STRATEGIES FOR INCREASING INTERMODAL FREIGHT TRANSPORT BETWEEN EASTERN AND WESTERN EUROPE Jost Wichser Ulrich Weidmann

Nikolaus Fries (Corresponding Author) Andrew Nash Institute of Transportation Planning and Systems ETH Zurich Wolfgang Pauli Strasse 15 Zurich, 8098 Switzerland ABSTRACT An important European Union policy is to decrease the share of freight transport moving by truck in favor of alternative land transport modes (rail and waterway). The research projects purpose was to identify strategies for increasing the share of intermodal freight transportation between Eastern and Western Europe. The project evaluated the demand for transport in this market and identified a potential candidate corridor. This corridor was used to help analyze strategies for addressing the key problems in increasing intermodal transport. The three main problems with intermodal transport are: quality, price and coverage; more specifically, intermodal transport is often slower, less reliable and more expensive than truck-only transport, and furthermore it is only offered in selected corridors. Addressing these problems is the key to increasing intermodal transport. Quality is the most important factor in todays freight transport market. There are two main ways to improve the quality of intermodal transport: consolidate management and improve the infrastructure. Intermodal transport in Europe today is relatively disorganized; often it involves multiple parties working together on an ad-hoc basis. The best option would be a single company providing door-to-door service (similar to truck transport), but this is practically impossible for long distance intermodal transport. Therefore, to increase quality, a single responsible party must manage all transport chain partners, information flows must be improved, quality improvement strategies must be implemented, and all partners must share the same objectives. There are several alternative organizational structures that could achieve these objectives. One common requirement is that the intermodal terminal operator be responsible for providing the pre- and post-haulage service (to increase PPH efficiency). Ideally both the origin and destination terminals would be under the control of the same operator. The terminal operator could either contract with a railroad for the main haulage or (preferably) operate its own trains (under Europes Open Access rules) between terminals. In cases where the origin and destination terminals are operated by different companies, these companies must develop a real working partnership.

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Europes intermodal transport infrastructure must be improved to increase its share of the freight market. New terminals must be built and the capacity of existing terminals increased to support development of new operational strategies (e.g. liner trains or hub-and-spoke systems). In some locations new track infrastructure must be built to help freight trains travel quickly and efficiently between terminals. The main responsibility for planning and financing these infrastructure investments must be government because of their high cost, long life and impact on economic development; however, intermodal operators should strongly support these efforts. Many of the recommendations for increasing quality will also reduce expenses. A good example is using coordinated information systems to quickly and accurately transmit information between partners. The research found that the cost of inefficient pre- and post-haulage process adds up to 37% to the cost of intermodal transport in typical markets. Two ways to reduce these costs are to better plan the PPH operation (making more efficient use of PPH trucks) and locating intermodal terminals closer to customers (or viceversa). The best markets for intermodal transport are large volumes of freight moving on a concentrated axis over relatively long distances (around 1000 km or more). Intermodal operators can build these markets using the cooperative strategies outlined above. Another strategy is to increase freight volumes by serving smaller markets with a multi-level service offer (which increases the number of efficient direct trains). 1. INTRODUCTION

East-West trade in Europe is growing rapidly due to the 2004 European Union (EU) expansion and development in former Soviet Union countries. Eastern Europes transport infrastructure often does not meet Western standards and is oriented eastward. The combination of rapid growth and insufficient infrastructure has created fears of increased traffic congestion, logistic bottlenecks and environmental problems. An important EU policy (also shared by many individual countries) is to shift freight transport from road to rail. [European Commission (2001)] The research purpose was to analyse possible business, market and operating strategies for increasing east-west intermodal transport and thereby help achieve this policy. Intermodal freight transport (or combined transport) means movement of goods in an intermodal transport unit (ITU), using two or more modes of transport without handling the goods themselves when changing modes (in this paper the term container will be used to mean ITU). This research study focuses on road-rail transport, i.e. the principal transport process (main haulage) is done by rail, while the comparatively short connection between terminal and consignor or consignee is by road (truck). The study methodology consisted of four steps: Evaluate market conditions, infrastructure, and legal conditions in central and Eastern European countries; Identify promising transport markets (axes) between Eastern and Western Europe; Prepare a detailed market and cost analysis for the most promising axes;

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Identify potential business, market and operational strategies to increase intermodal transport in these markets. This paper presents a summary of the full research report. [Wichser et al. (2006)] It focuses on the research methodology and strategy development to provide ideas and information for an international audience of transport and logistics managers rather than the analysis details (which apply mainly to Europe). 2. MARKET, ANALYSIS INFRASTRUCTURE AND LEGAL CONDITIONS

The first step in the research was to analyze market, infrastructure and legal conditions in Eastern European countries to help identify the most promising markets. The analysis was completed by ranking conditions using a three point scheme with 3 being the highest (indicating a high potential for success) and 1 being the lowest (indicating a low potential). The full report describes this process and the data used in detail. The main indicators and example measures are presented in Table 1.
Analysis Type Market Indicator Economic Sector Industrial Sector Foreign Trade Economic Growth Gross Wages Infrastructure Rail Network Quality and Capacity Interoperability Intermodal Terminals Road Network Quality and Capacity Topography Legal Conditions Fiscal System Customs Regulations Economic Policy General Settings Example Measures Major Industries, GDP, GIP; Employees contribution (percentage %) Resource orientated vs. production orientated: approximate contribution Major import/export goods GIP/GNP, per inhabitant in purchasingpower parity Average gross wage in purchasing-power parity Possible trains; reliability; axes; number of locomotives; network density Weight per axle; track gauge; electrical network; structure gauge Existent / non-existent; quality; capacity Road quality; capacity; conditions; network density; possible bottlenecks Flat/hilly; bodies of water, etc. Qualitative evaluation of how these impact introducing and/or expanding intermodal transportation

Table 1: Country Analysis Indicators and Example Measures

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3.

EAST-WEST TRANSPORT CORRIDORS EVALUATION

The second step was to identify main east-west transport corridors and evaluate their potential for increased intermodal transportation. 3.1 Corridor Identification

The European Unions Maastricht Treaty (1995) calls for development of a Trans-European Network (TEN). This network is designed to link the major cities and economic areas throughout Europe (both inside and outside the EU). It consists of ten multimodal (e.g. road, rail and waterway) corridors. The idea is to concentrate international traffic in these corridors. As part of the EUs development strategy, a large number of infrastructure improvement projects have been identified for the TEN corridors. These high profile projects are intended to better coordinate national and international network development and to improve trans-border transportation. The projects include improvements to infrastructure of central, eastern and southeastern European countries. Progress on implementing the TEN corridors and infrastructure projects differ significantly between regions and countries. The corridor analysis began by identifying the main east-west transportation axes by linking the key economic regions in Western Europe to key regions in the east. Key economic regions were identified using the market data outlined above and demographic data (e.g. population). These data were used to eliminate unpromising areas and markets with little expected economic growth. The research identified six main east-west axes and two sub-axes (Figure 1). The axes were designated A, B, C, D1, D2, E and F, to differentiate them from TEN corridors (which are numbered).

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Figure 1: East-West Transportation Axes (Source: [Wichser et al. (2006)]) 3.2 Corridor Evaluation The six east-west corridors were evaluated using infrastructure data and detailed market data to estimate their potential for intermodal transport. The detailed market data consisted of foreign trade statistics for EU member states from Eurostat. [Eurostat (2005)] First, the raw Eurostat data was used to identify goods that could be transported by container based on the following criteria: It must be possible to transport the goods in containers; No bulk goods (e.g. cereal grains); No goods that can be transported by unit trains (e.g. coal); and No goods that require quick transport (express goods). Next, the country-to-country flows of goods suitable for intermodal transportation were used to identify feasible east-west routes. An essential condition for successful intermodal service is to minimize moving empty containers (for example by having approximately equal volumes of goods moving in both directions). The detailed evaluation showed that Axis D had the most potential for increasing intermodal transport. This is logical since the Axis D corridor links many major Western European markets to newly developing industrial (especially automobile related) regions in Eastern Europe. In fact, many new factories were built in this part of Central/Eastern Europe specifically because it had relatively good transport links to Western Europe. 4. DETAILED TRANSPORT COST ANALYSIS

One of the main problems with intermodal transport is that, often, it is more expensive than truck-only transport on similar routes. To better understand this problem, a detailed analysis comparing the costs for moving goods by intermodal and truck-only modes was completed. 4.1 Cost Analysis Data

The project developed country-specific unit costs for moving containers. [NEI Transport (2001)], [Hubauer (2005)] These costs depend on many assumptions and reliable data were not always available to make extremely accurate estimates for all countries. Therefore, the specific cost values developed are not directly applicable for other studies, although they are sufficient for purposes of this research. The cost analysis considers production costs only (no profits for operators). Furthermore, it assumed that the necessary infrastructure and container investments have already been made, although amortisation costs for rolling stock are included. Thus, the analysis considers only specific costs depending on time, distance and number of containers transported. 4.2 Cost Analysis Results (Summary)

The project analyzed several different scenarios for shipping a container (specifically a twenty foot equivalent unit - TEU) on three specific routes:

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Frankfurt-Prague (500 km), Frankfurt Krakow (1000 km), and Frankfurt-Kiev (2000 km). This section summarizes main findings of the cost analysis. The largest cost element for truck-only transport is fuel, which represents about 36% of the total cost per consignment. Driver cost represents only 15 20%, and amortization 18 21% of the total costs. As expected, the analysis showed that the total cost for shipping a TEU by truck is directly proportional to the distance. One important caveat is that the driver costs in Eastern Europe (which were used in this analysis) are lower than the average rates for truck drivers in Western Europe. The cost analysis for intermodal transport evaluated the two main differences between intermodal and truck-only transport in detail, specifically the costs associated with pre- and post-haulage, and the costs of transshipment. The analysis confirmed that pre- and post- haulage (PPH) is a significant cost factor for intermodal transport. It represents up to 37% of the overall cost per TEU although it covers only a small portion of the total distance travelled. The difference in efficiency with shorter PPH distances is considerable. The cost for PPH on the 1000-km route evaluated in the study is 77% higher for a 50km PPH distance than for a 20-km PPH distance and increases the total transport cost per TEU by 19%. The two main reasons for this cost increase are the longer travel distances and the longer waiting time in terminals caused by inefficient internal organization. The analysis also confirmed that transshipment is a significant cost. Costs were estimated for three transshipment scenarios: continuous main haulage (2 transshipments: truck-train/train-truck), main haulage with intermediate transshipment (3 transshipments: truck-train, train-train, train-truck), and post haulage only (1 transshipment: train/truck, for example in the case of seaport hinterland connections). Transshipment costs represent up to 23% of the total transport costs in the continuous haulage scenario and up to 31% of total transport costs in the broken main haulage scenario. Due to the costs of transshipment, it is clear that by eliminating a pre- or posthaulage, intermodal transport can be a good alternative to truck-only transport even on medium distance trips. Seaports are especially attractive for intermodal transport because, in addition to eliminating the need for pre haulage, they are much more likely to fill a train to capacity given the greater commodity flows passing through a typical seaport. 4.3 Cost Comparison: Intermodal Versus Truck-only Transport

Once the costs for the example scenarios were calculated, they were plotted on cost (per TEU) versus distance graphs. These graphs help provide a better understanding of the factors that influence intermodal transports competitiveness. This section presents several of the more interesting comparisons. Figure 2 compares the cost of shipping a TEU by truck to the cost by intermodal transport (continuous main haulage with 50 km PPH distance). Figure 2 clearly illustrates the main difference between intermodal and truckonly transport: intermodal transport has higher fixed costs while truck-only has higher variable costs. Thus, truck-only transport is less expensive over short distances and intermodal transport is less expensive over longer distances. Figure 2 shows that the break-even point for this specific case is about 1400

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km. These results agree with actual conditions in Eastern Europe in that intermodal transport does not compete seriously with truck-only transport at distances less than 1000 km.

Figure 2: Break-even analysis: intermodal versus truck-only transport assuming 50 km PPH process. Figure 3 illustrates the impact of pre and post haulage on intermodal transport costs. In Figure 3 the green line represents the cost per TEU for intermodal transport with 20 km PPH distance, the red dashed line represents the 50 km PPH case, and the blue line represents the truck-only transport cost (unchanged from Figure 2).

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Figure 3: Influence of PPH distance on intermodal versus truck-only breakeven analysis. Figure 3 makes clear the importance of an optimised terminal location. Reducing the average distance between intermodal terminal and the consignor/consignee by 30 km reduces the break-even point between truckonly and intermodal transport by 293 km (or 21%) to approximately 1100 km. Another important point to keep in mind is that PPH costs for intermodal transport can also be significantly reduced by using intelligent tour management techniques to serve multiple clients with one truck. Once the status quo analysis was completed, a sensitivity analysis was performed to test the impact of changes to three selected variables (fuel prices, wage costs, and road tolls) on the competitiveness of intermodal transport. Two scenarios were tested: a Trend Scenario which assumed that existing trends with respect to these variables would continue and a Maximum Scenario which assumed that these trends would accelerate. Table 2 summarizes the variables that were tested in this analysis.
Cost Element Energy Costs
1)

Trend Scenario +50% Truck +25% Intermodal 0.125 /km (EU-wide) +50% in road transport

Maximum Scenario +100% Truck +50% Intermodal 0.15 /km (EU-wide) +100% in road transport

Infrastructure Costs (Toll) Wage Costs

Notes: 1) Assumptions based on [Energy Information Administration (2005)]

Table 2: Cost Sensitivity Analysis Parameters

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Figure 4 compares the truck-only and intermodal transport costs (continuous main haul and 50 km PPH) versus distance under the maximum scenario (in green), the trend scenario (in yellow), and the status quo scenario (in red).
Prognosis - Cost per TEU (incl. inflation) pre/post haulage 50 km
1400.00

1200.00

1000.00

800.00

600.00

400.00

200.00

740 (54%) 482 (35%)

0.00 0 500 640 898 1000 1380 1500 distance (km) Road (maximum scenario) Intermodal (maximum scenario) Road (trend scenario) Intermodal (trend scenario) Road (status quo) Intermodal (status quo) 2000 2500

Figure 4: Influence of cost parameters on intermodal versus truck-only breakeven analysis. As shown in Figure 4, the trend and maximum scenarios show a significant decrease in the break-even distance. Under the trend scenario the distance is reduced by 35% from 1380 km to 898 km, while under the maximum scenario it is reduced by 54% to 640 km. 4.4 Cost Analysis Summary

The cost analysis shows that intermodal transport has a good chance of becoming competitive on medium distance routes and increasing its market share in the coming years. The most optimistic scenarios require the EU and national governments to make changes in transport policies (e.g. increase fuel prices, tolls). However, the analysis also shows that intermodal transport operators themselves can increase their competitiveness using strategies including more efficient PPH processes and improving intermodal transport chain organization. Finally, it should be emphasized that the cost analysis neglected the qualitative aspect of transport service. Unfortunately, in most cases, intermodal transport in Europe today cannot meet customer quality requirements (e.g. time window of delivery). Clearly, if intermodal transport cannot meet the clients quality requirements, it will never be competitive with truck-only transport even if it is less expensive. Quality is considered in the next section.

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5.

IDENTIFY BUSINESS, MARKET AND OPERATIONAL STRATEGIES

This section identifies strategies for increasing intermodal transport by improving quality. The first part outlines problems in intermodal transport sector and the second presents business, market and operational strategies to address these problems. 5.1 Key Problems with Intermodal Transport in Europe

From the customers perspective, intermodal transport on many European routes is not competitive with truck-only transport [Krueger (2005)] because it: costs more; takes longer; is less reliable; and its service offer (routes, frequency) does not meet customer needs. From the providers perspective, todays small market for intermodal transport has high growth potential, but the current business environment (a geographically dispersed market with many operators) makes it very difficult to build-up an attractive and efficient network. Customer and operator problems can be grouped into two main categories: Quality (i.e. reliability, speed etc.); and Coverage area (i.e. network density/number of routes offered). The effects of these problems are higher production costs and a less competitive service for intermodal transport compared with truck-only transport. 5.2 Quality

The most important aspects of quality are speed, reliability, and security (the goods arrive undamaged). When a shipper chooses a transport mode, often, quality is more important than cost. [IRE and Rapp Trans AG (2005)], [Bolis and Maggi (1999)] Therefore, quality problems must be addressed with highest priority. Quality problems have three main causes: complex transport chain organization, infrastructure capacity/priority on the main haulage, and pre- and post-haulage inefficiency. Complex Transport Chain Organization The intermodal transport process is a chain of independent companies working together to move a container from shipper to receiver. It consists of three main processes: pre- and post-haulage (picking-up/delivering the container to the intermodal terminal), transshipment (loading the container onto/off-of the train), and main haulage (container carried by train to destination terminal). Today, these processes are often completed by different companies and the main haulage process may even be completed by several companies. An example are the trans-alpine train services managed by HUPAC. [HUPAC (2006)] In general, the more independent partners involved in the transport chain, the more complex the process becomes, and the more difficult it is to insure high quality service. There are four main, mutually reinforcing, causes of increasing
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difficulty: competitive partners, self-interest, information transfer, and unclear responsibilities. In many cases a particular intermodal transport chain will include companies that are competitors in other markets (for example when the trucking companies that provide pre- and post-haulage also provide long distance road transport). In these cases companies lack incentive to work together efficiently on the intermodal process and each company will try to optimize its own process independently making it difficult to optimize the whole transport chain. The management of information flows between partners is a huge problem. In some cases there are technical problems transferring information, while in others companies dont want to share data for strategic reasons even when technically possible (maybe they are competitors in another market). Therefore information must be re-entered into the next partners information system at the interfaces, which takes time, increases costs, and increases the likelihood of mistakes. Finally, unclear responsibilities among partners to customers and each other make it difficult to guarantee reliability and quality standards. Customers generally want one partner to be responsible for the whole transport chain since this helps avoid finger-pointing when problems occur and leads to higher quality service. The following strategies are recommended to reduce organizational problems: Reduce the number of independent partners; Create a clear hierarchical organization; and Develop a uniform information management system. Some particular ideas for implementing these strategies are presented for the main haulage and PPH processes below. Infrastructure Capacity/Priority on Main Haulage The three most important aspects of quality in the main haulage process are schedule reliability, service frequency, and speed. In some cases these are not exclusively under the control of the main haulage operator (railway). Two examples are insufficient capacity on the rail network for intermodal traffic (both track and terminal capacity) and low freight train priority in Europe. These problems can only be solved with freight infrastructure investments (capacity upgrades) and policy changes both of which require some level of government action. In other cases improving quality on the main haulage is under the control of operators. The main haul operators railroads like for example Railion are in the process of evolving from national integrated companies (responsible for infrastructure and operations) into separate companies that (may) operate services in multiple countries. Clearly, a single train operating company providing the main haulage would improve transport chain organization. However, today there are only a few companies operating multi-national networks and these networks are limited. A good example is HUPAC, which operates for example intermodal trains between Germany and Poland. In the meantime, individual railroad operators must cooperate to improve quality.

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Pre- and Post-Haulage Inefficiency As outlined above, the PPH process is often inefficient and expensive due to poor use of capacity, organizational problems, and long pre- and post-haul distances. Improving efficiency of the PPH process can help to reduce cost and quality problems for the entire intermodal transport chain. One strategy is to increase the efficiency of PPH truck usage. The cost analysis considered three levels of PPH truck efficiency: 30% (which assumes no coordination between the terminal and PPH trucks), 50% (which assumes good coordination), and 70% (which assumes maximum coordination). The analysis showed that for a 500 km shipment from Germany to the Czech Republic the share of total cost expended on the PPH process falls from 34% to 20% (for 20-km PPH) and from 46% to 31% (for 50-km PPH) as efficiency increases from 30% to 70%. Under the 70% scenario the PPH trucks would be used efficiently over the whole day and would experience a maximum waiting time of 10 15 minutes at terminals and shippers/receivers. Unfortunately, generally PPH efficiency in Western Europe is less than 50% because shippers or forwarders organize it exclusively for their shipments. This means many trucks arrive at terminals with no coordination, resulting in long waits especially in the early morning and late afternoon. Another strategy to increase PPH process efficiency is to reduce PPH distances. The cost analysis found that the difference between a 20-km and a 50-km PPH can be up to 19% of total transport costs. This difference means that operating a network with many smaller terminals located near customers (short PPH distances) can be more cost effective than operating a few large terminals (long PPH distances). In summary, the PPH process can be improved by having drivers transport as many containers as possible during the working day. This requires, first, minimizing the waiting periods at the consignor/consignee and at the terminal; second, reducing the distance between terminals and consignors/consignees as much as possible; and third, optimising the route planning. A good strategy for making the PPH process more efficient would be for terminal operators to manage and control the PPH process. Under this option terminal operators could either own their own trucks or subcontract to trucking companies. The important point is that the terminal operators would manage the process. 5.3 Coverage Area Network Density

The second main problem for increasing intermodal transport between Eastern and Western Europe is the lack of service currently offered. In many cases a shippers needs cannot be satisfied since there are only a fairly small number of existing intermodal transport routes. This chicken and egg problem must be addressed by creating new routes and denser intermodal networks. There are three aspects of this problem: infrastructure, cooperation, and operating strategies.

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Infrastructure Often the infrastructure necessary to provide efficient intermodal transport (defined as meeting the customers quality requirements and generating a profit for operators) does not exist. This is especially true for well-located and efficiently operating intermodal terminals. Terminals are the key part of the intermodal freight transport network. Since they perform the same interface function between transport modes as passenger railway stations, terminals should be part of the public infrastructure and thus should, at least partly, be financed by government. Furthermore, government should be involved in coordinating terminal planning and location to insure equitable access and efficiency. [UIC (2004)] In some cases the rail network also needs to be improved to provide capacity for improved intermodal transport. Governments also need to support these improvements financially and from a policy perspective. Shifting freight transport from roads to rail is a key transport policy of the European Union and of almost all European countries; one of the main ways government can help encourage this shift is to provide funding and policy support for infrastructure improvements needed to provide efficient intermodal transport service. Cooperation While it would be ideal for a single company to own and operate all parts of an intermodal transport network, this is probably unachievable for international freight in Europe. Therefore, different transport companies must cooperate to create and operate effective intermodal transport networks. The basic conditions for successful cooperation of independent companies are: Similar business objectives; Reliability of partners; and Medium/long term prospect for success. Once companies have agreed to work together they must adopt these strategies to work efficiently. If necessary contract penalties can be an effective way of assuring reliability and quality among partners, if responsibilities are clearly defined throughout the transport chain. Finally, since intermodal transport requires large investments (e.g. in terminal infrastructure and rolling stock), partners working together to improve service face high financial risks. One solution is to share these risks with public authorities as part of public-private partnerships or other financing techniques. 5.4 Main Haul Operating Strategies

In this research the intermodal trip main haulage takes place by rail. Main haul operating strategies are techniques operators can use to support creation of an efficient intermodal network. There are four main types of main haul operating strategies. Direct trains, which move entire trains between two terminals without shunting or adding any containers en route, are the simplest and most efficient type of main haulage. Since they can only be offered between terminals with high demand, several alternative operational strategies including feeder trains, liner

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trains, and hub-and-spoke systems have been developed to increase market coverage (Figure 5).
Direktzug
A B

Feeder System
A>Z B>Z

Linienzug
A

Hub & Spoke System

D
A> F A> D

C
B>C A>C A>D B>D

C>D A>D B>D

A> E

A> D

D A>

C>

D B>

D A>

B>D B>E B>F B>E

D F C>

HUB

C>E B>E A>E B>E

B> F C>

F C>

C>

C>

A> F

C>

C
A>B A>C A>D

Figure 5: Main haulage operating strategies (Source: [Wichser and Weidmann (2003)]). Feeder trains collect cargo from local terminals and take it to a central regional terminal. There the feeder trains are coupled together to form a direct train that runs to a central terminal in the destination region. (The system also operates in reverse for distribution.) The advantages of feeder trains are that they allow service to be provided in less dense markets and they have a relatively short transport time (the time loss for coupling and splitting trains is on the order of 10-20 min). The disadvantages are increased costs for the feeder trains and the need for high train punctuality. Liner trains are direct trains that connect several different regional terminals. At each terminal they pick-up containers bound for the upcoming terminals and drop-off containers for the current terminal. The distance between terminals should be approximately 100-150 km. The advantages of liner trains are that they allow service to be provided in less dense markets and can be heavily used (thus helping to build an effective network). The disadvantages are that they place heavy demands on loading capacity (terminals must be able to load/unload containers very quickly to minimise stop time) and they have longer end-to-end transport times than feeder trains. Any combination of the systems described above may be called a hub and spoke system when several branches of a network are linked together in a central hub. At the hub, all trains arrive at the same time, then containers are transferred from train to train in a short time window. The main advantage of a hub-and-spoke system is the ability to efficiently connect a large number of small terminals. However this advantage comes at the cost of longer transport times, high requirements for train punctuality, additional transshipments at terminals, large infrastructure needs at hub terminals (high loading/unloading capacity and one loading track per train), and inefficient use of hub terminal capacity (it may only be used for a short period of time every day). Finally, while in most cases intermodal trains are operated separately from other rail freight transport (wagonload transport), it is possible to create trains

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that combine intermodal and wagonload cargo into a single train. The advantages of this system are that it can connect small terminals and make use of the existing train network/schedule. The disadvantages are that it has long transport time and high costs (due to shunting). In Europe today, main haulage is generally operated using direct trains (due to their cost effectiveness). There are several examples of feeder systems in operation, but no operating examples of liner trains or hub-and-spoke systems. A main problem with both liner trains and hub-and-spoke systems is that they require expensive high capacity loading/unloading equipment to reduce train stop time. In summary, feeder, liner and hub-and-spoke systems have fewer risks for operators introducing new transport services, because the minimum demand necessary is lower than for direct trains, but they require careful analysis and planning. The choice of an appropriate strategy depends on market considerations, specifically the quality of service required (main haulage transport time, departure/arrival time, punctuality, frequency of service), and the coverage area (number of point-to-point connections). 6. CONCLUSIONS AND RECOMMENDATIONS

The research projects purpose was to identify strategies for increasing the share of intermodal freight transportation between Eastern and Western Europe. The project evaluated the demand for transport in this market and identified a potential candidate corridor. This corridor was used to help analyze strategies for addressing the key problems in increasing intermodal transport. The three main problems with intermodal transport are: quality, price and coverage; more specifically, intermodal transport is often slower, less reliable and more expensive, than truck-only transport, and furthermore it is only offered in selected corridors. Addressing these problems is the key to increasing intermodal transport. 6.1 Increasing Quality

Quality is the most important factor in todays freight transport market. There are two main ways to improve the quality of intermodal transport: consolidate management and improve the infrastructure. Intermodal transport in Europe today is relatively disorganized; often it involves multiple parties working together on an ad-hoc basis. The best option would be a single company providing door-to-door service (similar to truck transport), but this is practically impossible for long distance intermodal transport. Therefore, to increase quality, a single responsible party must manage all transport chain partners, information flows must be improved, quality improvement strategies must be implemented, and all partners must share the same objectives. There are several alternative organizational structures that could achieve these objectives. One common requirement is that the intermodal terminal operator be responsible for providing the pre- and post-haulage service (to increase PPH efficiency). Ideally both the origin and destination terminals would be under the control of the same operator. The terminal operator could

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either contract with a railroad for the main haulage or (preferably) operate its own trains (under Europes Open Access rules) between terminals (e.g. HUPAC between Germany and Poland). In cases where the origin and destination terminals are operated by different companies, these companies must develop a real working partnership. Europes intermodal transport infrastructure must be improved to increase its share of the freight market. New terminals must be built and the capacity of existing terminals increased to support development of new operational strategies (e.g. liner trains or hub-and-spoke systems). In some locations new track infrastructure must be built to help freight trains travel quickly and efficiently between terminals. The main responsibility for planning and financing these infrastructure investments must be government because of their high cost, long life and impact on economic development; however, intermodal operators should strongly support these efforts. If Europe is to be successful in its effort to shift goods transport to rail an important EU and nation policy in many countries government must take a more aggressive role in infrastructure development. Detailed approaches are presented in [Tyrinopoulos and Giannopoulos (2006)]. 6.2 Reducing Expense

Many of the recommendations for increasing quality will also reduce expenses. A good example is using coordinated information systems to quickly and accurately transmit information between partners. The research found that the cost of inefficient pre- and post-haulage process adds up to 37% to the cost of intermodal transport in typical markets. Two ways to reduce these costs are to better plan the PPH operation (making more efficient use of PPH trucks) and locating intermodal terminals closer to customers. The combination of a single terminal operator and better information flows will help improve the efficiency of the PPH operation. Intermodal operators and all levels of government must work together to locate, plan and finance efficient intermodal terminals. 6.3 Increasing Network Coverage

The best markets for intermodal transport are large volumes of freight moving on a concentrated axis over relatively long distances. Intermodal operators can build these markets using the cooperative strategies outlined above. Another strategy is to increase freight volumes by serving smaller markets with a multi-level service offer (which increases the number of efficient direct trains) similar to the three-level system illustrated in Figure 7. Level 1 is the principal network (multinational scale). It consists of high demand axes with central intermodal hubs at connecting points. Frequent direct trains on these axes guarantee a consistently high quality level. Level 2 represents a number of regional networks structured around the central hubs of the principal network. Those networks increase market coverage to increase freight demand on the core network. Finally, Level 3 provides service to very small markets and to private sidings. The quality is lower than on the

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first two levels, because transport times are longer and operational costs are higher.

Figure 6: Proposed multi-level intermodal operating network (Source: [IVT et al. (1996)]). 6.4 Recommendations for Further Research

The key problem identified in this research was the generally low quality of intermodal transport quality and coverage in Europe for East West transport. This is especially problematic given the EUs adopted policy of increasing rail freight transport. Two of the projects main recommendation for increasing intermodal transport is to reorganize transport chains for stronger management and to improve cooperation between different partners in the transport chains. There are several intermodal operators who are moving in these directions, it would be very interesting to study the specific techniques they are using and to evaluate their success. Another area for further research is the process for locating, planning and financing intermodal terminals. Finally, it would be interesting to analyze the costs of intermodal transport in more detail.

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