The supermarket supply story

Why don’t supermarkets send more stuff by rail? is a common refrain. In fact rail is playing a growing part in supermarket logistics and has seen three new household names, Asda, Argos and Superdrug join its list of customers very recently.

Asda, Britain’s second largest food retailer, plans to cut four million lorry miles by 2004 as it seeks to expand its use of rail freight. Since October 2003 it has been importing goods through the port of Felixstowe, with GB Railfreight providing a five day service to and from Daventry for Asda locations in the Midlands. Over a year this contract will move up to 2,000 containers from our congested road network. A partnership with WH Malcolm set up in 2002 has enabled Asda to take advantage of rail’s fast and punctual services to Grangemouth and Coatbridge in Scotland. Direct Rail Services currently runs six trains a week each way for W H Malcolm between Daventry and Grangemouth and a further five trains between Daventry and Coatbridge in Scotland conveying a variety of general merchandise for several customers including Asda. Rail operations for Asda alone on this route to Scotland have already removed over 6,000 lorries from the congested M6 and M74 motorways.

Asda spokesperson Rachel Fellows said, “The existing business is a huge success – the trains are quicker, they arrive on time often better than passenger operators.” The forthcoming EU Working Time Directive which places stringent limits on the hours lorry drivers can work, was at the core of the company’s plans. “As far as the directive is concerned rail has it licked and has massive potential”, she said.

Superdrug, the leading health and beauty retailer has started using EWS Intermodal Express rail services for the movement of goods imported through the port of Felixstowe to the EWS-run terminal at Wakefield. Superdrug’s Head of Transport said, “Intermodal express services offer fast reliable and regularly timetabled services which enabled them to connect rail with our own distribution network and improve its availability.”

Argos, the UK’s largest non-food retail chain has started using EWS services to move containers of mixed cargoes from Southampton to the EWS intermodal terminal at Willesden, North West London. The containers then go forward (sometimes by rail via other railheads up country) to Argos' high street and out of town discount stores.

Marks and Spencer has been using rail freight for imports from France and Spain since early 2001 as well as daily deliveries to its distribution centre in Scotland. The continental service is based around four rail-connected warehouses at selected locations in France. Consignments are received by road and consolidated into rail wagons for onward movement by EWS trains to the UK direct through the Channel Tunnel to rail-connected warehouses at Daventry. Steve Mulvey from Marks and Spencer explained, “Rail freight is part of a mix of supply chain solutions that assist in keeping the company competitive. Security of supply is vital to us; no one route or mode is totally secure so having the rail alternative is important in providing us with a diversity in the supply chain that would not otherwise exist.” Rail has been found to be 15 per cent more efficient (per pallet) to unload than a road vehicle and rail gives better utilisation of warehouse resources in the UK as the rail wagons do not clutter the exporting truck loading docks. Plans are currently in hand to establish a further warehouse in South East France to take product from that region and also from parts of Italy.

Safeway, at the leading edge of many transport initiatives, was the first to integrate rail into a daily part of the supply chain in 1998. It currently uses an EWS daily service to take goods from depot almost directly to its stores across Northern Scotland from Mossend Glasgow to Inverness and Georgemas Junction in the far North. One of the big advantages of rail for Safeway is the speed compared to a road operation as the trains run at 75mph and that brings a significant time saving. The temperature-controlled intermodal swapbodies used to carry the Safeway traffic look almost identical to conventional trailers but are fitted with strengthened lifting points.

Another Channel Tunnel user is Danone. EWS and its French partner moves large quantities of mineral water from France to railheads in north London and Scotland for onward delivery to supermarket shelves across the UK. Half of the imported bottled water consumed in the UK comes by rail in this way, including leading brands such as Evian and Volvic

Freightliner intermodal trains, which move over one million container units a year, carry a variety of supermarket food cargoes ranging from meat, avocado, chicken products, tea, coffee and alcho-pops as well as clothing, general merchandise and white goods to various destinations.

There has seldom been a better time to promote rail freight. Road congestion levels will continue to get worse with no clear prospect of any improvement, making rail freight a more attractive alternative. The latest Government figures show traffic volumes increased by 2.5 per cent for 2002. Road congestion does not just reduce speeds, it also reduces reliability since a congested road is more vulnerable to disruption forcing hauliers to build-in “recovery time” to their journeys to ensure right-time arrival every time. This in turn reduces productivity and adds cost. Retailing is very competitive, shoppers are very demanding and the logistics companies that move the goods have to offer the highest standards of speed and reliability at the best rates possible. For rail to be chosen as well as road speaks volumes for the way the market now perceives rail.

The FTA, recognising rail’s role said, “It is clear that rail freight can provide a valuable congestion by-pass for individual companies” . There are already some 47,000 HGV driver vacancies and this is likely to be exacerbated when the Working Time Directive comes into force in early 2005, which promises to add £1.5 billion to UK industry’s costs per annum .

Rail is poised for future market penetration as the impacts of further road congestion, the Working Time Directive and HGV driver shortages bite.