Poor intermodal rail freight German 1st Qtr results suggests strategic issue

A news report tonight in the IRJ from German sources suggests a broader strategic question. What role does proven rail engineering technology offer a better growth future for Europe’s rail freight sector?

Let’s start with what was reported tonight. GERMANY’s railfreight industry has suffered a disappointing start to 2015 says the headlines. Germany’s federal statistics agency Destatis on June 3rd reported the largest decline in first quarter traffic since the height of the financial crisis back in 2009.

Overall rail freight traffic dropped 4.2% compared with the first quarter of 2014 to 88.1 million tonnes’

In the first quarter 2015′ —

International traffic fell 4.9%, —

German domestic traffic declined 2.1%. —

German rail freight intermodal traffic at 1.4 million TEU units was down a significant 12.8%

The posted rail results gives us the chance to ask about the real prospects for rail freight in Germany and Europe. Here is a short discussion


The German rail unit does not have doublestack container capability like the North American railways offer. With better stack train engineering and routes the North American rail companies have seen intermodal growth rates at a pace generally twice the national GDP rate of change — pretty consistently since 2009.

Over the past three decades, no European publicly owned rail network like that in Germany has invested yet in even a single stack train capable intermodal corridor. The Rotterdam to Duisburg corridor comes the closest as a “near” stack train corridor.

The first U.S. Stack Train technology ran in 1983. Today, stack trains account for an estimated two thirds to three quarters of all North American intermodal units moved. Profit rates for the railroads typically exceed 135% on average of long term variable below and above the rail costs.

Without an investment in higher axle load and stack train clearance technology (engineering and operations focused), Europe and Germany are unlikely to reach their dream of a 40% or greater rail freight market share. Not in my life time.

In contrast, intermodal market share on strategic corridors in North America three decades after introduction of the technology can see 70% or better share versus highway trucking.

The European intermodal rail train product is simply too short in length, too short in vertical clearance, and too light in net to tare weight.

Running at near passenger train speeds really does little to develop huge shifts away from truck/road movement to the European intermodal freight trains. Marginal shifts? Yes.

The Europeans rail organizations collectively continue to struggle for market share growth by offering marginal engineering and service improvements to their intermodal customers over a high speed light axle passenger design loading track network.

There has been no WOW success factor in the past two generations of rail leadership for rail freight.

Who is going to break out of this post World War 2 freight business model?

If I had to bet, I would think that Sweden might offer the break out leadership based on their adoption of heavier axles loadings and longer freight trains over the past two decades.

Who would you bet on and why?

Sent from Jim’s iPad

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