Consumer packaged goods giants launch collaborative rail intermodal service in Europe

Three consumer packaged goods giants have shifted some of their pan-European shipping from truck to intermodal and are sharing rail capacity on deliveries heading west across the continent. This shift marks perhaps the most ambitious effort to date by companies in the category to use intermodal to reduce their carbon emissions.

The companies—personal care firm Colgate-Palmolive Co.; snack foods company Mondelez International Inc.; and the Swiss conglomerate Nestlé S.A.—launched a pilot program in late September to move goods via rail from Poland to the Netherlands. Under the program, the companies load their own containers at factories in Poland and have them drayed to a rail terminal in Poznan in the western part of the country. From there, the equipment moves by rail to the Port of Rotterdam, where it is shipped by ferry across the North Sea to Immingham on central England's east coast. The shipments are then trucked to each company's logistics providers. Immingham has highway connections linking it to major population centers in England and Scotland.

The shift from truck to intermodal is part of an initiative to reduce greenhouse gas levels, according to the Joint in Transport Cooperative (JIT), which was formed in February 2012 to promote the environmental benefits of transferring highway traffic onto the rails. The service between the three companies is being run under the cooperative's umbrella, according to Peter Jordan, its director. Groups such as The Global Commerce Initiative and The Consumer Goods Forum were involved in establishing the cooperative, as was global consultancy CapGemini Consulting.

Antitrust and other legal concerns were a major impediment to rolling out shared rail services on the continent, Jordan said. The group eventually developed an appropriate "legal infrastructure" that avoided problems with the European Commission, the European Union antitrust arm, he said.

Seacon Logistics, a Dutch third-party logistics provider (3PL), is overseeing the program's execution. Seacon handles the logistics operations for the rail movements and manages a so-called control tower to provide real-time in-transit shipment visibility.

Jordan said Colgate-Palmolive, Mondelez, and Nestlé hope to move between 50 and 100 containers a week via intermodal during the Christmas season. JIT plans to offer train services next year in Spain, France, and Italy to create a south-to-north route through Europe, he said. JIT is seeking other companies to join the program.

Based on the current projections for use of the shared rail service, JIT estimates that the conversion from truck will reduce the companies' carbon dioxide (CO₂) emissions by 18 million kilograms (nearly 40 million pounds) per year. "Moving from road to rail will save a bucketful of CO₂," Jordan said.

U.S.VIABILITY?
It remains to be seen whether such an effort could also work in the United States. Alex Stark, director of marketing for 3PL Kane is Able, a Scranton, Pa.-based company that specializes in consumer packaged goods (CPG) logistics, said he's seen no evidence in the United States of CPG companies shifting from truck to rail other than a conversion of a small amount of traffic moving from factory to distribution center.

Shanton J. Wilcox, a principal at CapGemini, said also he's unaware of any such activity in the U.S. market. Wilcox said some industries doing business in Europe are looking at converting from road to rail for shipments bound for emerging EU markets in part because the lower cost of rail services would neutralize the impact of high tariffs imposed on inventory in those markets.