Tipping the balance

As Europe’s economy revives, freight transport will increase creating opportunities for all modes but, of course, exerting even more pressure on the transport network. The dominance of road transport for freight movement is causing delays and bottle-necks on the main freight corridors and this is having a negative impact on the environment, business, and economy, as well as society in general. The European Commission is pushing hard to encourage freight to migrate from road to the more environmentally sustainable modes of rail, inland waterway and shortsea transport to help combat these issues.

But it is not an easy task. A single phone call to a road haulier is all it takes to move a consignment of containers from a factory to a customers’ doorstep. It’s simple, easy, quick and relatively cheap. Constructing a complex supply chain involving rail, maritime and the associated transhipment activities is much more complex. Depending on distance, it can also be more expensive. So why bother?

The answer is complex and probably includes a mix of ethics, commercial and social factors and a view of future policy. It is generally true to say that it is cheaper to move containers by sea than by road over distances of more than 1000km - a Drammen to Oostende route, for example. And in the current climate of economic prudence and thin margins, this is an important factor. But for shorter routes, the argument for modal shift is less clear. Sustainability is certainly a consideration as an increasing number of end-users are not only asking how their products are produced but also how are they delivered. Being able to demonstrate green credentials within the manufacturing process as well as the supply chain is becoming more important. And politicians are increasingly looking at ways of forcing modal shift. Currently, road hauliers do not cover the true cost of moving freight. They don’t pay for maintenance costs, social costs or other externalities that their actions create. If future policy insists on higher road charges then parity between road and sustainable transport modes is likely to emerge.

Conscious of this, the European Commission is actively promoting the move to a sustainable and balanced transport network through a series of funding initiatives. The North Sea Region (NSR) programme is part of the inter-regional (Interreg) initiative that encourages Europe’s regions to work together on common projects.

One project currently being led by the Institute for Sustainability and funded by Interreg is LO-PINOD or Logistics Optimisation for Ports Intermodality: Network, Opportunities, Development.

This initiative brings together partner organisations from the seven states that border the North Sea with the common aim of promoting sustainable freight transport and re-balancing the transport network. Today, freight tends to discharge at large hub ports for onward transport by road. LO-PINOD will make regional ports more efficient and attractive for freight allowing goods to be discharged closer to their final destination by water.

This shortens the road leg of a supply chain and re-balances Europe’s transport network. Greater use of regional ports will reduce road congestion around hub ports and assist with local development and regeneration.

LO-PINOD got underway at the end of 2010 and will run until end 2013. It is operating to a budget of around €8 million with 50% being provided by the European Regional Development Fund (ERDF) and the remaining 50% from the 16 project partners. The partners themselves are mainly commercial operators comprising regional ports throughout the North Sea Region as well as local authorities. Leading the project is the UK-based Institute for Sustainability, a not-for- profit organisation with expertise in delivering sustainable communities and driving economic development.

The three key objectives of LO-PINOD are: 

• To initiate investment for multi-modal connections to ports: With a focus on port hinterland connections and freight distribution, activities will concentrate on improving accessibility to ports by road, rail, ferry and barge that are sustainable and can be replicated across the North Sea Region. Additionally, the development of new shortsea and coastal services to link regional ports to main transport hubs will result in a more efficient and robust transport network and safeguard employment in regional ports.
• Neutral platform for discussion: The neutral environment of The Interreg project structure aims at sharing knowledge amongst partners. This allows commercially orientated ports to improve their efficiency and competitiveness by exchanging best practice and learning in areas such as port security, safety, operational procedures and general management. 
• National and EU policy support: Regional, national and EU policies will be tested through pilot projects and, based on findings, proposals made to strengthen, enhance and join-up policies at all levels to encourage greater use of regional ports, shortsea shipping and multi-modal transport chains.

Although LO-PINOD is still in its early phases, it is actively engaged in a number of activities that will result in new and improved multi-modal supply chains, enhanced performance of regional ports and stronger links between these ports and their local communities and hinterlands.

Identifying opportunities to develop new multimodal supply chains that rely heavily on sustainable transport is a central objective. Project partners are currently working on two initiatives that have the potential to remove sizeable quantities of freight from the road. On the east coast of Scotland, the project is working with a major manufacturer and ports group to introduce a new shortsea service that will move around 40 containers a day from factory to distribution port by water. This will relieve congestion on the local roads as well as the problematic Forth road crossing. Partners in Norway, Belgium and the Netherlands are combining efforts to develop a rail/shortsea intermodal supply chain to move fresh produce from Northern Norway to the fish markets of London and Paris. If successful, fresh fruit and vegetables will be introduced as a back-haul cargo to Norway.

Looking inland, two LO-PINOD partners are working to enhance a rail link into a major UK distribution and manufacturing park in the lower Thames that also benefits from an adjacent port facility. The aim is to encourage tenants of the business park to move their goods by rail rather than road and to make more use of the water-side freight handling facility. Ideally, the new rail link could take freight directly into the country as well as to the dock area for onward transport by sea.

These two initiatives demonstrate one of the project’s central strengths – providing a noncompetitive forum for commercial operators to share knowledge and best practices and to identify opportunities to work together. A good example of how this works in practice is provided by project partner Brunsbüttel Ports. Located in Northern Germany, this regional port operator has identified that the growing offshore wind-farm sector will provide significant commercial opportunities for ports. Wind farm operators require large water-side areas of land to manufacture and store their components as well as the means of transporting, erecting and maintaining the turbines in coastal waters.

Recognising that regional ports are not in a position to satisfy the requirements of a wind-farm operator on their own, Brunsbüttel Ports has formed a cooperation of a network of regional ports that, together, can deliver the space, physical locations and varied facilities required. By working together, the port network can offer space to manufacture and store towers and turbine blades at one port coupled with a quick response maintenance service from a smaller port that is located on the doorstep of the wind-farm. This innovative business model is being shared with the LO-PINOD partners with the aim of replicating it across the North Sea Region and, perhaps, across other industries.

The creation of sustainable, intermodal supply chains that encourage freight to migrate off the road has obvious benefits. If this can be coupled with a greater use of regional ports as a way of re-balancing the transport network and reviving local communities then an added and valuable advantage is achieved. Through the EU Interreg initiative, LO-PINOD has the potential to tip the balance in favour of a more sustainable and equal freight transport network.

By Detlef Golletz, Head of EU Projects at the Institute for Sustainability & Projet Director for LO-PINOD and Laurienne Tibbles, LO-PINOD Project manager, Institute for Sustainability