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The use of intermodal transport reduces carbon emissions by 80%. With this said, a partial transfer of freight from truck to rail platforms seems inevitable. Is intermodal transport set to save the continent from excessive carbon emissions and driver shortages? This question is answered by experts in the fourth edition of the Market Insights ON report.
Containers all over Europe
The European Commission announced back in the early 1990s that freight trains would soon dominate Europe’s transport routes. Today, nearly 30 years after the boastful declarations, the auditors of the European Court of Auditors have pointed out to the European Commission not only the ineffectiveness of its ambitious plans, but above all the blatant inconsistency of its actions. But does this mean that intermodal transport has lost its raison d'être? On the contrary, after the woes of the pandemic and the start of the war in Ukraine, it has taken its place at the forefront of expert discussions. But, most importantly, real action has finally begun to make intermodal transport an important complement to trucking.
- Doubling the share of rail freight by 2050 is a very ambitious target for the European Commission. There is still a lot of work to be done. Rail infrastructure needs to be upgraded, but at the same time the passability of Europe’s main road routes needs to be improved. Road carriers and logistics operators must also prepare for the changes, says Matteo Codognotto, Marketing & Innovation Group Director at Codognotto Group.
Awareness of the many challenges facing intermodal transport is also shared by the auditors of the European Court of Auditors who looked at the work of rail carriers, the condition of transport infrastructure and the quality of intermodal services. They came to the not-so-optimistic conclusion that of the six countries analysed, i.e. Spain, France, Italy, the Netherlands, Germany and Poland, none is fully prepared to handle intermodal chains to a greater extent.
- The pressure to reduce carbon emissions and the obligation for large companies to carry out non-financial reporting will certainly expedite the use of intermodal transport. Shippers are increasingly coming to see that decarbonisation improves the image of their business. The immediate future of European transport will be a balanced use of different modes. Long-distance transports should be carried out more frequently by intermodal trainsets. This will help us get to low carbon sooner, points out Ignasi Gómez-Belinchón, Cluster Manager at In-Move by Railgrup.
Experts agree more than ever that technology is needed to meet all these demands, to make supply chains more efficient and to bring carbon emissions to a radical halt. Without it, no transport revolution will be possible. - Transport companies should use technology to improve productivity, for example by using platforms to increase the load factor. For companies that do not implement the right technological solutions, the future looks rather bleak, adds Albert Jan Swart, industry, transport and logistics sector expert at the Dutch ABN Amro Bank.
Freight rates still uncertain
As in previous editions, the authors of the Market Insights ON report also try to deduce from the available data what lies ahead for supply chains in the coming months. Economic indicators in the European Union are falling, Germany is in a shallow recession and carriers often have no goods to transport. On the other hand, relative stability in the fuel market and inflation bars moving slowly down in the strongest economies are encouraging. Companies also have a good opportunity to reduce transport costs, as freight rates are steadily falling.
- From the point of view of a manufacturing or distribution company, this is a good time to negotiate favourable freight rates with the potential for considerable savings. All the more so as in many industries transport costs are one of the most important components of the budget, says Piotr Roczniak, Head of Business Consulting and Data at CargoON, a company providing technological support for shippers within the Trans.eu Group. He points out that in the first months of this year, an unprecedented thing happened: freight prices in Europe reached pre-Ukraine war levels. - As recently as January this year, average spot market rates were around 23% higher than twelve months ago, adds Piotr Roczniak.
Lower freight prices are due to decelerating European economies and falling consumption. Less work for suppliers automatically means a decrease in demand for capacity. But the variables affecting carriers are so many and times so unstable that it is by no means certain that rates will not skyrocket again.
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