Munich report: concerning shift of goods to road in the near future

Munich report: concerning shift of goods to road in the near future — 2023-05-15

Land transportation

Over 75,000 people from the logistics, mobility, IT, and supply chain management industries gathered at the Messe München exhibition center for Transport Logistics last week. was there and talked to some of the major rail freight players at the event. When it comes to the future of the industry, most agreed that a few rough years are ahead but the long-term future looks encouraging.

The current issues are causing goods to move back to the road, with some companies having to adapt, looking at new markets and new solutions. Among others, representatives from Rail Cargo Group (RCG), Mercitalia, Lineas, and LTG Cargo shared their main takeaways from the event in Munich and their views on the future.

Rail Cargo Group: a shift from rail to road in the near future

Clemens Forst, CEO of RCG said that he is “On the one hand I’m very optimistic for the sector on a mid-to-long term time horizon”. The support from rail freight is in expansion, as Forst highlighted. The influence of public opinion and rail policymakers is allowing to lay the foundation to bring rail freight forward.

On the other hand, when it comes to the next few years the head of RCG said that significant challenges are ahead. The difference between diesel and electricity prices, as well as the availability of trucking capacity, are causing “an inverse modal shift from rail to road”. This, as Forst explained, does not just have a negative impact on the modal shift, but also damages the economy of the industry.

Mercitalia: construction works and strikes are the main issues

Francesco Cacciapuoti, Head of Strategy and Sustainability for Mercitalia Logistics, said that “2022 was a good year in terms of volumes and revenues, especially in the first 9 months”. Volumes for some products, including steel, have decreased since the end of 2022. However, other sectors such as automotive and waste have been filling this hole, as Cacciapuoti explained. When it comes to the short-term future, he said that demand is expected to start increasing again in the middle of 2023.

On the other hand, in 2023, the rise in the cost of commodities is having an important impact on the group, especially on traction costs, Cacciapuoti specified. “We decided to apply a price increase with a floating method. When the energy cost goes back to 2021 levels, the impact will be zero”. Some other issues he highlighted are the construction works on railway infrastructure in Europe, especially in Germany, and strikes. This led to some services being moved back on the road. To make up for these problems, for example, Mercitalia launched a specific business unit in France that offers truck services.

When it comes to the longer term, Cacciapuoti underlined that the main focus for the Mercitalia hub is its 10-Year Industrial Plan. Moreover, the group is investing quite heavily in rejuvenating its rolling stock fleet and is increasing its presence in rail terminals both in Italy and the rest of Europe. “For the future, these investments are necessary to support our programme”, he concluded.

Lineas: a new app for better cargo monitoring

Frank Berweger, CCO at Lineas, said that 2022 was a challenging year for the rail freight industry in general. The aftermath of the COVID-19 pandemic caused a significant shortage in staff, especially when it comes to train drivers, which led Lineas to “drive less trains than expected”. Berweger highlighted the role of construction works and the lack of significant subsidies among the main obstacles for Lineas and Belgium in general in 2022.

It looks like 2023 is starting on a much better note”, he added. Berweger said that the focus for Lineas this year will be their customers. The Belgian company, as he said, is launching a new app called MyLineas, which was fully developed in-house. Through this app, customers can book services but also track and monitor their cargo as it is being transported. Moreover, Lineas has a new initiative called the Godparent Programme where C-level leaders at the company establish a stronger relationship with a group of customers.

LTG Cargo: looking more to the west

Laimonas Nekrošius, Head of Sales for LTG Cargo, and Mindaugas Skunčikas, the company’s Head of Business Development, also had a chat with us. Nekrosius also said that 2022 was a challenging year for LTG Cargo. The company is therefore “losing interest in the east while growing it in the west”. As he explained, despite this move was not dictated by the Russian invasion of Ukraine, the war did accelerate this process. On a more positive note, he said that 2022 was not as bad as LTG Cargo was expecting, especially thanks to investments that the company did last year in new marekts. “It could have been much worse if we did not do our homework in advance”, he concluded.

Skuncinas gave us an outlook on the future of LTG Cargo. The company now has a subsidiary in Ukraine to help export goods from the war-torn country. He added that LTG Cargo will also open a second office in Poland, this time in Katowice. The main focus for the future of the Lithuanian company, as Skuncinas highlighted, revolves around the implementation of the standard gauge and connecting the Baltics with the rest of Europe. Finally, he said that LTG Cargo is “willing to connect the Muuga terminal in Estonia with Kaunas and Duisburg”.