Channel Tunnel Seen Winning Mail Bonanza From Airlines

This is an interesting article from Europe. Cargo flights at night are no longer allowed due to "environmental concerns."

Can the US be far behind?

From Bloomberg News: Channel Tunnel Seen Winning Mail Bonanza From Airlines

The Channel Tunnel, devoid of passengers at night since opening in 1994, is seeking an influx of mail trains as flight curbs at European airports crimp cargo flows, opening the market for millions of next-day deliveries.

EuroCarex, which groups French, Belgian and Dutch airports, yesterday ran its first test train into St. Pancras, the London terminus for Eurostar Group Ltd.’s passenger expresses, after an overnight trip from Lyon via Paris’s Charles de Gaulle hub.

Adding nightly routes for parcels and mail through the 30- mile subsea link would boost sales at manager Groupe Eurotunnel SA (GET) as freight flows languish two-thirds below their 1998 peak. Each train can carry 120 metric tons of parcels, equal to seven Boeing Co. 737 freighters. Rail will be competitive in both the next-day delivery “express” market and in three-day deliveries where cost is the chief priority, Brussels-based Carex predicts.

“There’s huge potential,” John Smith, managing director of Eurotunnel’s GB Railfreight cargo unit, said in an interview. “As time rolls on with the green agenda, problems at airports and the capacity that these trains can offer, the economics are going to begin to swing big-style in its favor.”
Air France, UPS

The test, arranged with Eurotunnel, train operator Societe Nationale des Chemins de Fer Français or SNCF and rail networks in the U.K. and France, aims to prove the plan’s viability to end users. Potential customers include Air France-KLM Group (AF), FedEx Corp. (FDX), United Parcel Service Inc. (UPS) and the TNT Express NV business it’s acquiring, SNCF’s Geodis SA logistics arm and Worldwide Flight Services, owned by buyout firm LBO France.

High-speed mail and parcel services through the Channel Tunnel may become possible as an Anglo-French safety committee loosens limits on train types permitted to use the subsea link in order to encourage new passenger entrants. The journey from London to Charles de Gaulle would take just over two hours, Carex says on its website, with Amsterdam’s Schiphol airport accessible in 3 1/2 hours and Frankfurt in about 5 1/2.

Yesterday’s test was performed by one of a handful of specially adapted TGV expresses that normally operate for French state mail service La Poste on SNCF’s Provence-Lyon-Paris route. The 10-car units, which have no seats, are the fastest freight trains in the world, with a top speed of 168 miles per hour, compared with just 100 mph for the equivalent model in the U.K.
New Trains

Alstom SA (ALO), maker of the TGV, and Siemens AG (SIE), which builds the rival ICE, have been consulted on providing 25 new trains capable of 186 mph, the same speed as the Eurostar, featuring a floor with ball-bearing plates and rollers like those used in cargo jets and with a loading and unloading time of 30 minutes. A minimum of eight sets would be needed to commence services.

Older passenger TGVs could also be converted for freight use as they are retired from traffic, Smith said at St Pancras.

Winning permission to run scheduled trains through the tunnel should be straightforward given that Eurostars are themselves modified TGVs, and that the postal units carry no passengers, so that current evacuation rules won’t apply, said Francois Coart, managing director of Carex’s London division.

Mail trains would be competitive over distances of 300 kilometers to 800 kilometers (185 miles-500 miles), Carex says, with trucks and planes winning out either side of that range.

Air France Interest

The plan will appeal most to freight integrators operating aircraft every night between cities such as Paris and London and for which “even 15 minutes means something,” said Olivier Rilhac, Air France Cargo’s delegate to the Carex project.

The carrier’s own model uses hold space on day-time flights within Europe, with shorter trips performed by trucks at a cost with which trains can’t compete, though the business case could move in the direction of rail over the next five years, he said.

“We don’t know what’s going to happen,” Rilhac said. “You have to take into account the fuel price and environmental concerns, and you can’t be very optimistic about night flights. We want to be a client but we can’t lose customers, so we must find a way with EuroCarex to devise a more competitive model.”

Environmental curbs on cargo flights are most evident at Frankfurt, Europe’s third-busiest airport, where a 760 million- euro ($1 billion) fourth runway opened Oct. 21. The strip, which lifted capacity 40 percent to 700,000 flights a year, operated for nine days before a temporary court ban on services between 11 p.m. and 5 a.m. took effect, with a federal court judge saying March 14 that the ruling is likely to be made permanent.

Frankfurt accounts for 25 percent of European air-freight consignments, or 2.3 million metric tons a year. One-third move at night, according to Deutsche Lufthansa AG (LHA), the airport’s No. 1 user and the biggest cargo carrier among passenger airlines.
Road Limits

Elsewhere, London Heathrow airport, Europe’s busiest, last year handled 476,197 flights, or 99.2 percent of its 480,000 limit. The airport also operates under a night-flights ban and won’t be allowed a third runway, the U.K. government has said.

A switch to trains for express-mail deliveries will also be spurred by new speed-limit restrictions for heavy trucks imposed across Europe in 2007, together with crowded roads, high oil prices and the deregulation of freight and high-speed rail networks, which has simplified operations, Carex says.

Paris-based Eurotunnel bought GB Railfreight in 2010 to win clients directly, instead of relying on train operators such as SNCF. The deal also means a company that ran only auto shuttles through the tunnel can provide trains across Europe, helping boost cargo volumes 17 percent to 1.32 million tons last year.

Airport Links

Eurotunnel shares have gained 27 percent this year, buoyed by plans at Eurostar and Deutsche Bahn AG (DBHN) to offer passenger services from the U.K. to Amsterdam, Cologne and Frankfurt which should also speed up the approval process for mail-only trains.

Carex’s plans envisage rail-mail services linking London with Paris CDG, Schiphol, Lyon, Cologne and Liege, Belgium, in the 2015-2017 period. The group aims to extend the network first to Frankfurt and the French cities of Bordeaux, Marseilles and Strasbourg and eventually to locations in Spain and Italy.

While St Pancras has road access to some platforms, the Eurostar terminus is unlikely to be chosen as a permanent postal base, with Carex instead exploring options for a “railport” to the east, where the line crosses London’s M25 orbital motorway.

The emphasis at St. Pancras will remain on “quality and luxury,” according to Nicola Shaw, CEO of High Speed 1, which runs the station and its connection to the Channel Tunnel. While the route as a whole is open to freight trains, cargoes can be “heavy but not dirty,” she said in interview.

“This line is principally for high-speed passenger services,” Shaw said. “After that comes high speed freight, and then things like fruit from Spain and Italy. But we’re not expecting to have coal or aggregates. That doesn’t fit.”