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Logistics and supply chain management

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 Research in Transportation Economics 41 (2013) 3e16

Contents lists available at SciVerse ScienceDirect

Research in Transportation Economics

journal homepage: www.elsevier.com/locate/retrec

Logistics and supply chain management

Dewan Md Zahurul Islam a, J. Fabian Meier b, Paulus T. Aditjandra a, *, Thomas H. Zunder a, Giuseppe Pace c
a
NewRail, Newcastle Centre for Railway Research, Freight & Logistics Research Group, School of Mechanical and Systems Engineering, Newcastle University, UK
b
Institut für Transportlogistik, Technical University of Dortmund, Germany
c
Ghent University, Belgium

a r t i c l e i n f o a b s t r a c t

Article history: In this paper an introduction to the principles and methods used in logistics and supply chain
Available online 27 November 2012 management is presented. It begins by a discussion on fundamentals and explains the relevant terms.
Next policy and practice associated with logistics and freight services are regarded with a focus on the EU
Keywords: policy for the sector which greatly influences the development of logistics chains and services. Mathe-
Logistics matical formulation of typical transport and logistics-related problems is also presented followed by
Freight transport
a discussion on the concept of sustainability.
Policy
Ó 2012 Elsevier Ltd. All rights reserved.
Practice
Sustainability

1. Principles of logistics Logistics is also commonly seen as a branch of engineering which

Dr. Dewan Md Zahurul Islam, NewRail, Newcastle University.
1.1. Background
The term “logistics” originates from the ancient Greek word
“lógo2” (logosdratio, word, calculation, reason, speech, oration),
and as such the word logistics has been in use for a much longer
time than the current business logistics concept. The word logistics
itself originates from the military discipline. There were divisions in
the military who were responsible for the supply of necessary arms,
ammunition and rations as and when they were needed, for
example when they had to move from their own base to a forward
position. In that situation the logistics division would provide all
the necessary support to move the arms, ammunitions, tents, foods
etc. In the ancient Greek, Roman and Byzantine empires, there were
military officers with the title ‘Logistikas’ who were responsible for
financial, supply and distribution matters. Not surprisingly the
Oxford English dictionary defines logistics as; “The branch of
military science having to do with procuring, maintaining and
transporting material, personnel and facilities.” Another dictionary
defines logistics as “The time related positioning of resources.”
* Corresponding author. NewRail Research Hub, Stephenson Building, Newcastle
University, Newcastle upon Tyne NE1 7RU, UK. Tel.: þ44 (0) 191 222 5997; fax: þ44
(0) 191 222 8600.
E-mail address: paulus.aditjandra@ncl.ac.uk (P.T. Aditjandra).
URL: http://www.ncl.ac.uk/mech/staff/profile/paulus.aditjandra
creates “people systems” rather than “machine systems”, but the
modern logistics concept and practice is about providing cost and
time effective services for non-military, mainly commercial activi-
ties. This service includes the transport of goods from one point to
another, warehousing them in a suitable place, inventory, pack-
aging, and other administrative activities such as order processing.
1.2. Understanding logistics
Generally logistics is about adding “place utility” to a product
meaning that, for example, a product needs to be moved from one
point say Newcastle upon Tyne, UK to another point say Budapest,
Hungary (Fig. 1). The product could be raw material to be processed
(thus will also need material management) in a factory, or the
product could be finished from the factory and to be distributed to
the market for consumption.
In terms of “place utility” in logistics, this is due to the fact that
a buyer and a seller of the product have agreed to sell and buy the
product at certain conditions that include delivery price and time.
As per the agreed conditions, a transport and/or logistics service
provider will be hired (by the buyer or seller depending on the sales
terms) to move cargo from the seller’s premises to the buyer’s
premises. When it is in transit or under logistics service, the
“product” will be termed as “cargo” or “goods”. As per the agree-
ment, the cargo may need to be stored in somewhere along the
transit; this service is termed as ‘warehousing’ and depending on
the necessity and type of cargo, the warehouse location, size, type
etc. will be determined. The buyer may buy the product in a big lot

0739-8859/$ e see front matter Ó 2012 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.retrec.2012.10.006
4 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
Fig. 1. Logistics: a graphical example.
for once in a month or every week in a smaller lot and this decision
influences the level of inventory the buying company has to
maintain. It can be noted that inventory costs capital and interest.
To determine the optimal size of the inventory level, there are
concepts such as Just-in-time (JIT) which is a ‘pull’ technique
meaning that the buyer will receive the product only when it is
needed. This concept aims to have an effective inventory level of
“zero”. In contrast the traditional approach is the ‘push’ technique
where, the buyer will buy the product a lot and will maintain
a certain level of inventory. Such an inventory approach is dis-
cussed further in a later chapter. For the transport and warehousing
services, the product will be suitably packed depending on the type
of product it is. From the beginning to end there will be some
administrative activities such bill of lading (B/L) issued by the
transport service provider. The B/L contains details of the shipment
of the product and gives title of the shipment to a specified party
(here the buyer). B/L is a very important document used in inter-
national trade to provide guarantees that the seller (exporter)
receives payment and the buyer (importer) receives the product.
From the above discussion we understand that:
Logistics ¼ supply of raw materials
þ materials management in a factory
þ distribution to customers;
1.3. Varying terminologies and definitions
Langley, Coyle, Gibson, and Novack (2008, p. 34) notes that
“logistics management is the most widely used term and encom-
passes logistics not only in the private business sector but also in
the public/government and non-profit sectors.” There is confusion
about the definition of logistics due to the fact that a number of
terminologies are used to describe logistics management including
the following:
 Logistic Management;
 Business Logistics Management;
 Integrated Logistics management;
 Materials Management;
 Physical Distribution Management;
 Industrial Logistics Management;
 Procurement and Supply;
 Product Flow Management; and
 Marketing Logistics Management.
Logistics involves an integrated approach with the integration of
information, transportation, inventory, warehousing, material
handling, and packaging, and recently added security. There are
varying definitions due to the varying scope and understanding of
logistics.
Mangan, Lalwani, and Butcher (2008, p. 9) states that “Logistics
involves getting, in the right way, the right product, in the right
quantity and right quality, in the right place at the right time, for
the right customer at the right cost”. Rushton, Oxley, and Croucher
(2009, p. 6) explains that “Logistics concerns the efficient transfer of
goods from the source of supply through the place of manufacture
to the point of consumption in a cost-effective way whilst providing
an acceptable service to the customers The Charter of the Institute
of Logistics and Transport (CILT) (2012) maintains that logistics
should aim “to deliver exactly what the customer wants - at the
right time, in the right place and at the right price”. CILT (2012)
defines logistics as “the process of designing, managing and
improving such supply chains, which might include purchasing,
manufacturing, storage and, of course, transport.”
 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
1.4. Elements of logistics
There are five key elements of logistics: transport, warehousing,
inventory, packaging, and information processing (Fig. 2). Generally
transport is the major component of most logistics services. The key
aspects of transport management include modes of transport (such
as road, rail, waterways, air, pipeline, multimodal or intermodal),
transport infrastructure, geographical condition, type of delivery
(such as overnight express, normal, long distance), load planning
(in the cargo unit), routeing and scheduling. The important
considerations of warehouse management include the location,
number (linked to the warehousing policy as to central versus
decentralised concept), size (again linked to the warehousing
policy), type of storage (such as for refrigerated cargo, electronics,
garments) and material handling equipment. The crucial charac-
teristics of inventory management include the strategic decisions
as to what to stock, how much to stock, and where to stock.
Inventory management is sometimes confused with warehouse
management; inventory management is about the amount of stock
of the product or raw material whereas warehouse management
deals with the housing aspect of this stock. All products (raw
material, semi-finished, finished) need packaging. Packaging and
unitisation are also important aspects of logistics. The key elements
of packaging and unitisation include the type, cost, etc. that is
linked to the value and the type of product. For example, for high
value goods, the packaging and unitisation cost can be high
whereas for the raw material the cost has to relatively lower and
more affordable.
1.5. Logistics e an integrated approach
An efficient and effective logistics system needs an integrated
approach where all the elements of logistics have to be considered
to get a balanced service level that includes transit time, reliability
and above all, cost. If a company chooses a slower mode (e.g.
waterways) of transport to get a lower transport cost, the company
may have to bear higher inventory and warehousing costs and the
transit time will be higher. Another issue to be considered is that
due to the requirement of multiple handling at modal transport,
reliability remains an important issue. Also another such balancing
act is to choose between frequent delivery with small lots and less
Fig. 2. Key elements of logistics management.
5
frequent delivery with bigger lot size (e.g. of raw material). In the
case of frequent with smaller lot supply will incur higher transport
costs but lower inventory and warehousing costs. Thus the
managers responsible for hiring transport and warehousing
services have to liaison with the inventory manger to make a trade
off and adopt the best policy for getting logistics services.
Another issue that may need to be considered is that part of the
transport chain may be unreliable, which could be due to a number
of factors, such as bureaucratic border crossing formalities or loss or
theft issues.
1.6. Global nature of logistics
Today we are living in a truly global village. We buy many
products from stores such as Tesco that receives thousands of items
from all over the world, every day or week. Each item has an
individual transport chain using multi-modes. When sourcing
a particular product from a foreign country, the logistics manager
must have knowledge of the logistics service level in that country as
well as countries in transit. The Logistics Performance Index (LPI) is
produced by the World Bank. The LPI for 2012 offers ranking of
countries worldwide based on a survey of logistics service opera-
tors working in these countries. They survey collected feedback on
the logistics “friendliness” of the countries in which they operate
and those with which they trade. The LPI consists of both “quali-
tative and quantitative measures and helps to build profiles of
logistics friendliness for these countries. It measures performance
along the logistics supply chain within a country and offers two
different perspectives: International and Domestic. International
LPI provides qualitative evaluations of a country in six areas by its
trading partners e logistics professionals working outside of the
country. Domestic LPI provides both qualitative and quantitative
assessments of a country by logistics professionals working inside
it. It includes detailed information on the logistics environment,
core logistics processes, institutions, and performance time and
cost data.”
2. Logistics and transport
Dr J. Fabian Meier, Institut für Transportlogistik, Technical
University of Dortmund.
6 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
2.1. Organisation of shipping
Consider that there are a number of recipients, who need some
kind of good. Furthermore, there are a number of dispatchers (e.g.
warehouses or producers) who provide these goods (Fig. 3).
The task is now to organise this shipping. First of all, information
about possible means of transport, the costs for using different
vehicles or for renting and maintaining additional warehouses/
hubs must be gathered.
Once this information is available, there are a number of
possible ways to organise the traffic. Important choices are:
 Which dispatcher will deliver goods to which recipient (and in
what quantity)?
 Do we transport our goods directly from A to B or do we
consolidate them somewhere else (and deconsolidate them
afterwards)?
Your choice must not rely solely on chance or some very general
considerations, but it should be optimised in some way. Optimisa-
tion targets may be different; you could opt for minimizing cost,
minimizing time (or some kind of delay), minimizing environ-
mental impact etc.
Even if you decide to optimize the overall cost, this does not
mean that you ignore the other possible optimisation targets. A
delivery which takes a long time may cost a lot of money, and
furthermore, usually time restrictions apply. Restrictions or
constraints are generally an important concept to keep in mind as
normally, your aim to reduce costs is limited by things like working
hours or maximum truck loads which have to be checked for every
“solution” you come up with; otherwise, it is infeasible.
Up to this point, the following should have been done:
1. Gather all relevant information;
2. Decide what is to be optimised;
3. Look for possible restrictions or constraints to the problem.
Now a mathematical model has to be formed to accurately
represent the problem. This has two major advantages:
1. The model and so the optimisation question becomes very
precise. This allows the formal checking of a solution, to
Fig. 3. Relation between hub-depots-dispatcher.
determine whether it is feasible or not and furthermore, brings
understanding and determines whether all relevant “real”
information has been included.
2. It allows the use of a computer for help. This can be generally
done in two ways:
a. Through giving the formula to some kind of specialized
software like GAMS/Cplex or Gurobi; which “attacks” the
problem with all the general mathematical methods to find
good (or even optimal) solutions depending on the opti-
misation target. In many situations, especially where
formulae are not very big, this works very well.
b. By using the formula to develop a unique algorithm to
“attack” the problem, usually heuristically: This means
a solution is attempted to be found and improved in each
step by searching for strategies from which the under-
standing of the problem can be derived. Giving real world
knowledge and experience to the computer may be more
powerful because it will consider not only 48 million vari-
ables but also a graphical structure of what is to be achieved.
Many examples can be used to illustrate the general idea of
heuristics, e.g. the Klinkewicz hub location method, the Savings and
Sweep Algorithms or the classical transportation problem with its
various algorithms. The following are important considerations for
a choice of a good example:
 The algorithm should be short and computable by hand for
small instances in reasonable time;
 The solution should be presentable in a table or graph in
a human-accessible way.
 It is helpful, if the strength of the algorithm can be compared to
a naïve solution, other algorithm or a (known) optimal
solution;
 At least one of the algorithms presented should be strong
enough to give near optimal solutions to the example problems.
Below, a detailed description of a presentation of the trans-
portation problem is given, comparing a naïve approach to two
other algorithms. Furthermore it shows the connection between
incorporating more information and getting better results.
2.2. The classical transportation problem
Assume there are 3 dispatchers A1, A2, A3 (warehouses,
producers) of some homogeneous good (like coal, milk, oil.) and
there are 3 recipients B1, B2, B3. Furthermore it is known for each of
them, their capacity/demand. Now the aim is to make a strategic
plan for how much is to be delivered from which dispatcher to
which recipient. This can be seen as a first step before the intro-
duction of more details.
For this aim, use a simple cost structure, calculating for every
warehouse A and customer B the average cost for transporting
a unit (meaning a kilogram, a litre.) from A to B. Having all the
information mentioned above, Table 1 is drawn.
The last row describes the demands of the three customers B1,
B2 and B3, while the last column shows the capacities of the
warehouses A1, A2 and A3. The problem is only solvable if the total
Table 1
Classic transportation problem I.
B1 B2 B3 Capacity
A1 5 7 9 12
A2 9 9 3 21
A3 11 4 7 14
Demand 19 13 15
 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16 7

capacity of all warehouses is at least the total demand of all
customers.
The small numbers on top right corner of the grey shaded area
give the costs of shipping one unit between the respective ware-
house and customer. The aim is to fill the table with numbers (i.e.
specify how many units are send from each warehouse to each
customer) so that the total cost is as low as possible. An example is
shown in Table 2.
It can be seen that 6 units are transported from warehouse A2 to
customer B2 at a total price of 6$9 ¼ 54. So the total cost of this
solution would be:
12$5 þ 7$11 þ 6$9 þ 7$4 þ 15$3 ¼ 263:
Additionally this solution should be checked to determine
whether or not this solution is feasible. What are the constraints?
Each customer has to be satisfied; this means that the sum of the
elements in a grey column has to be (at least) the demand written
beneath it. Equally, the capacity of each warehouse must be taken
into account, i.e. the sum of every grey row can be at most the
capacity given at the end of that row.
From the table above, it is seen that these conditions are satis-
fied (e.g. in the second row there is 6 þ 15  21). By drawing the
table, the first step in the formulisation process is complete. This
must now be transformed into a mathematical problem, which can
take the following shape:
1. Approaches which first construct a feasible solution;
2. Improvement methods, i.e. heuristics which reduce the costs of
a given solution by making small changes.
For the transportation problem, only the first approach is dis-
cussed. The simplest heuristic is given by transporting as much as
possible from the first warehouse A1 to the first customer B1 (in the
example, this is 12 units). Then either the first warehouse is empty or
the first customer is satisfied. In this way, either the first row or the
first column of our table can be deleted. Now this can be repeated for
the rest of the table until a feasible solution is constructed.
Generally speaking this solution is relatively poor, as a large
portion of the information held is ignored and cost is ignored,
rather than being optimised. The second approach, the Matrix
minimum method, improves on the choice of table cell. A good
solution is to look for the cheapest connection (the cell with the
least cost), and again transport as much as possible to fully exploit
the cell with the smallest cost. As in the approach mentioned
before, the row or column can then be deleted.
After each deletion the table becomes smaller and this is
repeated until the problem is solved. Table 3 shows the situation
after 3 steps (where the strikes mean deletion):
The solution is normally much better than the naïve result ob-
tained beforehand. The general scheme followed can be described
as follows; in every step try to optimize the result of this step.
Methods of this kind are called greedy. Greedy methods are suitable

objective function
Pm P n
minFðxÞ ¼ cij xij
i¼1 j¼1
subject
Pn to (1)
j¼1 xij  ai for i ¼ 1; .; m ðcapacity restriction of warehouse iÞ
Pn
i¼1 xij  bj for j ¼ 1; .; n ðrequirements=demand of customer jÞ
xij  0 for all i and j

The function F sums over all the products that were also
considered in the example above (giving 263 e the terms involving
zero shipped units were omitted). cij is the cost of shipping a unit
from i to j while xij is the number of goods to be shipped. This cost
function should be minimized.
The constraints are same as those for the table; the first
constraint states that no row exceeds the capacity limit whilst the
second constraint means that each customer is satisfied (i.e.
demand is fully met). The last constraint denotes that negative
amounts cannot be delivered, i.e. units cannot be shipped from the
customer back to the warehouse.
For small or medium sized problems, most optimisation soft-
ware provides a very good or optimal solution for a problem
formulated in this way, as a mathematical optimisation model.
For large problems a heuristic approach can be utilised. Gener-
ally, heuristics can be divided into two categories:
for many situations. Nevertheless this greedy approach does not
incorporate the whole picture, but always just one single step.
Optimising every step does not necessary produce a good solution
for the whole problem. Eating a chocolate fudge cake may be a good
decision today, but it could be a regrettable decision later.
The Vogel method for the transportation problem uses more
information which makes it a stronger method, but also a more
time intensive one. Assuming there is one column with costs 5, 7
and 8 and another column with costs 7, 20, and 100, the greedy
method would take the 5 (because it is the lowest value). Utilising
the 5 and exploiting the connection might mean that the row is
deleted, i.e. the 7 is deleted from the second column. Now in order
to satisfy the customer with the 7, 20, 100 column, the 20 or the 100
cost cell has to be used, which is unsatisfactory. What can be done?
Table 3
Classical transportation problem III.
B1 B2 B3 Capacity a

Table 2 A1 12 5 7 9 12
Classic transportation problem II.
A2 9 9 15 3 21
B1 B2 B3 Capacity a
A1 12 5 7 9 12 11 13 4 7
A3 14
A2 9 6 9 15 3 21
A3 7 11 7 4 7 14
Demand b 19 13 15
Demand b 19 13 15
8 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
Through making a list of all the differences between the two
smallest values in each row and column, the lowest cost cannot
only be identified but also the lowest cost differential. If the
difference is low, the column or row can be kept for later use. The
method is to start at the cell with the lowest cost in the column/row
with the greatest difference! In this way, very costly connections
are avoided.
Table 4 gives the cost differences in a separate column/row and
indicates where the application of the method should start from.
The emphasised cells indicate the greatest difference between
the two cheapest connections and the lowest element in the row.
Once this element has been identified, the method proceeds in
a similar manner to those before.
By incorporating more information into a heuristic solution, it
usually becomes stronger, but also more complicated. Depending
on the computation time restrictions and result quality required,
a heuristic approach may be the best choice.
3. European Union (EU) rail freight policy with reference to
logistics action plan and green corridors
Dr. Paulus T Aditjandra and Thomas H Zunder, NewRail, Newcastle
University.
3.1. Transport policy and EU
The official EU website on transport policy summarises its
legislation into a paragraph that states “transport is one of the
European Union’s (EU) foremost common policies”. It is governed by
Title VI (Articles 90e100) of the Treaty on the Functioning of the
European Union. Since the Rome Treaty’s entry into force in 1958,
this policy has been focused on removing borders between
Member States and thus contributing to the free movement of
individuals and of goods. The first steps after the formation of
European Union were to foster economic co-operation, which has
developed into a single market. An initially purely economic union
has evolved into an organisation spanning many areas. Currently,
the EU has the most ambitious emission reduction targets for
fighting climate change in the world. Since the abolition of border
controls, it is now possible for people to travel and trade freely
within most of the EU.
In 2009, the GDP of the EU was approximately V11.7 billion,
larger than the USA. With 7% of the world’s population, the EU’s
trade with the rest of the world accounts for around 20% of global
exports and imports. The EU is the world’s biggest exporter and the
second-biggest importer. Around two thirds of EU countries’ total
trade is done with other EU countries. The United States is the EU’s
most important trading partner, followed by China.
3.2. Freight transport in EU
Recent estimates put the share of the logistics industry in
Europe at close to 14% of GDP. Over recent years, the logistics
industry has grown at a rate beyond the average growth rate of the
European economies. For example, intra-EU and extra-EU trade has
Table 4
Classical transportation problem IV.
B1 B2 B3 Capacity a
A1 5 7 9 12
A2 9 9 3 21
A3 11 4 7 14
Demand b 19 13 15
Diff 4 3 4
risen by 55% in value since 1999. This growth has come about
through European integration, liberalisation and the relatively low
cost of freight transport, which has led to changes in production
and trade patterns, both inside the EU and globally.
In 2009, total goods transport activities in the EU-27 are esti-
mated to have amounted to 3632 billion tkm including intra-EU air
and sea transport. Individual modal shares were: road 46.6%, rail
10.0%, inland waterways 3.3% and oil pipelines 3.3%. The remaining
was intra-EU maritime (including coastal) transport (the second
most important) 36.8% and the intra-EU air transport only accoun-
ted for 0.1%.
Fig. 4 suggests that the share of rail freight transport remained
stagnant, with only a slight improvement until 2008 when it fell
sharply. In contrast the share of road freight has continuously
increased until 2007. Maritime transport also experienced a similar
(with road) pattern of share.
Henceforth, the role of EU freight transport policy is a crucial
component of the planning, practice and sustainability of freight
logistics. Whilst much of policy is enshrined at the national level,
the Union has various methods in which a pan-European policy can
be promulgated. The following are relevant here; the regulation
and the decision, which have direct effect; the directive, a legisla-
tive act of the EU, which requires member states to achieve
a particular result without dictating the means; and the commu-
nication, which is an opinion or recommendation which has no
legal effect (Borchardt, 2010).
3.3. Timeline and key policies
Before the 1990s the EU formulated little transport policy, but in
the last decade of the 20th century the area starts to receive focus,
in parallel with and caused by the completion of the single Euro-
pean market (1st January 1993), with the free movement of goods,
services, people and money. The 1996 Single Market Review
concluded that the reorganisation of the distribution process
generated lead to logistic cost reductions between 1987 and 1992 of
as much as 29%. The largest cost reductions were in transport,
where firms reported up to a 50% cost reduction and the average
number of days from order placement to receipt declined from 21
days to 15.
Key EU freight transport policy milestones:
 1992 Common Transport Policy (defining services);
 1993 Single European Market e free movement of goods,
services, people and money;
 1993 TEN-T promoted via the TEN (defining infrastructure);
 1996 “A strategy for revitalising the Community’s railways”,
Introducing market forces into rail, Integration of national
systems;
 2001 White Paper e modal shift policy (addressing services);
 2006 Review of 2001 White Paper e co-modality policy;
 2007 Freight Transport Logistics Action Plan;
 2011 White Paper e multimodal policy.
The common transport policy from the beginning of 1990s up to
2000 was marked by two significant changes, which were the new
environmental debate and the challenge of sustainable develop-
ment. Whilst environmental issues such as noise, severance, visual
intrusion, and pollution had been a concern of the transportation
Diff development, the new debate was broader and included the global
2 issue of climate change, use of non-renewable resources and
6 general quality of life. The definition of sustainable development is
3 best summarised as “meeting the needs of present generations
without jeopardizing the ability of futures generations to meet their
own needs e in other words, a better quality of life for everyone,
 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
EU27 Performance by Mode for Freight Transport
2200
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1995 1996 1997 1998 1999 2000
Road Sea
Fig. 4. Comparison between transport modes. Source: EC Statistical Pocketbook (2012).
now and for generations to come.” (European Commission, http://
ec.europa.eu/environment/eussd/, retrieved August 2012).
Post 2000, the key milestone of common transport policy was
the White Paper, “European Transport Policy for 2010: Time to
Decide”. One of the main messages is the recognition of the
increasing demand for transport that cannot be answered by
building new infrastructure, instead the transport system needs
optimisation to meet the demands of both enlargement of the EU
and sustainable development. The document reviews the problems
derived from the growth of road transport demand including dis-
torted competition (between different transport modes), traffic
congestion, environmental pollution, public health and road acci-
dents. The White Paper also identifies the need for integration of all
modes of transport as envisioned in the Treaty of Rome. Also
identified is the need for better usage and integration between sea,
inland waterways, and rail. Intermodality is seen as under-utilised,
particularly as this provides an opportunity to reduce both road
congestion and air pollution.
There were 60 measures to be taken at the EC level up to 2010;
the key freight issues included:
 Funding the need for renewed infrastructure against falling
state investment;
 Revitalising the railways;
 Decoupling economic growth and transport growth;
 Improving the quality of the road transport sector;
 Turning intermodality into reality, with the new Marco Polo
funding instrument;
 Building the Trans-European Transport Network (TEN-T);
 Developing short sea shipping “Motorways of the Seas”;
 Standardising containers and swap bodies (to an EU norm);
 Encouraging a new industry role, the “freight integrator”;
 Improving road safety;
 Eliminating bottlenecks;
 Multimodal corridors giving priority to freight;
 A policy on the effective charging for transport, fuel tax
harmonisation and pooling of funds at EU level.
9
1995 - 2010
billion tonne-kilometres
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Rail Inland Waterway Pipeline Air
In 2006 the EU published a mid-term review of the 2001 White
Paper. Entitled ‘Keep Europe Moving: Sustainability for our continent’
(European Commission, 2006a; the freight aspect was specifically
discussed in European Commission, 2006b). It was in many ways
a repudiation of the ‘dirigisme’ of the earlier policies, and intro-
duced the concept of co-modality. This is recognition that all
transport needs to be sustainable and transport policy should
optimize each mode separately, integrate the modes for seamless
transport, and then look for modal shift in specific areas (long-
distance, urban areas and congested corridors). This coincided with
the enlargement of the EU into the former Warsaw Pact countries of
Eastern Europe, their needs for growth over environmentalism, and
also the changing political and national make up of the European
Parliament and the Commission civil service.
The 2011 White Paper is a very different document to the 2001.
It has been written alongside the “Roadmap for moving to
a competitive low carbon economy in 2050”. There are clear division
lines between it and its predecessor, clause 18 states bluntly and
simply “Curbing mobility is not an option.” Clause 48 begins “New
mobility concepts cannot be imposed”. With regard to rail freight the
message reiterates that of 1992 and onwards, that rail shall liber-
alise, separate operations and infrastructure and allow an open free
rail freight market, allowing rail to compete with road and actively
achieve modal shift. The targets for modal shift are even more
ambitious than in 2001, and in line with co-modality, rail is to adopt
a dominant role in long haul freight. As part of better modal
choices, greater integration of the modal networks and hubs
including; airports, maritime ports, dry ports, and rail terminals
physically as well as virtually with support from information and
communication systems, which will facilitate tracking, tracing, e-
booking and e-payment. The optimisation of the performance of
multimodal transport chains is aimed to achieve the following
targets; 30% of road freight over 300 km should shift to other
modes such as rail transport by 2030, and more than 50% by 2050,
facilitated by efficient and green freight corridors. Given the failure
to achieve the 2001 modal shift targets, these are ambitious targets
for the sector.
10 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
3.4. Freight transport logistics action plan
In 2007 the Commission published a Freight Transport Agenda,
a top-level statement on freight. The EU had expanded further that
year and the rotating Presidency of the Council of the EU passed to
Germany who focussed on freight transport, and co-hosted
a conference in Brussels on Freight in May. There was concerted
attention on freight from the Commission and one of the leading
member states and logistics nations in Europe.
Co-modality is once again considered critical, and a wide range
of policy initiatives are proposed; Freight Transport Logistics Action
Plan (FTLAP), Communication on a freight-oriented rail network,
Communication on a European Ports Policy, and the commence-
ment of consultation on maritime space and Motorways of the Sea.
The document also draws out synergies from all the individual
initiatives; a focus on corridors, the promotion of innovative tech-
nologies, the simplification of transport chains and the reinforce-
ment of quality.
Freight Transport Logistics Action Plan is a focused set of actions
to support the logistics industry to achieve primarily sustainable
and competitive mobility, and secondarily, a cleaner environment,
security of energy supply, transport safety and security. Written
after extensive consultation for the mid-term review, it is a docu-
ment based not in DG TREN (Directorates General Transport and
Energy) but in the actors and stakeholders. The key actions are, as
follows:
3.4.1. e-Freight and intelligent transport systems (ITS)
The concept of e-Freight is of a paper-free, electronic flow of
information associating the physical flow of goods with a paperless
trail built by ICT (Information, Communication and Technology),
RFID (Radio Frequency Identification Technology) and the use of the
Galileo satellite positioning system. All of this could lead to the
capability to view and compare multiple freight transport services
online. A deployment strategy for ITS was proposed, incorporating
logistics requirements: navigation systems, digital tachographs, and
tolling systems. A number of obstacles were noted including insuf-
ficient standardisation of the respective information exchanges,
legal requirements, data security, privacy issues and market actors’
disparate capabilities to use ICT (Zunder, Westerheim, Jorna, &
Pedersen, 2012).
3.4.2. Sustainable quality and efficiency
The theme continues the 2006 identification and solution of
approximately 500 operational, infrastructure-related, and admin-
istrative bottlenecks. The aim is to enhance the attractiveness of
logistics professions, support professional training and encourage
staff mobility across borders. Additionally, it targets to establish
a core set of generic indicators that would best serve the purpose of
measuring and recording performance (e.g. sustainability, effi-
ciency) in logistics chains to encourage a switch to more efficient
and cleaner forms of transport and improve logistics performance.
It also aims to develop a set of generic European benchmarks for
intermodal terminals and to promote best practice through Short
Sea Promotion Centres and a network between logistics institutes
and industry initiatives. A meta-analysis of port study suggests that
international collaboration is relatively limited (Pallis, Vitsounis, &
De Langen, 2010). Finally, the research agenda will also include
a review of the availability of and determine the requirements for
data on freight transport logistics, across modes and assess
improvements to the collection of statistical information.
3.4.3. Simplification of transport chains
This theme aims to establish a single access point and one stop e
for administrative procedures in all modes. It can thus be achieved
by firstly, by making a legislative proposal on simplifying and
facilitating short sea shipping towards a maritime transport space
without barriers. Secondly, examine the details and added value of
establishing a single transport document for all carriage of goods,
irrespective of mode. One of the key aspects of pursuing such
approach would be a ‘liability’ issue that works towards creating
a multimodal regulatory structure at global level. This approach has
been seen as starting to develop European standards to facilitate
the secure integration of transport modes in the logistic chain and
simplify port access requirements. Recent review on the impact of
supply chain practices on green logistics performance shows that
little attention was being paid by researchers (Harris, Rodrigues,
Naim, & Mumford, 2010).
3.4.4. Vehicle dimensions and loading
The modification of the standards for vehicle weight has
conveyed an update to the 2003 proposal on Intermodal Loading
Units. It aims to establish a mandate for standardising an optimal
European Intermodal Loading Unit (EILU) that can be used in all
surface modes. An effort to address this theme has been studying the
options for a modification of the standards for vehicle weights
(Robinson, Carruthers, O’Neill, Ingleton, & Grasso, 2012). Regarding
load factors, a British based study demonstrates that the use of spare
existing capacity would increase 38% container traffic by rail that
consequently lead to a 65% rail freight traffic growth (Woodburn,
2011).
3.4.5. “Green” transport corridors for freight
A corridor approach originated from the development of Trans-
European Network (TENs) leads to a need to understand how best to
use these priority networks’ sustainably. Along these corridors,
industry will be encouraged to rely on co-modality and on advanced
technology in order to accommodate rising traffic volumes, whilst
at the same time promoting environmental sustainability and
energy efficiency. One of the efforts has been made to address this
these was to define green transport corridors and organise co-
operation between authorities and freight transport logistics
within the TEN-T (Trans-European Transport Network) outline and
in the Marco Polo priorities (EC incentives to project on transfer
freight from road to rail or short-sea shipping routes or inland
waterways) (Aditjandra, Zunder, Islam, & Vanaale, 2012). Addi-
tionally a number of EU funded projects have developed a better
understanding of freight-oriented rail network and the establish-
ment and recognition of Motorways of the Sea; and the NAIADES
programme for inland waterway transport. There is a section on
‘Green Corridors’ that is discussed later.
3.4.6. Urban freight transport logistics
The Agenda recognises that the lead in this area has been taken by
the cities, and therefore restricted proposed actions to exchange of
best practice and the development of benchmarks (Allen, Thorne, &
Browne, 2007). Despite the increasing problem caused by freight
traffic urban setting may have, rail freight and a sustainable urban
distribution potential has been identified as having limited appli-
cability in practice (Dinwoodie, 2006) though in theory, the opera-
tion is feasible and potentially beneficial (Motraghi & Marinov, 2012).
3.5. Towards a rail network giving priority to freight
When the communication on rail freight was published in
October 2007, it was a more clearly defined document than the
agenda initially suggested. It also shows how the overall freight
policy is intertwined with wider transport policy. EU railway policy
is a strategy for the revitalisation of the railways in Europe, against
a backdrop of decline, through the separation of infrastructure and
 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
operations and the opening of the market to competition. The EU
used directives in this area, possibly due to the almost exclusive
state ownership of rail at the beginning of the period; these were
delivered in railway packages, 2001, 2004, and 2007, with varying
success. The first package permitted open access for national rail
services across EU. The founding is based on 1991 Railway Directive
and focus on the separation of operations and infrastructure. The
second package aimed to build an integrated European railway
area, in particular by opening up more quickly the international
rail-freight market, with a new directive on railway safety and the
establishment of a European Railway Agency. The third opened up
international passenger rail services from 2010 and the introduc-
tion of a certification system for locomotive drivers.
The communication of 2007, “Towards a rail network giving
priority to freight” notes, “As road transport steadily becomes more
efficient, rail transport has to become more competitive, especially as
regards quality. For logistics customers, quality means in particular
competitive journey times, reliability of goods transport and capacity
adapted to needs.” In response to the rejection of a proposal for the
regulation of quality levels in rail freight in the third railway package,
the European Commission was suggesting the status quo, a partially
dedicated freight network, or a wholly dedicated parallel rail freight
network, perhaps akin to that proposed by the NEWOPERA project
(Castagnetti, 2008). A compromise position, viewing a dedicated
network as “too large, too costly and too much of a long-term
prospect” has been chosen.
In order to support quality reliable international rail freight
services, the Commission proposed giving priority to international
freight in operation and train path allocation along defined trans-
national corridors. These would have regulated service quality
levels and would operate rather like the dedicated high-speed
networks built in Europe for passengers. The problem was they
weren’t dedicated; nearly all of the routes were existing mixed-use
paths where passenger trains had priority. This problem, which is
one the USA is about to face in reverse (Economist, 2010), was too
much for the industry and Deutsche Bahn, in its role as infrastruc-
ture manager in Germany and growing international and freight
operator, came down in marked opposition, so much so that every
Annual Report from 2007 to 2010 states blunt opposition to any
such proposal (Deutsche Bahn, 2007). Despite the conflict between
the Commission and member states, it was argued that EU rail
policies in general have positive effects, which created the growth of
freight market between 1995 and 2007 in Britain (98% e in tonne
km), Sweden (20%) and Germany (63%) (Nash, 2011).
The European Commission sent formal notices to 24 EU member
states on 26 June 2008 regarding their failure to properly imple-
ment the First Railway Package legislation. In 2010 the Commission
reported; “it has not been possible to improve the overall modal share
of rail freight and passenger transport in line with the objectives set in
the 2001 Transport White Paper. monopolistic positions still exist in
many Member States both for freight and for passenger transport
services.” To that end they have proposed a ‘recasting’ of the first
railway package. This proposal emerged following recent studies
that identified that ‘weak finance’ of many Railway Undertakings
(RUs) in new Member States and low infrastructure quality are the
main barrier to the development of the open access (IBM, 2011;
PwC, 2009). The first railway recast should emphasise non-
discriminatory use of service facilities, transparency, finance, and
political incentives to support new comers (Zunder, Islam,
Mortimer, & Aditjandra 2012; Zunder, Westerheim, et al., 2012).
Higher number of RUs in a country is highly associated with high
rail liberalisation index (IBM, 2011).
The Policy realises that the freight shipments over short and
medium distances (below 300 km) will largely but not exclusively
remain on trucks. There is a concern that this sort of prescriptive cut
11
off distance becomes a self-fulfilling mantra and is based on existing
technical, commercial and operational models that may be subject
to major change (Zunder, Islam, et al., 2012; Zunder, Westerheim,
et al., 2012). Therefore suggesting that the services of other trans-
port models (rail, waterborne transport) have to achieve efficiency,
cost-effectiveness, availability, and reliability at the level (if not
better) of truck service. The trucking industry also needs to achieve
further improved efficiency through the development and the
uptake of new engines and cleaner fuels, the use of intelligent
transport systems and further measures to enhance market mech-
anisms (Zunder, Islam, et al., 2012; Zunder, Westerheim, et al.,
2012). Over longer distances, options for road decarbonisation are
limited, and freight multi-modality has to become economically
and operationally attractive for shippers. Thus efficient and effec-
tive co-modality is needed.
3.6. Green corridors
Following the launch in 2007 of the Freight Transport Logistics
Action Plan (FTLAP) document discussed in an earlier section, the
concept of ‘Green freight transport corridors’ has been introduced
by the European Commission to act as a catalyst to concentrating
freight traffic between major hubs over relatively long distances.
The overarching objective is to develop a sustainable and
competitive co-modal freight services. Whilst the suitability defi-
nition of green corridors has been explored and investigated
further via European Commission funded research projects
(Aditjandra et al., 2012; Psaraftis & Panagakos, 2012), the root of the
examination is the development of the trans-European transport
networks (TEN-T).
The trans-European transport network (TEN-T) is an EU infra-
structure development programme that was created following the
Maastricht Treaty of 1992 (EU formulation of the Euro single
currency) in response to increasing EU economic integration and to
the increasing competitive pressures, which consequently demand
a solid reliable supra-regional transport system (Vickerman, 1995).
Before the TEN-T guideline was introduced in 1996 via Decision
1692/96/EC, the Trans-European Network (TEN) term was used to
promote the interconnection and the interoperability of national
networks, as well as access to such networks (Böttcher, 2006).
International and intermodal links fall under the umbrella of ‘Inter-
connection’, all of which are aimed at facilitating the use of different
nations and different modes’ network. It aims at improving the
transport system’s efficiency and effective synergy. ‘Interoperability’
on the other hand is the suitability of a network for safe through
traffic with respect to administrative, technical and operational
preconditions so that barriers to free access are kept to a minimum.
Please note that these preconditions have been taken into consid-
eration particularly with respect to high-speed rail networks
(Sichelschmidt, 1999). TENs was designed to develop an appropriate
financial instrument for dealing with European Community (EC)
infrastructure needs. It is therefore important to note that TENs’
coverage is including energy and telecommunication while TEN-T
was designed to address the transport aspects of it including air,
road, rail, inland waterways, ports, and maritime transport.
The TEN-T programme now has undergone 3 phases in terms of
the number EU member states involved in: TEN-T 15 (1996e1999),
TEN-25 (2000e2006) and TEN-T 27 (2007e2013). TEN-T 15
included 14 priority projects, mainly rail (with more than 50% of the
total investment over the 5 years period that demonstrated a pref-
erential treatment of the railway sector). This is comprised of
a network of 70,000 km of rail track (including 22,000 km of new
and upgraded track for high-speed trains), 58,000 km of roads
(including 15,000 km of new roads). Corridors and terminals for
combined transport (i.e. combination of 2 or more transport modes
12 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16

for freight), 267 airports of common interest and networks of inland
waterways and seaports are also included. TENT-T 25 extended the
project to 20 priority projects and TEN-T 27 to a new tally of 30
projects. The TEN-T 27 comprises 65,100 km motorways and
212,800 km of rail lines (including 110,458 km electrified),
42,709 km navigable inland waterways, and 70,000 km of maritime
coasts and 1239 ports. The deployment of Intelligent Transport
System (ITS), European Rail Traffic Managements System (ERTMS),
Vessel Traffic Management Information System (VTMIS), Air Traffic
Management (ATM) and Global Navigation Satellite System (GNSS)
are some of the main features included in the TEN-T programme
that demonstrates the Commission plans to stimulate the use of
telematics e new technologies combining telecommunications and
informatics e in order to facilitate an ‘intelligent’ guidance of traffic
flows with the aim to improve capacity utilisation of infrastructure
networks (Böttcher, 2006; Sichelschmidt, 1999). Table 5 demon-
strates details of each of the TEN-T priority projects and the prog-
ress. The use of the term ‘green corridors’ has only emerged after the
introduction 2007 FTLAP and simply can be recognised as TEN-T.
Whilst the idea of green corridors can be associated mainly with
rail transport because rail is seen as the greenest mode at least in
the UK (AEA, 2010), the development of corridors approach at the
later stage has taken a ‘multimodal’ approach as the way ahead
from the European Transport Policy perspective. It is in fact a back
to back since the term multimodal has been introduced in the 1992
Transport White Paper that described a combination of two or
more transport modes for freight as also known as ‘combined
transport’. In the 2011 Transport White Paper, however, multimodal
approach is simply a transport operation for both freight and
passengers using different modes of transport.
One of the EU-funded projects looking at the ‘green corridors’
concept is currently on going (2010e2013). The SuperGreen project
used the TEN-T structure to investigate priority freight corridors.
Fig. 5 shows the scope of the SuperGreen project. At the time of
writing, there are no final conclusions officially published from the
SuperGreen project, however the initial investigation demonstrates
that the priority corridor approach has also been adopted at the
national level and can potentially support the connectivity of
European supra-regional transport network within a sustainable
manner (Aditjandra et al., 2012).
4. Principles of sustainable transportation
Giuseppe Pace, Ghent University, Ghent and ISSM-CNR, Naples.
4.1. Introducing the concept
Sustainable transportation is associated with the many different
disciplines and fields which draw the framework of sustainable
development, with the aim of redressing “the balance between
economic, social and environmental priorities” (Banister, 2005, p. 3).
The emerging discipline, called sustainability science, nonetheless,

Table 5
TEN-T priority projects and their progress. Source: Adapted from European Commission (2005).

Mode 1996e1999 2000e2006 (include progress) 2007e2013 (include progress)

TEN-T EU-15 PP1 Rail e high speed (HS) NurembergeBerlin Extended 2004: rail upgrade Ongoing: Brenner tunnel,
bridge, new lines
PP2 Rail e HS PariseBrusselseCologneeAmsteLondon Ongoing: Rotterdam station Amsterdam station
PP3 Rail e HS MadrideBarcelonaeMontpellier Ongoing: new cross border tunnel Upgrade and New lines
PP4 Rail e HS PariseStrasbourgeKarlsruhe Ongoing: new line and upgrade
PP5 Rail e dedicated freight RotterdameRhineeRuhr (Betuwe line) Completed 2007
PP6 Rail and tunnel LyoneTurineTrieste Extended 2004: new lines, Ongoing: new tunnel, new track
upgrade
PP7 Road AthenseBulgariaeTurkey Extended 2004: new road, Ongoing: upgrading motorway
upgrade
PP8 Road (extended to LisboneValladolid Ongoing: rail upgrade, New Lisbon airport
multimodal) new motorways
PP9 Rail CorkeDublineStranraer Completed 2001
PP10 Air Milano Melpansa Airport Completed 2001
PP11 Road/rail DenmarkeSweden (Øresund) Completed 2000
PP12 Road/rail CopenhageneStockholmeHelsinki Ongoing: road and rail upgrade Road and rail upgrade
(Sweden and Finland)
PP13 Road/sea IrelandeUKeBenelux Ongoing: road upgrade
PP14 Rail GlasgoweLiverpooleLondon Completed 2009
TEN-T EU-25 PP15 ICT Galileo GPS Ongoing: development and
deployment
PP16 Rail e high ZaragozaeToulouse Ongoing: new long distance tunnel,
capacity freight new line
PP17 Rail e HS StuttgarteSalzburgeVienna Ongoing: new lines, upgrade and
electrification
PP18 Inland waterways StraubingeVilshofen Ongoing: improve navigability,
new lock
PP19 Rail e HS Spain and Portugal Ongoing: new lines
interoperability
PP20 Road/rail GermanyeDenmark Ongoing: rail-road link, upgrade,
Fehmarn belt electrification
TEN-T EU-27 PP21 Multimodal Motorways of the sea (MoS)
PP22 Rail AthenseViennaeNuremberg
PP23 Rail GdanskeBratislavaeVienna
PP24 Rail Lyon/GenoaeRotterdam/Antwerp
PP25 Road GdanskeBratislavaeVienna
PP26 Rail/road IrelandeUKecontinental Europe
PP27 Rail Baltic: WarsaweTallinneHelsinki
PP28 Rail BrusselseLuxembourgeStrasbourg
PP29 Rail IonianeAdriatic intermodal corridor
PP30 Inland waterways SeineeScheldt
 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
Fig. 5. Multimodal corridors (MC) approach under discussion beyond TEN-T 27. Source: adapted from Port of Gijon (2012).
is not yet an autonomous field or discipline of its own. Its approach,
more than defining general principles tends to be problem-driven
and oriented towards guiding decision-making. It answers
a growing demand from the public sector for concrete and suitable
planning tools (i.e. computer-aided sustainability evaluation tools,
sustainability assessments, etc.) and indicators, which help to find
out how individual short-term decisions can affect long-term stra-
tegic goals.
But sustainability is much more than a set of tools and indica-
tors, it is a call to action, a task in progress or a “journey”, and
therefore a political process, affecting different dimensions and
cultures, such as economy, society, environment, institutions and
also transport.
A sustainable process, in particular, needs to develop governance
approaches based on an interaction of the actors e individuals,
companies, industries, and governments e and on a cross-sectoral
integration, breaking the traditional linear decision-making
carried out at all levels of government within a sectoral frame-
work. To develop interaction and integration, many European
countries established new institutional structures, e.g. agencies
dealing with sustainable development. However in many cases,
a sectoral approach to policy and responsibility is still predominant,
as in the case of transportation.
Transport is not a secondary factor for developing sustainability. It
has, from the one side, growing in relevance for national and inter-
national economies, by improving mobility and providing benefits
to individuals and businesses and, on the other side, it has major
environmental impacts e by provoking negative externalities
through congestion, urban pollution, greenhouse gas emissions,
noise, accidents, etc. e and the highest consumption of
non-renewable energy. Currently, transport accounts for 33% of
Europe’s energy consumption (2009) and 20% of its total CO2 emis-
sions (2010).
However, transport is strictly connected to economic factors and
its decision-making is affected by many other factors. The demand
for transport is a derived demand; transport is not demanded for
what it is, but for what it can do, that is, moving people and goods.
Price, quality, speed, safety, users income, and common behaviours
influence the choice of the transport mode, made daily by millions of
customers. In a business-as-usual (BaU) situation, the modal choice
influences the decisions on building infrastructure taken by the
governments. The thesis of this short paragraph is that sustainable
transportation, more than intervening on individual choices, can be
promoted at national and European level and affect transport
behaviours through infrastructure planning and management,
13
together with indirect taxation and subsidies. As an example, the
European Commission White papers on transport and the “Strategy
for the internalisation of external costs” will be analysed, in order to
verify if the European policies in their current state are best placed to
“help focus the attention of decision-makers at all levels on a wider
range of indicators of well-being” (Banister, 2005) and force an
integrated and interactive sustainable policy.
4.2. Externalities and their internalisation
A largest part of studies and analysis focussing on sustainability
are related to the measurement of the “external effects” or “exter-
nalities” of economic activities, which needs to be converted in
economic value, accounted and integrated in the decision-making.
In the transport sector, this need has been usually interpreted by
policies aiming at internalising the external effects, which are
produced by the interaction of the transport system with envi-
ronment, safety, public health, land use and congestion. Some
external effects issues (and causes) are:
 Climate change (greenhouse gas emissions);
 Respiratory disease (pollutants and road dust);
 Stress disease (noise, congestion traffic);
 Obesity-prone lifestyle (car dependence);
 Trauma (collisions);
 Modified plant, animal and aquatic habitats (fragment, noise,
road kill, contamination);
 Biodiversity (loss of habitat, migration of exotic species);
 Soil quality (erosion, contamination);
 Water quality (contamination, loss of natural filters);
 Land take (right of way, structures, parking);
 Neighbourhood severance (noise, physical barriers, traffic
volume);
 Built environment (loss of heritage, loss of pedestrian comfort,
aesthetics).
One way for applying the “polluter pays” approach is the trans-
port taxation. In 2008, the European Commission draft communi-
cation on the “Strategy for the internalisation of external costs”, was
part of a package of initiatives intended to make transport more
sustainable (COM (2008) 435). The EC recognises that taxation, tolls
(or user charges) and emissions trading are the main economic
instruments for internalising external costs, already applied in
different countries, and tries to lay down their principles at Euro-
pean level in order to prevent any discrimination and fragmentation
14 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
of the market, and to strike the right balance between a Community-
level approach and a more local approach. The internalisation of the
externalities has to set prices that do not lead to overexploitation of
resources, but at the same time do not damage the transport sector.
To achieve that balance, the EC proposes a general principle, for
internalising externalities in transport, the “social marginal cost
charging”, that is, the additional short-term cost created by one
extra person using the infrastructure including the costs to the user
and the external costs. Although the EC communication achieves the
target of promoting common principles and a common method-
ology, it has been considered less effective than it could be for its
non-transposition into law and the limitation to the road transport.
4.3. A definition of sustainable transportation
The externalities concept does not cover all aspects of the notion
of sustainable transportation, which is a more comprehensive
forward-looking concept aiming at the achievement of a better
overall level of welfare for society, including environmental quality
and social justice. Sustainability in transport concerns systems,
policies, and technologies. In particular, sustainable transport
operates fairly and efficiently, promotes equity within and between
successive generations, limits emissions and waste, and encourages
the use of renewable resources. The employ of verbs such as “to
promote” and “to encourage” suggests that the concept is not used
for assessing a current sustainable state of the system, but for
promoting a transition towards a sustainable condition (Pace, 2009).
Many studies and programmes have investigated sustainability
in transport, and there is extensive literature on the argument. In
particular, they deal with the two main transportation parts: the
mode of transport and the infrastructure.
The first covers the vehicle used to move people or goods, in
general cars, buses, trains, aeroplanes, lorries, ships and so on. The
second, the way with which the vehicle is used and includes roads,
railway track, airspace, sea channels, as well as facilities such as
stations, distribution centres, ports and airports. Only when both
parts are sustainable can a transport system can be considered as
sustainable. Therefore sustainability should be a relevant element
in transport infrastructure selection and management, and should
be incorporated in the main EU transport infrastructure pro-
gramme, the Trans-European Transport Network (TEN-T).
At the moment, there is less reference than there could be to this
in the TEN-T application forms and appraisals, which could be seen
as at odds with the internal market and competition. It may be
beneficial to address this lack of reference, in order to reduce the
difficulty of naming the sustainability principles in concrete
outcomes.
4.4. Measuring transport sustainability
For measuring sustainability of transport modes and their
impacts on environment and health several indicators have been
selected, flexible enough to be adapted to technological innovation
and society changes (greenhouse gas emissions, pollutant emis-
sions, noise, congested traffic, car dependence, traffic volume,
collisions, road kill, etc.). In particular, there has been defined an
aggregate indicator, “eco-efficiency”, which is “the amount of
natural resources used (including emissions) in physical terms in
relation to the output of the activity, either in physical terms (e.g.
tkm) or in value terms (e.g. Euros)” (Perrels, Himanen, & Lee-
Gosselin, 2008).
Problems can arise when measuring the sustainability of future
transport infrastructure as any appraisal of new investments in
infrastructure is made over a long time period, with 30 years being
typical for a new stretch of road and in the case of major project, as
much as 50 years. As such, building transport infrastructure is
a time intensive and relatively inflexible process.
Remaining at financial level, it is a common belief that public
transport infrastructure projects involve many risks and uncer-
tainties, partially explained by the long period of time taken in the
design and the construction of project once the decision to proceed
has been made. In a more comprehensive forward-looking
approach, those uncertainties have relevant impacts on the infra-
structure sustainability too. When a new technology able to miti-
gate some impacts becomes available, or new behaviours or
lifestyles take root, or new global, national or local policies are set
up, a transport infrastructure should have the capacity to adapt
itself and provide the necessary support to minimise future nega-
tive transport externalities. Therefore, the introduction of radically
more fuel-efficient propulsion technologies can reduce greenhouse
gas emissions and break away from the overwhelming oil depen-
dency only if infrastructure is ready to provide the necessary
facilities and the society has progressed in social learning. For large
infrastructure projects, the process of adjustment is possible only if
already included in the project alternatives. This indicates the
potential positives in a long-term development vision, in the
pursuit of an effective, efficient and sustainable transport system.
4.5. Sustainable transportation (ST) approach
Many authors define ST as opposed to the paradigm of
conventional transport planning and policy, that is, “Business as
usual” (BaU). One way of understanding the world that BaU in
transportation has led is to consider the magnitude of personal and
freight mobility and the increasing length and dispersion of trips:
Hypermobility (Schiller, Bruun, & Kenworthy, 2010).
If BaU emphasises mobility and quantity (more and faster) then
ST gives priority to accessibility and quality (closer, better). To the
traditional uni-modality (mainly road transport) and absence of
connections between modes, ST supports plurality (multi-
modality) and emphasise interconnections (intermodality). If BaU
accommodates and accepts trends, plans and builds based on
forecasts of likely demand (predict and provide), ST can be seen to
interrupt and reverse harmful trends, and works backwards from
a preferred vision to planning and provision (deliberate and
decide). If the BaU approach is about expanding roads to respond to
travel demand, ST manages transportation or mobility demand. If
BaU ignores many external costs (social and environmental), ST
incorporates full costs (inclusive of external costs) within planning
and provisions. Finally, to the BaU conventional transportation
planning developed often in ‘silos’ disconnected from environ-
mental, social and other planning areas, ST supports integrated
planning combining transportation with other relevant areas.
4.6. A case study on policy: EC transport white papers
The White papers (WP) of the European Commission are
documents containing proposals for EU action in a specific area.
Through a WP, the EC defines the overall strategy for funding
programmes, actions, directives and communications in a specific
sector. After the sustainable development strategy adopted by the
European Council in Gothenburg, June 2001, there was a clear need
for promoting a major change in transport. In that perspective
“European transport policy for 2010: Time to Decide” (2001), the
first Transport White paper, was presented. Composed of about 60
measures, the WP aimed at developing a sustainable European
transport system capable of:
 Shifting the balance between modes of transport;
 Revitalising the railways;
 D.M.Z. Islam et al. / Research in Transportation Economics 41 (2013) 3e16
 Promoting transport by sea and inland waterways; and
 Controlling the growth in air transport.
The mid-term review of the WP in December 2005 brought
significant revitalisation of the objectives for the future of the
transport policy with a less mode-centric approach, aiming to:
 Develop mobility (economic growth implies a growth of
transport);
 Protect (safety agencies in the air, maritime and rail sectors);
 Innovate (technological revolution in transport).
The “White Paper on Transport 2011: Roadmap to a Single
European Transport Area e Towards a Competitive and
Resources-Efficient Transport System” is a major change to
previous iterations. The WP presents the EC vision for the future
and defines a policy agenda for the next decade, as well as pursuing
an efficiency concept and calling for integration and contribution
from all transport stakeholders.
Its common ground is the based on the challenge to break the
transport systems dependence on oil without sacrificing its effi-
ciency and compromising mobility, and is based on the following
strands:
 Improving energy efficiency of vehicles across all modes;
 Developing sustainable fuels;
 Optimising multimodal logistic chain performance;
 Using improved traffic management and information systems.
In what can be considered pure ST style, the WP suggests to
works backwards from 2030 to 2050, and to define new transport
patters, based on the following vision:
 Large volumes of freight are carried to their destination by the
most efficient (combination of) modes;
 Road transport is preferably used for the final miles of the
journey and performed with clean vehicles;
 Information technology provides for simpler and most reliable
transfers;
 Users pay for the full costs of transport in exchange for less
congestion, more information, better service and more safety.
An important question may be the viability of improving
efficiency (by reducing oil dependency and CO2 emissions), in the
face of mounting global competition and demand. Typically, an
increase of efficiency brings with it, an increase in volume and
distances travelled, and hence further transport intensity. One
possible solution is to match efficiency and sustainability, through
initiatives that reduce transport intensity (reducing travel
distance and consumption of fossil fuel, increasing load factors)
(Banister, 2005). According the WP, the most immediate impact is
on the intermediate distances (freight shipments over short and
medium distances (below 300 km) for more than 75% are moved
by road). Whilst the WP strategy appears comprehensive in
sectoral terms, it may be further beneficial to pursue an improved
cross-sectoral approach also. The WP identifies the importance of
technological innovation as a major contributor to make the
European transport system competitive and resource efficient by
2050, however this could turn out to be difficult to evaluate at
this stage.
The strategy appears too sectoral comprehensive, and very little
cross-sectoral and technological innovation is promoted as the
major contributor to make the European transport system
competitive and resource efficient at 2050, which is difficult to
evaluate at this stage.
15
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