Strengths and Weaknesses of Railway Transport*

Human Resources and Social Development Program

FUEL EFFICIENCY

In an economy-wide context, the fuel efficiency of Thailand's transport system is an issue of

some significance. As transport is an essential supporting sector for the whole economy, gains in
transport fuel efficiency will lower production and distribution costs, household transport-related
consumption, and also help improve the country's external trade position.

In fuel efficiency, rail transport is much superior to road transport. Recently, a study sponsored
by the U.S. Federal Railroad Administration into the relative fuel efficiency of truck versus
railway freight operations was concluded. The study's objective was to identify the
circumstances in which rail freight service offers a fuel efficiency advantage over alternative
truckload options, and to estimate the fuel savings associated with using rail service. The
findings were based on computer simulations of rail and truck freight movements between the
same origins and destinations. The simulation input assumptions and data were based on actual
rail and truck operations. Input data were provided by U.S. regional and Class I railroads and by
large truck fleet operators.

The study noted that design improvements have been incorporated into successive series of
locomotives, with each new model containing greater levels of fuel economy improvement.
These design changes are made on an evolutionary basis and work in concert to improve overall
locomotive fuel efficiency. Locomotive fuel economy improvements have been added in the
areas of the engine, auxiliary systems and rail lubrication.

Because of the many variables involved with the simulations, and the resultant "best/worse case
scenarios," the study shows a wide range of savings in rail transport over road transport (Table
3). On average, however, the study shows that, in ton-miles per gallon of fuel, railways are about
4.5 times as fuel efficient when compared to trucks. If we assume the same efficiency for
passenger operations, then the fuel expenditure by the State Railway of Thailand (SRT) in 1990
of 724 million baht would have cost the Thai economy an additional fuel cost of approximately
2,500 million baht had all rail transport services been carried out by road transport. It is
interesting to note that this amount is greater than the current annual loss of SRT.

ENVIRONMENTAL CONSIDERATIONS

Environmental considerations also favor rail over road transport. Given the superior fuel
efficiency of rail transport, emissions of harmful gases from fuel usage will obviously be less per
unit of output for rail compared to road transport. Some numbers from Sweden, which has
integrated environmental concerns into its transport pricing policy through environmental
charges, illustrate the difference.2

In 1990, the Swedish Commission on Economic Instruments in Environmental Policy proposed

the following pollution charges:
Sulfur (SO2) $ 5.25/kg
Nitrogen Oxides (NOx) $ 7.00/kg
Hydrocarbon (HC) $ 3.50/kg
Carbon Dioxide (CO2) $ 0.04/kg

Using these "price tags" as weights, 45 percent of total SO2, NOx, HC, and CO2 emissions in
Sweden originate from the transport sector. Taking the traffic level in 1990, and the above
proposed charges, the cost responsibilities for the Swedish transport sector's various subsectors
are as follows:

Road $ 16,300 Million

Maritime $ 2,600 Million
Aviation $ 900 Million
Rail $ 60 Million

Thus the emission costs for road are more than 270 times that for rail, even though road
passenger traffic is only 16 times higher than that for rail (96,400 million passenger kilometers
for road compared to 6,120 million passenger kilometers for rail), and freight traffic is only 1/3
higher for road (25,000 ton kilometers for road versus 19,100 ton kilometers for rail). Thus, the
unit pollution cost for road is much higher than that for rail.

These figures give a rough guide to the advantage of rail service in containing environmental
pollution. In Thailand, however, the advantage will probably not be as great as in the Swedish
case, as most of the Swedish rail network is electrified, while Thailand still relies on diesel
locomotives.

ROAD CONGESTION

That traffic congestion is a serious problem for the Bangkok Metropolitan Region (BMR) is
more than clear. The problem does not just occur inside Bangkok, but also along routes leading
from the city in all directions. For major cities in other parts of the country, such as Chiang Mai
or Hat Yai, the traffic situations are also becoming severe.

Table 4 shows the rapid growth of traffic on the Bangkok expressway. From this, it is easy to
understand why, at times, the expressway becomes more of a car park than an expressway.
Nationwide, average road density has also increased rapidly. Table 5 shows transport flows by
various types of vehicles for 1984 and 1990 on national and provincial highways, and also the
length of the road stocks. It can be seen that the average density on national highways has
increased by over four times between 1984 and 1990.

With continuing high growth of transport demand, the present traffic situation on the roads has
every prospect of getting worse and worse. More intensive use of rail transport in the future may
help to alleviate this worsening trend.

SAFETY
In terms of safety, rail transport also has advantages over road transport. Table 6 shows accidents
by mode of transport in Thailand for 1990. It can be seen that road accounts for about 94.5-97.5
percent of all the country's accidents, deaths and injuries, while rail accounts for about 2.5-4.8
percent. If this is compared to the 16.6 percent share of rail in inter-provincial land person trips,
then the safety rate for rail can be seen to be far superior to that for road. While this comparison
is not strictly accurate, as for proper comparison one needs to look at intra-provincial travel as
well and also include freight traffic in the analysis, it seems fairly clear that rail transport should
be much safer than road transport. Nevertheless, this does not mean that SRT should not put
continued efforts into trying to make rail travel even safer. This is particularly so in view of
indications of past deferred maintenance, and increasing age of rolling stock.

COMPETITIVE CONSIDERATIONS

In spite of all the advantages of rail transport, the railway remains a relatively minor player in the
Thai transport picture compared to road transport. The railway accounts for not more than 16.6
percent of all inter-provincial passenger movement and only 2.5 percent of all inter-provincial
freight movement. To a large extent, this is due to the relatively poor competitive position in
Thailand of rail versus road (and also air and waterway) transport, which in turns depends on
many factors; such as the country's geography, human settlement and urbanization patterns,
overall government policy concerning the transport sector through infrastructure investment,
pricing, fare controls etc., and also the operational efficiencies of the various Thai transport
providers.

As far as the operational efficiency of SRT is concerned, analyses indicate that it has been fairly
satisfactory, in that it has been able to provide increased services for both passengers and freight,
while, at the same time, reducing the number of employees and improving the average train
speed.3 The principal disadvantage of rail transport, however, is its inefficiency in door-to-door
operations. This is especially true for freight services where SRT does not connect directly with
the origin or destination organizations. In such cases, the overall transport costs may involve
trucking at either end of the route, with high handling costs for transferring from truck to train
and train to truck. For short distances, this additional cost is greater than any savings gained by
rail transport. This explains why the railway has not been that competitive with road transport,
even though analyses show that the unit cost for rail transport (ignoring multiple handling costs)
is much less than that for road transport for comparable commodities.4 The long-term variable
cost for rail transport of petroleum trainloads, for example, is about 0.35 baht per ton/kilometer
(1991 prices), while the full cost less annual capital cost of road transport of petroleum comes to
about 1.00 baht per ton/kilometer (at a distance of about 200 kilometers). Similarly, for
passengers, heavy bus operations at optimum operating speeds cost about 0.28 baht per
passenger kilometer, versus express train services which cost 0.18 baht per passenger kilometer,
or rapid train services which cost 0.12 baht per passenger kilometer.

For the future, however, with ever more congestion on the roads, and the rapid growth of
provincial cities—which may generate large distribution centers near to the rail network that can
take advantage of scale economies to reduce multiple handling costs—the railway may be able to
compete better with medium- to long-range road transport. Intensive marketing efforts will be
needed, however.
Another consideration is government transport policy. It is often suggested that, in the
competition between rail and road, the playing field is tilted toward road transport. While the
railway has to invest in its own infrastructure and take care of the debt payments, road users are
subsidized in that the charges they have to pay do not cover the full cost or even the marginal
cost of using the roads. This is certainly the case. Based on previous studies, it is clear that the
road user charges on 6-wheel and 10-wheel trucks (which do the most damage to the roads) do
not cover even the marginal road cost. This obviously gives an edge to road transport of freight
compared to rail. On the other hand, light vehicles generally pay more road user charges than the
marginal road cost.

While present road user charges are biased in favor of road freight transport, however, this is not
a major reason behind the competitive edge that road has over rail, i.e., that even if heavy trucks
were to pay the full cost of road use (not just the marginal cost) the competitive edge of road
over rail would not be affected in a major way. Basically, it is estimated that if 6- and 10-wheel
trucks were charged the marginal road cost, then the vehicle operating cost would increase by
about 2.5-5.0 percent, while if the full road cost were charged, then the vehicle operating cost
would increase by about 5-10 percent. Against this, it has to be borne in mind that transport rates
are often very different from vehicle operating costs, and are often two to three times the
calculated vehicle operating costs. Thus, an increase in vehicle operating costs by about 5-10
percent is unlikely to have any major impact on the relative competitive position between road
and rail transport.

Government policy also applies to rail fares, particularly from passengers. SRT earns over 70
percent of its passenger revenue from Third Class passengers. Political considerations have made
fares on this class of passengers extremely hard to increase. This, of course, encourages more rail
use than otherwise. The low fare policy is, however, a two-edged sword. It leads to the continued
financial loss position of SRT. This leads to deferred maintenance, difficulty in getting
investment funds, and a general lack of morale in the staff. The problem is compounded if it is
difficult to ascertain the detailed operations that account for the total loss, or if policy-makers are
not interested in such details. In this case, if the organization feels that no matter how much
effort it tries to put into improving performance, the loss position will not go away and the
organization will continue to be looked upon unfavorably by outsiders as being inefficient and
loss-making, then there will no incentive for improved performance or improved competitive
position. This is the kind of situation that SRT finds itself in today, and urgently needs to change.

CONCLUSIONS

From the above, one can conclude that rail transport does have many advantages. The key ones
relate to the relatively high negative externalities generated by road transport-relative fuel
inefficiency, pollution, congestion, and safety considerations. These externalities have not been
taken into account in the nation's overall transport policy. Without such considerations, the
railway is likely to continue to play a relatively minor role in the nation's future transport needs.
The railway's share in passenger transport has been on the decline over the last decade. Without a
change in the approach to transport policy, this trend is likely to continue.
In examining the railway's likely future role, a strategic approach is recommended. Analyses
based on past trends implicitly assume that the current transport policy will continue. This is
likely to lead, as expected, to the railway's declining role over time. Such an approach is unlikely
to be helpful when looking at the long horizon necessary for transport planning.

Assuming that the negative externalities associated with road transport are considered
important, and need to be corrected over time, it is suggested that, as a minimum, the rail shares
in future transport should not be allowed to decline below the share in the base period (1990).
While this will mean that the negative externalities associated with road transport will continue
to increase, along with increases in the country's overall transport sector, the target still will not
be easily achieved without effort and new investment. If more effective government action to
alleviate the harmful externalities associated with road transport is taken, then the railway may
even be able to increase its share in the nation's future transport system.

REFERENCES

Bevis, Alan. 1992. Transport Costs, Working Paper No. 2. SRT Master Development Plan
Study, May.

Hansson, Lars. 1991. The Pricing of Air Pollution in the Swedish Transport Policy. Transport
Research Board's 70th Annual Meeting, January 13-17, Washington, D.C.

U.S. Federal Railroad Administration. 1991. Rail vs. Truck Fuel Efficiency: The Relative Fuel
Efficiency of Truck Competitive Rail Freight and Truck Operators Compared in a Range of
Corridors. Final Report. Abacus Technology Corporation, April.
Railway transport – road transport. These notions are not two antagonistic problems, as one
may think, but they represent, in fact, a false dilemma. Lately, due to the so-called priorities
regarding either the construction of new highways or the development of more efficient railway
lines, these two notions only generate excuses and motivations that lead nowhere.

In a civilized country with a healthy economy, the two transport systems don’t have to compete;
they should be in a fair competition, in order to ensure passenger and freight transport at
reasonable costs, in conditions of maximum safety and with minimum impact on the
environment.
Until 1990, the Romanian railways represented the main means of transport, taking over over
80% of the total volume of freight and passengers. After 1990, in the context of a transition
economy, the situation changed completely. Railway passenger and freight transport continued
to lose ground. Another major factor that contributed to this situation was the slow
modernisations made, which didn’t meet the precise requirements of the customers concerning:
- an efficient transport system
- a sufficient number of trains, with a timetable that satisfies the customers’ demands
- low tariffs
- reduced travel time

At the same time, the endless import of motor vehicles and the disloyal competition between the
two transport systems causes even today road traffic congestion at national level, as well as a
high number of accidents which result in deaths, wounded and important material damages. We
have reached a situation in which, in certain days, the number of deaths and wounded on our
country’s roads exceed even the body counts of WWII. Another aspect strongly debated, but for
which no measures are taken, is represented by climate pollution. It a well-known fact that
railway transport causes a level of pollution 10 times lower compared to road transport. In
Romania, due to the reduction in the industrial activity, the chemical pollution is due mainly to
the excessive use of the personal motor vehicles. Because of this phenomenon, the large urban
agglomerations in Romania record a level of pollution so high that the decision-makers and the
local authorities should be on full alert. To date, the local decision-makers haven’t taken any
measures to restrict road traffic, not even in the historical centres or during certain hours of the
day. How come the Romanian authorities don’t imitate the measures taken in several European
cities and take actions to restrict road traffic in certain days and areas of Bucharest, such as Calea
Victoriei, or in the leisure areas of the citizens? The fight for a clean and sustainable
environment is not easy.

To that effect, a good example is the recent Summit held in Copenhagen, which was finalized
with very modest measures and which didn’t take into account the agreements with legal power,
because it is very hard to merge the interests of countries with different economic and social
developments. In this context, the activity of the Romanian decision-makers will not be easy.
Finally, the issue of environmental protection was approached at international level. On
September 12, 2001, the European Commission adopted the “White Paper – European transport
policy 2010”, a document which stipulates the promotion of railway transport.
To that effect, by signing the Kyoto Protocol, the European Union promised to reduce CO2
emissions by 80% by 2012, compared to the level recorded in 1990.
The measures taken at international level and ensuring the priority of the railways were soon
implemented. Hence, the THALYS programme eliminates flights between Paris, Brussels, Köln
and Amsterdam and introduces high-speed trains, which reduce CO2 emissions by 7000 tonnes
every year.
The PARCEL INTERCITY (PIC) programme ensures container transport on the DB railway
network, this eliminating road transport.

The postal services in Germany, Denmark and Sweden use exclusively the railway system to
carry packages. In most European countries, including our Hungarian neighbour, combined
container transport and the so-called “rolling road” (RO-LA) which ensures the transport of
trucks in international traffic have begun to develop.
In Sweden, a new main railway line was built between Stockholm and Eskilstuna (mining area),
thus reducing CO2 emissions by 6000 tonnes/year and eliminating ore transport and tipping
lorries. This measure also generated the creation of remarkable art works, such as ORESUND
(between Denmark and Sweden) or the modernisation of the transalpine tunnels, which
significantly reduce road traffic.
In Spain, due to the development of high-speed lines (3000 km) between Madrid-Seville-
Barcelona, most passengers choose railway transport to the detriment of road transport.
In the last few years, even the United States have started to promote high-speed railway transport
in the industrial areas in the north-east and on the western coast, between Los Angeles and San
Francisco and other such examples can be seen on all the continents.

In Romania, in the context of the strong competition between the two transport systems, too little
measures were taken in order to ensure a fair competition between the two competitors. Stating
that the revenues of the two State-owned freight and passenger transport companies decreased
because of the low number of customers, CFR SA received State subsidies that cannot even
ensure a minimal survival!
In this context, the railway network and the works made for the trackbeds, buildings and
equipment are constantly degrading. The number of dangerous areas has significantly increased
and the means of intervention – if and where they exist – cannot be used because of the lack of
funds necessary to pay the service suppliers, the fuel, power supply and spare parts.
The Romanian railways and especially the superstructure made up of tracks, installations,
sleepers and ballast, is over 30-40 years old, characterising the entire network as “old”.
Official statistics show that, at the end of 1989, 1.234 km of track were overdue for major repairs
and by the end of 2006, their number increased to 5.148 km and it keeps increased year after
year, because of the lack of funds.
Based on these facts, the speed limit continues to decrease. In 2008, the number of railway lines
operating at a speed of 81-100 km/h decreased by 48% and the number of lines operating at a
speed of 101-140 km/h decreased by 25%. The speed limit decreased because of the increase in
the speed between 50-80 km/h and the speed lower than 50 km/h.

The speed reduction prevents railway transport from being active. Of all the elements that make
up the superstructure, the poor state of the railway tracks, installations and the sleeper fastening
elements generate a high level of concern. Many works require urgent interventions. The
measurements made periodically using the EM 130 R diagnosis unit show significant track wear,
in some places even exceeding the normal limit.
Lately, many derailments and train collisions were reported, which fortunately caused only
material damage. This should alert the decision-makers, seeing as this old railway network
carries not only goods and assets, but also human lives.
The fact that, lately, no major catastrophes was recorded is mainly due to the efforts made by the
personnel who, with very modest means, ensure traffic safety.
Alarm signals related to the state of the transport systems were given only by the experts in the
field. The mass-media reports periodically the negative aspects regarding road and railway
transport. In conclusion, there should not exist competition between road and railway transport
and a fair solution should be found in accordance with European Directive 2001/14/3 which
states the following at point 43: “it is necessary to initiate stimulative measures through which
railway companies and the infrastructure manager are encouraged to reduce network
malfunctions to a minimum”.

All the analyses and the measurements made have to be preceded by the elaboration of various
strategies concerning the future of the transport infrastructure (railway, road, air transport),
which take into account determinant factors, Romania’s economic and social development, the
demographic and tourist impact and the relations with the local and European region.
In order to reduce the technological difference between the Romanian railways and the efficient
railway administrations, major efforts should be made, both at decisional and executional level.

by Eng. Ion Stafie

The Advantages Of Rail Freight Transport.

by Auto on April 7, 2010

Rail freight transport is the main type of the freight transport, which provides inter-
regional transportation of bulk commodities. This prime importance of rail transport due to two
factors: the technical and economic advantages over most other forms of transport and the
coincidence of the direction and power, major transport and economic inter-regional and inter-
state relations with the configuration, capacity and carrying capacity of railway lines.

Rail freight has a number of advantages, which are determined their priority development in the
world. Rail freight transport is distinguished from the rest of the modes of transport by many
attractive features, among them are the key:

– Versatility (rail freight transport is capable of carrying almost all types of goods).

– The high freight capacity (rail freight transport is able to provide transport over 100 million
tons of cargo in each direction).

– The relatively low cost of transportation (as opposed to commercial air and maritime
transport).

– Relatively free accommodation, that is, rail freight transport is not dependent on natural
conditions.

– Regularity (can carry cargo in all seasons, in contrast to the river and sea transport).
– The relatively high speed, reliability and other indicators.

Rail freight transport is especially effective in traffic over long distances, and taking into account
the vast distances, to which it is sometimes necessary to deliver the goods, you can expect that in
the future it will remain the leading mode of transport in bulk freight transport over long
distances and in passenger traffic in the middle distance and commuter services.

In the assortment of goods carried by rail freight transport stand out coal and coke (it takes the
first place in total cargo turnover and the second one – in the volume of freight), mineral building
materials (first place in terms of cargo and the second – on the cargo volume). In third place
there are liquid cargos (mainly fuel oil and light oil). Ore, ferrous metals, timber and grain
shipments, mineral and chemical fertilizers occupy a significant proportion. The share of these
eight types of bulk cargo accounts are almost 9 / 10 throughout the cargo in rail freight transport.

Rail freight transport is essential in passenger traffic. Despite the development of road and air
transport of passengers, the direction and power of the passenger flows is largely determined by
the configuration and capacity of railways. In general, the development of railways and
improvement of economic performance of their activities were clearly lagged behind the needs
of the world economy. Despite this, the railways remain the most economical means of cargo
and passenger transport (in contrast to air and road transport), yielding in terms of transportation
cost only to pipeline and marine transport. The advantage of rail freight transport is independent
of the natural environment.
Transportation Modes: An Overview
Authors: Dr. Brian Slack, Dr. Jean-Paul Rodrigue and Dr. Claude Comtois

1. A Diversity of Modes

Transport modes are the means by which people and freight achieve mobility. They fall into one
of three basic types, depending on over what surface they travel – land (road, rail and pipelines),
water (shipping), and air. Each mode is characterized by a set of technical, operational and
commercial characteristics:

• Road transportation (Concept 2). Road infrastructures are large consumers of space with the
lowest level of physical constraints among transportation modes. However, physiographical
constraints are significant in road construction with substantial additional costs to overcome
features such as rivers or rugged terrain. Road transportation has an average operational
flexibility as vehicles can serve several purposes but are rarely able to move outside roads. Road
transport systems have high maintenance costs, both for the vehicles and infrastructures. They are
mainly linked to light industries where rapid movements of freight in small batches are the norm.
Yet, with containerization, road transportation has become a crucial link in freight distribution.
• Rail transportation (Concept 3). Railways are composed of a traced path on which are bound
vehicles. They have an average level of physical constrains linked to the types of locomotives and
a low gradient is required, particularly for freight. Heavy industries are traditionally linked with
rail transport systems, although containerization has improved the flexibility of rail transportation
by linking it with road and maritime modes. Rail is by far the land transportation mode offering
the highest capacity with a 23,000 tons fully loaded coal unit train being the heaviest load ever
carried. Gauges, however, vary around the world, often complicating the integration of rail
systems.
• Pipelines (Concept 3). Pipeline routes are practically unlimited as they can be laid on land or
under water. The longest gas pipeline links Alberta to Sarnia (Canada), which is 2,911 km in
length. The longest oil pipeline is the Transiberian, extending over 9,344 km from the Russian
arctic oilfields in eastern Siberia to Western Europe. Physical constraints are low and include the
landscape and pergelisol in arctic or subarctic environments. Pipeline construction costs vary
according to the diameter and increase proportionally with the distance and with the viscosity of
fluids (from gas, low viscosity, to oil, high viscosity). The Trans Alaskan pipeline, which is 1,300
km long, was built under difficult conditions and has to be above ground for most of its path.
Pipeline terminals are very important since they correspond to refineries and harbors.
• Maritime transportation (Concept 4). Because of the physical properties of water conferring
buoyancy and limited friction, maritime transportation is the most effective mode to move large
quantities of cargo over long distances. Main maritime routes are composed of oceans, coasts,
seas, lakes, rivers and channels. However, due to the location of economic activities maritime
circulation takes place on specific parts of the maritime space, particularly over the North
Atlantic and the North Pacific. The construction of channels, locks and dredging are attempts to
facilitate maritime circulation by reducing discontinuity. Comprehensive inland waterway
systems include Western Europe, the Volga / Don system, St. Lawrence / Great Lakes system, the
Mississippi and its tributaries, the Amazon, the Panama / Paraguay and the interior of China.
Maritime transportation has high terminal costs, since port infrastructures are among the most
 expensive to build, maintain and improve. High inventory costs also characterize maritime
transportation. More than any other mode, maritime transportation is linked to heavy industries,
such as steel and petrochemical facilities adjacent to port sites.
• Air transportation (Concept 5). Air routes are practically unlimited, but they are denser over the
North Atlantic, inside North America and Europe and over the North Pacific. Air transport
constraints are multidimensional and include the site (a commercial plane needs about 3,300
meters of runway for landing and take off), the climate, fog and aerial currents. Air activities are
linked to the tertiary and quaternary sectors, notably finance and tourism, which lean on the long
distance mobility of people. More recently, air transportation has been accommodating growing
quantities of high value freight and is playing a growing role in global logistics.
• Intermodal transportation (Concept 6). Concerns a variety of modes used in combination so
that the respective advantages of each mode are better exploited. Although intermodal
transportation applies for passenger movements, such as the usage of the different, but
interconnected modes of a public transit system, it is over freight transportation that the most
significant impacts have been observed. Containerization has been a powerful vector of
intermodal integration, enabling maritime and land transportation modes to more effectively
interconnect.
• Telecommunications. Cover a grey area in terms of if they can be considered as a transport
mode since unlike true transportation, telecommunications often does not have a physicality. Yet,
they are structured as networks with a practically unlimited capacity with very low constraints,
which may include the physiography and oceanic masses that may impair the setting of cables.
They provide for the instantaneous movement of information (speed of light in theory). Wave
transmissions, because of their limited coverage, often require substations, such as for cellular
phone networks. Satellites are often using a geostationary orbit which is getting crowded. High
network costs and low distribution costs characterize many telecommunication networks, which
are linked to the tertiary and quaternary sectors (stock markets, business to business information
networks, etc). Telecommunications can provide a substitution for personal movements in some
economic sectors.

2. Modal Competition

A general analysis of transport modes reveals that each has key operational and commercial
advantages and properties. However, contemporary demand is influenced by integrated
transportation systems that require maximum flexibility. As a result, modal competition exists
at various degrees and takes several dimensions. Modes can compete or complement one another
in terms of cost, speed, accessibility, frequency, safety, comfort, etc. There are three main
conditions that insure that some modes are complementing one another:

• Different geographical markets. It is clear that if different markets are involved, modes will
permit a continuity within the transport system, particularly if different scales are concerned, such
as between national and international transportation. This requires an interconnection, commonly
known as a gateway, where it is possible to transfer from one mode to the other. Intermodal
transportation has been particularly relevant to improve the complementarity of different
geographical markets.
• Different transport markets. The nature of what is being transported, such as passengers or
freight, often indicates a level of complementarity. Even if the same market area is serviced, it
may not be equally accessible depending of the mode used. Thus, in some markets rail and road
transportation can be complementary as one may be focusing on passengers and the other on
freight.
 • Different levels of service. For a similar market and accessibility, two modes that offer a
different level of service will tend to complement another. The most prevailing complementarity
concerns costs versus time.

Thus, there is modal competition when there is an overlap in geography, transport and level of
service. Cost is one of the most important considerations in the choice of mode. Because each
mode has its own price/performance profile, the actual competition between the modes depends
primarily upon the distance traveled, the quantities that have to be shipped and the value of the
goods. While maritime transport might offer the lowest variable costs, over short distances and
for small bundles of goods, road transport tends to be most competitive. A critical factor is the
terminal cost structure for each mode, where the costs (and delays) of loading and unloading the
unit impose fixed costs that are incurred independent of the distance traveled.

With increasing levels of income the propensity for people to travel rises. At the same time,
international trade in manufactured goods and parts has increased. These trends in travel demand
act differentially upon the modes. The modes that offer the faster and more reliable services gain
over modes that might offer a lower cost, but slower, alternative. For passenger services, rail has
difficulty in meeting the competition of road transport over short distances and aircraft for longer
trips. For freight, rail and shipping have suffered from competition from road and air modes for
high value shipments. While shipping, pipelines and rail still perform well for bulkier shipments,
intense competition over the last thirty years has seen road and air modes capture an important
market share of the high revenue-generating goods. Road transport clearly dominates.

Although intermodal transportation has opened many opportunities for complementarity between
modes, there is intense competition as companies are now competing over many modes in the
transport chain. A growing paradigm thus appears to be supply chain competition with the modal
competition component occurring over three dimensions:

• Modal usage. Competition that involves the comparative advantage of using a specific or a
combination of modes. Distance remains one of the basic determinants of modal usage for
passengers transportation. However, for a similar distance, costs, speed and comfort can be
significant factors behind the choice of a mode.
• Infrastructure usage. Competition resulting from the presence of freight and passenger traffic
on the same itineraries linking the same nodes.
• Market area. Competition being experienced between transport terminals for using new space
(terminal relocation or expansion) or capturing new markets (hinterland).

Modal competition can also been influenced by public policy where one mode could be
advantaged over the others. This particularly takes place over government funding and regulation
issues. For instance, in the United States the Federal Government would finance 80% of the costs
of an highway project, leaving the state government to supply the remaining 20%. For public
transit, this share is 50%, while for passenger rail the Federal Government will not provide any
funding. Under such circumstances, public policy shapes modal preferences.

The technological evolution in the transport industry aims at adapting the transport
infrastructures to growing needs and requirements. When a transport mode becomes more
advantageous than another over the same route or market, a modal shift is likely to take place. A
modal shift involves the growth in the demand of a transport mode at the expense of another,
although a modal shift can involve an absolute growth in both of the concerned modes. The
comparative advantages behind a modal shift can be in terms of costs, convenience, speed or
reliability. For passengers, this involved a transition in modal preferences as incomes went up,
such as from collective to individual modes of transportation. For freight, this has implied a shift
to faster and more flexible modes when possible and cost effective, namely trucking and air
freight.

There are important geographical variations in modal competition. The availability of

transport infrastructures and networks varies enormously. Some regions possess many different
modes that in combination provide a range of transport services that ensure an efficient
commercial environment. Thus, in contrast to the situation in the EU, rail transport occupies a
more important market share in North America. In many parts of the world, however, there are
only limited services, and some important modes may be absent altogether. This limits the
choices for people and shippers, and acts to limit accessibility. People and freight are forced to
use the only available modes that may not be the most economic for the nature of the demand.
Goods may not be able to find a market, and people’s mobility may be impaired.

For these reasons, transport provision is seen as a major factor in economic development. Areas
with limited modal choices tend to be among the least developed. The developed world, on the
other hand possesses a wide range of modes that can provide services to meet the needs of
society and the economy. Since 2000 the price of fuel has increased significantly as well as its
volatility. All modes are affected, from the individual car owner to the corporation operating a
fleet of hundreds of aircraft or ships. The higher costs are being passed on to the customer, either
directly, as is the case of shipping where freight rates are climbing, or indirectly as is the case of
airlines, where passengers are being charged additional fuel surcharges. These cost increases are
likely to have significant impacts on mobility and trade, as well as on the modal split:

• Higher transport costs increase the friction of distance and constrain mobility. As a major
consumer of petroleum the transport industry has to increase rates. Across the board increases
causes people to rethink their patterns of movement and companies to adjust their supply and
distribution chains. One of the expected effects of these cost increases is a decline in freight
shipments and passenger carriers, such as airlines are anticipating a reduction in trips. Even
school districts are anticipating reducing the number of busses and making children walk further
to school.
• Because the impact of higher fuel costs hits the modes differentially, a modal shift is
anticipated. Road and air transport are more fuel intensive than the other modes, and so fuel
price increases are likely to impact upon them more severely than other modes. This could lead to
a shift towards water and rail transport in particular.
• A further impact of fuel price increases is greater fuel economy across the modes. One of the
best ways for all modes to reduce consumption is to lower speeds. A future of high energy prices
is likely to have a major impact on just-in-time deliveries, and lead to a restructuring of supply
chains.

3. Passengers or Freight?
With some exceptions, such as busses and pipelines, most transport modes have developed to
handle both freight and passenger traffic. In some cases both are carried in the same vehicle, as
for example in the airlines where about 80% of the freight is transported in the cargo holds of
passenger aircraft. In others, different types of vehicle have been developed for freight and
passenger traffic, but they both share the same road bed, as for example in rail and road traffic.
In shipping, passengers and freight used to share the same vessel, but since the 1950s
specialization has occurred, and the two are now quite distinct, except for ferries and some
RORO services.

The sharing by freight and passengers of a mode is not without difficulties, and indeed some of
the major problems confronting transportation occur where the two seek to co-inhabit. For
example, trucks in urban areas are seen as a nuisance and a cause of congestion by passenger
transport users. Daytime deliveries and double-parked trucks are a particular nuisance. The poor
performance of some modes, such as rail, is seen as the outcome of freight and passengers
having to share routes. There are also growing interests expressed at using segments of transit
systems to move freight, particularly in central areas. This raises the question as to whether
freight and passengers are compatible. The main advantages of joint operations are:

• High capital costs can be justified and amortized more easily with a diverse revenue stream (rail,
airlines, ferries).
• Maintenance costs can be spread over a wider base (rail, airlines).
• The same modes or traction sources can be used for both freight and passengers, particularly
for rail.

The main disadvantages of joint operations are:

• Locations of demand rarely match – the origins and destinations of freight are usually quite
distinct spatially from passenger traffic.
• Frequency of demand is different – for passengers the need is for high frequency service, for
freight it tends to be somewhat less critical.
• Timing of service – demand for passenger services has specific peaks during the day, for freight
it tends to be more evenly spread throughout the day.
• Traffic balance – on a daily basis passenger flows tend to be in equilibrium, for freight, market
imbalances produce empty flows.
• Reliability – although freight traffic increasingly demands quality service, for passengers delays
are unacceptable.
• Sharing routes favors passenger traffic – passenger trains are given priority; trucks may be
excluded from areas at certain times of the day.
• Different operational speeds – passengers demand faster service.
• Security screening measures for passengers and freight require totally different procedures.

The separation of passengers and freight on specific gateways and corridors is consequently a
likely outcome.

4. A Growing Divergence
Passengers and freight are increasingly divergent activities as they reflect different transportation
markets. In several modes and across many regions passenger and freight transport is being
unbundled:

• Shipping. Mention has been made already how in the maritime sector passenger services have
become divorced from freight operations. The exception being ferry services where the use of
RORO ships on high frequency services adapt to the needs of both market segments. Deep sea
passenger travel is now dominated by cruise shipping which has no freight-handling capabilities,
and bulk and general cargo ships rarely have an interest or the ability to transport passengers.
• Rail. Most rail systems still operate passenger and freight business. Where both segments are
maintained the railways give priority to passengers, since rail persists as the dominant mode for
inter-city transport in India, China and much of the developing world. In Europe the national rail
systems and various levels of government have prioritized passenger service as a means of
checking the growth of the automobile, with its resultant problems of congestion and
environmental degradation. Significant investments have occurred in improving the comfort of
trains and in passenger rail stations, but most notable have been the upgrading of track and
equipment in order to achieve higher operational speeds. Freight transport has tended to lose out
because of the emphasis on passengers. Because of their lower operational speeds, freight trains
are frequently excluded from day-time slots, when passenger trains are most in demand.
Overnight journeys may not meet the needs of freight customers. This incompatibility is a factor
in the loss of freight business by most rail systems still trying to operate both freight and
passenger operations. It is in North America where the divorce between freight and passenger rail
business is most complete. The private railway companies could not compete against the
automobile and airline industry for passenger traffic, and consequently withdrew from the
passenger business in the 1970s. They were left to operate a freight only system, which has
generally been successful, especially with the introduction of intermodality. The passenger
business has been taken over by public agencies, AMTRAK in the US, and VIA Rail in Canada.
Both are struggling to survive. A major problem is that they have to lease trackage from the
freight railways, and thus slower freight trains have priority.
• Roads. Freight and passenger vehicles still share the roads. The growth of freight traffic is
increasing road congestion and in many cities concerns are being raised about the presence of
trucks. Already, restrictions are in place on truck dimensions and weights in certain parts of
cities, and there are growing pressures to limiting truck access to non-daylight hours. Certain
highways exclude truck traffic – the parkways in the US for example. These are examples of what
is likely to become a growing trend – the need to separate truck from passenger vehicle traffic.
Facing chronic congestion around the access points to the port of Rotterdam and at the freight
terminals at Schiphol airport, Dutch engineers have worked on feasibility studies of developing
separate underground road networks for freight vehicles.
• Air transport. Air transport is the mode where freight and passengers are most integrated. Yet
even here a divergence is being noted. The growth of all-freight airlines and the freight-only
planes operated by some of the major carriers, such as Singapore Airlines, are heralding a trend.
The interests of the shippers, including the timing of the shipments and the destinations, are
sometimes better served than in passenger aircraft. The divergence between passengers and
freight is also being accentuated by the growing importance of charter and "low-cost" carriers.
Their interest in freight is very limited, especially when their business is oriented towards
tourism, since tourist destinations tend to be lean freight generating locations.
Advantages And Disadvantages Of Different Modes Of Transport.

by Auto on March 28, 2010

Transportation is an important link of the logistics system. Transport is a branch of

material production, transporting people and goods.

Vehicles must have a number of necessary properties and satisfy certain requirements in order to
create innovative systems for the collection and distribution of goods. First of all, transport
should be flexible enough to provide the transportation process that is subject to weekly or even
daily adjustments, to ensure frequent and clock delivery of goods in scattered and remote
locations, reliably serve clients in order to avoid interruption of business or deficit at the client.
Simultaneously, transport must be able to carry small loads over short intervals, in accordance
with changing user demands and conditions of small-scale production.

Transportation is represented as a system consisting of two subsystems: public transport and

transport non-generic use.

Public transport is a sector of the economy that meets needs of all sectors of the economy and the
population in the transportation of cargo and passengers. Public transport serves the scope of
treatment and population. It is often called the backbone (backbone is a main line in any system,
in this case – the system of means of communication).

Transport non-generic use – in-plant operations, as well as vehicles of all kinds, belonging to the
non-transport enterprises, is typically an integral part of any production systems.

Here are the main means of transport: rail, marine, inland, waterways (river), automobile, air,
and pipeline.
Each of the modes of transport has specific characteristics in terms of logistics management,
strengths and weaknesses, determine the possibilities of its use in the logistics system.

Rail. Advantages: high throughput, and the freight, regardless of climatic conditions, time of
year and day, high frequency of traffic, the ability to effectively organize the implementation of
loading and unloading operations; relatively low rates and significant discounts for transit
shipments, high speed delivery of goods over long distances. Disadvantages: limited number of
carriers, large capital investments in industrial and technology base, high material and energy
intensity of transport, low accessibility to the final point of sales (consumption), high enough of
the cargo.

Naval. Advantages: possibility of intercontinental transport, low cost of transport over long
distances, the freight and high throughput, low capital intensity of transport. Disadvantages:
limited traffic, low speed of delivery (large transit time), depending on geographical,
navigational and weather conditions, the need for complex email infrastructure, stringent
requirements for packaging and stowage of cargo, the low frequency of shipments.

Inland waterways (river). Advantages: high carrying capacity in the deep rivers and reservoirs,
low transportation costs, low capital intensity. Disadvantages: limited traffic, low speed of
delivery of goods; dependence on the uneven depth of rivers and reservoirs, navigation
conditions, seasonality, low reliability of transport and cargo safety.

Road transport. Advantages: high availability, possibility of delivery of cargo from door to door;
high agility, flexibility, agility, ability to use different routes and delivery schemes, high safety of
the cargo, the possibility of sending the goods in small batches; great opportunity to select the
most suitable carrier. Disadvantages: low productivity, dependence on weather and road
conditions, the relatively high cost of transport over long distances, lack of environmental
cleanliness, punctuality of discharge, a relatively small payload.

Air transport. Advantages: the highest speed of delivery, high reliability, the highest integrity;
the possibility of reaching remote areas. Disadvantages: high cost of transportation, the highest
rates among the other modes of transport, high capital intensity, material and energy transport,
the dependence on weather conditions.

Pipeline. Advantages: low cost, high capacity, high safety of the cargo, low capital intensity.
Disadvantages: limited types of cargo (gas, oil, emulsions and raw materials), low availability of
small volumes of transported cargo.
Road: Over-the-road Transport

It is not enough to load goods on a truck and have an address in hand to call yourself a road
transport and shipping company. It requires skills, efficiency, intelligence, attention,
organisational capacity, professionalism, passion, enthusiasm, and culture.

We acquired these through lengthy experience. We have been “on the road” for 130 years: for
each shipment, we choose the most appropriate, most economical, and most efficient method, by
balancing tractor-trailers, trucks dedicated to express services, special transport means, transport
equipped for dangerous goods, dump trucks, vehicles of any size. The service is complete and
aims to optimise each shipment. To manage the traffic, delays, the unforeseen circumstances is
our daily challenge. Road safety always remains our first concern. We plan services with
couriers or with 2 drivers on board according to your needs and the safety regulations.

Rail: Rail transport

Rail transport: trustworthy, safe, ecological, and economical for all types of goods. Long
distances, dangerous goods, oversized or heavy packages: transport on rails can satisfy the most
diverse transport needs, offering logistical and commercial solutions that are advantageous
compared to road transport. At the same time, our offer also includes mixed transport solutions
with truck and freight car. According to the type of goods and the loading characteristics you
could opt for the use of conventional freight cars or containers. In the former Soviet republics,
central Asian countries, Mongolia and China we supply last-trip containers. Thanks to our
network of correspondents we are able to offer constant monitoring of the journey of the freight
cars and containers from departure to destination.
The Advantages Of Rail Freight Transport.

by Auto on April 7, 2010

Rail freight transport is the main type of the freight transport, which provides inter-
regional transportation of bulk commodities. This prime importance of rail transport due to two
factors: the technical and economic advantages over most other forms of transport and the
coincidence of the direction and power, major transport and economic inter-regional and inter-
state relations with the configuration, capacity and carrying capacity of railway lines.

Rail freight has a number of advantages, which are determined their priority development in the
world. Rail freight transport is distinguished from the rest of the modes of transport by many
attractive features, among them are the key:

– Versatility (rail freight transport is capable of carrying almost all types of goods).

– The high freight capacity (rail freight transport is able to provide transport over 100 million
tons of cargo in each direction).

– The relatively low cost of transportation (as opposed to commercial air and maritime
transport).

– Relatively free accommodation, that is, rail freight transport is not dependent on natural
conditions.

– Regularity (can carry cargo in all seasons, in contrast to the river and sea transport).
– The relatively high speed, reliability and other indicators.

Rail freight transport is especially effective in traffic over long distances, and taking into account
the vast distances, to which it is sometimes necessary to deliver the goods, you can expect that in
the future it will remain the leading mode of transport in bulk freight transport over long
distances and in passenger traffic in the middle distance and commuter services.

In the assortment of goods carried by rail freight transport stand out coal and coke (it takes the
first place in total cargo turnover and the second one – in the volume of freight), mineral building
materials (first place in terms of cargo and the second – on the cargo volume). In third place
there are liquid cargos (mainly fuel oil and light oil). Ore, ferrous metals, timber and grain
shipments, mineral and chemical fertilizers occupy a significant proportion. The share of these
eight types of bulk cargo accounts are almost 9 / 10 throughout the cargo in rail freight transport.

Rail freight transport is essential in passenger traffic. Despite the development of road and air
transport of passengers, the direction and power of the passenger flows is largely determined by
the configuration and capacity of railways. In general, the development of railways and
improvement of economic performance of their activities were clearly lagged behind the needs
of the world economy. Despite this, the railways remain the most economical means of cargo
and passenger transport (in contrast to air and road transport), yielding in terms of transportation
cost only to pipeline and marine transport. The advantage of rail freight transport is independent
of the natural environment.
Benefits And Disadvantages Of Road And Air Transport.

by Auto on March 24, 2010

The most widespread types of modern transport are automobile and air transport.
Road transport. The main reasons for the active use of vehicles in the logistics systems are
inherent flexibility of delivery and high speed of intercity transport. Comparing with railway
transport, road transport has relatively small investment in equipment terminals (loading and
unloading facilities) and the use of public roads. However, the vehicles value of variable costs
(salaries of drivers, the cost of fuel, tires and repairs) per 1 km of track is great, permanent costs
(overheads, depreciation of vehicles) are small. Therefore, unlike rail automobile transport is
best for the carriage of small shipments for small distances. This defines the scope of use of
vehicles – manufacturing, trade, etc.

Despite of some problems in the road transport industry (growth in the cost of replacement and
maintenance of equipment, salaries of drivers, loaders and maintenance staff) for the foreseeable
future, road transport will remain the central position in providing the transportation needs of
logistics.

Air transport. Cargo aircraft is the newest and least-needed international mode of transport. The
main advantage is speed of delivery; a major drawback is the high cost of transportation, which
is sometimes offset by the speed of delivery that helps eliminate the other elements of the
structure of logistics costs associated with maintenance of warehouses and stockpiles. Although
the range of air transport is not limited to, their share still represents less than 1% of all intercity
freight (expressed in ton-miles). Features of air transport capacity and cargo capacity are limited
by aircraft, as well as their limited availability.

Traditionally, for long-distance freight transport incidental passenger flights were used a lot, that
was beneficial and economically, but also led to a loss of flexibility and delay of technological
development. Freight jet airliner is costly, and demand for such transportation is not regular, so
fleet, carrying only freight traffic, is very low.

Air transport is less the size of fixed costs compared to railways, waterways or pipelines. Fixed
costs include the cost of air transport for the purchase of aircraft and, when it is necessary,
special equipment and materials handling containers. Variable costs include the cost of kerosene,
aircraft maintenance and labor costs of flight and ground personnel.

Since airports need very large open spaces for accommodation, air transport, as a rule, are not
integrated into a single system with other modes of transport, except automotive.

Variety of goods is transported by air transport. The main feature of this mode of transport is that
it is used for delivery of goods mainly in case of emergency, but not on a regular basis. Thus, the
main cargo shipped by air – either expensive or perishable goods, where high transport costs are
justified. Potential air cargo facilities are also such traditional logistics operations products, such
as assembly parts and components, products sold by mail catalogs.

Road versus rail - Facts sheet number 1 - Capacity, average flow, density of use

Updated April 2009

This facts sheet provides information on capacity, average flows, density of use and some
anecdotal illustrations of the use that rail makes of its rights of way and compares that with the
same for the motorway and trunk road network.

Capacity

The line haul

At Waterloo 50,000 crushed passengers alight in the morning peak hour. They could all find
seats in 1,000 50-seat motor coaches. Those coaches would occupy no more than one lane of a
motor road. At Waterloo there is room for 3 or 4 lanes in each direction. The waste is
lamentable.

At Euston, 60,000 passengers alight all day. They would require no more than 3,000 coaches
each with only 20 people aboard. 3,000 coaches could pass in 90 minutes in the space available
on the approaches to the terminal but the railway has run out of capacity all day.

In the peak 3 hours some 500,000 passengers enter central London by surface Rail spread over
25 pairs of tracks. If half the passengers arrive in the peak hour the average flow per inbound
track is 10,000 passengers. They could all fit in 200 50-seat coaches, sufficient to fill one fifth of
the space available.

The Americans, particularly Don Morin, Head of Public Transport, US Department of Transport,
concluded in the 1970’s that there is no movement corridor in the world where demand cannot be
satisfied by one lane of a motor road dedicated to coaches.

Terminals

Neither British Rail nor Railtrack would provide plans that would enable the areas of London
terminals to be estimated and we have not enquired of Network Rail. However, at Waterloo
probably the 21 platforms occupy an area 250 metres square, or thereabouts, a total of 6.25
hectares. If 50,000 alight in the peak hour the density of use is 8,000 passengers per hour per
hectare.

In contrast (a) Victoria Coach station is said to be able to handle 10,000 passengers per hour,
many with baggage, on one hectare. (b) The area in front of Victoria Rail terminal used to
handle 280 buses an hour on 0.2 hectare’s. If each bus had 50 people alighting the density of use
was 70,000 passengers per hour per hectare.
Hence it appears likely that the nimble bus would use terminal space very much more efficiently
then can the cumbersome train.

If at Waterloo as many as 1,000 buses an hour were to arrive and if each needed to stand for as
long as 6 minutes then there would need to be 100 bus bays. If they were spread over 3 levels
there would be 33 bays per level. That does not seem unreasonable. Perhaps the number could
be halved if half the buses drove onwards, so avoiding the need for some of the passengers to
alight.

Average Flow

The calculations appended show that national rail carried an average flow equivalent to only
some 340-400 buses plus lorries per day per track in 2008 - a flow which is so small that it is fair
to say that the network was, and is, substantially disused as it lies there basking in the sun of
government subsidy.

Density of use

The calculations appended provide the following densities for rail and the motorway and trunk
road systems for 2007. Data for earlier years is in the appendix.

For passengers:
National Rail 1.53 million passenger-km per km of track.
M'ways and trunk roads 4.66 million passenger-km per km of running lane.
For freight:
National Rail 0.72 million tonnes-km per km of track.
M'ways and trunk roads 2.24 million tonnes-km per km of running lane.
For passengers and freight
combined
National Rail 2.25 million unit-km per km of track.
M'ways and trunk roads 6.90 million unit-km per km of track.

Despite the rail network occupying corridors of intense demand and penetrating to the hearts of
our towns and cities the density of use is less than one third of that achieved by the strategic road
network, which peters out on the fringes of urban areas.

Anecdotal illustrations

Anecdotal illustrations of the inability of rail to make reasonable use of track include:
 Welwyn Viaduct, shown opposite, on the
East Coast Main Line,. That viaduct has one
track in each direction and carries 14 trains
towards London in the peak hour (Letter
from Railtrack dated 8th December 1999).
Those trains are equivalent to not more than
150 buses and coaches, enough to fill one
sixth of one lane of a motor road. Despite
that trivial flow the viaduct limits the
capacity of the entire route.

The Ouse Viaduct , Balcombe and St Germains Viaduct Cornwall . These immense pieces of
engineering, shown below, feature in the 1996 Network Management statements by Railtrack.
Railtrack were not been able to identify the use to which the structures are actually put but flows
are likely to be much below those for the Welwyn viaduct. Hence it is fair to say that the
structures achieve little for the nation beyond photo opportunities.

The capacity sections of The West Coast Main line

Page 3-2 of the Environmental Statement of Main Report supporting Railtrack's case at the
Public Inquiry into the West Coast Main Line Modernisation Programme provides the flows at
the capacity sections. During the 18 hours 6 am to midnight these carry some 110 passenger
trains and 55 freight trains, together equivalent to perhaps 2,500 buses plus lorries per day.
Despite that relatively trivial flow the limitation on capacity forced 35 to 40 other goods trains to
operate from midnight to 6 am. There are 3 running tracks at two of the capacity sections and
two tracks at the third. If the 18 hour flow, equivalent to 2,500 buses plus lorries, is split between
just two tracks the directional 18 hour flow is 1,250 vehicles per track, sufficient to fill one lane
of a motor road for about 75 minutes.
Source: P.O. Roberts (1999) "Logistics and Freight Transportation: Review of Concepts
Affecting Bulk Transportation", World Bank.

Shipment Size and Transport Costs

The principle of economies of scale in transportation particularly applies to freight distribution as

costs tend to be inversely proportional to shipment size. Freight shipped in 10 pounds parcels
would cost about $1,000 per ton while freight shipped on a 2 million pounds barge load would
cost $2 per ton. This favors a specialization of shipments according to the value of what is being
transported.
High Speed Trains
Authors: Dr. Jean-Paul Rodrigue and Dr. Claude Comtois

1. Existing High Speed Networks

High speed trains refer to passenger rail systems running at operational speed between 200 and
300 km/h. They have been developed in Japan, France, Germany, Spain and South Korea.
Another high speed system in Taiwan, linking Taipei to Kaohsiung, is scheduled to be completed
in 2006. The high speed train passenger system era truly originates from Japan with the Tokaido
line, bridging Tokyo and Osaka, which began in 1964 with the Tokyo Olympics. Today, this
transport mode is perceived as an efficient alternative to highway and airport congestion.
Evidence underline that travel time are cut in about a half when a high speed service begins.
High speed trains currently function under two discrete technologies:

• Improvement of conventional rail. The first type uses existing conventional rail systems and
its great velocity is primarily the fact of considerable improvements in locomotive performance
and train design. They may not be considered as a high speed trains per se. England (London -
Edinburgh), Sweden (Stockholm - Gothenburg), Italy (Rome - Florence and Rome - Milan), and
the United-States (Boston - Washington) are examples of this type of technology. Trains can
reach peak speeds of approximately 200 km/h in most cases and up to 250 km/h in Italy. The
principal drawback from using this system, however, is that it must share existing lines with
regular freight services.
• Exclusive high speed networks. In contrast, the second category of high speed trains runs on its
own exclusive and independent tracks. Such systems are presently in operation in France,
Spain, Germany, Japan and South Korea. In Japan, trains can attain speeds of 240 km/h, but
ongoing projects to raise peak speeds at 300 km/h aim at maintaining competitiveness of rail
passenger transport versus air. In France, the TGV Sud-Est (Trains a grande vitesse) reach speeds
of 270 km/h while the TGV Atlantique can cruise at speeds of 300 km/h. One of the key
advantages of such a system is since passengers trains have their exclusive tracks, the efficiency
of rail freight transport increases as it inherit the almost exclusive use of the conventional rail
system.

The first high speed train networks were built to service national systems, mostly in a linear
fashion along main corridors. For the case of Europe this development has reached a phase
where integration between different national high speed systems is taking place. This notably
involves Eurostar (Paris - Lille - London) and Thalys (Paris - Brussels - Antwerp - Rotterdam -
Amsterdam). The setting of high speed train networks consequently must take into consideration
the following constraints:

• Distance between stations. A distance of 50 km is often considered a minimum, leaving enough

for trains to accelerate and reach cruising speed. Servicing too many stations undermines the
rationale of high speed systems, which is to service large urban agglomerations in a fast and
continuous manner.
• Separation from other rail systems. This is mainly the case in and out of metropolitan areas
where high speed train are forced to use the standard rail network.
 • Availability of land, both for terminals and high speed lines. This problem can be mitigated by
using existing central rail stations.

2. Impacts on Other Modes

High speed rail systems can have a substantial impacts on other transport modes, even freight
transport systems. One of the most apparent is on air transportation services between cities of the
high speed rail corridor, particularly the most distant ones. High speed as able to compete
successfully with short to medium distance air transport services as it conveys the advantage of
servicing downtown areas and has much lower terminal time, mainly because of less security
constraints. Rail stations with high speed rail services are also increasingly becoming transport
hubs with the associated demands on urban transport systems, particularly public transit.

For freight transportation, the are several potential impacts, mostly indirect. The most
straightforward is that since high speed rail uses its own right of way, the separation between
passenger and freight systems promotes the efficiency and reliability of both networks. The main
reason is that passengers and freight have different operational characteristics, namely in terms
of speed and frequency of service. The setting of high speed networks may also incite additional
investments in rail freight infrastructure, particularly in metropolitan areas, better signaling
technologies and cost sharing initiatives. Although there have been discussions about the
potential of using high speed rail to move freight, these have not led to concrete realizations.

3. New Technologies

In addition to present technologies, an entirely new technological paradigm has been under
development in Japan and Germany since the late 1970s. The new technology is known as
Maglev (Magnetic Levitation); it utilizes magnetic forces to uplift trains, guide them laterally
and to propel them, relying upon highly efficient electromagnetic systems. The first commercial
maglev rail system was inaugurated in Shanghai in 2003. Maglev systems have experienced
some constraints on widespread commercialization, however, such as difficulties with integration
in established rail corridors and perceptions of high construction costs.
Road Transportation
Authors: Dr. Jean-Paul Rodrigue and Dr. Brian Slack

1. The Setting of Road Transport Systems

Two major modes are composing the land transport system, roads and railways. Obviously, roads
were established first, as rail technology only became available by the 18th century, in the midst
on the industrial revolution. Historical considerations are important in assessing the structure of
current land transportation networks. Modern roads tend to follow the structure established by
previous roads, as it was the case for the modern European road network (especially in Italy,
France and Britain) that follows the structure established by the Roman road network centuries
before.

The first land roads took their origins from trails which were generally used to move from one
hunting territory to another. With the emergence of the first forms of nation-states trails started to
be used for commercial purposes as trade expanded and some became roads, especially through
the domestification of animals such as horses, mules and camels. The use of wheeled vehicles
encouraged construction of better roads to support the additional weight. However, a road
transport system requires a level of labor organization and administrative control that could only
be provided by a form of governmental oversight offering some military protection over trade
routes. By 3,000 BC the first road systems appeared in Mesopotamia and asphalt was used to
pave roads in Babylon by 625 BC. The Persian Empire had a road of 2,300 km in the 5th century
BC. However, the first major road system was established by the Roman Empire from 300 BC
and onwards, mainly for economic, military and administrative reasons. It relied on solid road
engineering methods, including the laying of foundations and the construction of bridges. This
was also linked with the establishment of pan-continental trading routes, such as the Silk Road,
linking Europe and Asia by 100 BC.

Following the fall of the Roman Empire in the 5th century, integrated road transportation fell out
of favor as most roads were locally constructed and maintained. Because of the lack of
maintenance of many road segments, land transport became a very hazardous activity. It is not
until the creation of modern nation-states in the 17th century that national road transportation
systems were formally established. The French, through central government efforts, build their
Royal Roads system spanning 24,000 km, over which a public transport service of stage-coaches
carrying passengers and mail was established. The British, mainly through private efforts, built a
32,000 km system of turnpikes where tolls have to be paid for road usage. A similar initiative
was undertaken in the United States in the 19th century and by the early 20th century, a network
of 3 million km of roads, most unpaved, was in operation. 1794 marks the beginning of modern
road transportation with the first mail coach service between London and Bristol, operating
under a timetable.

Also of high significance were technological innovations in road engineering that permitted the
construction of reliable and low cost hard surface roads. One such achievement came from the
Scottish engineer McAdam who developed a process (later known as macadam) where hard and
waterproof road surfaces were made by cemented crushed stone, bound together either with
water or with bitumen. It provided a cheaper, durable, smooth and non-slippery pavement, which
considerably improved the reliability and the travel speed on roads. Many roads could now be
used year round.

Road development accelerated in the first half of the 20th century. By the 1920s, the first all-
weather transcontinental highway, the Lincoln Highway, spanned over 5,300 km between New
York and San Francisco. The Germans were however the first to build the modern highway
(autobahn) in 1932 with specifications such as restricted access, overpasses and road separation
that would eventually become common characteristics of highway systems. The post World War
Two era represented a period of rapid expansion of road transportation networks worldwide. The
most remarkable achievement is without doubt the American Interstate highway system initiated
in 1956. Its strategic purpose was to provide a national road system servicing the American
economy and also able to support troop movements and act as air strips in case of an emergency.
About 56,000 km was built from the 1950s to the 1970s, but between 1975 and 2006 only 15,000
km were added to the system, underlining growing construction costs and diminishing returns.
Overall, about 70,000 km of four-lane and six-lane highways were constructed, linking all major
American cities, coast to coast. A similar project took place in Canada with the Trans-Canada
highway completed in 1962. By the 1970s, every modern nation has constructed a national
highway system, which in the case of Western Europe resulted in a pan-European system. This
trend now takes place in many industrializing countries. For instance, China is building a
national highway system that expanded to 53,000 km in 2007, with construction taking place at a
pace of about 2,000 km per year.

2. The Spatial Impacts of Road Transportation

Road transportation is the mode that has expanded the most over the last 50 years, both for
passengers and freight transportation. Such growth in road freight transport has been fuelled
largely by trade liberalization as modal shares of trade between the United States and its NAFTA
partners suggest. This is the result of growth of the loading capacity of vehicle and an adaptation
of vehicle to freight (e.g. perishables, fuel, construction materials, etc) or passengers (e.g. school
bus) demand for speed, autonomy and flexibility. New types of problems, such as a significant
growth of fuel consumption, increasing environmental externalities, traffic congestion and a
multiplication of road accidents have also emerged.

All road transport modes have limited potential to achieve economies of scale. This is due to
size and weight constraints imposed by governments and also by the technical and economic
limits of engines. In most jurisdictions, trucks and busses have specific weight and length
restrictions which are imposed for safety reasons. In addition, there are serious limits on the
traction capacities of cars, buses and trucks because of the considerable increases in energy
consumption that accompany increases in the vehicle weight. For these reasons the carrying
capacities of individual road vehicles are limited.

Road transportation is characterized by acute geographical disparities in traffic. It is not

uncommon that 20% of the road network supports 60 to 80% of the traffic. This observation
is expanded by the fact that developed and developing countries have important differences in
terms of the density, capacity and the quality of road transport infrastructures. Acute
geographical variations of the inventory are therefore the norm.

Technological evolution of road transport vehicles was a continuous trend since the construction
of the first automobiles. The basic technology is however very similar, as road transportation
massively relies on the internal combustion engine. In the future new materials (ceramic, plastic,
aluminum, composite materials etc...), fuels (electricity, hydrogen, natural gas, etc...) and
computerization (vehicle control, location, navigation and toll collection) are expected to be
included in cars and improve the efficiency of road transport systems. There are however signs
that a peak mobility can be achieved for road transportation when the car has been diffused to
some optimum level and that countervailing forces are at play such as congestion, the aging of
the population or an decline in income.

The urban population has increased considerably over the last 50 years and about 50% of the
global population was urbanized by 2000 (about 3 billion people). It is impossible for developing
countries to have a rates of individual vehicle ownership similar to those of developed
countries, especially compared with the United States. This will impose new or alternative
methods to transport freight and passengers over roads in urban areas. The reduction of vehicle
emissions and the impacts of infrastructures on the environment are mandatory to promote a
sustainable environment. Under such circumstances cycling is thus to be considered an
alternative to the automobile in urban areas, widely adopted in developing countries, although
more for economic reasons. A symbiosis between types of roads and types of traffic with
specialization (reserved lanes and hours) is to be expected.

Road transport, however, possesses significant advantages over other modes:

• The capital cost of vehicles is relatively small. This produces several key characteristics of road
transport. Low vehicle costs make it comparatively easy for new users to gain entry, which
helps ensure that the trucking industry, for example, is highly competitive. Low capital costs also
ensure that innovations and new technologies can diffuse quickly through the industry.
• Another advantage of road transport is the high relative speed of vehicles, the major constraint
being government-imposed speed limits.
• One of its most important attributes is the flexibility of route choice, once a network of roads is
provided. Road transport has the unique opportunity of providing door to door service for both
passengers and freight.

These multiple advantages have made cars and trucks the modes of choice for a great number of
trip purposes, and have led to their market dominance for short distance trips.

3. Infrastructures and Investments

Road infrastructures are moderately expensive to provide, but there is a wide divergence of
costs, from a gravel road to a multi-lane urban expressway. Because vehicles have the means to
climb moderate slopes, physical obstacles are less important than for some other land modes,
namely rail. Most roads are provided as a public good by governments, while the vast majority
of vehicles are owned privately. Capital costs, therefore, are generally assumed by the society,
and do not fall as heavily on one source as is the case for other modes. This can convey several
advantages to the private sector, but can also lead to serious problems. The main advantage is
clear; the users of roads commonly do not bear the full operating costs implying that road
transportation tends to be "below real market price". For road freight transportation, this can be
seen as a subsidy as road maintenance is not part of the operating costs, but is indirectly present
with taxes and tolls. As long as there is spare road capacity this situation works for the benefit of
trucking. However, when congestion starts to arise, users have limited, if any, influence on the
construction of new and improved infrastructure to mitigate the problem since they do not own
the infrastructure and are using it for free. Lobbying public entities to receive public road
infrastructure investments can be a very long process, subject to constant delays and changes.
Road users thus become trapped in a situation they can do little to change since it is provided
free of charge. This can be labeled as the "free roads curse". An entity owning and operating its
own network, such an a rail company in North America, has the advantage of directly
implementing improvements with its own capital if congestion arise on a segment of its network.
It is thus better placed to cope with congestion.

Governments can expropriate the necessary land for road construction since a private enterprise
may have difficulties to expropriate without government support. Another important aspect about
roads is their economies of scale and their indivisibility, underlining that the construction and
maintenance of roads is cheaper when the system is extensive, but to a limit. However, all road
transport modes have limited abilities to achieve scale economies. This is due to the size
constraints imposed by governments and also by the technical and economic limits of the power
sources and what infrastructures can bear weightwise. In most jurisdictions, trucks and busses
have specific weight and length restrictions which are imposed for safety reasons. In addition,
there are serious limits on the traction capacities of cars, busses and trucks because of the
considerable increases in energy consumption that accompany increases in the weight of the unit.
For these reasons the carrying capacities of individual road vehicles are limited. Roads are thus
costly infrastructures, but also sources of revenue:

• Costs. They include rights of way, development costs (planning), construction costs, maintenance
and administration costs, losses in land taxes (urban environment), expropriation costs (money
and time), and external costs (accidents and pollution).
• Revenue. They include registration, gas (taxes), purchases of vehicles (taxes), tolls, parking, and
insurance fees. Another form of indirect income concerns traffic violations (e.g. speeding) that
are using the pretext of public safety to hide revenue generation practices by local governments.

In many cases governments have been inefficient custodians of road infrastructure as it is

tempting because of high costs to delay maintenance or improvements. Budgetary problems are
also inciting selling assets to increase revenue and reduce expenses. Consequently, a growing
number of roads have been privatized and companies specializing in road management have
emerged, particularly in Europe and North America. This is only possible on specific trunks that
have an important and stable traffic. Unlike governments, private enterprises have vested
interests to see that the road segments they manage are maintained and improved since the
quality of the road will be directly linked with revenue generation. The majority of toll roads are
highways linking large cities or bridges and tunnels where there is a convergence of traffic. Most
roads are not economically profitable but must be socially present as they are essential to
service populations.
Rail Transportation and Pipelines
Authors: Dr. Jean-Paul Rodrigue and Dr. Brian Slack

1. Rail Transportation and Rail Lines

Although primitive rail systems existed by the 17th century to move materials in quarries and
mines, it is not until the early 19th century that the first real rail transportation systems came into
existence. Rail transportation has been the product of the industrial era, playing a major role in
the economic development of Western Europe, North America and Japan. It represented a major
improvement in land transport technology and has obviously introduced important changes in the
movement of freight and passengers. This was not necessarily because of heavy loads, since
maritime transportation excelled at doing so, but because of the time element. Rail transport
systems dramatically improved travel time as well as the possibility to offer reliable schedules
that could be included in the planning of economic activities such as production and distribution.
The coherence of economic activities and social interactions was thus substantially improved.

With the introduction of the steam locomotive in 1829, a mechanized land transport system
became available for the first time. According to the geographical settings, rail lines were
established differently because of the variety of strategies to be achieved, namely access to
resources, servicing regional economies and to achieve territorial control. The first railway
companies were mainly point to point ventures with the company often taking the name of the
serviced destinations. As the rail system expanded, several mergers took place, which lead to
rather peculiar semantic results. For instance BNSF Railway (Burlington Northern Santa Fe; the
company uses the acronym to avoid confusion) is the outcome of some 390 different railroad
lines that merged or were acquired over a period of more than 150 years.

Rail transportation is characterized by a high level of economic and territorial control since most
rail companies are operating in situation of monopoly, as in Europe, or oligopoly, as in North
America. The United States has seven large rail freight carriers, each having a market area.
Operating a rail system involves using regular (scheduled), but rigid, services. Rail
transportation, like roads, has an important relationship with space, since it is the transport mode
the most constrained by the physiography. These constraints are mainly technical and involve
issues such as:

• Space consumption. Rail transportation has a low level of space consumption along lines, but its
terminals are important consumers of space, especially in urban areas. This increases operation
costs substantially. Still, rail terminals tend to be centrally located and accessible.
• Gradient and turns. Rail transportation can support a gradient of up to 4% (e.g. 40 meters per
kilometer), but freight trains rarely tolerate more than 1%. This implies that an operational freight
rail line requires 50 kilometers to climb 500 meters. Gradient are also important as they involve
more energy consumption, particularly for freight trains traveling over long distances. For turns,
the minimal curvature radius is 100 meters, but radiuses of 1 km for a speed of 150 km/hr and 4
km for a speed of 300 km/hr are needed.
• Vehicles. Rail transportation is very flexible in terms of vehicles and there is a wide variety of
them filling different purposes. The locomotion technology ranges from steam, to diesel (mainly
for freight in the United States) and electric (mainly for passengers in Europe). The recent trend
 has been a specialization of freight wagons, such as hopper wagons (grain, potash and fertilizers),
triple hopper wagons (sand, gravel, sulfur and coal), flat wagons (wood, agricultural equipment,
manufactured goods, containers), tanker wagons (petrochemical products), box wagons
(livestock, paper, manufactured goods), car wagons and passengers wagons.
• Gauge. The standard gauge of 1.435 meters has been adopted in many parts of the world, across
North America and most of Western Europe for example. It accounts for about 60% of the
railways. But other gauges have been adopted in other areas, such as the broad gauge (1.520
meters) in Russia and Eastern Europe accounting for about 17% of the railways. This makes
integration of rail services very difficult, since both freight and passengers are required to change
from one railway system to the other. As attempts are being made to extend rail services across
continents and regions, this is an important obstacle, as for example between France and Spain,
Eastern and Western Europe, and between Russia and China. The potential of the Eurasian land
bridge is limited in part by these gauge differences.

Other factors that inhibit the movement of trains between different countries include signaling
and electrification standards. These are particular problems for the European Union where the
lack of "interoperability" of the rail systems between the member states is a factor limiting the
wider use of the rail mode. There are also signs that the passengers and freight markets are being
separated. First, it is occurring at the management level. The liberalization of the railway system
that is being forced by the European Commission is resulting in the separation of passenger and
freight operations. This had already taken place in the UK when British Rail was privatized.
Second, the move towards high speed passenger rail service necessitated the construction of
separate rights of way for the TGV trains. This has tended to move passenger train services from
the existing tracks, thereby opening up more daytime slots for freight trains. Third, the Dutch are
building a freight only track, the Betuwe Line, from the port of Rotterdam to the German border,
having already sold the freight business of the Netherlands railway (NS) to DB, and having
opened up the freight business to other firms.

It is often possible to combine rail transportation with road transportation, simply by carrying
trailers. This is called "piggy back" and it is increasingly used to efficiently combine the inland
potentials of rail and road transportation. The most flexible is obviously the RO-RO (Roll On –
Roll Off) method where the tractor and the trailer are directly loaded on a rail platform. The
driver usually rolls in with an outbound carriage and rolls out with an inbound carriage. Overall,
rail transportation is more efficient than road transportation, although its main drawback is
flexibility as traffic must follow fixed routes and transshipment must be done at terminals.

2. The Spatial Economy of Rail Transportation

The ability of trains to haul large quantities of goods and significant numbers of people over long
distances is the mode’s primary asset. Once the cars have been assembled or the passengers have
boarded, trains can offer a high capacity service at a reasonable speed. It was this feature that led
to the train’s pre-eminence in opening the interior of the continents in the 19th century, and is
still its major asset. With containerized unit trains, economies of scale can be readily been
achieved while road accounts for no such advantage. Each additional container being carried by
road involves the same marginal cost increase, while for rail there is a declining marginal cost
per additional container until the unit train size is reached. Passenger service is effective where
population densities are high. Freight traffic is dominated by bulk cargo shipments, agricultural
and industrial raw materials in particular. Rail transport is a ‘green’ system, in that its
consumption of energy per unit load per km is lower than road modes.

The initial capital costs are high because the construction of rail tracks and the provision of
rolling stock are expensive. Historically, the investments have been made by the same source
(either governments or the private sector). These expenditures have to be made before any
revenues are realized and thus represent important entry barriers that tend to limit the number of
operators. It also serves to delay innovation, compared with road transport, since rail rolling
stock has a service life of at least twenty years. This can also be an advantage since the rolling
stock is more durable and offer better opportunities at amortization. On average, rail companies
need to invest about 45% of their operating revenues each year in capital and maintenance
expenses of their infrastructure and equipment. Capital expenditures alone account for about
17% of revenue, while this share is around 3 to 4% for manufacturing activities. One successful
strategy to deal with high capital expenditures has been the setting of equipment pools such as
TTX in North America that account for about 70% of the intermodal railcar assets of North
American rail companies.

Since the end of the 1950s, railway systems in advanced economies have faced an increasing
competition from road transport, with varying results. In several countries such as China,
India, and Japan, rail transportation accounts for the majority of interurban passenger
transportation. Among developed countries, there are geographical differences in the economic
preference of rail transportation. For Europe, rail transportation is still very important, mainly for
passenger transportation, but has declined over the last decades. High-speed passenger rail
projects are however improving its popularity, but the competition was mainly being felt on air
transportation services. For North America, rail transportation is strictly related to freight, with
passengers playing a marginal role only along major urban corridors. This has reached a point
where passenger trains are getting increasingly delayed because priority is given to freight. It is
only in the northeastern part of the United States that passenger services are running on time
since Amtrak (the federally owned passenger rail operator) owns the tracks.

An important concept in rail competitiveness concerns the breakeven distance which is a

threshold above which rail becomes most cost effective than road. Conventionally, the breakeven
distance between intermodal rail and truck is in the 600-800 miles (950 - 1,300 km) range. Under
500 miles (800 km), drayage costs from the terminal usually account for for 70 percent of total
costs. There are regional differences impacting the breakeven distance. For Europe it is in the
range of 650 miles (1050 km) while in the United States it is around 750 miles (1,200 km). For
the United States, only around 5 percent of the intermodal rail traffic concerns distances of less
than 750 miles underlining the clear supremacy of trucking for such a service range. The average
rail haul length is about 1,900 miles (3,050 km), with around 65 percent involving distances of
more than 2,000 miles (3,200 km).

Even if rail transportation was primarily developed to service national economies, globalization
is having significant impacts on rail freight systems. These impacts are scale specific:

• At the macro scale, new long distance alternatives are emerging in the form of land bridges in
North America and between Europe and Asia. In North America, rail has been very successful at
 servicing long distance intermodal markets, underlining the efficiency of rail over long distance
and high volume flows.
• At the meso scale, the railway transportation network is influenced by the pattern of energy
consumption. Many countries still rely overwhelmingly on foreign suppliers for their source of
fuel. Countries still build major fuel moving transport arteries. Another important trend has been
the growing integration of rail and maritime transport systems. Rail transportation has thus
become the extension of maritime supply chains. A key issue is the concentration of investments
in shaping rail corridors.
• At the micro scale, recent tendencies notably in extended metropolitan regions reveals a
specialization of rail traffic as well as a transfer of certain types of commodities from the rail
network to the fluvial and road network systems. Railways servicing ports tend more and more to
concentrate on the movement of container traffic. This strategy followed by rail transport
operators allows on the one hand, an increase in the delivery of goods and on the other hand, the
establishment of door-to-door services through a better distribution of goods among different
transport modes.

3. Technical Changes in Rail Transportation

Rail transport has been affected by continuous innovations, technical and commercial changes.
Increasing electrification and automation will also improve the efficiency of rail transportation,
passenger and freight alike. A few new rail lines are being built, but mainly in developing
countries. Railway speed records have constantly improved. For instance, portions of the French
high speed rail system (also known as TGV: Tres Grande Vitesse) can reach speeds up to 515
km/hr. Variable wheel-base axles permit rail transport between different gauges. However,
freight trains run at a considerably lower speed, in the range of 30-35 km/hr. In some cases, as
the rail system gets more used, operational speed may decline.

Longer and heavier rail coupled with major engineering feats allow the suppression of natural
obstacles, which enhance network continuity. The Seikan tunnel between the islands of Honshu
and Hokkaido in Japan has a length of 53.8 kilometers while the Channel tunnel between France
and England reaches 50.5 kilometers. One of the most technically challenging rail segment ever
built was completed in 2006 in China. The 1,142 kilometers line links Golmud in Qinghai
province to Lhasa in Tibet. Some parts go through permafrost and altitudes of 16,000 feet,
conferring its status of the world's highest rail line. Rail transport has comparative advantages in
carrying heavy bulk traffic on specific itineraries over long distances. For instance, a 10 car
freight train can carry as much cargo as 600 trucks. Beside its emphasis on safety and reliability,
rail transport favors the fast commuting of suburbanites during peak hours and has become an
important mode supporting passenger movements in large cities.

The global trend involves the closure of unprofitable lines as well as the elimination of several
stops. Over the last 50 years, with downsizing of rail transportation, while traffic was moving to
other modes, rail companies abandoned lines (or sold them to local rail companies), removed
excess terminals and warehousing capacity and sold off property. The process of rationalization
(deregulation) of the rail network is now completed in a number of countries, such as in the
United States. This has implied significant labor savings with the reduction of train crews (from
3-4 to 2), more flexible working hours and the usage of subcontractors for construction and
maintenance. In addition to energy efficient (the fuel efficiency of locomotives has increased by
68% between 1980 and 2000) and lighter equipment, the usage of double-stack cars has
revolutionized rail transportation with additional fuel efficiency and cost reductions of about
40%. Unit trains, carrying one commodity-type only, allow scale economies and efficiencies in
bulk shipments, and double stacking has greatly promoted the advantages of rail for container
shipments. Rail transport is also enjoying a resurgence as a mode for commuters in many large
cities.

Trends concerning cargo transport using trailers on flat cars (TOFC) and containers on flat
cars (COFC) well illustrate the increasing adoption of intermodal transport. Still, TOFC services
are being phased down and COFC increasingly dominates. Still, there is an active market for
niche services such as Roadrailers mounting truck trailers as train convoys. Due to its great
versatility, the container is highly favored as such a means of cargo transport; loading trailers
unto rail cars is prone to inefficiencies, particularly a much lower load factor than containers.
Double-stack rail technology is a major challenge for the rail transport system as it is effective
for long distances where additional terminal costs are compensated by lower transport costs.
The United States has a notable advantage over Europe on this issue since a full double-stacked
unit train can carry between 500 and 600 TEU (200 to 300 containers) and can have a length
exceeding 10,000 feet (about 3,000 meters). Further, most railroads were constructed early in the
20th century and have an overhead clearance that is inadequate for the usage of double-stack
trains. This is notably the case for tunnels and bridges. Even if improving clearance is a major
investment, several rail companies, notably in North America, have invested massively on
double-stacking projects. In 2005, American and Canadian railways carried more than 13.9
million intermodal containers and trailers. The economies and improved capacity of double-
stacking have justified investments of raising the clearance from 5.33 meters (17’6") to 8.1
meters (20’6") along major long distance rail corridors. Europe is less advanced in this process
because most of its rail facilities were built in the middle of the 19th century. Clearance thus
forbids the usage of double-stacking on most European rail corridors.

The emergence of high-speed rail networks and increasing rail speed had significant impacts on
passengers transportation, especially in Europe and Japan (high speed freight trains are not
currently being considered; see Application 1 for a more detailed overview). For instance, the
French TGV has an operational speed of about 300 km/h. High-speed passenger trains require
special lines, but can also use the existing lines at a lower speed. In many cases it permitted a
separation between rail passenger traffic rolling at high speed and freight traffic using the
conventional rail network. The efficiency of both the passengers and freight rail network is thus
improved significantly. Since high-speed trains require some time to accelerate and decelerate,
the average distance between stations has increased significantly, by-passing several centers of
less importance. Over average distances, they have proved to be able to compete effectively with
air transportation. Other strategies include improving the speed of existing passenger services
without building a high speed corridor. This involves upgrading the equipment and improving
the infrastructure at specific locations along the corridor. The benefits of offering a passenger rail
service about 120 km/h can be substantial to improve the quality and efficiency of inter-city
services in high density urban regions.

2. Modal Competition
A general analysis of transport modes reveals that each has key operational and commercial
advantages and properties. However, contemporary demand is influenced by integrated
transportation systems that require maximum flexibility. As a result, modal competition exists
at various degrees and takes several dimensions. Modes can compete or complement one another
in terms of cost, speed, accessibility, frequency, safety, comfort, etc. There are three main
conditions that insure that some modes are complementing one another:

• Different geographical markets. It is clear that if different markets are involved, modes
will permit a continuity within the transport system, particularly if different scales are
concerned, such as between national and international transportation. This requires an
interconnection, commonly known as a gateway, where it is possible to transfer from one
mode to the other. Intermodal transportation has been particularly relevant to improve the
complementarity of different geographical markets.
• Different transport markets. The nature of what is being transported, such as
passengers or freight, often indicates a level of complementarity. Even if the same market
area is serviced, it may not be equally accessible depending of the mode used. Thus, in
some markets rail and road transportation can be complementary as one may be focusing
on passengers and the other on freight.
• Different levels of service. For a similar market and accessibility, two modes that offer a
different level of service will tend to complement another. The most prevailing
complementarity concerns costs versus time.

Thus, there is modal competition when there is an overlap in geography, transport and level of
service. Cost is one of the most important considerations in the choice of mode. Because each
mode has its own price/performance profile, the actual competition between the modes depends
primarily upon the distance traveled, the quantities that have to be shipped and the value of the
goods. While maritime transport might offer the lowest variable costs, over short distances and
for small bundles of goods, road transport tends to be most competitive. A critical factor is the
terminal cost structure for each mode, where the costs (and delays) of loading and unloading the
unit impose fixed costs that are incurred independent of the distance traveled.

With increasing levels of income the propensity for people to travel rises. At the same time,
international trade in manufactured goods and parts has increased. These trends in travel demand
act differentially upon the modes. The modes that offer the faster and more reliable services gain
over modes that might offer a lower cost, but slower, alternative. For passenger services, rail has
difficulty in meeting the competition of road transport over short distances and aircraft for longer
trips. For freight, rail and shipping have suffered from competition from road and air modes for
high value shipments. While shipping, pipelines and rail still perform well for bulkier shipments,
intense competition over the last thirty years has seen road and air modes capture an important
market share of the high revenue-generating goods. Road transport clearly dominates.

Although intermodal transportation has opened many opportunities for complementarity between
modes, there is intense competition as companies are now competing over many modes in the
transport chain. A growing paradigm thus appears to be supply chain competition with the modal
competition component occurring over three dimensions:
 • Modal usage. Competition that involves the comparative advantage of using a specific or
a combination of modes. Distance remains one of the basic determinants of modal usage
for passengers transportation. However, for a similar distance, costs, speed and comfort
can be significant factors behind the choice of a mode.
• Infrastructure usage. Competition resulting from the presence of freight and passenger
traffic on the same itineraries linking the same nodes.
• Market area. Competition being experienced between transport terminals for using new
space (terminal relocation or expansion) or capturing new markets (hinterland).

Modal competition can also been influenced by public policy where one mode could be
advantaged over the others. This particularly takes place over government funding and regulation
issues. For instance, in the United States the Federal Government would finance 80% of the costs
of an highway project, leaving the state government to supply the remaining 20%. For public
transit, this share is 50%, while for passenger rail the Federal Government will not provide any
funding. Under such circumstances, public policy shapes modal preferences.

The technological evolution in the transport industry aims at adapting the transport
infrastructures to growing needs and requirements. When a transport mode becomes more
advantageous than another over the same route or market, a modal shift is likely to take place. A
modal shift involves the growth in the demand of a transport mode at the expense of another,
although a modal shift can involve an absolute growth in both of the concerned modes. The
comparative advantages behind a modal shift can be in terms of costs, convenience, speed or
reliability. For passengers, this involved a transition in modal preferences as incomes went up,
such as from collective to individual modes of transportation. For freight, this has implied a shift
to faster and more flexible modes when possible and cost effective, namely trucking and air
freight.

There are important geographical variations in modal competition. The availability of

transport infrastructures and networks varies enormously. Some regions possess many different
modes that in combination provide a range of transport services that ensure an efficient
commercial environment. Thus, in contrast to the situation in the EU, rail transport occupies a
more important market share in North America. In many parts of the world, however, there are
only limited services, and some important modes may be absent altogether. This limits the
choices for people and shippers, and acts to limit accessibility. People and freight are forced to
use the only available modes that may not be the most economic for the nature of the demand.
Goods may not be able to find a market, and people’s mobility may be impaired.

For these reasons, transport provision is seen as a major factor in economic development. Areas
with limited modal choices tend to be among the least developed. The developed world, on the
other hand possesses a wide range of modes that can provide services to meet the needs of
society and the economy. Since 2000 the price of fuel has increased significantly as well as its
volatility. All modes are affected, from the individual car owner to the corporation operating a
fleet of hundreds of aircraft or ships. The higher costs are being passed on to the customer, either
directly, as is the case of shipping where freight rates are climbing, or indirectly as is the case of
airlines, where passengers are being charged additional fuel surcharges. These cost increases are
likely to have significant impacts on mobility and trade, as well as on the modal split:
• Higher transport costs increase the friction of distance and constrain mobility. As a
major consumer of petroleum the transport industry has to increase rates. Across the
board increases causes people to rethink their patterns of movement and companies to
adjust their supply and distribution chains. One of the expected effects of these cost
increases is a decline in freight shipments and passenger carriers, such as airlines are
anticipating a reduction in trips. Even school districts are anticipating reducing the
number of busses and making children walk further to school.
• Because the impact of higher fuel costs hits the modes differentially, a modal shift is
anticipated. Road and air transport are more fuel intensive than the other modes, and so
fuel price increases are likely to impact upon them more severely than other modes. This
could lead to a shift towards water and rail transport in particular.
• A further impact of fuel price increases is greater fuel economy across the modes. One
of the best ways for all modes to reduce consumption is to lower speeds. A future of high
energy prices is likely to have a major impact on just-in-time deliveries, and lead to a
restructuring of supply chains.