Analysis of business models for potential 3Mode transport corridor

Journal of Transport Geography 22 (2012) 96–108

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Journal of Transport Geography journal homepage: www.elsevier.com/locate/jtrangeo

Analysis of business models for potential 3Mode transport corridor Jarkko Lehtinen a,⇑, Anu H. Bask b,1 a b

Aalto University School of Economics and VTT-Technical Research Centre of Finland, P.O. Box 1000, 02044 VTT, Finland Academy of Finland, Aalto University School of Economics, Department of Information and Service Economy, P.O. Box 21220, 00076 AALTO, Finland

a r t i c l e Keywords: EU Intermodal transport Corridor Business model Rail Road

i n f o

a b s t r a c t This paper focuses on a potential, sustainable, intermodal transport option in the EU connecting two geographical areas: the Nordic and Southeast European countries. The different parties included in this potential corridor constitute a complex, intermodal transport corridor network. In this paper our aim is not to focus on the infrastructure itself; rather, it is to discuss potential business models for this corridor based on a combination of three modes of transport: road, sea and rail. In this study the potential corridor is referred to as the 3ModeCorridor, and the study examines potential business models for this type of corridor. We use four business model options from the literature for intermodal transport and describe their content. Then, based on the case study findings, we describe which of the business models are realistic and which can exist at the same time. We also analyze the starting model with the most potential and the possible evolution of the business models in a 5-year time frame. For the analysis we use results from in-depth interviews conducted in 51 companies from Norway, Finland, Poland, the Czech Republic, Austria, Hungary, Bulgaria, Romania and Greece. The interviewed companies represent potential service buyers and transport service operators for the potential corridor. Based on the results, most of the interviewees believe a balanced model (the Operator-3PL Model) will be the starting business model with the most potential. In this model, the logistics service providers (LSPs) and operators have a rather equal relationship and there are few customers using the service. Concerning evolution, the results indicate that the models with the most potential will be those that cater for the needs of different clients. As a consequence, the role of LSP would seem to grow over time. It seems that in this type of business model the operators (rail, shipping and trucking companies) will increasingly focus on their basic function, transport. Ó 2011 Elsevier Ltd. All rights reserved.

1. Introduction Research on intermodal transport has been popular in recent decades, being dealt with in more than 60 comprehensive and diverse projects (Meyer-Larsen and Duhme, 2006). At the EU level, the White Paper ‘‘European Transport Policy for 2010: Time to Decide’’ (Commission of the European Communities, 2001) identifies a number of priorities relevant to freight transport, especially for developing competitive alternatives to road transport. The aim is to shift more freight from roads to short-sea shipping, rail and inland waterways by launching freight services and facilities that are of strategic, cross-border, European interest. The Freight Logistics Action Plan emphasizes not only sustainable and green transport corridors, but also e-freight and Intelligent Transport systems, quality and efficiency, simplification of transport chains,

⇑ Corresponding author. Tel.: +358 (0) 40 527 4809. E-mail addresses: jarkko.lehtinen@vtt.fi (J. Lehtinen), anu.bask@aalto.fi (A.H. Bask). 1 Tel.: +358 (0)50 5013558. 0966-6923/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.jtrangeo.2011.12.001

vehicle dimensions and loading standards, and urban freight transport logistics (Commission of the European Communities, 2007). Research on intermodal transport at the EU level has usually been concentrated on connecting two big economic regions (e.g. countries like Italy and Germany, or the EU and Russia). Research has typically been quite technical and has focused on the issues between two hubs, or seaports and hinterland (van Klink and van den Berg, 1998). Consequently, complex, three-mode (rail, road and sea) corridors connecting peripheral areas in the EU, as well as their respective business models, have not been key focuses of research. However, construction of the Trans-European Transport Networks, TEN-T (http://tentea.ec.europa.eu/en/ten-t_projects/30_ priority_projects/) and ‘‘Motorways of the sea’’ (European communities, 2009) has facilitated the linking of peripheral regions with the EU’s other regions. A typical intermodal transport chain consists of local road haulage, rail, sea or inland waterway transport, independent companies handling transshipment at either end of the main haul, and an intermodal operator integrating all these activities. The customer may be the shipper, the owner of the cargo, but very often it can also be an intermediate company in the logistics chain such as

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freight forwarders, shipping lines or other logistics service providers (Vrenken et al., 2005). The term ‘‘customer’’ can be confusing because these relationships may exist between most of the actors in the corridor. In the text we avoid this term and use ‘‘buyer/seller of the product’’ when referring to owners of the goods. The others we refer to as members of the service production network. Instead of using the wording ‘‘Two-Mode Corridor’’, intermodal transport is commonly used. An older term, and a slight modification of intermodal transport, is combined transport, in which the explicit purpose is to reduce road transport by using modal shift from road to rail. The term, intermodal, is today more common and is more neutral with respect to the types of transport included in the service chain (see for example Frémont and Franc, 2010). In European continental traffic more than half of the total volumes are transported over the Alpine corridors between Italy and Germany (Vrenken et al., 2005). One of the pioneers of this corridor is HUPAC (http://www.hupac.com/), which first provided services about 40 years ago. The business model they used is typical of existing intermodal transport: the operator takes care of rail transport between the hubs, while the forwarding sector takes care of client services and local operations from and to the hubs. The business model is balanced between the operator and forwarding, and resembles the model that we call the Operator-3PL model in this paper. Other high-volume corridors are the routes via the Alps to Benelux and France (Vrenken et al., 2005). The presence of mountain barriers to road transport, and Austrian and Swiss transport policies that are geared towards discouraging transit road traffic, have promoted the development of intermodal services on Transalpine corridors. Today, the development of intermodal transport is spreading between other corridors also – for example in France, Germany and Italy (Vrenken et al., 2005). In Europe there are only a few examples of 3Mode intermodal transport systems. There are many isolated examples of three modes used, but few integrated service production systems. For example, containers delivered at port terminals by short-sea feeders and then taken on by rail for final delivery by road use three modes, but not necessarily as part of an integrated 3Mode system. Vrenken et al. (2005) mention two examples of integrated systems: first, the combined transport operator Kombiverkehr offering services to Scandinavia and Baltic seaports. It uses Ro-Ro services departing from the North German ports. Second, the intermodal operator Geest offers door-to-door, short-sea services. Geest calls at ports in the UK, Ireland and Rotterdam with further services by barge and rail from its Rotterdam terminal to the hinterland. In both of these 3ModeCorridors the operators bear the commercial risk only for the leg in which they are traditionally involved – for example, railways for Kombiverkehr and short-sea for Geest. Though the examples are few, a discussion on ‘‘Motorways of the Sea’’ and environmental issues offers new insights, not only for the case discussed here, but also for all potential corridors where short-sea shipping is an option: the North Sea, Western Baltic, Eastern Baltic, Western Mediterranean and Eastern Mediterranean areas (Vrenken et al., 2005). As these regions are potential users of 3Modes, an understanding of differences between the model types is a prerequisite for successful construction of a new corridor. From the geographical perspective, the Nordic countries form a peripheral region that is separated from Continental Europe by the Baltic Sea. As the Southeastern countries are also peripheral, the connection between these two regions is important, as, from a transport geography perspective, it connects two areas separated by long transport distances. In addition, from an economic geography perspective, the EU is an important export and import area. Therefore, it is extremely important to look at potential intermodal transport options, including rail and road transport. This is strongly supported by the aims of the EU. Due to the Baltic Sea, the feeder traffic from the Nordic countries to continental Europe (e.g. Polish

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and German ports) is an important addition to the corridor. As the Nordic countries have different ports, the shipping routes and schedules require different processing. Also, the local transport and distribution at both ends of the corridor need to be organized separately. These factors not only increase the number of actors, but also influence the transit time, make scheduling more difficult, disengage the operators from their clients, and complicate the coordination of shipments. Therefore, this study considers a potential three-mode corridor linking the geographical areas of the Nordic and Southeastern countries together. Due to the long distances between the regions and the numerous operators involved, many of the actors are separated from their customers, and the client service (forwarding sector, LSPs) is partly separated from the transport operators. Due to this, the network is more difficult to control compared to common corridors. So far, there has been little research focusing on the connection of these two peripheral areas and on their potential business models. This forms the research gap for this paper.

2. Research objectives and methodology This paper has three objectives. The first objective, based on the literature, is to describe the background for intermodal transportation in the EU, as well as the business model options for intermodal transportation. The business model options include different transport modes, and form the basis of the case study. The second objective, based on the case study data, is to describe the realistic business model options for a potential 3ModeCorridor (see Fig. 1). The aim is to understand the potential of the different types of business model that this kind of corridor provides. These 3ModeCorridor business model options include road, sea and rail transport. Based on earlier studies, it is expected that establishment of the corridor will be competitive enough to attract freight to rail-based intermodal solutions (see for example the REORIENT Consortium, 2007). The third objective is to increase understanding of the possible evolutionary steps for different types of business models in the 3ModeCorridor. This is discussed in light of information gained from interviews with potential service providers and service users of the 3ModeCorridor. The literature part of the study provides a basis for understanding the motives behind broadening the use of rail transport, and especially intermodal transport, in the EU. First, the current situation of rail transport and the domination of road transport are discussed. Extensive intermodal research has been done in recent decades and we refer briefly to some of these studies. We also consider, in light of the literature, the reasons behind declining rail volumes. The quest for sustainability is one of the key arguments for rail and this is discussed briefly. The term ‘business model’ is also examined. After this, the proposed business model options for a successful 3ModeCorridor are described. To find the most promising business model options and an evolutionary path for a 3ModeCorridor, data were collected from nine 3ModeCorridor countries: Norway, Finland, Poland, the Czech Republic, Austria, Hungary, Bulgaria, Romania and Greece. Previous studies show that there is a sufficient amount of transport cargo available to establish an intermodal corridor between the Nordic countries and Southeastern Europe (Polcorridor, REORIENT), and that it is technically possible to establish a corridor from Polish ports to hinterland hubs. In the last couple of years, the ports in the Bay of Gdansk are witnessing a growth and an increasing market share (Notteboom, 2010). This development indicates that part of transport volumes to and from Nordic countries might move from German ports to Poland ports. The rail connection is also in place and many potential operators are interested in the corridor (Polcorridor, REORIENT).

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Fig. 1. Map presentation of the potential 3ModeCorridor (adapted from Ludvigsen, 2003).

participated in the semi-structured interviews. Eight of these were not included in the data due to their incomplete answers. Of the accepted 51 respondents, 14 companies combined more than one role. Consequently, the interviewed companies represented a total of 65 roles (see Table 1). Despite the numerical limitations, the respondents were carefully chosen by project representatives from each of the nine countries and do seem to provide valid information for a preliminary analysis of the potential of the business models proposed for the 3ModeCorridor. One of the benefits of the data is

The respondents from the nine countries were selected based on their different roles in this potential 3ModeCorridor under research, some being potential service users and others being potential service providers. For example, the service users chosen for this study are companies that already have business relationships spanning these two geographical areas and transport their goods between them. Therefore, the chosen companies have the potential to shift their transportation to three-mode chains including rail, sea and road. Altogether, 59 companies responded to the questionnaire or

Table 1 Representatives interviewed from different countries. Export/import Manufacturer Austria Bulgary Czech Finland Greece Norway Poland Romania Total

4 PL

Other

Total

6 0 3 2 2 1 4 0

Wholesale 3 0 2 1 1 1 2 0

Transport 1 0 7 6 2 1 1 2

3PL 0 2 1 3 1 1 3 1

0 0 1 1 0 0 1 0

0 0 0 0 2 0 0 0

10 2 14 13 8 4 11 3

18

10

20

12

3

2

65

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that it consists of the opinions of key operators from nine countries in the corridor. Moreover, respondents were categorized by their size and type of business into manufacturing (18), trading (10), transport (20), third-party logistics (3PL) service providers (12), fourth-party logistics (4PL) service providers (3), and other companies (2). The reason for categorizing them in this way was to see if the results of the study were dependent on the role of the company that the respondent represented. The interviews took place in the fall of 2006 and the spring of 2007. The data was acquired by means of a carefully structured questionnaire, which was used as a tool for qualitative analysis – especially the Finnish parts of it. However, the interviewers were also allowed to execute the interview by telephone or by an internetbased questionnaire, due to the limits imposed by geography. In these cases, the interviewer first selected the company, sought the right person, and explained the questionnaire in detail. The interviewees were often senior managers of the company and were chosen according to their expertise. The interviewers ensured beforehand that the interviewees understood the idea of the four different business models by explaining and discussing the model types. After this discussion the interviewees were asked to express their views on the business models in the context of the case study. The companies interviewed were either known to do business with corridor countries or were logistics service providers.

3. Literature review The main cornerstone for future EU transport policy has been the 2001 EU White Paper entitled ‘‘ European transport policy for 2010: time to decide’’ and its 2006 mid-term review ‘‘Keep Europe moving – sustainable mobility for our continent’’. The White Paper was supplemented in 2011 with a paper entitled ‘‘Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system’’. One of the issues arising in the White Paper is the need for better integration of services. Our paper supports this objective by analyzing the business model options that could facilitate the better integration of services in a proposed 3ModeCorridor. The general goal of the EU’s sustainable transport policy is to ensure that transport systems meet citizens’ economic, social and environmental needs (European Communities, 2009). Under the Seventh Research Framework Program (FP7), for example, the central objective of transport research is to develop safer, ‘greener’ and ‘smarter’ pan-European transport systems that will benefit all citizens, respect the environment, and increase the comparative advantage of European industries in the global market. Behind this objective is the fact that road transport contributed 93.1% to the greenhouse gas emissions of the transport sector in 2006. Road transport was the mode that consumed the most energy, accounting for 26% of the EU-27’s total final energy consumption. The Euro Standards for new vehicles and the growing share of bio fuel have recently improved the situation. Other examples of progress include the use of cleaner fuels, reduced emissions, and fewer CO2 emissions per vehicle-kilometer (European Communities, 2009). Transport is an important industry in the EU as the sector accounts for 5% of the GDP and employs around 10 million persons (European Commission, 2011). Transport was seen as a crucial element in the establishment of the Common Market, whose rules made possible the free trade of goods and the free movement of persons (European Communities, 2009). Concerns over environmental and noise pollution, intermodal shifts and the decongestion of transport corridors, sustainable urban mobility, and stronger competitiveness, are the driving forces behind general discussion on the use of train transportation (http://ec.europa.eu/transport/

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logistics/rdn/networking_en.htm). The concern over the general trend for train transport volumes to decrease on long-distance bulk shipments in Europe has also gained the attention of European research organizations (REORIENT Consortium, 2007). At the same time, road and sea transport volumes have grown. Road transport dominates in the EU, as is indicated in Fig. 2 which shows the distribution of transported goods by mode (European Communities, 2009). Almost 90% of all transport in the EU is done by truck, while the share of rail is 8% and inland waterways 2.6%. Rail’s share in tonne-kilometers is 17% and in tonnes carried 8%. This reflects the fact that goods are transported by rail over greater distances than they are on average by all three modes. The main products transported by rail are machinery, transport equipment, manufactured and miscellaneous articles. Solid mineral fuels are the only group where rail has a bigger share (56.2% of the total) than road. Other important product groups for rail are metal products, ores and metal waste, crude and manufactured minerals, building materials and petroleum products. The biggest product group, ‘‘crude and manufactured minerals, building materials’’, was 96% transported by road. (European Communities, 2009). There are several reasons for the declining market share of rail freight transport. One reason has been the transformation of the European economy from an industrial to a service-based one, and the adoption of just-in-time production processes. The strong policy preference since World War II for road-based transportation, as well as of similar individual preferences, has also been important (Di Pietrantonio and Pelkmans, 2004). Another reason has been an inability to adapt to dynamic markets and changing customer requirements. While the EU markets and their associated trade flows have increasingly become cross-border, rail services have been kept national. Other reasons include shipment reliability and punctuality, the ability to handle trans-shipments, fragmented and slow cross-border services, the absence of cross-border cabotage, the lack of logistics service integrators (LSPs), traffic priorities allocated to passengers, path allocation, cargo tracing and handling, the lack of competition and non-transparent cost structures on international corridors (Di Pietrantonio and Pelkmans, 2004). Combining different modes of transport to offer better overall links is important for developing alternatives to road transport. Freight will benefit from technical harmonization and the ability of different systems to operate together. The role of combined road–rail transport in easing road congestion depends in part on rail’s ability to meet this challenge. The combined transport segment is the segment that is growing most rapidly compared with other freight businesses. Between 1988 and 2008 international unaccompanied combined transport (in tonnes) increased by 215% and between 2002 and 2015 it is expected to grow by 135% (European Commission, 2003). However, the structure of rail transport organizations does not tempt potential users to change transport modes (REORIENT Consortium, 2007). The quality issues include transit times, scheduling and local operations, while several technical and infrastructural questions lie in the background. Also, the capacity of the rail transport network does not allow too big changes. But the concept has shown its vitality when full loads (containers, swap bodies, trailers and road trains) have successively been moved long distances. Prior to the European integration process, national railways operated mainly in national markets and international consignments were handled on the basis of bilateral or multilateral agreements or standards drafted by the railway community; e.g. the International Union of Railways (established in 1922; UIC www.uic.asso.fr). The Single Market policy changed this approach and, for more than 15 years now, railway sector reform has taken serious steps forward. The Commission first turned specifically to railways in Directive 91/440/EEC (July 29, 1991), which addressed railway

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Fig. 2. Goods transport performance by mode, EU-27, 1995–2006 (billion t km) (European Communities, 2009).

efficiency and competitiveness. In addition, EU legislation has highlighted requirements for the separation of infrastructure and operations. Infrastructure is open for competition and charges are mainly levied on operators that use the tracks. Directive 2001/12/EC continued this trend by demanding separation of the accounts of passenger and freight transport services (ECMT, 2007). These actions were designed to unbundle the railway sector (Leviäkangöas et al., 2007). Supporting the implementation and development of the Internal Market, the Trans-European Transport Networks (TEN-T) has been established as a major element contributing to economic competitiveness and the balanced and sustainable development of the European Union by linking island, landlocked and peripheral regions with the EU’s more central regions through interconnecting and interoperable national networks by land, air, sea and inland waterways (European Communities, 2009). There are 30 TEN-T projects (http://tentea.ec.europa.eu/en/ten-t_projects/ 30_priority_projects/) in total. EU rail investments for 2007–2013 are focused on European rail networks, to which the European Commission (DG TREN) has assigned great socio-political value, and which are also the main network for most rail shipments (REORIENT Consortium, 2007). For the evaluation of the TEN-T projects Gutiérrez et al. (2011) have developed a methodology for assessing the regional integration value of cross-border projects. There has been an increasing amount of research focused on intermodal freight transport. The main research topics relate to road and rail haulage, trans-shipment, standardization, multi-actor chain management and control, transport in the economic and policy context, mode choice and pricing strategies, and intermodal transportation policy and planning (Bontekoning and Priemus, 2004; Bontekoning et al., 2004). As far back as 1998 Woxenius presented development strategies for a future European intermodal transportation system in order to compete with single-mode road transport. He suggested renewing the train operations system and the trans-shipment technology employed (Woxenius, 1998). Bontekoning and Priemus (2004) suggest that the main growth potential lies in markets for flows over short distances, especially for perishable and high-value commodities, for small shipments, and for flows that demand speed, reliability and flexibility. The solution

for existing barriers lies in radical breakthrough innovations in modal shift which they provide under the following themes: the system and multi-player perspective, the level of automation, and the type of organizational innovations made possible by ICT applications. The aim is to integrate operations that have always been separate and sequential. Within the EU, the Marco Polo and Marco Polo II programs, for example, assisted the transport and logistics industry to achieve sustained modal shifts of road freight to short-sea shipping, rail and inland waterways (European Commission, 2003; European Communities, 2009). Some of the projects also aimed at increasing international rail freight transport through different corridors (see for example the Brenner Corridor, and the Bravo project http:// www.bravo-project.com). From their perspective, they have provided valuable guidance for other European corridors. Other research programs have concentrated on bundling and terminal concepts, with analyses of their technical and economic feasibility for the European transport network (for example TERMINET http://www.europa.eu.int/comm/transport/extra/terminetia.html; see also Bontekoning and Kreutzberger, 1999). These studies present railway corridor types. The coordination and cooperation between different national and European initiatives was in focus in the PROMIT project, for example (PROMIT, http://www.promitproject.net/). It reviewed several intermodal corridor case studies in Europe and presented solutions, best practices and intermodal transport opportunities for potential users, politicians and the research community. More recent projects in the field include CREAM and RETRACK. In CREAM the objective is to design advanced, customer-driven business models for railway and intermodal operators for a TransEuropean corridor between the Benelux countries and Turkey (http://www.cream-project.eu/home/index.php). CREAM focuses on analyzing the operational and logistic prerequisites for developing, setting up and demonstrating seamless rail freight and intermodal rail/road and rail/short-sea/road services. In RETRACK the objective is to apply an innovative rail freight service concept to the movement of rail freight along the rail corridor between Rotterdam (Netherlands) and Constanza (Romania) on the Black Sea. The project objective is to create an effective and scalable rail

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freight corridor between high-demand regions in Western Europe and new high-growth regions in Central and Eastern Europe (http://www.retrack.eu/). There is a bunch of studies focusing on developing intermodal transport in Europe from the Nordic perspective. For example, Bärthel and Woxenius (2004) compare the capabilities of conventional European intermodal transport with special reference to competitiveness and innovative concepts in markets with small flows over short distances. They found that market and financial uncertainties, insufficient network connectivity and policies favoring the existing technology paradigm severely hamper the development and diffusion of small flows over short distances. Based on Bergqvist (2007), short distances (about 130 km) can be organized into intermodal solutions by collaboration between different actors. He expects that the level of commitment between the actors (private and public) must be reciprocal in character through the elements of information exchange, trust and affinity. Public–private collaboration can facilitate the development of strong regional capabilities that improve regional logistics systems. From the perspective of the 3ModeCorridor, this finding is important because it indicates that development of a corridor needs the commitment of both the private and public sectors in the various countries (which is essential in this case). Bergqvist (2008) studied different traffic solutions for transport between regions in Sweden and compares direct road solutions to road–rail intermodal solutions. He found that about 30% of the volume between two regions, Göteborg–Skaraborg, could be economically transported using the intermodal option, including a train shuttle. The challenge for rail operators is to design a good timetable for train shuttle services in order to increase their attractiveness. In this case the environmental impacts of the solution were substantial, due not only to reduced emissions, but also to the better use of renewable energy. Björklund (2005) studied the environmental aspects of transport service purchasing decisions in Sweden. Although her study does not focus on intermodal transportation itself, it does focus on the purchasing of transport services in general. The study shows, for example, that shippers increasingly consider the environment and that they consider environmental aspects more than is required by law when purchasing transport services. Ohnell and Woxenius (2003) analyzed intermodal express freight transport from the perspective of European railways. The importance of connecting the air network with the rail network is also highlighted in White Paper 2011 (European Commission, 2011). Their focus was on the production system in intermodal transportation from Sweden to continental Europe and on domestic transportation within Sweden. They found that a modular approach had been used in many express transport systems, which implies that subsystems can be changed. This offers the possibility to use a rail subsystem as an option in the intermodal transport chain. They also found that complex transport chains with many actors do not necessarily entail longer transport times than short distances when they are offered under single management. For the 3ModeCorridor this highlights two very important issues. Firstly, one of the key questions is who will take the responsibility for service, from the perspective of service production and the customer interface? Secondly, they draw attention to the question of modularity in the service context. This is a very promising new research area, as not much research has yet been done in the field and the expectations of its benefits are high. Modularity has earlier been studied mainly from the product, production and processes, organization and supply chain perspectives (Bask et al., 2010). One future research area in intermodal transport systems is a more in-depth study of the possible benefits and outcomes of the use of service modularity in service offering and service production. Aastrup (2002) applied a network approach to the production of rail–road-based intermodal transport. The study provides new

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insights into the organization of intermodal transport by providing a framework for analyzing how inter-organizational structures can help or hinder players in maintaining, developing and building up rail–road-based intermodal transport services. The approach to intermodal transport presupposes active players, such as those that take roles as initiators, organizers, risk takers or system builders. The data consists of four Danish-based case studies of key players and their focal networks. One of the empirical findings was that ‘‘the ability to provide rail haulage seems to be harder to imitate than is often assumed (when discussing the opening of rail markets), and thus heavily affects the positions in the networks producing intermodal transport in disfavor of the actors that often hold the commercial risks (problem owners)’’. The other important finding was that ‘‘the capabilities of coordinating door-to-door solutions are important and necessary to the competitiveness of intermodal transport. However, these tasks are not extremely hard to imitate, do not affect the positions between the actors in any significant manner, and are not viewed as major barriers when building up intermodal transport’’. Despite the EU authorities having paid much attention to rail transport, road still dominates today. Intermodal transport has grown steadily, but still accounts for only 2–4% of volume. Environmental issues favor rail, but their effect still seems to be marginal in practice. European rail freight’s problem still seems to be national boundaries, i.e. cross-border haulage. One way to reshape the value equation is to create partnerships. Incumbent operators have expanded their services by founding intermodal subsidiaries or business units that are still partly internal – except for DB whose business units are already global. Infrastructure managers seem to face the same problem and have tried to overcome this through partnerships and by establishing a joint forum – the EIM – European Infrastructure Managers (EIM www.eimrail.org) to handle and allocate international train paths. To summarize, a lot of research has been done in the area of intermodal transport towards more sustainable choices. However, there seems to be only a limited amount of research focusing on business models and how to apply them to intermodal transport. In other words, what could be the cooperation options in the planning of new sustainable transport corridors? In general, the business model concept has recently become popular (Osterwalder and Pigneur, 2009; Osterwalder, 2004), having its origin in e-business research. Osterwalder and Pigneur (2009) define a business model as ‘‘The rationale of how an organization creates, delivers, and captures value; a blueprint for strategy that is implemented through organizational structures, processes, and systems’’. A business model is a description of the way a company makes money; what it offers, to whom it directs the offering, and how it accomplishes delivery. The blueprint for strategy is implemented through organizational structures, processes, and systems (Osterwalder and Pigneur, 2009). Based on Chesbrough (2006), although effective business models are a tremendously valuable asset to a company, they are nevertheless difficult to develop. Next, we will discuss four basic business models for sustainable intermodal transport chains. 3.1. Four basic business models identified In Europe freight forwarders (third-party logistics 3PL and fourth-party logistics 4PL companies) and transport operators (agents, and trucking, rail and shipping companies) both provide logistics services to clients. The difference between forwarders and transport operators is that forwarders typically offer various transport mode options and their combinations (rail, road, sea and air), while transport operators typically provide only one alternative. According to the Intermodal Yearbook 2010 (2010), 105 companies provided intermodal rail/road services in Europe in 2007.

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Bontekoning (2006), Trip and Bontekoning (2002), Bontekoning and Kreutzberger (1999, 2001), Bontekoning and Priemus (2004), Macharis and Bontekoning (2004), and Konings and Kreutzberger (2001) have intensively studied intermodal logistics structures in Europe, especially two-mode transport with a focus on operational aspects. In the two-mode aspect, one of the recent studies is conducted by Baindur and Viegas (2011), having its focus on the agent based model in France–Italy trade corridor. In the study they have added behavioral aspects of transport choice and supply market dynamics at the place where actual transport decisions are made. Bontekoning et al. (2004) conducted an extensive review (92 publications) investigating the characteristics of the intermodal freight transport research field. Their main focus was on truck– train intermodal transport chains. They found that researchers had used varying definitions of intermodal transportation and a consensus definition was lacking. One of the more common definitions used was: ‘‘the movement of goods in one and the same loading unit or road vehicle, using successively two or more modes of transport without handling the goods themselves in changing modes’’ (European Conference of Ministers of Transport, United Nations Economic Commission for Europe Statistical Division and European Union Eurostat, 1997, ECMT/UN Definition, http://www.railfreightportal.com/spip.php?article4). Based on Bontekoning et al. (2004) the definition is limited in that it only covers the physical characteristics of intermodal transport. Definitions often also restrict transportation to the same loading unit. On the other hand, the European Commission’s definition is broader and is not restricted to the same loading unit: ‘‘Intermodality is a characteristic of a transport system that allows at least two different modes to be used in an integrated manner in a door-to-door chain’’ (Commission of the European Communities, 1997). Furthermore, aspects such as multi-actor chain management are typically not included in intermodal transport definitions (Bontekoning et al., 2004). Since our focus is on business models and new potential transport corridors where service buyers use three modes of transport, we redefine the business model for 3Mode intermodal transport as follows: ‘‘A network of companies providing a door-to-door intermodal transport

Door-to-Door Transport Service: •

Operator – 3PL Model – Rail Freight Operator and 3PL share business responsibility; 3PL makes agreements with clients Service provider Forwarder, 3 PL…

Coordination responsibility Service provider, Forwarders, 3PL etc.

Service buyer having direct contact to transport operators

service including three modes of transportation (e.g. road, sea and rail)’’. Our definition is close to the idea of ECMT’s definition of combined transport: ‘‘ Intermodal transport, where the major part of the European journey is by rail, inland waterways or sea and any initial and/or final leg carried out by road is as short as possible’’ (Commission of the European Communities, 1997). However, we want to highlight the business model, networks and three mode perspectives in intermodal transport. Hesse and Rodrigue (2004) highlight importance and requirements of high level of coordination in integrated freight transport systems. There have been few studies focusing on business models for intermodal transport chains. In the Intermodal Yearbook 2010 (2010) three types of intermodal business model were identified, namely a generalist intermodal operator, a railway undertaking acting as an operator, and a logistics service provider acting as an operator. Leviäkangöas et al. (2007) and Vold et al. (2007) also conducted two comprehensive studies on intermodal transport business models. They suggest four business model types for intermodal transport corridors. We use their approach, with slight modifications, to better distinguish coordination responsibilities in door-to-door service from service production (see Fig. 3). Coordination responsibilities focus on the relationship between service buyer and service seller, while service production focuses on relationships between intermodal service providers. These business models cover the main actors in the whole supply chain (door-to-door) transport corridor. Later, we will use these business models as the starting point for our analysis. Next, we will briefly describe these four models from the perspective of door-to-door service. The business models in Fig. 3 include the main actors in the corridor. The sellers or buyers of the product at both ends of the corridor are often called ‘‘customers’’, but to avoid misunderstandings they are called ‘‘sellers or buyers of the product’’. The service to customers is usually provided by service providers that are often called forwarders or 3PL or 4PL companies. Another possibility is that the sellers or buyers of the product are in direct contact with the transport companies or their agents. The HUBs are terminals that reload the transport units for the next transport mode.

Service provider Forwarder, 3 PL…

Sellers or buyers of the product

Sellers or buyers of the product HUB 1

Rail freight operator

Rail freight operator

•

Co-operation mode between actors Strategic alliance

HUB 2

Anchor Customer Model —Freight operator makes direct agreements with clients (anchor customers) Sellers or buyers of the product Sellers or buyers of the product HUB 1

Transport Production:

No co-operation mode

HUB 2

Agent Model – Agents of the rail freight operators make agreements with clients

Rail freight operator via agents

Sellers or buyers of the product

HU B 1

Agent or intermodal marketing company

HU B 2

Sellers or buyers of the product

Rail freight operator Agent or intermodal marketing company

3 PL Model – 3PLs make agreements with clients and subcontracts the rail freight operator Sellers or buyers of Sellers or buyers of the product the product Rail freight operator Party responsible for overall corridor H UB 1 HU B 2 organization and client contact Service provider, Service provider, Forwarder, Forwarder, 3PL 3PL

Service provider, Forwarders, 3PL etc.

Selling agreement with agent

Transactional relationsship

Fig. 3. Four Business model options for intermodal transport corridors (adapted from Leviäkangas et al., 2007; Vold et al., 2007).

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Railway freight operators are companies that coordinate the rail part of the transport chain. These companies and their partners can build a complex transport corridor network, and we will next discuss the differences between the types of model. In the Operator-3PL Model (Business Model 1, BM 1), an intermodal transport service is produced by a strategic alliance between the actors. In this case, the service is divided somewhat evenly between the parties, i.e. the 3PL logistics service provider and the rail freight operator. At the customer interface the 3PL companies work with the customers and negotiate the transport conditions. In service production the rail freight operator has the main responsibility for the coordination of rail operations, e.g. between national freight companies, if the case includes cross-border operations. It concentrates on the rail operations between hubs. Examples of this type of operator in the European markets include the International Union of Road–Rail combined transport companies – UIRR companies (UIRR http://www.uirr.com/en/road-rail-ct.html). The Anchor Customer Model (BM 2). The customer has a direct relationship with the rail freight and other operators. It is typical of this case that there are one or a few customers, i.e. the customer provides a significant volume of freight for the corridor. The customer is typically responsible for coordinating the door-to-door service package. On the other hand, the rail freight operator coordinates the hub-to-hub service, but has no specific cooperation with other transport operators as the customer has coordination responsibility. The products transported are typically industrial and bulk products. In the Agent Model (BM 3), the rail freight operator establishes an agent network to provide local services to the customers in every country. The rail freight operator controls the corridor and the agents provide local services and make agreements in the name of the operator. The difference between the agent and 3PL (forwarder) models is that the forwarder is typically more independent and provides a variety of services and options. Agents focus more on a specific transport service or chain and develop services for that. In this case, the rail freight operator and its agent network is responsible for door-to-door service production. Typical examples of service providers in the EU markets are DB Schenker (http://www.dbschenker.com) and CargoNet (http://www.cargonet.no/en/). In the 3PL Model (BM 4), the role of the 3PLs is crucial and the rail freight operator focuses on operating the trains as part of the 3PL service providers’ network. 3PL service operators are in direct contact with customers and organize the whole door-to-door transport chain. The main difference from the Operator-3PL model is that 3PL service providers are not committed to any one intermodal choice, but can choose from all options available (e.g. road transportation). The 3PLs either cooperate or compete with other

3PLs. If they cooperate, they can use only a limited number of rail freight operators (same operators) to run a corridor. If they compete, more freight operators will be needed. Examples of 3PL companies operating with this mode in the EU are DHL Freight (http:// www.dhl.fi/en/about_us/forwarding_freight.html) and Kuehne & Nagel (http://www.kn-portal.com/). Table 2 summarizes the key issues related to each business model type. Next, we will use these four types of business model as a starting point for 3ModeCorridor analysis. 4. Analysis of the data from potential service users and service providers for the potential corridor The objective of this part of the paper is to give options for the evolutionary path of business models in a new potential 3ModeCorridor. Data was collected from potential service providers and service users from nine corridor countries by asking respondents to evaluate the role and expected evolution of the four business models (BM) described in the previous section. The companies represent the key roles in intermodal transport chains, i.e. the roles of manufacturer, trader (exporter/importer/wholesaler), transporter, 3PL company and 4PL company and expert (research and consultancy companies, etc.). Consequently, our analysis takes account of all key member perspectives, allowing analysis of similarities and differences in their views. Answers to the hypotheses were gained by exploiting the questionnaire used in the study. The four models were shown to the interviewed persons and were fully discussed to ensure that they understood their meaning and purpose. The goal was to reach a common understanding of the business models to support the homogeneity of answers. In the second step, the company representatives were asked their views on the four models and their evolution. The discussion was based on five key questions: (1) (2) (3) (4)

Which of the models are realistic? Which of them could be the starting business model? Which of them might be the next? Which of them could be the main business models after 5 years? (5) Which of the business models can exist at the same time? The purpose of the first question was to discuss the models in general, and to gain a better view of the usability of the models in 3ModeCorridors. The second question aimed to find the most probable starting model. The interesting issue behind this question was to see which of the models the interviewee chose: the model M1 represents typical intermodal models, the models M2 and M3 conventional rail transport models, and the model M4 more

Table 2 Key issues of the four business models under analysis. Type of business model

Door-to-door coordination responsibility at customer interface

Cooperation mode between service providers in door-to-door service production

Example of mode in operation

Operator-3PL (BM 1)

Service provider has coordination responsibility, e.g. 3PL service provider, forwarder

UIRR companies

Anchor customer (BM 2)

Customer has coordination responsibility for each of the three modes and related schedules

Agent (BM 3)

The rail operator has coordination responsibility 3PL company has coordination responsibility. Compared to BM 1, 3PL can choose between three-mode or two-mode

Service is provided by strategic alliance between actors. Service providers of each mode are responsible for their part; e.g. rail freight operator takes responsibility for all rail operations between two hubs Services of each mode are produced separately. There is no specific cooperation mode in use, as each operator focuses on developing its own services Freight operator establishes agent network for selling agreements 3PL coordinates service operators network. In this case, the rail freight operator focuses on operating its trains

3PL (BM 4)

Service providers in the market

DB Schenker, CargoNet DHL Freight, Kuehne & Nagel

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each from Finland, Greece and Norway. Compared to the manufacturers’ responses, the trading companies’ responses were more aligned (Table 4). Trading companies expect that the starting model could be BM1. They predict that the business model after 5 years could be either BM1 or BM4. The BM2 and BM3 models got some support in all phases. As the manufacturers and trading companies represent buyers and sellers of the products, their opinions must be taken seriously as these groups make the commercial transport service agreements with logistics service providers. It seems that these potential logistics service buyers need versatile logistics services. This was emphasized in some answers as interviewees stressed that different products require different logistical solutions. The interesting finding is that trading companies believe BM4 is not very realistic (‘‘Low’’), but see it as a potential model (‘‘High’’) after 5 years. Our conclusion is that respondents have learnt from experience that this model is questionable as a model for this corridor, but, on the other hand, they have seen that the big 3PL and 4PL companies are developing their processes towards the coordinated services that, in this case, are needed.

modern types of model where the role of LSP is significant. The purpose of the third question was to discuss a possible evolution of the models, while the next question completes this discussion. The time frame (5 years) was quite short as the purpose was also to get an understanding of possible deficiencies in the starting model. The fifth question was chosen to find out how the interviewees relate to the possibility of running several different types of model at the same time. This question throws further light on the coherence of the market. The answers could be either ‘‘yes’’ or ‘‘no’’. If the answer was yes, ‘‘x’’ was marked in the questionnaire, and if the answer was no, the questionnaire was left empty. Because of the different numbers of representatives in the groups, any interpretations and comparisons based on the number of supporting answers would have been biased. Therefore, we modified the answers by using three categories: High, Moderate, and Low. They were chosen respectively when support was more than 40% of the total, between 20% and 40%, and less than 20%. If there were no support, word ‘‘No’’ has been used. Next, we will describe the results gained from representatives of the different company groups. 4.1. Manufacturer perspective

4.3. Transport company perspective

There were 18 respondents representing the manufacturers’ perspective. The results indicate that all four models were supported, although BM1 and BM4 were seen as the most realistic. Most of the manufacturers believed that BM1 is the most potential starting model (Table 3) and that BM4 could be the business model in use after 5 years. However, a lot of responses differed from this basic line. For example, there was moderate support for BM1 being the model after 5 years, and high support for BM4 being the nextafter-starting model. BM2 and BM3 were also supported somewhat in all phases of evolution. The results of the study show that one specific business model type does not satisfy all manufacturers’ needs, and therefore a couple of options are needed to carry out the needed services. The results indicate that if the corridor would be implemented with one business model (BM1), there could be some manufacturers that would not start to use the corridor. Many of them seem to prefer models 2 and 3 as well. This important finding indicates that, when successively peripheral countries with diverse and low transport volumes are concerned, this can be a huge challenge for the corridor actors.

The transport company analysis included 20 respondents. Of these companies seven were from the Czech Republic, six from Finland, two each from Greece and Romania, and one each from Austria, Norway and Poland. The transport company representatives saw all the models as realistic, and this group also gave BM1 the most support as the starting model (Table 5). There was high support for BM4 being the model after 5 years, although BM1 also got moderate support. BM2 and BM3 received low or moderate support from the transport companies. This is quite similar to the responses from the other two groups described above. 4.4. 3PL company perspective A 3PL company can be defined as one that provides multiple logistics services for customers. There were 12 3PL companies in this study – three each from Finland and Poland, two from Bulgaria and one each from the Czech Republic, Greece, Norway and Romania. The 3PL companies considered all of the models quite realistic, and BM1 was seen as the most realistic (Table 6). BM1 also had high support as the starting model and BM4 as the model after 5 years. BM2 and BM3 got minor support as the starting model and BM3 got minor support as the business model after 5 years. This indicates that 3PL companies also believe these models can play a certain role in three-mode corridors.

4.2. Trading company perspective The trading company analysis is based on 10 responses – three from Austria, two from the Czech Republic and Poland, and one Table 3 Manufacturer analysis. Manufacturer

Model 1: operator-3PL

Model 2: anchor customer

Model 3: agent

Model 4: 3PL

Which are realistic? Starting model Next after starting model Model after 5 years

High High Low Moderate

Low No High Low

Low Low Low Low

Moderate No High High

Table 4 Trading company analysis. Exporter/importer/wholesaler

Model 1: operator-3PL

Model 2: anchor customer

Model 3: agent

Model 4: 3PL

Which are realistic? Starting model Next after starting model Model after 5 years

High High No High

Low Low High Low

Low Low Moderate Low

Low No Low High

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J. Lehtinen, A.H. Bask / Journal of Transport Geography 22 (2012) 96–108 Table 5 Transport company analysis. Transport company

Model 1: operator-3PL

Model 2: anchor customer

Model 3: agent

Model 4: 3PL

Which are realistic? Starting model Next after starting model Model after 5 years

High High Moderate Moderate

Low Low Moderate Low

Moderate Moderate Moderate Low

Moderate Moderate Moderate High

Table 6 3PL Company analysis. 3PL company

Model 1: operator-3PL

Model 2: anchor customer

Model 3: agent

Model 4: 3PL

Which are realistic? Starting model Next after starting model Model after 5 years

High High Moderate Low

Low Low No No

Low Low Low Low

Moderate Low High High

4.5. 4PL company perspective Only three companies from the sample classified themselves as 4PL companies. They were from the Czech Republic, Finland and Poland. According to one definition, a 4PL company manages the services of other 3PLs for customers. Despite the relatively small number of respondents in this group, their answers were considered important due to the corridors where 4PL companies currently operate. Although the responses of 4PL companies are quite similar to the answers of the other groups, there are some interesting differences (Table 7). BM4 has high support in all four questions. Thus, 4PL companies believe this business model could be both the starting model and the business model in use after 5 years. However, BM1 and BM2 are also seen as potential starting models. BM4 is predicted to be the only business model in use after 5 years. This result indicates that, if the aim is to involve global actors offering services for a complex three-mode corridor, they will see the models developing towards BM4. This could mean that the role of integrators should be much more than just sending their customers’ shipments. 4.6. Expert company perspective In this group two experts – one in logistics research and the other in consultancy – from each company were interviewed. As their field of knowledge is different than that of organizations in the operating business, their responses have an indicative value to support the results of other groups. The experts regard BM1 as the most realistic, while BM2 and BM4 got slight support (Table 8).

Respondents believe BM1 could be the starting model and BM4 the model after 5 years. BM3 might play some role during the transition period, but the experts seem to support BM1 and BM4.

5. Summary of the analysis The results of the service buyer and service provider analysis are rather coherent. There seems to be no big differences between company types. All groups support BM1 as the most potential starting model and BM4 as the model after 5 years. This indicates that business models in the 3ModeCorridor will evolve over time. Presumably, this is a consequence of the fact that customers in peripheral regions are highly dispersed – not only in one country, but in all of the countries involved. This calls for the kind of highlevel customer orientation and coordination that the 3PL sector typically specializes in. For example, in Finland, which is mostly separated by the sea, shipments should be scheduled primarily according to the ships calling at intermodal harbors. As distances in Finland are long, and there are several harbors, coordination is not easy. The situation in Sweden and Norway is similar to that in Finland. It is hard to believe that a rail company could produce this service comprehensively. At the other end of the chain the customer needs are also high, supporting the use of BM4. While the responses generally supported BM4 as the business model after 5 years, several also believed that BM1 could be an option after 5 years. This could mean that an evolution to BM4 is not necessary. Although this result sounds a bit paradoxical, it has some logic. Most of the currently existing intermodal corridors in the EU represent BM1, and there are examples of this model being

Table 7 4 PL company analysis. 4PL company

Model 1: operator-3PL

Model 2: anchor customer

Model 3: agent

Model 4: 3PL

Which are realistic? Starting model Next after starting model Model after 5 years

High High Low No

No High No No

Low No No Low

High High High High

Expert

Model 1: operator-3PL

Model 2: anchor customer

Model 3: agent

Model 4: 3PL

Which are realistic? Starting model Next after starting model Model after 5 years

High High No No

Low Low Low No

No No Low No

Low No No High

Table 8 Expert company analysis.

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Table 9 Models existing at the same time. BM1

BM2 BM3 BM4

BM2

BM3

Yes

No

Yes

No

7 7 15

30 30 22

5 4

32 33

Yes

5

No opinion No

32

14 14 14

used for more than 40 years (UIRR, case Hupac). We expect this can also occur on the 3ModeCorridors for at least two reasons. First, as the connection uses harbors, the operator may achieve a neutral role by also opening up the corridor to cargo from other than the Nordic countries. This will ensure that 3PL companies cannot achieve a dominating role in the corridor. Secondly, because the cargo from the Nordic countries is largely bulk (in containers), manufacturers will have much influence in choosing the transport corridor. In this case, even though the 3PL company may still lead the shipment, its leadership will be limited to coordination and not the choice of transport mode. Although most of the respondents supported BM1 and BM4, there was also some support for the use of BM2 and BM3 as both a starting model and the model after 5 years. This reflects the different needs of customers. Despite the long period of recession in conventional train shipments with a limited number of operators involved, it does not mean that transport corridors do not need this kind of model, or that customers do not need this kind of organization. However, it seems that a combination of all these models would be difficult to organize. While it is possible to have more than one operator in a corridor, we asked the respondents: Which of the models can exist at the same time? The following Table (Table 9) shows that, of those who believe that two models can exist at the same time, most support a combination of BM1 and BM4 (15 votes). The combinations BM1–BM2 and BM1–BM3 got both seven votes. However, most respondents do not believe two models can exist at the same time. For example, 22 respondents do not support the BM1–BM4 combination. The conclusion is that it is very difficult to establish a threemodal corridor that can serve all potential customers. If the BM1 and BM4 models are preferred, it is possible that customers preferring conventional rail business models will not use the services. On the other hand, if the BM2 and BM3 models are in use, the intermodal users might not use their services. When we consider that 14 respondents did not answer the question, it might indicate that the question is very difficult to answer.

6. Discussion and conclusions In this paper we have studied business models for intermodal transport employing three modes of transportation. The perspective has been the connection of peripheral regions separated not only by long distances, but also by the sea. This has led to a need for three different transport modes – road, rail and short-sea. As the regions consist of several independent and peripheral countries, and as trade between them is secondary to both regions, it would seem that developing a transport corridor between the regions would be difficult to organize. The customers are dispersed, harbors separate the shipments, customer contacts are remote, and thus the building of a network and the coordination of a corridor would seem to be a challenge. However, as the total transport volumes between the regions are sufficient to establish a corridor, and since environmental aspects and the need for competitiveness argue for a change in today’s ship–road-based solutions, rail-based intermodal transport would seem to have potential.

The intermodal transport sector is developing rapidly in the EU. The EU-wide TEN-T network is extensive and transport volumes are growing steadily, which is not the case in more conventional train transport. The business models in intermodal corridors seem to favor cooperation. The division of tasks between actors is basically divided so that the main actors in the chain have a successively independent role in the chain. Train operators have concentrated on the train part, leaving the end-customer service to LSPs (like forwarders, 3PL and 4PL companies). This has given LSPs the freedom to concentrate on coordinating services and local services at both ends of the chain. The business models used in conventional rail transport build up a successively closed circle, where the rail company or its agent takes care of customer service. This is one of the reasons why LSPs today favor road transport which has given them an important role in logistics service. Although the main business for most LSPs is related to road transport, customer demands for more sustainable transport solutions will enable LSPs to differentiate themselves from competitors and improve their competitiveness. Examples of this development are Kuehne & Nagel (http://www.kn-portal.com/) and DB Schenker (http://www.dbschenker.com) which are developing their intermodal services while emphasizing environmental issues. A potential 3ModeCorridor is a complex network. The clients are dispersed in several countries and thus it is difficult to exactly assess the volumes that the whole region can provide. The railway operators also have challenges in maintaining contacts with customers because of the distances, and especially because of the third mode – the sea, which separates customers from the train operators. On the other hand the LSP sector is also separated from intermodal operators, partly because of the distances, and partly, as mentioned earlier, because of their own interests, which favor road. To be able to establish a 3ModeCorridor, one or more companies need to start development work. One of the first considerations will be which companies should participate in the network. Our study considers four types of business model that are possible in an intermodal corridor. A deeper analysis of the models, based on interviews with potential users in different countries, shows that, although all models are seen as realistic, two have the most potential. Both of these models are co-operative and suggest an important role for the LSP. The Operator-3PL model (BM1) represents the common model that intermodal companies already use in the EU. This model is strongly supported as the start-up model. Another favored model is the 3PL model (BM4), where the LSPs’ role becomes even more dominant than in BM1. An interesting finding in the study was that most of the interviewees suggested that the model will start to evolve over time (5-year period). The results of the interviews suggest that the most potential start-up model, BM1, will start to evolve towards BM4. This finding prompts us to ask: ‘‘If this is true, why not start immediately with BM4?’’ There seems to be two explanations. First, because it is the rail volumes that have declined, we assume it is the rail companies who have more interest in developing new services. In this case, the initiative should come from these actors. Second, it is clear that the LSPs already transport most of the potential volumes by road. So their interest in developing a competing transport system is surely not their first priority. Therefore, the situation seems to encourage them to just wait. If somebody makes the corridor work, they can join it easily. The results of the study show that the two remaining models, the Anchor Customer model (BM2) and the Agent model (BM3), in which the rail companies have a dominating role, are also somewhat supported as the models to be used in the corridor. These models are most suitable in cases where big customers have an interest in establishing the corridor, mostly for their own requirements. As these solutions are tailored for a small number of users, like Volvo and Ikea, the transport coordination can be managed by

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train operators or their agents. However, this kind of structure seems not to be convenient for all potential users and, as a consequence, it either remains a ‘‘closed circle’’ or is opened for all users. If opened, the model could start to evolve towards the more balanced BM1 and BM4 models, and then the LSPs’ role would start to grow. Coordination and local services would be transferred to these companies. This paper enriches the understanding of complex intermodal transport systems, especially concerning business models, their service production and evolution. The research results provide new insights for academics, policy makers and practitioners in the logistics field. Theoretically, the study shows the applicability of the four business model types presented in this paper. The suggested topology is, of course, only one way of viewing the business models, but still provides valuable output for better understanding of corridor development. The empirical part of the study was based on 59 interviews with logistics specialists in companies in nine countries, enabling a deeper understanding of the potential progress of a corridor that is actually at the dawn of its history. The study contributes to intermodal transport research and the transport business by, for example, showing that the choice of business model is a strategic issue. Once the actors are selected, the model will start to evolve. This is dependent not only on the leader, but also on all the other actors. The results of the theoretical study seem to favor the corridor, while the practical results, which today seem only partly to favor the corridor, leave some questions open. It can be assumed that, if the corridor would be attractive, it would certainly already be either in use or progressing towards use. Although some traffic from Sweden is already utilizing the corridor, no broad acceptance has yet been reached. Some of the reasons for this could be:  The business risks are too high for transport companies to carry.  The peripheral regions have different customer needs, which prohibits development.  The big players are already investing in bigger markets with lower risks.  The coordination of shipments from different countries is too difficult.  Road transport is still more efficient as an alternative to intermodality in this case.  The pressure of environmental values is not (yet) a driving force for change.  The present players are comfortable with existing solutions. The initiative should come from the outside – from political decision makers, new entrants or customers.  The quality of intermodal transport is not sufficient for the users. We feel that the key question relates to the question of peripheral regions and customer needs. The coordination of exports (manufacturers) and imports (trading companies), which enables balanced transport flows in both directions, is another issue to be studied. These two topics will be the next steps in our research.

Acknowledgements The authors wish to thank the European Commission for funding the REORIENT project, which allowed us to collect the data for this paper, and the REORIENT research consortium led by Johanna Ludvigsen and Arild Vold for the good cooperation during the whole project. We also thank Evelyn Thomchick and John Spyzhalski from PennState University and Pekka Leviäkangas from VTT, Finland, for helping to establish the four types of business model adapted for this paper. We also thank the Editor-in-chief and two

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anonymous referees for their constructive suggestions on how to improve the paper.

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