d2.1 final 20101221 - europa - trimis · 2015. 7. 3. · start date: 1st september 2009 duration:...

SEVENTH FRAMEWORK PROGRAMME

Coordination and Support Actions (Supporting)

Grant Agreement No: 233910

Project ENABLE Stimulate Sustainable Freight Transport Systems with

Latin American countries

Deliverable 2.1 Best Practices Handbook

Version: Final

Date: 23rd of December 2010

Dissemination level: Public

Deliverable code: D2.1

Deliverable D2.1:

Best Practices handbook

December 2010 page 2

PROJECT INFORMATION Title: Stimulate Sustainable Freight Transport Systems with

Latin American countries Acronym: ENABLE Grant Agreement no: 233910 Programme: 7th Framework Programme Funding Scheme: Coordination and Support Actions (Supporting) Start date: 1st September 2009 Duration: 24 months Web site: www.enable‐project.net

CONTROL SHEET Version history

Version number

Total Pages

Date Main author Contributors Summary of changes

1.0 5.6.2010 Antti Permala, Jarkko Lehti‐nen

2.0 24 June 2010

Antti Permala, Karri Rantasila

Jarkko Lehti‐nen

3.0 119 8 Sept 2010 Antti Permala Karri Rantasila

Input from D1.1 (draft)

4.0 125 21 Dec. 2010

Antti Permala Karri Rantasila

Input from D1.1 (final) and 1st conference

Abstract

The deliverable D2.1 of the ENABLE project documents the European Best Practices that provide solutions to intermodal logistical challenges and barriers in Argentina and Brazil. The selected Best Practices are based on the analysis of existing intermodal situation in target countries. The cases allow building up a picture of the main development lines of logistics corridors in LA. All the presented parties (companies, operators, LSPs, IT providers and policy makers) are essential stakeholders for building up a well‐functioning logistics network.

Approval

Name Date

Prepared VTT 21st December 2010

Reviewed CERTH/HIT 22nd December 2010

Authorized CERTH/HIT 22nd December 2010

Circulation

Recipient Date of submission

European Commission 23rd December 2010

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EXECUTIVE SUMMARY The focus of ENABLE project is in co‐modal and intermodal freight transport. This pos‐sesses fundamental importance in developing competitive alternatives to road trans‐port. As roads are being increasingly overloaded, intermodal transport can offer reliable and cost‐effective transport mode in an environmentally conscious manner.

EU is Brazil's biggest trading partner, accounting for 22.5% of its total trade. Brazil is the single biggest exporter of agricultural products to the EU, accounting for 13% of total EU imports. Also Argentina is a big exporter of agricultural goods to the EU, as well as Eu‐rope is Argentina's second export market after Brazil. In addition, EU is the biggest for‐eign investor in Argentina and Brazil respectively. The backbone of the EU's future bilat‐eral trade relations with Argentina and Brazil will be a wide‐ranging EU‐MERCOSUR As‐sociation Agreement. This Agreement aims at the creation of a free trade area.

Based on the analysis of existing situation in Argentina and Brazil, findings of project forums and logistics performance indicators, the main logistical challenges and needs for improvements in Brazil and Argentina are addressed and discussed. After identifying the problems, the European intermodal innovations and best practices, mainly devel‐oped in projects of PROMIT, Viacombi and Bestlog and by European Intermodal Associa‐tion, are employed to provide solutions to logistical challenges in Latin America.

General approach to best practices has been:

• Benchmarking the European Intermodal best practices • Looking for sustainable concepts, industrial innovations, and intermodal solu‐

tions • Classification and clustering the best practices • Review of innovations and ideas • Analyzing the organization of innovation process and business models of ser‐

vices • Transferability to other situations or framework conditions.

The current intermodal status in LA has guided the selection of best practices that are further divided into five categories according the type of the case: 1) Company Cases, 2) Operator Cases, 3) Logistics Service Cases, 4) Information Technology Cases and 5) Pol‐icy Strategies. Despite of the differences in EU and LA logistics systems, the key findings of EU Best Practices are extendable to LA and allow one to understand the development paths of LA logistics. The key findings of best practices to be transferred to LA include:

• Arranging logistics chain by using intermodal transport • Business models, service concepts and operational principles of intermodal

transport operator • Business model and service concept of intermodal logistics network • Connecting port‐ and shipping operations to logistics network by utilizing in‐

formation technology Chosen cases allow together to build a picture over the main development lines of logis‐tics corridors in LA. All the parties presented above (companies, operators, LSPs, IT pro‐viders and policy makers) are essential stakeholders for building up a well‐functioning logistics network.

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ABBREVIATIONS AEO Authorized Economic Operator

BP Best Practice

CA European Coordination Action

CCD Coca Cola Drikker

DB Deutche Bahn

DBS Deutche Bahn Schenker

CO2 Carbon Dioxide

CT Combined Transport

ICT Information and Communication Technologies

IT Information Technology

ITU Intermodal Transport Unit

JIT Just‐In‐Time

EDI Electronic Data Interchange

EIA European Intermodal Association

IMMTA International MultiModal Transport Association

KN Kuehne+Nagel

KPI Key Performance Indicator

LA Latin America

LDC Local Distribution Centers

LCL Less than Container Load

LPI Logistics Performance Index

LSP Logistics Service Provider

PCS Port Community System

RORO Roll‐on/roll‐off

SECU StoraEnso Cargo Unit

SLA Service Level Agreements

UIRR International Union of Combined Road‐Rail Transport Companies

TEU Twenty‐foot Equivalent Units

3PL 3rd Party Logistics

4PL 4th Party Logistics

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CONTENTS 1. Introduction _______________________________________________________________________________9 1.1. ENABLE Project _____________________________________________________________________9 1.2. Aims of Best Practices analysis ____________________________________________________9 1.3. PROMIT Project ___________________________________________________________________ 10

2. Intermodal transport in Europe________________________________________________________ 12 2.1. EU Intermodal Policy and Actions _______________________________________________ 12 2.2. Related organizations_____________________________________________________________ 14 2.2.1. EIA____________________________________________________________________________ 14 2.2.2. UIRR__________________________________________________________________________ 15 2.2.3. IMMTA _______________________________________________________________________ 15

3. Approach _________________________________________________________________________________ 16 3.1. Methodology_______________________________________________________________________ 16 3.2. An outlook of the EU‐LA logistics environment ________________________________ 16 3.3. LA intermodal status______________________________________________________________ 18 3.4. EU Intermodal status _____________________________________________________________ 22 3.5. Criteria and classification of Best Practice cases _______________________________ 23

4. Best Practice cases ______________________________________________________________________ 31 4.1. Company Cases____________________________________________________________________ 31 4.1.1. Volvo _________________________________________________________________________ 31 4.1.2. StoraEnso ____________________________________________________________________ 35 4.1.3. Coca Cola_____________________________________________________________________ 43

4.2. Operator Cases ____________________________________________________________________ 48 4.2.1. Hupac ________________________________________________________________________ 48 4.2.2. Rhinecontainer ______________________________________________________________ 53 4.2.3. BoxXpress Germany_________________________________________________________ 57 4.2.4. Polzug ________________________________________________________________________ 61 4.2.5. Construrail ___________________________________________________________________ 64 4.2.6. Corman_______________________________________________________________________ 67 4.2.7. HUB Zahony _________________________________________________________________ 70 4.2.8. BILK Combiterminal ________________________________________________________ 74

4.3. Logistics Service Cases____________________________________________________________ 78 4.3.1. DB‐Schenker _________________________________________________________________ 78 4.3.2. Kuehne&Nagel_______________________________________________________________ 85 4.3.3. Cargo Domino _______________________________________________________________ 90

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4.4. Information Technology (IT) Cases______________________________________________ 95 4.4.1. Port Infolink _________________________________________________________________ 95 4.4.2. Short Sea XML _______________________________________________________________ 99 4.4.3. Valenciaport IT Platform __________________________________________________103

4.5. Policy strategies __________________________________________________________________110 4.5.1. German terminal policy____________________________________________________110 4.5.2. Swiss case___________________________________________________________________111 4.5.3. EU Maritime Knowledge Platform ________________________________________113 4.5.4. IPC/SPC Intermodal/Short Sea Shipping Promotion Centre____________113 4.5.5. Railway border interoperability (INTERFACE)__________________________114 4.5.6. Case Port of Helsinki / Vuosaari Harbour, Finland ______________________114

5. Analysis _________________________________________________________________________________117 6. Concluding remarks ____________________________________________________________________124

LIST OF TABLES Table 1: Basic figures _________________________________________________________________________ 18 Table 2: European Best Practice cases according to LA needs and challenges___________ 25 Table 3: Overview of European Best Practice cases described____________________________ 30 Table 3: Transport of products from CCD’s plant at Lørenskog to the warehouse in Tromso (mode, volumes and logistics costs) _______________________________________________ 47 Table 4: Types of swap bodies _______________________________________________________________ 93 Table 5: Modes of integration_______________________________________________________________108 Table 6: General aspects of Best Practices to be applied in LA ___________________________117

LIST OF FIGURES Figure 1: Areas of Freight Transport Innovations in Europe______________________________ 14 Figure 2: Logistics Performance Index (LPI) in Argentina and Brazil ____________________ 17 Figure 3: Comparison of LPIs ________________________________________________________________ 17 Figure 4: Cost of container transport in some countries___________________________________ 18 Figure 5: General freight loads (without ores) – Brazil ____________________________________ 20 Figure 6: International corridors of maritime transport between Brazil, Argentina and the European Union __________________________________________________________________________ 21

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Figure 7: Intermodal Transport Units (ITUs) forwarded at EU‐27 level*, by mode of transport, 2005 _______________________________________________________________________________ 22 Figure 8: Volvo Supply chain_________________________________________________________________ 32 Figure 9: The schedule of Train "8"__________________________________________________________ 33 Figure 10: The roles of actors in a Supply Chain ___________________________________________ 34 Figure 11: The first implementation of the Stora Enso supply chain concept ___________ 37 Figure 12: Starting point and NETTS principle _____________________________________________ 39 Figure 13: Cost comparison in transportation chain_______________________________________ 40 Figure 14: INFOLOG System _________________________________________________________________ 42 Figure 15: CCD’s production and distribution map ________________________________________ 44 Figure 16: Different Business Models (Lehtinen in Nofoma 2008) _______________________ 46 Figure 17: HUPAC network __________________________________________________________________ 50 Figure 18: Graphic representation of ports served by Rhinecontainer___________________ 54 Figure 19: BoxXpress network_______________________________________________________________ 58 Figure 20: Polzug Network___________________________________________________________________ 62 Figure 21: Construrail route _________________________________________________________________ 65 Figure 22: Example of emissions between multimodal and road transport _____________ 66 Figure 23: Economic and environmental aspects of redesigning the transportation chain_________________________________________________________________________________________________ 69 Figure 24: Gauge‐transfer stations in Europe ______________________________________________ 71 Figure 25: Railway reloading facilities ______________________________________________________ 72 26: BILK intermodal connections____________________________________________________________ 76 27: BILK Combiterminal______________________________________________________________________ 77 Figure 28: The factors of a leadership in multimodal transports. Case DB Schenker ___ 82 Figure 29: SBB Cargo‘s intermodal transport volume (single wagon by origin)_________ 91 Figure 30: Cargo Domino transport system ________________________________________________ 92 Figure 31: Planned transshipment points until 2008 ______________________________________ 92 Figure 32: Cargo Domino technology _______________________________________________________ 93 Figure 33: The Cargo Domino concept ______________________________________________________ 94 Figure 34: The complexity in transport chains ___________________________________________101 Figure 35: SSXML messages_________________________________________________________________102 Figure 36: Valenciaportpcs.net operating Principles _____________________________________106 Figure 37: PCS development stages ________________________________________________________106 Figure 38: Development of combined transport in road/rail on Kombi‐network2000+________________________________________________________________________________________________111 Figure 39: Progress of modal shift policy in Switzerland_________________________________112

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Figure 40: Map of Vuosaari Harbor, Finland_______________________________________________115

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1. INTRODUCTION 1.1. ENABLE Project The main goal of the ENABLE project is to contribute to the external relations of EU with Latin American countries, specifically Argentina and Brazil, in the area of co‐modal and intermodal freight transport. This goal will be served by defining and promoting to the Latin American region European innovations and best practices that will facilitate the development of sustainable intermodal freight transport systems in the target area. Networking and partnership building actions will be employed, strengthening in this way the dialogue between Europe and Latin America, as well as fostering international cooperation between the two geographical areas.

The focus of ENABLE project is in co‐modal and intermodal freight transport. Co‐modal transport1 means efficient use of different modes on their own and in combinations, and will result in an optimal and sustainable utilization of resources. Intermodal transport2 means the movement of goods in one and the same loading unit or road vehicle, which uses successively two or more modes of transport without handling the goods them‐selves in changing modes. Combined Transport is a subset of Intermodal transport where the major part of the European journey is by rail, inland waterways or sea and any initial and/or final legs carried out by road are as short as possible.

Intermodality is of fundamental importance for developing competitive alternatives to road transport. As roads are being increasingly overloaded, intermodal transport can offer reliable, cost‐effective delivery in an environmentally conscious manner. Develop‐ing freight transport logistics is primarily a business‐related activity and a task for in‐dustry. Nevertheless, the authorities have a clear role to play in creating the appropriate framework conditions and keeping logistics on the political agenda.

1.2. Aims of Best Practices analysis The main objective of this Best Practice work package is to organize the information from different sources, to build a sound picture of the main developments in European intermodal transport and to rewrite and adjust it for the situation of the target coun‐tries. The main sources have been the outcomes from the PROMIT project, especially best practice cases, benchmarks and presentations in PROMIT workshops and confer‐ences, the European Intermodal Association (EIA) award winner’s cases, EC projects Viacombi and Bestlog and other available sources.

Best practice3 is a technique, method, process, activity, incentive, or reward that is be‐lieved to be more effective at delivering a particular outcome than any other technique, method, process, etc. when applied to a particular condition or circumstance. The idea is that with proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and unforeseen complications. Best practices can also be defined as the 1 http://eur‐lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2006:0336:FIN:EN:PDF 2 Terminology on Combined Transport. Prepared by the UN/ECE, the European Conference of Ministers of Transport (ECMT) and the European Commission (EC). UNITED NATIONS. New York and Geneva, 2001. 3 Ilies, Crisan, Muresan (2010) Best Practices in Project Management, Review of International Comparative Management Volume 11, Issue 1, Page:43

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most efficient (least amount of effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that have proven themselves over time for large numbers of people.

This deliverable D2.1 includes a comprehensive description of the selected European best practices to be transferred to the two LA countries. In addition some state‐of‐the‐art technical innovations are presented in D2.2.

1.3. PROMIT Project PROMIT was European Coordination Action (CA) for intermodal freight transport initi‐ating, facilitating and supporting the coordination and cooperation of national and Eu‐ropean initiatives, projects, promotion centers, technology providers, research institutes and user groups related to this most complex transport form. The strategic PROMIT ob‐jective was to contribute to a faster improvement and implementation of intermodal transport technologies and procedures and to help in promoting intermodal logistics and mode shift by creating awareness of innovations, best practices and intermodal transport opportunities for potential users as well as for politicians and for the research community.

Due to the immense size of the intermodality domain PROMIT choose a matrix organiza‐tion, where the domain expertise was treated in five parallel clusters:

1. Organization and Business Models,

2. Intermodal Infrastructure and Equipment,

3. Information and Communication Technologies,

4. Operation and Services and

5. Security, Safety, Legislation and Policy

PROMIT Coordination Action lasted for 3 years, during which 3 Intermodal Innovation Day Conferences and nine cluster workshops and seminars were organized in addition to the dissemination via brochures, newsletters and an Internet homepage (http://www.promit‐project.net/).

PROMIT included 64 Best Practice cases. Rail operations cover some new intermodal connections and several types of development of existing services, based on block and shuttle trains. Information platforms base on quite different approaches, e.g. regional, mode such as rail or port based solutions. Some platforms serve both stakeholders in intermodal business as well as authorities. Some have more informative nature. Termi‐nal cases cover actions directed to operations efficiency, in many cases based on soft‐ware development and handling technology development. Tracking cases include satel‐lite positioning of equipment and track and trace services in intermodal rail transport.

14 business cases were analyzed in detail from strategy point of view. Intermodal trans‐port service consists of a network of different companies, and not all of them can be the actual leader of the network. Strategic leadership of intermodal service was analyzed with three different types of cases Volvo, Hupac and Kuehne+Nagel. These companies are leaders of the service but they have a quite different position in the intermodal ser‐vice network. Volvo is an industrial end customer, HUPAC a railway operator and Kue‐hne + Nagel a 3 PL logistics service provider.

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PROMIT collected also extensive data on national transport policies supporting inter‐modality; R&D, services, environment, taxation, legislation and transport policy. This analysis shows the many strategies available in EU‐27 to support sustainable transport.

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2. INTERMODAL TRANSPORT IN EUROPE 2.1. EU Intermodal Policy and Actions Traditional freight forecasts suggest continuous growth by a further 50% between 2000 and 2020. Growth rates for goods transport traditionally exceed those of the economy in general. Current forecasts need revision due to current economic downturn and pros‐pects4. Main policies are documented in the following publications:

White paper – ‘European transport policy for 2010: time to decide’ (September 2001)

In this white paper the Commission proposes some 60 measures aimed at developing a European transport system capable of shifting the balance between modes of transport, revitalizing the railways, promoting transport by sea and inland waterways and control‐ling the growth in air transport.

Mobility is essential for Europe’s prosperity and for free movement of citizens. The neg‐ative impact of mobility in terms of energy use and environmental quality must be re‐duced. Next to actions foreseen in the 2001 White Paper, such as boosting rail and mari‐time connections for long distance freight transport, additional instruments will be needed to achieve these objectives. They include a freight logistics action plan; intelli‐gent transport systems to make mobility greener and more efficient; a debate on how to change mobility of people in urban areas; an action plan to boost inland waterways; and an ambitious programme for green power in trucks and cars.

The orientations of the transport policy build upon the 2001 White Paper. They include actions to create a competitive European railway network through liberalization, tech‐nological innovation and interoperability of equipment, investment in infrastructure and better market monitoring with a new scoreboard from 2007 onwards. Motorways of the sea and short sea shipping need to be developed with an increased emphasis on land‐ward connections. The European ports policy, which was launched in 2007, has as one of its goals increased investment within ports and towards the hinterland.

Review of White paper in 2006

The review announces a methodology as a basis for smart infrastructure charging by 2008. There is also a continuation of measures to improve security and safety in various modes. Measures must be stepped up to reach the target of halving the number of peo‐ple killed on EU roads between 2001 and 2010. The instruments of the 2001 White Pa‐per must be adapted to a new context of an enlarged Europe, rising petrol prices, Kyoto commitments and globalization. A European sustainable mobility policy needs more pol‐icy tools to optimize the performance of each transport mode and their combined use.

Freight Transport Logistics Action Plan, Communication from the Commission COM(2007) 6075

4 Giannopoulos. ENABLE Conference Buenos Aires, 12 March 2010. 5 Promit D53. http://www.promit‐project.net/

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The Commission adopted a logistics action plan in 2007 in order to create better syner‐gies between road, sea, rail and river, and integrate various transport modes in logistics chains. This will give the industry a competitive edge but also diminish the environ‐mental impact per unit of freight.

The review puts an increased emphasis on intelligent transport systems. There is no reason why ships, trucks, cars and trains would not have the same sophisticated com‐munication and navigation tools as aircrafts. Real‐time management of traffic flows and capacity use as well as tracking will cut costs, improve environmental quality and im‐prove security. Galileo will play a key role to promote new technologies.

Today’s review calls for more ambitious actions to change mobility in Europe’s urban areas. The Commission launched a debate on urban transport policy in 2007 through a Green Paper. The EU can play the role of a catalyst to encourage decision‐makers to bet‐ter tackle congestion, pollution and accidents with innovative actions. As part of the de‐bate, a clear view is needed on what level of government is responsible for new actions.

The greater use of intermodality, whereby different transport modes are used along the transport chain, using each mode to best effect, is a key element of the EU freight trans‐port policy. In particular, it is promoted in medium and long‐distance corridors – for Al‐pine crossings due to the environmental sensitiveness of these areas – and for port‐hinterland and terminal‐to‐terminal connections. Focus in European intermodal freight transport6 is in: barrier‐free international road and rail transport and the opening of these markets to competition; logistics solutions based on harmonized communication framework conditions and Information and Communication Technologies (ICT) plat‐forms, which are key to intermodality and comodality.

Various barriers inhibit, however, the wider use of intermodal transport. These include the lack of a coherent network of modes and interconnections, capacity problems at terminals, the lack of technical interoperability both between and within modes, and a variety of regulations and standards. Levels of performance and service quality between modes are uneven and there are different levels of liability and a lack of information about intermodal services. As a result, intermodal door‐to‐door transport still offers un‐tapped capacity and partnership opportunities.

Actions

Freight transport innovation areas in Europe are described in Figure 1.

6 Towards an Integrated Transport System – Freight Focus. http://www.transport‐rsearch.info

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Figure 1: Areas of Freight Transport Innovations in Europe7

2.2. Related organizations 2.2.1. EIA The European Intermodal Association (EIA)8 is the first European association open to all transport modes: rail, road, waterborne, air. Its aim is to improve the co‐operation of the different modes of transport as the logistics' chain still has lots of shortcomings in infra‐structural, technical, organizational and legal respect. Therefore, this neutral organiza‐tion with more than 90 members is suitably qualified to discuss controversial subjects and to propose balanced and sustainable solutions in line with and to improve the EU transport policy.

EIA maintains compendium for Freight Transport & Logistics Best Practices. This in‐cludes market cases stemming from transport and manufacturing industry side. It de‐scribes running services and sustainable initiatives regarding their background, motiva‐tion, main benefits, innovations, partners involved etc. These cases have been obtained via various ongoing EU initiatives. Currently there are available a total of 60 cases from the EU funded projects Viacombi, BestLog and Promit9.

7 Giannopoulos. ENABLE Conference Buenos Aires, 12 March 2010. 8 http://www.eia‐ngo.com/ 9 http://www.eia‐ngo.com/category/best‐practices

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2.2.2. UIRR The International Union of Combined Road‐Rail Transport Companies (UIRR)10 is a co‐operative limited company. It has 19 member companies. UIRR companies mainly in‐volve the combination of road and rail. This combination brings together the advantages of both rail and road:

• Rail can carry large quantities of freight over long distances, and

• Road vehicles provide the flexibility needed for regional distribution

2.2.3. IMMTA International Multi‐Modal Transport Association (IMMTA) is a non‐profit technical and specialized organization, which is dedicated to promote the concept of multi‐modal transport globally. The objectives of the IMMTA are:

• To act as a catalyst for the exchange of ideas and information on modern trade and multimodal transport technologies and logistics, including implications for the en‐vironment and development, and to arrange meetings thereon;

• To act as a pool of experts on multimodal transport issues.

The activities of IMMTA include research, training seminars, conferences, and conferring of the awards. IMMTA will further the concept of multimodal transport and logistics through various means including the publication of papers, articles and books and other technical activities as appropriate. Working Groups on Multimodal Transport are also arranged to monitor the latest developments taking place at the international, regional as well as national level that impact multimodal transportation. See more at: http://www.immta.org/

10 http://www.uirr.com/

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3. APPROACH 3.1. Methodology The methodology followed in this report is based on the idea of transferability of the European intermodal innovations. From numerous innovative solutions, Promit project and European Intermodal Association, the most promising ones to European Best Prac‐tices have been selected. From this selection, ENABLE project has chosen the ones which shall be of interest for LA circumstances. General approach to best practices has been:

• Benchmarking the European Intermodal best practices

• Looking for sustainable concepts, industrial innovations, and intermodal solutions

• Classification and clustering the best practices

• Review of innovations and ideas

• Analyzing the organization of innovation process and business models of services

• Transferability: Transferability to other situations or framework conditions.

The current intermodal status in LA has guided the selection. The next chapter gives an overview to LA developments. LA current status (needs, barriers, etc.) combined with feedback generated by the various events that took place in LA have been the basis for cases selection.

3.2. An outlook of the EU-LA logistics environment To create an overlook over the logistics environment in EU and LA, two individual indi‐cators, Logistics Performance Index (LPI) developed by the World Bank Group, and the cost of container transport, are presented below.

LPI is based on a worldwide survey of operators on the ground (global freight forward‐ers and express carriers), providing feedback on the logistics “friendliness” of the coun‐tries in which they operate and those with which they trade. They combine in‐depth knowledge of the countries in which they operate with informed qualitative assessments of other countries with which they trade, and experience of global logistics environment. The LPI consists of both qualitative and quantitative measures and helps build profiles of logistics friendliness for these countries. It measures performance along the logistics supply chain within a country11. The LPI of Argentina and Brazil is illustrated in Figure 2 and Figure 3.

11 http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTTRANSPORT/EXTTLF/ 0,,contentMDK:21514122~menuPK:3875957~pagePK:210058~piPK:210062~theSitePK:515434,00.html

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Figure 2: Logistics Performance Index (LPI) in Argentina and Brazil

Figure 3: Comparison of LPIs

Most of the indicators confirm the need for improvements in logistics performance in Brazil and Argentina. Main challenges for logistics competence seems to be customs and infrastructure. This was also one of the conclusions in the BA Forum. However, it should be noted that the comparison was made against two highly developed EU countries and generally Argentina and Brazil performed rather well in terms of rank and LPI score. It is more a question of further developing the rather solid logistics network than starting from a scratch.

Another important factor influencing the logistics performance is the cost of container transport, compared to European countries, seems to be more expensive in LA. In this analysis the fees are levied on a 20‐foot container in U.S. dollars. All the fees associated with completing the procedures to export or import the goods are included. These in‐clude costs for documents, administrative fees for customs clearance and technical con‐trol, customs broker fees, terminal handling charges and inland transport. The cost measure does not include tariffs or trade taxes. Only official costs are recorded12.

12 http://www.doingbusiness.org/Documents/CountryProfiles/ARG.pdf, http://www.doingbusiness.org/Documents/CountryProfiles/BRA.pdf

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Cost to export (US$ per container)

0

500

1000

1500

2000

2007 2008 2009 2010

Argentina Brazil Germany Netherlands

Cost to import (US$ per container)

0

500

1000

1500

2000

2007 2008 2009 2010

Argentina Brazil Germany Netherlands Figure 4: Cost of container transport in some countries

As presented in figure above, the cost of transporting containers to/from LA is about 50 to 70% more expensive compared to EU. The high cost might restrict the flows of con‐tainers to be used in intermodal transport corridors inside the LA countries.

3.3. LA intermodal status EU is a key trading partner for LA economic and industrial development and is set to play a major role in science and technology. The territorial area of Brazil and Argentina is enormous (Table 1).

Table 1: Basic figures13

COUNTRY TERRITORIAL

AREA (km2)

POPULATION

(Inhabitants)

GDP 2008

(Million US$)

GDP PER CAPITA

2008 (US$)

Argentina 2,766,889 40,276,376 333,322 8,358

Brazil 8,514,876 193,733,795 1,595,498 8,311

EU is Brazil's biggest trading partner, accounting for 22.5% of its total trade. Brazil is the single biggest exporter of agricultural products to the EU, accounting for 13% of total EU imports. Despite its size, Brazil only ranks as the EU's 10th trading partner. EU is the biggest foreign investor in Brazil. Main EU imports from Brazil are primary products, in particular agricultural products. However, manufactured products such as machinery and transport equipment represent almost one third of Brazilian exports to the EU. The EU exports mainly manufactured products to Brazil; machinery, transport equipment and chemicals.

Argentina is one of the most important partners of the EU. It is a big exporter of agricul‐tural goods to the EU and also an important destination for EU investment. Europe is Argentina's second export market after neighboring Brazil. EU is the biggest foreign in‐vestor in Argentina, accounting for about half of the FDI in Argentina, notably in the au‐tomotive sector.

13 IBGE and United Nations Statistics Division (2010)

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The backbone of the EU's future bilateral trade relations with Argentina and Brazil will be a wide‐ranging EU‐MERCOSUR Association Agreement aims at the creation of a free trade area. This agreement is currently under negotiation.

The majority of the products imported by Argentina come to the country through mari‐time and road. The multimodal transport network is historically consolidated by the use of extensive road routes that cross the country, added to a remarkable agglomeration of the rail network around the district of Buenos Aires. Inland waterways consist of rivers Parana, Uruguay and Plate that discharge into the Atlantic Ocean and provide connec‐tion with Brazil.

Rail networks serve basically to the national connection with the maritime port system of each country, for the predominant transport of bulks turned to the export. In Brazil, part of this network also serves as a way for the transport of raw material to the heavy industry, mainly in the transformation of the iron ore. The railway network has different gauges compared to the neighboring countries and also some national networks.

In the last years, the use of containers has increased significantly in foreign trade in Bra‐zil. Container movements have been restricted to the maritime ports for many years, but from the concession of the rail system increasingly more containers have been trans‐ported by railways. In the period between 2004 and 2008, the amount of containers moved in the Brazilian port terminals presented growth of approximately 30%. In 2008, the port of Santos, located in the State of São Paulo, was responsible for around 1.7 mio TEU. The total volume was 4.6 mio TEU. As an example of the transport of containers, only the concessionaire ALL, manager of the rail axle that links the State of São Paulo, in Brazil, to the Province of Buenos Aires, in Argentina, moved in 2007 around 5,000 con‐tainers. According to information of the own operator company, punctual investments aiming at removing the obstacles existing along the railway can allow that this number is tripled in a short term. The flows of general freight (without iron ore) are concen‐trated in South‐West Brazil, with some main axis to North (Figure 5).

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Figure 5: General freight loads (without ores) – Brazil14

The Amazon River is the third most extensive river of the world. The navigable parts of the Amazon River and its tributaries provide an extensive system of water distribution ways used mainly to transport materials to develop the basin’s land. The La Plata Basin includes the de La Plata River, the Paraná river, Paraguay river and the Uruguay river. More than 100 fluvial ports are found in this fluvial system, with a total volume of 110 million tons of products transported per year. From this amount, around 30 percent re‐fers to grains and 20 percent to general freight, including 1.4 million TEUs.

The main container transshipment points in the Argentina’s international trade opera‐tions are Puerto de Buenos Aires, Zarate/Campana and La Plata.

In the case of the Brazilian export, seeds and grains, agricultural supplies and ore are the more relevant products, representing 73.2% of the total export. The main Brazilian Ports which export goods to the European Union are Vitória, São Luís and Rio de Janeiro with the share of 60%. This is due to the fact that the iron ore is exported through these ports, for in terms of exported products, in dollars, the most significant ports are Santos and Paranaguá, with 25.19% and 9.97% of the total, respectively. In the case of the im‐

14 PNLT, 2007

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portations derived from the European Union to Brazil, it can be highlighted the Brazilian demand for mineral fuels, manure and fertilizers and inorganic chemicals, representing 48.76% of the total Brazilian imports. The main Brazilian Ports that receive the products imported from the European Union can be observed on Table 3.11. It is possible to con‐clude that the Ports of Santos, Paranaguá and Rio de Janeiro are responsible for receiv‐ing 58.7% of the imports derived from the European Union. Regarding the Brazilian im‐portation of manures and fertilizers derived from the EU, 07 Ports are responsible for 90.5% of the ingress in the Country. They are: Paranaguá, Santos, Vitória, Rio Grande, Porto Alegre, Maceió and São Luís (Port of Itaqui). Table 3.12 shows the total imported, in tons, through the mentioned Ports.

Great part of the products exported from Argentina to the European Union is formed by industrial wastes, cereals and fruits. Main import goods to Argentina are fuels, oils, fer‐tilizers, chemicals, paper and machines. Used main EU‐LA routes are presented in the next picture (Figure 6).

Figure 6: International corridors of maritime transport between Brazil, Argen-

tina and the European Union15

15 Maritime Guide (2010)

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3.4. EU Intermodal status Eurostat statistics gives the following figures for unitisation of freight transport in Eu‐rope in 2005. Road, with 77.5 million ITUs carried in 2005, is the most important trans‐port mode in unitised transport in Europe. Another large share of traffic is taken by ma‐ritime transport with 58.8 million ITUs while rail is considerably less with 4.7 million ITUs. The major part of unitised transport in the EU is performed on roads. Germany’s rail and road transport performances of unitised cargo are more than double that of any other Member State. The rail share in unitisation is high on the North‐South axis. Con‐tainers and swap bodies are by far the most important rail loading units. In several Member States, over 50% of the container traffic is accounted for by maritime transport (Figure 7).

Figure 7: Intermodal Transport Units (ITUs) forwarded at EU-27 level*,

by mode of transport, 2005

In order to evaluate the importance of unitized transport in total goods transport it is useful to have a look at their shares in the total tkm performed in 2005. Norway is first among European countries with 37% whereas Spain is first in the EU with a share of 33%, closely followed by Germany, Italy and the Netherlands with shares between 27% and 29%. This group of countries seems to feature a developed level of containerization on North‐South axis, starting in Scandinavia and ending in Spain and Italy. For many other countries, often located at the EU’s outer borders, this share is below 3%. In abso‐lute terms, highest performances in unitized traffic expressed in tkm are registered in Germany (25.8 billion tkm), Italy (9.4), France (8.7), Spain (3.8), Sweden and Austria (3.7), accounting together for over 80% of the EU’s performance16.

16 Promit D53

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3.5. Criteria and classification of Best Practice cases Intermodal topics for Latin America have been presented and discussed in ENABLE fo‐rums. Intermodal aims at changing modes of transport to more environmental friendly modes, such as rail, short sea shipping and inland waterway, combined with road trans‐port. Prerequisite for combining different modes is organization of multimodal termi‐nals with the application of information and communication technologies. Identifying and quantifying the actual benefits to all players such as transport business, cargo own‐ers and public administration is needed, also the commitment of all these stakeholders in order to put together a plan of action to be taken with necessary investments and per‐formance goals. One big issue is support from government to the logistics sector in gen‐eral. It is necessary to create a pressure to the public sector by associations, port com‐munities, research institutes, local authorities etc.

Main areas of (European) best practices and innovations that seem to be of particular interest and priority for the LA region are:

• Design of logistics chains utilizing intermodal transport corridors (rail and wa‐terways)

• Business models and service concepts more suitable for intermodal logistics net‐works

• Systems for connecting port operations and shipping operations to logistics net‐works by utilizing advanced information technology (ITS)

• Real time information systems for managing and controlling the total door‐to door transport chains;

• Standards and standardization of procedural issues

• Dangerous goods handling systems and tools

• Container handling systems and security green lanes.

Port activities are complex. LA ports are working to combat bureaucracy and lack of communication among the various players in the ports. EU benchmarks of Single Win‐dows and Port Community Systems are useful tools for the development. Single Win‐dows concept serves the clients and authorities. Port Community System simplifies commercial and operational transactions as well as coordinates the container transport flows inside port terminals and optimizes the respective operations.

Main issues and priority areas for improvement of railways are:

• Investment in coordination of the various railway lines and companies.

• Improvement of the connectivity and access to the railway networks across the country

• Tariffs harmonization (with particular emphasis on setting upper limits and deal‐ing with the captive shippers)

• Settling some economic and financial issues particularly as regards the types of concessions given to private operators.

International transport connections base today on flows to main European and US hubs. Distribution to the rest of the world is based on these connections. This was epitomized by saying that “a Brazilian chicken exported to South Africa has to pass via a hub in Am‐sterdam”.

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The Rio de Janeiro Conference identified a number of specific thematic topics where the European and Latin American business cooperation can be promoted:

Port development and management; Among the systems and concepts most likely to be the “front runners” in this Thematic Area are: Port Community Systems, new business models for ports management, the encouragement and promotion of PPPs in port infra‐structure development, ICT applications for port and terminal management, and most notably the “paperless port” concept, and finally e‐freight applications.

Balancing the transport matrix; This expression means measures to rebalance the modal split of freight transport in the region by giving more emphasis towards the environ‐mental friendly modes of rail and short sea shipping. In this respect, it was recognised that the EU’s experience has a lot to offer in terms of both success and failure stories.

Regulatory issues: The transport sector in LA countries, especially freight transport and logistics, is under serious strain to introduce more competition and to stimulate compe‐tition in all sectors. Drawing from the European experience in all these fronts would be a very useful area of cooperation including actions to put in place relevant legislation. The European experience in setting up and operating PPPs is a particular case for imminent application.

Planning of new transport infrastructures and above all new transport international links and connections; The international transport connections between LA countries and their markets in the rest of the world need to be restructured taking into account the emerging new economic geography of the region and the rest of the world. This is an action that is primarily regulated by the private sector (forwarding companies, shipping lines, etc.), but the National and International governments (notably the EU) can play a useful role.

Short Sea Shipping and Coastal Shipping: This thematic area is mentioned separately due to its great potential in serving intra‐regional transport flows and balancing the O‐D ma‐trix (modal split) easing up the burden on land networks. Again, the European experi‐ence (with programs such as Marco Polo and Motorways of the Seas) can be of value. . Short Sea Shipping is an area of interest for EU – LA cooperation

Putting in place new Logistics concepts and services; the operation of an efficient freight transport system relies heavily on efficient supply chain management and logistics net‐works. New Logistics concepts and services as well as new business models such as: “collaborative logistics”, forward and reverse buyer‐to‐buyer and seller‐to‐seller co‐operations, are of importance. An added objective will be to increase capacity utiliza‐tion and shared transportation services so as to reduce the movements of empty con‐tainers.

The aspects mentioned above have been taken into account, while considering appro‐priate European best practices to be presented in Chapter 4. Furthermore, the chosen best practice cases meet the following general requirements and criteria set by the pro‐ject:

• Intermodal transport: current practices, strategies, concepts, projects and initia‐tives should address complete intermodal transport chains or parts of them. Co‐modal/mono‐modal and multimodal solutions can be also relevant, for co‐modal solutions and the ones which are transferable to intermodal transport

• Strong relation to the topic

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• Improving quality and/or efficiency of intermodal transport

• Coverage of intermodal modes (rail/road, inland waterway and shipping)

• EU ‐ LA corridors coverage

• Feasibility: technical, operational, organizational and financial feasibility.

Table 2 characterizes the key barriers and challenges of LA transportation identified in project. These challenges and barriers presented are divided into three categories: In‐frastructure, Operational, and Institutional and Regulatory. In addition, the appropriate best practice cases of each challenge and barrier are indicated.

Table 2: European Best Practice cases according to LA needs and challenges

TRANSPORTATION

SYSTEM

TYPE OF BARRIER

BRAZIL

ARGENTINA

Infrastructure Problems with size of runway

airport that hinder direct cargo flights to other continents, forc‐ing the use of Airport of Viraco‐pos.

Limited articulation between the domestic and international air transport markets due to the two‐airport system in Bue‐nos Aires.

Brazil as a hub port in Latin America for transit cargo.

Small amount of exports with a profile compatible with the use of air transport.

Transportation provision for air cargo is limited, since most of the cargo is transported by pas‐senger aircrafts.

Higher costs of maritime trans‐port (2005‐07) have coincided with apex of air sector crisis. Currently, much lower costs of maritime transport are a strong disincentive.

Air transport

Operational

Provision of air cargo at most airports is less than demand, causing the load in most cases be transported by road to an air‐port that concentrates cargo flights to and from abroad.

Number of flights offered in the domestic market is still (March 2010) below the level of 1998, when touristic destinations are excluded.

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Institutional and Regu

latory

Additional charge for storage and wharfage charges on import.

Rapid and subsequent changes in the domestic air market over the last decade. Operators have appeared and disappeared from the market, including changes in ownership that have blocked the consolidation on the cargo market.

Infrastructure General road conditions are pre‐

carious. Capacity problems in metro‐

politan highways leading to the ports of Rosario and Buenos Aires. Expansion of capacity around Rosario is urgent, as well as expansion of parking and waiting facilities for trucks.

Operational Lack of supervision of the limit

loads carried by vehicles, which hinder the road structure and reduce the competitiveness of companies within the limits.

Need for enforcement of load restrictions on roads. Lack of compliance affects the econom‐ics of maintenance and reduces the competitiveness of truck operators complying.

Road transport

Institutional

and Regula

tory

Excessive bureaucracy in inter‐national transport.

Excessive bureaucracy in inter‐national transport. Not infrequently, border con‐trol of driver´s migratory pa‐pers may delay cargo already cleared.

Transposition of rail freight through the São Paulo city could be facilitated by the “ring rail” in São Paulo state.

‐RHINE‐CONTAINER ‐BOXXPRESS

Need of warehousing areas and parking coordinated with port operation.

Inherited infrastructure built 80‐100 years ago. Coverage is good (density of demand in the south of the country isn’t likely to justify additions). Bringing new branches into service should be carefully assessed to avoid compromising current density of use.

‐HUPAC ‐POLZUG

Interface with urban areas, where problems, such as inter‐sections with city streets and occupied the tracks of the field, persist and thereby reduce the efficiency of the system.

Bi‐oceanic rail corridor needs to be promoted.

‐HUPAC ‐POLZUG ‐DB‐Schenker ‐KUEHNE &NAGEL

Rail access to terminals in greater Rosario needs urgent expansion and adaptation. This issue is a key for greater use of the entire railroad network. Railway access to Buenos Aires is clogged by the operation of metropolitan passenger ser‐vices.

‐BILK Com‐biterminal ‐COCA‐COLA

Rail transport

Infrastructure

Guidelines for railway expansion in the Midwest.

‐ HUB Zahony ‐ BILK Com‐biterminal ‐POLZUG

Rail access to the new con‐tainer port in La Plata, equally inherited, should receive atten‐tion.

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Rail access to port of Sepetiba. ‐BOXXPRESS Rail network which has different sizes of gauges of the neighbor‐ing countries and some national meshes well.

‐HUB Zahony

Format of tracks, that are an‐cient, have curves and ramps which require speed reduction.

Rail links from Argentina to northern Chile, Eastern Bolivia and Paraguay, in fair and good condition, but underutilized. Rail connection to Brazil de‐pendent on transfer at rail yard at Uruguayana given the differ‐ent gauges. International rail operations are not usual for rail operators and employees. Inef‐ficiencies in border controls may favor fear to reach this latent cargo market.

‐HUPAC ‐HUB Zahony ‐BILK Com‐biterminal ‐POLZUG ‐VOLVO ‐COCA‐COLA

Intensify use rail to stimulate the rail and road integration.

Operational Low use of rail for freight be‐

tween Brazil and Argentina. ‐BILK Combi‐terminal ‐ HUB Zahony ‐ VOLVO

One issue that should receive more attention is the possibility to develop a management sys‐tem to allow for shared infra‐structure use of different cargo operators. One port operator has shown interest in expand‐ing to rail operations. Large mining companies could as well consider becoming operators if legal framework is available.

Institutional

and Regula

tory

Existing concessions, due to the types of contracts agreed, in general, limit the role of the con‐cessionaires to maintain the in‐frastructure, impeding their en‐largement of activities.

Extension of the current fran‐chise schemes, or transition into a new model with greater emphasis on long term invest‐ments to adapt and renew in‐herited infrastructure.

Construction of logistics termi‐nals for connecting waterways to the highways and railroads. Need for construction of locks to improve inland transport.

Need for strengthening the former river ports that where important in the past, espe‐cially on the upper section of Paraná river.

Need of enlargement of spans and / or reinforcement of the bridges pillars.

Infrastructure

Access by road and rail net‐works to ports and inland ter‐minals.

‐POLZUG ‐BOXXPRESS ‐ONSTRURAIL

Dimension problems of chan‐nels. Some stretches of Para‐guay river should be adapted to reduce sharp curves and in‐crease safety.

Waterborne (Ports and Inland Wa

terways)

Op

era

tion al Shipping is not competitive

enough with the road system. Reliability and visibility of wa‐

terways would require tracking systems for cargo status and

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Need to improve inland sections of inland waterways with exist‐ing operation and with potential to operate.

‐RHINE‐CONTAINER ‐CORMAN

Delays in issuing environmental licenses hinder the navigation potential of waterways.

Tax levied at ports in the reload‐ing of goods transported by wa‐terways; it is not imposed on the goods transported by rail and road.

Institutional and Regulatory

Rules for hiring of manpower in the public ports that generates excessive labor costs.

Intermittent reluctance of Mer‐cosur members to facilitate navigation of the upper section of Paraguay river. Potential market for bulk transport on waterways is likely to be sig‐nificantly larger but linked to international traffic rather than domestic.

Problems in land access are crit‐ical to port operations.

‐BOXXPRESS ‐VALENCIA

Problems in road access and highways links in metropolitan areas of Rosario and Buenos Aires. Congestion, overlapping with local traffic, entrances to terminals in some cases still. Numerous Buffer yards for trucks have been built but the problems remains. IT to coor‐dinate origin‐destination tim‐ing may apply.

‐BOXXPRESS

Problems in access routes, such as maintenance and deepening of channels and berths.

Berths of container ports around Buenos Aires cannot yet fully accommodate 7100‐TEU ships already operating.

Lack of storage containers.

Infrastructure

Studies for economic and envi‐ronmental feasibility of new port areas.

Problems in access routes.

Much of the operation in stuffing and stripping of containers is in port, which hinders the opera‐tion modes, facilitated by the unitization of cargo.

Weak coordination procedures for receiving and delivery of container terminals in exports. Potential for technology ap‐plied to customs controls and procedures.

Need of feeder service of the loads with Argentina.

Legal definition of containers as transport equipment, al‐though recently improved, still confusing.

Little use of inland ports due to difficulties in connection with other modes of transport.

‐RHINE‐CONTAINER ‐CORMAN

Port of Buenos Aires area is considered a regional hub.

Waterborne (Ports and Maritime Long Course and Cabotage)

Operational

Encourage the waterway trans‐port through the Paraguay River to Argentina.

‐RHINE‐ CON‐TAINER ‐CORMAN

Difficult to accommodate the new vessels spokesman con‐tainers.

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Lack of clear definition of the model of private participation in port terminals in both the public ports and outside the port area.

‐GERMAN TERMINAL POLICY

Road congestion around main ports (greater Rosario and Bu‐enos Aires).

Existence of legal restrictions on cabotage by foreign vessels.

Lack of leasing areas and facili‐ties.

Necessity of review and update development and zoning plans.

Strategy deployment of new ports; no guideline that limits competition and complementari‐ties between existing ports and new ports.

‐SKEMA ‐STORA‐ENSO

Issue of port security concern to operators of port terminals, es‐pecially in relation to additional costs and their impact on com‐petitiveness.


Problems of communication and information flow at ports.

Lack of points of primary and secondary storage nodes.

Infrastruc

ture

Necessity of support structure of intermodal terminals in the “road ring” of São Paulo State.

Size’s restriction of the parking lot of the Cristo Redentor bor‐der.

Incipient congestion at border posts.

Opera

tional

Lack of adequate operational safety.

Incipient development of logis‐tics zones.

Non standard systems and doc‐uments.

‐PORT INFO‐LINK ‐VALENCIA‐PORT IT ‐SHORT SEA XML

Opening hours at border posts insufficient or inadequate to the needs.

Warehousing and border crossing


Lack of harmonization of control services and support provided by organizations involved in the operations of customs control.

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Minor use of the International Cargo Manifest / Customs Tran‐sit Declaration International.

Best Practice descriptions are divided into three parts:

1. Fact box which gives the basic information about the case and helps the reader to decide whether it is worth to read the whole case description. Fact box includes Name/technology/approach/concept, Implementation date, Main achievements, Main innovations, Motivation, Main companies involved, Transport / Geographical characteristics

2. The case description the starting point (targets of the case), mode selection background and used equipment and finally the results and experiences from this case: Main benefits, Market success factors, Strengths and weak‐nesses, IT‐ Applications, Collaboration between actors, Supply Chain Man‐agement, Contract agreements, Quality issues, Environmental impacts, Safety and security

3. The last part discusses about the transferability of the case in LA and gives references and contacts.

17 best practice cases have been identified, which have been grouped into four groups according to their topic. Furthermore, 4 policy oriented cases have been added:

Table 3: Overview of European Best Practice cases described

Type of case Case Acronym

Company Cases: Transport system man‐aged by shipper

Coca Cola, StoraEnso, Volvo

Operator Cases: Transport system man‐aged by transport operator

Hupac, Rhinecontainer, BoxXpress Germany, Polzug, Construrail, Corman, Bilk, HUB Za‐hony

Logistics Service Cases: Transport system managed by Logistics Service Provider (LSP)

Cargo Domino, DBS, Kuehne&Nagel

Information Technology (IT) Cases: Fo‐cus in IT

Port Infolink, Short Sea XML, Valenciaport IT Platform

Policy Strategies Swiss Case, German Terminal Policy, Port Governance Models, Port of Hel‐sinki/Vuosaari Harbor

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4. BEST PRACTICE CASES 4.1. Company Cases 4.1.1. Volvo Fact Box

Name/technology approach / concept

The "8" Train and "Eurobridge"

Implementation date

Fully operational since 2002

Main achievements Organizing efficient rail operations through 5 countries, with 5 independent rail operators, with governments demanding return on rail infrastructure investments, and with several unions of transport workers. Robust solution by having two operations working in parallel, the "Euro Bridge" acting as a back‐up for the "8" Train when required.

Main innovations Harmonization of rail operations in 5 countries with different cultures and languages. Common quality handbook for complete operation used by all operators. Organizational set‐up and use of KPIs that have resulted in very reliable services.

Motivation Reducing logistics costs Reducing the environmental impact of transport

Main companies involved

Volvo logistics Rail: Green Cargo, Railion Denmark, DB Cargo, Railion NL, SNCB Short Sea Shipping: DFDS Tor Line

Transport / Geographical characteristics

Linking Sweden to Belgium Intermodal: Road, Rail, Waterborne

Starting point Volvo's production is based on "built‐to‐order“. The distance of Volvo factories to the market was a starting point to the planning of train transports between suppliers (Swe‐den) and the market (Central Europe). Improved transport efficiency is decisive to com‐pensate the distance handicap. Business from peripheral areas, have to pay transport costs twice; sourcing distance and market distance.

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Figure 8: Volvo Supply chain

Targets of the case Volvo's factories locate in Sweden, comparatively far away from their market. The pur‐pose was to create cost effective and environmentally sustainable transport solution to the company.

The solution needed to:

• be at least as fast as the old system, • be more cost effective, • be reliable, • have more capacity, • be sustainable, • combine products (cabs) with production material, • be possible to develop further.

Case description

Mode selection background The Volvo Logistics solution for transport between the factories and distribution centres was solved by rail operation called “8”. The "8" operates two trains per day in each di‐rection connecting Umeå, Gothenburg, Ulofström (Sweden) and Ghent (Belgium). The transport route is strictly scheduled (Figure 9).

The “8” operates two trains per day in both directions Olofström‐ Gothenburg‐Olofström and Olofström/Umeå‐Ghent‐Olofström/Umeå Transport between Gothenburg and Ghent is crucial to Volvo’s operations and as a back‐up transport solution Volvo Logistics uses short sea shipping operation EuroBridge offered by DFDS Tor Line.

Equipment There are in total 210 wagons, the same for both the Gothenburg and Olofström flow and there are 2 departures 5 days per week from each place. 22 440 wagons are trans‐ported every year between Olofström and Gothenburg carrying 67 320 containers, spe‐cially built to be able to take more cargo compared to road transports. Between Olof‐ström and Gent is every year 16 960 wagons transported that equals 50 660 containers + 4 800 multipurpose wagons (big conventional wagons) taking truck cabs from Umeå to Gent with back load of racks and cars. The amount of wagons can be changed accord‐ing to needs.

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Results and experiences

Figure 9: The schedule of Train "8"

Main benefits

• Better efficiency, measured in reduced lead times, • The reliability with precision better than 95 % with very little warehousing • Reduced round trip time • Compared to road transport, the solution is less environmentally harmful • The solution is flexible and able to handle fluctuations by carrying different

number of wagons • The solution has potential for expansion • The EuroBridge as a back‐up for "8" has reduced the lead time from 42 to 36

hours, enabling the shipping line to call extra port (Brevik, Norway). 1100 truck movements from Gothenburg to Norway have been removed.

Market success factors

• Strategic decisions and persistence from Volvo Logistics • Willingness to adapt in all participating rail operators • Organizing the operation with clear door‐to‐ door responsibilities

Strengths and weaknesses Volvo case is today still a closed circle, serving few companies and few destinations. The concept is built to serve Volvo, and other users are rather limited. The management and coordination is strictly in the hands of Volvo (Volvo Logistics). Strict rules and standards limit both new clients but also new service providers.

The corridor works fine as long as the volumes are sufficient to run the corridor. If this balance will be broken, the basis of the whole system might change.

IT applications A comprehensive and transparent data handling is critical success factor in the opera‐tions. The challenge is a common information base for all material flow patterns glob‐ally.

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A4D (Applications for Distribution) is the world’s first distribution system that is totally integrated with order and production systems. Volvo Buses has been using A4D since autumn 2000. This e‐business platform is all set to help other customers such as Volvo Cars to further improve the precision of their deliveries and to plan the physical distri‐bution processes.

They are developing a new IT‐ tool, called "Atlas", which will always have updated real‐time information about all relevant activities in the material supply process, and will enable us to provide proposals regarding the best transport solution for each individual customer.

Collaboration between actors Volvo Logistics, a subsidiary to Volvo, acts as the manager of the supply chain. Volvo lo‐gistics interacts with Green Cargo, who is responsible to organize the rail transport ser‐vices from origin to destination.

Figure 10: The roles of actors in a Supply Chain17

Contract agreements Volvo Logistics sets many requirements to their transport companies. This way they achieve their qualitative requirements, but also the domination of the chain. They have set the following (minimum) requirements:

• At least Euro 2/US98 for road transports • All major suppliers must have a third party certified quality management system

according to ISO 9001 • All major suppliers must have a third party certified environmental management

system according to ISO 14001/SmartWay or equivalent standard • Fulfilment of EU Directive 1999/32/EC and MARPOL 73/78 Annex VI for maxi‐

mum sulphur content in bunker fuel for sea transports (May 19th, 2006). • Fulfilment of national and international legal requirements concerning road

safety. Carriers must present policies and a dedicated work around our focused areas: Speed limits, Use of seat belts, Driving‐ and resting times, Alcohol‐ and drug policies, Securing of loads and Dangerous goods.

17 Gina Hernefjord, (2007), Volvo Logistics

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• Apart from these requirements, they also require additional "Binding documents for carrying Volvo Logistics goods".

Quality issues Volvo uses two Quality criteria:

• Reliability of service in time, 95 % is considered as good • Quality of cargo delivered in origin and destination. The transport service

providers have been involved with the Volvo Damage Prevention at the Risk Management department

Environmental impacts Compared to road transport, the solution is environmentally harmful.

Safety and security Minimum requirements are set to all partners (see above).

Transferability to LA

• The solution as such is not transferable to other situations, since it is developed for the special need of Volvo Logistics.

• The concept and approach where a shipper with significant volumes wants to improve the logistics performance to establish efficient and sustainable solutions is most definitely transferable.

• The business model (strategic partnership between shipper and transport service providers) is transferable. This is a type of business relationship that has been developed in many industries. The automotive industry was one of the pioneers, when number of suppliers was greatly reduced and in many situations single suppliers were chosen for strategic equipment. This required a new type of contractual cooperation – strategic partnerships – where there are transparency and “sharing of profits”.

References http://www.promit‐project.net/

http://www.eia‐ngo.com/intermodal‐freight‐transport‐logistics‐best‐practices.html

4.1.2. StoraEnso Fact Box

Name/technology, approach/concept

Stora Enso System Traffic / Baseport and NETTS

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Implementation date

2000‐2006 (incl. Baseport)

Main achievements Concentrated cargo flows reduced costs. Transferring cargo from road to rail Reduced lead times Improved environmental performance

Main innovations Density of cargo by using SECU and special rail wagons Cargo handling concept and technology in port operations (250‐400 TEU per hour) Vessels designed to support efficient cargo handling Emission reducing vessel technology

Motivation Reducing environmental impact of transportation and distribution Reducing logistics costs and lead times

Main companies involved

Stora Enso, Green Cargo, Wagenborg, Cobelfret, B&N, Nordsjöfrakt, Ports of Gothenb