very frequently has necessitated the provision of an enormous fleet of wagons. This results in a low level of profitable utilisation. Because of their almost random circulation, the wagons have to be universally capable of coupling and running with one another and of going almost anywhere on the system. Wagon compatibility and fleet size has been an obstacle to technical progress leading to slow technical evolution of rolling stock, and the respective control and management. The Smart-Rail consortium believes that expansion of the current freight fleet in Europe is unnecessary. Instead rail freight needs to focus on the improvement of the level of efficient management of the existing fleet, solving


Page | 35

compatibility/standardisation issues, and replacing older wagons for new to offer higher reliability, noise reduction, and easier handling etc.

3.2.3 International Aspect

In general, the border crossing market share of SWL is much lower than the domestic one. Border crossing traffic could benefit from the better economics of longer distances, higher load factors and massively enhanced vehicle productivity. However, that is where wagonload suffers significant weaknesses when compared to block trains or road transport. The interdependency between incumbent railways and international links is an issue that needs to be addressed. Wagon management and operational “ownership” has been historically disregarded and considered of minor importance. The railway transport is, from its inception, best suited for transporting large volume of goods (not necessarily bulk) on long distances. This should therefore be stressed – from both the technological and business point of view, and this is why long distance transports should be preferred in the SWL segment. The single wagons limited on the domestic railway network, on the other hand, go directly against these technological implications.

3.2.4 Fleet Monitoring

Proper fleet monitoring is a necessary prerequisite to achieve efficiency in the core business of a railway undertaking or operator: a freight wagon is one of the most significant enterprise resources of a RU or an operator in the setting of a highly competitive transport market. A number of various technologies are therefore being used for the fleet monitoring – differing in their sizes and scopes for various RUs or operators. The most important components of these are the identification technologies and tracking and tracing technologies. Identifying the wagon (i.e. the specific object or “instance”) is the necessary first step of any fleet monitoring. Without unique identification, no status, no events, alarms, and no statistics either can be assigned to the wagon. To identify the wagons (or other loading units, for that matter, the following technologies are commonly used:

• RFID (Radio frequency identification): Originally developed and used in the retail sector, the RFID technology has gained a widespread usage, among others also in the transportation industry. The technology requires installing special devices, so-called RFID readers, in the monitored area or system. Using the RFID technology involves installation of a relatively simple device on the vehicle (i.e. the RFID tag); on the other hand, rather costsly equipment on the infrastructure side is necessary (readers, data collection network etc.), and therefore its usage is dependent on an external subject (the IM). The RFID tag is also usable only for identification, and can carry only limited additional information. In the area of transport and logistics the RFID technology is therefore mostly used in closed areas and systems as logistic centres, industry railways, or warehouses (where they serve to steer the inventory and picking processes). On railways the RFID technology has still a rather limited usage – due to the varying standards (lack of unification hinders a more widespread usage) and due to rather high investment costss on both the infrastructure and fleet side.

• Camera-based technologies: (with Optical character recognition or OCR) are independent of any information given into the system by other subjects. However, due to varying technical states of the rolling stock, the wagon numbers are often


Page | 36

difficult to read and therefore error-prone. The technology is directly dependent on investments on the infrastructure side.

• Mobile technologies: As an independent way, identification by a mobile device may be also used. In this case it is the train driver who provides the train identification and assigns it to his or her mobile device (smartphone, tablet etc.). This way also the necessary communication with the infrastructure manager may be facilitated (where the train driver communicates messages as Train Ready, Train Position, and exchanges information, dispositions and instructions with his or her dispatching).

“Third-party” identification is frequently used – assuming the wagon information and numbers typically from another RU (the national carriers being the most significant and operating the most comprehensive fleet management ICT systems), or from the infrastructure manager (IM). This requires, however, a contractual agreement with the specific subject. Employing a technology in a closed area imposes a limitation that the internal wagons (owned by that operator) are often out of reach of the system (out of the controlled area) and external wagons (owned by other operators) were untraceable in this network. Following the identification, the precise position of a railway wagon is necessary to track and trace. For this purposes, several methods are typically used:

• Human tracking & tracing: the “old fashioned” human inspection and subsequent data entry into the ICT systems – i.e. on the loading and unloading railway stations, sidings, in the shunting yards (where applicable), and at other workplaces – has still its significance; its advantage is complete independency of any technical devices on both the rolling stock and the stations.

• GNSS systems: the well-known satellite-based Global Navigation Satellite Systems (GNSS) – the major ones including the U.S. NAVSTAR GPS, the European Galileo, and Russian GLONASS – are giving a very precise position of the unit. The technology is well-matured and thanks to the standardisation and widespread usage the competing producers and vendors push the costss well down. However, rather high investment costss are involved in tracking a larger part of the fleet with GPS (equipping each wagon with a GPS unit with specific robust form-factor suitable for the railway vehicle). Therefore tracking the whole trains (i.e. engines) is usually employed (sometimes also providing the information by the train driver); individual freight wagons are tracked usually only in case of a higher-value cargo as automotive.

• RFID and RTLS: the telemetric Real-time locating systems (RTLS) are in a widespread use in manufacturing. However for the railway transport it has a rather limited usage. The more generic radio-frequency technology RFID may be used instead. However, due to technical and standard-pertinent issues their usage is again to be seen rather in closed systems (as mentioned above).

Tracking and tracing is also often based on “third-party systems”, i.e. mostly the IM or the partner RU (similarly to wagon identification, as mentioned above). A comprehensive set of standardised wagon management tools composed of tracking and identification hardware, information, condition monitoring, utilisation and management (e.g. communication protocols, data formats, etc.) provides the basis to enable the creation of efficient fleet and freight management tools with continuous visibility of the network and the assets under management). In addition to enabling fleet visibility, standard hardware tools with communication functionalities improve also productivity as they provide the capacity to automate the train information build-up. This implies that human intervention is not necessary to identify and register the wagons and their position in a train. This information is collected


Page | 37

by the wagon management units communicating between themselves and collaborating on building the train structure. A set of protocols and procedures would enable these units to define the communication strategy between them to keep a central management application updated with the train information and location. An integrated approach is necessary – to merge the data from varying data sources into one place for accessing by both the personnel and the customers of the RU. In this context, previously separate applications (having been often developed separately or independently at the large companies) have been usually integrated into one comprehensive ICT system (if not right replaced by another solution of the next generation). The ICT systems are nowadays used not only for operational support in day-to-day business, but also on the tactical and strategic level. As a “case study”, the Czech national operator ČD Cargo may be mentioned: its ICT solution had been since long developed by traditional vendors, in accordance to the three levels of ICT and process control (strategic, tactical and operative). More recently, the ICT landscape of ČD Cargo has been redesigned and upgraded into an integrated ICT system called PROBIS (Operation and business information system). The integrated system includes, among others, a dedicated fleet management system (formerly called “UDIV”) with mathematically optimised repositioning of the empty wagons: this way the non-productive empty runs are reduced, which leads to significant costs savings, and therefore to increasing the efficiency and attractiveness of the railway freight transport. The operator ČD Cargo is the largest freight railway undertaking in the Czech Republic, and a member of the X-Rail alliance, cooperating mostly with the other national cargos in Europe. It accounts for around two thirds of transport performance in gross tonne-km and in train-km; however the market position is in a slight decline (in favour of the private RUs). The ČD Cargo offers broad services (as any national cargo), i.e. from SWL transports (both domestic and international), to serving railway sidings, to transporting bulk trains and intermodal trains, special transports (oversize) etc. In Smart-Rail, however, such a company is considered as a sort of case study: the over-complicated business and over-complicated ICT landscape causes drowning in the permanent business issues.

3.2.5 ICT Standards for SWL and Rail Freight

In the ICT systems, communication and data exchange standards are of the utmost importance, as they allow for seamless communication between different systems from different vendors and subjects. In the transportation area, the standards may be seen mainly in the area of application protocols (according to the seven-layer ISO/OSI model). The application protocols take care of data structures and data semantics in the first place; furthermore the data semantics is to be agreed upon by the applications, typically based on the application standards. Multitude of different projects and multiple varying standards are in use. Some examples for this are:

• RFID, control and command systems ―Lorangaǁ in Sweden; • DSRC Electronics implementation for transportation and automotive applications -

the Delta project; • F-Man – an FP5 collaborative project on tools for fleet management and asset

control addressing SWL operations. This project developed Prototype which consists of:

o Tracking System Module (TSM) to locate wagons wherever they are in Europe, and to retrieve wagon status information (loaded, unloaded, moving)


Page | 38

o Data Processing Module (DPM) to progressively predict the Estimated Time of Arrival (ETA) for each wagon, and to make available all information regarding wagon history;

o Asset Management Module (AMM) to propose a proper choice of wagons to comply with clients' orders, according to customised productivity indicators;

o Graphical User Interface (GUI) to present the fleet manager, in an intuitive and user friendly way, with details on wagons position and operating data on geographical maps.

• TSI (Technical Specification for Interoperability) – defining standards to ensure the interoperability of the trans-European rail system in general;

o TSI TAF – Telematic applications for freight services (the most determining for IT in SWL); published as a Commission Regulation (EC) 62/2006. Its goal is to simplify and/or allow seamless data exchange among various stakeholders on rail, especially among the IMs and RUs or operators. It includes and defines: 1) common objects; 2) common processes of the train lifecycle; and 3) the pertinent messages to be exchanged among various stakeholders of the railway business.

• Legacy UIC applications (A30 for the freight train pre-advice, A31 or ISR for monitoring wagon movements – now under RailData, A38 or wagon search, A40 for bilateral data exchange of the consignment notes and wagon sheets): may be considered a sort of legacy applications, but still in use, operated within the Hermes network by the organisation HitRail. Nowadays they follow the Hxx numbering (H standing for the Hermes network), the most important being H01, H30, or the new H20 for requesting a train path.

• RailData and ISR – RAILDATA is a subsidiary of UIC and provides freight wagon and consignment information for its member railways. They are tasked with designing, developing and running IT services that support the European freight railway sector. As a result of this they have developed four main tools for this purpose:

− ORFEUS - Open Rail Freight EDI User System − ISR – International Service Reliability − Use IT – Uniform System for European Intermodal Tracking and Tracing − WDI – Web Data Interface.

Within Smart-Rail both ORFEUS and ISR will be utilised.


Page | 39

− ORFEUS provides the electronic data exchange of the consignment note data between the co-operating railway undertakings using its central database. In the first step the data are sent in parallel to the paper CIM consignment note (or CUV wagon notes data for empty wagons). Since 2006 ORFEUS migrated to the XML-CTD message using system, in particular to fulfil the requirements related to the coming into force of the new international rail transport law CIM. In 2009, the system was extended with the ECN message format and new message flows.

− ISR is an information system developed and operated by RAILDATA. It is a common tool of RAILDATA RUs for the concentration and exchange of information about movements of freight wagons in international traffic through a central platform. It makes it possible to track both loaded and empty freight wagons and consignments across significant parts of Europe.

• railML – a new emerging standard. It is an open, XML-based data exchange format for data interoperability of railway applications. Its three sub-schemes are used for 1) infrastructure (description of tracks and signalling); 2) rolling stock (vehicles); 3) timetables. The railML standard has been increasingly adopted by the European IMs mostly for the infrastructure part; the timetabling sub-scheme is not mature enough to gain a widespread usage, and the TSI TAF standards and communication messages are used instead.

• Proprietary solutions are also frequently used

3.2.6 Production Pattern

The orthodox rail freight model for SWL subordinated to Hub and Spoke structure has shown to be inflexible to match the new requirements of shippers and wider cargo interests. Downstream trends have been observed and this situation in Europe is unlikely to change any time soon. If rail freight in Europe and SWL in particular is to break back into markets, it has to rapidly adapt to changing political measures, economic trends and market conditions. This could be achieved by employing innovative logistics’ concepts and through collaboration in door to door services.

3.2.7 Costss and (dis)Economies of Scale

A single freight wagon (or block of freight wagons) does not move usually on one freight train directly to its demand destination. Instead, the freight wagon moves on various freight trains. This process can be specified by schedules. To some extent, the schedules indicate the connections between freight trains that the freight wagon must be part of in order to arrive at the demand destination at the appointed time. These connections take place at the marshalling (shunting) yards. If a connection fails, the freight is detained and the client does not receive the freight at the appointed time. Negative effects observed: the yard queue materialises, the yard limited physical/operational capacity is reduced, the yard personnel encounters difficulties to serve the next freight trains, low utilisation of moving assets, low efficiency, long term average costss for the railway company increase, the quality of service provided declines, unreliable service seen in infeasible contracts, unfulfilled customer expectations, and the rail freight operator loses its reputation as a reliable provider of freight transportation services.

3.2.8 SWL Modernisation

Over the last 15 years many customer’s needs have changed. Railway companies see SWL modernisation through reduction of complexity in providing their services by rail. New services have emerged, such as Non-Bulk Services by Rail. It is also evident that SWL services have been abandoned by some rail freight undertakings in Europe, only to concentrate on Block Trains. Operating processes with freight trains at marshalling yards (shunting and hump yards) have been reduced significantly. Unattended services with


Page | 40

block trains have emerged. New concepts and technologies for rail freight have been developed and tested such as CityCargo, CargoSpeed and TruckTrains. However what is observed is that modern technologies and new technical developments have – with the exception of Combined Transport – not yet experienced a significant market uptake by industry, which led to old systems being retained but which are inappropriate for the most recent developments in the sector, and being incapable to respond adequately to demanding customer requirements.

These old train-assembling stations might gain in logistics functionality by connecting them to European gateway ports and TEN-T corridors. European gateway ports such as ARA, Hamburg, Zeerbrugge and Bremenhaven receive large volumes of imported goods from overseas sources and/or inland navigation centres but also consolidate large quantity of commodities manufactured in Europe for overseas travel. The TEN-T corridors are the most used freeways for hauling inbound and outbound goods traffic between the regional and national origins and destinations. Thus, connecting some of them with large rail shunting yards will provide access to large cargo repositories.

Investing in and overhauling these old marshalling yards for consolidation and handling of large freight volumes and liaising with European corridors may dramatically increase the quality of rail infrastructure and produce efficiency gains buttressing competitiveness of intermodal and SWL rail carriers.

Here the rail port concept could be useful. The rail port derives from a dry port solution whose original task was to reduce the container dwell and turnover time by pushing box storage and handling functions out of harbour facility to geo-strategic hinterland locations. Relieving the seaports of box congestion caused a dramatic increase in extra- and intra-European trade and fostered the establishment of several regional inland freight consolidation and logistics hubs for intermittent freight service operations. The rail port concept could be applied as traffic organisation tool for converging of large volumes of rail, barge and truck-moved European goods from dispersed point-to point delivery patterns towards several, carefully selected regional cargo gravitation centres connected to European ports and inland transhipment depots where goods shipments destined to domestic terminals could be loaded onto rail. Establishment of rail ports will reduce the number of transportation links between the large cargo consolidating gravitation centres, the European gate ports and the national distribution hubs.

Although establishment of new logistics facilities may not totally reinstate the demand for SWL services to the pre-crisis levels, still they may increase the market potentials for both the intermodal and SWL solutions.

3.2.9 Customer’s choice

The most important factors for a freight forwarder to choose SWL appear to be: reliability, security in transit, frequency of service, schedules, efficiency, economic viability, availability of an extensive and seamless network and easy access. The practical service introduced in this CIT addresses these topics employing a structured and fully integrated approach.

3.2.10 Access to Capital

Given the current Europe-wide post-crisis scarcity of private risk capital such as bank loans, private investors’ support for rail industry, which is notorious for low financial efficiency evidenced in poor ROIC and TRS scores12 cannot be expected.

12 A recent McKinsey (2015) study “Creating Value in Transportation and Logistics - a Perspective

on how Transportation and Logistics Businesses can Increase their Economic Profit” shows that rail freight companies score particularly poor on ROIC which makes that market valuation


Page | 41

A recent study by the European Central Bank (2015)13 which investigated, inter alia, the dynamics in the European SMEs’ rankings of different problems obstructing their business expansion has shown that between October 2014 and March 2015 “access to finance” was considered as an important issue. This problem was most acute for SMEs from Greece, the Netherlands and Ireland. It was less severe for SMEs from Austria, Germany where availability of “skilled labour” appeared the most significant concern. However, it has to be observed that SMEs from countries with most dynamic growth prospects in manufacturing and consumptions, such as Romania, Poland and the Czech Republic, which are important drivers of transport demand, did not participate in the survey.

This exclusion is important because Germany, Poland, the Czech Republic and Romania were identified by Collier International14 as countries where absolute increases in manufacturing activity and consumer spending are expected to grow until 2020 far ahead of those forecast in Austria, France, Spain and Sweden.

The competitive position of private rail undertaking is further exacerbated by the fact that some national cargo companies benefit from cheap loans for asset acquisition and other business investments, which either have been procured by their state owners and/or took a form of financial guarantee, which the latter extended to private and/or public loan givers. In some cases, such as the one described in 2015 “New Industry” an business and industry periodic published in Poland, in 2013 PKP Cargo’s acquisition of 80 container carriages was funded by European Infrastructure and Environment Fund and channelled through the transport ministry15.

Several other cases, where high-growth rail-freight start-ups have been acquired by the German incumbent with public money, are also well-known.

The RETRACK project has further established that the scarcity of human and financial resources, weak market position and competitive vulnerability towards established rivals were the root causes which made that many rail start-ups became easy targets for incumbents’ buy-outs. As result, many small players exited the rail cargo competitive arena, thus entrenching market dominance of the state owned carriers

Therefore, in order to not only survive but change the current modal structure of European rail freight industry, private rail entrepreneurs need to make bold strategic moves to improve their competitive positions. In order to boost capacity, technology deployment and economic efficiency and margins, they need money.

Under these circumstances, a continuous inaction on the part of the EC as regards the lack of access to private equity, venture capital or other debt-based finance for private rail undertakings will jeopardise competitiveness of European freight rail sector vs road transport even further. As a consequence, it will preserve the dominance of trucking in European goods conveyance and contribute to further raise in negative socio-environmental externalities from motorised transportation. By doing so it will provide more evidence of inability by the EC rail-market liberalisation policy to attain its socio-environmental objectives.

multiples for rail freight companies in 2015 amounted to about 11 versus 13.5 for S&P 500. The report also mentions that the total return to shareholders (TRS) by rail freight companies over the last ten years was 7.2 percent, a figure well below the sector’s costs of capital (10.5 percent), confirming its poor financial and economic efficiency. (http://ww.mckinsey.com/insigths/Travel_Transportation/Creating_value.)

13 European Central Bank (2015) “Survey on the Access to Finance of Enterprises in the Euro-area”, June.

14 Source: www.colliers.com/research 15 Source: http://logistykakolejowa.pl/html/pkp_cargo_odebra3o_od_ekk_wago.html


Page | 42

Figure 3-1 details the outcomes of European rail freight industry system’s analyses which identified four main problem drivers, their manifestations and five types of remedial policy interventions which both European and national policy makers may employ to help all private and public rail operators in winning higher shares of European freight market.

Problem Driver

1

• Inneficient functioning of national institutions set up by the EU legislation

Problem Driver

2

• Scarcity of private venture capital hinders new entrant's investments in

service production assets and market expansion

Problem Driver

3

• Financial and regulatory discrimination of private entrants

Problem Driver

4

• Access to subsidised loans for state owned incumbents for acquisiton of

rolling stock, IT platforms, modernisation of classification yards and

terminals. Non-transparent access conditions for incumbents


Page | 43

Figure 3-1: European rail freight industry system’s analyses

Specific

objective 1

• Increase the efficiency of safety certification, vehicle authorisation, and

access granting

Specific

objective 2

• Ensure non-discrimination in the recognition of safety certificates, and inter-

operability authorisation

Specific

objective 3

• Sensitise national competition authorities to technical, legal and financial

discrimination and predatory M&A

Specific

objective 4

• Engage with private capital (PPP) to invest in high technology-driven rail-

ports in CSEE

Specific

objective 5

• Better harmonise the technical and safety standards


Page | 44

4 Corridor selection

4.1 Current routes and frequencies

At the outset of the project in May 2016 operations had commenced in the south of France (Figure 4-1).The initial service coordinated by Smart-Rail consortium member BD Rail Services who, in conjunction with three RUs (Ferrivia, Securail, and RDT13), have an existing operation in the south of France. This, in addition to having a willing consortium partner, offers the CIT the advantageous situation that it can make use of an already existing SWL operation. At a very early stage, the project has a corridor and service that can be used as a building block for further development and expansion. This also gives a focus as to which geographical areas market-research should be carried out in, and provides the logical direction for routes into which to expand.

The existing route offers a connection from Belleville – north of Lyon, to Sélestat – near the German border. There are two weekly departures from each city; Monday and Wednesday departing Sélestat, with Tuesday and Thursday departures from Belleville. The current capacities limitations of the corridor are a 750m train length and 1600 tonnes. At the commencement of the project the service consisted of one customer and 600 pallets per train.

This current operation is based on a direct A-B delivery concept in contrast to the offers currently on the market which often offer a convoluted route from shipper to customer. The current operation has the capability to carry a range of wagon types and commodities from all classes except class one and seven.

To shortlist potential clients the CIT aims to find partners that share the overall view of Smart-Rail, are willing to share their network and customers and shippers that have an output of ca. 50,000 - 100,000 tonnes annually.

Table 4-1 details the interaction of BD Rail Services and their partners, with Figure 5-1 detailing how Smart-Rail can provide the link between BD Rail Services as a co-ordinator in France and a further Europe-wide co-ordinator operated under the Smart-Rail banner.

Table 4-1: Interaction of BDRS and its partners

Roles

Partner Coordinator LSP RU

BDRS X X

Ferrivia X X

Securail X

RDT13 X


Page | 45

Figure 4-1: Service as of the commencement of Smart-Rail16

4.2 Current Marketing Tools

Initial marketing tools have been in place for setting up the initial corridor and service but the results and successes of these have been due to the efforts of BDRS and their partner RUs.

The initial marketing has mostly focused around face-to-face meetings with using the existing contact network of BDRS and their partner RUs as a base.

Under Smart-Rail these have been added to with extra resources and contacts as detailed in Section 5.7.

16 Source: BD Rail Services/Railistics


Page | 46

4.3 Existing IT

In terms of wagon tracing, BDRS and their partners utilise QR codes attached to the side of wagons. The capability then exists so that when scanned at an origin, destination, or an intermediate point, an automated email is forwarded to the customer informing them of the current location of the wagons. While the system is appropriate for the current level of service there is a need for this to evolve in order to take account of a larger number of clients, commodities, wagons and routes. This development will form a part of this CIT in conjunction with other Work Packages to ensure a consistent implementation and efficient use of resources.

5 Concept Extension

5.1 Potential expansion routes and frequencies

Why did SWL not follow the success of intermodal rail freight transport? The two main differences when compared to the “trainload” market are the lack of rail on rail competition on the strategic level, the inflexibility on an operational level caused by infrastructure constraints and the costss of outdated operational procedures e.g. on the last mile. Through this CIT, Smart-Rail will aim at both the macro and micro level of this market.

This CIT does not see SWL as an alternative to intermodal transport but as an operations concept for railways to bundle or aggregate volumes into trainloads to both satisfy national traffic demand and feed long haul international services. It fully includes intermodal businesses as well as all other existing and potential new goods sectors. The Smart-Rail approach will include an innovative cooperation structure between logistics service providers, forwarders, RUs and new operation and technological solutions (including robust ICT solutions) that increase the efficiency of train formation activities and last mile operations.


Figure 5-1: The Smart-Rail interaction17



5.1.1 Extensions in 2016

With the initial service well established the priority for this CIT is to extend the services so that a direct connection to a port is achieved. The Port of Fos-sur-Mer was been chosen as a partner RU of BDRS which is already established in this area. This extended service commenced operation in March 2016. As seen in Figure 5-2 the service will be extended to serve Neuf-Brisach, Chalon-Sur-Saône, Le Teil and Fos-sur-Mer. The commodities and routings of this extended service are detailed in Table 5-1.

This extended service will open doors to new clients, new commodities while at the same time offering direct access to port facilities. It is expected that this direct connection to a deep-sea port will make the service more attractive to shippers who require port access as part of their business model.

These extensions offer connections to border cities, through which connections to Germany and further east can be realised when the appropriate loads, commodities, and customers are found. Customers in East Germany are actively being investigated.

Figure 5-2: Extensions in 201618



Page | 49

Table 5-1: Extended service with terminal type, commodities and routings

Terminal

Type

Commodity

Type

Routing

Neuf-Birsach

Inland Port • Direct from Chalon-sur-Saône (A-B),

• Fos-sur-Mer via Chalon-sur-Saône (A-C)

Sélestat Sidings Wood, Solid Bulk, Pallets

Chalon-sur-Saône

Sidings • Direct from Fos-sur-Mer (A-B), • Neuf-Birsach (A-B)

Villefranche Sidings Pallets

Le Teil Sidings Wood

Fos-sur-Mer

Maritime Solid Bulk • Direct from Chalon-sur-Saône (A-B),

• Neuf-Birsach via Chalon-sur-Saône (A-C)

5.1.2 Extensions in 2017

In 2017 it is planned to extend the service so that it includes further connections to deep-sea ports (Le Havre and Antwerp), as well as international connections to Belgium and Switzerland. These further extensions will be achieved through agreements between BDRS and Greenmodal, B-Cargo, and SBB Cargo (already existing).

In order for this service to be successful the offer needs to be flexible and offer short transit times to all customers. As such, the travel time from each of these locations to the main network is foreseen to be one day.

5.1.3 Connection with other potential networks

SWL services already exist in Europe for example those offered by RETRACK and ChemOil. A goal of this CIT is to maintain communication with these services with a view to working together in the future and linking the renewed French SWL network to the rest of Europe.


Page | 50

Figure 5-3: Extensions in 201719



Page | 51

Figure 5-4: Future Expansions and interactions with other networks20



Page | 52

5.2 Case Study: Germany

With the exception of the 2009 financial crisis, SWL has been making steady increases in line with the overall increase of rail freight. This is in contrast to the block trains that between 2010 and 2013 have plateaued and in 2014 decreased. It is clear that SWL services have been winning loads and with the corresponding decrease in Tkm this seems to indicate that these wins are over shorter distances. This corresponds to Figure 5-7 which details the average rail transport distance in Germany that shows for SWL there is indeed a decrease in the distances travelled. This shows that SWL is improving its competitiveness with other modes over shorter distances; an idea that goes against the more commonly held thinking regarding SWL transport.

Table 5-2: Division of rail freight in Germany (Tonnage)21

Year Total Block Trains Single

Wagonload

Quantities (1000 Tonne)

2005 321,343 232,295 89,048

2006 346,118 254,224 91,894

2007 351,857 255,471 96,386

2008 371,298 267,134 104,164

2009 312,087 233,656 78,431

2010 355,939 262,955 92,984

2011 374,801 269,220 105,581

2012 366,204 270,644 95,560

2013 373,274 267,938 105,337

2014 365,026 257,216 107,810

Difference to the previous year (%)

2006 7.7 9.4 3.2

2007 1.7 0.5 4.9

2008 5.5 4.6 8.1

2009 -15.9 -12.5 -24.7

21 Source: Eurostat


Page | 53

2010 14.1 12.5 18.6

2011 5.3 2.4 13.5

2012 -2.3 0.5 -9.5

2013 1.9 -1.0 10.2

2014 -2.2 -4.0 2.3

Figure 5-5: Freight moved by rail in Germany22

22 Railistics/Eurostat


Page | 54

Figure 5-6: Rail freight transport performance in Germany23

Table 5-3: Division of rail freight in Germany (Tkm)24


Wagonload

Transport Performance (Million Tkm)

2005 96,533 63,715 33,818

2006 107,008 73,556 33,452

2007 114,617 80,991 33,626

2008 115,652 84,002 31,650

2009 95,834 72,607 23,228

2010 107,292 79,673 27,619

2011 113,201 83,809 29,392

2012 110,979 86,134 24,663

2013 112,670 84,402 28,269

2014 112,553 85,424 27,129


2006 10.9 15.4 1.9

2007 7.1 10.1 0.5

2008 0.9 3.7 -5.9

2009 -17.1 -13.6 -26.6

2010 12.0 9.7 18.9

2011 5.5 5.2 6.4

2012 -2.1 2.8 -16.1

2013 1.7 -2.0 14.6

2014 -0.1 1.2 -4.0

23 Railistics/Eurostat 24 Source: Eurostat


Page | 55

The average distance travelled by SWL services has seen a reversal over the past decade from highs in 2005 falling steadily until 2014. This reinforces the idea that SWL is becoming more competitive over shorter distances as the tonnage carried is increasing. However the Tkm are remaining steady therefore in Germany it is the case that more freight is being carried over shorter distances.

Figure 5-7: Average rail transport distance in Germany25

25 Source: Railistics/Eurostat


Page | 56

5.3 Case Study: Switzerland

As shown in the following tables and figures, Switzerland lies in contrast to Germany. Whereas in Germany the share of SWL is increasing the situation in Switzerland is somewhat different. Following a significant drop in 2009 neither the tonnage carried nor the Tkm have shown any reversal of fortunes. It does appear that some services have been lost to wagonload transport which has shown continuous increases over this timeframe.

It is interesting to note however that the average distances for SWL in Switzerland are steady at approximately 150km which is normally seen as the realm of truck transport. The reasons for this are due to the geography of the country and that suppliers are never far from a rail connection or branch line and that many shippers have their own sidings negating the need for other modes.

It will be interesting to see if developments put forward under the ViWas project which focused on SWL in Switzerland will have the effect of increasing the market share of SWL.

Table 5-4: Division of rail freight in Switzerland (Tonnage)26

Year Total Block Trains Single Wagonload


2008 63,336 37,705 25,631

2009 56,640 35,765 20,875

2010 60,418 39,125 21,293

2011 61,114 40,349 20,765

2012 55,607 34,013 21,594

2013 59,505 36,401 23,104

2014 60,345 38,197 22,148


2009 -10,6 -5,1 -18,6

2010 6,7 9,4 2,0

2011 1,2 3,1 -2,5

2012 -9,0 -15,7 4,0

2013 7,0 7,0 7,0

2014 1,4 4,9 -4,1

26 Source: Eurostat


Page | 57

Figure 5-8: Freight moved by rail in Switzerland27

Figure 5-9: Rail freight transport performance in Switzerland28

27 Source: Railistics/Eurostat 28 Source: Railistics/Eurostat


Page | 58

Table 5-5: Division of rail freight in Switzerland (Tkm)29


Wagonload


2008 11,483 7,508 3,975

2009 9,495 6,474 3,021

2010 10,750 7,613 3,137

2011 11,009 7,987 3,022

2012 10,290 7,212 3,078

2013 11,015 7,721 3,294

2014 11,667 8,776 2,891


2009 -17,3 -13,8 -24,0

2010 13,2 17,6 3,8

2011 2,4 4,9 -3,7

2012 -6,5 -9,7 1,9

2013 7,0 7,1 7,0

2014 5,9 13,7 -12,2

29 Source: Eurostat


Page | 59

Figure 5-10: Average rail transport distance in Switzerland30

30 Source: Railistics/Eurostat


Page | 60

5.4 Case Study: Europewide31

The analysis from 10 European countries is showing that SWL has kept steady in terms of tonnage transported over the analysed time period. After an increase in 2011, block trains too remained steady over this time period. It is interesting to note in Figure 5-13 that the average distance travelled in terms of SWL has dropped significantly over this timeframe reflecting the pattern that was seen in Germany and Switzerland.

This shows once again that while the tonnage carried and Tkm remained relatively stable, SWL services must be carrying more loads over shortage distances. These increases may be as a result of general improvements in SLW as a product, the development of rail ports, the revival of private sidings, better operations concepts, and based as a result of other schemes that have been implemented in terms of EU funded projects and other initiatives put in place by private groups and alliances.

Table 5-6: Division of rail freight in Europewide (Tonnage)32



2010 914,574 648,173 266,401

2011 1,010,284 705,400 304,884

2012 965,713 690,917 274,496

2013 979,576 689,046 290,530


2011 10,1 8,8 14,4

2012 -4,4 -2,1 -9,9

2013 1,4 -0,3 5,7

31 Europewide includes information from Germany, Italy, Lithuania, Poland, Romania, Slovenia,

Slovakia, Finland, Sweden, and Switzerland 32 Source: Eurostat


Page | 61

Figure 5-11: Freight moved by rail Europewide33

Figure 5-12: Freight moved by rail Europewide34

33 Source: Railistics/Eurostat 34 Source: Railistics/Eurostat


Page | 62

Table 5-7: Division of rail freight in Europewide (Tkm)35



2010 248813 177860 70953

2011 265,351 187230 78121

2012 253,906 186259 67647

2013 258043 187578 70465


2011 6,6 5,3 10,1

2012 -4,3 -0,5 -13,4

2013 1,6 0,7 4,2

Figure 5-13: Average rail transport distance Europewide36

35 Source: Eurostat 36 Source: Railistics/Eurostat


Page | 63

5.5 Potential markets and commodities

The potential markets into which this service can develop and the commodities included therein depend completely on the shippers and receivers that are active in the geographical expansion areas, their current and expected outputs or requirements, and their willingness to change to a rail based solution.

Depending on where Smart-Rail expands into, future loads can potentially come from trucking or IWW.

5.6 IT developments to account for the higher demand

As part of the Smart-Rail project WP5 is concerned with the information availability and as a part of this the Interoperability Platform is being designed and developed to facilitate data sharing among stakeholders involved. The architecture represents the unified data exchange environment and data interfaces or user interfaces, as designed in a comprehensive and versatile way in WP5.

Altogether WP5 shall cover:

• T5.1 – Interoperability Architecture: requirement analysis, use case drafting, specifying the architecture, and developing the necessary components

• T5.2 – Data Governance: Measures and rules for participation and data sharing, i.e. rules to be adhered to, issues of data privacy, data secrecy, authorisation; data quality, data verification and more

• T5.3 – Semantic interoperability: developing a semantic model of the platform, based on the ontology approach; defining the data structures, data interfaces and possibly data exchange standards used

• T5.4 - Validation of solution in the Continuous Improvement Tracks:

detailing technical requirements for each CIT, defining the detailed configuration of the virtual data space, validating and testing the solution

5.6.1 Data requirements on CT-Rail

Generally speaking, the following data were identified as necessary for implementation:

- Pre-trip information - data and information for planning the train service (in cooperation with the RU), covered often by so-called “reference files”

- Train path availability for ad hoc planning – in its narrow sense, the train path is available only for the authorised RU; however, for planning purposes, the planning is done in cooperation between RU and LSP;

- Real Time Information – most notably the Train Position; multiple primary information sources are used (e.g. independent ones as GPS units, RFID tags; primary data from the traffic control processes of the IM; fleet management systems of the RU), as described in Section 3.2 in more detail;

- Location of the wagons, Track & Trace of individual wagons. Can be used for prioritisation for loading and unloading trains (e.g. weight, high value products, client request);

- Estimated time of arrival (ETA), estimated time of departure (ETD) – the key data items for the operative planning.

5.6.2 Communication between an IM and a RU

As far as planning and controlling the train traffic is concerned, the licensed RU is the only possible authorised partner for the IM, and it is responsible for the train as a whole during its whole lifecycle, from the Path Request, through the pre-trip information (Train Preparation) and trip information (Train Position), to the reporting and access fee charging.


Page | 64

What information is provided by the IM to the RU:

- Network Statement – the most basic document (provided generally as PDF), defining the general conditions on accessing the railway infrastructure;

- Reference Files – data files containing the keystone information on the railway network (among others), according to the TSI TAF standards, occasionally in other formats;

- Infrastructure Restriction Notification Database – defines both planned and unplanned closures (as maintenance works), disruptions, temporary speed limits etc., necessary for proper planning of the train traffic;

- Path Request – request for a timetable “slot” or Train Path; involves a rather convoluted communication dialogue described by TSI TAF;

- Path Study – a preliminary, non-binding request (“what may be requested, what is feasible to offer from the IM”);

- Train Composition, Train Ready – a sort of “complementary” information to the train from its RU (information on vehicles and dangerous goods; Train Ready is a signal saying basically “I am ready to go”).

5.6.3 Inter-relation of WP5 to other WPs within Smart-Rail

The Continuous Improvement Tracks (CIT1-CIT3) establish the “testbed” environment for various measures to be implemented, and address specific aspects of the cooperation on the freight market.

Figure 5-14: Interdependencies (interaction) of WP5 with other WPs, mostly

CITs

Based on the similar or parallel structure of the Living Labs, the following interconnections between the CIT1 and WP5 or its sub-tasks can be seen:

- Task 6.3 Information exchange required: defines the requirements of CIT1 on the data exchange tools and platforms developed in WP5 for general use in the whole Smart-Rail project. Therefore T6.3 task is an important input for WP5, defining the architectural, platform relevant, governance related, semantic and other requirements to be considered and fulfilled in WP5. These requirements affect together the requirements for the architecture defined in T5.1, for the governance models addressed in T5.2, and for the semantic issues solved and suggested in T5.3.


Page | 65

- Task 6.5 Implementation of measures: implements the measures suggested in the Living Lab. Among others, the data exchange with the aim of better visibility is considered; therefore T6.5 task implements actually also the solution designed and developed in WP5, with the overall architecture and data exchange platform defined in T5.1, with the governance rules defined in T5.2, and with the semantics and data structures defined in T5.3.

- Task 6.6 Monitoring and adjustment: assessing, monitoring and adjusting the measures and their impacts, evaluating the defined KPIs. As far as the data exchange issues are concerned, it means direct interconnection with T5.4 where the solution is to be verified within the CIT.

- Task 6.7: Conclusions and recommendations: among other measures defined in each CIT, implementation of the Interoperability Platform is to be considered, as described and recommended in T5.5.

This way the proper alignment of the WP5 efforts within the whole Smart-Rail project is ensured, and the requirements of each CIT are to be met by the Interoperability Platform.

5.7 Proposed Marketing Tools

In order to promote the SWL service many tools are at the disposal of the consortium.

Marketing for this service is based on: 1. Contacting previous clients and sources of rail freight;

− As BD Rail Services have a longstanding history in France and in particular the region of operation a large potential network of clients is readily available.

2. Clients and contacts of consortium members; − Within the Smart-Rail consortium there are 19 companies with vast

experience and a large network of contacts. These contacts will be called upon in order to get an idea of the general attitude towards SWL transport, while also advertising this new service to new potential contacts with an aim of widening the scope of service.

3. Conferences & meetings; − Conferences and meetings (large scale and one on one) will be used as a

means for pushing the Smart-Rail agenda while drumming up support and searching out potential clients.

4. Advertising flyers and Newsletters; − An advertising flyer will be created for the project as a whole. This will identify

the members of the consortium while introducing the project and defining what it wished to achieve over the lifetime of the project.

− In addition to this, a further WP specific flyer will be designed to provide interested parties with extra information related to the SWL services. This flyer will introduce the idea behind the CIT while detailing the range of expertise within the consortium that can be relied upon over the course of this CIT. This flyer will act as an information document and be used as an information basis when approaching potential clients. It will be designed to give the pertinent information in a short timeframe and will evolve and change over the course of the project.

− This advertising also extends also to regular newsletters that will be posted on the project website.

5. Website; − A project website has been created that will give interested parties updates on

the ongoings of the project while keeping them informed with relevant information. The final deliverables will also be published on this website and made available to the public.


Page | 66

6 Conclusions and recommendations

6.1 Development of SWL services and options for expansion

The existing service that is in place provides an excellent starting point for this CIT. A functioning, costs effective, and efficient service is in place in a country that has a poor history of SWL services and that offers difficult operating circumstances.

This existing service demonstrates that with suitable clients, suitable commodities, and suitable partners the potential is there, and not only that, there is demand enough that requires early stage expansions within France. Investigations at this stage of the project show that there is further demand for new services to Germany where in the past there was little to no SWL transport from East Germany to France. This is a route which at the moment is served by trucking and short-sea shipping, and where the potential of shipping freight by rail, at a competitive costs is high.

Numerous issues relating to SWL were elaborated in the previous chapters many of which have been covered in previous projects related to this topic. Each of these is surmountable when proper planning, research, and funding is introduced. This can come from the standardisation of parts, systems, definitions (namely the full introduction of TAF-TSI), and in some cases the sharing of information where possible.

6.2 Policy Options for SWL Revitalisation

To improve the viability of SWL in Europe the authors propose that both, the European and national policy makers should help private rail undertakings to “re-discover” market potentials within SWL segment and broaden their service offerings so that the SWLs are put on a par with intermodal solutions.

To attain these goals, the scarcity of private capital for funding of new rail business value-propositions, which function as a disguised form of discrimination of private rail undertakings needs to be addressed and resolved. The lack of private funding severely constrains rail entrepreneurs in market expansion. If not dealt with, this problem might further increase the rate of market demise for private rail ventures, and consequently, reduce the level of competition in market for European cargo carriage.

It is worth remembering that the regulators behind the First Infrastructure Package saw private rail entrants as change agents whose business activity will increase the intra-and inter-modal competition, restructure modal composition of European rail freight-industry and, thereby reduce the road-rail imbalance in freight carriage37. Unfortunately, these policy objectives have not yet been realised.

The current initiatives by the European Commission aiming to ease access to finance for SMEs in transport industry are primarily driven by spurting innovation in passenger transit through more flexible public procurement policies38.

These policy measures will not help the rail freight undertakings who want to revamp their rolling stock, acquire new traction equipment, digitalise fleet management installations and/or invest in private rail cross-docking ramps for processing of containers, traditional wagons and semitrailers. Neither, expansion into temperature

37 Source: Johanna Ludvigsen (2009): “Liberalisation of Rail Freight Markets in Central and

South-Eastern Europe: What the European Commission Can Do to Facilitate Rail Market Opening” European Journal of Transport and Infrastructure Research, 9 (1), pp.46-62

38 https://ec.europe.eu/inea/connectin-europe-facility/cef-transport /apply-funding/2015.


Page | 67

sensitive-cargo segment where ownership of reefers with digital control of on-route cargo quality is a-must will be within these players’ service provision reach. Consequently, many private rail undertakings will remain outside the market for highly profitable mix of service offerings.

Without capacity increases and adoption of digitalised technologies for productivity growth, private rail entrepreneurs will not expand into supply chains, which offer better-paid, fixed-terms capacity utilisation contracts. Thus, without tapping into risk underwriting securities either in the form of private equity or corporate debt-financing instruments, expansion into new geographic and/or high-yield high- technology-driven service markets will not be feasible.


Page | 68

7 References

[1] PWC, Study on Single Wagonload Traffic in Europe, Brussels, 2014.

[2] McKinsey, “Creating Value in Transportation and Logistics - a Perspective on how Transportation and Logistics Businesses can increase their Economic Profit,” 2015.

[3] “Survey on the Access to Finance of Enterprises in the Euro-Area,” European Central Bank, Frankfurt, 2015.

[4] J. Ludvigsen, “Liberalisation of Rail Freight Markets in Central and South-Easten Europe: What the European Commission can do to facilitate rail market opening.,” European Journal of Transport and Infrastructure Research, pp. 46-62, 9 2009.

[5] T. van Rooijen, “RETRACK Final Report,” TNO, Rotterdam, 2012.

[6] M. Lankhorst, Enterprise Architecture at Work - modelling, communication, and analysis, Springer, 2005.

[7] Y.-H. Tan, W. Hofman, J. Gordijn and J. Hulstijn, “A framework for the design of service systems,” in Implementing Service Science, Springer-Verlag, 2011.

[8] P. Pruksasri, J. v. d. Berg, W. Hofman and S. Deskapan, “Multi-level access control in the data pipeline of the international supply chain system,” in iCETS, Macau, 2013.

[9] J. K. S. Spohrer, “Service Science, Management, Engineering, and Design (SSMED) - An emerging discipline - Outline and References,” International Journal on

Information Systems in the Service Sector, May 2009.

[10] S. Eckartz, W. Hofman and A. F. v. Veenstra, “A decision model for data sharing,” in eGov2014, Dublin, Ireland, 2014.

[11] J. Dietz, Enterprise Ontology, Theory and methodology, Springer-Verlag, 2006.

[12] O. Williamson, Markets and Hierarchies: analysis and antitrust implications, New York: Free Press, 1975.

[13] W. Hofman and M. Rajagopal, “Interoperability in self-organizing systems of multiple enterprises - a case on improving tunraround time prediction at logistics hubs,” in IWEI2015, Nimes, 2015.

[14] D. Uckelmann, M. Harrison and F. (. Michahelles, Architecting the Internet of Things, Heidelberg: Springer, 2011.

[15] A. Wieland and C. M. Wallenburg, “The influence of relational competencies on supply chain resilience: A relational view,” International Journal of Physical

Distribution & Logistics Management, pp. 300-320.


Page | 69

[16] P. M. Swafford, S. Ghosh and N. Murthy, “Achieving supply chain agility through IT integration and flexibility,” International Journal of Production Economics, pp. 288-297, 2008.

[17] L. Ouabouch, “Supply Chain Resilience,” Materials Management Review, pp. 16-18, July 2015.

[18] M. t. Lindert, “Control Towers are emerging everywhere,” Supply Chain Movement,

no. 3, pp. 16-25, 2013.

[19] B. Behdani, Y. Fan, B. Wiegmans and R. Zuidwijk, “Multimodal Schedule Design for Synchromodal Freight Transport Systems,” in Information Systems Logistics And

Supply Chain, Breda, 2014.

[20] B. Rukanova, N. Bjorn-Andersen, F. v. Ipenburg, S. Klein, G. Smit and Y.-H. Tan, “Introduction,” in Accelerating Global Supply Chains with IT-innovation, Springer, 2011.

[21] D. Delen and H. Demirkan, “Data, Information and analytics as services,” Decision

Support Systems, vol. 55, no. 1, pp. 359-363, April 2013.

[22] M. R. Endsley, “Toward a theory of situation awareness in dynamic systems,” Human Factors: the journal of the human factors and ergonomics society, vol. 37, no. 1, pp. 32-64, 1995.

[23] T. Erl, Service Oriented Architecture - concepts, technology and design, Prentice-Hall, 2005.

[24] W. Hofman, “Data sharing requirements of supply - and logistics innovations - towards a maturity model,” Bordeaux, 2016.

d6.1 v1.0 choice of corridor and design of wagonload concept · smart-rail-d6.1-v1.0 smart supply...

Documents