Across Europe, road freight has received far greater support than rail because of its ability to innovate much faster. However, the revision of the 32-years-old EU Combined Transport Directive could render the political support rail freight needs to increase its market share.
The volume growth recorded by multimodal operators across Europe over recent years signals a positive development in the multimodal market, especially in light of cheap oil prices and the stagnating road tolls which heavily favour road freight operators. This mode of transport is also being increasingly offered as an alternative to the traditional ocean services from the Far East to Europe as an increasing number of operators expand their networks to an alternative to traditional ocean services. According to the UK forwarder Davies Turner, which has been pioneering a number of now well-established Silk Road routes, the response from the marketplace has been good due to the big speed advantages over sea freight as well as the lower cost advantage of rail services which are typically around half the costs of an air alternative. The growing importance of multimodal solutions in Europe was highlighted towards the end of last year by the €8bn contract between the PSA Group and Gefco.
Intermodal traffic is also on the rise in North America where volumes have grown by 4.5% in Q2 2017, the strongest growth in nearly three years, according to the Intermodal Association of North America. The rapid expansion of intermodal options from the US into Mexico has benefited from a shift in production as well as increased investment from both US and Mexican rail operators. This trend is likely to continue considering that intermodal capabilities are still being ramped up between US and Mexico.
There are many reasons for this upsurge in combined traffic. Contributing factors range from transportation costs to investments in rail infrastructure. Trains are roughly four times more fuel-efficient than trucks, providing an advantage on the price of fuel. Furthermore, as same-day delivery becomes more common, short-haul drivers within metropolitan areas are presented with more job opportunities which makes it more difficult to staff long-haul companies. The investments in rail infrastructure across Europe have also provided strong impetus for growth. Between 2011 and 2014 EU Member States have increased their investments in rail infrastructure by 50% to approximately EUR 50bn per year. This should significantly increase rail productivity and the competitiveness of rail over other modes of transport.
Moving forward, in addition to investments in rail infrastructure, of particular importance for the competitiveness of multimodality will be the revision of the 32-years-old Combined Transport Directive of the European Union. The directive should contribute towards harmonisation of multimodal legislation across the EU and provide a framework for introducing advanced IT in multimodal transport. The EU Commission declared 2018 the year of multimodality so it will be interesting to see if it honours this commitment and renders the investment and political support rail freight needs.
In theory, the European Commission strategy on decarbonising the transport sector could have also sent a strong signal in favour of rail freight. However, road freight has received far greater support because of its ability to innovate much faster than other modes. If new technologies enable the road sector to self-correct its negative externalities, the rationale behind multimodality would be severely eroded. Therefore, the future of multimodality also lies in ability and rate of innovation of rail freight. In addition, rail needs to become more agile at competing with road. If the current low rate of innovation and limited agility in rail pertains, it is unlikely that the aspirations to engineer modal shift towards rail will materialise.
Source: Transport Intelligence, August 8, 2017
Author: Violeta Keckarovska
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