A major focus has been placed on the Belt and Road initiative in 2017, with a significant emphasis put on China-Europe train shipments. Rail freight was almost described as the new "El Dorado" in the European logistics landscape, with many logistics service providers and shippers being attracted by this new solution.
But attention to this growing, albeit from a small level, network belies the deep government and industry reforms needed to push containerized rail to where it is most needed — connecting European ports to the hinterland and vice versa.
While 45 percent of inland transportation in the United States was done by rail in 2013, rail freight accounts for only 17.8 percent of intra-European transport — compared with 19.7 percent in 2000. During the same period the road transport share increased from 73.7 percent to 75.4 percent; in other words, the European freight market increased by 2.3 percent annually, with 25 percent of the trucks reported to have been driven empty because of the lack of freight match back.
An EU commission set up clear objectives in 2011: transfer 30 percent of the current freight tonnage above 300 kilometers (186 miles) from road to rail/barge by 2030 and 50 percent by 2050. It is clear now that these objectives will not be achieved.
An audit performed by the EU Court of Auditors in 2015 highlighted the following root causes to such a lack of performance:
- The main structural weakness of the freight market in Europe comes from the road transport supremacy for historical reasons. Despite significant funding for rail infrastructure development (28 billion euros) provided by the European Union during the 2007 to 2013 period, EU member governments mainly played a conservative approach in Western Europe when Eastern countries used the EU development funds to develop their road networks; they accouted for 80 percent of investments in the 2000s. Countries such as France decided to put priority on passenger transport rather than rail freight, especially using European funds to develop high-speed train networks. France did not show any real, political commitment to reduce the weight of road transport in the country.
- Rail infrastructure is a key issue. Infrastructure development has always been driven by each EU member within domestic borders, usually managed by state-owned companies. This situation is mainly due to the fact that such infrastructure was funded by local governments. Rail freight share has decreased since the 2008 financial crisis as governments invested less in new infrastructure but also less into maintenance of the existing networks. For the same reason — the financial crisis — shippers decided mostly to use road transport from 2008 because of lower cost.
- More free competition should be developed on the European market. Although the European Union opened rail freight to free competition on the entire trans-European network in 2001 (EU directive 2001/12/CE), effective on Jan. 1, 2007, more should be done. As a first step, state-owned companies had to split their activities between infrastructure management and providers of rail freight services. But protectionist practices still exist, as train time slots are still allowed by each national infrastructure company and not centrally.
- National rules and regulations are not harmonized at the EU level. Rail freight development was basically easier to achieve in the United States or Australia, whereas 26 different entities exist in Europe instead of having a single integrated legislation. This lack of cooperation between each member's infrastructure management body creates service disruptions: rail freight trains in Europe achieve an average speed of 18 to 30 kilometeres per hour due to administrative constraints, waiting times, lack of central management, etc., when the average truck speed on European roads is 60 kilometers per hour.
- Regarding administrative complexity, to arrange a train from Rotterdam to Spain, four different national infrastructure companies (Netherlands, Belgium, France, and Spain) have to give a time slot within different legal and administrative rules. This is a major issue to achieve attractive transit times, online visibility, and be cost-competitive. Also, booking procedures are quite complex.
EU wants rail freight development
Despite these issues, the EU commission is pushing further for rail freight development. In addition to reducing carbon dioxide emissions by 30 percent, facilitating the free circulation of goods within Europe is part of the European Union's DNA. And the quality of inland transportation is a key success factor for port development.
Major initiatives have been developed to further promote rail freight. For example, nine rail freight corridors have been created to ensure a consistent and efficient rail network is developed on the continent. A single booking center has been implemented for these freight corridors that avoid the rail operator having to ask each single national infrastructure management company for time slots. Time slots are now confirmed two months in advance. The average train speed on such corridors has improved to 50 kilometers per hour — close now to trucks' average commercial speed. A successful example is the port of Hamburg–Northern Italy freight corridor.
But the biggest challenge regarding attracting more shippers to use rail freight is cost reduction. It cannot be achieved only with additional volumes, more competition, and less bureaucracy. As infrastructure costs are paid by train slot, the length of trains and the related number of coaches is critical to decrease operating costs. Here again harmonization would be welcome. The average train length in Spain is 450 meters (1,476 feet) compared with 740 meters in France and between 1,500 and 2,000 meters in the United States.
Finally, strong political commitment is — as always — critical to success. Several European countries increased their rail freight share between 2000 and 2013 when the average EU share decreased. Germany achieved a 43 percent increase in 15 years (23.5 percent in 2013), the United Kingdom, 15 percent, when 40 percent of the freight moved in Switzerland was done by rail.
The current success of the China-Europe initiative is due to the strategic willingness and commitment of China. If the European Union wants to achieve its 2011 agenda and objectives, initiatives must be decided and implemented at the European level, not only at the national level.
Pierre Liguori is director of Tokema International, a supply chain consultancy firm. Contact Liguori at: email@example.com.