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European railway freight transportation and adaptation to demand decline

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  • Olli‐Pekka Hilmola

Abstract

Purpose - Railway freight transportation in Europe is in a state of change. The system has been freed from protection from the beginning of 2007 and market forces will start to act. Demand for, and the market share of, this form of transportation has been declining for decades. Therefore, there is a need to know more about the efficiency and productivity of this sector, in order to understand the nature and magnitude of potential restructuring changes. This paper aims to address this issue. Design/methodology/approach - Data envelopment analysis (DEA) is used to analyze different European countries throughout the longitudinal observation period of 1980 to 2003. Also partial productivity analysis is used to support DEA evaluation. Findings - Based on DEA results, it is found that those countries that were showing the highest efficiency levels in the 1980s, without exception, experienced an efficiency collapse in the 1990s. These include both former Eastern Bloc and West European countries. Based on partial productivity analysis, it is proposed that productivity of locomotives and railway tracks should be the primary target of productivity improvement in these formerly highly efficient countries. The efficiency analysis shows also that currently the most efficient railway freight transportation is located in the Baltic States, namely Estonia and Latvia. If one does not include data from Estonia and Latvia in the overall analysis, in a European context the only truly improving performance indicators are partial productivities of freight wagons, and staff. Research limitations/implications - In contrast to previous efficiency studies in this sector, railway freight transportation shows high differences between European countries; it is necessary to address further research in the efficiency and productivity area in this respect to identify ongoing structural change. Practical implications - Restructuring in European railways is just taking its first steps, and a combination of downsizing and greater freight volumes is needed if this mode of transportation is going to prosper in the future, and take market share back from others. Restructuring within this sector will most probably result in increased internationalization, mergers and acquisitions, and intermodal transportation solutions. These all represent new avenues for research. Originality/value - This article helps to advise clear remedies for European railways and suggests interesting avenues for further research.

Suggested Citation

  • Olli‐Pekka Hilmola, 2007. "European railway freight transportation and adaptation to demand decline," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 56(3), pages 205-225, March.
    • Handle: RePEc:eme:ijppmp:v:56:y:2007:i:3:p:205-225
    DOI: 10.1108/17410400710731428
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    Citations

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    Cited by:

    1. Mahmoudi, Reza & Emrouznejad, Ali & Shetab-Boushehri, Seyyed-Nader & Hejazi, Seyed Reza, 2020. "The origins, development and future directions of data envelopment analysis approach in transportation systems," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    2. Piotr Gołębiowski & Marianna Jacyna & Andrzej Stańczak, 2021. "The Assessment of Energy Efficiency versus Planning of Rail Freight Traffic: A Case Study on the Example of Poland," Energies, MDPI, vol. 14(18), pages 1-18, September.
    3. Feras Tayeh & Osman Ghanem, 2023. "Decision-Making Support of Sustainable and Efficiency of Railway Project: Case Study China-Pakistan," International Journal of Decision Support System Technology (IJDSST), IGI Global, vol. 15(1), pages 1-25, January.
    4. Marchetti, Dalmo & Wanke, Peter, 2017. "Brazil's rail freight transport: Efficiency analysis using two-stage DEA and cluster-driven public policies," Socio-Economic Planning Sciences, Elsevier, vol. 59(C), pages 26-42.
    5. Holvad, Torben, 2020. "Efficiency analyses for the railway sector: An overview of key issues," Research in Transportation Economics, Elsevier, vol. 82(C).
    6. Lerida-Navarro, Carlos & Nombela, Gustavo & Tranchez-Martin, Jose M., 2019. "European railways: Liberalization and productive efficiency," Transport Policy, Elsevier, vol. 83(C), pages 57-67.
    7. Khalid Mehmood Alam & Li Xuemei & Saranjam Baig & Li Yadong & Akber Aman Shah, 2020. "Analysis of Technical, Pure Technical and Scale Efficiencies of Pakistan Railways Using Data Envelopment Analysis and Tobit Regression Model," Networks and Spatial Economics, Springer, vol. 20(4), pages 989-1014, December.
    8. Saeedi, Hamid & Behdani, Behzad & Wiegmans, Bart & Zuidwijk, Rob, 2019. "Assessing the technical efficiency of intermodal freight transport chains using a modified network DEA approach," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 126(C), pages 66-86.
    9. Bhatia, Vinod & Sharma, Seema, 2021. "Expense based performance analysis and resource rationalization: Case of Indian Railways," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).
    10. Verhetsel, Ann & Kessels, Roselinde & Goos, Peter & Zijlstra, Toon & Blomme, Nele & Cant, Jeroen, 2015. "Location of logistics companies: a stated preference study to disentangle the impact of accessibility," Journal of Transport Geography, Elsevier, vol. 42(C), pages 110-121.
    11. Tavassoli, Mohammad & Faramarzi, Gholam Reza & Farzipoor Saen, Reza, 2014. "Efficiency and effectiveness in airline performance using a SBM-NDEA model in the presence of shared input," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 146-153.
    12. Marchetti, Dalmo & Wanke, Peter F., 2019. "Efficiency in rail transport: Evaluation of the main drivers through meta-analysis with resampling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 83-100.
    13. Shih-Heng Yu & Chia-Wei Hsu, 2020. "A unified extension of super-efficiency in additive data envelopment analysis with integer-valued inputs and outputs: an application to a municipal bus system," Annals of Operations Research, Springer, vol. 287(1), pages 515-535, April.
    14. Vasco Correa, Carlos Andrés, 2012. "Economic evaluation of current conditions of competition and efficiency of automotive and rail systems in Colombia," Energy Policy, Elsevier, vol. 46(C), pages 78-87.
    15. Song, Malin & Zheng, Wanping & Wang, Zeya, 2016. "Environmental efficiency and energy consumption of highway transportation systems in China," International Journal of Production Economics, Elsevier, vol. 181(PB), pages 441-449.
    16. Weidong Li & Olli-Pekka Hilmola, 2019. "Belt and Road Initiative and Railway Sector Efficiency—Application of Networked Benchmarking Analysis," Sustainability, MDPI, vol. 11(7), pages 1-21, April.

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