Scan on International Freight: The European Market

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Scan on International Freight The European
Market May 28-June 10, 2001
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• Scan panel included representatives from
• The Federal Highway Administration and Ministries
  of Transport from Canada and Mexico
• American Association of State Highway and
  Transportation Officials
• Florida, Ohio, and Minnesota Departments of
  Transportation
• MPOChicago Area Transportation Study (CATS)
• Intermodal Research and Education Foundation
• University

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Mission To identify challenges, opportunities,
government strategies and market responses
associated with the European Union experience in
forming a common market.and relating them to the
North American context, such as --National and
sub-national freight investment decisions
--Public/private sector freight
initiatives --NAFTA
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• Panel met with representatives from
• Government
• The Netherlands Ministry of Transport, Public
  Works, and
• Water Management
• EUDirectorate General for Energy and Transport
• Ports of Rotterdam and Gioia Tauro (Italy)
• Facility Developers/Operators
• The Netherlands Betuweroute, Rail service
  center, port
• terminal operator (ECT)
• Medcenter container terminal (Gioia Tauro)
• Freight village (Verona, IT)
• Frankfurt (GER) airport

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• Private Sector Service Providers
• Railion (The Netherlands)
• Maersk (Italy)
• CEMAT (Italy)
• HUPAC Intermodal (Switzerland)
• LKW Walter International/Trucking/Intermodal
  (Austria)
• Logistics Service Providers
• Holland International Distribution Council
• Kombi verkehr (Germany)

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Some important differences.
EU-15 USA NA
Population (millions) 375 270 398
Urban pop. (millions) 78 77 174
Area (million km2) 3.24 9.6 21.6
GDP (Euro billion) 7,586 7,760 9,105
Trans. invest GDP 1.1 1.2 --
Ave. trans costs of value of products transported 5-6 3-4 Can 4-6 Mex 8-9
HH spending on trans/communications 15.2 14.0 --
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EU-15 USA NA
Motorization (cars/1000 pop) 451 488 --
Exports (Euro billion) 936 1019 1535
Imports (Euro billion) 1023 1301 1786
Road network (1000 kms) 3500 6460 8217
Rail network (1000 kms) 156 240 317
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Source EU Statistical Pocketbook, 2000 (Note 1
ton-mile 1.46 tonne-kilometer)
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Freight Mode Split and Average Trip Distance
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• Freight Transportation Challenges Facing EU
• Substantial increases in passenger and freight
• movement over the past 20 years have led to
  significant
• levels of road and freight/passenger terminal
  congestion
• Many freight transport movements occur on same
• facilities as passenger movement (e.g. rail and
  road systems)
• creating pressures on facility space management

• Strategic geographic barriers
• hinder easy continent-wide
• transportation (e.g., English
• Channel, the Alps, etc.)

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• Level of transport infrastructure development
  varies
• across EU countries
• Historically, national transport systems were
  designed for
• national defense purposes to constrain cross
  boundary
• movements, leaving a legacy in some cases of
  incompatible
• operational systems and design
• Transport policy is integrally linked
• to EU and national policies on
• environment/sustainability/
• energy this leads to differences
• of opinion on most appropriate
• transport investment policies

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• Changing global economy has challenged logistics
  and the entire production/distribution process
• Freight modal distribution has steadily shifted
  toward
• truck and short sea movements

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Road
Short sea
Billion tonne-kilometers
Rail
Inland water
Pipeline
EU Transport System Freight Use, 1970-1998
(billion t-km) (Note 1 ton-mile 1.46
tonne-kilometer)
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Road
Short sea

Rail
Inland water
Pipeline
EU Transport System Freight Mode Split, 1970-1998
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How is Europe Responding?
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Public Sector--European Union (EU) The EU
created to establish common economic market and
to deal with history of conflict coordination
and development of EUs transport system was
one of the first areas of attention Major
focus of initial EU efforts was on developing
free competition and consistent interoperability
Strong policy linkage between transport goals
and environment/sustainability/energy goals
major policy approach has been to establish
target market shares for modes
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Road
Short sea

Reversal of these trends is the focus of EU and
national policies
Rail
Inland water
Pipeline
EU Transport System Freight Mode Split, 1970-1998
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EU has several roles Ø Advocates common
principles and interests Ø Facilitates
multi-country activities Ø Coordinates
multi-country planning, policy and research
activities Ø Establishes EU vision and policy for
EU/member state action Ø Provides varying
levels of funding support for EU priority
projects
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Ø Targets human resource development/training in
transportation projects Ø Establishes legally
binding rules and regulations for such things as
safety and vehicle characteristics (e.g.,
infrastructure manager for railroads should be
different from operator) Ø Monitors member nation
actions and, if necessary, takes to action to
European Court
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Common Transport Policy Sustainable mobility is
the core purpose of the Common Transport
Policy. The Commission has been developing policy
approaches that will encourage the establishment
of public/private investment and development
partnerships. The Community has an obligation to
pursue measures to improve transport
safety. (The) rail, road, maritime and aviation
systemsmust also be made interoperable.
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(It) is essential to make much better use of what
exists. Intermodalitycould transform the ease
and efficiency of movement. Any pricing and
charging system must clearly and fairly relate to
the infrastructure and external costs caused by
use To protect the legitimate interest of
consumers and competitors in transport as
elsewhere, the competition rules that help to
sustain the vitality of the market system have to
be applied.
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• Policy Priorities
• European Single Sky
• Clean Urban Transport
• Sustainability
• Interoperability and intermodality
• Intelligent transport systems
• Maritime safety

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1992 Maastricht Treaty fostered development of
trans-European transport network (TEN-T) Program
of improvement that includes 100s of projects
(EUR 400 to 500 billion cost) 14 priority
corridor improvements (EUR 100 billion) Funding
50 for feasibility studies 10 for
construction (85 for accession states) EUR
18 billion from 2001 to 2006 expected to trigger
between EUR 60 to 100 billion Historically,
however, EU investment has triggered only 30
match
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Trans-European Transport Network The 14 Priority
Projects 1. High-Speed Train/Combined transport
N/S 2. High-Speed Train PBKAL 3. High-Speed Train
South 4. High-Speed Train East 5. Betuwe Line,
Conventional rail/Combined transp. 6. High-Speed
Train/Combined transp. France-Italy 7. Greek
Motorways Pathe and Via Egnatia 8. Multimodal
Link Portugal-Spain-Central Europe 9.
Conventional rail Cork-Dublin-Belfast-Stranraer 10
. Malpensa Airport, Milano 11. Øresund Fixed
Rail/road link Denmark-Sweden 12. Nordic Triangle
Multimodal Corridor 13. Ireland/United
Kingdom/Benelux road Link 14. West Coast Main
Line
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14
9
11
13
5
5
1
2
4
10
6
8
3
7
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ITS Priority Projects Sponsored by the EU
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• Establishment and development of connections, key
• links, and interconnections needed to
  eliminate
• bottlenecks, fill in missing sections and
  complete
• major routes
• Establishment and development of infrastructure
  for
• access to the network, making it possible to
  link
• island, landlocked and peripheral regions with
  the
• central regions of the Community
• The optimum combination and integration of the
• various modes of transportation
• Ø  Integration of environmental concerns into the
• design and development of the network

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• Gradual achievement of interoperability of
• network components
• Ø Optimization of the capacity and efficiency of
• existing infrastructure
• Ø Establishment of and improvement in
• interconnection points and intermodal
  platforms
• Ø Improved safety and network reliability
• Ø The development and establishment of systems
  for
• the management and control of network traffic
  and
• user information with a view to optimizing
  use of
• the infrastructure

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• Changing budget programming to multi-year
• Maximum of 75 45 goes to public/private
• projects, 20 to GPS implementation, and 35 to
• rest of projects for which there are over 200
• requests (EUR 1billion of needs for which only
• EUR 137 million available)
• Risk capital on projects outside of program
• Galileo system

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• Customs 2002
• Realizing that the abolition of internal border
  checks requires enhanced clearances and controls
  at external borders, the EU has adopted the
  following strategy, called Customs 2002, for
  providing coordinated EU-wide external border
  controls.
• Identification of best practices among member
  states
• Collection, analysis and exploitation of data
  to combat fraud
• Support for customs administrations to
  improve internal
• administrative structures, e.g.., risk
  analysis, post-
• importation audits, and computerization.
• Exchange of customs officials among member
  states
• Training that disseminates best practices.
• Computerization of customs procedures
  throughout the EU

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• Enlargement of EU
• 13 countries are seeking membership
• Must adopt entire body of EU rules and
  regulations
• Financial assistance in 2000, EUR 3.2 billion
• provided to candidate countries with EUR 1
  billion
• for transport and environmental systems
• From 2001 to 2006, EUR 22 billion for pre-
• accession support EUR 57 billion for new
  members
• Significant budget for training

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Types of studies Competitiveness of national rail
systems Application of road user charges Costs of
upgrading infrastructure in each
country Forecasting demand in 10 pan-European
corridors Road and maritime safety Environmental
concerns incorporated into decisions?
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Public Sector--Member Nations Member nations are
responsible for implementing EU policies and
directives little enforcement of this response
unless issue is of such significance that it goes
to European Court Linkage to broader societal
goals Consistency with EU policies Focus on
existing transport system infrastructure and
technology Investment in freight infrastructure
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Better use of existing options leads to interest
in intermodal Market-driven transport
policy Public/private partnerships have been used
to provide joint investment in freight
infrastructure Trend toward separating freight
infrastructure ownership from operations
responsibility National planning emphasizes
freight and role in economic development
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Public Sector--Local Governments Several examples
found of local government financial support of
freight infrastructure Success of these
initiatives was related to ability of local
officials to link economic development objectives
with broader community goals Competitive
advantage in a global, or at least European,
market was a key driving force
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• Private Sector (carriers/logistics
  companies/terminal
• operators)
• Focused on rationalization of services and
  operations with strategies to increase economies
  of scale
• larger ships and ports
• block trains/unit trains/shuttles
• freight villages
• intermodal consolidation terminals
• automated operations
• Trend toward more hub operations
• Intermodal freight movement has been important
  for handling increasing freight movements

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Some Examples. Facility Service
Investment --The Betuwe corridor --Port of
Rotterdam --Swiss shuttle trains --Verona
Freight Village --Gioia Tauro port
development Institutional Framework --Dutch
program on logistics efficiency --German public
investment in intermodal terminals
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Inland Water
Motorways
Short Sea
Rail
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• Port of Rotterdam
• Gateway to Europe 80 of freight destined
  elsewhere
• Delta Terminal provides 24/7 operations
  automation
• Rail service centers and shuttle trains
  targeting 20
• share
• Large scale investment on part of government,
  port,
• and private sector

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The Betuwe Corridor First railway in Holland
designed exclusively for freight Connects
Rotterdam to Germany with 160 kms of
track Approximate 4 billion in investment
Contributions from The Netherlands, EU, and
private sector Separation of infrastructure
ownership and operations
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Gioia Tauro Port Development New container port
in southern Italy designed to act as
trans-shipment point for containers coming from
Asia and Middle East 1993--0 movements 2000--2.7
million TEUs 3,060 vessel calls
95 trans-shipment to other vessels
Expansion plans for larger vessels and creation
of European Free Trade Zone
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Estimated government investment 50 million 250
million from terminal operators EU provides
funds for training Investment being made (with EU
support) for improved rail access to Europe Port
officials view this as important in making Gioia
Tauro possible intermodal port to
northern markets
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Swiss Shuttle Trains Switzerland not a member of
the EU has agreements with EU concerning
transport Alps serves as significant barrier to
freight movement along north-south axis Swiss
also had more stringent truck weight
limits Swiss have imposed new truck
tolls of 200/truck at border Part
of strategy is to provide shuttle
trains for containers or trailers
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Number of consignments
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• Verona Freight Village
• One of largest intermodal service
• centers in Italy handles
• 30 of Italys intermodal traffic
• 2.5 million m2 of space
• Includes office center, rail service yard,
  customs,
• warehouses, forwarding agent center, and
  logistics
• center

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• The Netherlands Transactie Modal Shift
  Program
• Provides government funds to shippers to
  conduct logistics
• scans and to develop long-term plans for more
  efficient goods
• movement
• Proposed actions have included
• Development of new logistics strategies (e.g.,
  reduction in
• scheduled deliveries and improved route
  planning)
• Changes in transport technology (e.g., use of
  sea
• containers)
• Consolidation of freight distribution activities
  at freight
• centers
• Enhanced training to improve vehicle fuel
  efficiency.

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• From 1997 to 2000
• --200 logistics efficiency scans
• --100 mode shift scans
• --50 integrated scans
• --142 implemented projects.
• Seventy-five of the mode shift scans showed the
  possibility
• of using intermodal services
• Approximately 10 percent of these cases, such
  service was
• cheaper than existing truck service.
• Estimated reduction of 72 million
  vehicle-kilometers due
• to more efficient logistics strategies 18
  million vehicle
• kilometers due to targeted mode shift
  strategies.

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German government provides funds for construction
or expansion of intermodal terminals that include
the exchange of freight from truck to rail,
inland barge, or coastal shipping. Ø The
terminal improvement must not be economically
viable solely with private
financing. Ø The terminal operator must be
different than the organization that owns the
terminal Ø Open access to the terminal
improvements will be allowed to all who desire
to use the operation Ø An intermodal facility or
facility expansion is planned in the region by
one of the intermodal carriers
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Ø The funding recipient must commit to operating
the facility for a specified period of time,
which varies according to how much of the
initial cost is borne by the recipient At
least 20 percent of the government funding will
come in the form of an interest-free loan, with
the rest being a construction grant. Eligible
activities, for example, loading and siding
tracks, road connections, loading equipment,
support buildings, signalization, and automated
vehicle identification (AVI) systems. Planning
costs up to 10 percent of the eligible
construction costs are also allowed.
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• Lessons learned.
• Understanding the motivations for logistics
  decisions
• and their implications on transportation system
• performance in a changing global market is a
  critical
• point of departure for a national or
  multinational
• effort to foster trade.
• Identifying freight bottlenecks and solving
  them,
• should be an important focus of regional, state
• national, and international planning/policy
  efforts.

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• An international and national strategy for
  investing
• in freight transportation facilities and
  services is
• an important component of transportation
  policy.
• Public investment in the EU has been designed
  to act
• as catalyst for private sector investment.
• Public investment targeted at improving freight
• movement should be based on incentives that
  leads
• to private decisions that best meet corporate
  needs
• while achieving public goals (e.g., economic
• development, sustainability, etc.). This was
  described
• as market-driven policy.

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• Focus on best use of existing transportation
  options
• while also looking at needs for new
  infrastructure this
• suggests an important role for integrated
  information
• systems that can manage transportation system.
• Interoperability and consistency in national
  laws
• are important areas of multinational concern
  inter-
• operability leads to a focus on compatible
  information
• systems. However, EU experience shows that
  there
• are many other transportation issues that need
  to be
• examined in establishing a common trade market.

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• Important role for multinational efforts is to
  foster
• open competition and open borders free access
  allows
• market to take advantage of productivity
  economies
• and the results of market-placed decisions.
• EU has served as an important forum for
  establishing
• consensus on strategies for establishing a
  competitive
• market in Europe.

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• Human resource development/
• training is an important element
• of public/private initiatives to
• improve freight transportation.
• System reliability is one of, if not
• the most important performance
• measure

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Post Script The focus of this scan was no
international freight movement and on easing the
transport constraints of an open market. The
events of September 11th highlight a critical
aspect of how international border crossings must
be viewedas one of many opportunities for
reducing the risk of attack. Although this scan
did not investigate the national security
circumstances of international border crossings,
this clearly is a focus that must be considered
in any effort to provide for open markets.
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Logistics distribution is the core business of
the Netherlands
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Without transport, it (the Single Market of the
Union) would exist only in name. Without
efficient, compatible, sustainable transport
systems and operation, it obviously will not
flourish --European Commission, 1999