Sunday, November 22, 2009

Rail Freight And Logistics Analysis For November

A Brief Look at Attempts to Remove Cargo from the Roads Around the World
Shipping News Feature

UK – USA- INDIA – NEW ZEALAND – BALTIC STATES – Railfreight, often seen as an obvious solution to several types of transport problems is once again fighting to become the primary source of long distance freight carriage in many countries in the world. Without becoming embroiled in the “how green actually is rail” argument we take a look at different happenings around the globe as the industry faces the inevitable problems as it struggles for supremacy over long distance road trucks.

Few would dispute that in the bulk haulage market rail wins clearly over road when it comes to moving large quantities efficiently over any reasonable distances. Iron ore, coal, bulk liquids and grain are all obvious cargoes but now, in many places these are dwindling and new multi modal terminals are seen as a solution to help cut emissions and fuel consumption for conventuonal cargo, shipping containers etc.

A report this week shows that all railroad companies in the Baltics have reported a decrease in freight tonnages for 2009 compared to the previous year. State owned Latvian carrier LDz Cargo were the least affected, handling almost 45 million tonnes , a drop of less than 2%. The worst were Lithuanian rail group Lietuvos Gelezinkeliai, whose Freight traffic slumped by almost 26.5%.

The world situation seems to be polarising. Whilst the former communist states lose ground there are world markets where investment in rail appears to be de rigeur. India saw the recent acquisition of a stake in the Indian Gateway Rail group by Blackstone and 79 year old Warren Buffett has made the system attractive again for Stateside investors with his Burlington Northern Santa Fe purchase.

Railfreight deals however often have a “repent at leisure” element. Burlington Northern (BNSF) have been squabbling in the State Court of Montana over subsidy payments it has been making to the tune of $1 million annually to the officially recognised rail operator, Central Montana Rail. BNSF simply stopped paying, which state attorneys say is illegal under a 1984 agreement. Without such subsidies the state argues BNSF will negotiate themselves a monopolistic position and devastate an already pressured grain market. BSNF stand accused of subsidising further infrastructure developments to ensure grain transits through their facilities.

New Zealand also sees strains between Government and rail operators. The private logistics companies believe they are subject to apathy from the Government in their fight to get decent rates since KiwiRail became state owned in October 2008. Formerly the facilities, land and equipment were the property of Toll Holdings and now customers like Mainfreight believe that Toll may get preferential treatment. They are looking to Government to get a clear policy for the rail system in the future and for plans on how it intends to develop it.

The UK is another country where forces are raging for and against more intensive rail development. The drive to reduce emissions gives the pro rail lobby a powerful argument, but the siting of the necessary multi modal freight terminals in such areas as Bearstead/Borough Green and the second St Albans/Radlett Airfield enquiry, due to commence 24th November, will mean more controversy, and almost inevitably, delays.