Green Cargo AB, Sweden’s freight rail company has a new idea. It has been backloading a few trail cars that carry new vehicles to car dealers in the north of the country with sawn lumber headed south to the Port of Malmö. While the volume is still small, the backhaul transport opens up a wealth of possibilities for lumber logistics around the world.
For the past year, Green Cargo AB, Sweden’s freight rail company, has been backloading a few wagons that carry new vehicles to car dealers in the north of the country with sawn lumber headed south. From the port of Malmö, the lumber is loaded onto trucks and then exported to other countries in Europe, notably Germany, the Netherlands and Hungary.
The new business hasn’t exactly transformed forest products logistics in Sweden. Only about two to five wagons are being filled this way on any given week. However, this seemingly simple backloading venture points to a new logistics calculus, one that combines economics with environmental considerations.
The concept appears straightforward and makes perfect sense, since the alternative in the past has been to move empty wagons and transport the wood products by truck or separate rail. But the story behind the move shows just how difficult and time-consuming a switch like this can be. Not only did Green Cargo have to demonstrate this method was cost-effective as well as environmentally beneficial, but must break through resistance to change, not to mention overcome existing contracts.
“There have been a lot of things that we needed to sort out…different hurdles we ran into,” explained Richard Kirchner, Green Cargo’s director of sales. “Changing a logistical flow means investing in time and energy.”
“It depends on many different” variables, added Bjorn Larsson, the terminal manager in the southern Swedish port of Malmö, where the car shipments originate and sawn lumber is received. “The market is now ready to see the possibility of backloading on rail.”
Sweden isn’t alone in attempting to tackle the twin issues of boosting forestry products and backloading. For example, a recent study by the British freight rail concern, Colas Rail, focused on unmet potential in hauling forestry products in Scotland, while positing ways to backload wagons as a means to drive down costs.
Ports Look for Backhauls
Likewise, ports have been investigating how to better balance vessels carrying forestry products with backloading other cargo. In Britain’s Hull, for example, weekly ships from Sweden and Finland that are loaded with paper and pulp are being returned with machinery and containers.
A government corporation owned by the Ministry of Enterprise and Innovation Green Cargo is helping to lead the way. According to Kirchner, the idea for backloading new vehicles with lumber started in 2014, but took a year to get moving.
For years, new cars have arrived on vessels from Asia and elsewhere in Europe to Malmö’s car terminal. From there, the vehicles are loaded onto rail wagons and transported to northern Sweden. Destinations include, most notably, the terminal of Umeå, some 1,250 kilometers north and a bit east of Malmö, on the Baltic Sea. The cars are distributed to various retailers throughout the region.
On the flip side, forest products are hugely important to Sweden and its economy; it remains the country’s third largest export. What’s more, according to Skogs Industrierna, the country’s forest products industry association, forest products are the single largest purchaser of transport services.
Northern Sweden is laden with lumber mills. Most forest products are transported by truck, although some rail is being used.
The forest products industry is under pressure to reduce its carbon footprint and must meet increasingly stringent environmental goals the Scandinavian countries have established. Transportation is one element of the process that it can improve on. Rail itself is more environmentally sound than road and the degree trains can take trucks off the road will impact greenhouse gasses. In Sweden, rail is completely electrified and based on renewable generation sources.
However, all that isn’t nearly enough to prod supply chain specialists and logistics handlers to switch. Green Cargo had to make a convincing economic argument, as well as demonstrate that the goods could be delivered quickly and efficiently. What’s more, the freight rail carrier had to keep the car distributors onboard. Green Cargo couldn’t sacrifice its steady service northbound to add a sometimes-southbound component.
“You have to coordinate with customers using the wagons to make sure one solution doesn’t interfere with another,” said Kirchner.
According to Kirchner, Green Cargo has experience backloading wagons that carry cars to the north and this is one key. Umeå is the site of a Volvo truck cab manufacturing plant and Green Cargo hauls these cabs south using the wagons that deliver the cars headed north.
Multipurpose Rail Cars the Key
Green Cargo doesn’t use dedicated car carriers to move vehicles to the north. Instead, it uses multipurpose wagons with floors that can be raised to create a double-deck necessary to haul the new cars economically. The floors can be lowered to carry breakbulk items and palleted goods.
So, the carrier can use existing wagons to handle the new forest products-related cargo. “They don’t have to be modified,” said Larsson. “That’s the best thing about it.”
Because these wagons are so easily adaptable to different freight, Green Cargo can turn around its wagons with minimal delay, an important selling point.
“One challenge in this case was not prolonging the staging time in the terminals once the cars were offloaded,” Kirchner explained. “Our target was not to disturb the existing system.”
According to Kirchner, to accommodate the offloading of the lumber, there’s maybe a one- or two-hour delay on the Malmö side, when compared to the wagons returning empty. However, it remains possible for the trains to make the round trip journey to Umeå in 24 hours if necessary.
The Need for Flexibility
But it does require flexibility on the part of those transporting the lumber. For starters, truckers have to get the cargo from the mills to Umeå and a few other rail terminals and coordinate rail schedules.
Then there are existing logistics contracts, which usually last for one or two years. The mills and their logistics specialists can’t just terminate these contracts. “There are limited windows of opportunity,” said Kirchner. “We have to be lucky.”
And, customers are reluctant to overturn their current logistics arrangements unless they can see that the solution works, is reliable and cost effective. That means an even bigger reluctance to be the guinea pig.
To entice customers, Green Cargo has decided to handle the entire process from the site of the lumber mills to the transshipping in Malmö. The company created cross-functional teams and initiated what Kirchner described as a “mini control tower function,” that keeps track of the wagons. It uses its own rail freight forwarding agent, a subsidiary called NTR.
So far, Green Cargo hasn’t been forced to acquire additional wagons for the new business and that keeps costs down as well.
Right now, Green Cargo is attempting to garner more business from sawn lumber. But Kirchner said that paper and pulp producers could provide additional business as well, as backloading gains traction.
“Usually, these kinds of developments start with creative discussions between one of our sales staff and a client, where one idea creates another,” Kirchner said.