In Germany alone, some 1.2 million trucks clog up the country’s transportation routes daily. Competition is fierce. Surviving in the freight business means getting goods from A to B faster and more cheaply than your rivals. Little by little, however, road freight customers are discovering their green conscience and making efforts to improve their carbon footprint. Rail freight is coming back into fashion, but it has some ground to make up before it can match the flexibility offered by its road-based counterparts. Logistics service provider Green Cargo has recognized the signs of the times. Established in 2001 when the Swedish national railway company spun off its logistics division, Green Cargo positions itself primarily as a clean alternative to long-haul road transportation. It has been investing in locomotives with low energy consumption for years.
“We transport most of our freight volume with electric locomotives,” says CIO Björn Rosell. “And we are gradually modernizing our diesel locomotives to reduce the CO2 emissions from our fleet.”
But that’s not all. Green Cargo offers its customers the option of having their goods transported most of the way by rail before switching to road transportation near the end to bring the goods to their final destination. The logistics division complements the transportation services for customers with storage requirements. Rosell reports that this flexible service is convincing numerous customers to switch to rail transportation. “Our sustainability strategy is starting to pay off,” he says. “Our customers know that our business model is based on green logistics.”
New goals, new IT
As Green Cargo’s CIO explains, it was a modernization of the corporate IT setup that made this hybrid offering possible in the first place. While the company’s software was perfectly adequate for a monopolist, ensuring glitch-free rail freight transportation, Green Cargo – now competing internationally– needed a system that supported production, sales and distribution, and planning in equal measure. This requirement led the company to choose SAP Business Suite 7.
The Swedes had already been using SAP software for financials, materials management, and sales and distribution. In just 18 months, they added the following SAP applications: Transportation Management, Customer Relationship Management, Event Management, NetWeaver Business Warehouse, and NetWeaver Portal. Finally, they replaced the Microsoft BizTalk integration platform with SAP NetWeaver Process Integration. “We now implement SAP software to process all of our core business,” says Rosell.
“The high degree of integration offered by the SAP system gives us the big picture of our processes and enables us to operate end-to-end processes across all divisional boundaries,” says Rosell. The company’s rail, road, and logistics divisions had previously been separate companies that ran their own systems. SAP Event Management makes it possible to handle orders in one continuous electronic process, Rosell says, and customers can query the status of their orders via the Internet at any time. What’s more, IT operating costs on the integration platform are lower.
Green Cargo’s customers are also impressed by the new system, because they now receive more information. The company’s 1,500 clients include industrial enterprises (steel, wood, paper, and automotive), wine dealers, and film companies. Green Cargo, for example, brings European films to the movie theaters of Sweden.
The company cooperates with various delivery-service partners, and the new software has proven its value in this area too. Green Cargo transmits orders to its partners via EDI, and they submit their invoices by the same route. “We’re now planning to introduce electronic bid invitations,” explains Rosell. Freight forwarders will then be able to submit their quotations online and Green Cargo will select the best one.
“With SAP Business Suite 7, we can implement new transportation concepts and services more quickly,” says the IT manager enthusiastically. “In the SAP system, it is just one small step from the idea to the actual process. This gives us a real competitive advantage.”
A European alliance
Green Cargo harbors ambitious plans. Together with rail operators from six other countries, including Germany’s Deutsche Bahn and France’s SNCF, the Swedish company is hammering out an alliance of European rail logistics services providers based on the aviation industry model. The aim is to work together to optimize routes, systems, and timetables for cross-border goods transportation, which involves, among other things, complying with EU directives on data exchange between the operators. In conjunction with 50 companies from the industry, Swiss transport solution provider ELOG is currently designing an appropriate IT solution.
If it is to succeed against road-based competition, rail logistics needs to improve its market focus. Rosell gives an example: “When we submit a quotation to a prospective customer for the delivery of goods from Sweden to Italy, we first have to ask the Germans, the Austrians, and the Italians what the costs will be on their section of the journey. If the price is too high, we have to start negotiating with all the parties again. This can take weeks. If the prospective customer contacts a truck company, he receives an answer within 24 hours.”
All the more reason, says Rosell, to ensure that a transparent and efficient rail transportation network is put in place in Europe within the next few years. After all, it is not just logistics services providers such as Green Cargo who will profit from such a development. The environment will, too.
Swedish logistics-services provider Green Cargo employs approximately 3,200 people at over 100 locations in Scandinavia and Europe, and delivers goods primarily to Norway, Germany, and Italy. Eighty percent of its revenues come from rail transportation, 13 percent from truck transportation, and seven percent from other logistics services. The company transports 94 percent of its freight cargo using electric goods trains and is a holder of the Environmental Choice label awarded by the Swedish nature conservation association.