FAQ on Freight Transport in Europe

October 18, 2007 // Published as a news service by IHS

Why is the European Union involved in freight transport?
Since freight transport is so often a cross-border activity, concerted action at the European level will obviously greatly increase the chances of success. In its efforts to promote freight transport in Europe, the approach of the European Commission (EC) is based on co-modality - making it possible to enhance the efficiency of all transport modes and their combination - and on innovation, simplification, quality and the concept of "corridors."

The EC's new transport initiatives are aimed at several different transport modes and form part of a single package of measures with the following components:

• An action plan on freight logistics.
• Several initiatives in the field of maritime transport, in particular a communication on European ports policy.
• A communication on a freight-oriented rail network.

Clearly, these objectives will not be attained without the active participation of all stakeholders concerned and the EC wishes to involve these groups fully in both finding the solutions and implementing them.

Why is freight logistics so important?
The efficiency of logistics services impacts the prices and quality of products. The sectors of the economy are affected differently, but estimates put logistics costs at up to 12% of the final costs in the manufacturing industry and more than 20% in the retail sector.

In recent years, efficiency gains in logistics have helped bring down the transport component in the total product price. This has increased European competitiveness in global markets by making it possible for European companies to source raw materials and components from all over the world. European manufacturers also have access to worldwide markets to sell their products.

Why is action needed now?
The evolution in freight transport has put a strain on infrastructures in the European Union (EU). The visible signs of this are congestion on parts of the European transport system, including many of its roads, rail links and harbours. Some estimate these costs to be as high as 1.5% of GDP, and they are likely to increase substantially in the years to come as growth continues. Studies show that 50% more freight is expected by 2020. For some parts of Europe, predictions even suggest a doubling of freight transport by 2050.

Growth in freight has also increased the dependence on fossil fuel imports, the main energy source for transport, which now accounts for 31% of total EU energy consumption. Furthermore, there are signs that growth in transport and logistics is leading to shortages in qualified staff.

Finally, the transport sector's CO2 emissions and its contribution to climate change are a major concern. Transport emissions are still increasing, and one third of these are estimated to be caused by freight transport. This trend needs to be stopped if the EU is to meet its greenhouse gas emissions targets.

What is in the EC's Logistics Action Plan?
The EC's Logistics Action Plan is based on the following key concepts:

• Innovation
• Simplification
• Quality
• Updated regulatory framework
• Green corridors

For each of these areas, the plan introduces a range of concrete measures that are set against a concrete objective and a clear timetable. In total, the Logistics Action Plan proposes more than 30 actions to be implemented over the coming years.

To promote innovation, the plan will encourage the use of information and communication technologies in freight. It outlines the vision of paperless information flows accompanying the physical shipment of goods. It will also help make traffic management more efficient by promoting intelligent transport systems as well as facilitate the roll-out of innovative services. Emerging technologies, such as radio frequency identification (RFID) and the possibilities offered by satellite services, will revolutionise freight transport.

The paperless transfer of information on the transport of goods will also help the simplification of freight flows. Another element of this strategy is to create a single transport document to replace the many mode-based versions that currently render multi-modal transport less attractive. The Logistics Action Plan also gives a new boost to efforts to simplify administrative reporting by creating a single reporting interface.

To improve the quality of logistics services, the plan proposes to tackle the many bottlenecks that create unnecessary obstacles to the efficient flow of goods, from a lack of parking spaces for trucks to bureaucratic red tape. Quality will also be enhanced by giving more value to professional competence and ensuring that qualifications are mutually recognised.

In terms of updating the regulatory framework, the Logistics Action Plan proposes developing standards for loading units suitable for all modes of transport. It also suggests assessing the need to review the current limitations of road vehicle weights and dimensions. Further legislative proposals will be initiated by the EC in the coming years.

Finally, the Logistics Action Plan suggests that priority should be given to the improvement of efficiency and sustainability of freight transport where pressure to do so is highest, namely in urban environments and along the major European transport corridors. The plan will help ensure that Europe's main transport arteries become "green," taking account of environmental concerns as well as the growing need for safety and security.

How does the rail network fit in?
The development of rail freight is a major challenge for the EU transport sector. Although it declined significantly from the 1970s until recent years, this mode can make a significant contribution to the construction of an efficient and sustainable European transport system. Rail transport is less costly in environmental terms than road transport and may offer a competitive alternative to the latter on certain major segments of the market. However, it suffers from major drawbacks: the fact that it has to share the infrastructure with passenger traffic, the lack of interoperability and a culture that is still insufficiently customer-orientated.

Over the last 15 years, the European Community has launched a series of initiatives aimed at revitalising rail freight transport and giving it a more European dimension, concerning the way in which the sector is organised (rail freight has been gradually opened up to competition and has been fully open to competition since 2007), the development of technical interoperability and the construction of key infrastructures across Europe through the TEN-T programme.

These measures have produced satisfactory results, but they do not go far enough. The performance of rail freight has been improving significantly for a number of years. According to the UIC, in the first half of 2007, it increased by 7%, in particular as a result of the dynamism of international traffic. However rail's modal share of freight transport is scarcely increasing. In addition, the development of interoperability remains modest and needs to be accelerated.

Why is rail network action needed at the European level?
In this context, it seems appropriate to supplement the European Community initiatives already launched by taking further action to promote the construction of an integrated and competitive European railway area. The white paper on transport for 2010 already expressed the EC's desire to promote a European network that gives priority to freight.

The EC wishes to transform this objective into action. It is still relevant and in keeping with the current context of the freight transport market, since it is when large volumes are transported over long distances that rail freight seems to have the best prospects of being able to compete with road transport. The growing containerisation of freight transport and the longer distances covered in the single European market should generate a growing demand for rail transport.

Therefore, the EC proposes that a series of financial and legislative measures should be initiated aimed at promoting the development of a European freight-orientated rail network, corridor by corridor. This approach is based on the programmes and initiatives already launched in this area, such as the deployment of the European Rail Traffic Management System (ERTMS) on major European routes.

What is the EC's rail freight corridor concept?
The EC has identified a possible European network based on existing and future flows. For the corridors in the network, greater cooperation between the infrastructure managers and member states on both the corridors' investments and management should result in infrastructure use and funding that is optimised at the European level.

Greater coordination and a common desire to give adequate priority to freight on these routes should make it possible to propose to rail freight operators high-quality train paths and thus improve the performance of the production chain involved in provision of rail freight transport services.

Here are examples of two key corridors:

• Rotterdam-Genoa Corridor. The objectives on this corridor are to double the volume transported between now and 2020, with an increase in punctuality of 26% and a reduction in transport time of 20%. In absolute terms, these measures will allow 28 billion freight tonnes per km each year to be transported by rail rather than by road. This means, at each point along this 1,300-km corridor, one lorry with 26 tonnes of freight passing by every 37 seconds, 24 hours a day, all year round.
• Antwerp-Lyon/Basle Corridor. The objectives on this corridor are to increase the volume transported by 55% between now and 2020, with a reduction in transport time of 15%, a four-fold reduction in the number of late trains on the Antwerp-Lyon line and a two-fold reduction on the Antwerp-Basle line. On these very dense routes where rail can have a competitive edge, this would mean that approximately seven billion freight tonnes per km use rail rather than road transport.

In addition, the EC proposes the creation of at least one international freight-orientated corridor in each member state by 2012. For each corridor, it recommends initiatives aimed at:

• Improving coordination between member states and infrastructure managers on management and investment.
• Giving adequate priority to freight traffic compared with other traffic on the network giving priority to freight.
• Improving access to ancillary services and transparency concerning the quality of the service offered.

All the proposals will be carefully examined and assessed by an expert group at the beginning of 2008 and then transformed into legislative and financial proposals by the end of 2008.

The EC is aware that these proposals are only part of the response to the need to revitalise rail freight. The effective restructuring of the incumbent undertakings, greater opening up of rail freight to competition, and greater innovation in the sector, which needs to find new models more in keeping with the requirements of modern logistics, remain essential for the redynamisation of a sector which Europe needs.

Source: European Commission.