Lack of competition
In terms of the prevailing market structure, BMW’s Jung says levels of competition among railway companies and rail transport providers “could be better”. That said, he concedes that the needs of the finished vehicle sector do create some limitations, compared with simple container transport or general cargo.
“The rail equipment-producing companies are very few and new products are only built with long lead times of approximately three years,” he states.
Interoperability between different national rail networks is a key target of the EU
Quentin agrees that there is not currently enough competition in the sector, believing that service could be improved with greater diversity and innovation (see box below).
Bong stresses that rail wagons are “quite investment-intensive” and that rail requires a “much bigger critical mass” – particularly in terms of the number of wagons a rail–based logistics provider must own or operate before it can offer a reliable service.
“Taking all of these factors together – combined with the lower productivity [of the rail–based finished vehicle sector] and low margins – it is not a very attractive business for investors,” he says.
The DB Cargo spokesperson highlights that the extent of consolidation in the sector depends on individual markets, as well as on how authorities implement EU liberalisation efforts, adding: “In some markets, like Germany, we have a good competitive situation – in other countries, such as France, it is more difficult.”
Rieder believes that interoperability is “essential”, pointing out that this depends upon railways conforming on standards of gauge, couplings, brakes, signalling, communications, loading gauge, structure gauge and operating rules. Whereas North American freight railroads are highly interoperable, systems in Europe and Asia are much less so.
However, the EU is working on establishing transnational legal, technical and operational conditions with a view to harmonising the different systems. This will entail the standardisation of infrastructure facilities, train control and signalling systems, plus technical equipment related to traction units, power supply and rail operation. Steps towards this include the European Train Control System and the Global System for Mobile Communications – Railway.
“The aim is to shape the transnational rail traffic in the EU and in third countries so that it is interoperable in order to make rail freight significantly more efficient and faster,” he states.
Technological revolutions
Vehicle distribution could benefit from technological innovations including driverless trains and big data
Over the next few years, industry observers suggest, several ongoing innovations and technological changes – including advances in digitalisation and self–driving trains – are likely to exert a growing influence on the rail sector and help make the most of existing capacity.
While a tough investment environment and the high cost of traditional rail wagons lead consultant Hans-Bert Bong to predict that capacity shortages will probably increase, he suggests that one positive factor is the growing trend towards containerisation of finished vehicles.
Although regarded as quite exotic ten years ago, he says, several providers now offer stillage systems for vehicles in containers.
“The advantage of containerisation is that existing transporters and infrastructure can be used and vehicle containers enjoy the same priority as any other container in the system, which offers speed,” he explains.
“Climate change will force politicians, OEMs and LSPs to push for an increase in environmentally-friendly modes, such as trains powered by green, electric energy.
This shift from road to rail and water will make demand even bigger,” he adds.
“Automation could also be interesting,” says Guillaume Quentin of Renault-Nissan Alliance Supply Chain Europe, “but there are technical and legal challenges to be tackled.”
A spokesperson for DB Cargo points to ongoing innovations in safety, steering and control systems across rail infrastructure as factors that could also help, effectively increasing capacity by making for faster trains and shorter safety distances between them.
“The equipping of locomotives and wagons with GPS systems and sensors improves steering, utilisation and maintenance. We also assume that the environmental aspect of transport will become even more important for customers in the future. This is where the rail sector can play on its advantages,” says the spokesperson.
Jung notes that digitalisation in finished vehicle rail transport is progressing at a similar pace to that of general cargo traffic.
In particular, GPS tracking of rail carriers is being implemented by some companies already and will help streamline rail distribution in the future, he believes.
“Current distribution systems definitely need to be enabled to employ GPS big data. The cargo rail network has high potential for self-driving solutions, due to predictable routes and influencing factors,” he says.
“Nevertheless, willingness to invest in self-driving concepts is rather low. Long-term contracts between rail service providers and OEMs could foster greater investment readiness.”
“Current distribution systems definitely need to be enabled to employ GPS big data. The cargo rail network has high potential for self-driving solutions, due to predictable routes and influencing factors. Nevertheless, willingness to invest in self-driving concepts is rather low. Long-term contracts between rail service providers and OEMs could foster greater investment readiness.” –
Siegfried Jung, BMW Group
Though not yet the subject of much public discussion, Bong says, self–driving trains are an exciting option and one that should be “much easier to achieve than self–driving cars and trucks”. This is mainly because locomotive drivers only control the speed of a train, while the track is controlled and set centrally, avoiding any need for sophisticated navigation.
“We all know examples of driverless airport or city ‘sky trains’. It can help to overcome locomotive driver shortages which, next to the assets themselves, are a limiting factor to growth. In addition, regularly occurring industrial action could be avoided.”
Introducing driverless trains could be a tricky business, however, as Bong admits: “Of course, this is quite a political issue and needs to be addressed carefully.”
Chugging or changing? - Automotive Logistics
MY TAKE
Wakati Dunia ina move forward in sophisticated technology with European Rail Control System, mtambo wa gongo umekurupuka na kuingia kichwakichwa kwa Mchina ukasmbulia block signalling system.