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1 The future of freight transport ECT s vision on sustainable and reliable European transport De toekomst van het goederenvervoer De visie van ECT op duurzaam en betrouwbaar Europees transport

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3 The future of freight transport ECT s vision on sustainable and reliable European transport 1

4 2 Unimpeded and optimal transport across Europe requires a vision

5 Introduction The Netherlands in general and Rotterdam in particular are perfectly positioned for the handling of large volumes of cargo. On the sea side, the port s strategic location in North-west Europe, its unrivalled depth and the large-scale container handling facilities definitely give Rotterdam an edge over the competition. Decisive, innovative companies have already been optimally utilising these advantages for decades. For the hinterland transport of deep-sea cargo throughout Europe, the comprehensive networks of rivers and railway lines constitute major trump cards as well, with a huge capacity for sustainable transport. The Rhine river and the Betuweroute dedicated freight railway line are the most prominent examples in this respect. More however is needed to guarantee unimpeded and optimal transport across Europe. Practice has proven that if we continue to organise transport in the current manner, Europe will inevitably grind to a halt at some point. The European transport system simply cannot cope. In this document, ECT therefore offers its vision on a successful future of freight transport in Europe in general and that of its customers in particular. Key words in this respect are the development of synchromodality, the realisation of push systems and a shift towards thinking in terms of flows. 3

6 4 Better use needs to be made of the infrastructure

7 The challenges facing European logistics The current European transport system The continuous growth in global trade, China s ongoing expansion and (despite various economic and political difficulties) a structural increase in purchasing power within the European Union justify the expectation that transport will continue to grow in the future. It is up to Europe to adequately accommodate this transport. A major challenge; the European transport system is currently under a great deal of pressure. Of the four modes of transport - road, rail, inland shipping and feeder - only the first two are actually available in many cases. Large parts of Europe lack (sufficiently navigable) rivers and feeder transport is only an option for the coastal regions. It is partially for this reason that the European transport chains often lack sufficient capacity. The volumes simply fail to flow through the pipeline; the infrastructure has reached its maximum. Congestion is constantly looming. An example of the potential impact this may have occurred in early 2006, when a winter storm disrupted Germany s rail system for a week. It next took three months for cargo transport to return back to normal. Obviously, the limits in terms of capacity had clearly been reached. The blockade of the Rhine river in February 2011 due to a capsized vessel near the Lorelei in Germany resulted in major logistical problems which lasted several weeks as well. As it turned out, other modes of transport were only partially capable of compensating for the unavailability of inland shipping on this route. 5

8 6 Sustainability encompasses more than being stuck in clean traffic jams

9 Sustainability as a driver What positively and undeniably affects current and especially also future logistics is the constantly increasing focus on sustainability. Major shippers are taking the lead in this respect. More and more, sustainable transport is a hot topic in their boardrooms. Companies explicitly indicate that they want to start transporting in a different manner and want to shift their cargo from road to rail, inland shipping and feeder, not in the last place for reasons of improved efficiency and cost reduction as well. In actual practice, things are not quite that straightforward though. In the hinterland transport from the Rotterdam port, road transport currently still has a market share of approximately 50 percent; a market share which is even higher for continental transport. Within this context, the car industry is devoted to becoming increasingly cleaner and therefore greener (euro 6, gigaliners, green cars etc) in order to remain an attractive mode of transport. This definitely helps. Sustainability however goes way beyond all of us being stuck in clean traffic jams. Reliability, accessibility and social responsibility are just as important. 7

10 Intermodal A B C From A to B by inland shipping or rail and from B to C - the last mile - by truck. Co-modal In A, the shipper has the choice between inland shipping, rail, feeder and road. Synchromodal Optimally flexible and sustainable system: a choice of different modes of transport in A, but also in B and, in the case of return cargo, in C. 8

11 From intermodal via co-modal to synchromodal The familiar alternative to trucking is intermodal transport. From A to B, cargo is moved by inland shipping or rail and from B to C - the last mile - by truck. The next step is co-modal transport, in which the shipper can choose from different modes of transport (barge, rail, feeder and road) in A. Synchromodality takes things even further. It offers companies the ability to time and again select the most appropriate mode of transport for that particular moment and circumstances with the customer s wishes as a starting point. This requires a choice from various modes of transport in A, but if possible also in B. Thus, an optimally flexible and sustainable transport system is created in which companies are always assured of optimum transport combinations depending on the circumstances - product, required speed, physical conditions etc - and can easily switch between modes of transport if necessary. For all parties involved, synchromodality means a greater degree of cost efficiency, more sustainable operations and an optimum use of resources and infrastructure. An important distinction of synchromodal transport in comparison to intermodal and co-modal transport is also that the customer is not forced to use rail, barge or feeder transport. The offered product is so attractive that the customer will automatically select this. Road transport is a fully fledged option in this concept as well, for example when specific destinations are involved or when time is of the essence. 9

12 10 Optimally and sustainably organising transport

13 Synchromodality is an essential pre-condition for optimally and sustainably organising transport in the future. By shifting from a terminal operator to a terminal operator plus, ECT can play an important role in this. The deep-sea terminal after all is but one single link in often highly complex logistics chains. The primary concern of the customer is that his cargo is always at its destination at the agreed-upon time. The customer does not select a port, but a complete solution in which all the links in the chain play their roles. Important customer criteria in that respect are (in varying orders) reliability, efficiency, price, speed and, increasingly, sustainability. The selection of a port is consequently determined by many more factors than just the presence of quays and cranes. Much more important is that the terminal forms an integral part of a comprehensive transport network, is willing to think along with the customer and is also able to optimally organise the hinterland transport. Without there being forced choices and with a maximum degree of flexibility as regards modes of transport, price, speed, etc. For example, take a logistics service provider who has agreed with his customer to always deliver containers in Belgium no later than three days after the expected time of arrival (ETA) of a sea-going vessel in Rotterdam. Mind you, the agreement between the customer and the service provider is based on the expected time of arrival of the sea-going vessel, not on the actual arrival time. What needs to be taken into consideration in this respect is that despite so-called slow steaming (which increases reliability), ships regularly arrive behind schedule. After all, ships may encounter all sorts of delays such as storms, typhoons, delays in ports, etc during their day roundtrips. As a result, ECT is pre-eminently in a position to help both parties to meet the agreements made. The terminal knows the actual time of arrival (ATA) and can (co)determine the time of discharge of specific containers. Next, it can ensure that these containers are moved to Belgium within the timeframe agreed upon by the customer and the service provider, in this case by inland shipping. Or, if this is a better option due to time constraints: by truck. 11

14 12 Straight into Europe

15 Carrier haulage and merchant haulage, but also terminal haulage In addition to carrier haulage (in which the shipping line organises the European transport) and merchant haulage (in which the shipper or forwarder bears the responsibility), a third form of organising transport is in fact created: terminal haulage (in which the terminal co-determines the transport to and from the hinterland). The contents of the container and the agreements to this extent are then determining as regards the speed of the transport. This will not work without synchromodality. ECT facilitates this through European Gateway Services: a European network of inland terminals which function as extended gates of the deep-sea terminals in Rotterdam and which are highly frequently connected with the seaport by rail, barge and road transport. Supplementary (customs) services furthermore allow for document-free transport under the responsibility of ECT, in which the progress of the cargo can be monitored in real time (cargo tracking and tracing). It is not until the inland terminals that companies need to spring into action to deal with their customs formalities. The onward distribution of their cargo can also be organised far more efficiently from here. It goes without saying that a similar efficiency improvement can also be achieved the other way around, from the inland terminals to the deep-sea terminals in Rotterdam. European Gateway Services however offers even more. The inland terminals which function as extended gates also maintain connections with other inland terminals and deep-sea terminals, both in Rotterdam and beyond. This creates a constantly larger and further expanding open network of efficient, reliable and sustainable connections. 13

16 Amsterdam European Gateway Services forms the basis for a constantly larger and expanding open network. Rotterdam EUROMAX - DELTA - CITY Norway Oss Venlo Lübeck (Germany) Dortmund (Germany) Leipzig (Germany) Munich (Germany) United Kingdom Basel (Switzerland) Spain Moerdijk Duisburg Other Neuss Zeebrugge Antwerp Vienna (Austria) Wels (Austria) Graz (Austria) Gallarate (Italy) Willebroek Milano (Italy) Avelgem Liège Piacenza (Italy) European Gateway Services Rail Barge Shortsea 14

17 A good example of the knock-on effect of European Gateway Services as a synchromodal network is the role which the sister terminals of ECT within Hutchison Port Holdings can fulfil as extended gates for feeder traffic. The Gdynia Container Terminal in Poland and the Container Terminal Frihamnen in Stockholm, Sweden, for example, can thus manifest themselves as efficient stepping stones to Scandinavia and the Baltic region. Other ports and terminals can also be part of the network. On the landside, the through connections which rail operator Kombiverkehr currently already offers from Duisburg to more than 70 European destinations are a good example of how European Gateway Services functions as a flywheel for organising transport differently TEU plus There is another important reason why European transport needs to be organised differently. A significant increase in scale is occurring in deep-sea shipping. The number of vessels with a capacity of 12,500 TEU (Twenty feet Equivalent Units) and beyond is increasing rapidly; ships of 18,000 TEU are already on the horizon. Trends and expectations indicate that the larger these giants become, the fewer ports they will call at during their trips. As a result, terminals will see themselves confronted with great peak loads. In the near future, unloading 6000 containers and loading 6000 new ones as quickly as possible will become increasingly more common, especially in Rotterdam. This requires adequate facilities on the sea side (depth, quays, cranes), but also on the landside. Without a substantial open network such as that of European Gateway Services, it is impossible to efficiently, reliably and sustainably handle all these containers. The more the process of scaling up continues in the deep-sea shipping sector, the more important the services on the landside which are offered as part of European Gateway Services consequently become. 15

18 16 Making optimum use of modes of transport and time

19 From push to pull Synchromodal transport means making optimum use of the different modes of transport. In addition, it means making optimum use of time: push instead of pull. Unlike the example mentioned earlier of the agreement between the customer and the logistics service provider about a three-day lead time between the port and the hinterland, the average dwell time of containers at deep-sea terminals can currently amount to as much as six days. At the inland terminal in the hinterland, up to twelve days can sometimes be added before the recipient calls the container to his warehouse or production location. It means that in the current logistics system, it can take eighteen days to get a container from Rotterdam to, for example, a factory in Frankfurt. This is almost the time it takes for the container vessel to sail from Hong Kong to the Netherlands. An important reason for the long lead times in Europe can be traced back to the recent past, to the years before the economic crisis of By then, the limits of the transport capacity had been reached and the ensuing logistical stagnations meant companies explicitly ran into difficulties with supplying their factories and distributing their production. In response to this, these companies introduced even more containers into the logistics chain, culminating in a self-perpetuating negative impact. Just-in-time escalated into just-too-late and just-too-much. 17

20 Pull Containers remain at the deep-sea terminal in anticipation of action on the part of the recipient. Deep-sea terminal Final destination Push Containers are directly moved to inland terminals in the hinterland by barge or train in a pro-active flow. Deep-sea terminal Inland terminal Final destination Thinking in terms of flows from pull to push prevents that containers unnecessarily remain at the terminal and need to be moved by truck. 18

21 Thinking in flows To reverse this trend and create a reliable just-in-time transport system, another way of organising is necessary in which synchromodality and thinking in terms of flows have to play an important role. A switch is needed from the pull system of containers which is controlled by the recipient to push systems. In that, containers no longer remain at the deep-sea terminals in anticipation of action on the part of the recipient (pull), but are directly moved by barge or train to the inland terminals in the hinterland in a pro-active fashion (push). The other way around, the timely supply of export cargo at the inland terminals enables the deep-sea terminal to also call in containers by barge or train at the most appropriate moment for the logistics system. Both flows prevent the logistics system from becoming more vulnerable as a result of transport always and only being carried out by truck - too late - during peak times, allow for the optimum deployment of sustainable transport by rail and inland shipping and lead to a better organisation of logistics chains with reliable (just-in-time) delivery from the inland terminals. ECT s European Gateway Services is fully geared to this. 19

22 Single window - information must come together properly and always be available to stakeholders. i 20

23 Properly organising data exchange A crucial precondition for being able to organise container logistics in pro-active flows in a synchromodal manner is timely knowledge about the contents and destination of the containers. Information should come together properly and be available to stakeholders at all times. In today's logistics chains that required information is often available, but due to the linear exchange that takes place it is not always accessible for the right parties. In the future, information flows must therefore be organised as a logistics circle, for example by means of a single window. All parties involved, both companies and government bodies, will then always have direct access to the data which are relevant to them and can benefit from this when organising their logistics processes. Companies must however be able to retain control over their own information flows and, if desired, distinguish themselves by means of their own information exchange. An optimal organisation of information exchange in the logistics chain needs to be further worked out in a proper manner. Knowledge centres (such as Dinalog) can play an important role in this. 21

24 Opportunities for the Netherlands Synchromodality is only possible with high volumes and highly frequent hinterland connections. Like no other, the Netherlands therefore has the potential to profile itself in this respect in Europe. The country has the logistics scale sizes, the volumes, the network, the connections via all modes of transport, the knowledge and the organisational skills. The Netherlands is truly a logistics top location which encompasses more than just Rotterdam. It is up to companies to ensure that customers optimally reap the benefits from this. ECT among other things does this through its performance at the deep-sea terminal, its hub function for all transport modalities and through the implementation of European Gateway Services in conjunction with partners. Furthermore, the Netherlands has the opportunity to explicitly position itself as a combined seaport/airport, which is unique as well. Amsterdam Schiphol Airport and the seaport of Rotterdam are less than 100 kilometres apart. That is quite a difference compared to, for example, the distance between the seaport of Hamburg and Frankfurt airport in Germany or the seaport of Le Havre and Charles De Gaulle airport in Paris. For companies, this proximity between airport and seaport allows for the creation of a univocal logistics chain. In this respect, the Netherlands can also boast a fantastic top position. Companies can for example import complete machines via Rotterdam and have parts fly in via Amsterdam Schiphol. Or, in the case of a new grape harvest, use the plane to quickly supply wine tastings while the regular stock is moved by ship. With the combination seaport/airport, the Netherlands Ltd distinguishes itself for shippers and recipients. It must want to promote this as such to the world as opposed to profiling the port of Rotterdam and Amsterdam Schiphol as two separate entities. 22

25 It is up to new institutions such as the Strategic Logistics Platform (Strategisch Platform Logistiek) and the Dutch Institute for Advanced Logistics (Dinalog) to further shape and propagate the logistics future of the Netherlands. These new, government-initiated institutions are driven by strong companies and transcend the branch level. As a result, the Strategic Logistics Platform and Dinalog have a broad focus and are not hindered by special interests that can often stand in the way of optimum solutions. What also matters in this respect is not just properly organising the own 300 kilometres within the Netherlands, but looking across the borders and connecting with parties and initiatives which make the difference at the European level as well. 23

26 24 The business community must come together

27 Concrete collaboration Strategic collaboration alone will not suffice. To further streamline logistics in the future, the business community must also simply cooperate at the operational level. Currently, the truck is often chosen because a company is not able to fill a train on its own. More cooperation offers the solution to this. Companies will have to take the initiative themselves in that respect, supported by control centres, knowledge centres and/or umbrella organisations where possible. European Gateway Services of ECT is a good example of what this may yield in practice. At a different level, the same applies to the initiative by the European Intermodal Research Advisory Council (EIRAC) for the rollout of the CO3 Project: Collaboration Concepts for Co-modality. 25

28 ECT provides synchromodal transport. As the junction of the four modes of transport, it allows for optimum coordination. 26

29 More efficiency essential Thus, greater efficiency is an absolute prerequisite in many ways. The European transport sector currently generates more than 400 billion euros annually. The average occupancy rate of all that transport across Europe now however is below 45 percent. This means that in most cases, air is transported. Jointly increasing the occupancy rate to for example 70 percent throughout the entire logistics chain will consequently have a great impact in terms of efficiency, costs and sustainability. Achieving this ambition depends on many factors, but at least also requires a different allocation of government budgets. In addition to the funding of continuously essential extra infrastructure, more means are necessary in the future for organising transport in an alternative fashion. Synchromodality and the further development of push systems for sustainable transport two areas in which the Netherlands and Rotterdam have an excellent starting point are essential in that. Via European Gateway Services, ECT is concretely leading the way in this. As a result, unimpeded and optimum transport throughout the whole of Europe will also be possible in the future! 27

30 Colophon The future of freight transport is a publication of Europe Container Terminals (ECT). The contents are based on conversations with Wando Boéve, Director Marketing & Sales at ECT. ECT is the leading and most advanced container terminal operator in Europe. The company handles a majority of the containers at the port of Rotterdam. ECT operates three terminals to this extent: the ECT Delta Terminal and the Euromax Terminal Rotterdam at the Maasvlakte and the ECT City Terminal in the Eemhaven area (close to the city centre).via European Gateway Services, ECT offers customers a comprehensive range of services for an optimum transport of containers between Rotterdam and the European market. ECT is certified by Customs as an Authorised Economic Operator (AEO). October 2011 Europe Container Terminals BV P.O. Box HJ Rotterdam The Netherlands T +31 (0) E / 28

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