It pays to ship parcels by rail

The oldest known constructed trackways date back thousands of years. But we don’t need to travel nearly that far back to understand the essential role of railways in transportation and logistics. The development and expansion of the railroad revolutionized travel and shipping – and fueled the Industrial Revolution. However, the growing popularity and flexibility of road and air freight and the low cost of ocean freight in the second half of the 20^th Century made it difficult for rail to compete. Today, many shippers don’t even consider shipping by rail to be an option.

That’s changing. And that’s good news for both (ecommerce) business and the environment.

Regular nonstop rail links between China and Europe have been well established for nearly a decade. Trans-Eurasian rail services meet the growing demand for a quick and cost-effective option. Trains are faster than ships and less expensive than planes. Depending on the route, shipping by train is faster than ocean freight and costs less than air freight.

The European Union – along with many of its member states – has ambitious plans to increase shipping by rail within Europe. By 2030, the EU wants to see 30% of cargo shipments travelling by train. Currently that number stands at 20%, and closing the gap appears to be a daunting task. Freight volumes would need to grow by around 6% a year.

But experts believe there are ways to get things up and running relatively quickly, such as upgrading many existing freight bypass routes. They envision as many as 200 journeys a day on routes like the 805-kilometer Berlin-Metz line running between the German capital and Metz, a city in northeast France. While road freight will remain the primary mode for first and last mile delivery, the distances between them – especially those over several hundred kilometers – could easily by covered by rail.

It won’t be easy and will require a major shift in transport modes. But the move will be crucial to reducing the transportation sector’s greenhouse gas emissions. Shipping by rail is the cleanest and greenest mode of high-volume transport today.

Putting parcel shipping on the right track

Our parcel business in Germany is one area where we are working to ship more parcels by rail. For example, we’re collaborating with partners like DB Cargo, the rail freight business unit of Deutsche Bahn, Germany’s national railway company. Together we’ve increased the share of parcels we ship by train from 2% to 5%. In the long term, we’d like to see one in five shipments cover most of the distance on trains.

Innovative mountable swap bodies and Germany’s dense rail network certainly help our cause. Swap bodies are a type of exchangeable freight container designed to be easily moved between trucks and railroad cars. We ship thousands of these containers across the country each week on both north-south and east-west routes.  

Each kilometer of freight shifted to rail leads to an absolute reduction in carbon emissions. Compared with trucks on the road, shipping by rail reduces the carbon footprint by 80-100%. Our Post & Parcel Germany division has reduced carbon emissions by up to 18,000 metric tons per year by shipping parcels by rail. We can move up to 100,000 parcels on one EU-standard-length 740-meter train and replace 52 trucks.

What’s more, switching to rail gives us yet another option to offer completely carbon-free parcel delivery. By using DB Cargo’s Eco-Plus service, all parcels we ship by rail travel on trains powered by sustainably produced electricity.

More parcels by rail won’t be easy

Utilizing railroad networks to ship parcels harbors so much potential, but there is much to do if we are to tap into it fully. For example, we need faster freight cars for light goods transport, expanded infrastructure, better rail lines and high-speed routes, simplified processes for building and expanding rail connections, and optimized loading to and from trucks and trains.

That’s because sending parcels by train typically takes longer. In Germany, for example, we strive to deliver domestic parcels the day after they are received. Doing this by rail is a challenge. But shipping by rail does have its advantages. For example, rail is not subject to weekend driving bans and the industry has not been hit as hard by the driver shortage. So it has been more consistent then road freight in terms of cost and availability.

That said, switching from road to rail won’t be easy. A broken-down train has a far greater impact on delivery times than a defective truck. Climate-conscious customers who want the environmental benefit of rail will need to modify their supply chains, such as increasing inventories, adapting schedules, and adding more flexibility to their operations.

Still, many e-commerce companies are eager to give parcel shipping by rail a chance, which means we have an opportunity to tap into that market. Current trends also indicate that many climate-conscious customers will accept longer transit times for low-carbon logistics.

Climate change comes first

In Europe, it’s clear that cutting carbon remains the strongest selling point for switching from road to rail. The EU’s Green Deal, for example, heavily promotes the increased use of rail as a safe and sustainable mode of transport. The EU even designated 2021 as the European Year of Rail.

Transportation represents 25% of the EU’s greenhouse gas emissions, yet rail is only responsible for 0.4%. Electricity powers most trains, and while global greenhouse gas emissions from transport have continued to rise, rail is the only mode of transportation that has considerably reduced its emissions since 1990. In Europe, 75% of inland freight travels by road, and only 10% of goods travel by rail.

In an article on the future of rail freight transport published in January, management consultancy McKinsey argued in favor of fairer competition: “Establishing a level playing field would help companies choose the best transport mode, including being able to take sustainability issues into consideration.” But the authors point out that this is only one piece of the puzzle. Transforming the industry will take “real will, strong choices, and an active involvement of all stakeholders,” they say.

Shifting overland freight and parcel shipping to rail is a real opportunity to shape the future of parcel shipping. By collaborating with other forward-looking logistics companies, modifying outdated business models, and updating infrastructure, we can make a positive impact: consumers get more choice, e-commerce gets a competitive edge, and the world gets greener logistics.

It certainly seems like this could be the decade for rail freight – when shipping parcels by rail becomes a truly viable long-term alternative to the road.