DECISION FACTORS UNDERLYING TRANSPORT MODE CHOICE IN

EUROPEAN FREIGHT TRANSPORT

Berit Grue and Johanna Ludvigsen
Institute of Transport Economics, Oslo, Norway

INTRODUCTION

This paper summarizes the outcomes of research performed under

REORIENT project, which the European Commission awarded to a
consortium of seven European and American research institutions under
the 6th Research Framework. The overall objective of the project was 1) to
identify and develop new business concepts for trans-European rail freight
transport that will make rail conveyance more competitive that truck, and
2) to assess the extent to which the EC rail liberalization legislation
contributed to transfer of freight from roads to rail.
This paper presents results from three research tasks which accomplished
the following:
1. Identified the structure of supply and demand for rail and truck
freight supply solutions in twelve European countries
2. Explored the contents of market demand from small, medium and
large European shippers in manufacturing, merchandising and
logistics provision industries, and
3. Assessed important predictors of shippers rail and road transport
choices based on shippers satisfaction with important service
qualities and the types of cargo shipped
The interest of European Commission in freight transport solutions used
by European shippers, and factors that may explain their mode selection
decisions derives from two political concerns. The first is the need to stop
continuously growing scope of socio-environmental negative externalities
associated with wide-spread use of motor carriers for international freight
movement. The other arises from the need for empirically verified
knowledge of factors detrimental to use of environmentally friendlier freight
carriage such as rail-based intermodal and single-modal transport for
transfer of goods in European corridors. The latter would also provide the
European Commission with meaningful feedback on important
impediments hindering utilization of new business opportunities created by
its rails liberalization policy.
In terms of policy utility, this research sought hard facts on the structure of
supply and demand for freight carriage that the European Commission

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may use for making infrastructure decisions and/or design policy

instruments that will enhance market attractiveness of rail freight dispatch.
In analytical terms, the objective was to produce new knowledge on
important predictors that affect shippers modal choices in countries along
the REORIENT intermodal freight supply system. The REORIENT freight
supply corridor connects the Nordic countries with Central and South
eastern European states which became new members of European Union.
The paper represents the first attempt to collect data on Central and
Southeastern shippers who use, rail and road for freight conveyance and
systematically analyze the structure of service supply and demand in
these two European regions.
2

DEFINITION OF INTERMODALITY

In order to asses the patterns of freight transit solutions that currently are
supplied and used within and between the twelve European countries
surveyed by WP 6.1 study, a precise definition of single-modal and
intermodal freight carriage was needed. Whereas the concept of singlemodality is technically straightforward and pertains to door-to-door freight
supply effectuated by one transportation mode and maximally two
operators (e.g., truck and a Ro-Ro ferry), the notion of intermodality is
more complex. For this reason a definition from the European
Commissions Directive on Intermodality and Intermodal Freight Transport
in the European Union [COM (97) 243/4] was used. There, intermodality
was defined as a characteristic of a transport system that allows at least
two different modes to be used in an integrated manner in door-to-door
transport chain. This description actually allows that the transfer of unit
load devices is interrupted by opening the load carrying units at
intermediate points within an overall journey, for partial break-bulk at
freight handling stations.
3
3.1

METHODOLOGY
Respondents selection

Respondents in this survey included:

1. Large companies from manufacturing and/or merchandizing
industries located in twelve European countries along the
REORIENT corridor
2. Large logistics service providers in the same twelve countries who
serve international freight flows of their clients
For the need of first-hand-knowledge of quality delivered by single-modal
and intermodal transport operators, a criterion was initially imposed that

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respondents in this survey should concurrently and/or interchangeably use

both forms of freight carriage.
However, data collection revealed very early that intermodal freight
services are not yet well developed in several European countries and that
very few shippers could be identified which used both types of
conveyance. Particularly, this prerequisite could not be fulfilled by shippers
operating in Slovakia, Hungary, Poland, and Romania.
3.2

Measurement of demand construct

Searches in multiple data bases disclosed the dearth of academic

research on demand for freight transportation, modal choice decision
criteria and the structure of freight supply solutions in Europe. In addition,
no European studies were found which used the numerical and attitudinal
data for recording revealed preferences for transport qualities harbored by
the actual decision makers. Review of several engineering studies on
transport mode choices confirmed that the discrepancy between the
espoused and the revealed preferences was not only acknowledged, but
analytically ignored. Therefore, the survey instrument was initially based
on measurement and data collection technique devised by Evers, Harper
and Needham (1996) in order to assess The Determinants of Shippers
Perception of Modes, Transportation Journal Vol. 36, No.2, pp 13-25.
This instrument has later been adapted for use in the European context by
J. Ludvigsen, whose study Freight Transport Supply and Demand
Conditions in the Nordic Countries: Recent Evidence, Transportation
Journal Vol.39. No.2, pp 31-54 (1999) captured revealed preferences for
transport quality of Nordic shippers. Subsequently, the instrument was
amended in 2003 for survey trials in Norway, Hungary, Lithuania and
Sweden under the Eureka PolCorridor project.
3.3

The sample

Table 1: Firms in survey

Country of Location
Austria
Bulgaria
Czech Republic
Finland
Greece
Lithuania
Norway
Poland
Romania
Hungary
Slovak Republic
Sweden
Total

Forwarders and/or
Logistic Suppliers
3
7
7
4
7
27
9
24
6
5
6
1
106

Manufacturers and/or
Merchandisers
27
2
16
22
3
0
8
15
0
5
23
19
140

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The survey polled 246 business respondents; 140 were manufacturers

and/or merchandisers performing import and export shipments while 106
were Logistics Service Providers (LSPs) who served international freight
flows. Both groups of informants are referred to as shippers in this paper.
Figure 1 shows the sample composition of large, medium and small firms.
21 %

< 10 mill EUR

10 50 mill EUR
> 50 mill EUR

52 %
27 %

Figure 1: Size of companies in the sample

3.4

Data collection

Data were collected in 2005 by six research institutions and three

business consultancies with good knowledge of transportation and
logistics industries in twelve European countries. Data collectors identified
the target companies and obtained consent from companies management
for participation in survey. Subsequently, they queried the transport
professionals (dispatchers) inside the companies surveyed who procured
transport services and assigned freight shipments to migration solutions.
These individuals provided the actual data.
3.5

Measuring instrument and variable definition

The final questionnaire contained two thematic sections. The first gathered
information on shippers business demographics. The second main part
included decision scenarios where shippers assigned two regularly used
consignments (exports and/or imports) to transport solution offered by
operators of international corridor(s).
By applying a decision simulation scenario, we sought hard facts on how
the variation in service quality on freight routes would affect shippers
choices of transport solutions. In contrast to stated preference method,
which is often solely used to assess the transport users espoused quality
preferences, this design revealed the actual preferences. The respondents
specified duration of door-to-door transit, price for one-way freight
carriage, frequency of shipments, and all types of modes used under
consignment transfer. Next, informants evaluated twenty three quality
dimensions of transport solutions used for shipments of a given cargo and
then, the overall quality standards on each route. Service quality on routes
selected was evaluated by two measures. The first was importance that

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a given informant assigned to each of the twenty three quality-attributes

before a consignment was expedited. The second appraised satisfaction
that the informants attributed to the same twenty three quality dimensions
after a consignment has been delivered.
Our causal reasoning presupposed that quality requirements would affect
the shippers choices of shipment routes, these routes modal
configuration, and eventually, the use of road and rail transit. Majority of
freight shipping routes in Europe are served in parallel by carriers who
offer different levels of service quality and modal combinations. Besides,
European freight migration lanes run through highly variable quality of
national infrastructure stretches, which also affects the quality of services
offered. So, we also hypothesized that priorities for different services
qualities would also affect choices of geographical freight corridors.
Since we assumed that the different quality requirements would affect the
choices of modes and routes, these two types of decisions were defined
as two of the three dependent variables. The second dependent variable
was the geographical outlines of the freight migration lanes calculated by
use of GIS. This information provided later a basis for estimates of freight
movement speeds and probabilities of delays on different corridors.
The third dependent variable was composed of dispatchers appraisals of
the overall quality standards on the routes used measured by
assessments of importance and satisfaction. By so doing, we implicitly
assumed that service quality on European routes would constitute an
independent variable in our analytical model.
The aforementioned influenced the structure and the causal order of our
analytical model, and the statistical methods for model testing.
3.6

Model specification and statistical methods

Figure 2: Analytical model of relationship among variables affecting the

shippers route and modal choice decisions

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The model consisted of antecedent, independent and dependent

variables. The dependent variables were divided into two main variables
and one subsidiary. Shippers demographics, such as the company size
together with the types freight/cargo served constituted the antecedent
variables that affected the shippers service quality requirements.
The independent variable, the quality construct was measured by twenty
three performance dimensions, that together constituted an overall service
quality standards dichotomized by shippers appraisals of quality
importance and satisfaction.
The overall importance and/or satisfaction with quality standard were also
affected by antecedent variables such as the types of cargo handled, the
types of load carrying units (LCUs) used, and the kinds of shipments
forwarded. These two groups of variables affected the shippers choices of
routes, and subsequently, selection of rail and/or road conveyance for
freight transit.
The two main dependent variables were: 1) the shippers assessment of
an overall importance and satisfaction with service quality on the routes
chosen, and 2) the shippers actual choices of road and rail lanes. The first
main dependent variable was measured by the dispatchers evaluation of
importance of and satisfaction with twenty three quality dimensions. Both
importance and satisfaction were measured by five-category Likert scale.
By assuming that service qualities desired before execution of a given
shipment may differ from the qualities actually delivered, these measures
identified two stages in dispatchers decision-making. Importance served
as a tool for finding a suitable offering, while satisfaction provides
foundation for inclusion/exclusion of a given transport carrier from a pool
of operators eligible for future procurements. These two measures
revealed the sequential pattern in dispatchers transport decision making
where stated preferences for quality required preceded satisfaction with
service delivered.
Both, importance and satisfaction provided baseline for assessing the
overall standards for required and delivered service qualities. The second
main dependent variable, the shippers selection of shipment modes, was
affected by the quality standards on the routes used. Shippers route
choices thus preceded the choices of transport modes, and functioned as
a subsidiary dependent variable, which was later fed into GIS software
and presented graphically at European road and rail networks.
Testing the above model involved a stepwise examination of relationships
between the antecedent, the independent and the two main dependent
variables calibrated at two levels of measurement.
First, factor analysis was applied to extract the main underlying
dimensions of the quality construct from the data material and reduce the
variance in the data to few meaningful factors that explained a large

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portion of total variance. Using the principal component method, several

factors were extracted from data. The resulting factors represented a set
of quality indicators which were highly correlated with the factor that
represented them. The service indicators which loaded on a given factor
provided a particular dimension of service quality.
Next, the factors were regressed on the ratings of the overall importance
of service quality that shippers assigned to the routes chosen. Regression
analyses showed the importance of each factor to extend to which each
factor was correlated with the overall rating of shippers importance.
Subsequently, a logistic regression model was developed to assess the
relative probability of distribution of shippers selection of rail and road
routes. The model was used to test the sensitivity of rail-road probability
distribution on improvements of service qualities which proved important in
the preceding analyses.
4
4.1

FINDINGS
Supply of single-modal and intermodal transport in Europe

Table 2: Intermodal and single-modal transport solutions on survey routes

Single-modal Transfer

Number of
Shipments/Lanes

Truck
Truck + RoRo*
Rail
Rail + Rail Ferry

219
62
48
3

Sum

332

Intermodal Transfer
Truck + RoRo**
Truck + Rail
Truck + Ship
Rail + Ship
Truck+ RoRo+ Rail
Rail+Ship+Truck

Number of
Shipments/Lanes
19
29
32
3
4
6
93

*Although on the face this form of freight dispatch involves two modes, it was defined as single-modal because it
pertained to shipments involving Nordic countries and/or England. Geographical location in these countries
requires that all trucks need to cross the sea en route to Continental Europe. Therefore, RoRo ferries are
considered here as a part of road infrastructure for sea crossing.

** This freight dispatch category included un-accompanied load carrying units (LCUs) such as semi-trailers and/or
swap bodies which although carried by truck to a Ro-Ro quay may optionally be carried by truck or rail after arrival
at port of discharge.

Table 2 shows the types of single-modal and intermodal freight supply that
the studys respondents currently use for trans-European cargo transfer.
The structures of transport chains show that single-modal solutions involve
maximum two operators, while the intermodal ones two to three transport
carriers between shipments origins and destinations. Common for both
forms of freight transfer is that different operators need to function in highly
synchronized manner in order to produce on-time and breakage-free
freight delivery.

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The collaboration between truck and rail operators involves transfer of

containers, swap-bodies and semi-trailers on rail flatcars (TOFC) as well
as bulk-breaking at intermodal terminals and/or freight service stations.
Similarly, working relationships between railways and short-sea and/or
deep-sea shipping lines consists in transfer of containers on flatcars
(COFC), or supply of vessel-rail service combination for port-to-port freight
transfer and/or between harbors and t inland destinations. Collaboration
between rail-ship-truck operators involves sea-land bridging for terminalport and port-to-door rail freight supply.
The amount of intermodal freight lanes captured by the survey confirms
the dominance of single-modal freight carriage at European mainland. It
also reveals high dependence of Nordic countries as well as Lithuania on
intermodal solutions for inbound and outbound goods transfer.
Figure 3 shows the types of load carrying units (LCUs) used by the survey
respondents for dispatch of freight volumes.
Load Carrying Units Used to Transfer Goods in Overland Transit
(% of volumes shipped)
100 %
90 %
80 %

Traditional Rail Wagon

Tank Car/Wagon
Standard Container
Maritime Container
Swapbody
Semitrailer
Reefer
Other

70 %
60 %
50 %
40 %
30 %
20 %
10 %
0%
1 Truck

2 Rail

Figure 3: LCUs used by shippers surveyed

The types of LCUs used reveal that a good deal of intermodal competition
already exists between road and rail conveyance. Swap-bodies carry 78
p.c. of tonnage dispatched by both single-modal and intermodal truckbased freight supply. On the other hand, the amount of freight moved by
traditional full rail wagonloads (FWL) amounted to just 39 p.c. of volumes
carried by rail. This indicates that about 50 p.c. of freight carried by rail is

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conveyed in intermodal transport units like 20 and 40-feet containers (1

and 2 TEU), swap-bodies and tank cars. A relatively high share of
intermodal transport units carried by rail may also reflect the usage of
trans-European freight supply where rail haulage is combined with freight
consolidation and/or bulk-breaking operations performed by truck at both
ends of logistics chains. Although market segment for this intermodal
transit is small (only 4 p.c. of tonnage shipped by the shippers surveyed),
we conjectured that it may quickly rise if the quality of rail service is
improved.
Inspection of LCUs used by motorized operators reveals that about 90
percent of tonnage that today is carried by truck could be forwarded in
tanks, semi-trailers, swap-bodies and containers on rail flatcars. In the
following we shall explore why the truck conveyance sill dominates transEuropean transit of goods and what obstacles hinder rail from expansion
into truck-dominated freight market. Table 3 displays variation in amounts
of
freight
carried
by
different
types
of
LCUs.
Table 3: Freight volumes shipped by different types of LCU (Tons)
Type of LCU

Mean

Rail Wagon
Tank Car
20Container
40 Container
Swap Body
Semi-trailer
Reefer

36
34
21
15
19
18
18

Std. Deviation
19
14
4
6
7
9
6

Minimum

Maximum

Median

6
8
12
5
10
0
5

80
60
25
24
33
72
22

35
30
20
15
18
20
20

The above display underlies a conclusion that the degree of utilization of

different LCUs varies considerably. One reason could be carriage of
voluminous goods with low unit weights in rail cars, semi-trailers and 40
feet containers which causes under-usage of load carrying capacity.
Another could be inability to stow more freight in each freight box due to
time pressure for shipments expedition.
The account of commodities shipped by respondents and the prices paid
for freight carried by rail, truck and truck-rail intermodal, are presented in
this section.

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Goods Categories on International Road and Rail Shipments

(% of volumes shipped)
100 %
90 %
8 Manufactured goods

80 %
70 %

7 Machinery and
transport equipment
5 Chemicals

60 %
50 %
40 %

2 Crude materials and

fuels
0 Foodstuff and
beverages

30 %
20 %
10 %
0%
1 Truck

2 Rail

Figure 4: Commodity categories shipped by in the survey

Table 4: Commodity categories in shipments registered
Commodity Categories in Figure no 4

Denomination in Terms of SITC Main Chapters

Manufactured goods

SITC6 + SITC8

Machinery and transport equipment

SITC7

Chemicals

SITC5

Crude materials and fuels

SITC2 + SITC3

Foodstuff and beverages

SITC0 + SITC1

Figure 4 reveals that rail and road compete in several markets for freight
transfer. Competition interfaces, albeit of different size and intensity, could
be identified in transfer of freight within four of the categories.
Only machinery/transport equipment appears to be almost solely moved
by truck.
Manufactured goods dominate commodities forwarded.
Since rail
accounted for carriage of 80 p.c. of manufactured goods and truck for 48
p.c., this indicates that rail-road competitive interface exists in this market
segment. This competition is dominated by rail. About nine percent of
crude materials and fuels were carried by rail, but only for 3 p.c. by truck.
Chemicals represented another commodity category where rail and road
compete for the same type of shippers, with respectively 7 and 2 p.c. of
volumes carried by each mode. Foodstuff and beverages represented
another market segment with road-rail rivalry, which, however, was

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dominated by truck carrying 17 p.c. of tonnage registered against 2 p.c.

conveyed by rail. Machinery and transport equipment represented a large
freight segment where about 23 p.c. of tonnage was moved by truck.
Table 5 shows variation in Euro prices paid by shippers for unit ton of
freight carried over one kilometer in rail cars and semi-trailers.
Table 5: Mean prices for transfer of unit tons of commodity categories by
truck and rail (Euro)
Goods Categories (SITC1) Shipped by Rail and Truck
Food Stuffs
Chemicals
Semi-finished products
Technical products
Finished products

Mean Price Euro for Transfer of Unit Ton by

Truck
88.27
54.80
67.95
217.20
115.00

Rail
87.41
54.41
35.92
87.49
50.88

Table 5 reveals that rail obtains much lower unit ton prices than truck for
transfer of semi-finished, technical and finished products. This discrepancy
may:
1. Reflect the service quality differentials between truck and rail in
transfer markets for these three cargo categories, and
2. Be an effect of differences in rail and road positioning in specialty
sub-markets created by these aggregate goods categories.
The data also show that prices gained by rail for carriage of foodstuffs and
chemicals match those moved by truck.
Analyses of demographics of rail and road users shown in figure 5 reveal
that it was the medium-size shippers who forwarded the largest volumes
by rail and not the biggest ones. This finding has significant implications
for rail and rail-intermodal operators: for access to stable and large goods
repositories required for scale, scope and density economies please target
medium-size manufacturing companies and LSPs because these business
entities may represent prospective customers with positive experience
from usage of freight rail. Therefore, they may harbour greater propensity
for extended usage of rail, provided important service quality requirements
are fulfilled.

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70 %
59 %

60 %
50 %

42 %
37 %

40 %
30 %

30 %

Truck
Rail

29 %

20 %
10 %

4%

0%
Small (< 10 mill EUR)

Medium (10-50 mill EUR)

Large (> 50 mill EUR)

Figure.5: Road and rail shipments weighted by freight volumes shipped

yearly
4.2

Quality requirements for transport by road and rail

This chapter reports on how importance and satisfaction assigned by

shippers to twenty three quality dimensions varied between the routes
served by rail and truck operators. The shippers assessments are shown
in the next figures.
Importance
Satisfaction

Reliability of service
Cost of door-to-door delivery
Amount of loss and damage
Service availability at origin point

Service availability at destination point

Quality of freight handling
Duration of transit time from origin to destination
Processing of loss and damage
Frequency of service
Flexibility for dealing with seasonal variations in no. of shipments
Directness of shipment
Equipment free on time for loading/unloading
Information promptness on cargo under shipment and after arrival
Suitability of Load Carrying Units for commodity carried
Suitability of Load Carrying Units for shipment size
Expediency of ordering/chartering service
Availability of tracing/tracking services
After delivery service
Availability of Load Carrying Units (LCUs)
Kindness of service staff
Environmental friendliness
Goods availability at destination, for return transport
Efficiency at transloading stations

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Figure 6: Gaps between scores of importance and satisfaction assigned

by shippers to with twenty three quality attributes of truck shipments.

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4.5

Importance
Satisfaction

Service availability at origin point

Cost of door-to-door delivery
Amount of loss and damage
Reliability of service
Processing of loss and damage

Service availability at destination point

Frequency of service
Suitability of Load Carrying Units for commodity carried
Duration of transit time from origin to destination
Availability of Load Carrying Units (LCUs)
Information promptness on cargo under shipment and after arrival
Expediency of ordering/chartering service
Flexibility for dealing with seasonal variations in no. of shipments
Equipment free on time for loading/unloading
Kindness of service staff
Suitability of Load Carrying Units for shipment size
Directness of shipment
Quality of freight handling
Environmental friendliness
Availability of tracing/tracking services
After delivery service
Efficiency at transloading stations
Goods availability at destination, for return transport

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Figure 7: Gaps between scores of importance and satisfaction assigned

by shippers to twenty three quality dimensions of rail shipments.
The quality factors rank differently between truck and rail users, Shippers
importance and satisfaction with quality requirements differed broader for
rail than for truck. This shows that by and large participants in the study
were less satisfied with services supplied by rail than by truck. Both
negative and positive gaps exist between the service quality expected and
delivered by truck and rail. The reliability of supply and the cost of service
were the most significant quality requirements that truck users pointed out
deviated from the quality expected, and thus displayed a negative quality
gap. On the other hand, the shippers using rail were mostly dissatisfied
with poor availability of rail service at shipments origins and (poor) value
for money paid for freight transfer. Reliability of freight delivery, quality of
processing of loss and damage, duration of goods transit and information
promptness on cargo under shipment and after arrival, all scored low on
shippers satisfaction with rail services supplied. Yet, rail operators scored
better than road on environmental friendliness, and availability of LCUs
suitable for shipment size and types of commodity carried. All in all, rail
performance scored better on five qualities as compared to shippers
expectations. For truck, the number was seven. Motorized operators
excelled at kindness of service, service availability at shipments
destinations for provision of back-hauls and at efficiency at trans-loading
stations.
The following maps exhibit the road and rail routes in Europe used by
shippers surveyed for freight transfer and delivery.

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Figure 8: Map of road routes used by shippers in the survey

Figure 9 visualizes the currently used parts of rail corridors laid over the
Trans-European Transport Network to which the European Commission,
DG TREN assigns great socio-political value and which will receive
considerable European and national investments over 2007-2013. The
picture shows that shippers surveyed use majority of TEN-T axes for railbased consignments.
This indicates that shipments registered by our study represent typical
freight consignments moved along the existing European transport
pipelines.

Figure 9: Map of rail routes overlaid the TEN-T intermodal priority axes

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4.3

Determinants of shippers choices of railbased freight supply

solutions

Table 6: Service quality dimensions and loadings of importance assigned

to qualities of rail-based freight supply
Variable number
Imp_20
Imp_23
Imp-21
Imp_10
Imp_10
Imp-16
Imp_8
Imp_4
Imp_9

Factor Description
Factor 1: Dealing with Service Failures
Amount of loss and damage
After delivery service
Kindness of service staff
Processing the loss and damage
Factor 2: Intermodal Expediency
Suitability of Load Carrying Units for commodity carried
Duration of transit time
Efficiency at trans-loading stations
Factor 3: Efficiency of Cargo Intake& Discharge
Expediency of ordering/chartering service
Equipment free time for loading/unloading

Loadings
.654
.804
.709
.632
.814
.714
.611
.853
.799

Four variables loaded on Factor 1 Dealing with Service Failures, which

emphasized importance that shippers assigned to reduction of loss and
damage, needs for staff performing kindly when rendering after-deliveryservice, and especially, when processing cargo loss and damage. Failure
by rail operators to fulfil these service requirements enhances the scope of
shippers financial loss when their cargo gets damaged and/or lost. The
fact that this factor explained the largest amount of variance in data
material related to rail shipment routes reveals that this service dimension
is important, but not necessarily well fulfilled by rail carriers and logistics
suppliers who deliver rail-based freight supply solutions.
Three variables loaded on Factor 2, Intermodal Expediency, which
shows that shippers emphasized importance of suitable load carrying
devises for commodities carried, reliable transit time for cargo transfer and
efficiently functioning trans-loading stations. Failure to meet these
requirements leads to considerable transportation and non-transportation
costs for consignors, consignees and LSP. LSP who take over cargo after
rail haulage waist their time by waiting at trans-loading stations when real
time of cargo arrival deviates from the schedules. Inefficient intermodal
terminals cause higher inventory and capital costs for retailers and
distributors who use more stocks to prevent stock-outs and loss of
business. Besides, when cargo arrives later than scheduled by master
productions
plans
and/or
inventory
replenishment
timetables,
manufacturers suffer from equipment down-time and production stops
LCUs suitable for goods shipped hold transport costs down by maximally
utilizing the load carrying capacity. Arrivals of LCUs unsuitable for a given

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cargo category causes shipments of under-used boxes and/or generates

needs for more transport units to expedite the same freight volumes.
Finally, Factor 3Efficiency of Cargo Intake and Discharge demonstrates
importance that shippers assigned to expediency of ordering and
chartering and equipment free time for loading/unloading. Poor
synchronization between the times of freight availability and the time of
transport equipment arrivals and departures disturbs the delivery schedule
and increases costs of logistics. Late LCUs arrivals cause cargo to wait for
shipment and thus, inflate the costs of storage. Similarly, LSP incur
demurrage costs for retaining freight carriage equipment beyond the lease
deadlines when cargo discharge is delayed.
The results of regressions run on overall importance of service quality
assigned by shippers to rail routes they used for European freight transfer
is shown in table 7. In order to assess the impacts of shippers attitudinal
appraisals and contextual factors which jointly affect importance assigned
to rail service quality, the model included three dummies extracted from
descriptive analyses of rail freight flows and rail users. These included
FWL and tank-wagon consignments, shipments of foodstuffs and those
executed by large and medium-size shippers whose revenues exceeded
10 million Euros.
Table 7: Regression of factor scores on overall importance of rail service
quality
Independent Variables
Intercept
Full Wagon Loads
Tank-Wagons
Shipments of foodstuffs
Shippers >10-50 million Euros and >
Factor 1: Service Failure
Factor 2: Intermodal Expedience
Factor 3: Cargo Intake & Discharge

Parameter
Estimate

Standard
Error

.158
-.189
-335
.184
.241
.167
.632
.064

.485
.179
.266
.279
.192
.124
.105
.094

t-stat.
.326
-2.089
-3.731
2.097
2.752
1.626
6.495
.659

p-value
.746
.041
.000
.041
.008
.110
.000
.513

The model parameters explained 60 percent of variance in the overall

importance that European shippers assigned to rail service quality on
used shipment lanes. We can see that it was solely Factor 2, Intermodal
Expedience, which contributed to the latter. Other significant variables
included shipments of foodstuffs and shipments by companies with
revenues exceeding 10 million Euros. Consignments of full wagon loads
and tank wagons, although significant were not considered very important
for the overall service quality on the routes chosen. This is understandable
given the fact that wagon loads constitute traditions rail service which
usually operate in a single-modal fashion. The positive and highly
significant impact of Factor 2 signals that shippers attached more

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importance to efficiency of intermodal operations which are much more

challenging as regards service quality for high-value cargo such as
foodstuffs.
4.4

Determinants of shippers choices of roadbased freight supply

solutions

Table 8: Service quality dimensions and loadings of importance assigned

to qualities of road-based freight supply
Variable number
Imp_19
Imp_ 5
Imp- 8
Imp_23
Imp_22
Imp_ 1
Imp-12
Imp_ 2
Imp_21
Imp_20
Imp_13
Imp_10
Imp_11
Imp_17
Imp_18

Factor Description
Factor 1: Operational Efficiency & Sustainability
Environmental friendliness
Kindness of service
Efficiency at trans-loading stations
After delivery service
Information promptness on cargo under shipment and after arrival
Factor 2: Service Availability
Service availability at origin point
Reliability of service
Service availability at destination point
Factor 3: Dealing with Service Failures
Processing of loss and damage
Amount of loss and damage
Directness of shipment
Factor 4: Technical Efficiency
Suitability of Load Carrying Units for commodity carried
Suitability of Load Carrying Units for shipment size
Factor 5: Value for Money
Cost of door-to-door delivery
Flexibility of dealing with variations in no of shipments

Loadings
.730
.690
.631
.629
.557
.786
.753
.750
.855
.789
.678
.845
.795
.816
.560

Five variables loaded on Factor 1 Operational Efficiency and

Sustainability, showing that shippers emphasized importance of
environmental friendliness, kind service, and especially error-free invoicing
and prompt information after delivery. Significance of access to
information on cargo whereabouts under transfer and efficient transloading stations for load consolidation and deconsolidation was also
articulated by the users.
Factor 2 Service Availability involved loadings of three quality indicators
that revealed that shippers ranked service availability at shipments origins
and destinations as important for cost-effectiveness of forward and return
trips with import/export shipments. Reliability of service was also in focus
here as service availability may affect consistency of transit time, and
delay cargo arrivals and pick-ups.

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Factor 3 Dealing with Service Failures comprised loadings of three

variables which emphasized importance that shippers assigned to good
after-delivery-service for processing cargo loss and damage, reduction of
loss and damage and negative consequences of lees direct shipments.
Similarly to rail carriers, failure by truck and truck-intermodal operators to
fulfil these service requirements enhances shippers financial loss when
their cargo gets damaged, lost and/or delayed. The observation, however,
that this factor ranked third in the amount of variance explained in data
material related to truck-served routes reveals that this service dimension
is important, but maybe better attended to by motorized hauliers than by
rail-based operators.
Two variables that loaded on Factor 4 Technical Efficiency indicate that
shippers rated as significant suitability of LCUs for the commodity carried
and shipments size.
This finding confirms a tendency observed in European and the US
transportation and logistics markets. According to interviews with leaders
from major European and global LSP and manufacturing companies,
cheap transport ceased to be an unstated component of logistics design
on which so much worlds economy has been based. Lean inventory and
globally sourced supply chains depended on cheap transport. However,
the consequent huge demand for transport has unsurprisingly resulted in
price increases. Greater demand, combined with implications of political
and military crisis in oil-rich Middle East Asian countries have pushed-up
the price of fuel. In European countries with tight labor markets, this has
brought about higher operations and personnel costs, particularly for truck
drivers. Under these circumstances the more volumes one manages to
squeeze out of LCUs carrying capacity, the more money is saved on
freight shipment.
The latter provides also causally plausible explanation for Factor 5Value
for Money involving loadings of two variables, the cost of door-to door
delivery and flexibility of dealing with seasonal shipment variations. The
combination of these two variables underscores the everlasting downward
pressures on unit cost of freight movement. It also signifies that price paid
by shippers for freight conveyance is an important decision-making factor
even if its ranking was preceded by other quality attributes.
Table 9: Regression of factor scores on overall importance of road service
quality
Independent Variables
Intercept
Factor 2:Service Availability
Factor 3 :Dealing with Service Failures
Factor 4: Technical Efficiency
Factor 5: Value for Money

Parameter
Estimate

Standard
Error

3.799
.241
.388
.305
.281

.45
.045
.045
.045
.045

t-stat.
85.184
4.066
6.528
5.134
4.733

p-value
.000
.000
.000
.000
.000

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The above regression model explained 35 percent of variance in the

overall importance assigned by European shippers to service quality on
motorized routes. We see that four of the five factors extracted from the
data on road transit have significantly contributed to the above. The
relatively low percentage of variance explained and the high level of error
term indicate that variables other than those specified in the equation exert
causal impacts on shippers choices of truck-served lanes. These
variables may be related to cargo specifics shipped from/to the countries
analyzed, and/or to national features of truck service markets in the twelve
countries of our survey. Finally, one more reason for that may be that
important determinants of truck service selection have not been covered
by our survey instrument, and thus could not be tested by the above
model.
4.5

Determinants of transit time by road and rail

The regression models on the dependent variable transit time assessed

how this factor was affected by distances travelled and the features of
shipment corridors in different countries and regions.
Transit time by road
Table 10: Results of linear regression analysis on total transit time by road
Independent Variables

Parameter
Estimate

Standard
Error

t-stat.

p-value

Intercept

5.637

2.619

2.152

.033

Sea transit (km)

.448

.004

13.763

.000

Transfer <1,000 km, East

.180

.006

4.896

.000

Transfer >1,001-2,000 km, East

.456

.003

14.512

.000

Transfer >2,001-3,000 km, East

.352

.003

11,989

.000

Transfer > 3,001 km, East

.236

Transfer < 1,000 km, West

.330

.004

8,530

.000

.004

8,004

.000

Transfer >1,001-2,000 km, West

.520

.002

11,685

.000

Transfer >2,001- 3,000 km, West

.627

.002

14,948

.000

Transfer >3,000 km, West

.539

.002

13,600

.000

Frequency of service (daily)

-.054

. 001

-2,047

.042

Goods shipped (chemicals)

-.055

.002

-2,098

.037

Shipments origins (West Europe)

-.082

.001

-2,118

.036

The model parameters in table 14 explained 89 percent of variance in time

of door-to-door freight transfer by road. Route kilometres in transit by the
different modes are, not unexpectedly, the strongest determinants of
duration of transit time. However, the negative and significant coefficient
values on three dummy variables: service with daily frequency, shipments
of chemicals and consignments with origins located in west-Europe reveal
types of shipments that are moved significantly faster.

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Transit time by rail

Table 11: Results of linear regression analysis on transit time by rail
Parameter
Estimate

Independent Variables
Intercept

22,585

Standard
Error
9,455

t-stat.

2.379

p-value

.021

Sea transit (km)

.395

.023

3,843

.000

Transfer [1,000-2,000> km, West

.474

.011

5,647

.000

Transfers > 2,001 km, West

1.128

.009

10,997

.000

Transfers < 1,000 km, East

.269

.024

2,615

.012

Transfers >1,001 km, East

Shippers >50 million Euros

.644

.017

3,746

.000

-. 697

.005

-8.330

.000

Intermodal transfer by road (km)

.318

.068

3.799

.000

Intermodal transfer by rail (km)

-.796

.009

-6.149

.000

Eastern border crossings, rail (km)

.463

.005

3,059

.003

Mode shifts

.184

5.788

1.574

.121

The model explains 79 percent of variance in duration of freight transit by

rail. The nine parameters do positively and negatively affect the duration of
rail transit time. The impact of the tenth determinant was not significant
due to co-linearity with other residual variables. Rail transit time increases
with distances of sea crossings, overland haulage, feeder travel to
terminals trans-loading cargo onto rail carriage, and the border crossings
into and within east-Europe. The model indicates also that large shippers
manage to reduce transit time for their consignments and that usage of rail
haulage under intermodal freight transfer shortens the shipments overall
travel time. This may happen because large shippers possess efficient
service procurement departments who ship large and regular
consignments, and their shipments are prioritized by service providers who
manage to produce operational advantage from inclusion of rail line-haul
into intermodal supply chains.
Comparison of determinants of travel times by rail and by road discloses
that border crossings on routes through west and east-Europe do not
affect duration of truck transport. Border crossings on east-European
corridors do however, influence duration of freight travel by rail. Yet, this
did not apply to west European lanes. These findings provide empirical
support for anecdotal evidence that long stops at borders in north-eastern
and south-eastern European countries disrupt freight movement by rail
and by so doing constitute significant barriers to seamless freight flows.
4.6

Logistic regression model for choices between rail and road

routes

In the logistic regression model, the dependent variable in this model was
defined as a binary choice between road and rail transit. In this model, the

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impacts of variables representing shippers demographics and types of

shipments, the GIS-overlays of geographical routes as well evaluation of
shippers satisfaction with service qualities on the routes used have been
tested as explanatory variables.
Model with a combination of variables from each of these categories
showed useful for prediction of road and rail modal choices. The
independent variables in the model involved shipment volumes, transit
speed, commodity types, and satisfaction score of shipment reliability.
The logistic regression coefficients from the model were used to estimate
odds ratios for each of the independent variables through an iterative
maximum likelihood method. In the final step, the fit between the model
prediction and the data reached 86 percent. Rail was more difficult
transport choice to predict than road. Model-data accuracy for rail choice
prediction was 41 percent. The truck was correctly predicted by model for
97 percent of road choices in data set.
The models explanatory variables are shown in table below, along with
the corresponding ratio-changes in the odds, Exp(B), of rail-choice as a
consequence of one-unit increment in predictors values.
Table 12: Explanatory variables in logistic regression model for choices
between road and rail.
Variable
Goods volume yearly shipped by respondent on route
Transit speed for SITC6 (semi finished goods)
Transit speed for SITC7 (machinery, technical equipment)
Satisfaction score (1-5) on Reliability of Shipment

Unit

Exp(B) - Ratio-change in
odds for rail

1,000 tons
1 km/h
5 km/h
1 point

1.135
1.333
1.295
2.080

The Exp(B)-factors of above 1.0 imply that the probability of choosing rail
on shipment routes is expected to rise with increase/growth in the value
levels of model parameters.
An assumption of increase in volume of yearly freight shipped by 1,000
tons is probably not unlikely for some large shippers in the South-eastern
Europe with fast-growing markets for international freight transport.
The speed of freight travel variable gave the best prediction when
combined with SITC main categories 6 and 7, semi-finished products and
machinery/technical equipment. Since the speed of transit interacts
positively with these two goods categories, the effect of improved speed of
rail freight movement increases the probability of choosing rail for supply
of these two goods categories, whilst other cargo categories are not
significantly affected.
In this example, a one-point rise in satisfaction with reliability of rail service
achieved the highest odds of mode change in this example. A more

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realistic scenario would rather be to level up shippers satisfaction with

truck by improving rail customers satisfaction by 0.5 point. This
moderate option indicates that considerable mode shifts are possible in
regions/corridors with potentials for higher service reliability. One
hypothetical explanation for these prospects is that, by and large rail is still
cheaper than truck as regards transfer of some processed commodities,
provided of course, that other requirements related to e.g., volumes of
shipments could be met.
0.5

Baseline
Yearly volume +1000 tons
Reliability +1 point
Speed +5 kmh

0.45

0.4

0.35

0.3

0.25

0.2

0.15

0.1

0.05

0
0 Food and live animals 5 Chemicals and related 6 Manufactured goods
products
classified chiefly by
material

7 Machinery and
transport equipment

8 Miscellaneous
manufactured articles

Total

Figure 10: Probability of choosing rail by shippers of five goods categories

in four scenarios
The above figure shows the probabilities for shippers choices of rail for
shipments of the five main goods categories obtained from runs of the
three scenarios (in addition to baseline). The baseline included current
values of explanatory factors. The runs of three scenarios show the
changes in predicted probabilities when: 1) Shippers yearly volumes
increase by 1,000 tons, 2) Customer satisfaction with rail service reliability
rises by 1 point, or that 3) Speed of rail transit is improved by 5 km/h. The
latter affects two commodity categories. These probabilities refer to the
median score for each of the commodity segments.
5

SYNTHESIS OF FINDINGS

The first important finding deduced from this study is that shippers
surveyed use the TEN-T rail and road networks which are focus for

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European and national investments for improvement of freight transfer

between the different stretches of intermodal infrastructures.
The second important result is that railways transfer today more
intermodal freight transport units than rail wagons. Three types of LCUs
dominate rail transit in countries analyzed, 20 and 40feet containers, and
swap-bodies. This indicates that rail capitalizes on its inherent competitive
advantage in door-to-door segments and intermodal chains. Rail
competes with road in markets for manufactured goods, chemicals, crude
materials and fuels and even foodstuffs and beverages. This marks
considerable up-market shift from bulk haulage where rail used to
compete with low-value high-volume sea-going cargo. However, rail
commands about 50 percent lower prices for one ton of freight carried in
markets for finished and semi-finished products, machinery and technical
equipment. The most avid users of rail services are medium-size shipper
companies with yearly turnover 10 and 50 million Euros. This important
and counter-intuitive finding emphasizes that given that medium-size
business are much more numerous in Europe than very large
establishments, rail market potentials for rail may increase considerably
with increased service qualities.
However, shippers satisfaction with qualities delivered by rail was lower
than with truck. It is not to say that shippers were uniformly satisfied with
performance of motorized operators. Yet, the gaps between expected and
delivered service qualities were broader for rail than for truck.
Comparisons of regression models testing impacts of factor scores
extracted from choices of road and rail routes shows that factor
Intermodal Expedience was the most significant for shippers overall
assessment of rail quality. For track users, three factors, Service
Availability, Dealing with Service Failures, Technical Efficiency, and
Value for Money were important. The above signals that efficiency of
intermodal operations need to be improved by rail carriers. The structure
of rail and road models reveals also that more parameters affect modal
choices of rail lanes that road. This result was the third important outcome
from this study.
Finally, the fourth substantial finding was derived from the logistic
regression model testing sensitivity of relative probabilities for shippers
choices of rail versus road conveyance. Models runs showed that three
service improvements may significantly increase the likelihood of shippers
future selection of rail: 1) Shippers increase their volumes shipped. 2) Rail
improves speed of freight transit. This may facilitate more shipments of
semi-finished products, machinery and technical equipment with relatively
high unit ton price. 3) Rail improves shippers satisfaction with reliability of
rail. This may considerably increase rail service opportunities for transfer
time-sensitive high-margin goods, such as foodstuffs.

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