‘If we do not modernise our transport infrastructure, we will slide down the international scale’
Connecting with customers
Freight operators need to move to a more customer-focused business model, says Anand Medepalli
T
he European rail freight market has been de-regulated since 2007, enabling a rail operator to offer their services in any EU country without the hurdle of cross-border delays and the inherent complexity of individual nation regulations. This allows them to offer customers an enhanced logistics management experience by being a one-stop-shop. Such an ability naturally fosters competition in the industry, especially as national operators have to give up on their monopoly in their state. While this is great news for rail freight operators, they still have a long way to go. Statistics from the UK Department for Transport showed that in 2010, road freight carried 81 per cent of all domestic freight traffic in the UK while rail freight covered just five per cent; with organisations seemingly failing to see the value in rail freight. But a potential rise in taxation for road freight discussed in European Parliament last year means it stands to get more costly. So, with the ability to offer lower costs with higher capacity than road freight – especially for heavy or specialised loads – and therefore greater efficiency, rail freight has a golden opportunity to gain market share from road transport in particular, competing effectively within
the overall freight transportation market. In order to fulfil this potential, rail freight operators need to move away from thinking of themselves as a purely operational companies but, instead, as customer-centric entities. Instead of focusing primarily on how to move goods once they arrive, a more commercial way of thinking is needed by first planning for what goods they wish to move and how. While some freight operators have recognised this, many need to begin undergoing this change by implementing transformational strategies. In the EU’s deregulation proposals in the late 90s, the ‘freeway concept’ was defined as giving rail operators fair, equal and non-discriminatory access across all EU railways. To truly enable this concept, rail operators must invest in EU-wide sales and marketing with integrated systems that provide pan-EU quotes, pricing, invoicing and tracking capabilities – much like their counterparts in air cargo do. In air cargo, 80 per cent of revenues are provided by just 10 per cent of the customers. Air cargo carriers invest significantly in these customer relationships by offering logistics expertise and services such as handling and warehousing. Rail freight operators
need to begin emulating this winning approach from air cargo; especially since competing on a pan-EU basis will require these operators to have a strong base of key customers looking for more than just transport.
‘In air cargo, 80 per cent of revenues are provided by just 10 per cent of the customers’
Planning for demand In many organisations demand is not tracked at all – at least not for commercial reasons. To move to a commercial focus, rail freight operators should be monitoring demand, anticipating requirements of their key customers and feeding that information into all their planning activities. Understanding market segmentation and customer preference for transportation mode is imperative to gain market share overall. Some rail operators wait for enough orders to accumulate before announcing continued, page 31
AUGUST 2012 PAGE 29
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