Largest European inland operator warns of waterway crisis

Largest European inland operator warns of waterway crisis

Barges travel near the Rotterdam port.

Executives from Imperial Logistics International participated in a wide-ranging question and answer session concerning the mounting intermodal transport challenges facing shippers and forwarders moving cargo around Europe. (Above: Barges travel near the Rotterdam port.) Photo credit: Shutterstock.com.

Imperial Logistics International is Europe’s largest inland waterways shipping operator with 600 owned, rented, and chartered motorized and nonmotorized units, carrying around 40 million metric tons (44 million tons) of cargo a year. Executives from the logistics service provider participated in a wide-ranging question and answer session with JOC.com relating to the mounting intermodal transport challenges facing shippers and forwarders moving cargo around Europe.

Barge and Inland Waterways

JOC: Antwerp and Rotterdam are launching various measures to combat barge congestion as mega-ship call sizes choke the terminals. How are your shipments being affected by the congestion, and what do you believe needs to be done to improve the barge bottlenecks?

A: Steffen Bauer, chief operating officer, Business Unit Shipping

Barge congestion in Antwerp and Rotterdam is a big problem, causing many delays, so we are having to find alternative solutions to get the products to our clients on schedule. Sometimes this means using our own road fleet, or rail support, or bringing in dedicated feeder ships. We are holding constant, in-depth discussions with our customers to keep them up to date with the situation and find viable solutions for them.

The real answer is to generate greater European support for vital hinterland infrastructure projects, which will support the ports and reduce the pressure on them.

Q: With persistent congestion in Rotterdam and Antwerp, are using other European gateways an option for your customers?

A: We have been able to switch a limited amount of our clients’ traffic to Hamburg or Amsterdam, but that isn’t really a large-scale or lasting solution. The main ports remain Rotterdam and Antwerp, and we have to find a way of solving their congestion problems.

Q: Plans to expand Europe's waterways do not appear to be moving forward. What is your view on this, and does Europe need additional inland waterway capacity?

A: The expansion of Europe's waterways has long been discussed, but it’s not happening. Yes, we need more capacity, and the German federal government needs to put new infrastructure measures in hand as rapidly as possible, such as the planned deepening of the Elbe River navigation channel.

In dry bulk shipping there is no need for more capacity. The pressing need is more barge capacity for container transportation and transshipment. 

Road and Rail

 Q: There is a fast growing driver shortage in Europe (and everywhere else), rising cost of fuel, and a shortage of capacity that is raising the cost of road transport. Have your road freight rates increased in the past year, and do you see the rate increases continuing into the future?

 A: Srecko Mühling, director general cargo, Business Unit Road

Increasing fuel costs, driver shortages, and lack of capacity are all playing a part in raising rates. Rates have increased in the past year on average 5 percent or more in the full truckload (FTL) market, and they will continue to rise as long as there are no significant new technologies permitted and implemented, such as autonomous trucks, platooning, and permits for longer vehicles. Increased use of load matching and other digital solutions could help to optimize existing capacity.

But there are other factors, such as recent in-cab sleeping bans throughout Europe, and it is not helpful that there are ever-changing regulations throughout the EU states on matters like this and no consistency in implementation. This also adds considerably to operating costs.

Q: Is platooning something you are considering, and what stands in the way of its widespread implementation?

A: We are certainly watching platooning with interest. For long distance routes with high volumes and a need for frequent services, it’s potentially a good alternative concept. Currently, however, there are many unresolved legal questions such as liability, and the industry is still in an early operational pilot phase. Given that Imperial Logistics’ road movements include large volumes of hazardous goods, we also need to wait until the technology is mature and utterly trustworthy; so we are unlikely to be an early adopter. 

Q: Will the rising road transport prices see road losing market share to rail freight in Europe?

A: Currently not, because the capacity of rail is already full, and rail is best suited to very high volumes of lower-value goods, and noncritical production supplies. Rail is ideal for long distances, raw materials, and oversized or heavy goods. Road comes into its own with shorter journeys, shorter lead times requests, higher price/lower volume goods, situations where there is little flexibility, and commodities that are heavily regulated. 

Q: Is rail freight an option for you when it comes to moving Europe's containerized imports?

A: Hans van den Bosch, director International Freight Management

Rail is a relatively small part of Imperial Logistics International’s European import operations — around 10 percent — but we are generally happy with its performance. The main reason for using road, apart from flexibility, is the fact that a lot of our cargo destinations are in Benelux and the western part of Germany. For this, rail is not an option in comparison with road, as it is too expensive and the lead time is too long. 

Q: Mainland China will be enforcing a rule that only full trains leaving for Europe will be subsidized. Could this have an impact on services, such as creating delays and increasing cost of the long-haul rail transport?

A: Pierre Magnin, senior sales manager, Business Unit Retail and Consumer Goods

Imperial Logistics International does not foresee any impact on service levels or delays, but probably some reduction in the departure frequency to maximize train utilization. Moreover, the volumes are constantly growing, and more and more commercial customers and freight forwarders are moving to rail freight. Therefore, we believe that the major issue will be more the lack of capacity than increased costs.

However, this new rule will indeed have an impact on the cost. Today, most of the rail operators receive important subsidies from the Chinese government. If they stop receiving these subsidies, they will recover the cost from their customers. 

Air Cargo

Q: Europe's hub airports are facing slot constraints that are affecting freighter flights and in some cases pushing them to secondary airports. Have your shipments experienced this, and how do you manage the slot-constrained airports?

A: I don’t believe we have been affected by such constraints to date. In any event, having freighters pushed to secondary airports is not a problem; I would actually see it as an opportunity to negotiate better rates with the carriers, as we know that secondary airports have lower charges.

I would take [mainland] China as an example, where Zhengzhou was considered as a secondary airport and is now one of the biggest hubs for Cargolux in [mainland] China. From there, they are able to offer very competitive rates between [mainland] China and Europe.

From a carrier sales perspective, I would also change my strategy towards customers. I would sell them a transit time and price, instead of a specific routing and price. For the customer, does it matter whether the freighter carrying your goods lands in Hahn rather than Frankfurt? 

Technology

Q: Is the rising number of online forwarders a threat, or by investing in new technologies can traditional forwarders keep one step ahead?

A: Enno Devermann, PMO Digital Office, Information Technology

At the current stage, the impact of online forwarders on the business of traditional forwarders is still limited. One possible reason behind this is the ever growing transportation market. Traditional forwarders still find enough new business to make up for shrinking margins and lost clients. We expect that this situation will change in due course.

Traditional forwarders need to adapt and invest now in suitable technology to stay relevant. The answer may never be purely online forwarders, as they could not provide the specialist knowledge and complex individual treatment required for some shipments and commodities. But clients increasingly demand digital solutions that reduce the effort and cost to organize the transport of their goods. 

Q: What technology are you investing in, and what areas are the most important for a logistics service provider to digitalize?

A: Imperial Logistics is actively exploring various innovative technologies and is constantly monitoring the newest trends and startups. If there is a promising user case for a technology, we run POCs [proof of concept] to investigate if an investment in that technology is improving efficiency, generating additional revenue, or lowering costs.

Most importantly, logistics service providers have to work on transparency in the supply chain. There are various technologies that will play a major role in this area. Blockchain, Internet of Things [IoT], and Big Data will be enablers for highly efficient and transparent supply chains. In the upcoming years we will see a rising amount of machine learning and artificial intelligence applications that will help to increase efficiency and lower risks even further.

Among our most prominent current investment cases is the Blockchain protocol for supply chains, +D [plusdecentral], in which we are a founding partner, and have undertaken a successful POC. Imperial Logistics has also established an innovative online digital marketplace for warehouse space called “ShareHouse,” which is already fully functional with a number of users.

Contact Greg Knowler at greg.knowler@ihsmarkit.com and follow him on Twitter: @greg_knowler.