Retail Service is Essential

This article describes how many railways have tended to focus on “wholesale” movements of bulk flows over long distances in the search for profitability. But most freight moves over short distances or in small volumes, so in order to grow market share, railways must develop retail marketing skills. The article describes how railways have steadily lost freight market share to the road since the introduction of the lorry. As the highways improved, the losses accelerated. While rail’s market share has stabilized in some higher income countries, or even increased slightly, in most countries rail’s share of the freight market is less than 20%. In recent years growing awareness of environmental impacts and increasing traffic congestion have led politicians to call for rail to play a greater role in freight transportation in regions as far apart as the European Union and Australia. Commentators often look at the large profitable privately-owned railroads of North America and the thriving short line sector which supports the Class 1s, but while it may be one of the most successful models in the world, it has significant limitations and cannot easily be transferred to other regions. Closer examination of recent traffic data shows that there are some common trends in all markets, regardless of public or private ownership, the length of haul, or the size of the companies. Achieving a significant shift in modal share will involve rethinking many railway philosophies from square one.