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ECR Italy:

Intermodability

Silvia Scalia – ECR Italy

Andrea Fossa – Partner Hermes

Brussels, May 28th 2014

ECR Shared processes Creating value along the supply chain

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Why a Rail Transportation Project

• Sustainability and environmental issues are higher and

higher on FMCG consumers’ agenda.

• Leading FMCG companies already set ambitious

internal targets in terms of CO2 emissions reduction.

• European “laws” and “books” did set clear targets.

• Italian FMCG supply chain is 99% based upon road

transportation, independently of distance.

“The question is not

WHETHER modal switch will take place or not,

but WHEN.”

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The ECR working group

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Involving all the players in the working

group

All the players of the supply

chain involved (Retail,

Manufacturers, LSP, Rail and

Multimodal operators

Better understanding

of the rail sector

A complete map of rail transport

companies and services

Identification of FMCG

requirements

An industry-wide vision, defined and

shared

Potential estimate

Intermodability™

Project: The

simulation analysis

showing how many trucks

could be moved to rail

Pilot testing

The FMCG on the train: the

enabling factors and the barriers

Multimodal Transportation:

The project journey so far

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Flows simulation: 450k trips/year !

• Based upon 18 companies “real customers orders” (including

Retailers, Manufacturers and Logistics Service Providers)

• Database analysis has adopted “cautious parameters”

– 12 months orders including FTL or LTL with truck saturation >75%

– Underestimating intermediate flows towards local W/Hs and T/Ps

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. 6 months (June-November 2013)

. 9 companies (Manufacturers, Retailers, LSPs)

. 5 Multimodal Transport Operators

.16 North-South connections

2013 Test Phase – results

Average OTD statistical distribution (calendar days). Preliminary results 19/02/2014

-30% kgCO2

With respect to “all road”

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Planning

Order to delivery time reduction

Order visibility

Planning – rewarding rate

“Green slot”

Management

Flows selection (steady - rail)

(variable - road)

Service level agreement – (AxB)

Multi-pick / multi-drop

Track&Trace

Pallet interchange and goods return

management

Supply chain synchronization (modal hubs)

Asset

Availability and Sharing

Reefer swap body

Security ITU

Terminal efficiency and security

Capacity

Train availability

Slot on train availability

Pilot faced operational issues …

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The challenge is to develop a new business approach based upon:

• FMCG supply chain requirements

• Overcoming short-term approaches

• Aggregating demand for rail transport

… but the key issue is “volumes”

Volumes Service

development Stalemate:

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“Demand” is there …

MYTH “Flows are irrational, hardly compatible

with intermodal transportation limits”

Wee

kly

nu

mb

er o

f tr

ips

MM (k=5 gg)

Average: 3.100 trips/wk

52 WEEKS

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… let us stop the vicious circle !

Existing FMCG volumes do not

justify commitment for

service development

Existing trains do not answer current FMCG specifications

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• The project is evolving towards the creation of a “New subject” whose

main objective is to quickly achieve an adequate critical mass

allowing for a proper service design from Carriers

• This new “ECR subject” will

– Assure a proper legal framework (Trustee role, benefits split, …)

– Facilitate horizontal collaboration amongst participating Companies,

exploiting CO3 approach and experience

– Facilitate interaction with carriers/intermodal offer

– Provide budget, tools and procedures to implement the project

• A key role will be played by a 4PL acting on behalf of the “demand

side”, a player selected to carry out operational tasks

The 2014 project evolution

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New scenario: operational rel’p

New ECR Subject

SW Tools + Track & Trace

4PL Facilitator

MTO

Shipper 1

Shipper 2

Shipper 3

Shipper “n”

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New scenario: contractual rel’p

New ECR Subject

SW Tools + Track & Trace

4PL Facilitator

MTO

Shipper 1

Shipper 2

Shipper 3

Shipper “n”

Service contracts

Horizontal Co-operation agreement

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THANK YOU

INDICOD-ECR

Via P. Paleocapa, 7

20121 Milan - ITALY

T +39 02 7772121

www.indicod-ecr.it