LONDON — The European Union’s “Year of Multimodality” faces a tough test in its task to convince a skeptical transport industry that it can achieve a significant shift in cargoes, mainly containers, from the continent’s increasingly congested roads to its rails and rivers in the foreseeable future.
Some leading ports, mainly those in the Le Havre-Hamburg range, have persuaded ocean carriers and shippers to switch from truck to rail for hinterland transport, and leading intermodal companies are steadily boosting the frequencies of existing rail and barge services and adding new routes.
But the main stumbling blocks to a more-balanced modal split across Europe, where trucking hogs a 70 percent market share, is the dominance of state-owned rail operators in most countries that stifles urgently-needed competition and a web of national regulations that impedes cross-border traffic.
Nevertheless, EU Transport Commissioner Violeta Bulc remains surprisingly bullish. “We are working for the EU transport sector to function as a fully integrated system. Plenty of initiatives and events planned for 2018,” she recently tweeted.
Even so, shippers can be forgiven for doubting that Europe is moving toward a more-balanced modal system following a troubled 2017 dominated by the seven-week shutdown of the Rhine Valley Alpine rail track, the major north-south route, due to a tunnel collapse in southwest Germany, and the long-running barge congestion in Rotterdam and Antwerp, Europe’s largest container ports.
There is, however, solid “nuts and bolts” evidence that transport operators, particularly ports and freight forwarders, are having a positive impact on multimodality, although Europe will never match rail’s market share in the United States.
HHLA success story
The major success story belongs to Hamburger Hafen und Logistik AG (HHLA), the port of Hamburg’s top container terminal operator, whose strategic decision a few years ago to build a stand-alone intermodal business has paid-off with significant contributions to its revenue and earnings.
HHLA’s intermodal unit, Metrans, registered a 5.2 percent, year-over-year volume increase in 2017 to 1.5 million TEU, with rail accounting for 1.1 million TEU and road transport the remaining 400,000 TEU. Further, these figures are likely to increase in 2018 as the company expands its hinterland footprint.
HHLA’s success has helped Hamburg consolidate its position as Europe’s top rail port with more than 200 services a day hauling around 2.4 million TEU — for a 42 percent share of hinterland traffic — as well as bulk cargoes.
In addition, Hamburg recently opened Europe’s largest rail drawbridge, linking the port station with its main container terminals, separating road and rail traffic, as well as easing congestion in the city.
Hamburg’s nearby rival Bremen/Bremerhaven made rail infrastructure its key target last year because efficient rail services are a “crucial” factor in enhancing its attraction as a port and logistics centre.
Bremen-based Eurogate, Europe’s top, pan-European port operator, is playing its part, with intermodal traffic up two percent at its German terminals to 657,969 TEU. But while rail remains dominant, traffic crept up just one percent to 566,061 TEU while trucking jumped 8.4 percent to 91,908 TEU.
Contship Italia saw ocean traffic dip 1.3 percent at its six container terminals — five in Italy and one at Tangier, Morocco — to 4.32 million TEU last year, but this was offset by an 11 percent surge in its intermodal volume to just more than 301,000 TEU.
As the reorganization of liner shipping alliances has “significantly” changed the environment, “more and more the focus has shifted from port performance to supply chain performance,” said Contship president Cecilia Eckelmann-Battistello. “Contship continues to work hard to provide the market with fully integrated and competitive door-to-door services by deploying innovative solutions and strong inland connections with expected further growth in Italy and over the Alps.”
Other European ports are also pursuing modal shifts, mainly from road to rail. While the crash in Gothenburg’s container traffic took it to all-time lows, due to a two-year dispute at APM Terminals, the Swedish port continues to develop its intermodal facilities. It has just opened a terminal that is expected to shift more than 100,000 trailers per year from truck to rail.
Barcelona captured the headlines as Europe’s fastest growing major container port in 2017 with traffic soaring 32 percent to 2.97 million TEU, but its rail performance was equally impressive, rising eight percent to an all-time high just short of 244,000 TEU.
Felixstowe, the UK’s top container hub, last year became the country’s first port to post an annual 1 million TEU of rail traffic. “Rail is an increasingly important differentiator for shipping lines as well as importers and exporters, and we are able to offer them a greater number of rail services to more destinations, more often, than any other [UK] port,” said Clemence Cheng, executive director of Hong Kong-based Hutchison Ports and CEO of the port of Felixstowe.
Inland waterways — holding their own
Inland waterways are holding their own, despite the congestion at Rotterdam and Antwerp that has threatened to push containers back onto the road. Barges transport about 3 million TEU, or 45 percent of Rotterdam’s hinterland traffic, and 40 percent of Antwerp’s inland container volume.
The barge congestion in the two ports was not the fault of the inland waterway operators but resulted mainly from the radical restructuring of liner services by the new container shipping alliances launched last April and the late arrivals of ultra-large container vessels that created traffic peaks.
Intermodal transporters are steadily growing their operations, although they attract less publicity than the growing China-Europe rail services. Hupac, the Swiss-based company, grew 2017 traffic by 3.5 percent in 2017 to 763,101 road shipments, despite being hit by the closure of the Rhine Valley track and the six-month shutdown of the route between Bellinzona and Gallarate in northern Italy.
The company is also adding new routes, most recently a twice-weekly service linking Rotterdam, the inland German port of Duisburg, and Istanbul.
There is also some movement on the infrastructure front with contracts awarded last week for engineering work on the French side of the planned 57.5-kilometer (35.7-mile) Lyon-Turin tunnel, and tenders are out for the technical design for the first section of the Rail Baltica freight and passenger rail route in Latvia that will eventually link the three Baltic states to the European network.
Meanwile, trust busters in Brussels and the EU member states are also opening up the transport market by cracking down on anti-competitive behavior that has raised barriers to private firms seeking to offer shippers better deals and prevents the industry from competing on price and quality with trucking.
The European Commission, the EU’s executive, fined state-owned Lithuania Railways 28 million euros ($35 million) last October for dismantling a section of track to neighboring Latvia to prevent a Polish oil company from using a rival operator. Now it is investigating whether the write-off of the debts of Romanian freight operator CFR Marfa violated EU state aid rules. Meanwhile, Spain’s national competition authority last year imposed fines of 75.6 million euros on Renfe, the domestic rail company, and local subsidiaries of Germany DB Group, for collusion.
Other positives on the horizon include the German government’s decision to halve rail track access charges, which could prompt other countries to follow suit and boost rail’s ability to compete with trucking.
The French rail freight sector, which has suffered a sharp slump in traffic since 2000, could also undergo a major change if the government adopts reforms proposed for SNCF, the state rail company, in a report it commissioned in October, which was published last week.
The report, by former Air France-KLM CEO Jean-Cyril Spinetta, recommends SNCF’s freight unit, which has lost a significant slice of its domestic market to foreign firms, should be spun off as a separate company and freed from its 4.3 billion euro debt.
The report, which has sparked fierce union opposition, also recommends the government should review its taxation options and respond to rail’s environmental superiority over other transport modes following its rejection of a planned “ecotax” on heavy duty trucks.
Shippers will learn more about the EU’s plans at the European Multimodal Freight Transport conference in the Bulgarian capital of Sofia next month, which is expected to focus on digitalization, economic initiatives, and funding to rejig the modal split.
It is not that rail has been ignored by Brussels or national governments — it accounts for about 73 percent of EU transport funds, but only has a 12 percent modal share.
Rather than throwing more money at the sector, the European Union is under pressure to make a concerted effort to create a genuine pan-European single rail market that does away with differing operating regulations, technical equipment rules, signaling systems, and language requirements.
There is hope the anger stirred by the Rhine Alpine Valley shutdown — described by German intermodal operator Kombiverkehr as the “biggest loss of railway infrastructure Europe has ever seen" — could trigger the delivery of a productive rail system.
“For 2018 we are hopeful of a new dynamic on the horizon,” said Julia Lamb, secretary general of the European Rail Freight Association.
Contact Bruce Barnard at email@example.com.