Friday, April 24, 2009

Trains and Logistics in Europe

While on the other side of the Atlantic the Coyotes indulge themselves in a reading of "The Box", a book about containers and their triumph in shipping, on this side of the Atlantic I am confined to a mere "Logistics and the Flux of materials", which is not that interesting though the guy who gave it to me had some real interesting words to say about the current situation in logictics and distribution.

First of all, the situation in 2007 and the beginning of 2008 was a problem for many logistics companies though it was a problem other's would envy them for. They had too much business, which meant that distribution centers were high in demand and low in supply. To get trucks or trains for one's goods was clearly a critical problem.
The problem of logistic companies in Germany and all of europe was not that they couldn't find wares to transport, but where and how to transport wares. While construction of new distribution centers and storage facilities was on an all time high, this didn't include infrastructure. Actually, eco-policy made it worse and more costly to transport anything. Freight trains were pulled back in favor of uncompetitive and net cash draining passenger wagons. Which resulted in a flooding of high ways with trucks to make up for it. Port cities like Rotterdam or Hamburg were flooded with containers and couldn't expand fast enough.

All these problems disappeared when the economy slowed and came to a stand-still in late 2008. The actual usage of distribution centers fell from 125 % to 25% and now most of the companies in the distribution and storage sector of the economy live on the money they accumulated in prior years. Logistics and transport is the most volatile economy segment, because it readily replicates demand and supply.

However, the crisis also is an opportunity to work on something neglected for a long time:


It became apparent in the last years that the infrastructure may it be waterways, railroad, airways or high ways is insufficient for more growth. Europe has one of the most concentrated industrial economies. In France, Germany and Spain alone are more companies than in most bigger US states. However, unlike Japan, wares and products still have to be transported a long way in the same country. There are no concentrated super-hubs (except in the automobile industry) that do all the manufacturing. Instead, different producers in the supply chain are probably located in different parts of europe. Transportation remains one of the central goods of the european economy, but how to go about it?

Actually, trains and trucks are the only valid option for inter-europe transportation of wares and containers. Especially trains can do a huge job here since they could be automated and drive at high speeds. They could, but they can't because inefficient passenger train transportation is still a high priority for most european countries. Perhaps the crisis will reveal two things:

a) Infrastructure needs an update


b) Trains are better for transporting wares than people

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