Logistics in 2020: Rail Freight

With road congestion, high fuel prices and fewer ports being serviced by mega-container ships, the

(relatively) fuel efficient option of rail freight is set to play a more important role in global logistics going forward.

Rising fuel costs; with road transport hardest hit by the ongoing increases, rail freight, which

whilst less flexible is significantly more fuel efficient, is playing a more important part in logistics strategies.

Increased Government funding; Governments in established and emerging markets have major

investments underway and planned in rail. December 2012 saw the opening of a 1,428 mile rail line

linking Beijing to Guangzhou in only 8 hours, the precursor to a planned Ј248bn investment to

complete a 10,000-mile network by 2020, with four main lines running east to west and four from north to south.

Speed is imperative; road networks are increasingly unreliable, with congestion common and a lack of direct routes in some areas.

Long distance; To counter this, LSPs are looking to rail freight to cover long distances cross-country, for example taking goods from China to Europe, as infrastructures in former Soviet countries reap the benefits of major investment. Panalpina recently boosted its fast-growing less-than-container load

Asia-Europe network with the launch of three services from China and Singapore to Hungary, the

Czech Republic and Austria. This offers shippers a lower cost than airfreight and faster service than sea cargo.

Green Logistics; more stringent regulation and reporting requirements on both emissions and

measures taken to reduce environmental impact are pushing retailers, manufacturers and LSPs to

utilize rail freight for larger portions of journeys due to better fuel economy.

Hub-and-spoke logistics networks; the evolving nature of global trade, with new ports in emerging markets growing rapidly in commercial importance, along with the now prevalence of megacontainer ships and larger cargo planes has prompted a rise in hub-and-spoke networks for global shipments. Rail is playing an increasingly important role in getting goods from major hub ports to their final destination. There is increasing focus on rail terminals, often multimodal, to enable a service feeder concept. The challenge for the expansion of rail in Europe is the need for priority of freight on rail where governments have focused on the vote winner of prioritizing passenger transport, with rail freight normally moving on the same tracks in time windows during night.