Road vs. Rail
Road freight is the most basic means of transporting goods and/or people from one place to another using roads. Typically, delivery or shipping of perishable and non-perishable goods around the world is made possible through road transport. It is most often used for delivery and distribution of retail and other commodities from and to different Distribution Centers.
On the other hand, rail freight is most often used in the USA, China, Europe, and Russia. Trains can carry many different types of cargoes, like containers, automobiles, livestock, coal, metal, minerals, and grains.
As shown below, each moving option has its pros and cons:
|Road Freight||Flexible, fast, and on time delivery.||Transferring of goods across various states may be limited depending on the size and weight of the shipment.|
|Practical and best suited for carrying goods over short distances.||Unsuitable and costly for transporting goods over long distances.|
|Transportation in local, mainland, and across the boundary with long haul and short haul trucking.||Road transport over long distances is comparatively slow and limited|
|Provides complete door-to –door service||Restrictions caused by weather conditions and traffic delays.|
|Easy to monitor the location of goods through satellite tracking and GPS.||Use of fuel that may contribute to greenhouse gas emissions|
|Rail Freight||Environmentally efficient because trains consume less fuel.||Road transport may be needed. Costs may also grow to accommodate the final delivery.|
|Has a larger capacity for a larger volume of goods||Inflexibility due to the shifting of operators may cause delays.|
|Economical and ideal for carrying goods over long distances.||Unsuitable and not practical for short distance and few goods.|
|Delivery of goods by rail is dependable and faster compared to ocean freight. The delivery of goods from China to Europe via rail may take up to 18 days, unlike the usual 44 days via ocean freight.||Does not always offer the option of carrying gauge cargoes.|
This article offers an evaluation of what influences European shippers to favor road freight over rail when it comes to international moves and transport in general. Since the most used transport method is bound to also be the cheapest, the results presented in this article affect your options as a mover directly. The evaluation is based on 2 major factors:
- The primary developments in rail and roads, as well as freight delivery’s major trends and flow. Historical trends are noticed among different product types and topographies
- Major conclusions from a research based on elements affecting the freight forwarders’ chosen transportation method. The section also includes studies conducted for potential reasons on shifting from rail to road transport in Europe.
Rail and Road Freight Trends
On the average, rail cargo shipping’s growth dropped significantly across Europe since 2000. The number of rail shipping projects has decreased, most likely because of Road transport. These typical trends disguise important variations among Member States. While some experience a significant increase in the numbers of rail deliveries (the Baltic Member States and Germany for example), others experience great downturns (i.e. Slovakia, France and Bulgaria).
Countrywide developments rely upon several components that include the railways system’s scope, the percentage of worldwide traffic within the total traffic flow and the rivalry between other transport modes (for example waterways and inland transport). The portion of cargo delivered by road or by rail depends on the kinds of commodities they transport. Easily spoiled and lighter goods are transported mostly by road while heavier items like coals are mainly transported by rail.
Elements that Contribute to your Choice of Transportation
Among the choices available for delivering high-risk merchandise, there are series of micro elements that impact mode preference. The shipper’s decisions (the executive decision maker) are based on the feature traits of their previous experience, the variety of items carried, the company’s facet, time/distance requisites, etc.
Furthermore, some structural and overarching elements also add to long-term modifications in modal split. Those consist of the connection between financial growth and cargo shipping; road transport is more attentive to modifications within the economic period compared to rail. A modification of the industrial manufacturing system and the logistics disintegration has affected rail transport negatively. New varieties of Intermodal shipping compromise a higher growth market section for rail.
According to domestic case studies, shippers highly consider the expense especially to countries where it is anticipated to be pricey (e.g. Italy and France). Generally, the demand for an excellent rail system is shown in most studies which concentrate on obstruction (Germany), quantity (France and Italy), and dependability (Poland and Spain).
Different studies have gauged the possibility of shifting from rail to road or other intermodal options where it is assessed for the probability to be up to 14%. The research also shows a minimum of 200-300 km above where rail is more competitive and a potential mode shift is high. A sensible overall mark share for freights delivered via rail in Europe could be, at the minimum, roughly 20% of total inland freight volumes, measured by ton-km.
Current Scope Aimed for Mode Preference
Several initiatives have been presented at the European level that target modal shifting from road transport to rail freights. These include the Euro vignette Directive, which introduced road charging based on foreign expenses, railway reforms which launched the freight markets’ competition and developed interoperability and programs that financed investments for intermodal infrastructures and services, along with Marco Polo programs and TEN-T.
Similarly, Member states implemented a series of measures which included direct financial aid focused on rail infrastructure improvements (for instance, offering a higher gauge approval for bulkier trains and restoring sidings). However, countrywide measures haven’t had a great influence on mode shift.
This may be associated with the small-scale rail and intermodal shipping investments compared to the funding in roads, as well as the lack of regulations on rail transportation and initiatives among the EU and the governments. Road fees have been initiated in some countries even though the effect on road delivery has generally been outweighed by some measure that encourages using road delivery.
The most efficient policies have been the ones focused on intermodal delivery, either through intermodal operator subsidies or through detailed agreements on the main intermodal networks, particularly focusing on ports similar to the ones in the UK, Spain, and Germany.
Strategies Aimed at Changing Shipper’s Mode Preferences
The analysis completed for this review implies the current policies to influence mode switch can affect the shipper's preference by targeting the main factors that affect rail freight’s competitiveness. These policies embody both infrastructure investment guidelines and targeted administrative incentives.
Three major conclusions may be derived from the failure of old policies in addition to good practices as identified by public case studies:
- 1st: Excellentcoordination of techniques at distinct administrative stages, in addition to modes, can be crucial. Mode shifting programs need to keep away from a patchwork method to financial incentives. Lessons learned from each program should be shared within the business field. The impending Shift2Rail initiative ought to provide this resolution by concentrating on enhancing capacity, stabilizing reliability, and developing the growth of European rail networks. Harmonizing road and rail policies is necessary as any chosen method may have a negative outcome on the alternative.
- 2nd: It isessential that mode switch preference is fitted to the particular situations in which they are applied. For instance, it is likely for a long distance, across the border shipping to switch from road delivery to rail as noted in the instigation of European policies.
- 3rd: The execution of effective policies requires a solid and adequate capital from both the EU and its Member states. The CEF or Connecting Europe Facility will assist by providing adequate capital to co-fund the advancement of the ERTMS and TEN-T systems. Transport funds aren’t covered by the current CEF policy, which can help plan sponsors and encourage financing to exhibit the true profit added to each investment plan.
More effort is necessary to change the downturn in the modal share for rail freights. In line with the upcoming parliamentary debates about the actions the EU will take to influence the mode preference of shippers, the recommendations provided above should be considered to make sure subsequent strategies will prioritize rail policies, leveraging on its advantages, tailor fitting it to the needs of national markets, coordinating it among administration levels and modes, and giving it a sufficient amount of financing.
The General Context
In Europe, the rail freight industry has not shown any improvements for over a decade. On the contrary, road cargo has shown a positive impact and feedback for most of the Member States in Europe. This observation was felt regardless if there was a great or low demand in the freight industry. This situation has been ongoing and it has been a part of the economy's growth and even of its recession.
According to records, when it started from 2000 until 2012, data proved rail transport has declined over other freight modes, which have shown some improvement (+0.04%). The overall data according to EU does not show the huge differences between its Members. For example, in Austria and the Netherlands, the rail freight industry has shown a growth of 15%, while in Ireland, there was a massive decline. About 40% of freight business in EU happened in Poland and Germany. These two Member States were the major players around 2012.
However, this data is not coinciding with the policies the EU has set over the years. The European Union has been aiming for a development of around 30% for rail cargo until 2030, and a 50% target rate until 2050. These details can be located in the White Paper last 2011.
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In relation to this, they are also primarily focusing on system enhancements. This includes upgrading the information technology, system upgrades for the rail system technology or the EU Rail Traffic System. These will eventually lessen any barriers along the way.
Financial support and incentives have been offered by the EU to support this shift. It gave high regards to infrastructures and projects to fulfil its policies. Some groups have even contributed intensive research and funding to support these advocates. The European Regional Development Fund, the Cohesion Fund, and others have been actively participating in all these initiatives in Europe.
The next chapter will show you specifics regarding why some clients mainly prefer using road freight instead of rail transport. It will give you an idea of the trends by place, weight by freight mode.
In general, rail moving transport has shown low demand and has not seen any improvements since the early 2000. In connection to this, road freight had a huge advantage over the rail freight industry.
This trend reveals the differences across Europe. This is proven in Germany, where the rail freight data has increased by around 30%, not to mention The Netherlands, as well as the Baltic Member States. However, it has shown decreases in percentage in Bulgaria, Slovakia and France. This observation was actually based on factors like the traffic in the metro, competitors, and technical issues related to the railway system.
Shipped items are being classified depending on how much they weigh, so the right transport method is used, either rail or road. Items that are heavy in nature must be carried by rail while road freight has always been the best option for carrying lighter items.
Factors that Contribute to Freight Mode Choice
Next, we will show how Member States of the EU have chosen their transport mode, according to their studies and their findings or feedback from relevant sources. As mentioned in the last chapter, for some items, there are preferred shipping methods.
For instance, coal and other heavy items do not need fast transport time, so they are a perfect fit for rail transport. However, there are cases where these types of items are carried via road freight to shorten the time.
For special cases, like food or other perishable items, shipping companies do not recommend rail freight. These two modes of transport may be combined when shipping items, but this rarely happens as it still depends on the type of item being transported. If these two modes of transport are being used, a lot of factors need to be considered made since this will affect either the micro or macro level details of the process.
Identifying the Attributes when Choosing the Mode of Transport
The information provided in the next summary will tell us how important it is to use the appropriate mode of transport. Both the client and the shipping company must come to an agreement and decide which mode should be used.
Though it is always the shipper who has the final say, it will also benefit the moving company if all things go well. This is simplified by the expectations set by the shipper and the services the shipping company may offer.
For instance, when approaching a moving company, the shipper may ask for information like:
- How much is the cost?
- How long will it take?
- How reliable is the company?
- How safe is it to use the rail or road freight method?
- How flexible will the moving process be?
- How often do the items need to be transferred from one place to another?
As for the shipping company, they have to consider the following:
- Their contact information and reputation in the industry.
- Their location and the accessibility of their business.
- The type of goods being transported and their value, weight, and other descriptions.
- The start date of the moving process which must be given.
All these details must be included in the agreement.
There are several factors according to which the mode of transport is chosen, such as the location, time sensitivity, and the service provider's quality. These factors will help the client in choosing the better freight option.
The shipper considers the shipping company's network and convenience. The clients' feedback and responses are gathered to choose the ideal mode of transport. The shipping company checks the data and compares it based on the customers who have preferred rail freight or both rail and road freight versus the ones who have not used it at all.
When it comes to shipment, other factors are considered as well, like the life of the items being transported, the type of items, the cost or value of the belonging which may also be calculated per unit, and other characteristics that may help in determining the estimated cost of the shipment.
When it comes to shipping companies and freight mode, some of the most important factors are the time of delivery, the cost of the shipment, safety regulations, reliability, time sensitivity, special machines or vehicle availability when needed, customer satisfaction and efficiency, and of course, the impact on society and the environment's welfare.
One of the reasons why choosing the right freight mode is important is the length of the transport. Let us say the estimated distance is around 100 kilometers. In this case, the better option is always road freight. It has been proven according to Cambridge Systematics you will save on costs and it will be efficient as well.
If we are to compare with rail freight, the cost is not competitive enough since it has limited options. The schedules are usually dependent on the availability of trains and their routes. This restricts both the passengers and the items when trying to reach a destination in a timely and predictable manner.
Looking at how the system works, each client considers the best possible option when it comes to freight services. Shippers would consider the type of shipment and its description before making a decision for the freight options.
Generally, the process of deciding which mode will be used depends on how efficient and reliable the services are. Let us say a certain shipper, which has heavy items that need to be delivered, has experienced both rail and road freight services. This time, the client needs to have the items delivered over a 300 kilometers distance. Being near a transport terminal, if there is an option to choose rail, the shipper will likely go for this option.
If you are going to be a critic in checking the values of freight characteristics, you will find this is somehow complicated to understand. Some techniques are implemented and accepted during the process. Cost and time are variables that play a vital role in decisions. Advancements in the freight industry play a vital role as well.
In some cases, shippers are just being practical by following what has been accepted by most of them. Let us say some customers are particular about the time and date of delivery. They will prefer using the road freight for that instance. However, some who may consider money or price as a bigger factor, will choose rail transport in circumstances where it’s cheaper.
In relation to this, there was an article published in 2004 by Danielis et al saying that most shippers value time. The quicker their belongings arrive, the better and the more they value the service. According to some data and research made in 2010 by Samimi et al, they have found that road freight has the advantage of time sensitivity when compared to rail freight. They came to this conclusion by gathering feedback and data from 1000 shippers in the United States.
However, the advantage changes when the distance is longer. The longer your belongings have to travel, the more advantageous it is for you to choose rail transport since the cost of delivery is lower. This data was published by Patterson et al in 2008.
Rail transport gets even more advantageous if there are fuel hikes in the market. Any price increases in the market will have a detrimental impact on the cost of road freight services. This increase will cause even more damage when the price hike takes effect immediately. Reimbursing for the extra fuel costs caused by the hike can be protected depending on the agreement between you and the company.
An intensive study in 1999 by Cook et al emphasized more on the reputation or dependability of freight services. This includes the time and machine availability when negotiating the cost of the services, as explained by Indian transport services.
There was also a study conducted by Danielis et al in 2004 suggesting shippers from Italy are more likely to consider quality over cost. They prefer dependability and protection from damages above speed of delivery.
The reputation of the shipping company was considered as a voucher of their ability to keep their promises. This was carefully studied by Patterson et al in 2008 and was backed up by the data of shippers in Canada.
The situation in Turkey was similar. Studies show shippers created an impression that they value the reliability of freight services, according to Kofteci et al in 2010. Shippers who have chemical items for delivery demand high reliability and safety due to the product’s nature. This was included in the studies done by Cook et al in 1999.
Freight frequency plays an important role in choosing a transport method. Companies tend to move lighter items more frequently than heavy bulk items according to Shinghal and Fowkes in 2002. Eventually, this study was proven to be true by Combes who validated the data in 2012 after observing 3,000 customers’ behavior in France. In addition to this, Combes also found the size of the shipment and which transport mode to choose were important factors based on how frequent the delivery is made.
In 2006, Garcia-Menendez et al did a study showing services vary depending on the need for them. For instance, appliances and car parts are considered high-value items, compared to ceramics that are considered low-value items. Consequently, these items are affected when it comes to price.
A study in 2010 by Samimi et al discovered the size and the weight of the shipment are used in categorizing which mode of transport to use. Heavy equipment is likely to use rail freight services. According to a study made by Combes in 2012, shipment sizes and weights must be considered at the same time when choosing the appropriate transport.
The managers on this matter play an important role, especially during the process of making decisions. Their relevant experience within the freight industry will guide them in choosing the right transport mode. Factors like the cost, terms and conditions, as well as the quality of service the freight service provides will certainly help them. Some larger companies prefer using rail transport because their personnel is qualified for this type of work.
Most of the concerns regarding the rail transport industry were included in an article by Patterson et al in 2008. The impression created by this article ruined the reputation of the rail freight industry.
This research implied if the rail transport industry will be promoted to all, enhancements should be initiated and a lot of changes should be made with regard to its standards and quality of service.
Several factors were also pointed out by Cook et al in 1999 that had a big influence in the freight industry, like customer service, administrative tasks, such as processing payments and claims, and any other helpful instructions to the clients. They emphasized on these details, but they implied that there are more important attributes which were previously discussed.
Generally, pricing is important when it comes to the freight business, but this depends on whether customers need to have the items delivered quicker with a lighter load. This gives road freight a big advantage.
The most recent research emphasizes that, after careful consideration of several factors, it still boils down to the quality of the services the shipping company provides, as well as their reliability, timely delivery, etc. It also included earlier transactions which make an impact on how people decide. They rely on the previous decisions recommended by managers in their company.
The External Factors Approach to Transport Choice-Economic Indicators
Most of the time, there are indicators that help sudden shifts or changes of transport mode. This progress was observed and proven to the lowest level of management.
For quite some time, it has been observed the cargo load or transport demand has been dependent on the entire economic performance of society. What this means is whenever growth is felt, there is also a great demand for business and vice versa.
Particularly in the case of the Gross Domestic Product, the freight industry has been a stable component of it. This was part of the publication in ITS in 2012 and in 2002 with Vickerman. However, there is still a variance when it comes to the type of transport mode (both rail and road freight) since there are several indicators that show customers may choose road over rail transport due to technical and practical reasons.
Several countries in Europe have experienced a long period of economic downfall, and what’s worse, even the mining and the chemical industry, which have been strong economic leaders experienced decline consistently.
Generally, the road freight industry has been gaining an advantage due to this impact. Most shippers prefer this mode of transport since the cargo they are moving is less heavy and the fees are cheaper the more they use trucks. In addition, the rail freight industry has not shown any positive contribution to the economy during these times.
Statistics show there was a decrease in growth in the rail transport industry comparable to that of the mining and other similar industries. There was a clear reason why the majority invested more on road constructions and improvements. This amounted to about a billion pounds in 2014.
On the contrary, there were lesser demands for rail enhancements around that same year. An example of this even supported that there are two popular ports in France that have a much lower speed compared to using road transport. Imagine the running speed of 6 kilometres per hour.
The difference between rail transport progress and the industry-related production can be seen using the United Kingdom as reference. Rail transport had a better performance than the economy except in the period when there was a recession, from 2008 until 2010. There were some rail improvement projects especially at the busiest ports. This was helpful in developing the balance between the rail and road freight industries.
If we are looking at the data, the road transport industry has been doing well along with the mining and chemical industries in 1995 in France and in the United Kingdom.
Research made by Muller et al in 2014 showed there were new opportunities for the transport business caused by the increase in rail freight demand in European countries for the past 20 years. There was a downfall of the economy and it has affected the freight industry as well. During these times, investors lost confidence in taking part in investing in the rail freight industry. This resulted in a large difference in the market.
In contrast to the massive decline in the rail freight industry in European countries, the United States had a different situation. There was an impressive growth of it in terms of demand.
There was a thorough research in 2007 done by Vassallo and Fagan that compared both Europe and the United States. They have concluded there was a difference when it comes to demand. This is according to the most recent years in the business.
However, both the United States and European countries previously had the same rail transport demand around 1950, but started to vary in around 1960, and in 2000, the rail transport had risen by 38% in the United States. This was not the case in Europe, where it rose by around 8%.
Several factors are affecting which mode of transport to use. In the United States, the location / the land area has a very important role on why the majority prefers the rail freight industry. To be more specific, most of the shipments are long distance which have actually benefited rail freight compared to sea freight.
This is the exact opposite in Europe's case. Sea cargo is preferred and there is a lesser demand for rail transportation. In terms of policies, the United States has created regulations that are more beneficial to the rail cargo industry compared to Europe. Even so, the moving industry relies heavily on trucks, since railways cannot move belongings from one doorstep to another.
In 2007, Vassallo and Fagan researched and found out there were some policies which seemed to have more advantages in Europe than in the United States. For instance, the rail transport industry has been supported for years by the governments of Europe. Their study also discovered that one of the reasons why the United States has been efficient and successful in the rail freight industry is because of the information technology, which is also related to the network the rail transport system uses in Europe.
An indication there was a significant difference between Europe and the US is when the US was doing well in its market shares in 1980, while this was not felt in Europe until the year 2000. The rail transport industry in Europe never failed to give importance to passengers instead of the cargo business. It was between 1950 and 1970 when the US started providing priority to passengers, and eventually the US government decided not to act as the authority in control over the cost of rail freight services. The US transferred this authority to private railways, so they may take control of freight costs.
In conclusion, there are several reasons why some clients choose a transport mode and the impact these factors have may be long term impact. The road freight industry has been affected depending on the economic situation, while the rail freight industry is only affected when there is a decline in economic growth. It was also realized there is a direct, powerful impact on these industries when the United States and Europe implement policies on transport types.
When the principal reasons that affect modal options have been identified, understanding the range of a contestable rail market is important. As specified in the contestable market theory, the market's competitiveness will depend on the existence of barriers to the entrance and exit, on sunk costs required to access them and on the comparative competitor's technological advancement. As for the rail freight’s case, these attributes determine the degree of the rail freight's overall share in the transport market where road freight currently dominates.
Over the years, various researches attempted to evaluate and measure the probability of rails and intermodal transport services to gain market shares as opposed to road freights. The main conclusions are classified in line with the different methods used to estimate the effect on market shares as outlined in succeeding sections.
Cost Changes Evaluation
The European Commission has thoroughly investigated the possibility of internalization for external cost. For instance, the impact evaluation executed before the Euro vignette Directive was launched even during its monitoring period. Also, in line with the UIC (International Union of Railways 6) "External Transport Cost Calculator," several research results evaluated the impact of different scenarios carried out by internalizing external costs through a bespoke model. This interpretation covers the policy options that include expenses reflecting on both changeable infrastructure prices and external costs for rail and road. The result shows that once road pricing is placed throughout Europe by 2020, the road freight market will decline by about 7%, although the rail freight market will increase somehow.
A research conducted by the Policy Research Corporation (PRC), commissioned by the Netherland’s Ministry of Transport, reviewed the feasibility of encouraging a modal shift to rail freights by using measures like road cost. The research results show that spikes in rail shipping costs could urge up to 3% utmost potential shift in freight transport capacity from the road to alternate mode choices. The majority of modal switches happen in a “fight market” (the transporting of merchandise between a 400-600 km distance) where rails and inland water transports can challenge road transport.
The enforced price increase varies among market segments. It ranges from 20% within a fight market and up to 400% for a shorter distance. This is assuming the costs were comparable to the results of Germany’s heavy vehicle fee introduction (See Chapter 4), where an increase by 0.4% to 0.6% on a possible modal shift is expected.
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Additional insight came from an observation made by Significance and CE Delft in 2010 on the possible freight mode switch resulted from a relative price change, which includes an analysis on some survey articles about the flexibility of transport demands on each mode and commodity.
The review on price flexibility include: The own price elasticity (changes in demand in lieu of price changes within the same modal) and the cross price elasticity (changes in demand in lieu of price changes from one mode to another mode, i.e. road freight cost to rail freight cost).
The significance/CE Delft estimation on price flexibilities change considerably across samples, showing a remarkable uncertainty on the actual mode shift in reference to cost changes. Additionally, the efficacy of the strategies concerning relative prices (for example, fuel tax, and the environmental regulation price) varies substantially depending on the trade and market flow, and on the type of commodities as well.
All in all, it turns out the need for transporting commodities is relatively inflexible for both road and rail modes (where elasticities are usually between 0 and -1), which confirms the belief that the possibility of a mode shift thorough price variables alone is insufficient.
Muller and others (2014) examined the possible growth development for Europe’s rail transport and observed the intermodal rivalry is presumed to become unstable in the upcoming years, heightening the case on policy interference in benefit of rail transport. In their main case synopsis, the rail’s portion of transport traffic will remain the same until 2025, while the low and the high case plot varies between 5% and 15% relying on several determinants and policy interference.
Product Class and Distance Evaluation
In a research organized for the European Environmental Agency (AAA), Zimmer and Schmied (2008) gauged the possible modal switch of road freight to rail within Europe by taking into consideration the types of commodities that will fit in for rail transport, as well as the significance in transport distance. They calculated the modal switch possibility in EU-27 by around 362 billion tones –kilometers, similar to a road shipping to rail switch at around 14%, considering the commodities’ physical characteristics alone.
Still, after considering other elements, like cost, service quality, and accessibility to infrastructure, they observed only 1% of freight transport capacity can move from road freight to rail. Thus, while they resolved that the hypothetical possibility for a modal switch was significant, it was also distinguished that generally, some side factors like high price, low service quality, and unappealing schedules continue to restrict the need for transport by rail freight.
Supply-Side Measures Evaluation
A research by NEA7 in 2004 for the European Commission predicted the fulfillment of the Trans-European Transport Network (TEN-T) can affect the possible changes in traffic volume. In comparison to a cited scenario, it resolved that an increase of 100 million tons of shipment will be transported via rail by 2020 as an effect of about 10% of the European Union's foreign freight traffic was switching from the road. All in all, an estimate of 2% road shipping or about 1.4% points of the total shipping freight can be assumed to switch to rail.
A study carried out by the German Federal Environment Agency (UBA) about the German freight shipping market, specifies that an increase on the nationwide rail volume and shipping capacity can be accomplished by 2020 because of the range of the supply-aspect measure. About 1/3 of the increase in rail shipment will come from taking advantage of the existing infrastructure, and the remaining will be transported through the enhanced network.
The possible modal shift research conducted by Van Essen, den Boer and Brouwer of the CE Delft, Moizo of TRT (2011) and Pastori revealed that by maximizing the usage of current infrastructures, an increase of 30% to 40% can be achieved by 2020. Furthermore, if the accelerated potential had been allotted fairly among freight and passenger offerings, rail transport can gain 83% while 23% can be attained by passenger transport.
Estimates Based on International Standards
In 2007, Fagan and Vasallo evaluated the reasons for the difference in the rail’s share of freight in Europe and in the United States. They evaluated how rail freight in the United States would increase if the niche of their commodity mix is the same as with Europe, including consistent interventions in holding policy.
Based on their estimation, 80% of the modal split is due to natural or inherent differences, and other reasons are due to public policies. In conclusion, Europe's rail's share of freight would increase from 8-13% if the residual policy gap were closed.
Various studies have evaluated the possibilities for intermodal services or for shifting from road to rail. On the other hand, there are differences in their conclusions with regards to the shift's size, and where the percentage is (from 1-14%). It was shown in the article that transporting over long distances holds a greater possibility for a modal shift, with a maximum of 200 to 300 kilometers via rail.
There are various components that influence shippers in choosing between rail and road freight. The decision of the shipper is affected by their past shipping experience, by how commodities are transported by mode, speed/time, shipping cost and flexibility of transporting them over long distances.
The major underlying factors in the economic aspect of the transport system have resulted in constant modal share changes in relation to trucking and growth in the economy. Service level- flexibility of road freight is more reliable than rail between periods of growth and recession. Rail freight was negatively affected by limited economies and the scale of operations due to the fragmentation in service delivery, and due to intermodal competition.
Based on the studies and assessments, there is 1 to 14% chance for an intermodal services shift (shift from road to rail). Rail transport has a greater possibility for a modal shift. It is competitively flexible and can go beyond the limit of 200 to 300 kilometers.
Based on the data from national case studies about “Shippers' Preferences”, rail freight in countries like Italy and France have recognized it to be very costly. The demand for more capillary and high quality rail infrastructure focused on reliability (Poland, Spain), capacity (France, Italy), and bottlenecks (Germany) were emphasized across all case studies. In the meantime, road freight remains the most popular choice for both shippers and movers, and it is estimated to remain as such in the foreseeable future.
Written By:Joe Webster
Joe Webster began his journey in the auto transport field by attending the University of Southern California (USC), where he graduated with a Bachelor of Business Marketing.
After college, he started his career in the auto transport industry from the bottom up and has done virtually every job there is to do at A-1 Auto Transport, including but not limited to: Truck Driver, Dispatch, Sales, PR, Bookkeeping, Transport Planner, Transport Manager, International Transport Manager, Brokering, Customer Service, and Marketing. Working with his mentor Tony Taylor, Joe Webster has learned the ins and outs of this industry which is largely misunderstood.
With over 30 years experience in the industry, we've been helping people ship their vehicles, motorcycles, RV's, heavy equipment, household goods and more across the country or overseas without a hitch. Ask us anything.