ON THE RIGHT TRACK
to investigate a modal shift
A study on the applicability of intermodal transport for liquid food.
Name: F.J. Jansen
Student number: s1662570
Master program: Business Administration Operations and Supply Chains
Year: 2009 / 2010
Company: Fritom
University: Rijksuniversiteit Groningen (RuG) Supervisor (Fritom): G.P. de Vries MSc
First examiner: Prof. Dr. R. Teunter Second examiner: Dr. M.J. Land
ABSTRACT
This paper investigates intermodal transportation applicability for liquid food in the Benelux. Main reasons are the consequences of the European Union unification, the globalization, carbon footprint developments and the credit crisis, which pressure margins of road transportations. By order of Fritom, this research investigates the best practice solution for this problem and points out which modality fits best within the network of Fritom’s Liquid Food Group. The main research question that will be answered in this paper is as follows:
Is intermodal transport applicable for liquid food on short distances in the Benelux?
Intermodal transport is executable by several modes like road, rail, barge, deep-sea, short-sea and air. In this research air, deep-sea and short-sea are out of scope, because air transport is too expensive, deep-sea is no part of their business and short-sea expertise still exists. In order to decide which modality is best to use, the performances of road, barge and rail modes will be described. These indicators create insight in the costs, transit times and carbon dioxide emissions that come with each modality and will be used for further analysis. This analysis focuses on 14 percent of Fritom’s business, the part that contains mainly glucose and vegetable oil products. That part of its business is characterized by pickup locations in South-Western Benelux with final destinations in North Eastern Netherlands. The remaining part of 86 percent can not be applied by intermodal transportation, due to specific product restrictions and lane characteristics.
The analysis calculates the costs of intermodal transport, based on five cost categories namely pre transport, main transport, post transport, container lease and cleaning costs. The outcomes made clear that barge and rail are not competitive in comparison to road transportation. In general, it is concluded that intermodal transport is not competitive on LFG|Fritom’s lanes in-between countries in the
Benelux. It also may be concluded that intermodal transport is only competitive on five lanes that originate from Bergen op Zoom and run to Kielwindeweer, Hoogezand, Leeuwarden, Beilen and Meppel. Together, these associated final destinations have a potential saving of € 8,065 annually and is realizable by the implementation of barge transportation. The volume of these five lanes represents 2.2 percent of the total business. A reduction of carbon dioxide emission that fluctuates between 15 and 25 percent per lane could be realized. The modal shift from road to barge or rail has no
consequences for the transit time. The products into the analysis scope will not exceed their maximum perishability time if intermodal transport would be implemented.
If Fritom’s management want to create a modal shift in its business of liquid food on short distances, the results of the analysis made clear that the organization should focus on four factors:
1) Pickup and delivery plants located close to terminals.
2) Availability of shuttle services between arrival and departure terminals. 3) Lanes that characterize large volumes.
4) Competitive intermodal offers.
Keeping this in mind, it can be recommended to:
1) Create an economy of scale by a joint intermodal approach for all Fritom companies and possibly for other logistic providers.
2) Integrate the supply chain as it is better to cooperate instead of compete with other companies. 3) Focus on niche markets in order to add value to the chain.
PREFACE
The final assignment of the Master Business Administration from the Faculty Economics and Business at the University of Groningen is formed by a final thesis, which is written by individual students in a few months. The objective of this paper is to prove the knowledge and skills which should be geared during the Master of Science in Business Administration, within the specialization of Operations and Supply Chains.
This paper is written by commission of the Fritom company. Taking a look in the business of Fritom teaches that efficiency is of paramount importance to gain and maintain a competitive advantage. This research relates to efficiency of liquid food logistics in combination with corresponding consequences of an eventual modal shift.
As a consequence of the European Union, globalization, carbon footprint and the credit crisis, margins of road transportation stay under pressure. A modal shift could be competitive while carbon dioxide will be reduced in meanwhile. The research in this paper investigates the best practice solution which modality fits in-between the network of Fritom’s Liquid Food Group.
My research contributes to the applicability of intermodal transport on short distances for liquid food. A special thanks goes to my direct manager, Mister Gerbert de Vries. Brainstorm sessions with him were valuable and his accompany essential for this research. Furthermore, I want to thank all employees which helped me gathering data and advised me about relevant research possibilities. Without them it would be impossible to produce this thesis.
The Netherlands Enter
TABLE OF CONTENTS
ABSTRACT ... 2 PREFACE ... 3 TABLE OF CONTENTS ... 4 1. RESEARCH INTRODUCTION ... 5 1.1 The company ... 5 1.2 Research motive ... 5 1.3 Problem statement ... 6 1.4 Assignment ... 6 1.5 Preview ... 6 2. RESEARCH DESIGN ... 7 2.1 Introduction ... 7 2.2 Research structure ... 7 2.3 Research methodology ... 83. THE OPERATIONAL AREA ... 10
3.1 Liquid food business ... 10
3.2 Intermodal overview ... 11 3.2.1 Scale ... 11 3.2.2 Cost ... 11 3.2.3 Quality ... 11 3.2.4 Dependability ... 12 3.2.5 Transit time ... 12 3.2.6 Flexibility ... 12
3.2.7 Carbon dioxide emission ... 12
3.3 Product groups ... 13
3.4 Currently road lanes ... 15
3.5 Intermodal execution ... 15 4. ANALYSIS ... 18 4.1 Main transport ... 19 4.2 Pre transport ... 20 4.3 Post transport... 22 4.4 Container lease ... 24 4.5 Cleaning ... 24
4.6 Total cost price ... 25
4.7 Five steps approach ... 30
4.8 Sensitivity analysis ... 31
5. CONCLUSION ... 33
6. RECOMMENDATIONS ... 35
REFERENCES ... 37
APPENDIX 1: Road calculations... 38
APPENDIX 2: Barge calculations ... 39
APPENDIX 3: Rail calculations ... 40
APPENDIX 4: Sensitivity analysis ... 41
1. RESEARCH INTRODUCTION
The introduction of this paper gives a short impression of the organization where research will be done. The aim of this research is described in section 1.2. This motive results in a problem statement as treated in section 1.3. The assignment is formulated in section 1.4 and finalized by a preview of this paper.
1.1 The company
Holding|Fritom is the parent company of ten subsidiary companies, which together form the Fritom group. The group combines the expertise, flexibility and strength of companies within the areas of transport, warehousing and liquid food. Fritom is part of the top 25 Dutch professional goods transport companies. Its aim is to play a managerial role in relation to the provision on logistic services and participate in only those markets segments where the organization is able to add value to the logistic chain. Through continuous investment in staff and company processes, the organization has become one of the market leaders within its areas of expertise.
The liquid food group of the Fritom company exists of two business units. The first, Bidon|Fritom, focuses on road-only transport. The second, Melkweg|Fritom, is specialized in short-sea container transport. The different units focus on their own operational area which makes them both
geographically specialized. The transshipped goods of both units arrive as raw material deep-sea in European harbours. After stocking and processing, the goods like chocolate, glucose and vegetable oils are transshipped to inland food producing industries. However, loading points are not only located in European harbors. Also many inland dairy production locations are part of their network. In this Business-to-Business environment, the liquid food group of the Fritom operates between shipper and receiver within its operational area in North-Western Europe. Bidon|Fritom takes care of inland transportation by trucks with a strong focus on the Benelux and Germany. Melkweg|Fritom focuses on short sea destinations like the United Kingdom, Scandinavia and the Iberian Island.
Fritom|Holding Bidon|Fritom Melkweg|Fritom Annual revenue € 115 million € 15 million € 15 million
Employees 758 100 10
Equipment 450 60 130
Operational area Worldwide Benelux & Germany UK, Scandinavia & Iberia
Table 1.1, Fritom’s key characteristics
The current key characteristics of Fritom are presented in table 1.1. From now on, the Liquid Food Group of Fritom will be referred to LFG|Fritom in this report.
1.2 Research motive
Due to increasing costs and traffic congestion, it is hard to be a competitive logistics provider. The entrance of low-cost companies from East Europe in this market has reduced margins and market shares of local providers. There is overcapacity, which causes price erosion. The current economic crisis accelerates this process. Future expectations of increasing fuel prices, eco taxes on truck emissions, kilometer charges in the Netherlands and taxes in other European countries all add to the pressure to reduce costs. Also a lack of drivers is a threat to the market since the professional driver occupation becomes uninteresting due to minimal wages compared to the number of labor hours. Meanwhile, the society is moving from an industrial environment into a corporate social responsible environment, where reduction of carbon dioxide emission has been given high priority by world leaders. Carbon footprint and sustainability is booming and discussed daily. Corporate social
concept of intermodal transport is not new for the logistic branch, for Fritom’s liquid food group it may be the way to stay a competitive player in the field.
1.3 Problem statement
In order to be competitive and reduce carbon dioxide emissions, a shift to intermodal shipment is inevitable. Intermodal transport is formulated as the movement of goods in one and the same loading unit or vehicle which uses successively several modes of transport without handling the goods themselves in changing modes. Only the load unit is transshipped and not the goods themselves. However, the liquid food sector deals with perishable products that require fast transportation, short throughput times and just-in-time delivery. This leads to the question whether intermodal transport is suitable for liquid food. In the past, logistic experts assumed that intermodal solutions were profitable for corridors1 from one thousand kilometers and up. Several developments like increasing fuel prices and labor costs on the one hand and infrastructure improvements on the other will reduce this breakeven point drastically, making it profitable to use intermodal solutions for short distance transportation also. However, lack of research makes it hard to confirm this statement.
There are different ways to give substance to intermodal logistics. Intermodal transportation can consist through air, water, over the road and over rail tracks. The principal focus of this study is therefore on movement of containerized freight, legally allowed and applicable in the food sector. Due to perishability and low value of liquid food products, short haul shipments characterize the liquid food market. Minimal intermodal infrastructure developments, bad connected corridors and speed requirements made research of intermodal application on an intensive level uninteresting. However, the current economic crisis forces management to focus on costs. This tendency lacks modal shift2 opportunities, since many logistic providers of road transportation operate under their cost price due to overcapacity and lack of discipline. LFG|Fritom is persuaded to change strategy and focus on other modalities in order to be ready for the future when the economy will increase.
The problem proposition states that management of LFG|Fritom lacks information to determine whether intermodal transport is applicable in their liquid food business and can then generate a modal shift.
1.4 Assignment
Since the applicability of intermodal transport for liquid food never has been researched on an intensive level, this paper investigates possible intermodal solutions for LFG|Fritom’s transport lanes. The assignment is to design a cost analysis of several modalities, resulting in the best practice solution for transportation on short distances. This analysis will answer the main question whether intermodal transport is applicable for liquid food on short distance in-between countries in the Benelux.
1.5 Preview
In de next chapter, the theoretical method is described. It also creates conditions for intermodal applicability in the food branch. This framework will form the basis for the analysis of current and potential lanes of LFG|Fritom on intermodal transport possibilities, while reducing carbon emission. Chapter 3 formulates the operational area of LFG|Fritom’s liquid food branch. This section defines the scope on which part of its business the analysis takes place which will be described in chapter 4. The conclusion is treated in chapter 5 and finally in chapter 6, several recommendations will be made to advise the Fritom management on intermodal transport solutions for its business.
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A major transit route or railway between places and crowded areas.
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2. RESEARCH DESIGN
The theoretical background as described in this chapter forms the fundament for the research. First, some important definitions are given in order to understand the business in which LFG|Fritom is operating. The structure of section 2.2 presents the approach used in this paper. Finally, the methodology in section 2.3 is described related to the theoretical background.
2.1 Introduction
Before describing the research structure and relevant methodology, the most important keywords of this paper are defined. Intermodal transport refers to the movement of goods in one and the same loading unit or vehicle which uses successively several modes of transport without handling the goods themselves in changing modes. This definition is deduced from multimodal transport as defined by Macharis and Bontekoning (2004): ‘The combination of at least two different modes of transport in a single transport chain, without a change of container for the goods, with most of the route traveled by rail, inland waterways or ocean-going vessel and the shortest possible initial and final journeys by road.’
The environmental field of this research is on supply chain level since the company operates between shippers and receivers. In that case, supply chain management is defined as a set of approaches utilized to efficiently integrate shippers3, receivers, intermodal operators and transport providers, so that merchandise is produced and distributed at the right quantities, to the right locations, ant at the right time, in order to minimize system wide costs while satisfying service level as deduced from Simchi-Levi et al (2003). LFG|Fritom plays an important role in this process. These definitions will help determine the scope of this research where the organization is acting.
2.2 Research structure
Before the analysis take place, a detailed scope has to be defined. A structured approach helps define the scope in order to answer the main question. The research structure helps to leave out all irrelevant business parts that can be excluded on forehand and will be treated in chapter 3. Therefore, the current liquid food business will be described in combination with the operational execution of it. Subsequent, a focus on intermodal modes defines which modalities fall into the scope for further research.
Furthermore, the intermodal performances of these modes have to be determined on which indicators should be focused. As the environmental focus is defined, a close look on the transshipped liquid food products is necessary. It is supposed that some products fall out of the analysis scope due to criteria like perishability. From those products into the scope, their geographic flow of transportation will be mapped. Finally, the possibilities of intermodal execution form the guideline for the cost analysis in chapter 4.
Since LFG|Fritom is new on the intermodal market, first an orientation of this market takes place. The data gathering process will make use of several independent organizations that could help defining this environment, which players do exist and what are their activities. Furthermore, it is necessary to define the infrastructure, intermodal possibilities and their performances. The NEA is a Dutch information institute for traffic and transportation, which could help mapping the structure of realizing a modal shift by their years of experience. In order to find the right rail information of shuttle4 trains, CargoRail, a Dutch independent information centre, provides data for entrants on this market. Their internet site provides actual data to find the right partners, schedules and other relevant information to
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Owners of the loading and the contractor of the transport.
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orientate. Due to commercial independency no prices will be stated here. The logistic provider has to negotiate with the intermodal rail operators5 for the price of a container transhipment on the relevant shuttles. In order to find the right information on inland shipping, the information office of barge provides this on their internet site. In contrast with CargoRail, this independent information centre provides commercial prices.
After defining the environment, the current business of LFG|Fritom will be defined. The internal organization provides many information and data. These data about the company, volumes, rates, costs and lanes will be generated out of their IT systems, while practical information will be geared by observations and responsible employees. The data used during this research covers 2009. The scope must define on which part the analysis should be focused. Food products require minimal transit times, due to perishability or other restrictions. A determination which products are applicable for intermodal transportation is necessary to define this scope and might be used to focus during commercial
acquisition developing their new business focus.
Finally, it is defined how their current business fits into the intermodal business. The analysis determines if there are intermodal solutions for LFG|Fritom’s short distance lanes in-between the Benelux. The theoretical methodology will fundament this structure.
2.3 Research methodology
As defined the research structure, the methodology is determined in this section and forms the background for this research.
Many research have been done on maritime arriving general cargos, which are shipped inlands by intermodal modes. However, the business of LFG|Fritom is not only maritime arriving, which makes it more complex and not directly fits to theoretical backgrounds. As their network is mostly not direct linked with maritime cargo but also associated with inland cargo, a combination of several modes is required. A natural consequence of the combination of different modes of transport in intermodal transport is the involvement of several actors, like transshipments and intermodal providers. Figure 2.1 shows the maritime based intermodal cost structure. Macharis et al (2009) explains that intermodal transport has lower variable cost in comparison to unimodal road transport, thanks to scale advantage. However, the handlings within the terminals negatively affect its fixed costs. Considering the total transport prices and the distance traveled, unimodal road transport is cheaper on short distance, but once the breakeven distance is received, intermodal transport offers a competitive alternative. Based on that theory, figure 2.1 is draft and forms the theoretical background of this research in order to investigate competitive intermodal applicability for liquid food.
The SPIN (Scanning the Potential of Intermodal Transport) methodology of Tsamboulas et al (2006) might be a guideline of analyzing LFG|Fritom’s business on intermodal applicability. This theory attempts to address the impacts of a particular policy option on intermodal transport, considering it as a separate mode and taking into consideration the infrastructure network and services characteristics, as well as the business environment. However, their complete policy would be too broad and possibly not necessary as intermodal implementation would be concluded as not competitive or impracticable. A focus on a smaller part is therefore applied. Earlier research by Tsamboulas et al (2006) describes the development of a methodology with the necessary tools to asses the potential of a specific policy measure to produce a modal shift in favour of intermodal transport. The methodology is comprised of thee parts, namely a quick scan, an advanced scan and finally a macro-scan, which is a toolbox that assesses the potential for modal shift. This research forms a cost price comparison, which corresponds to their quick scan tool as the current business of LFG|Fritom will be analyzed and results in a
fundamental advice for possible alternative modes.
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Figure 2.1, Intermodal cost structure (source: CargoRail)
Before starting this analysis, the intermodal possibilities have to be mapped. An important lack in intermodalities and therefore the reservation of shippers and logistic providers is the performance. On many aspects such as service, reliability, frequency and speed, using road transport is more a
competitive factor than intermodal solutions will be. To produce a modal shift for some cases, innovation in intermodal freight transport is necessary. Examples of such necessary innovations are speed and flexibility for long distance perishable and high value goods, shorter transport times in rail haul and transhipment, or higher frequency of services for short distances (Bontekoning and Priemus, 2004). This research will investigate if such innovations are helpful realizing a modal shift for liquid food and might recommend other innovations based on short distance lanes in the Benelux.
As described in section 2.1, this research is acting in a supply chain environment field, as intermodal transportation is linked by several actors in the chain. Since intermodal transport is increasing, the opportunities and constraints of a modal shift must be evaluated from a supply chain perspective. Most of the developed researches are addressed from the supply side point of view. However, customer’s requirements on costs and quality of the transport system vary amongst supply chains. Because of that, the modal shift should also be examined from the demand side. The paper of Tsamboulas et al (2006) considers both the supply and demand side. A logistic provider operates as link between both sides in the chain and therefore a both sided view cannot be left out. Subsequent research will be executed in this paper.
Finally this research results in a cost price analysis, which requires minimal theoretical background. The research goal is to produce a cost analysis to determine if intermodal transport is applicable for liquid food. The investigation and final analysis determines the total costs of intermodal transport. The theory as presented in this section will be helpful realizing this objective.
Profit
Handling Pre- and post-transport
3. THE OPERATIONAL AREA
In order to analyze data, first the operational area has to be formulated. This chapter defines the business part on which intermodal transport applicability might be possible and forms a preview for the analysis in chapter 4. It has to be clarified on which part the analysis should be focused. An operational area description is needed to define the scope of analysis and creates guidelines for management to take decisions on a strategic level. Many variables determine if intermodal transport is applicable for liquid food. Besides product characteristics, also the flow of a lane influences this. The first section describes the business area of Fritom’s liquid food group. Several intermodal solutions in combination with their performances are explained in section 3.2. Since the liquid food branch deals with perishable goods, a definition of product groups is given in section 3.3. This is necessary to define which products are intermodal applicable. Section 3.4 describes the geographical deviation of the current road lanes, followed by the execution of intermodal transportation the last section.
3.1 Liquid food business
Intermodal transport in this paper is concerned with tank container6 cargo. Nowadays, more and more goods are transported in containers, since that makes a reduction of costs and carbon dioxide emission possible. This might be a great solution for LFG|Fritom, in order to change transport mode and ship goods by container instead of trailer. However, customers will be convinced of the advantages of intermodal transport by figures. The analysis and calculations in the next chapter form the basis for a commercial approximation of shippers and receivers. Before, the operational area is explained. Describing the operational area of LFG|Fritom, a broad helicopter view provides insight in this division. The current operational area of road transportation is Benelux oriented through the entrance of low-cost companies from East Europe. A close network of lanes is created in order to offer competitive rates. Short distance transport is characterized by low labor costs per lane, which makes this type of transport competitive with Dutch wages. Transportation on long distances includes many labor hours, which makes low Eastern wages more competitive compared to LFG|Fritom. However, on incidental demand, long distance transportations throughout Europe are carried out in order to serve their customers. Since these lanes are not used very regularly, it makes no sense taking them into the analysis scope of the current lanes. The advantages of reduced costs and carbon dioxide emission will be reached on lanes characterizes high frequencies. Since changing the transport mode from road to intermodal, the focus will be on these short distance transports. Short sea destinations like the UK and Scandinavia are then out of scope, while this business is still developed by intermodal solutions. Making intermodal solutions applicable, the goods have to be transported in dedicated liquid food 1 TEU tank containers as represented in figure 3.1. One TEU refers to a Twenty foot Equivalent Unit, which corresponds to the volume of a 20 foot container. During transportation, products do not change condition. While changing modality, no transfer of liquid food products takes place. The operational workflow is characterized by Full Truck Loads (FTL) mostly based on one compartment loading, which suggests the use of simple lanes in order to bring the goods from shipper to receiver directly. Fritom’s management has decided that the strategic move should not lead to a large investment in equipment, as there is no certainty the turnover from new customers will grow as a result of the new investment. This means that required equipment for a move to intermodal transport should be acquired in another way. Leasing the equipment during the introducing period avoids large fixed costs. Road transport using existing and new lanes will be switched to barge or rail transport. Investing in new trucks is therefore not necessary. As a consequence of intermodal transport, the remaining pre and post truck transportations will be done by local subcontractors, which will be explained in detail in section 3.5. Melkweg|Fritom disposes 130 tank containers and is able to lease them at Bidon|Fritom during
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less busy periods. If no overcapacity exists, leasing by other companies is necessary. The container is characterized by single compartments into a 20ft framework. The pre and post trucking requires tank chassis where the containers are set on. Some unloading places require a pump in order to lead the food from the container into the factory. This pump is not standard available on a tank chassis and should be taken into account during the analysis. Investments in infrastructure by meaning of new terminals for example, will be excluded from the analysis, because invests are too large.
Figure 3.1, Tank container Figure 3.2, Tank trailer
Figure 3.2 represents a regular tank trailer which is nowadays executed by Bidon|Fritom.
3.2 Intermodal overview
Intermodal solutions will be found in road, rail, deep sea, short-sea, barge and air modalities. Since deep-sea and air transport will not be a solution for liquid food on the European market, this will be left out of the analysis. Air transport is too expensive and deep-sea is no option as maritime arriving products first have to be processed in European harbours. Because short-sea expertise is available within the organization, the main focus is on rail and barge. Each transport modality has its own strengths and weaknesses. To compare the transport modes, the performance indicators are described in this section as a result of interviews with independent intermodal organizations.
3.2.1 Scale
Road transport is characterized by limited scale, but it has a strong market position in door-to-door transport. Barge and rail transport are able to operate on a large scale, but have relative high
transhipment costs. Due to necessary after-road transport, a minimum distance is necessary to compete with intermodal transport per rail or barge. This minimum distance in combination with a near
terminal determines whether intermodal transport is competitive compared to road transport or not. Research on volumes of LFG|Fritom should indicate whether volumes are sufficient to develop an intermodal dedicated mode.
3.2.2 Cost
According to the theory of Kreutzberger (2005), distance and time are important factors of competitiveness of intermodal transport. They generate (direct) vehicle costs and – via transport quality – indirect costs to the customers. Clearly direct costs are the most important performances of the intermodal transport system. The average costs per unit of intermodal solutions are lower, due to grouping cargo of several shippers. For destinations situated along waterways, inland shipping is almost always attractive in terms of costs. Furthermore, the necessary pre and post transport are determining factors. If these distances are too long or do not fit into the network, road transport stays profitable.
3.2.3 Quality
mistakes probably imply that customers claim costs, intermodal providers will be aware of competitive quality performances. The pre and post transport will be carried out either by own trucks or local partners. Through final contact with customers, they present as visiting card of the logistic provider. Intermodal providers however are not in direct contact with the customer and therefore less relevant for customer requirements.
3.2.4 Dependability
Dependability is also assumed to be competitive for all three modes. Customers emphasise the
importance of a good match between transport and the logistic system. Despite of better road transport on urban destinations, most of LFG|Fritom’s customers are located in industrial zones. In their
network, reliability is valued high. Often transit time, arrival and departure times, and frequency have a lower priority. Some lack of clarity in the performance per modality is obviously due to the overlap of different modes for the execution of one shipment.
3.2.5 Transit time
LFG|Fritom operates as logistic provider between shippers and receivers. As intermodal applicability is one of their important objectives, cooperation between shareholders is required, preferable on supply chain scale. While rail and barge have longer transit times7 due to lower average speed, it has consequences for scheduling processes. Shippers should produce more in advance, receivers will not receive their products at every requested moment and storage at terminals is required. This mentality will be new for shippers and receivers but is essential for intermodal transport as long as the maximum perishability of the liquid food is not exceeded.
3.2.6 Flexibility
In addition to longer transit times, the flexibility of intermodal transport is assumed to be sufficient, however lower than road transport. While road transport is influenced by fewer factors, intermodal transport deals with more stakeholders resulting in a more complex situation, making fast anticipation difficult.
3.2.7 Carbon dioxide emission
As a final indicator, carbon dioxide emission forms a new decision area for customers. The NEA concludes that cost leadership is still the most important criterion in tenders. In a strongly competitive market, specialization is very important in order to maintain a competitive edge. Still, costs are the decisive factors in tenders. This has nothing to do with the logistic service provider, but with the shipper, to whom the price is the most important factor. Besides that, other elements, such as quality, service, innovation, collaborating with the client, added value and sustainability come into play. In practice, a struggle between operational and commercial people is often ongoing. While operational employees are willing to change transport mode, commercial employees are reserved as it is hard to convince customers. Experience of LFG|Fritom with previous tenders of large shippers confirms this. However, LFG|Fritom wants to show that cooperation on a supply chain basis is much more profitable and creates advantages in the reduction of carbon dioxide emission, compared to tendering. The way of convincing customers for intermodal transport is mostly based on cost and sustainability. Research of Speditions- und Logistikverband DSLV (2009) concluded that logistic providers do not expect that shippers are willing to pay more for green logistics.
The model of Van Den Bosch Transporten B.V. is used as guideline for calculating the emission. There are many applications to calculate the emission, as each application depends on the criteria. Their tool is developed and constructed with the help of figures from CE in Delft. CE is an independent research- and advice office, specialized in development of innovative solutions for environmental issues. The calculation of CO2 emission is based on the values presented in table 3.1 and produces an indication to determine the emission of a modality as it is hard to determine the real consequences.
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A general summary of the three modality characteristics is given in table 3.1. Note that these figures are general for the transport branch and not specified for liquid food. Van der Horst et al (2009) described scale, speed and cost characteristics by road, barge and rail. As described above and defined by LFG|Fritom’s management, costs, transit time and CO2 emission are determining factors with high priorities for customers and resulting in the three leading indicators for further research.
ROAD BARGE RAIL
Scale 1-2 TEU 32-500 TEU 80-180 TEU
Quality Competitive Competitive Competitive
Dependability Good, especially urban Good Good
Transit time 60-70 km/h 15-20 km/h 40-50 km/h
Flexibility High Limited Limited
Costs € 1.00 per kilometer € 0.50 per kilometer € 0.60 per kilometer
CO2 emission 1.6 kg per kilometer 0.875 kg per kilometer 0.487 kg per kilometer
Table 3.1, General characteristics of modalities (source; Van der Horst et al 2009)
Both for barge and rail, their scheduled shuttle services are based on main hubs. The Rotterdam-area is the starting point for many shuttles throughout Europe. Since liquid food products deal with
perishability, long transit times are unacceptable and make barge transport applicable only on short distances.
After defining applicable product groups for intermodal transport in section 3.3, further research has to be done in subsequent section 3.4. This section describes the analysis of the current situation regarding the operational area of LFG|Fritom that mainly focuses on lanes in-between the Benelux.
3.3 Product groups
This product analysis is made to create insight in the products which are into the scope of intermodal transport. Several characteristics of the products are described in this section. Main inputs for this description are the interviews with employees. Their practical experience in combinations with historical data results in several criteria. The analysis of the operational area is distinguished per product group and is made on temperature, perishability, lot size, density, distance and other restrictions criteria. The transported products by LFG are grouped into ten main groups, ranged according to several characteristics. The conclusions of this paragraph clarify which products are applicable for intermodal transport and form the basis for further analysis. Those parts for which intermodal transport is not applicable due to restricted characteristics are out of scope.
Since LFG services almost all Dutch dairy producers, a detailed insight in the flow of liquid dairy goods has been acquired. The average distance of LFG’s dairy transport is about 135 kilometers per shipment. Dairy products are relatively low valued and in that case uninteresting for long haul shipments. Every European region has its own dairy products by the establishment of local farmers. Another limitation is the perishability of dairy. While mostly all of the transportations should be shipped into 24 hours, the transship time of intermodal transport takes too long. The operational dairy area of LFG in Benelux is representative to the rest of Europe, which takes dairy products out of the intermodal scope.
multiple compartments. This combination of equipment does not exist and takes chocolate out of the scope. Cocoa products fall in the scope, as heating facilities are optional to rent.
The remaining groups of fruit juices, wines, eggs and animal addressed feed products are representing low volumes, but might be in the scope of potential lanes. Especially fruit juices are easy applicable for intermodal transport.
Product group Perish- ability
Lot Restrictions Distance Turnover Share In scope Dairy 24 hours FTL none 135 km € 11,049,506 73.66 % N
Cocoa butter 96 hours FTL heating 800 km € 61,485 0.41 % Y
Cocoa liquor 96 hours FTL heating 462 km € 5,173 0.03 % Y
Chocolate 96 hours >1 pump & heating 290 km € 1,920,495 12.80 % N
Glucose 120 hours FTL none 381 km € 1,546,080 10.31 % Y
Veg. oils & fats 120 hours FTL none 169 km € 161,212 1.07 % Y
Fruit juices 96 hours FTL none 866 km € 3,975 0.03 % Y
Wine 96 hours FTL none 903 km € 4,788 0.03 % Y
Eggs 96 hours FTL none 387 km € 85,384 0.57 % Y
Feed / GMP8 72 hours FTL none 285 km € 161,902 1.08 % Y
€ 15,000,000 100%
Table 3.2, Product group characteristics
A summary of the product groups characteristics is presented in table 3.2 above and concluded with the scope in the last column. Based on turnover, around 86 percent of the current operational area in not applicable for intermodal transport, while the remaining 14 percent (mainly glucose, vegetable oils, GMP, eggs and cocoa butter) forms the basis for further research in chapter 4. Translating the turnover shares, approximately 14 percent of the yearly driven kilometers can be translated to 1.884.296 kg carbon dioxide emission. The carbon dioxide emission is based on 1.6 kg per kilometer as mentioned in section 3.2.7. The figures of kilometers and CO2 emission per product group are based on the distribution of turnover share.
Successful intermodal transport requires a balanced stable flow in combination with large transport volumes, which leads to a low cost price per transport unit concludes the NEA (2009). Volume will also lead to a higher transport frequency and a more efficient use of capacity. With these large volumes, a dedicated intermodal corridor could be explored in one single resource. This refers to one train or ship, provided for dedicated shippers. To operate a dedicated mode, volumes should be larger than approximately fifty TEU per week as concluded in table 3.1. On annually basis, a volume of 2500 TEU is required. As volumes are smaller, existing freight shuttles could solve this problem and offer solutions in grouping containers of several shippers and logistic providers. However, the various executing transport modes must be well assembled to each other in order to make intermodal transport profitable.
Analyzing the volumes of LFG|Fritom, it is concluded that volumes are too small to investigate in single resources. Together, the lanes with cocoa butter, cocoa liquor, glucose, vegetable oils, fruit juices, wine, eggs and GMP represent 2970 shipments annually, however all with different directions. Since a volume of 2500 TEU is required, intermodal solutions should be focussed on shuttle services. It can be concluded that intermodal applicability assumes a typical SFSD (Small Flow Small Distance) character, as described by Bärthel (2003).
Since volumes are known, research on eligible subsidy possibilities has been done. The Marco Polo 11 Programme is a fund which ‘gives financial support to initiatives taken by commercial undertakings aiming at shifting freight transport off the road or avoiding road freight transport.’ The research on the type of project for modal shift consists of several projects, where ‘Modal Shift Actions’ and
‘Motorways of the Sea Actions’ fall in the scope. The modal shift subsidy is not eligible, as at least 60
8
million tKM9 is required on average per year. The quantity of LFG|Fritom consists of 17 million tkm. Due to the same quantity guidelines, the subsidy of motorways of the sea action results in none subsidy opportunities.
3.4 Currently road lanes
In this section the current existing road lanes of LFG|Fritom are analyzed, as a consequence of the defined product groups in section 3.3. Only the associated lanes of products including the scope have been analyzed, which represents 14% of their business. The current road lanes will be compared to the different intermodal transport modes as mentioned in section 3.2.
Most important lanes are used on tracks that run from South-West Benelux to North-Eastern
destinations. Pickups are located in Aalst (B) (33%), Sas van Gent (22%), Bergen op Zoom (34%) and Rotterdam (11%) while destinations are located in the provinces Groningen (2%), Friesland (36%),
Drenthe (40%) and Overijssel (22%) as viewed in figure 3.3. Incidental carried out transports are not analyzed. Figures are based on historical data from 2009. The analysis is focussed on these lanes which have a South-North character, as products are picked-up in South-Benelux and delivered in North-Benelux.
However, when moving glucose and vegetable oil transport from tank trailers into containers, a completely new situation will arise. The applicability of intermodal transport then depends on terminal location close by pickup and delivery locations. Even when they exist, still a freight shuttle service should connect both locations. Without such a shuttle, an intermodal move is impossible for LFG|Fritom´s volumes. Four loading addresses in South-West Benelux have been investigated. The figures represent in total 1948 transports of glucose and vegetable oils on lanes in-between the Benelux. These plants are the main loading places where LFG|Fritom loads their food products. It is concluded that these volumes are too small for the applicability of one single resource in order to make a dedicated train or ship profitable.
Figure 3.3, South-North characterizing flow
3.5 Intermodal execution
In this section, three options for intermodal execution are described. This execution is mainly bases on pre and post transport, which is possible in several ways. The final cost price exists of five categories.
1) Costs of pre-transport: The costs of loading and transport from pickup address to the terminal by truck.
2) Costs of intermodal main haul: The costs of barge or rail outwards including handling at the
9
tKM (tonne-kilometer) refers to the transport of one tonne of freight across the distance of one kilometer
terminals.
3) Costs of post-transport: The costs of unloading and transport from the terminal to delivery address by truck.
4) Costs of equipment lease: While just a few containers are owned, it might be needed to lease a container and tank chassis.
5) Costs of cleaning: The costs of cleaning a food container.
Realizing a move from road transport to intermodal transport, the corresponding pre and post transport have to be considered. LFG|Fritom’s management gives direction to three organizational options that produces sufficient quality for the practical execution. By the experience of several employees of the company, these three options are described below.
A) Complete outsourcing (door-to-door concept)
Several intermodal operators offering a complete logistic door-to-door concept, focused on organizing intermodal cargo transport by different modalities resulting in complete logistic solutions from shipper to final customer. In general, this conflict with Fritom’s vision, as one of their main goals is to take a managerial role in logistic services to be responsible for development, execution as well as monitoring of logistic processes for all logistic cases of companies. Even, Fritom would explore such a service by itself. Outsourcing logistic cases to an intermodal ‘door-to-door’ provider presumes loss of control, while LFG|Fritom has the ambition top operate as logistic chain manager and managing pre- and post-transport by itself. Outsourcing to one logistic provider would create transparency in costs and reduces operational care. Despite that this door-to-door concept might be an opportunity for new market where less know-how of local partners exists, in many cases this option is too expensive.
B) Use of subcontractors
This option makes use of local logistic subcontractors who takes care of trucking of pre- and post-transport. The main reason for this approach is equipment saving costs. To be independent of fixed equipment costs, flexibility is created. As different subcontractors for pre-, main- and post-transport are used, each contractor is specialist on his own area. However, it is hard to control all subcontractors that are involved in the operational process. In addition, it results in more administrative work as they are not integrated into LFG|Fritom’s software applications. While entering new markets, it is hard to find reliable, certified subcontractors, provided with the right food equipment. In practice, this option is most profitable and attractive as volumes are low and flows are fluctuating.
C) Lease equipment
Starting point for this option is either lease or investment in equipment. As management of
LFG|Fritom decided not to invest due to uncertainty, chassis and truck equipment should be leased. A nervous planning and scheduling process might exist as all individual elements have to be managed. However, managing their own trucking will increase control since for example integrated onboard units in trucks facilitate real-time track and trace. In addition, this result in a fast administrative handling through several integrated applications. Another advantage corresponds to the direct contact with customers, which assumes fast anticipation. Trucking by leased equipment is only profitable for high volumes and steady flows.
Advantage Disadvantage A) Complete outsourcing - Less organizational care
- Transparency of costs
- Lose of control
B) Use of subcontractors - Flexibility - Using specialists - Mostly most profitable
- Hard to control - Difficult partner search - More administrative work
C) Lease equipment - Continue track & trace - Integrated onboard units - Fast administrative handling - Direct contact with customers
- Investment in equipment - Nervous planning & scheduling
4. ANALYSIS
The analysis in this chapter will help to create a guideline for the applicability of potential intermodal transport lanes. The analysis will be useful for future developments of commercial acquisition. Also it can be used to calculate the costs of a modal shift from road to environmentally friendly modes for liquid food logistics as cost prices are transparent. Section 3.2 describes the cost price per transport mode. It is assumable that these costs deviate per relevant sector. As this paper is focussing on
intermodal applicability for liquid food only, further analysis helps to interpret and determine the right costs.
The costs for road and intermodal transport will be compared through an in-dept analysis. After the explanation of the cost categories, an in-depth calculation can be made that is applicable for decisions on which modality can be used for which lane. The calculation of the total cost price is based on five main categories as treated in section 3.5, namely pre transport, main transport, post transport,
container lease and cleaning. The categories exist of fixed and variable cost components. The fixed costs will be considered as setup costs, while variable costs will be converted into a price per
kilometer. The most profitable solution is dependent on the combination of main transport costs with specific intermodal related costs like handling, pre transport and post transport. The figure of
intermodal cost structure in the methodology of section 2.3 confirms this, as costs like pre and post transportation are more expensive per kilometer than main transport costs as a consequence of their lower average speed.
This analysis makes clear why intermodal transport may be profitable for some lanes, while others are not. Furthermore, this analysis shows opportunities for other potential lanes. As stated in section 3.5, LFG|Fritom prefers to make use of subcontractors for the operational execution of pre and main transport. As a consequence, they are partly dependent on offered bids by these subcontractors. As LFG|Fritom is the purchasing organization, insight in these offers lacks. To prevent that too expensive services are purchased, offers are compared by their own cost price calculation to control them. Besides, it fundaments the consideration to lease equipment and execute the operation by their own. The figures presented in this section show basic cost prices, without profit surcharges. The calculation is made on basis of several costs components subdivided per category:
Cost categories Cost component Cost unit Main transport: Labour costs per hour € 38,-
Truck related costs per kilometer € 0.38
Pre transport: Labour costs per hour € 38,-
Truck related costs per kilometer € 0.28
Lease price tank chassis per day € 5,-
Post transport: Truck related costs per kilometer € 0.28
Labour costs per hour € 38,-
Lease price tank chassis per day € 7.92
Tank container lease: Lease price tank container per day € 7,-
Cleaning: Direct cleaning costs € 100,-
Labour costs per hour € 38,-
Table 4.1, Cost components overview
4.1 Main transport
The most important cost category is determined by the main haul and is influenced by its distance. The total costs are affected by the number of kilometers and labour hours. A first focus will be on the cost price per truck.
The main transport represents the main distance and has thus a large impact on the total costs. It might be assumed that intermodal transport will be more attractive the longer the lane exists, as labor costs per kilometer are reduced. Every single kilometer of a LFG|Fritom truck with combined trailer cost € 0.38, based on maintenance, repair and fuel. These truck related costs must be summarized with the labor costs of a truck driver per kilometer, which is dependent on the average speed. This figure of € 38 per hour includes depreciation, assurance and road taxes as it is calculated on expected productive hours per year and established by LFG|Fritom’s management. The average speed of each haul fluctuates, dependent on the route, speed limitations and congestion as a consequence of execution time. As it affects the price per kilometer of trucking, three categories are determined dependent on the distance and corresponding average speed, namely more than 100 kilometers, between 40 and 100 kilometers and less than 40 kilometers. Since the distances of the analyzed lanes are characterized by more than 100 kilometers main transport, only this category is treated.
Historical data present a suitable average speed of 70 kilometer per hour for distances more than 100 kilometers in the Benelux. Labor costs of € 38 per hour for a truck driver refers to € 0.54 per kilometer and results in a total cost price of € 0.92 per road kilometer which is applicable for the calculation of main transport costs. The theory of Van der Horst et al (2009) describes a general cost price per kilometer of € 1, which argues that LFG|Fritom disposes a competitive cost price.
Distance Labor costs p/hour Average speed p/hour Labor costs p/km Truck related cost p/km Cost price p/km >100 km € 38 70 € 0.54 € 0.38 € 0.92
Table 4.2, Cost price per road kilometer
As mentioned before, it should be noted that the applicability of intermodal modes on LFG|Fritom’s short distance lanes in-between the Benelux can not be combined with other lanes. The consequence is that after unloading, the tank container returns back empty to the loading location for a subsequent same loading. For this so called point-to-point transportation, the single distance of road transport has to be multiplied by two in order to calculate reliable and realistic figures.
Since LFG|Fritom is not operating its own
intermodal modes, the company depends on barge and rail providers. Based on LFG|Fritom’s cases, relevant lanes are offered by these providers and summarized in table 4.3. For barge, there are eight lanes that originate from the main hubs Antwerp and Rotterdam and go to five destination terminals in North-Eastern Benelux. The offers for lanes that originate in Belgium are relative expensive, as a consequence that hardly any private services between Belgium and The Netherlands are operating this market. The rail lanes all originate from Rotterdam with three destination terminals in
North-Eastern Benelux. Table 4.3, Offers of intermodal barge and rail providers
Since the three modalities can not be separated from the other cost categories like pre and post transport, they and will be treated later in this analysis. Furthermore, the available infrastructure plays a determining role in this balance. As mentioned in chapter 3, close by terminals in combination with fitting intermodal shuttle services have to be available for a successful intermodal applicability. This
Barge lane Modality Offer Antwerp - Harlingen Barge € 455
Antwerp - Groningen Barge € 450
Antwerp - Meppel Barge € 425
Antwerp - Hengelo Barge € 487
Rotterdam - Harlingen Barge € 205
Rotterdam - Groningen Barge € 200
Rotterdam - Meppel Barge € 175
Rotterdam - Kampen Barge € 150
Rotterdam - Hengelo Barge € 237
Rotterdam - Coevorden Rail € 273
Rotterdam - Veendam Rail € 300
influences the pre and post transport costs directly. Those are determined by the distance from the terminal to the pickup or delivery location. These two categories, together with the main transport, have the largest impact on the total costs. This impact is treated in the next section.
4.2 Pre transport
The second analyzed cost category refers to pre transport, the trucking costs of loading and
transportation from pickup address to the terminal by truck. This part deals with three substantial fixed cost, namely loading, handling and chassis lease and is followed by variable costs, resulting in a total price of this cost category.
A fixed part of pre transport is loading time. In general, two hours per cargo load is reserved within the total cost price. As labor costs are € 38 per hour, it results in the following costs:
Cost component Labor cost p/hour
Number of hours Total cost Loading € 38 2 hours € 76
Table 4.4, Loading cost calculation
Furthermore, intermodal transport is always confronted with handling costs. Therefore it forms a substantial distinction between road and intermodal solutions. Direct handling costs are included into the main transport costs as offered by the intermodal providers. However, the handling of a container from tank chassis to rail or barge mode or vice versa takes time, an average of 15 minutes is realistic per handling. During that time, the present truck driver has to be paid. For pre transport, two handlings are necessary, namely:
1. Empty tank container from depot or previous intermodal mode on tank chassis. 2. Replace full tank container from tank chassis on intermodal mode.
Based on the labor cost price of € 38 per hour of a truck driver, the fixed handling costs are calculated:
Cost component Time Labour cost p/hour
Total cost Handling 2 * 15 minutes € 38 € 19
Table 4.5, Handling cost calculation
A third part of the fixed cost regards the lease of a tank chassis. The assumption is made that one tank chassis executes approximately 19 deliveries per week; 3 pickups on a weekday and 2 pickups on a weekend day. With a lease price of € 95 per week it results in € 5 fixed price per delivery for pre transport. As it is included in the total price of a subcontractor, it is only assigned for LFG|Fritom’s cost price calculation.
Cost component Lease price p/week Pickups p/week Cost p/pickup Chassis lease € 95 19 € 5
Table 4.6, Chassis lease cost calculation
distances less than 40 kilometers, while an average speed of 50 kilometer per hour is suitable for distances between 40 and 100 kilometer. Due to slow speeds in industrial zones, the average speed for short haulage results in € 1.27 labor costs per kilometer. Together with the cost price of € 0.28, the average cost price per kilometer is € 1.55 for short haulage. Medium distance results in a cost price of € 1.04 per kilometer.
Distance Labor cost p/hour Average speed p/hour Labor cost p/km Truck related cost p/km Cost price p/km 40-100 km € 38 50 € 0.76 € 0.28 € 1.04 < 40 km € 38 30 € 1.27 € 0.28 € 1.55
Table 4.7, Cost price per road kilometer
The combination of fixed and variable costs result in a total cost price, as calculated in table 4.8. The presented single distances are multiplied by two, as calculations are based on roundtrips.
Lane Cost price
p/km
Single distance
Variable cost
Fixed cost Total cost LFG|Fritom Aalst (B) to Antwerp € 1.04 84 € 174.72 € 100 € 274.72
Aalst (B) to Rotterdam € 0.82 173 € 283.72 € 100 € 383.72
Bergen op Zoom to Rotterdam € 1.04 63 € 131.04 € 100 € 231.04
Sas van Gent to Antwerp € 1.04 68 € 141.44 € 100 € 241.44
Sas van Gent to Rotterdam € 0.82 158 € 259.12 € 100 € 359.12
Rotterdam(Botlek) to Rotterdam € 1.55 13 € 40.30 € 100 € 140.30
Table 4.8, Cost price calculation of pre transport
As mentioned earlier, LFG|Fritom’s strategy is to choose local trucking partners instead of using own equipment. These subcontractors have made offers on all relevant lanes, which are compared to the wrapped up cost price of LFG|Fritom in table 4.9 below. Main aim of this comparison is to be able to interpret them as competitive or not.
Lane Total costs
LFG|Fritom Offer subcontractor Deviation Aalst (B) to Antwerp € 275 € 300 9.1 % Aalst (B) to Rotterdam € 384 € 445 15.9 %
Bergen op Zoom to Rotterdam € 231 € 240 3.9 %
Sas van Gent to Antwerp € 241 € 255 5.8 %
Sas van Gent to Rotterdam € 359 € 410 14.2 %
Rotterdam (Botlek) to Rotterdam € 140 € 175 25.0 %
Table 4.9, Price deviation of pre transport
As presented in above table, there are deviations between subcontractor’s offer and LFG|Fritom’s cost prices. The general deviation is not more than 16%, except for trucking in-between Rotterdam. This deviation of about 25% has several causes confronted by additional aspects influencing this cost price:
As subcontractor’s hometown is not located near the relevant lane from pickup address to terminal, he is confronted with setup kilometers. These kilometers contents the distance from subcontractor’s home address to the first destination. The longer the lane, the less these setup kilometers influence the rate.
In general, a daily turnover of approximately € 600,- per truck is required as depreciation of truck related costs. This turnover is dependent on the complete processing time of the pre transport. While the share of truck related costs in short shipments is relatively low, its kilometer price is upgraded in order to be sure of a covered overhead.
With the exception of the Rotterdam zone, the marginal deviation would be no reason for LFG|Fritom to change strategy and invest in own equipment to execute the pre transport by itself. As described in section 3.4, LFG|Fritom decides to choose subcontractors, due to flexibility, specialism and profitable reasons.
4.3 Post transport
The third category refers to post transport, the costs of unloading and transport from the terminal to delivery address by truck. The calculation of post transport is based on the execution of self owned equipment, as final destinations in North-Eastern Benelux are geographic spread throughout a large area offering low shipment volumes per destination. This requires many irregular located
subcontractors, as post transport requires closely located subcontractors in order to minimize set up kilometers. Also, renting is complex to coordinate and subcontractors will not agree a low utilization. For example, it will not be profitable to execute one delivery per day. The revenue will not
compensate the costs. As LFG|Fritom is a large organization, the company is able to execute this post transport by its own equipment, in spite of low utilization. The organization already makes use of several reliable subcontractors in South-Western Benelux, cooperation that could be continued or even intensified. It is easier to guarantee these subcontractors daily work certainty as large volumes do exist, which is impossible by the geographic spread delivery locations characterizing small volumes. Subcontractors are not willing to organize post transport, as frequencies per delivery location are too low. LFG|Fritom can not guarantee complete utilization of work daily. As a consequence, the organization should lease its own equipment, in the form of a tank chassis. The calculation of post transport is build up of several fixed cost components, which are quite similar to the pre transport cost components. Even like loading, the total costs of unloading are € 76 as calculated in table 4.4.
The associated handlings exist of two factors, namely a full tank container from intermodal mode on tank chassis and an empty container from tank chassis on depot or intermodal mode. Despite of a distinction in the kind of handling, the costs are equal as is presented in table 4.5
The assumption is made that one tank chassis executes approximately twelve deliveries per week. This figure is based on an average lower utilization in North-Eastern Benelux, compared to the higher frequency pickup locations. The lease price of € 95 per week results in € 7.92 fixed leasing costs per delivery as part of post transport.
Cost component Lease price p/week Deliveries p/week Costs p/delivery Chassis lease € 95 12 € 7.92
Table 4.10, Chassis lease cost calculation
The cost components of unloading (€ 76), handling (€ 19) and chassis lease (€ 7.92) result in € 102.92 total fixed cost per delivery. As stated in section 4.2 the variable costs are subdivided in two
categories, namely more and less than 40. As a consequence of less congestion in this part of the Netherlands, the average speed differs compared to compact regions in the Western relevant for pre transport.
Distance Labor costs p/hour Average speed p/hour Labor costs p/km Truck related costs p/km Cost price p/km < 40 km € 38 50 € 0.76 € 0.28 € 1.04 > 40 km € 38 65 € 0.58 € 0.28 € 0.86
Table 4.11, Cost price per road kilometer of pre transport
increase of 1 kilometer post transport results in € 2.08 cost increase for distances smaller than 40 kilometers, and € 1.72 between 40 and 100 kilometers. Table 4.12 until 4.16 represents the arriving barge terminals in North-Eastern Netherlands.
Arrival barge terminal Final destination Distance Variable costs p/km variable costs
Fixed costs Total Costs Harlingen Harlingen 3.5 € 1.04 € 7.28 € 102.92 € 110.20
Harlingen Franeker 10.2 € 1.04 € 21.22 € 102.92 € 124.14
Harlingen Leeuwarden 30.0 € 1.04 € 62.40 € 102.92 € 165.32
Harlingen Hallum 37.8 € 1.04 € 78.62 € 102.92 € 181.54
Table 4.12, Total costs of pre transport from barge terminal Harlingen
Arrival barge terminal Final destination Distance Variable costs p/km Variable costs
Fixed costs Total Costs Groningen Groningen 7.1 € 1.04 € 14.77 € 102.92 € 117.69
Groningen Hoogezand 10.1 € 1.04 € 21.01 € 102.92 € 123.93
Groningen Kielwindeweer 10.8 € 1.04 € 22.46 € 102.92 € 125.38
Groningen Ter Apelkanaal 52.6 € 0.86 € 90.47 € 102.92 € 193.39
Groningen Wijnjewoude 52.7 € 0.86 € 90.64 € 102.92 € 193.56
Table 4.13, Total costs of pre transport from barge terminal Groningen
Arrival barge terminal Final destination Distance Variable costs p/km Variable costs
Fixed costs Total costs Meppel Meppel 0.4 € 1.04 € 0.83 € 102.92 € 10375 Meppel Beilen 42.0 € 0.86 € 72.24 € 102.92 € 175.16 Meppel Rotsterhaule 47.2 € 0.86 € 81.18 € 102.92 € 184.10 Meppel Sintjohannesga 48.6 € 0.86 € 83.59 € 102.92 € 186.51 Meppel Oosterwolde 54.7 € 0.86 € 94.08 € 102.92 € 197.00 Meppel Sneek 67.0 € 0.86 € 115.24 € 102.92 € 218.16 Meppel Sloten 67.6 € 0.86 € 116.27 € 102.92 € 219.19
Table 4.14, Total costs of pre transport from barge terminal Meppel
Arrival barge terminal Final destination Distance Variable costs p/km Variable costs
Fixed costs Total costs Hengelo Enschede 8.3 € 1.04 € 17.26 € 102.92 € 120.18
Hengelo Almelo 23.0 € 1.04 € 47.84 € 102.92 € 150.76
Hengelo Hellendoorn 32.9 € 1.04 € 68.43 € 102.92 € 171.35
Table 4.15, Total costs of pre transport from barge terminal Hengelo
Arrival barge terminal
Destination Distance Variable costs p/km
Variable costs
Fixed costs Total costs Kampen Deventer 63.3 € 0.86 € 108.88 € 102.92 € 211.80
Table 4.16, Total costs of pre transport from barge terminal Kampen
Table 4.17 until 4.19 represent the costs of pre transport from three terminals in North-Eastern Netherlands where containers arrive before being transshipped to their final destination.
Arrival rail terminal
Destination Distance Variable costs p/km
Variable costs
Fixed costs Total costs Coevorden Hellendoorn 43.5 € 0.86 € 74.82 € 102.92 € 177.74 Coevorden Almelo 43.9 € 0.86 € 75.51 € 102.92 € 178.43 Coevorden Beilen 49.3 € 0.86 € 84.80 € 102.92 € 187.72 Coevorden Meppel 51.9 € 0.86 € 89.27 € 102.92 € 192.19 Coevorden Enschede 70.1 € 0.86 € 120.57 € 102.92 € 223.49 Coevorden Deventer 71.0 € 0.86 € 122.12 € 102.92 € 225.04
