European Rail Freight Survey 2008
In the European transport market, rail freight continues to lag significantly behind road transport, which has a market share of around 80%. Despite rising truck toll charges, the high price of diesel, and constant traffic jams on clogged motorways, rail has still not yet managed to gain increased market share, which has long been desired at the transport policy level.
However, European logistics and transport managers have rated the quality of rail freight transport overall as positive, according to a Europe-wide survey by Booz & Company. Seventy-five per cent of those interviewed indicated that they were either satisfied or even very satisfied with the quality of rail freight transport overall. On average, the companies surveyed already handle up to 48% of their annual transport volume via rail, with further expansion likely. However, around half of those surveyed feared that the current capacities for rail transport will be insufficient to accommodate future demand growth.
Increasingly, production and distribution locations are no longer linked in to the European rail network via a local line. Along with current and foreseeable future capacity bottlenecks on mainline track, this is hindering significant expansion in rail freight transport. For example, the market share for rail in overall freight transport in Europe is only an average of 15%.
There is considerable growth potential for European rail companies – but rail freight needs to become quicker, more reliable and more cost-efficient in order to take substantial market share from road freight transport. A key success factor for the rail companies in winning new customers or new transport business now involves devising customer-specific transport and logistics solutions. In addition, the rail freight companies need to put their future capacity requirements more consistently to the network operators and policy-makers, and define specific investment requirements.
Customers see capacity bottlenecks on international connections as a serious obstacle to any further expansion of rail transport. Fifty-two per cent of those surveyed fear significant obstacles and bottlenecks on the European North-South corridors, such as from Rotterdam to Milan or from Copenhagen to Verona, and also increasingly on key East-West connections.
Fifty-eight per cent of decision-makers said that the most important criteria in their choice of provider for rail transport was meeting delivery dates. This ranks higher even than competitive pricing - cited as a decisive factor by 55%. If rail is to be used more intensively as a vital link in logistics chains then punctuality is a prerequisite for success.
The next highest-ranking criteria were transport time (44%) and the provider’s network coverage (42%). Of those surveyed, 37% chose their logistics partners for the quality of their order handling and flexibility of available capacities - the same areas where customers see the main deficiencies and problems with European rail freight transport. Other deficit areas , compared with road transport, were lack of punctuality (cited by 38%), poor quality order handling (35%) and the lack of available goods wagons (28%). In these areas there is a need for considerable action to be taken, both by the established national rail companies and by new private market entrants.
Whilst there have been quality improvements in rail freight transport in recent years, the quality is clearly not yet considered good enough by customers. In particular, further improvement is needed on punctuality in international rail freight transport and on near-time customer information regarding possible delays. This is only possible if all partners involved in the transport process – rail companies, infrastructure operators, trans-shipment companies and wagon leasing companies – drive forward joint initiatives to solve capacity bottlenecks and provide shipment tracking and customer information.
The increasing demand for rail freight transport identified over the past three years or so in Europe is likely to continue. Of those surveyed, 40% indicate that they intend to handle up to 10% more transports via rail over the coming 12 months; only 13% anticipate stagnant demand, and just 18% a decline in demand. That said, one in every four customers predicts an increase in freight volumes by up to 10%. Compared to competition on the roads, the customer perception is that rail freight transport is less affected by the explosion in energy and fuel costs. It therefore seems likely that rail will continue to post strong growth and a moderate increase in market share.
The strategic objective must be to establish a long term, efficient, environmentally-friendly and cost-favourable alternative to road transport, in the context of the rising volume in global trading and increasingly extended and more complex supply chains. Rail freight transport companies urgently need to drive forward consistent expansion of the rail network and optimise capacity and order management, and improve their performance capability, particularly in international transport. On long-haul routes, rail’s advantages can develop into a key transport system for Europe-wide logistics networks in the future. This requires substantial investment in locomotives with multiple system capability, modern freight wagons and a rail infrastructure consistently oriented to the needs of international rail freight transport.