Redesign - Transport

What is lacking is the mandate, structural linkages and governance across the food system to line up transport logistics with environment, health and supply chain efficiencies.  We need policy and regulatory interventions that preference modes based on a wider set of objectives related to food system sustainability, instead of mode neutrality based on market conditions. How do we construct mode preference? One possible solution is widespread demand-supply coordination (DSC) at a macro scale, broadly positioned within the arena of Integrated Resource Planning.  DSC, if properly designed, could help reduce the distance food travels and create greater transport efficiencies along the supply chain, with lower emissions and improved environmental performance.

A new approach to demand supply coordination is outlined under Goal 2, so in this section I present ideas on how to redesign freight infrastructure to support DSC.

Freight villages

The freight village concept, supplemented with price regulation (see substitution stage) and state acquisition of key infrastructure (see below), appears to be a viable approach to facilitating DSC.  It is an integrated approach to supply chain coordination and logistics efficiencies. It builds upon and aggregates some of the strategies identified at earlier stages of transition. With a freight village, manufacturers, suppliers and customers are on the same site, closely connected to transport modes, ideally road, rail and port on-site, with proximity to an airport. Freight villages can incorporate UCC functions (Higgins and Ferguson, 2011).

Freight villages help smaller operators, providing them shared services and infrastructure, marketing and access to information.  They allow for fewer links in the supply chain of higher quality. Urban distribution, typically the most poorly organized and coordinated, is facilitated. Evaluative studies show higher intermodal shipping and significant reductions in truck traffic, coming in and going out of urban areas. It also cuts down on intermediate movement between firms and helps also with reverse logistics (with assistance from 3rd and 4th party actors), minimizing a key problem right now, the movement of empty containers and vehicles (repositioning) (Higgins and Ferguson, 2011). Compared to current approaches, deliveries may not always be as fast, but often are more reliable which can be more critical (except for highly perishable items).

Ontario currently has nothing that approximates a freight village and only has 3 intermodal rail facilities all in the GTHA, none of which appear to have reduced congestion.  Some of the existing models have been designed as freight villages from scratch, others have transitioned from sites with some elements. In Ontario, the ones with most potential appear to be the Hamilton airport and the CP Vaughn site. More developed examples moving in the Freight Village direction are: CentrePort Canada in Winnipeg, Manitoba, the Port of Alberta in Edmonton, and the CN Calgary Logistics Park (Higgins and Ferguson, 2011).

Bologna Freight Village (FV) handles alot of packaged food and beverages but not much fresh food because of a lack of refrigerated storage.  Bremen, Germany’s FV also does a lot of food and beverage wholesaling and, somewhat unusually for current models, has water access and is close to a regional airport.  At one point, until government subsidies ended, it also functioned as a UCC with 9 companies consolidating into environmentally friendly trucks for urban delivery. A high percentage of freight came in by rail and was reconsolidated, reducing urban truck deliveries by 15%.  Raritan FV in NJ started as a small industrial park and became a freight centre (with some packaged food part of its freight mix). The FV connects primarily road and rail, but access to water is being developed to facilitate short sea shipping (Higgins and Ferguson, 2011).

Under what conditions do FVs work well? “Freight villages initiated by the public sector are inherently policy - oriented while their private counterparts are driven by profit” (Higgins and Ferguson, 2011). Set up costs are frequently high which explains in part why many are public/private collaborations, often with big roles for local government.  Good processes and structures for coordination and management across this mix of private and public actors is essential. Land consolidation is sometimes complex, given the need for a location to accommodate 24/7 freight across multiple modes. Brownfield, greenfield and decomissionned military bases are the most common US sites. The FV must be designed to reduce both long haul and local trucking, especially empty backhaul, otherwise there is a tendency for them to generate more regional and terminal congestion.  Freight villages really only work in high demand areas with intimate rail connections and lots of freight forwarders on site. A population of at least 3 million may be required to make it work. They may also work better in a region where conditions for trucking are deteriorating.  For example, in Canada, trucking across the US border is increasingly problematic. Rail has fewer delays and larger loads.  Private firms attracted to freight villages are “are typically companies engaged in a high degree of supply chain management and Just-In-Time logistics that prioritize service cost and quality considerations” (Higgins and Ferguson, 2011).

Government engagement can be through direct establishment of the FV: owning the site, assembling the land, dealing with zoning issues, supplying intermodal infrastructure, providing cheap rents to attract tenants.  In other cases, it is more indirect, providing money for critical infrastructure to private operators, tax increment financing, tax credits, grants and loans, free trade zone status, siting of anciliary government services on site,  favouring FV in customs arrangements. “The success of freight villages in Europe can be partly attributed to substantial disincentives to road transport and the continued subsidization of intermodal transportation..... “While some urban distribution projects have proven themselves viable in the marketplace, many more could only succeed with direct activity by the public sector through subsidization and the establishment of supportive policy and planning frameworks such as a truck ban in the city centre, time access windows, or the utilization of reserved parking or loading space for transport companies participating in the program” (Higgins and Ferguson, 2011).