Wednesday, January 8th, 2025
In the dynamic world of logistics and transport, finding sustainable and efficient solutions is paramount. Transport capacity has been highlighted as a key challenge hampering competitiveness and growth in regions such as Japan[1]. Over ALICE Summit November 2024, similar symptoms were perceived in Europe on the subject. Intermodality is a major lever for decarbonisation[2] and critical to increase sustainable transport capacity in Europe.
Recently, UIC/UIRR report on Combined Transport in Europe[3] highlighted that despite there is no growth in rail freight overall, combined transport has experience and important growth in the last decade.
However, the journey towards increasing the use of intermodality is fraught with challenges. ALICE is at the forefront of efforts to address these issues. Earlier this year, with the support of TRANSPOREON, ALICE published a comprehensive white paper titled “Increasing the Use of Rail and Intermodal Transport in Europe: Integration of Rail Freight Information with Other Supply Chain Solutions.”
This document addresses the main challenges faced by the sector, based on surveys, interviews and workshops. It also identifies the factors that hinder the integration of rail and intermodal transport into broader logistics solutions and the different perceptions from different stakeholders groups:
In the policy field, several pieces of legislation are under review as part of the Greening Freight Package[4]. With the new European Commission in place since 4th of December, these policies and legislative initiatives are expected to resume in the coming months.
The reality and perception of modal shift
Despite the clear benefits of rail transport in terms of reducing carbon footprints and reducing road congestion, the sector struggles to attract consistent additional traffic. ALICE’s 2023 survey and workshops, which involved shippers, rail sector experts, and other stakeholders, identified significant barriers to achieving the European Commission’s targets to increase rail freight by 50% by 2030 and double it by 2050 compared to 2015 levels.
One of the key findings of this research is the disparity in perceptions between stakeholders. Shippers, logistics service providers (LSPs), and rail operators assess performance through different lenses. For example, shippers assess on-time performance by looking at the entire journey – origin to destination – while rail operators often focus only on the terminal-to-terminal segment. This distinction highlights a gap in understanding, as rail freight punctuality expectations are not aligned with the tighter delivery windows typically managed in road transport, where hauliers are often scheduled within 20-minute slots. Shippers using comparative data can assess the performance of rail against road over both long and short distances, leading to more rigorous assessments.
Challenges in intermodal transport
On-time performance (loading/unloading) and transit time: Shippers emphasise the importance of estimated time of arrival (ETA) and lead times, and their visibility in planning and operational phases. While some shippers have very tight lead time requirements, others have found working models to relax the transit time for a few days in the connection.
Cost and capacity challenges: The ALICE Express initiative is working collaboratively with shippers and multimodal transportation operators willing to co-create new transportation solutions and address the challenges and well-known constraints intermodal transport is facing over the past 25 years in concrete corridors and implementations. The current high cost of intermodal transport and other operational challenges have put renewed pressure on maintaining the share and growth of intermodal transport. Balancing short-term operational decisions with long-term financial sustainability is essential. Market trends may change soon, becoming intermodal more and more competitive. However, intermodal offer takes time to build up and it is constrained due to capacity limitations.
Structural problems in intermodal solutions: The absence of a competitive intermodal solution is often due to structural reasons related to the cost structure of intermodal versus road transport. In these cases, increasing intermodal capacity is seen as a “public good” with no immediate benefit to shippers or the LSPs working on the new connection even though the introduction of intermodal could reduce costs in the medium/long term. There is no enough incentive for shippers to pioneer these changes so it would be important to address these structural reasons with public support.
Flexibility and set-up times: Road transport is more flexible and has shorter set-up times (days/weeks) compared to rail (months/years). If intermodal capacity is destroyed, e.g. in moments of low transport demand and low road transport prices, rebuilding the intermodal corridor is a challenging task.
Misperceptions and data transparency: Shippers may have misconceptions about intermodal performance due to multiple intermediaries in the value chain involving LSPs, intermodal operators, railways, infrastructure managers and first/last mile road transportation. Identifying and addressing these misperceptions could be a lever to improve transparency, decision making and shipper perceptions of intermodal. For example, while the shipper judges on-time by the source to destination arrival on plan, rail providers look at the terminal-to-terminal bit of the journey. Where is then the origin of the misperception? A different bar of the same reality or maybe the end to end road legs are key to address?
A strategic approach to increasing intermodality
Successfully increasing the uptake of intermodal transport requires a dual approach that recognises both the immediate opportunities and the longer-term challenges. While many intermodal experts focus on solving existing complexities, this can lead to an overemphasis on barriers. Intermodal solutions have been used successfully by many shippers for years. In order to increase their use, two parallel efforts need to be undertaken:
It is important to note that progress in expanding intermodal transport cannot depend solely on the success of Action Group B. Waiting for all barriers to be removed could significantly delay wider adoption. Potential adopters also need to engage with Action Group A, which is focused on identifying and exploiting immediate opportunities for growth.
For example, the ALICE Express initiative is a contribution to Action Group A. It aims to increase the use of intermodal transport by shippers who are already familiar with it and who want to increase their use on key corridors where a “good enough” solution can be implemented in the short term without waiting for the ideal scenario.
Stakeholder engagement
ALICE continues to engage stakeholders through surveys and workshops to gain a deeper insight into the challenges facing rail and intermodal transport. To this end, ALICE has launched a survey looking at challenges such as punctuality, transit time and the importance of ETA and lead times. The survey also explores the mismatch between short-term decision making and long-term cost structures, with the aim of identifying structural reasons for the current reliance on road transport over intermodal solutions.
The survey includes questions to understand the use of multimodal transport, the decision-making processes regarding transport modes and the roles and perspectives of different stakeholders (shippers, LSPs, railway undertakings, etc.). Follow this link to participate in the survey.
The future of logistics lies in a more integrated, efficient, and sustainable transport system. By addressing the challenges of rail and intermodal transport, we can move closer to achieving the ambitious goals set by the European Commission, industry and society.
Authors: Serge Schamschula, Michael Archer, Jannicke Baalsrud Hauge, Fernando Liesa, Yuliya Sahitava