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Green Logistics through Modal Shift - exploring the role of the transport capacity contract

Eng Larsson, Fredrik LU (2012)
Abstract (Swedish)
Popular Abstract in Swedish

För att minska CO2-utsläppen från godstransporter har politiker i Europa under de senaste tio åren framhävt att det krävs ett skifte i transportslag för europeiska transporter, från flyg- och lastbilstransporter till mer miljövänliga tåg- och sjötransporter. Intermodala väg-järnvägstransporter, där en kombination av tåg och lastbil använts för att förflytta lösa standardiserade lastbärare (lastbilstrailer, lösflak eller ISO container), har framhävts som extra intressanta då järnvägens miljövänlighet kan kombineras med lastbilens flexibilitet och tillgänglighet. Dock visar statistiken över de senaste tjugo åren inte på några tendenser till förändring. I Sverige, till exempel, har det totala... (More)
Popular Abstract in Swedish

För att minska CO2-utsläppen från godstransporter har politiker i Europa under de senaste tio åren framhävt att det krävs ett skifte i transportslag för europeiska transporter, från flyg- och lastbilstransporter till mer miljövänliga tåg- och sjötransporter. Intermodala väg-järnvägstransporter, där en kombination av tåg och lastbil använts för att förflytta lösa standardiserade lastbärare (lastbilstrailer, lösflak eller ISO container), har framhävts som extra intressanta då järnvägens miljövänlighet kan kombineras med lastbilens flexibilitet och tillgänglighet. Dock visar statistiken över de senaste tjugo åren inte på några tendenser till förändring. I Sverige, till exempel, har det totala transportarbetet ökat markant sedan 1990 medan järnvägens marknadsandelar minskat under samma period.



Det finns flera potentiella förklaringar till varför skiftet uteblivit. I många fall påstås problemet ligga på utbudssidan, där tågoperatörer erbjuder alltför låg kvalitet bland annat på grund av bristande standardisering, låg proaktivitet, och generella kvalitetsproblem i både infrastruktur och transportsystem. I andra fall läggs skulden på efterfrågesidans aktörer; innovationer på transportmarknaden anses driven av dessa aktörer och så länge de inte är villiga att anpassa sig till tågoperatörernas erbjudande kommer inget skifte att ske.



Men oavsett var problemen ligger utgör de barriärer för att realisera de politiska ambitionerna inom EU, och utbuds- och efterfrågesidans problem bör inte särkopplas; dålig kvalitet i utbudet leder till låg efterfrågan och låg efterfrågan ger inga incitament till förbättrat utbud. Det finns med andra ord få incitament för aktörer att bete sig annorlunda. På den intermodala transportmarknaden - precis som för stora delar av lastbilstransportmarknaden - manifesteras relationer mellan köpare och säljare i kontrakt. Dessa kontrakt styr aktörernas incitament och därmed beteende, och från litteratur inom nationalekonomi och supply chain management är det välkänt att dåligt designade kontrakt leder till snedvridna incitament med suboptimering, dubbelmarginalisering och icke-optimala produktionsvolymer som resultat. I denna studie väljer vi därför att, istället för att fokusera på aggregerade siffror, analysera skiftet i trafikslag genom att undersöka kontrakten som styr hur intermodala transporter köps och säljs.



För detta byggs en modell baserat på två fallstudier av speditörer som nyligen kontrakterat intermodal transportkapacitet. I modellen kontaktar speditören en tågoperatör för att låta denna bygga kapacitet som kan tillgodose speditörens kunders (varuägarnas) totalefterfrågan av transporter mellan två geografiska platser. Detta modelleras som ett en-periods-spel mellan köpare och säljare, där alla transporter mellan platserna som inte hanteras av tågoperatör antas köras med lastbil. Vi utgår från maktförhållandet som observeras i fallstudierna, där tågoperatören väljer kontrakt och speditör, baserat på kontraktet och kundefterfrågan, bestämmer vilken mix av trafikslag han vill använda.



Från fallstudierna framkommer det att operatörerna tenderar att ha strikt produktionsfokus där de överlåter det komersiella ansvaret att fylla tåget till speditören. På grund av maktförhållandet är detta möjigt. Speditörerna, som är vana vid låga fasta kostnader och därmed låga finansiella risker i verksamheten, menar att detta hämmar dem från att öka sin andel av intermodala transporter och därmed positivt bidra till det skifte politikerna önskar. I modellen undersöker vi därför två olika sätt för speditören att kontraktera kapacitet: 1) genom att reservera valfritt antal trailerplatser i tåget och betala per trailerplats; och 2) genom att kontraktera hela tåg med fasta avgångstider till en fast kostnad per tåg såsom i fallstudierna.



I studien karaktäriserar vi dessa kontrakt och visar att operatören i de flesta fall föredrar att sälja endast full tåg; på grund av marknadsstruktur och intre organisation är det produktionsfokus som speditörerna ogillar svårt att bryta. Vi ser också att detta sätt att sälja kapacitet på i många fall leder till största möjliga vinst för det totala systemet och därmed är totalt sett bättre än att sälja enstaka trailerplatser. I dess fall påverkar operatörens produktionsfokus inte heller trafikslagskiftet negativt; systemoptimal trafikslagsmix erhålles ändå. Problemet ligger snarare på längre sikt, då inget av kontrakten garanterar att största möjliga (systemets optimala) vinst alltid nås. Vi föreslår därför ett riskdelningskontrakt med tre parametrar som garanterar detta. Kontraktet innefattar ett pris per trailerplats, en avgift för tågavgången samt en riskdelningsparameter som är förhandlingsbar. med denna typ av kontrakt nås alltid systemoptimal vinst där fördelningen av vinsten styrs genom förhandling mellan parterna. Troligen är dock detta kontrakt svårt att implementera i verkligheten på grund av sin komplexitet. Analyser med modellen visar även att styrmedel som en allämn koldioxidskatt under vissa förutsättningar kan öka andelen järnvägstransporter men att så sinte alltid behöver vara fallet. Emellertid kan åtgärder som minskar de finansiella riskerna, som t ex längre tåg, lägre banavgifter eller en välfungerande spotmarknade, öka andelen.



Studien bidrar till nya insikter kring de mekanismer som finns på mikronivå som påverkar de aggregerade siffror som politikerna vill åtgärda. Detta har praktiska implikationer för tågoperatörer såväl som speditörer och beslutsfattare och ger ett delvis nytt perspektiv på frågan, något som innebär ett bidrag till såväl miljölogistiklitteraturen som till litteraturen kring processer/modeller för val av trafikslag och kapacitetskontrakt. Slutligen diskuteras fyra möjliga vägar för vidare forskning: empirisk forskning för att bättre förstå den komplexa marknaden; relaxering av modellen med avseende på tidshorisont, information, risk, etc. för att bättre förstå inverkan av dessa antaganden; utökning av skop för att undersöka fler spelare så som varuägare och statens roll; samt att jämföra resultat med andra industrier där kapaciteten kommer i "sjok" så som vid köp av järnvägstransporter. (Less)
Abstract
Among policy-makers in Europe the modal shift - a shift från polluting modes of freight transport to less polluting modes - has been a popular suggestion for reducing CO2-emissions of transportation. In particular, intermodal road-rail solutions, where a combination of road and rail transport is utilized to move trailers and containers, have been stressed as an important measure to reach de desired reduction in emissions. However, looking back at the development over the last twenty years, no shift to rail-bound transport can be seen. for example, the share of rail-bound transport has decreased.



There are several potential explanations to the absence of modal shift. Often, the supply-side is held responsible, with rail... (More)
Among policy-makers in Europe the modal shift - a shift från polluting modes of freight transport to less polluting modes - has been a popular suggestion for reducing CO2-emissions of transportation. In particular, intermodal road-rail solutions, where a combination of road and rail transport is utilized to move trailers and containers, have been stressed as an important measure to reach de desired reduction in emissions. However, looking back at the development over the last twenty years, no shift to rail-bound transport can be seen. for example, the share of rail-bound transport has decreased.



There are several potential explanations to the absence of modal shift. Often, the supply-side is held responsible, with rail operators offering too low quality due to lack of standards, lack of proactivity, and general infrastructure and transport system deficiencies. Others claim the non-existent shift dependson inertia on the demand-side. Innovations on the transport market are driven by the demand-side customers and as long as the demand-side is not willing to make any adjustments to better fit the supply-side's offers, no shift will occur. Arguably, both underdeveloped service production and demand side inertia create barriers to realize the political ambitions of the EU. But supply- and demand-side problems cannot be discussed in isolation: low service quality leads to low demand and with low demand there are little incentives to invest in quality.



On the intermodal transport market (and much of the trucking market as well), supply and demand is matched in contractual relations. These contracts affect the incentives of the players, and from the economics and supply chain management literature it is well known that badly designed contracts and incentives may lead to sub-optimization and double-marginalization effects, including lower production levels and less total profit than what would have been optimal. Therefore, instead of focusing on aggregate behaviour, this research approaches the modal shift by investigating t he contract that governs the sale and purchase of these services. The purpose, is to build a model to explore the currently used contracts on the intermodal market, explain how these contracts may have affected the modal shift, and explore how changes in the contracts and market conditions could increase the share of intermodal transport.



The purpose is approached through a research process in which the findings from two company cases, Bring Frigo and Volvo Logistics, are used to model the system. We consider a situation in which a Service Provider approaches an Intermodal Operator to build the service capacity that the service provider can use to satisfy demand created by the upstream Shippers. The system is then modeled as a one-period, continuous, newsvendor modal with fixed costs associated with each train put into operation. Any demand which cannot be satisfied by the intermodal operator is handled by a truck carrier. Contrary to the trucking market, the Operator is the leader in our Stackelberg game, in which the Service Provider decides upon the final modal mix.



It is found in the cases that the operators tend to have a strict production focus, preferring to transfer the responsibility of filling the train to the service provider. Since the service providers are used to having very low fixed costs (no own assets), they claim that this way of selling the capacity inhibits the possibilities to increase the rail-share of their modal mix. In the model, we therefore investigate two possible ways to contract the capacity: 1) through a unit price per trailer, in which an arbitrary number of trailers is sold to the service provider at a unit price per trailer, and 2) with a service charge per train, in which the operator charges a fixed rate for operating each train, leaving the responsibility to fill the train to the service provider.



The research characterizes these contracts and show that the operator prefers a per-train charge in most instances: the production focus in inherent with the current market structure. It is also shown that the per-train type of payment coordinates the system in several instances and thus outperforms the unit price preferred by the operator. In that, the production focus has no negative impact in the modal mix in these instances. However, none of the contract types can guarantee coordination, leading to lower total profits than optimal. We therefore show how a three-part tariff, in which the operator charges a unit cost per trailer, a service charge per train, and a wealth-transferring component, can achieve full coordination. Such a contract may however be difficult to implement due to its complexity.



Analysis with the model shows that policy measures such as a general carbon tax under some circumstances may increase the amount of intermodal capacity although this may not always be the case due to decentralized decision-making. Measures aiming at reducing the financial risks of the markets, such as allowing longer trains, reducing slot-fees, or introducing a well-functioning spor-market may more easily achieve a higher intermodal share.



In that, the research provides insight on the mechanisms on the micro-level that may affect the realization of the political visions, with implications for operators and service providers as well as policy-makers. In particular, the semi-fixed cost structure of the intermodal investment has been poorly addressed in the past, and by analyzing the impact this has on the capacity investment, the study builds on previos research on green logistics, as well as mode choice, capacity management, and supply chain contracting.



Finally suggestions for future research along the four potential paths are discussed: empirical research to understand the actual rather complex market; relax model assumptions regarding number of time periods, compliance regime, private information, hidden actions and risk aversion; include more players as shippers and infra structure owners; and compare results with other service markets very capacity is "lumpy". (Less)
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author
supervisor
organization
publishing date
type
Thesis
publication status
published
subject
keywords
green logistics, modal shift, mode choice, capacity management, supply chain contracting, intermodal transport
pages
154 pages
external identifiers
  • Other:1051
ISBN
978-91-7473-273-3
language
English
LU publication?
yes
id
c032c25e-8f75-4651-8144-72a6ba7d1bc4 (old id 5159426)
date added to LUP
2015-08-20 10:13:19
date last changed
2016-09-19 08:45:18
@misc{c032c25e-8f75-4651-8144-72a6ba7d1bc4,
  abstract     = {Among policy-makers in Europe the modal shift - a shift från polluting modes of freight transport to less polluting modes - has been a popular suggestion for reducing CO2-emissions of transportation. In particular, intermodal road-rail solutions, where a combination of road and rail transport is utilized to move trailers and containers, have been stressed as an important measure to reach de desired reduction in emissions. However, looking back at the development over the last twenty years, no shift to rail-bound transport can be seen. for example, the share of rail-bound transport has decreased.<br/><br>
<br/><br>
There are several potential explanations to the absence of modal shift. Often, the supply-side is held responsible, with rail operators offering too low quality due to lack of standards, lack of proactivity, and general infrastructure and transport system deficiencies. Others claim the non-existent shift dependson inertia on the demand-side. Innovations on the transport market are driven by the demand-side customers and as long as the demand-side is not willing to make any adjustments to better fit the supply-side's offers, no shift will occur. Arguably, both underdeveloped service production and demand side inertia create barriers to realize the political ambitions of the EU. But supply- and demand-side problems cannot be discussed in isolation: low service quality leads to low demand and with low demand there are little incentives to invest in quality.<br/><br>
<br/><br>
On the intermodal transport market (and much of the trucking market as well), supply and demand is matched in contractual relations. These contracts affect the incentives of the players, and from the economics and supply chain management literature it is well known that badly designed contracts and incentives may lead to sub-optimization and double-marginalization effects, including lower production levels and less total profit than what would have been optimal. Therefore, instead of focusing on aggregate behaviour, this research approaches the modal shift by investigating t he contract that governs the sale and purchase of these services. The purpose, is to build a model to explore the currently used contracts on the intermodal market, explain how these contracts may have affected the modal shift, and explore how changes in the contracts and market conditions could increase the share of intermodal transport. <br/><br>
<br/><br>
The purpose is approached through a research process in which the findings from two company cases, Bring Frigo and Volvo Logistics, are used to model the system. We consider a situation in which a Service Provider approaches an Intermodal Operator to build the service capacity that the service provider can use to satisfy demand created by the upstream Shippers. The system is then modeled as a one-period, continuous, newsvendor modal with fixed costs associated with each train put into operation. Any demand which cannot be satisfied by the intermodal operator is handled by a truck carrier. Contrary to the trucking market, the Operator is the leader in our Stackelberg game, in which the Service Provider decides upon the final modal mix. <br/><br>
<br/><br>
It is found in the cases that the operators tend to have a strict production focus, preferring to transfer the responsibility of filling the train to the service provider. Since the service providers are used to having very low fixed costs (no own assets), they claim that this way of selling the capacity inhibits the possibilities to increase the rail-share of their modal mix. In the model, we therefore investigate two possible ways to contract the capacity: 1) through a unit price per trailer, in which an arbitrary number of trailers is sold to the service provider at a unit price per trailer, and 2) with a service charge per train, in which the operator charges a fixed rate for operating each train, leaving the responsibility to fill the train to the service provider. <br/><br>
<br/><br>
The research characterizes these contracts and show that the operator prefers a per-train charge in most instances: the production focus in inherent with the current market structure. It is also shown that the per-train type of payment coordinates the system in several instances and thus outperforms the unit price preferred by the operator. In that, the production focus has no negative impact in the modal mix in these instances. However, none of the contract types can guarantee coordination, leading to lower total profits than optimal. We therefore show how a three-part tariff, in which the operator charges a unit cost per trailer, a service charge per train, and a wealth-transferring component, can achieve full coordination. Such a contract may however be difficult to implement due to its complexity. <br/><br>
<br/><br>
Analysis with the model shows that policy measures such as a general carbon tax under some circumstances may increase the amount of intermodal capacity although this may not always be the case due to decentralized decision-making. Measures aiming at reducing the financial risks of the markets, such as allowing longer trains, reducing slot-fees, or introducing a well-functioning spor-market may more easily achieve a higher intermodal share. <br/><br>
<br/><br>
In that, the research provides insight on the mechanisms on the micro-level that may affect the realization of the political visions, with implications for operators and service providers as well as policy-makers. In particular, the semi-fixed cost structure of the intermodal investment has been poorly addressed in the past, and by analyzing the impact this has on the capacity investment, the study builds on previos research on green logistics, as well as mode choice, capacity management, and supply chain contracting. <br/><br>
<br/><br>
Finally suggestions for future research along the four potential paths are discussed: empirical research to understand the actual rather complex market; relax model assumptions regarding number of time periods, compliance regime, private information, hidden actions and risk aversion; include more players as shippers and infra structure owners; and compare results with other service markets very capacity is "lumpy".},
  author       = {Eng Larsson, Fredrik},
  isbn         = {978-91-7473-273-3},
  keyword      = {green logistics,modal shift,mode choice,capacity management,supply chain contracting,intermodal transport},
  language     = {eng},
  pages        = {154},
  title        = {Green Logistics through Modal Shift - exploring the role of the transport capacity contract},
  year         = {2012},
}