CMA CGM exec: Ocean and rail transport must cooperate, not compete
An official with CMA CGM's rail subsidiary Rail-link told a conference in New Delhi Thursday that steamship lines and railroads cannot compete for business but must work together to synergize supply chains and develop new multimodal services where none existed before.
'From my point of view, there's no competition between rail and sea,' said Patrick Ben Arous, director of development for Rail-link. 'It's a continuum. If we think about them as competition, it's a mistake.'
Speaking at the Global Rail Freight Conference, held by the International Union of Railways and the Indian Railway Board, Ben Arous said the two modes must always think first of the customer whose shipment is being moved. Some speakers suggested that a trans-Asian railway network could provide competition for ocean services between the Far East and Europe.
'The only question is how to serve our customer best,' he said in response to a question about whether railroads or steamship lines should move into the others' industry to become more seamless in service offerings to customers.
Another speaker agreed.
'Customers are demanding door-to-door logistics and railroads have to have the ability to develop strategic alliances with carriers and other partners,' said Siyabonga Gama, chief executive officer of Spoornet, a freight rail services provider in South Africa. 'It's not so much that you have to have vertical integration, but that you have strategic alliances to make sure your customers' demand is being satisfied.'
Ben Arous gave an example of CMA CGM forging relationships with railroads to provide a new service — one that would link North Africa to northern Europe through ocean service to Marseille and rail transport to Ludwigshaften in Germany. He said transit time in that case would be cut from 15 to six days from traditional ocean service.
'This synergy between the ocean and train could create new services,' he said. 'For CMA CGM, it's easier to sell a global package to a client than to split each part of the transport and global services. It's harder to make a profit when you split that up.'
The conference underscored the varying challenges facing nations with different rail management structures. Asian nations primarily operate state-run railroads — most significantly those in India and China — while North America has private companies operating its major railroads. Whatever the ownership, most nations are facing capacity constraints as cargo flows grow faster than track can be laid, intermodal terminals built, and tunnels for double-stack container trains can be dug.
The conference continues today.