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Article Excerpt
Abstract
This article focuses on answering the following research question: How efficient are European rail transport companies compared with each other? When the focus in benchmarking is placed on "employee productivity performance," Railcargo Austria and VR Cargo perform relatively well when compared with their competitors. RENFE and SNCF Fret are the worst performers. If the focus is on "sales productivity performance," the best performers are Green Cargo, SBB, and VR Cargo. The worst performers are Trenitalia, CP, and SNCF Fret. The best in "railcar productivity performance" are Green Cargo, VR Cargo, and Railcargo Austria. The worst performers are SNCF Fret, Trenitalia, and RENFE. Analysis of effects, using a mixed model approach, showed that there are large differences among the companies. The overall trends were mostly not significant, but the distributions of the signs of the trends (+ or -) are quite plausible and significant. Two main conclusions arise: First, the inputs (employees, locomotives, and railcars) have been reduced over the years. Second, the partial productivity performances (tons/ railcar, tonkms/railcar, sales/railcar, employees/railcar, sales/ton, sales/employee, sales/tonkm, and tonkms/employee) have improved over the years. Overall, less freight is transported more efficiently.
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In Europe, the importance of the road transport sector is measured in terms of the volume of transported goods. It represents about 75 percent of the total ton kilometers (tonkms) transported in the EU. Whereas road transport in the period 1985-1995 has grown by 163 percent (with respect to tonkms), rail transport has increased by only 20 percent (EC 2002). Although the total rail transport is growing, its market share is in decline. "Closed" national systems and decreasing networks have caused customers to abandon rail transport in the course of the past three decades in favor of road. Now, however, the European Union is trying to persuade companies to come back to rail to transport their goods. By liberalizing rail freight services and opening them to competition, the European Union wants to cut greenhouse gas emissions and revitalize the rail freight market. And indeed, albeit slowly, freight transport by rail is changing.
Changes have taken place in the type of freight that is transported by rail (e.g., high-value and high-quality goods have been added to the product portfolio) and in the transport units (more standardized units, such as containers). However, even more changes are needed, and in particular the productivity of rail freight transport companies might be improved as a first step to lure customers back to rail. More efficiency creates stronger companies that focus on their valuable customers and that make profits. That might create space for investments in new market segments and/or customers, in order to start growing again.
The challenge in this article is to examine the extent to which the efficiency of rail freight transport can be improved. The research question posed in this article is, How efficient are European rail transport companies compared with each other? To answer this question only publicly available data have been used. First, the article will describe the rail freight sector on a European level (English, Welsh & Scottish Railway [EWS] in the United Kingdom is not included in the analysis because it does not publish an annual report); second, a mixed model approach to analyze trends and benchmarking theory will be described; and third, the efficiency of rail freight transport companies in Europe will be compared.
RAIL FREIGHT TRANSPORT IN EUROPE
There are a number of reasons cited for the diminishing attractiveness of rail. Historically, most rail freight companies in Europe were nationally held. This has resulted in a lack of international integration and has reduced the railway companies' chances of offering fast, reliable, and efficient international services. In the United States, where most rail networks are private and transcontinental transportation is open to competition, railway companies maintain a 40 percent share of the overall freight market (European Commission 2001). Currently, only 9 percent of all the freight transported in Europe is moved by rail, down from 21 percent in 1970. The problems are numerous: incompatible forms of traction electrification, differing track gauges, and lengthy border checks, to name but a few. Nijkamp (1995) observed twelve years ago that a drastic reorientation of the management of railways was required. However, in a recent report, the European Commission found that the average speed of international freight services has fallen to eighteen kilometers per hour: "slower than an icebreaker opening up a shipping route through the Baltic Sea" (European Commission 2001). Figure 1 shows the main developments in rail freight transport in the EU and reveals that in terms of tonkms, almost all EU countries have shown an increase from 1995 to 2000.
[FIGURE 1 OMITTED]
In recent years, important changes in European rail transport have occurred: e.g., containerization and shuttle trains (Bouwknegt et al. 2004; Logitech 2003). However, in spite of these advantages, it still proves difficult to improve the competitive position of rail freight transport. This is supported by several research studies. Ferreira (1997) proved that rail freight market share increases are closely related to the level of service offered, particularly with respect to transit times and reliability of arrivals. Keaton (1991) has shown that significant reductions in transit times require large increases in both the number of connections and the operating costs. In addition to this, FitzRoy and Smith (1995) demonstrated that high train frequencies have contributed to a strong rail performance for freight in Austria and Switzerland. For the development of new rail freight markets, Barthel and Woxenius (2004) identified the factors that severely hamper the attraction of small flows over short distances. These are market and financial uncertainties; insufficient network connectivity; limited track time for extra services vis-a-vis existing passenger and freight movements; and policies that favor the existing technology paradigm. Furthermore, cost diseconomies-an increase in output comes with a relatively large increase in total costs--limit the potential for short-haul rail freight transport. All of these studies reveal that it is quite difficult to improve the competitive position of rail freight transport and underscore the urgent need for seeking ways to improve the efficiency and effectiveness of current rail operations.
Markets can be divided according to product (service) or according to geography (de Vries et al. 2001). The rail freight product market can be divided according to the way the freight is transported (based on EC 2002; IBM 2002; Community of the European Railways 2003; Lupo 2003: Wiegmans 2003):
a) Dry bulk: This sector consists of materials like gravel, sand, coal, detritus, wood, and agrarian products.
b) Liquid bulk (or tanker transport): This sector consists mainly of chemicals and fuels.
c) Intermodal transport unit: This sector is growing rapidly and consists of ISO containers, semi-trailers on railcars, the rolling road (transport of complete trucks and trailer by train), and swap bodies (the swap body is a container of lightweight construction and relatively low tare weight. Swap bodies are available in a variety of lengths and other design characteristics [Muller]).
d) Railcar loads: This sector transports mainly large parts and semi-manufactured articles (e.g., steel articles, cars, agriculture machines).
Alternatively, the freight can be divided into type of products to be transported (see Figure 2).
[FIGURE 2 OMITTED]
Another way to analyze the rail freight market is by looking towards transport services. In general, three types of services can be distinguished (de Wit and van Gent 2001):
a) Shuttle trains transport mainly maritime containers. The transport takes place at regular time intervals between the same origin-destination combinations.
b) Mixed trains transport mainly continental containers, trailers (on train), and packaged freight (fresh foods and other agrarian products, bulk materials, and cars). Usually these types of trains...
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