Obstructing the future?

Panta rhei – everything flows. Although the dictum coined by the ancient Greek philosophers refers to the ever-changing character of the world it also describes an ideal state of the global supply chain and logistics network. However, we have experienced quite the opposite of late, as interruptions to the flow of goods and raw materials pose problems to businesses worldwide.

Bottlenecks for container and shipping cargo are not only due to the recent Shanghai port lockdown, and the situation has worsened globally in recent years. A similar situation is observed for rail: recent issues come on top of a longer trend seeing decline in reliability and performance. An example recently discussed in the logistics magazine Logistik heute outlines how strongly industries and local value chains depend on functioning rail freight connections: Up to 60 trains run weekly between Duisburg as the end point of the new Silk Road in Europe and various destinations in China. The transports usually pass-through Russia and Belarus – but, due to the ongoing war in Ukraine there might soon be tangible cutbacks in frequencies. Another tangible and literally palpable example: the rail-to-road transition being interrupted trough temporary closure of railway container terminals due to congestion during the easter holidays.

But it is not only geopolitical crises that impair cargo supply chains via railway. The system itself is making industries that need reliability to meet their delivery goals pessimistic about the future. Even without the crisis, the rail system is at its limit. With construction sites all over Europe’s railway net, hundreds of trains were cancelled over the last months, as the Handelsblatt reports. A situation that according to experts will last and is forecasted by operators to deteriorate further, adding to the strain of industry logistics and on-time-delivery. Take Germany: the country has the largest highway network in the European Union. But even in 2019, 100,000 construction sites and 4000 kilometers of congestion slowed down vehicles every day.

Investments are overdue – not least with the pressing need for profound climate action. With our strive for a greener industry, this aim cannot be reached without a fully circular economy. However, circularity goes along with a significantly increased logistics volume. Sending a large proportion of components fit for recycling or reclaimed raw materials on their way to being re-used via rail-cargo is the way to go when we want to establish a sustainable supply chain for the circular economy.

Change won’t come overnight, but it starts with substantial investments in the railway infrastructure as planned by the German government – and about time in a country where investments in this sector rank third lowest in Europe and with only about 60 percent of the German railway network electrified. A longer decline in performance due to construction cannot be accepted: it takes smart approaches on providing detours, capacities in non-peak times and highly effective construction sites to minimize the negative impact.

The debate about competition also needs to continue – how can we boost efficiency and quality of the network as a whole? How could regulation make a difference and regulatory incentives increase the quality of rail infrastructure?  Europe’s infrastructure policy will finally have to set a determined course here, to keep the flow of global supply chains going. A strong infrastructure will be key for Europe’s market supply – resilient and sustainable.