10 May 2017

How do the truckers feel about intermodal transport?

Interview with Søren Hyldstrup Larsen, the CEO of the Nordic Logistics Association (NLA)
by George Panagakos and Harilaos Psaraftis

In the framework of the Scandria®2Act work package on Multimodal Transport, the Technical University of Denmark (DTU) has undertaken to investigate the requirements that shippers and freight forwarders impose on arranging intermodal shipments along the Scandria® corridor. A questionnaire has been developed for this purpose, which is currently being tested prior to circulation. We asked Mr. Søren Hyldstrup Larsen, the CEO of the Nordic Logistics Association (NLA), to test our draft questionnaire and took the opportunity to have a friendly discussion with him on intermodal logistics solutions and the other challenges that the transport industry faces today.

The Brussels-based NLA was formed in 2012 as a joint lobby-organisation representing the interests of the Danish Transport and Logistics (DTL), Norwegian Road Hauliers Association (NLF) and Swedish Road Operators Association (SÅ), which jointly have a membership of more than 15,000 transport operators. It is NLA’s massive membership combined with its geographic scope that covers three of the five Scandria-related countries that make his views important to us.
Søren’s telephone conversation with DTU’s George Panagakos took place on 20 April 2017.

Photo: NLA

Søren, why did the Danish, Swedish and Norwegian associations decide to represent themselves in Brussels?

Our founding associations have common interests that reflect the particular challenges that our Nordic countries face. The fact that we share common positions enabled our joint representation in Brussels in an effort to ensure visibility and enhance our influence on the decisions made by the Commission, the Parliament and the Council. The working conditions of our transport operators are basically formed by the EU legislators in Brussels and NLA makes our voice stronger. In fact, this voice is further intensified by our cooperation with the Finnish transport and logistics association SKAL through their affiliated membership with NLA. We believe that our Nordic positions are now listened to. Moreover, our presence in Brussels facilitates the constructive cooperation of our member associations with the International Road Transport Union (IRU) and strengthens the dialogue we maintain with land transport organisations from other EU countries.

Do you want to tell us, which are the challenges that you referred to, Søren?

Road transport faces several challenges like technological advancements and the need to invest in modern vehicles, the shortage of drivers and the lack of secure parking lots. There are two important challenges, however, that affect particularly the Nordic countries. The first one relates to the unfair competition that Danish, Norwegian and Swedish operators face despite the good intentions of the internal market. The aim of cabotage  is to improve the efficiency of road freight transport by reducing empty trips after the unloading of international transport operations. However, a number of companies exploit existing loopholes in the legislation, which, combined with insufficient enforcement, turn the temporary activity of cabotage into a permanent reality. This creates situations where transport services are offered at prices, wages, social conditions, that national hauliers in our countries cannot compete with. Moreover, the price dumping effect of cabotage inversely affects the modal shares of other modes.
The second significant challenge relates to low-emission mobility. The emphasis placed on co-modality  and the end of the Marco Polo programme that subsidised actions to move freight from road to other modes make us think that the Commission is taking a realistic rather than dogmatic approach to the issue of reducing CO2 from transport. In this respect, NLA would like to send two messages: Firstly, we are in favour of the use of bio-fuels; certainly the advanced, but also the first-generation ones when considering the Scandinavian production methods. We see a clear role for them in the short-run and even long-term possibilities. Do not forget that the phasing out of bio-fuels may jeopardise the forestry industry, which is crucial for this part of the world. Secondly, the high-capacity vehicles that we use for specific trades in the Nordic countries deliver more efficient transport services. Provided that the safety standards are observed, logistics solutions like the modular roadtrains exhibit improved performance in terms of carbon emissions. As such, if the Commission links road pricing to the greenhouse gas emissions, they should apply reduced road charging to this type of vehicles.

Policy-makers in Europe promote intermodal transport for several years now, but the results remain below expectations. Which are the most important factors that hamper the development of intermodal solutions?

First, we have to stress that not all cargoes are suitable for intermodal arrangements. In addition, such solutions are financially infeasible for small consignments (less than full container loads) and cargoes transported over short distances. Transport price is the single most important factor that affects modal choice. Other important factors that impede intermodality include the preferences of external decision makers (customers/suppliers), inadequate reliability in terms of timely delivery, lack and low frequency of appropriate services, inadequate customer support, as well as mode specific problems like interoperability in the rail and cumbersome administration in the shipping sector.

There is a number of actions that have been proposed for helping intermodal transport develop. Which are the most important ones?

Among the long list of actions mentioned in your questionnaire, I would single out the longer trucks and trains, investments in modern transhipment schemes and the provision of financial incentives to the users of intermodal arrangements as the most important measures. Other important measures relate to:
  1. infrastructure improvements (enhance the capacity of existing facilities/links and the road/rail accesses to ports);
  2. regulatory and policy interventions (implement a single intermodal waybill and liability clause for all modes, standardise modular logistic units, address the interoperability problems of rail and the administrative barriers of water transport, and enhance training in logistics); and
  3. ICT applications (provide easy access to information on available intermodal services, an on-line platform for cargo consolidation, and cargo monitoring services).

Søren, which are the main drivers that influenced modal selection in the past and what do you expect for the future?

I think that in general the price and reliability of transport services are the most decisive drivers in modal selection. Maybe in the future we need to become more responsive to shipper needs and offer our customers a greater flexibility in arranging shipments. Of course, this requires a dense network of and easy access to multimodal terminals and logistics centres.

How do truckers from the Nordic countries that you represent feel about intermodal transport?

Many people see road haulage as a direct competitor to intermodal transport. But this not the case or, to be exact, this is only partly true. A recent report  for the Norwegian Ministry of Transport, undertaken in the framework of the proposed national transport plan, found that out of about 270 million tons of goods transported over long distances on the Norwegian roads, only 5-7 million tons can be shifted to sea and/or rail transport. This is only 2.5% of the total. Furthermore, the study claims that even if the road tolls and other tax measures associated with this scenario were introduced, there would be no sufficient ship and railway capacity on offer to cope with this demand.
Of course one needs to be careful when generalizing such results, as the structure of national and international trades differ with the country (distances in Denmark are much shorter than in Sweden and Norway, while Swedish and Norwegian goods often cross Denmark in transit) or the region (the Swedish economic activity in concentrated in the south-western regions).
Talking about cooperation, though, we have to refer to the recent practice of truck operators who, in their attempt to improve the utilisation of their assets, engage in integrated solutions and behave to a certain extent as freight forwarders. Thinking of transport modes in terms of silos is not valid any more. In the same token, no subsidies favouring specific modes over others are conceivable, while environmental pricing schemes should be applied horizontally across all modes.

Contact / Further information:

George Panagakos
Postdoc
DTU Management Engineering
Tel.: +45 45 25 6514
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Harilaos Psaraftis
Professor
DTU Management Engineering
Tel.: +45 45 25 1519
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