News

European single wagon-load rail freight service threatens to implode on itself and shippers

Sunday, 24 October 2010

The European single wagon-load rail freight service sector is in danger of imploding in on itself, leaving thousands of customers stranded with 'nowhere' to go. That was the warning given by Henk Schaafstal, Chairman of the ESC Rail Freight Council, at the Rail Freight Seminar this week, 22nd November, organised by the European Shippers' Council, in association with De Lloyd and NT.

Shippers reliant on such services, he said, needed to remain positive in their outlook and show the single wagon-load service providers that they were willing to look at any solutions to keep such services going. For some plants, an end to the single wagon services could be the end of the plant itself; "There isn't much time to find solutions; but I have to hope there is still light at the end of the tunnel" he said.

At the heart of the matter, according to Mr Schaafstal, was the failure of many incumbent operators - which have remained national or state-owned railway companies, to rationalise and adapt to a liberalised freight market. In his view it is mainly these same operators that he sees now cutting their single-wagon freight services particularly, and making those big cuts often within weeks of announcing them, leaving shippers high and dry.

Mr Schaafstal was also keen to say, however, that there had been many instances where liberalisation had made a big and very positive difference for shippers over the past ten years or more.New entrants and new services have helped in some parts of the EU to stabilise and grow rail's share of the freight market. Neverthless, it was disappointing that a significant number of new entrants that had entered the market during the formative years of liberalisation had since ceased operations or been taken over by the incumbent operators, which had slowed down the pace of liberalisation.

Many shippers refuse to give up on the single-wagon services claiming it can work. The Seminar saw different models of sustainable single-wagon services for the future: they largely comprised collaborative models - whether rail freight operators (as with the X-Rail alliance of European operators) combining their operations for international single-wagon services, or customers grouping together to offer the necessary volumes for a logistics company to manage and contract the necessary rail freight services into and across the continent. Yet, those looking to co-modal solutions such as road to rail to road, may be disappointed due to the lack of intermodal capabilities on many key intra-European freight corridors, warned Mr Schaafstal.

Which ever solution worked for which ever operators and their customers, the transition period must be accompanied by a guarantee to the shippers that the current services would remain, or else the shippers will not be able to hang around for the long-term solution to materialise.

Fundamental to the whole issue was liberalisation: Monica Heiming, Secretary General of the private rail freight operators association (ERFA), gave numerous examples where barriers remained for new entrants, preventing fair access to the track and facilities, to train paths and slots.

It was clear from the seminar that the solutions that might safeguard and grow single wagon-load services, whether by incumbents, new entrants, alliances, 3PLs, shipper freight-pools or a mix of them all, needed a fully liberalised sector in order to work.

Nicolette van der Jagt, Secretary General of the ESC said after the event that her members are very pleased by the Recast of the First Railway Package and the announced study on the single-wagon load issue: "ESC is especially pleased to hear that a study into single wagon traffic is to be undertaken, and that more immediate solutions will be sought by the European Commission. But from what we have heard today, from shippers, private and incumbent rail freight operators and their representatives, many of the solutions rest in the hands of the industry and customers themselves. However, it is also very clear that nothing will work without the adoption of the Commission's proposed Recast of the First Railway Package which needs the support of the European Parliament and the Council. In the end, these are the people that can either save and make rail freight more attractive to industry, or kill it stone dead."