There are also related capacity challenges, exacerbated by the parallel desire to keep increasing numbers on the passenger side of the business.
Additional capacity could be made available by increasing the size of bridges and tunnels on key freight routes, and by investing in other technical solutions such as faster freight trains, double stack containers and the conversion of high-speed trains to accommodate the transportation of parcels.
But while greater capacity would certainly help, it cannot be the only answer. In an increasingly connected and high-tech world, the rail freight sector needs to stay up to date with the latest commercial trends and technological advances – or risk losing out to other modes of transport.
The imperative of innovation in freight
One such commercial trend that is affecting nearly all industries is the increased personalisation of services and the move by more and more businesses to minimise stock in order to keep costs low. The prevalence of ‘just in time’ inventory management has already transformed the way in which goods are manufactured, as well as the quantity and frequency in which they are moved. This in turn has created a need for responsive and flexible systems right across the freight and logistics sector.
Ensuring that systems remain responsive and flexible is clearly not easy in a sector where infrastructure is fixed and vehicles have long life-spans, but failure to evolve could see the rail freight industry lose out to road freight as well as to emerging new modes of transport, such as tube logistics and unmanned aerial vehicles.
Another trend spreading across industries combines increased automation and digitalisation with a view to embracing globally connected systems along the lines of the Physical Internet Initiative. As a result of this, the next ten years will likely see a greater adoption of automation within physical infrastructure and handling equipment at ports, airports and other logistics hubs.
Digital identifiers and blockchain technologies are meanwhile likely to spread through supply chains to improve the safety, security and traceability of goods in an automated environment. Again, rail cannot afford to just watch from the sidelines.
Shake-ups to trade and industry
Beyond the changes to physical infrastructure and the arrival of new technologies, there will also be a need to keep up and adjust to potentially major shifts in international trading arrangements.
The Chinese government’s Belt and Road initiative is a striking example of how new initiatives can have sweeping effects on the way goods are transported globally, with trial deliveries of goods from the UK to China along the road and rail route already achieving transit times of 12-18 days – around a third of the time that it would take to transport the same goods by sea.
The logistics industry is also going through a period of consolidation. We have already seen some of the largest carriers merge with forwarders to have more control over end-to-end operations. It is possible that more online retailers will follow Amazon’s lead and create their own logistics operations in order to reduce supply-chain costs.