Challenges of Future Freight Transport Services – Multimodal Solutions

PhD Olli-Pekka Hilmola Lappeenranta University of Technology, Kouvola Research Unit Prikaatintie 9, FINFIN-45100 Kouvola, Finland Fax: +358 5 344 4009, EE-mail: [email protected] www.kouvola.lut.fi, www.kouvola.lut.fi, www.his.se

Level of Outsourcing in Logistics Functions 100.0% 90.0% 80.0% 70.0%

Contracted Logistics Market = 130 bill. €

60.0% 50.0% 40.0% Sweden / Finland

(2006, Review of Maritime Transport 2008, UNCTAD)

30.0%

UAE

20.0% 10.0% 0.0%

Scope of logistics outsourcing in the respondent companies (Sweden and Finland, n = 32-34 – UAE, n = 16-19) – amount of “Yes” answers from total. Source: Hilmola & Tan (2009)

Utilized storage at Lastbilcentralen Sweden AB (Tibro, Sweden) Storage area (m2) 100000 95000 90000 80000 70000 60000 50000 40000 30000 20000 12000

10000 4000

15000

17000

7000

0 1985

1990

1995

2000

2004

2007

350

300 247 250

222 205

200

Number of employees (total)

188

160 115

100

Turnover (Million SEK)

219 164

150

240

118

120

90

50

Number of employees (full-time)

Source: Jäger, Hilletofth & Ujvari (2009). From Standard 3PL Provider to Service Developer: A Case Study from the Swedish Furniture Industry. World Review of Intermodal Transportation Research, Vol. 2, No. 4, pp. 376-390.

4

0 2004

2005

2006

2007

Intermodality Requires Standardization of Transportation Units

11% 23% 8%

Something else Semi-trailer 20" 40/45" 58%

Use of transportation units in Finnish and Swedish companies during early year 2011 (n = 26), Source: LUT Kouvola

Warehouse location criteria concerning (most important) of Finland and Sweden during years 2006, 2009 and 2010 responses Criteria 2006 2009 2010 Average Cumulative Low distribution costs 41.9% 21.7% 40.0% 34.5% 34.5% Road transportation connection 4.7% 26.1% 10.0% 13.6% 48.1% Assembly/manufacturing plants near-by 16.3% 13.0% 10.0% 13.1% 61.2% Inbound logistics were easy to connect 14.0% 4.3% 0.0% 6.1% 67.3% Infrastructure support for intermodal transportation 0.0% 13.0% 5.0% 6.0% 73.3% Third party logistics solutions are widely available 9.3% 8.7% 0.0% 6.0% 79.3% Sea transportation connection 4.7% 0.0% 10.0% 4.9% 84.2% Selected place appears to hinder future potential 4.7% 4.3% 5.0% 4.7% 88.9% Low cost of labour 0.0% 4.3% 5.0% 3.1% 92.0% Railroad connection 0.0% 4.3% 5.0% 3.1% 95.1% Company specific warehouses available for lease/rental 2.3% 0.0% 5.0% 2.4% 97.6% Availability of labour 0.0% 0.0% 5.0% 1.7% 99.2% Enlargement space in the future 2.3% 0.0% 0.0% 0.8% 100.0% Air transportation connection 0.0% 0.0% 0.0% 0.0% 100.0%

6

Why Intermodality is not that popular in north?

Finland Sweden Russia Estonia Latvia Lithuania Germany

Poland

In Sweden, Sea Port Volumes More Concentrated (than e.g. Finland) and Direct Deep Sea Connection Available Sea Port Göteborg Helsingborg Norrköping Stockholm

2007 (TEU) 840,550 240,000 100,000 44,563

Year 2008: 342 kTEU were transported via rails (to/from harbour)!

8

Port of Göteborg 400,000

45%

350,000

40% 35%

300,000

30%

250,000

25%

TEUs transported by rail

200,000 20% 150,000

15%

100,000

Rail's percentual proportion of the whole inland transportation

10%

50,000

5%

0

0% 2001 2002 2003 2004 2005 2006 2007 2008

Source: Modified from Rail services (2011) and Port of Gothenburg (2010).

Environmental impact factor

Difference between train and truck

Fuel, diesel

21,000 cubic meters

Carbon dioxide

51,000 tons

Source: Rail services (2011), “Railservices feb 2011”, available at: http://viewer.zmags.com/publication/d129d0fd#/d129d0fd/16 (accessed March 2011).

Source: LUT Kouvola and Ville Henttu (Mobile Port Project)

9

Advantages generated by dry ports •

Seaports: – – – –

•

Less congestion Expansion in hinterland Possible capacity increase Benefits of specialization

Seaport cities: – Less congestion – Land use opportunities – Better image

•

Society: – – – – –

Decrease of environmental impacts Distribution of logistics jobs more evenly Regional development Less seaport centrality and less risks Oil consumption decreases

Source: Roso, V. (2009), The Dry Port Concept, Thesis for the degree of doctor of philosophy, Department of Technology Management and Economics, Chalmers University of Technology, Göteborg.

10

11

Consolidation at Cross-Dock Steps: • Unload inbound truck • Sort by outbound location • Pull up empty trailer • Load outbound trailer • Store trailer until tractor picks it up • Not a warehouse! • Stock turn is 90%)

Terminal Area From container harbour: block train (20 %, 50-60 wagons)

Distribution: railway transports (only occasionally)

16

Transportation Flows of Warehouse Facilities Located in Southern St. Petersburg

From container harbour: road transports

Terminal Area

Distribution: road transports

Empty containers: Block train to pulp & paper industry

17

Apart from These, Interesting Example from Warehouse Operating in St. Petersburg

From container harbour: by road transports (