51-day Rhine Alpine rail closure cost $2.5 billion

51-day Rhine Alpine rail closure cost $2.5 billion

BCS Cargo had one-third of its traffic involved in the Rastatt closure that shut down the Rhine Alpine corridor for almost two months. Photo credit: BLS Cargo.

It was not only the reputation of Europe’s rail freight industry that took a hammering when the main north-south corridor was shut down for two months during a peak shipping period last year — the wider economic impact has been estimated at an eye-watering $2.5 billion.

It is the first time a price has been placed on the 51-day shutdown of one of the most important rail corridors in Europe, the Rhine Alpine gateway that handles about half of the trade between northern Europe and Italy via Switzerland, connecting Mediterranean ports with the economic heartland of Germany and Central Europe. Infrastructure work caused a section of track at Rastatt between Basel and Karlsruhe to collapse on Aug. 12, and the line was only opened on Oct. 2.

Of the 8,262 trains that could have operated with a clear track, only 2,627 trains could run during the Rastatt incident. “There are 162 trains per day on average in August and September, and at peak periods there are 200 trains a day. We had 51 days of trains at a standstill, and the industrial impact of that Rastatt event was 2 billion euros, a huge amount of money,” Michail Stahlhut, CEO of SBB Cargo International, said at a gathering of the European Rail Freight Association (ERFA) in Brussels.

Stahlhut was delivering the results of a joint report on the Rastatt closure and its impact on Europe by the HTC Hanseatic Transport Consultancy, the ERFA, the European Rail Network, and the International Union for Combined Rail-Road Transport.

The rail freight specialist said the financial impact on the industry, as well as the wider economy, was significant and exposed serious flaws in the rail freight network.

“We need to change strategy, operational improvement, and planning. We need to safeguard volume during disruptions,” he said. “Every day we have disruptions with traffic jams on some routes and we have to open the other networks and bypass routes, not only for big disruptions but also for the day-to-day delays. A four hour standstill with 600 tons of freight, with a value of 300 euros per ton, affects the whole industry.”

At the time of the crisis, Godfried Smit, European Shippers' Council (ESC) policy manager for inland transport and trade facilitation, said it cost ESC members an additional €100 to €150 ($123 to $184) per TEU to transport containers affected by the route closure.

“It was difficult for shippers to find solutions because of all the maintenance work on the other routes, and if you have to suddenly buy transport on the spot market it is more expensive than the prices you will have had on longer-term contracts,” he told JOC.

In the aftermath of the Rastatt line closure, the rail freight industry and policy makers looked at contingency plans in the event of delays, but Stahlhut believes more needs to be done to make them effective. “It is nice to know that we have a contingency management system in place that will act after three days, but we need more. It is a good first step but we have to improve because we are infecting the industry with a lot of money if transport is not working.”

ERFA: 'Supply chain could not cope with disruption'

Lindsay Durham, president of ERFA, said the supply chain could not cope with disruption such as at Rastatt that happened so quickly and lasted for so long. It was a theme echoed by Dirk Stahl, chief executive officer of supply chain services company BCS Cargo, who said the system was not prepared for disruption on such a scale and on such an important rail corridor.

“BCS Cargo had one-third of its traffic involved in the Rastatt closure and had to deviate 450 trains and cancel 370 others during the period. It hurt us,” he said. “We looked for deviation routes to take those trains but it was not easy. We only had two options — one via France, and the other via Germany and Lake Constance, but parts of that route are not electrified and drivers speak different languages. On the French side the systems are not harmonized.”

Stahl said Europe needed concrete plans for each rail corridor, with simulations of crises ensuring the contingencies are compatible with national regulations. “Such a thing must never happen again. Through this incident we have learned that the rail system is so important for the economy that it has to work. We cannot afford the rail system to be out of order for 50 days with no contingency plans.”

Apart from improving the planning of infrastructure works across the network that disrupt traffic and create delays, other measures had to be taken, but there was no simple solution.

“The main obstacle is that if you have one corridor that does not work, you need an alternative and that alternative has to be harmonized. We need to harmonize infrastructure requirements and the corridors need to be more internationalized. With the languages, we need to accept the national language as first language, but need English as a second language to make the system more flexible,” Stahl said.

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