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ΕΛ/ΛΑΚ Μονάδες Αριστείας (ΜΑ. ΕΛΛΑΚ)eServices - Open Source Software in Transport & Shipping I

UAegean Center of Excellence (CoE) – Open Source Software in Transport and Shipping

University of the Aegean Dpt of Financial and Management Engineering & Dpt of Shipping and Transportation Services

Lecture: Intermodal transport: organization and fundamentals

Seraphim Kapros, Associate Professor

@ i-nformation M-anagement Lab

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Seraphim Kapros

Intermodal transport: organization and fundamentals

Chios, 2014, May, 20th

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Definitions

Intermodality allows at least two different modes to be used in an integrated manner, in a door-to-door transport chain

Various legal/institutional references (Dir. 106/92, COM 243/97 etc)

Intermodal transport is based on the use of loading units (containers, swap bodies, semi-trailers)

Intermodality is a policy tool enabling a systems approach to transport

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Driving forces

Road transport dramatic increase, external cost, societal needs

Need to shift traffic from road to other modes

New policy approach: towards a –different- modal split/ modal shift policy ?

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Market segments

Several Intermodal market segments

Two large segments, with respect to loading unit type: Transport of swap bodies and semi-trailers Transport of maritime containers

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Market actors involved

Actors involved in the intermodal transport market:

The road transport companiesThe “Rail Family”: railway companies and their subsidiariesThe rail-road companies, members of UIRRThe “maritime family”: the emerging actors from maritime and harbour businessThe freight forwardersThe transport actors emerging from integrated industrial logistics supplyThe “inland waterways” familyThe “short sea shipping” family The "new" door-to-door intermodal transport services providers

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Policy discussions

Fair/unfair competition ?

Internalisation of external cost: political and methodological constraints

Factors of success, factors of failure of the European Transport Policy on Intermodality

Does intermodal transport match the users’ logistics requirements ?

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Overview of the existing situation in Europe

Incomplete knowledge of the field

Lack of appropriate statistics

Heterogeneity of units used (tones, TEUs, ITUs)

Structural-methodological problems of traditional data collection systems

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Overview of the existing situation in Europe

Intermodal transport share estimated at approximately 5% of the total continental freight traffic

However, global estimations might lead to biased conclusions, because:

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Overview of the existing situation in Europe

…because:

Lack of intermodal service between several O-D pairs representing significant activuty centers: intermodal transport is not present everywhere

Intermodal transport is competitive on medium-long distances while more than 50% of European freight transport relates to short distances !

Finally, on certain corridors of massive flows, Intermodal transport share exceeds 30%

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Structure of European freight traffic: per distance class

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Modal split and modal shares

great variety at an international level (considering national statistics, which can cover even stronger differences between regions inside the same State)

Intercontinental comparisons show greater discrepancies

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Modal split and modal shares

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

EU 25(2004)

USA(2003)

Japan(2002)

China(2004)

Russia(2003)

%

Sea (domestic/intra EU)Oil pipelineInland waterwayRailRoad

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Modal split, European Union, (inland transport, t.km)

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Intermodal transport through the existing modal structure

This 5 % of total freight in Europe represents:

25 % of railway transport (t.km),

5 % of waterway transport,

10 % of maritime transport on the inland leg,

deriving from a large variety of regional situations:

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Combined transport traffic shares in European countries

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“Relevance” of intermodal transport

Therefore, freight organisation strongly depends on the context where it takes place and not on an universal, uniform mechanism

In this framework, Intermodal transport remains a market for "niches", mainly in Western Europe, concentrated on a few corridors, particularly across the Alps

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Rail-road flows in Europe

Unaccompanied international traffic in 2001 (without alpine traffic)

Unaccompanied international traffic in 2001 (alpine traffic)

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General trends

The visible growth during the 1990’s follows a period of stagnation, even of crisis

Why ?

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Decision-making process of users

A methodological approach: identify criteria and variables affecting decisions

Basic criteria:

Cost

and Quality

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Cost

minimisation of costs a basic concern for modal choice

transport cost varies according to the length of haulage, but is not proportional to it: it also comprises a fixed cost, independent of distance, covering such operations as packaging, loading and unloading, preparation of the vehicle, invoicing, organisation and transaction costs, etc

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Cost structure

Transport cost according to distance (y = ax + b)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

0 200 400 600 800 1000 1200

distance

c

Road costRail cost

Fixed cost

D0

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Cost structure

Transport average cost (per kilometre) according to distance (y/x = a + b/x)

0

10

20

30

40

50

60

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80

90

0 200 400 600 800 1000 1200

distance

cost / km

Road costRail cost

Road

Rail

D0

Bulk of the market,road and rail

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Cost and Quality

Therefore, the divide between road and rail solutions takes place according to a threshold distance based on the cost factor

Beside the cost, quality criteria affect the decision-making process, to various extends

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Quality time indicators - e.g. the total length of time between when the load unit

is ready for transport and when it is delivered, reliability - the absence of unforeseen lowering of performance, flexibility - the ease with which the system adjusts to an unexpected

change in logistic requirements, qualification - the capacity to cope with complex logistic requirements, accessibility - the ease with which the intermodal transport system can be

used, monitoring - this relates to whether and to how well the cargo or load

units can be monitored and the ability to obtain information about the status of the cargo,

safety and security - the risk of losing equipment and goods

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Decision-making process: other variables

Variables affecting decisions by affecting the relative weight of cost and quality can be divided into four groups:

shipper characteristics (size, volumes, regularity of shipments etc)-demand side

transport actors’ characteristics-supply side cargo characteristics- demand side characteristics of economic environment-supply side

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Quality and decision-making

The relative weight of quality criteria varies according to these variables: Intercontinental maritime transport presents less time pressure than continental

transport. Time and commercial accessibility are less important on long distances, while the

importance of control is growing. The need for additional services such as pre- or end-haul arrangements is needed.

As for hazardous goods and perishable goods, control and reliability are of relatively high importance.

As for hazardous goods, security, qualification and safety are important. As for low-value cargo, it is mainly price, which determines the modal choice. No

quality features are expected to be of more than average importance

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Who is the decision-maker ?

By its nature, a multiplicity of actors are involved in an intermodal chain:

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Who is the decision-maker ?

Case 1 Decision-maker: Large shipper owning assets and operating own account transport and logistics activities.It is interesting to investigate how “own assets” affect the usage of intermodal transport. Investments in intermodal equipment

can result from a decision process to use intermodal transport. Therefore, the decision process is influenced by the necessity to optimise the own assets use. Finally, to further evaluate the influence of own assets on decision, the different types of own assets and the respective types of actors must be taken into consideration.

Case 2Decision-maker: Large shipper directly contracting out transport activities and ensuring own account forwarding and logistics

activities.Case 3Decision-maker: Large forwarder having the freedom to chose transport modes, routes and transport operators to carry out

transport functions. In case 3, shippers, however, impose the quality parameters of transport (frequency, dispatch size, delivery time etc).

Case 4Decision-maker: Large forwarder or large road transport company operating for the account of a large number of shippers of

various size.Case 5 Decision-maker: Deep sea shipping line or feeder operator also organizing the transport and logistics activities on the inland

leg. The so-called “carrier haulage” is mainly concerned.

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How he makes decisions ?

Results of a European research project on the theme

Relative weight of decision variables :

Mean values

Variables Forwarders Shippers Shipping Lines Total

Transport Cost 4,3 ( 0,3) 4,1 ( 0,5) 5,0 ( 0,0) 4,3

Size of Shipment 2,6 ( 0,4) 3,1 ( 0,5) 2,4 ( 0,7) 2,8

Regularity of Shipment 3,8 ( 0,4) 3,2 ( 0,5) 3,0 ( 0,8) 3,5

Warehouse Location 2,8 ( 0,4) 2,7 ( 0,5) 2,1 ( 0,7) 2,7

Historical Tradition 1,9 ( 0,4) 1,6 ( 0,3) 1,1 ( 0,1) 1,7

Reliability 4,3 ( 0,3) 4,0 ( 0,5) 3,1 ( 1,0) 4,0

Flexibility 3,5 ( 0,4) 3,5 ( 0,5) 2,8 ( 1,0) 3,4

Safety 3,6 ( 0,5) 3,7 ( 0,5) 2,4 ( 1,0) 3,4

Operating systems

Systems

3,5 ( 0,4) 3,1 ( 0,5) 2,7 ( 0,9) 3,2

Frequency of services 4,0 ( 0,3) 3,5 ( 0,4) 2,8 ( 1,0) 3,6

Additional logistics

services

2,1 ( 0,4) 2,6 ( 0,4) 2,4 ( 0,8) 2,3

Information systems 2,9 ( 0,4) 2,8 ( 0,5) 2,4 ( 0,8) 2,8

EU transport policy 1,9 ( 0,4) 2,2 ( 0,4) 2,1 ( 0,7) 2,1

Regional/local policy 2,4 ( 0,5) 2,5 ( 0,5) 2,2 ( 0,9) 2,4

Other 1,7 ( 0,4) 1,4 ( 0,4) 1,3 ( 0,6) 1,6

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How he makes decisions ?

Factor analysis identified three decision groups:

Factor Actors group % of the sample

(respondents)

1 "Quality-cost oriented" 45,1

2 "Specific" 19,8

3 “Cost oriented” 35,1

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How he makes decisions ?

Actor groups and actor types :

Actors Cost

oriented

group

Quality-

cost

oriented

group

Specific

group

Row total

Forwarders Row percentage

Column percentage

33,3%

46,9%

51,1%

56,1%

15,6%

38,9%

49,5%

Shippers Row percentage

Column percentage

28,1%

28,1%

43,8%

34,1%

28,1%

50,0%

35,1%

Shipping Lines Row percentage

Column percentage

57,1%

25,0%

28,6%

9,8%

14,3%

11,1%

15,4%

Column total 35,1% 45,1% 19,8% 100%

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What decision ?

Ranked diagram of individual intermodal transport shares

0

20

40

60

80

100

Observations

Inte

rmo

dal tr

an

sp

ort

sh

are

(%

)

"Specif ic" "Quality oriented" "Cost oriented"

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Why stagnation ?

From the supply side: Investments to extend quality and coverage are heavy and of high

risk while the return on capital is limited Business opportunities at the national level are restricted; the

international market is much more competitive The (few) new entrants in the market did not bring the expected

impetus Traditional actors (e.g. UIRR members) kept their position in the

market

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Why stagnation ?

In a more detailed level, the intermodal market knew several organizational changes, induced by the liberalisation process in the railway sector:

New partnerships, alliances and agreements Break of monopoly in traction practicesCreation of new companies and entrance of actors operating in other sectors of transport business etcVarious extend of these changes from country to country (e.g. in France is limited, in Italy quite important)

However, the overall picture did not change a lot.

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Why stagnation ?

At the political level:

Significant decrease of public aids -under various forms- in the recent years revealed the problem of economic viability of intermodal business

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Why stagnation ?

From the demand side:

The improvement of quality in several intermodal services seems not to be appreciated as such…

The logic behind the promotion of intermodality is still socio-economic (reduction of external cost) rather than financial…

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Για περισσότερες πληροφορίες:

skapros@aegean.gr

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