UK Case Study: Experience of the use of rail in servicing. national supermarket traffic activity
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1 CLUSTER 2: Green Logistics and co-modality UK Case Study: Experience of the use of rail in servicing national supermarket traffic activity Philip Mortimer, NewRail (Newcastle University) AMSTERDAM, June 22nd, 2012
2 Context National spread of major players Regional emphasis for some players and market positioning Complex interleaving spread of distribution activity Specialist depots (frozen/chilled/ambient) Massive dependency on universal road transport for trunk movements and to-store delivery Mixes of owned & operated haulage with commercial haulage contracted in on long term and spot basis
3 User requirements High levels of precision and reliability required for store replenishment (15 minute windows) Impact of requirements on produce (field to shelf time) and store opening times (24/7 and early opening options) Rail used primarily for long haul movement of commodities (long lead time) between major rail heads (Daventry International Rail Freight Terminal, DIRFT) and Scotland Direct to store deliveries using pre-packed and compartmentalised containers Some operators are using rail to an increasing degree for middle distance operations. (DIRFT to London & S. Wales)
4 Constraints on rail (1 of 2) Train paths/train space/service spread and availability (24/7) Consolidators leading in relation to supermarket & retail FOCs as providers with minimal commercial risk Big train complexity including loading gauge variability if normal routes not available (Green corridor designated routes WCML & ECML) Electrified route network constrained
5 Constraints on rail (2 of 2) Non-availability of reefer power Adoption of non-standard containers (13.85 m x 2.61 x 2.46) Need to accommodate roll cages and bulk heads Reliability and cost competitiveness together with responsiveness and availability Ability to meet the precision requirements of the supermarkets
6 Current practice (1 of 2) Wide variability of user experience and practice (e.g 260 HGV vehicle moves saved compared with HGV moves saved) Big battalions driving emerging best practice for co-modality Use of a mix of chartered trains and open services available to competing retailers on common lines of route Some collaboration and slot swapping and use of backhaul empty slots
7 Current practice (2 of 2) Drive to use rail include environmental and commercial imperatives with the latter always dominating despite green positioning Rail cost base and pricing to supermarkets is opaque. Stores have backhaul traffic of roll cages and packaging but round trip prices still not competitive or atractive to some operators Rail capabilities not synchronised with store operators schedules and business requirements currently fulfilled by road
8 Future developments (1 of 2) Major operators developing networks around the UK to drive up rail participation Medium distance sectors being planned Possibilities of further shared space activity for other retail competitors Need for more rapid processing of train path requests (scheduled and very short term)
9 Future developments (2 of 2) Need to be able to manipulate train capacity rapidly or to sell space to others Need for more rail terminals and services (who funds?) Need for more flexibility in scheduling train movements Need to develop mechanisms for pooling capacity/identification of routes, services, space and prices as a composite mechanism (FA)
10 Supermarket and retailers perspectives (1 of 2) Concerns over the opacity of the cost base Need for intervention to level up road and rail cost Need for more versatile and timely services reflecting retailers requirements 24/7 availability required
11 Supermarket and retailers perspectives (2 of 2) Ambient products seen as time sensitive as frozen and chilled Need to recognise the impact of deliveries to RDCs as well as internal distribution traffic B/E threshold distances appear to be high (>500km) Underpinning green agendas within the supermarkets real or imagined?
12 Conclusions (1 of 3) Supermarkets/major retailers are using rail at an increasing scale. It remains a small component of their logistics activities Real constraints identified based around prevailing oprational, technical and commercial models and asset management Widely varying practice amongst users best practice still emergent Key players appear to be the consolidators and not the FOCs (risk averse)
13 Conclusions (2 of 3) Major deficiencies in terms of identifying open services, schedules, routes, availability, space and prices. Limited spot pricing Supermarkets will use their road fleet assets ahead of externally sourced transport Collaboration between supermarkets for point to point movements on chartered trains is feasible and happens. It could be enhanced Still a wide difference between rail and road capabilities, product and service levels. Rail needs to reflect the capabilities of road freight
14 Conclusions (3 of 3) Existing practices (operational, technical & commercial) need significant enhancement. Best practice may be difficult to identify given the diversity of retail operators and their differing market positioning Rail has demonstrated CO2 savings and HGV journey savings Commercial pressures and operational imperatives will constrain the penetration of rail in this market segment
15 Question time and THANK YOU FOR YOUR ATTENTION
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