The European Commission DG-MOVE has published a major report on the Combined Transport (intermodal) sector in Europe, the result of a year-long study by a consultancy consortium featuring KombiConsult, Intermodality, Planco and Gruppo Clas.

The report’s executive summary pulls no punches in outlining the challenges and opportunities for using intermodal and multimodal freight transport in Europe, stating:

“Whilst it is unlikely that anyone would disagree with the aims and objectives of the Transport White Paper of 2011, its hope that the performance of supply chains will be optimised and become economically attractive for shippers, remains elusive…The hope would be that, by now, CT would already be addressing the issues outlined in the White Paper, with world-class services continuing to attract customers on the basis of a major (almost dominant) share of freight traffic in Europe over road haulage.

This is very much the case with the North American CT industry, which has seen a dramatic turnaround in fortunes since the 1980’s, transforming a virtually bankrupt and dysfunctional rail sector into a key player in the overland freight market, where legislation is now focussed on limiting its scope for market dominance, rather than to try and stimulate the market to make more use of it.

The opposite applies in the EU. Here, the CT industry has been around for as long as in North America, and the liberalisation of the rail sector from the 1990’s onwards was anticipated by policy-makers to achieve a similar transformation. Twenty years have passed since “open access” liberalisation appeared, and whilst the EU’s CT industry would hopefully by now have been similarly mature and as successful as in North America, it instead appears at times to remain in adolescence and, at worse, at risk of heading for obsolescence.

At present, CT has achieved a market share equivalent to 12% of total road freight, and 9% of all surface freight. To set this further in context, rail freight has a 22% share of the combined volume of road and rail freight – almost half the share achieved in North America.

This is then the fundamental challenge facing CT: most policy-makers wish to see it play a much greater role in addressing the freight-related issues of transport in the EU; many end users would like to see it become much more commercially attractive; but relatively few customers actually use it, and often without any great enthusiasm…

There is no doubt that CT should be capable of significant growth in the years ahead. The extent to which the various CT stakeholders and actors can realise this growth will be conditioned by various factors, most of which relate to current challenges, which can be grouped into the following broad categories:

  • Service providers that still fail to recognise, adopt or improve on the performance benchmarks, or continuous innovation, established by the road haulage industry. Unreliable, unpredictable, inflexible, slow and expensive services, which by their very nature introduce extra risks associated with multiple transport modes and interchanges between them, is unlikely to attract, retain and grow the customer base to any great extent in the face of a road haulage industry which remains agile, aggressive and responsive in spite of its own set of challenges;
  • Failure of rail industry liberalisation to achieve the intended full separation of track from trains, with the breakup of former state-controlled monopolies. A large part of the rail and intermodal freight industry is now controlled by DB / Schenker and SNCF / Geodis, state-funded transport conglomerates each much larger and dominant than before the liberalisation process started, and both seemingly intent on preventing any further liberalisation of the rail industry;
  • Much of the EU’s rail and inland waterway networks are not capable of handling the type of CT traffic which operators and users would like to carry on it…Securing planning consent for new CT terminals may take years due to ponderous national planning processes, compounded by local “environmental” protestors. Solutions are available but funding is constrained and lead times may be extended;
  • The lack of electronic ICT infrastructure…In such a modern ICT-driven world, it is wholly unacceptable for some CT services to still involve the manual re-keying of data between modes and operators, based on hand-delivered or faxed documentation, or for end users to find it challenging to obtain real-time information on services, rates or even the location of their load units. Road haulage is moving forward in this area, the CT sector needs to as well;
  • Commercial and public policy towards use of CT can only ever be as good as the data it relies on. This study has highlighted the very poor quality and depth of data on freight moved by CT services, which at present prevents any forensic analysis of existing activity, or the opportunities to enhance and expand that activity.”

In terms of the 1992 Directive on Combined Transport, the report notes:

“…Some parts of the CT Directive have inevitably been overtaken by wider events, outside and within the CT sector, creating a need to revise or remove parts of the text accordingly. Other parts of the CT Directive have, as will often occur with legislation applied individually in multiple Member States, either not been transposed at all, or only in part, or been subject to various interpretations which, in some cases, may actually depart from the original objectives. This creates a greater administrative burden for CT operators and users managing services across multiple Member States (and in some third countries as well), where the rules at each end may be very differently interpreted and applied.

Yet, the CT Directive still retains a relevant role to play in establishing (or reaffirming) core principles in support of CT, whether with long-established or recent-accession Member States. There is no question that the CT Directive (possibly in an updated form) should be retained as part of the wider promotion of CT within EU transport policy. The majority of stakeholders agree with the need for the CT Directive in supporting CT, as well as the need for it to adapt and improve to support CT in future.

The key lesson learnt here is the need to achieve a delicate balance between, on the one hand, imposing a rigid pan-European “one size fits all” Directive, and on the other, a profusion of different interpretations of the CT Directive which then hinder its overall objectives…harmonising the application of the key provisions of the CT Directive across MS may be material to achieving further breakthroughs in making CT a more mainstream offer.”

In conclusion, the report sets out a way forward for the CT sector:

“…This report sets out a CT sector capable of making a major contribution to commercial and public policy objectives in the coming years. The European Commission has a critical role to play in co-ordinating investment in TEN-T and other cross-border initiatives that will over time suitably enhance the CT infrastructure networks. Alongside this, the CT Directive (with scope for updating and refinement) remains an important and relevant piece of legislation for promoting CT at Member State level. Member States then have a valuable role to play in implementing and enhancing the provisions of the CT Directive and related EU / national policies in support of CT.

Yet all the above measures will count for nothing without radical and real change within the CT sector itself which, in return for continuing to receive scarce public resources (and end user goodwill) on which to build the business, needs to adopt the practices and standards of logistics service providers. The CT sector should then build on these benchmarks, as far as possible, to evolve to a point where (as in North America) support is no longer necessary.

The White Paper concludes that a transformation of the European transport system will only be possible through a combination of manifold initiatives at all levels. For this study and its appraisal of the CT sector, we concur with this conclusion.”

A copy of the report can be found here.

Published by Nick Gallop