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«Optimisation of rail freight operations along the network of the Western Balkans» A case study for a train distribution strategy in an intermodal

terminal along the supply chain

George Haralampous

Civil Engineer – MSc. Transportation Planner

Hellenic Institute of Transport (HIT)

6th km. Charilaou-Thermi rd., 570 01 Thermi, Thessaloniki

Tel.: +30 2310 498462,

Fax: +30 2310 498269

E-mail: [email protected]

Dr. Georgia Ayfandopoulou

Civil Engineer – Senior Transportation Planner

Hellenic Institute of Transport (HIT)

6th km. Charilaou-Thermi rd., 570 01 Thermi, Thessaloniki

Tel.: +30 2310 498451

Fax: +30 2310 498269

E-mail: [email protected]

1 «Optimisation of rail freight operations along the network of the Western Balkans» A case study for a train distribution strategy in an intermodal terminal along the supply chain

George Haralampous, Dr. Georgia Ayfandopouloua a Center Of Research and Technology - Hellenic Institute of Transport 6th km. Charilaou-Thermi rd., 570 01 Thermi, Thessaloniki Tel.: +30 2310 498451, +30 2310 498462 Fax: +30 2310 498269

Abstract

The paper presents the case study of the train collection and re-distribution logistics strategy implemented by an international private logistics company activated in the area of South Eastern Europe. The aim of the company was to achieve better service times and a reduced cost for its supply chain by integrating a distribution terminal along the network in ate area of the Western Balkans.

Even though the strategy was calculated beneficial in the planning, however in practice a series of conditions along the network, mainly depending on the organisation of the business deal between the public entities and company lead the whole project to an entrepreneurial failure. The paper makes an assessment of the overall procedure from the planning level of the approach, focuses on the main bottlenecks encountered during the deal with terminal and development of the strategy and finally proposes organizational and cooperation schemes between the private and public entities for the transport operations. Special emphasis is placed on the critical parameters to take under account for setting productive Public and Private Partnerships for terminal developments.

2 Key words: Rail Freight Transport, Logistics terminals, SE Europe, Public

Private Partnerships

1. Introduction

During the last years the freight railway services along the traditional axis connecting the countries of the Western Balkans (WB) and Greece with the core network of Central Europe, namely Pan-European Corridor X1 (Figure 1) has been constantly increasing due to the rough economic development of the area of

South Eastern Europe (SEE). Even if road freight haulage is still dominant, several private logistics companies and hauliers are operating railway Corridor X and try to organize their supply chains in a more efficiently way by rail. There are several strategies that are implemented in this competitive environment aiming at raising the market share of each company.

Figure 1: The railway Corridor X

The paper aims at analyzing the supply chain of a Greek logistics company

(LC) operating international freight transport along Corridor X, which was modified in order to be more efficient in both time and cost. It may be considered as a comparative analysis between the two alternative set-ups, which were a) The

Initial Network Structure (INS), used traditionally by the company and b) the alternative Network Structure (ANS) which comprised an additional distribution center along Corridor X. The second strategy was the one selected form the 1 Corridor X (X stands for the Latin Ten) and is one of the European transport infrastructure projects linking South European countries with Central Europe, Austria and Germany

3 company as it reduced the overall transportation times and costs at a modeling level, but the special conditions of the terminal operating environment caused unpredicted inefficiencies in the chain and thus after two years of implementation the project was abandoned.

The rationale behind the failure of project is the primal objective of the paper, since through the identification of the bottlenecks in the business agreement between the railway terminal (RT) and the LC, and analysis of the results provide the critical points to be taken under consideration for any future business agreements. The fact that this case reflects a typical terminal operation on the area of the WB, the final conclusions proposing measures for the efficient cooperation of public and private entities involved in the transport and terminal operations may be replicated as guidelines for the public stakeholders in the area for attracting private investments.

2. Background of the study case-New strategy concept

The LC operates railway operations along Corridor X (Figure 1) from

Slovenia and Austria, via Serbia to the SEE countries such as Greece, Turkey,

FYROM, and Bulgaria. The demand for freight transport allowed the LC to create block trains from each origin point in Central Europe to each respective destination on a daily basis mainly. The INS envisaged that when the critical mass of wagons per location would be ready at each origin point then the block trains were formed and departed. The problems of INS, was that the destinations with low demand were served scarcely and no regular trains could be introduced, while the high costs at eth origin points at Western Europe, increase the cost of the total supply chain.

4 From 1998 until 2003 the LC had a total increase of its throughput of 32% which lead to a decision to change the INS. The strategic decision made was that instead of the current set-up, a new railway terminal (RT) would be integrated along the network and form the ANS.( Figure 2)

Figure 2: Network approach

The role of this intermediate terminal would be to collect trains with mixed wagons from the origin points, regardless their final destination, disassembling of these trains and reforming the trains according to the final destination for quicker response to the customers. This fact would lead to a more competitive and qualitative product for the customers, since more frequent and reliable train connections, with probable better slots would be introduced. From the rough estimations the

The RT selected in the Western Balkans was State owned shunting yard inof the Serbian Republic, which would provide mostly train disassembling and assembling services, with any other operations of warehousing. The location of the station in Corridor and the good capacity in terms of side lines for the operations provided a threshold for a viable collaboration for both sides of private and public entities. As part of the deal the private entity offered to upgrade a part of the current infrastructure and resources as well as restoring some of the damages from the war, e.g. broken bridges, obsolete lines, buildings poor condition, which would hinder at some extent the services of the RT.

Despite the amendments agreed for the ratification of the cooperation the services in the RT remained limited and the main problems were the lack of the

5 warehousing capacity which reduced the possibilities of other potential added value services and further development or more active role in an integrated chain. This fact though would not affect at a first level negatively the cooperation between the two parties (LC and state railways) however; it would prove that the

RT would not have alternatives for attracting more flows and investments.

Finally, important services that are prerequisites in the modern structure of the network building in Europe were missing, such as provision of ICT systems like Track and Tracing, e-documentation, etc while also the security issue was neglected from the authorities since the station is not fenced posing dangers for the wagons’ intactness.

3. The Cost Functions and improvement of the Network

The model used for the improvement of the entire network of the LC was in line with the classical warehouse location-routing model transformed accordingly for the needs of the railway operations. The aim was that through the insertion of the new RT not only the LC should reduce the overall transport and operational costs along the chain but achieve also quicker transit times. The approach of LC may be depicted in the following

The strategy aimed at avoiding high variable costs at the origin terminals and diminishing the waiting times, by the integration of a less expensive terminal at the middle of the Western Balkans, with additional benefit the quicker bundling of the critical masses for the creation of the block trains at RT. The costing function for the INS approach is described as follows:

i) Subscripts:

6 h = “point” of the network 1  h  N  M i = origin (supply source) node index 1  i  N

j = destination node index 1  j  M t = time interval during a period f , t = 1, 2, …, f

ii) Sets:

P = {ph 1  h  N  M } set of all points

D = {dh 1  h  M } set of destination points

O = {oh 1  h  N }set of origin points

iii) Parameters:

D j = Demand at the nodal point j in wagon units

MWi = Critical number of wagons to assemble a train at origin i

t MGi = Maximum number of wagons allowed to enter a terminal i at the time interval t

VCi = Variable costs at the nodal points i per wagon unit

CTij = Train Transportation cost unit from origin i to the destination point i per time unit

t Gij = the number of unassembled wagons arriving at origin i with destination to j arriving at a time interval t

Fij = the frequency of the trains T departing from the origin point i to the destination node j in a period f

7 t Wij = the number of wagons assembled into train at the origin i with

destination to point j at the time interval t

Variables:

 ij = the time required for a train to cross from origin point i to destination

node j

t Tij = Assembling train departing from the origin i to the destination point j at

the time interval t

t f 1 if Wij  MWi , t = 1,2, ..f-1, or Wij  0 for t=f

t Tij =

0 otherwise

The cost function of the company is as follows:

N M N M f C(T, ) F CT t    ij ij ij + VCiWij i1 j1 i1 j1 t1

The cost function integrated the two main cost categories which are a) the terminal costs (train assembling and disassembling, train siding, and transportation costs

8 The constraints of this cost function are as follows:

N f t i) D j  WijTij , j=1, …,M i1 t1

N F t ii) ij = Tij , j=1, …,M , t= 1, 2…,f i1

t1 t t1 t iii) Wij  Wij  Gij  Tij MWi

t t iv) Gij  MGi

t v) Tij = [0,1] i = 1, 2, …N, j=1, …,M

 ij  0

The basic assumptions that have been made in order to simplify the network, consider no constraints for the capacity of the railway links and the capacities of origin and destination terminals. The delays and periods at the controlling points, custom controls and handling times are also integrated in the total train travel time per link. Each time, the Demand from each destination point is given, as well as, the variable costs per wagon as well as the transport cost of each train per time unit. In addition it is considered that whenever the train has reached the critical mass, is ready to depart within the same time interval (slot). In addition only a single train can depart at a given time interval t.

Regarding the constraints, i) indicate that the demand from the j point should be served from either point i , constraints ii) sets the relation between the frequency of trains from an origin point i; constraints iii) indicates the sequence between the wagons at each time interval and, giving also the link between the

9 trains and the wagons, iv) the maximum number of wagons that could be inserted in the terminal i and destined to the j.

The ANS, which aimed at reducing the costs and transit times is based on the fact that for networks comprising of more than 1 origin and destination nodes

t (i>1, j>1) this structure has always less links thus the overall travel time of a Tij could be reduce since it won’t be depended at this extent to the time interval t.

Thus, quicker response to the customers and fulfillment of the demand at a reduced time would be achieved, allowing also LC to have frequent anr regular trains connections from either point i to j.

The inclusion of the intermediate terminal RT, nonetheless, would increase both the operational costs and the time due to additional services i.e. (train assembling and disassembling), however, since the handling tariffs at the RT and were significantly lower compared to those of the origin points, the critical issue would be to investigate whether the transit time of an individual train per destination would be faster.

Hence, the description of the costing function of the ANS which in practice segmented the corridor into two major where is linked by terminal RT was as follows:

i) Subscripts:

h = “point” of the network 1  h  N  M

i = origin (supply source) node index 1  i  N

j = destination node index 1  j  M

q = wagon index 1  q  Q

10 t = time interval during a period f , t = 1, 2, …, f

k =1

ii) Sets:

P = {ph 1  h  N  M } set of all points

D = {dh 1  h  M } set of destination points

O = {oh 1  h  N }set of origin points

Wj = {Wq 1  q  Q } set number of Wagons requested from the j

ii) Additional Parameters

D j = Demand at the nodal point j in wagon units

MWi = Critical number of wagons to assemble a train at origin i

MWk = Critical number of wagons to assemble a train at k

t MGi i= Maximum number of wagons allowed to enter a terminal i

VCi = Variable costs at the nodal points i per wagon unit

VCk = Variable cost at the RT k per wagon unit

Ck = Wagon capacity of the RT k

CTik = Train Transportation cost from origin i to the destination point k per time unit

CTkj = Train Transportation cost from k to the destination point j per time unit

11 t Gij = the number of wagons arriving from supply source and awaiting to be assembled into trains at origin i with destination j at a time interval t

t Gik = the number of wagons arriving from supply source and awaiting to be assembled into trains at origin i with destination k at a time interval t

t Wqj = the number q of unassembled wagons at the terminal at a time interval t

Fik = the frequency of the trains T departing from the origin point i to the destination node k in a period f

Fkj = the frequency of the trains T departing from k to the destination node

j in a period f

t Wij = the number of wagons assembled into train at the k with destination to point j at the time interval t

t Wik = the number of wagons assembled into train at the origin i with destination to point k at the time interval t

t Wkj = the number of wagons assembled into train at the k with destination to point j at the time interval t

iv) Variables

 ik = the time required for a train to cross from origin point i to k

 kj = the time required for a train to cross from k to destination node j

t Tik = Assembling train departing from the i to k at the time interval t

12 t f 1 if Wik  MNi , t = 1,2, ..f-1, or Wik  0 for t=f

t Tik =

0 otherwise

t Tkj = Assembling train departing from k the to j at the time interval t

t f 1 if Wkj  MN k , t = 1,2, ..f-1, or Wkj  0 for t=f

t Tkj =

0 otherwise

The cost function is as follows:

N M N M t t C(T, )   Fik CTik ik   Fkj CTkj kj  VCiWik  VCkWkj i1 j1 i1 j1

The stationing time of each train in the RT is subject to the concentration of the critical mass of wagons for each destination.

Constraints

M f t i) D j  WkjTkj , j1 t1

13 N t ii) Fik = Tik , t= 1, 2…,f i1

M t iii) Fkj = Tkj , t= 1, 2…,f j1

t1 t t1 t iv) Wik  Wik  Gik  Tik MNi

M t1 t t t v) Wkj  Wkj  Tkj MN k  Wqj j1

t MG t vi) Gik  i

N M t t vii) Gij  Gik t= 1, 2…,f i j

N M N t viii) Gij  Wik , t= 1, 2…,f i j i1

N M ix) Wik  Wkj  0 i j

N t x) Wik  Ck , t= 1, 2…,f i

t xi) Tij = [0,1] i = 1, 2, …N, j=1, …,M

 ij  0

The cost function of ANS was formulated in accordance with the experience from the INS in terms of total transport time of an individual train for i to j. As stated previously, the modelling results proved to be resourceful with the integration of the RT in this new concept of the wagon collection and distribution strategy. ANS comprised of 2 origin points in Hungary and Slovenia and 5 destination points in the SEE with different demand levels. The results for each destination point from the modeling procedure indicated an average reduction of

14 time around 8% with most indicative cases the destinations with low demand, since the strategy ensured a faster cargo bundling in the RT from the origin points and hence additional possibilities for direct trains from the RT. The cost of the chain though would not have such significant alterations not exceeding a reduction of 5%.

4. The practice in reality

The fact that the cooperation between the LC and the State railways was not as expected and initially planned; caused the real times of haulage not only to be higher than expected, but also higher than in the INS. The main destinations affected were those that were traditionally the most cost-effective coming from the nearest origin points and thus the RT ended being a major bottleneck in the network rather than a point that would rationalise the supply chain. Indicatively the transportation time increased for all links and in some cases the total transport time was doubled causing delivery delays and reduction of the LC efficiency. The total cost of the transport haulage increased as well due to the additional delays along the network by 5%.

The reasons behind the failure of the strategy were mainly operational and organizational deficiencies, unfavorable public policies towards rail freight operations, socio-economic conditions and reluctance of cooperation from the part of the terminal authorities in several crucial services, were in general terms the main reasons of failure. More concretely the basic drawbacks encountered during the implementation of the project were the following :

 Insufficient rolling stock equipment:

15 The services provided by the station were dependent mainly by the availability of the appropriate equipment to perform the train management, composition and decomposition processes. At the time of the strategy implementation, the number of locomotives was not sufficient for the needs of the Serbian network and the LC was served with limited priority. This deficiency led to a costly delay for the train assembling procedure and transport haulage for the next transport branches. Therefore the capacity and productivity of the station was relatively limited and could not comply with the requirements of the LC.

 Limited trains management systems and ICT operations.

The needs of the modern supply chain management require more and more the integration of Information and Communication Technologies in order to facilitate the transport conditions and increase the productivity of the transport chain. The RT did not have any respective systems for communication and monitoring of the procedures, as all rail terminals in Serbia and most of those in

WB, which was also reflected in the productivity of the chain. For this reason the

LC furnished the station with computers and Internet access for its own needs for ordering, invoicing and communication.

However the investments for other systems like tracking and tracing operations and other software and equipment related to the monitoring of the cargo inside the station and along the chain were not planned in a short-term plan. The lack of modernized and innovative technologies for the train

16 management inside the station was also hindering the smooth collaboration of the two parties.

 Under-qualified personnel:

The fact that the station had a customer list of only local forwarders and cooperated only with the Serbian railways association, the personnel was not in the position to communicate in English with the foreign companies served. The ordering and clarification of the train arrival and dispatch became a problematic task that caused numerous misunderstandings and resulting decreased reliability of the companies transport chains to its own customers. The limited number of personnel with the expertise to perform the train management caused additional problem to the speed and quality of the services provided inside the station.

 Limited accessibility and bottlenecks in the exit:

The accessibility of the RT was also a problematic issue. Initially, the entrance and exit of the station comprised of two access gates for incoming and outgoing trains. However, during the war, the gate for the entrance to the RT was cut since the bridge connecting the station to the Corridor X was demolished.

This drawback, not only hindered the access and caused a longer journey, but also resulted additional congestion at the exit point requiring longer waiting times in the station.

 Security and safety issues:

17 The RT even though considered as the one of the most strategic in Serbia did not comply with the security and safety standards that the LC required. The extent stationing of the wagons with valuable contents lead several times to wagons violations causing additional problems of reliability and efficiency of the transport chain.

 Reluctance of the station’s authorities to cooperate and improve

services:

Even if there were problems with the personnel of the station and the provision of the services, it appears that the authorities of the Serbian railways refused to comply with the requests of the LC to diminish the operational bottlenecks in the RT. Despite the fact that the agreement of the station with the

LC was a deal that would lead to private investments as well as the upgrade of the infrastructure and services, the decision makers of the Serbian railways did not plan from their side to improve the overall conditions of the RT in order to create a more convenient environment and attract other investors. Furthermore the complicated bureaucratic system and unjustified controls resulted to additional delays that could be avoided from the first place.

These issues were identified to be the most crucial factors that would prevent the stimulation of private entities to collaborate in terminals in the WB as this has emerged from the study case of private and public (PP) cooperation and the consultation of the involved parties.

18 5. Assessment of critical parameters for PP successful cooperation

This strategy and attempt of Public-Private cooperation in the WB and was questioned for its effectiveness since the business deal did not have the results expected, despite the growth of demand. The critical parameters that may be extracted from the experience may be concluded to the following statements.

 Reliability of the deal:

The business agreement although it was based on the cost benefit analysis and modeling approach followed by the private LC which was proven feasible could not further continue. The problem of smooth cooperation and lack of understanding of the requirements of both sides with the private entity mostly affected by the competition led to the decision of abandoning the project.

 Unbalanced participation of private and public entities in the scheme:

In this deal there was a significant difference in the negotiation power on both financial and managerial level of the participating parties. On the one side there was the private LC a respectable firm in the forwarding industry complying with the rules of free competition. Its main target was to increase the share in the market of the transport haulage through strategic deals with other private or public parties such as the one examined.

On the other hand there was the RT, owned by the Serbian railways association with the mission of servicing the train composition and wagon

19 management of the Serbian railways. The limited financial possibilities for investments and improvements were mainly relying on the funding from the

Serbian government. As a state-owned entity the decision-making was stiff and dominated by bureaucracy, which hindered the implementation any improvement measures. In addition, the war has affected the capability for funding and investments from the Serbian economy which is oriented mainly to the links and not the terminals. Therefore the development of the station was fully or at least in a high level, depending on private investments, even if these possibilities were not taken under serious consideration before the war.

It is clear that the provision of infrastructure and land area within the station premises is not enough to assure a long and viable collaboration but a more dynamic participation especially on the management and servicing side is required from the station’s authorities. Was the quality of services better from the

RT, and probably this Public-Private Cooperation could have been upgraded into a Public-Private Partnership for the upgrade of RT into a more strategic terminal for the entire area of the Balkans providing added value to the regional and

National development of Serbia. Even so, a more cooperative policy from the authorities may had more substantial beneficial results for this entire approach of collaboration, and a long term agreement might have been established

 RT operational profile

The operational profile was also a reason why the station could not keep the private investors to use its infrastructure. It is a fact that the RT being a shunting

20 yard without the possibilities of providing any added value or logistics services affected negatively the potentiality for development.

The lack of warehousing capacity, the moderate access to the road network and main axes are at a first level the reasons why the station could not have additional services. This is an important fact to be considered since in a different place the upgraded services could increase the cash flow to the station in order to be re-invested for the development of the RT. In this case, the RT could build demand other that the railway services, but also could provide integrated services to the International forwarders.

Moreover, the provision of land spaces for the construction of private-owned facilities and infrastructure in the station are not the only prerequisites for the attraction of private investors. The management of the station based on the philosophy for sustainability and constant growth is required, which is rarely encountered in state-owned stations, especially in countries in the Balkans with inflexible administrative processes.

 Accordance with the rules of competition

Even though the situation in the first year of the business agreement and implementation of strategy was disheartening, the LC selected to continue with the deal considering that the demand had grown and the situation might be ameliorated. However, the services in the previous terminals (origin terminals) used by forwarders were more competitive from the services point of view. The cost was higher but the quality of the services was by far better and more convenient for the LC. In this extent and since the supply chains of the LC were

21 less competitive when using the RT, the choice for the management was to return to the previous situation and use the INS due to the higher quality of services.

The investigation of other alternative basis in a more competitive terminal (even if private) in the network or within Serbia for the block train composition was also an issue considered from the LC given that the preconditions and modelling results could be applied.

From this angle, the RT station could not afford the competition among the more developed terminals with the quality services. The cheaper tariffs were eliminated by the higher operational costs, due to the problems of safety and security, delays and limited expertise of the personnel, which could not be ignored by the LC.

6. Recommendations for Intermodal terminals development in WB

The experience of this business agreement in the field of railway freight operations in the area of the WB has revealed the reality of the freight transport system in this area of Europe. The rehabilitation of the transport infrastructure, terminals and services even if not in the primal priority agenda of the countries but still are considered crucial for their economic development. Given the low potential for investment from national funds, the strategic agreements with private investors, even of foreign seem as a one way solution. The case study of

RT and the operation for LC has indicated that PPP schemes may provide an alternative for the development of terminals in this area. The consideration of intermodal terminals, instead of solely rail terminals, for the promotion of railway operations is an additional added value perspective for the WB countries.

22 The critical parameters identified for the development of the RT which can be a generalized for the terminal developments along Corridor X in countries like the Federal Republic of Yugoslavia, Croatia etc, can be summarized to the following:

 Adequate infrastructure not only for single transport mode but also for

combined transport, in order to built demand and attract a wider range of

transport operators

 Efficient public investments in equipment oriented to intermodal services, in

order to magnetize and provide the appropriate benchmark for private capital

investments

 Provision of qualitative multi-modal services with respect to the requirements

of the international intermodal transport operators. The quality of the services

are reflected in reliability, on time operations when needed, proficient

capacity to avoid bottlenecks, monitoring of the processes and surveillance of

the terminal to expel external threats for the goods, provision of e-services

and web-base applications or several procedures for the supply chain

 Provision of warehousing capacity, logistics and added value services. This

fact would expand the influence of the terminal to a wider area and have

additional prospects. The modernization of the station according to the

demand envisaged is important

 Favourable policies in terms of building Public Private Cooperation or

Partnerships, for all public decision making mechanisms, from a local to a

national level. Flexible formulas are requested or the facilitation of the

procedures for private investors on public ground in order to accelerate the

structuring of the projects. The state-owned railways association need to

23 provide the railway infrastructure, the city authorities have to provide lower

taxes and fees for intermodal operations and the national plan of the country

should solve the problem of liability and ensure the good accessibility of the

terminals regarding the links of road and railways

 Synergies with other terminals within the catchment and transforming of

competition to collaboration with specialization of goods or sharing

capacities. The direct links between these terminals is an essential

prerequisite

 Concrete strategic planning for the development of terminal in cooperation of

both private and public side.

 Activation of local forwarders for the servicing of the domestic needs.

Foreign investors are more likely to participate in schemes that are supported

by local investors and companies

Nonetheless, important feature for the development of a terminal and its increase in influence is the existence of the critical cargo mass. The area of the

Western Balkans is constantly increasing its geo-strategic importance as the main passage from Central Europe to new and potential EU member states such as

Bulgaria, Romania and Turkey.

Furthermore, the example of the RT and the cooperation with private investors LC, despite the fact that it was not considered a successful model, several important outcomes have emerged from the consultation of the involved partners and the reasons why the model failed. The practical guidelines to set productive PPP for the establishment of intermodal terminals in the area of the

WB can be summarized to the following.

24 i. Determine the need to form a partnership:

Not always is a PPP scheme required for all kinds of businesses, when an agreement is achieved between a public and a private body. The business deals could be just limited to the request and provision of infrastructure and services and not participating in any investment projects due to the type of the terminal. A

PPP scheme cannot be biased to the private bodies but should be a potential opportunity for it to participate with the capitals if proven that they are indeed necessary.

ii. Identify common goals and resources for partnership members:

In order for a PPP to be successful, the goals of each member of the partnership should be clearly understood. Often, public and private sector agencies may have divergent, but compatible goals. For example, a private rail company may participate in a project because it is interested in generating new business and therefore larger profits. This goal should be compatible with the terminal authorities and the state railways goal for increasing the demand for railway transport and move to a profitable deal.

Moreover each member should bring its own resources “to the table”. One of the main failure factors of the study case were that the RT could not contribute efficiently to is own development but relied only on the assistance of LS and the rest of the private companies cooperating

25 iii. Develop a plan/process for dealing with anticipated and unanticipated

legal, political and financial conflicts that may occur

The lack of means to assure the longevity of the project from the public bodies’ side led to the collapse of the deal. Nonetheless, the same should be applied from the private bodies in order to be guaranteed for their investments in case of the alteration of the conditions during the implementation of the deal.

Additionally, methods of handling conflicts over purchasing requirements, project scheduling, and financial matters should also be discussed and codified as part of the partnership agreement.

iv. Clarify roles and responsibilities of each of the partners for all project

stages

Each party should have a distinctive role in the partnership, which would be predefined in the agreement. The responsibilities and financing of the different amendments in the terminal during the deal should be allocated in order to avoid deficiencies and have a reliable agreement. In the RT case study the model was rather simple but in the case for a future development of the terminal with the contribution of LC should be structured upon a respective principal

v. Secure project resources as planned or through alternative means

Once a PPP is formed and necessary items are negotiated into an approved project agreement, all parties should begin to pull together the resources

26 (financial and technical) that each has committed to the project. If at all possible, resources should be identified and solidified prior to completing the project agreement/ PPP formation and planning stage. This may include considerable effort to develop public support for the project. In RT no such planning was applied specially from the public funds and thus the future expansion of the project to more concrete investments could not be realised.

vi. Evaluate conditions and success of partnership and project:

Operation of a new infrastructure (or new operations over existing infrastructure) should be evaluated to determine if traffic levels/usage are in accordance with the financial and operational projections made before construction. A feasibility study should be conducted for each investment plan in order to examine the potentiality and its return. Even though there have not been a specific plan for the selection of infrastructures and services to be evaluated, the modification of the RT station to an intermodal nodal point is primarily depended from its viability and return of the investments.

vii. Negotiate/renegotiate partnership structure as necessary

The time plan of an agreement and its respect is related to the reliability of a project and considered as an important prerequisite. However, in order to affront the difficulties occurring during the deal on several issues, the possibilities of negotiation the terms could contribute to the continuation of the efforts for a successful scheme. The lack of common understanding in the case of RT and the

27 problems that could not be dealt during the agreement was one of the reasons significant for the failure. If the station is to develop to an intermodal point with the participation of private funds, this factor has to be taken under account to increase the possibilities of success and diminish bottlenecks of administrative, managerial of operational type.

7. Conclusions

The paper has provided a concise overview of the case that was studied from the Hellenic Institute of Transport in the context of a respective research activity in order to evaluate the supply chain management of the international forwarders operating along Corridor X. The study has focus on three basic lines:

 Assessment of the modeling process of LC for the optimization of the

railway and decoding of the reasons of failure of the approach

 Acknowledgment of the critical parameters affecting the smooth

collaboration of the private and public entities in a freight transport operation

in the WB and supply chain management

 Recommendations for future development of terminals in the area under

the frame of PPP for the promotion of intermodal transport and services

Through the thorough examination and reading between the lines of the case, the critical points that should be taken under consideration from both private and public parties of a potential deal have been identified. It was concluded that the cooperation of private and public cooperation for the development of terminals could be a win-win situation that would act beneficially in a developing environment eager to attract foreign investments for the development of

28 infrastructure like the one is SEE. Even though the study concerned a concrete case, the similar situation of the terminals’ conditions in the area of SEE and

WB, make the results possible to be replicated also for other cases fostering the development of intermodal terminals and hence intermodal operations.

Finally, the assessment of the impact on the supply chains in the area of the

SEE countries if an interoperable network of terminals is established in terms of services and communication for a train’s distribution strategy may be considered as a field that would follow this study. The organizational strategies that could be pursued, preconditions, policies and organizational schemes that would facilitate and ensure viability and efficiency of the supply chains in conjunction with the special characteristics of the operational environment are also issues to look further for this specific area of Europe.

8. References

[1] Borislav S, Miodrag V, Ksenja P, Zlata Y, Ivana L, (2000) “The planning

situation in Yugoslavia-General and Specific Framework” Paper

presentation at the 5th CEI Summit Economic Forum, 13-15 Nov. 2002,

Skopje – Macedonia

[2] City of Belgrade authorities (2003) “Master plan of the city o Belgrade

2021”

[3] Drobac M, Radivic M, Jovanov D, “Strategy of development of multimodal

transport infrastructure in the Belgrade port, measures for integration in the

transport system of Southeastern Europe” Paper presentation at the 5th CEI

Summit Economic Forum, 13-15 Nov. 2002, Skopje – Macedonia

29 [4] European Bank for Reconstruction and development (2005), “Transport

Operation Policy 2005-2008”

[5] European Commission, (2003) “Regional Balkans infrastructure study,

Transport”, (Final report and Annexes), 2000 CARDS Programme

[6] European investment Bank, (2000)“Urgent investments or basic

Infrastructure in Federal Republic of Yugoslavia”, Luxembourg, November

2000

[7] IMONODE consortium 2005, “Supply side International network analysis” ,

Deliverable 3 (final report), Efficient Integration of Cargo Transport Modes

and Nodes in CADSES area, IMONODE project, EU Community initiative

INTERREG III B CADSES 2003-2006

[8] IMONODE consortium, 2005 “Demand Side – Socioeconomic development

and cargo transport “, Deliverable 2 (final Report). Efficient Integration of

Cargo Transport Modes and Nodes in CADSES area, IMONODE project,

EU Community initiative INTERREG III B CADSES 2003-2006

[9] IMONODE consortium, 2005 “The RAIL-FREIGHT Pilot“, Deliverable 6

(final Report). Efficient Integration of Cargo Transport Modes and Nodes in

CADSES area, IMONODE project, EU Community initiative INTERREG

III B CADSES 2003-2006

[10] J. Perl, M.S. Daskin, A warehouse location–routing problem, Transportation

Research B 19B (1985) 381–396.

[11] Nada Stijepovic-Sirkinagic, (2002) “Traffic Network of the former

Yugoslavia”, “DOC.ument”, Economic Magazine, Serbia

[12] Serbian-Montenegro Ministry of Construction (1996) “Spatial plan of

Serbia”

30 [13] Technical Secretariat of the steering committee for Pan-European Corridor

X, (2004) “Activity report on cross border issues and results of the cross

border survey”

[14] Technical University of Belgrade (2002) “Feasibility study for the

implementation of new technologies in the Intermodal freight terminal of

NOVI SAD”

[15] TINA Vienna, TINA final report, 1999

[16] Trade and Transport Facilitation in Southeast Europe Program, (2003)

“Progress report 2003”

Figure 1: The railway Corridor X

31 Initial Network Structure Alternative Network structure i j i j

1 1 1 1

2 2 2 2

K

N M N M

NxM N+M

Figure 2: Network approach

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