Rail freight, the missing link in urban logistics?

By Claire Lepelletier, Market Development, Aster

While the annual growth of e-commerce is expected to reach 11.7% by 2025[1] with the result that the number of parcels shipped in Europe will double, urban logistics has to juggle with ever more constraints: legal constraints on the one hand, with many European cities setting access restrictions on their city centers to diesel vehicles; and economic constraints on the other hand. For example, the closure of Foodora’s meal delivery company business in France has highlighted the fragility of platform models for last-mile delivery because they do not allow the pooling of flows (for those most interested in this subject, I recommend reading this McKinsey analysis: The urban delivery bet: USD 5 billion in venture capital at risk.

In this context, can trains, subways, tramways and the Paris RER, for instance, which criss-cross large cities daily with a low carbon footprint[2] answer the current challenges of urban logistics?

While the potential of co-modality may be emphasized by Jerome Libeskind who quotes some examples in his work Urban logistics in Japan, this expert reserves his opinion on the ability of rail transport to provide a solution to urban logistics: “Rail mode, which is very rigid and often saturated, will not bear up to the competition […] in the face of highways made “clean” again and which bring flexibility of use”[3].

For our part, we wish to point out the intrinsic strengths of rail mode and the resulting opportunities in this growing market.

Stations are natural hubs within urban areas

Places of transit par excellence, the world’s largest stations every day see hundreds of thousands of people pass: between 500,000 and 700,000 people per day pass through Paris Gare du Nord, London Waterloo, Hamburg Hauptbahnhof, etc., while the figure for Tokyo’s Shinjuku Station is said to be more than 3,000,000[4].

“The station of the future […] will connect people, commercial flows and data all at the same time”. This is the conviction of Patrick Ropert, as the former CEO of SNCF Gares & Connexions explains in his book Citybooster[5] published in 2017. For this reason, picking up parcels at a collection point in a station looks to be an interesting compromise between economic efficiency and fluidity of the customer journey. The experiences of self-service pick-up lockers in rail stations, such as those operated by the La Poste Group company, Pickup, and Amazon Locker, are promising.

Digital tools are an opportunity for the train to be put (back) into the urban supply chain

Let’s stimulate our imagination by analyzing some start-up models that could be taken and applied to our subject:

• E-merchant X uses the Byrd (D) platform to manage its shipments. The Byrd algorithm — depending on package size and destination — determines the most suitable partner carrier.
• Then there is suburban train operator Y which can perform real-time tracking and predict numbers in its trains thanks to the Opencapacity(UK) platform. The latter merges data from ticketing, surveillance cameras and weight sensors and extrapolates them with artificial intelligence. The operator sells seats available at off-peak times to its network of parcel carriers.
• Carrier Z receives the transport order from e-merchant X. Thanks to its Wise (US) routing optimization software, it decides to consolidate its flows on the day via rail mode and organizes the last-miles with its network of cyclists equipped with K’ryole (FR).

A clever mix of Internet of Things, artificial intelligence and digital platform will allow operators to share their available transport capacity and the delivery status of packages in near-real-time. Customers will then have an ecological, capacitive and inexpensive mode of transport if they make use of the spaces available in off-peak hours. Resolution of the economic and operational equation will undoubtedly greatly depend on how the modal disruption and last-mile are organized. Rail station layout will be fundamental in this respect as will finding the right combination with “soft” transport modes. In these areas, the creativity of start-ups and the proactivity of our cities do not mean there won’t be surprises in store.

The train, new e-commerce platform?

Beyond the possibility of conveying parcels by rail, these means of transport could themselves become places of life in which purchase and collection actions are an integral part of the passenger experience.

Last November, the Telegraph reported that deliveries of Amazon packages would be possible on board the trains being proposed by Bombardier and Hitachi for the London-Birmingham line. According to the article, passengers could, for example, order a pair of sneakers on board the train and have them delivered right to their seat at the train’s next in-station stop. True bill or fake news in the context of a close struggle between bidding manufacturers for this huge tender?

In an “economy in which attention is the scarcest commodity and the most precious source of value”[6], the idea of encouraging consumers to shop while on their journeys is gaining ground. Start-ups are positioning themselves to capture and monetize some of the attention available from passengers during a flight, an Uber ride or a train journey. While Skydeals (FR) has been exploring the lie of the land with airlines for a few months, Enroute (IL) has just started an experiment with Deutsche Bahn with an original model: passengers who agree to do their shopping on board a train get a free journey!

Thus it may be seen that the rail passenger transport system, with its structuring axes, its stations and its thousands of potential consumers using the network, in a way focuses on the major issues of urban logistics: ordering, routing and withdrawal. To take it out of its marginal role, all that remains to be done is to convert stations into multimodal platforms. In any case, “there will be no large metropolises without transformed stations, responding to the intensified challenges of the rapid urbanization of the world”[6].

[1] Grand View Research, September 2017

[2] https://www.oui.sncf/aide/calcul-des-emissions-de-co2-sur-votre-trajet-en-train

[3] What future for urban rail freight? Blog Logicités, Sept 2018

[4] https://www.worldatlas.com/articles/7-of-the-busiest-train-stations-in-the-world.html

[5] Citybooster, Patrick Ropert, 2017

[6] The economy of attention, the new horizon of capitalism? Under the auspices of Yves Citton, Edition La Découverte, 2014