In this Q&A with Tim Davies, LSA gets an insight into the multimodal logistics market

Q: What is the current multimodal logistics market like in the UK and Europe, and can you explain how it lags behind the US?
A: At present, the multimodal logistics market in the UK and Europe is making slow but steady progress. This is because infrastructure improvements are needed in order to boost its competitiveness in comparison to road-only transport.

There is increasing interest in multimodal logistics from occupiers, property developers and investors and a growing number of multimodal platforms are emerging across Europe that are making use of options such as waterways and railways to complement road transportation. These can help in beating traffic congestion and reducing CO2 footprints, and are becoming more relevant and visible in crucial last-mile distribution.

Europe lags behind the US in moving freight by combining two or more modes of transport, and a major factor is this the different way in which rail is used on the two continents. In the US, railroads have been traditionally dedicated largely to freight while in Europe they are dedicated almost exclusively to passengers. America moves almost six times as many ton-miles (or tonne-kilometres) of freight by rail as Europe, while both move about the same number of tonne-kilometres by road.

The UK has made progress in terms of their multimodal offer with London Gateway being a prime example of how this concept can be an integral part of the supply chain. Not surprisingly more and more occupiers have confirmed the importance of multimodal logistics as the way forward.

Q: What needs to be done in the UK and Europe to improve this situation?
A: Policymakers have a key role to play here, and this can already be seen in the impact of the EU’s Transport 2050 Roadmap which aims for 30 per cent of road freight traffic on distances over 300 km to be shifted to rail or water-borne transport by 2030, increasing to 50 per cent by 2050.

Local authorities in the UK and Europe can help to boost multimodal logistics by adopting proactive planning policies, and by engaging with stakeholders with often divergent interests such as cargo originators, freight forwarding, rail operators, landowners and the community.

Last mile distribution is presently dominated by lorries and vans due to their ubiquity and speed. However, bans on vehicles will mean road based distribution in city centres may not be sustainable at current levels in the future, so rail and waterways could provide an alternative and complement eco-friendly vehicles such as cycles within the last-mile in cities.

Paris is one of the European cities leading the way, having embarked on a strategic initiative to redevelop city logistics hubs around major rail transportation nodes and along the River Seine.

Q: How does using a multimodal approach benefit both manufacturers and consumers?
A: A multimodal supply chain approach can enable manufacturers to be more agile, responsive and flexible. These are valuable attributes at a time when manufacturers are trying to meet the expectations of their customers while also providing a quality service and producing a profit.

Consumers can also benefit from the flexibility and immediacy offered by a multimodal approach, particularly with the increasing introduction of legislation to restrict vehicle movements in cities and towns.

Q: Can you tell us more about your report Multimodal: Shaping the Future of European Logistics and give some more details about the future drivers of multimodal traffic in European corridors that it identified?
A: In its latest industrial research for the EMEA region: ‘Multimodal: Shaping the Future of European Logistics’, Colliers International discusses drivers and prospects for multimodal logistics in Europe, and expresses optimism about the future of multimodal transportation in Europe.

The reasons for this optimism are various. We believe the growth of multimodal logistics in Europe will be underpinned by a growing awareness of green issues resulting in new environmental policies.

Multimodal transportation sometimes comes at an extracost due to transhipment operations, particularly over shorter distances. Nonetheless, there is greater acceptance within the corporate world that the higher short-term costs associated with more sustainable transport solutions can be justified by the longterm benefits in terms of Corporate Social Responsibility (CSR) and the fact that at some point more stringent environment regulation is likely to come into force.

Improving multi-modal infrastructure, the diminishing cost of technology and the ability to deliver scale will contribute to make multimodal – rail in particular – a more compelling proposition from an economic point of view.

Infrastructure projects highlighted in the report for the opportunities they represent to multi-modal logistics include the Alpine crossing between Switzerland and Italy, which is probably the largest project in Europe and represents a key section of one of Europe’s most important trade corridors connecting Northern Europe’s seaports with Northern Italy through Germany.

Q: Is one mode of transportation standing out as the most important, or is every mode equal?
A: Rail stands out as having considerable significance for the future of multimodal transport, particularly as vehicular traffic faces increasing constraints.

At present, the distribution footprint is largely built around trucking. However, rail could be used to deliver goods directly to urban consumers from less expensive regional distribution hubs, bypassing the need for outer-city distribution and crossdock facilities.

In the UK, GB Railfreight has plans to start a train service from iPort Doncaster in South Yorkshire to a site in north London from 2018 which would cater for same-day delivery services offered by e-commerce retailers. The iPort Doncaster development by Verdion, which is being marketed by Colliers, has the potential for up to six million sq ft of logistics space. Current tenants include Amazon, CEVA Logistics, Lidl and Fellowes.

Q: What, in your opinion, would be the one improvement that would make a significant difference, or are all changes incremental?
A: Infrastructure improvements will be vital in enhancing the efficiency and competitiveness of multimodal transportation against trucking only. Multimodal transportation needs infrastructure in order to work.

A more efficient network and growth in capacity and scale will make multimodal transportation economically more compelling to a broader range of industries.

Most ongoing infrastructure projects in Europe involve upgrades of existing lines and platforms, such as ports. Many European ports have set-out modal split targets and have embarked on ambitious infrastructure investment programmes to get there. Due to importance of maritime trade, ports have a clear role in facilitating the modal shift.

Q: What do you anticipate will be the next ‘big thing’ in multimodal logistics?
A: Automation has been attracting considerable attention as the next ‘big thing’ in multimodal logistics. This has been very much driven by the growth in e-commerce, and the need to fulfil consumer demand for same-day delivery.

This demand requires warehouse and logistics facilities operating 24/7, and has led to increased demand for warehouse labour, and has also boosted pay for warehouse jobs. Greater automation is being seen as a way of addressing these issues.

Automation could also involve use of driverless vehicles, and Amazon has also been looking into the use of drones, although with increased regulation of airspace it remains to be seen whether this will be feasible.

Tim Davies is head of EMEA Industrial & Logistics for Colliers International. Colliers International Group Inc. is an industry leading global real estate services company with 15,000 skilled professionals operating in 68 countries. With an enterprising culture and significant employee ownership, Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide.
www.colliers.com/en-gb/uk