New Inter-Modal Freight Technology and Cost Comparisons

Abstract

Freight carried by rail has traditionally been mainly low value bulk commodities. As Western economies advance the market for such freight services is at best static, and forms a smaller proportion of the total demand for freight transport. There is thus an urgent need for British Rail and other rail systems to develop practical and cost effective inter-modal systems, which offer high quality services to consignors of consumer goods whose premises are not usually connected to the rail network. The new developments are of two types. Either they involve transferring the body of a road vehicle from road to rail, or moving the complete semi-trailer of an articulated outfit by rail. Each system has disadvantages in terms of volume or tare weight when compared to road, but each system may attract different commodities. Though the costs of inter-modal systems vary, their cost structures have similarities, consisting of collection and delivery costs, terminal, and rail movement elements. The break- even distance of each system depends on the extent to which low rail haulage charges offset the other costs incurred. However, traffic will only be attracted to inter-modal in sufficient quantities to enable viable services to be provided over a limited number of long distance routes. These services must also approach, if not equal the competition in terms of quality of service attributes, particularly reliability, if they are to overcome customer resistance. To assess the distances over which these new inter-modal systems will be cost competitive a cost model has been developed. The paper decribes how the model works, and the sources from which data was obtained. A separate paper (Working Paper 276) reports on a study to find the value placed by shippers on quality of service attributes, and a third paper (Working Paper 286) brings the two together to reach conclusions on the future role of inter-modal systems