VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030

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VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
FRAUNHOFER-INSTITUT FÜR MATERIALFLUSS UND LOGISTIK, IML
DAIMLER AG
DB MOBILITY LOGISTICS AG

VISIONS OF THE FUTURE: TRANSPORTATION
AND LOGISTICS 2030
VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
VISIONS OF THE FUTURE: TRANSPORTATION
AND LOGISTICS 2030

EXAMINING THE POTENTIAL FOR THE
DEVELOPMENT OF ROAD AND RAIL
TRANSPORTATION TO 2030
February 2014
VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
Responsible
                    Prof. Dr.-Ing. Uwe Clausen, Fraunhofer Institut für Materialfluß und Logistik (IML) &
                    Institut für Transportlogistik (ITL), Technische Universität Dortmund, Director, Joseph-
                    von-Fraunhofer-Straße 2-4, 44227 Dortmund
                    Klaus-Dieter Holloh, Daimler AG, Head of Advanced Engineering, Daimler Trucks, TP/VE
                    – T330, 70546 Stuttgart
                    Michael Kadow, DB Mobility Logistics AG, Vice President Business Excellence DB
                    Schenker, Edmund-Rumpler-Straße 3, 60549 Frankfurt am Main

                    © Fraunhofer IML | Daimler AG | DB Mobility Logistics AG

2   Fraunhofer IML | Daimler AG | DB Mobility Logistics AG      Visions of the Future: Transportation and Logistics 2030
VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
I       Summary

Status quo and purpose
With a focus on road and rail freight, we examine and develop scenarios for the future
based on innovative and sustainable transportation systems in the context of growing
transport volumes. These scenarios require no more than minor changes to
infrastructure.
As well as identifying global trends, influential factors and effects on the efficiency of
transportation, we describe various solutions capable of tackling future challenges and
fulfilling the target requirements set.

Future scenario and efficient transportation
Based on global trends and target requirements, we develop nine future scenarios that
we then combine into a final future scenario. These highlight solutions for ensuring
efficient transportation in future.

   Integrating systems to enable goods in transit to be monitored and managed in
    real time
 Using infrastructure efficiently with intelligent traffic guidance systems
 Safe and efficient transportation with driver assistance systems
 Optimizing processes with intelligent freight cars
 Low noise levels in city logistics with alternative propulsion and new logistics
    concepts
 Using capacity efficiently with modular container design for small transport
    volumes
 Consolidating transport volumes with multimodal integration of different modes of
    transport
 Modern work environments to make the logistics industry more appealing
 More environmentally friendly transportation with alternative vehicle and
    propulsion technologies
The interaction of the nine future scenarios creates the overall picture of efficient
transportation. The increase in digitization, in information flows before and during
transport, and the ongoing development of vehicle and propulsion technologies,
combined with networked assistance systems, are the prerequisites for efficient
transport and competitive industries in Germany in the year 2030.

Efficient transportation 2030: Areas for action
The future scenario we describe aims to achieve the objectives set and minimize
impacts. It shows various areas for action that have been identified for efficient
transportation in the year 2030. We categorize these into the three areas of
innovation: digitization, technology and flexible management. While digitization
enables optimized planning based on real-time data, improving technology leads to
optimized, energy-efficient and safe processes. Flexible management supports
collaboration within and between companies.
These areas for action and their potential synergies give rise to the vision of efficient
transportation in the year 2030. Realizing this scenario for the future will require
intensive and innovative research work in these areas.

         Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030   3
VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
II        Contents

                    I           Summary .................................................................................................... 3
                    II          Contents .................................................................................................... 4
                    1           Introduction ............................................................................................... 6
                    2           Developments influencing road and rail transportation....................... 7
                    1.1         Globalization ............................................................................................... 7
                    1.1.1       Global transport flows and developments .................................................... 7
                    1.1.2       Germany as Europe's logistics center ........................................................... 8
                    1.1.3       Freight traffic growth in Germany ................................................................ 9
                    1.1.4       Summary of the effects of globalization ....................................................... 10
                    1.2         Demographic change ................................................................................... 11
                    1.2.1       German population trend ............................................................................ 11
                    1.2.2       Development of the labor force in the logistics industry ............................... 12
                    1.2.3       Attractiveness of the workplace ................................................................... 12
                    1.2.4       Summary of the effects of demographic change .......................................... 14
                    1.3         Urbanization ................................................................................................ 14
                    1.3.1       Reurbanization ............................................................................................. 14
                    1.3.2       Social development and individualization ..................................................... 15
                    1.3.3       Summary of the effects of urbanization ....................................................... 16
                    1.4         Sustainability ................................................................................................ 16
                    1.4.1       Environmental sustainability ......................................................................... 16
                    1.4.2       Economic sustainability ................................................................................ 17
                    1.4.3       Social sustainability ...................................................................................... 17
                    1.4.4       Summary of the effects of sustainability ....................................................... 17
                    1.5         Resource scarcity .......................................................................................... 18
                    3           Solutions .................................................................................................... 20
                    3.1         Digitization .................................................................................................. 20
                    3.1.1       Internet of Things ........................................................................................ 20
                    3.1.2       Intelligent traffic guidance systems .............................................................. 21
                    3.1.3       Intelligent freight cars .................................................................................. 22
                    3.2         Flexible management ................................................................................... 23
                    3.2.1       Quiet nighttime transport ............................................................................ 23
                    3.2.2       Integrating modes of transport and consolidating transport volumes ........... 23
                    3.2.3       Deceleration ................................................................................................ 24
                    3.2.4       Attractive workplace design ......................................................................... 24
                    3.3         Technology .................................................................................................. 25
                    3.3.1       Modular container construction ................................................................... 25
                    3.3.2       Automatic coupling ..................................................................................... 25
                    3.3.3       Waste heat utilization .................................................................................. 25
                    3.3.4       Autonomous assistance systems .................................................................. 26
                    3.3.5       Autonomous driving in rail transportation .................................................... 27
                    3.3.6       Alternative propulsion technologies ............................................................. 28

4   Fraunhofer IML | Daimler AG | DB Mobility Logistics AG             Visions of the Future: Transportation and Logistics 2030
VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
4     Future scenarios 2030 ...............................................................................31
4.1   Integrating systems to enable goods in transit to be monitored and managed
      in real time...................................................................................................31
4.2   Using infrastructure efficiently with intelligent traffic guidance systems .......32
4.3   Safe and efficient transportation with driver assistance systems ...................33
4.4   Optimizing processes with intelligent freight cars .........................................34
4.5   Low noise levels in city logistics with alternative propulsion and new logistics
      concepts ......................................................................................................35
4.6   Using capacity efficiently with modular container design for small transport
      volumes ....................................................................................................... 36
4.7   Consolidating transport volumes with multimodal integration of different
      modes of transport ......................................................................................37
4.8   Modern work environments to make the logistics industry more appealing..38
4.9   More environmentally friendly transportation with alternative vehicle and
      propulsion technologies ...............................................................................39
5     Efficient transportation 2030 ...................................................................41
6     Areas for action .........................................................................................42
7     Literature ...................................................................................................43

      Fraunhofer IML | Daimler AG | DB Mobility Logistics AG                   Visions of the Future: Transportation and Logistics 2030   5
VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
Introduction                   1
                               Introduction

                               The demand for freight transportation has been rising for many years at both national
                               and global level. Existing transport volumes are already overloading today's
                               infrastructure at difficult-to-expand bottlenecks. At the same time, population shifts are
                               in evidence, indicating a growing number of people living in cities and metropolitan
                               regions, while increasing individualization is another factor that will transform the
                               logistics of tomorrow. These are just some of the trends that will intensify in the
                               coming years, leading us to ask:
                               How can Germany cope with transport volumes up to the year 2030 with its existing
                               infrastructure?
                               To answer this question, the Fraunhofer Institute for Material Flow and Logistics (IML)
                               has produced its "Visions of the Future: Transportation and Logistics 2030" study,
                               initiated by Daimler and DB Schenker. The study highlights impacts and developments
                               associated with the megatrends that have been identified – globalization, demographic
                               change, urbanization, sustainability and resource scarcity – and presents approaches to
                               solving these. It then places these in nine future scenarios that combine the potential
                               synergies of the individual approaches and identify and describe the research needed in
                               the years ahead. The scenarios show ways of meeting the challenges of tomorrow and
                               increasing the efficiency of transportation while protecting the environment and
                               safeguarding the supply of goods.

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VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
2                                                                                                         Developments influencing road
                                                                                                          and rail transportation
Developments influencing road and rail transportation

Focusing on road and rail transportation in Germany, this chapter presents the impacts
and developments that have been identified and divides them into the five megatrends:
globalization, demographic change, urbanization, sustainability and resource scarcity.
Alongside recent studies and publications, it draws upon expert industry knowledge
taken from interviews and discussions. At the end of each section, it summarizes the
key trends as a basis for developing solutions in chapter 3.

2.1       Globalization
Globalization means the international division of labor and industry and the opening up
of new markets. The globalization of the transportation industry is a consequence of
this wider phenomenon. The process has been ongoing for many years and has already
integrated most industries on a global scale. Many companies therefore structure
themselves internationally and pursue a global strategy. In 2010, most German
corporations were already generating a considerable share of their revenues in other
countries. At Siemens, for example, such revenues represented 83.7% of the total, at
Daimler 77.2% and at Deutsche Post 69.2%.1 Companies have therefore been
presented with the mission of prevailing amid foreign competition and facing
international competitive pressure. The term "glocalization" describes the increasing
penetration and influence that global processes are exerting on regional conditions,
customs and habits. Glocalization runs parallel to globalization and represents its
effects at regional level.2
Rising production costs in countries that previously served as attractive outsourcing
destinations are increasing the importance of nearshoring, i.e. partial provision of
services from a less distant location. From a Western European perspective, for
example, this means moving production locations to Eastern Europe, while from an
American perspective it means a shifting production to Mexico or Brazil. There is also a
trend to move production from locations near to the raw materials to places that are
closer to sales markets.3

2.1.1     Global transport flows and developments
The volume of world trade and the global population are constantly growing, and, with
them, the demand for transportation. This is true for both passenger transportation,
which will increase particularly strongly in developing and emerging markets, and
freight transportation, where the growth forecasts are even higher.4 This trend will not
be without consequences in Germany. Often it is not domestic demand that this
responsible for the growth in transport volumes, but the global economy.5

1
    Holtbrügge 2010
2
    Thomi 2001, p. 203
3
    ten Hompel 2009, p. 28
4
    DVWG 2009
5
    DVWG 2009

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VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
Developments influencing road       One reason that goods exports are growing faster than the economy as a whole is the
and rail transportation             increasing cross-border trade in intermediate goods. Lower costs of trading are making
                                    it increasingly attractive to split value chains and create "multi-layered, regional and
                                    international production processes (fragmentation)."

                                    2.1.2      Germany as Europe's logistics center
                                    Germany is one of the world's most important logistics centers. This is thanks both to
                                    its location at the heart of Europe and its well-developed infrastructure. Figure 1 shows
                                    the geographical locations of Europe's largest logistics regions and illustrates their
                                    importance.

                                    Figure 1: European logistics regions6

                                    The illustration clearly shows that Germany is an important part of the red zone and
                                    also lies in close proximity to the surrounding growth markets. At around 223 billion
                                    euros, the revenues of Germany's logistics sector are the highest in Europe, ahead of
                                    France at 131 billion euros and the UK at 93 billion euros (2011 figures). The logistics
                                    sector is one of Germany's most important job creators, employing some 2.82 million
                                    people.7
                                    Several logistics clusters have emerged within Germany due to their geographical
                                    locations and the need for companies to network with each other in order to
                                    strengthen their position in the global market. In the Rhine-Main/southern Hesse
                                    logistics region, for example, Frankfurt Airport plays a key role both for the distribution
                                    of high-value (replacement) parts and the supply of the domestic market.8

                                    6
                                        LaSalle 2013, p. 4
                                    7
                                        LaSalle 2013, p. 5
                                    8
                                        HMWVL 2013

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VISIONS OF THE FUTURE: TRANSPORTATION AND LOGISTICS 2030
A large number of companies in this sector have therefore established themselves here,                                     Developments influencing road
enabling the region to grow as a whole. Another example is the clustering of cities in                                     and rail transportation

the Ruhr area into a single logistics region. Increasing urbanization, the growth of the
logistics industry and the need for regional and interregional networks are causing the
various clusters to grow ever more tightly together. An example of this is the
agglomeration of the Ruhr, Lower Rhine and Cologne/Bonn regions.

2.1.3               Freight traffic growth in Germany
National road and rail freight transportation in Germany have both recorded strong
growth rates since the early 1990s. In addition, Germany's central location in Europe
gives it great importance as a transit country for freight transportation. Transit traffic
across all modes of transport is expected to increase by some 25% in the period from
2012 to 2030.9 Transit by road will increase faster than by rail. Figure 2 shows this
development in freight transport for Germany.

                   700

                   600

                   500
     billion tkm

                   400

                   300

                   200

                   100

                    0
                     1995         2000        2005        2010         2020          2030         2040         2050

                                   Road (inc. import/export)          Rail (inc. import/export)
                                   Road transit                       Rail transit

Figure 2: Forecast of volume sold in freight transportation – Germany up to the year 205010

9
     ProgTrans 2012, p. 94
10
     ProgTrans 2007, p. 118

                     Fraunhofer IML | Daimler AG | DB Mobility Logistics AG          Visions of the Future: Transportation and Logistics 2030        9
Developments influencing road       It is also evident that there will be considerable regional differences within Germany in
and rail transportation             road transport growth. Growth will be highest on the Hamburg - Ruhr region -
                                    Stuttgart - Munich axes and around Berlin.11, 12 The continual increase in freight
                                    transportation on the roads is also leading to a shortage of parking places for trucks on
                                    German highways. The states most affected are Baden-Württemberg, Bavaria, Hesse,
                                    Lower Saxony, North Rhine-Westphalia and Rhineland-Palatinate. The consequences of
                                    this shortage of parking space are illegal stationing of vehicles along entrances and
                                    exits at rest areas and chaotic parking. This often causes dangerous situations by
                                    reducing breaking distances and obstructing visibility. These hazards lead to accidents
                                    and endanger traffic.
                                    There will be 55% growth in rail freight transport from 2011 to 2020. Increasing traffic
                                    will be seen especially on the north - south axes from Hamburg - Hanover and
                                    Karlsruhe - Basel, although, as with road transport, a decrease in infrastructure
                                    utilization can be expected in areas where the economy is weaker.
                                    Another factor driving the growth in freight is hinterland traffic from seaports. For
                                    Germany, the North Range ports (Antwerp, Rotterdam, Bremen/Bremerhaven and
                                    Hamburg) play an important role here. The Port of Hamburg serves as a logistics hub
                                    for Southern and Eastern Europe13, while the ports at the western end of the North
                                    Range "the ARA ports"14 are important for seaport hinterland traffic along the Rhine.
                                    Transport flows in Germany are mismatched in places. This is generally due to an
                                    imbalance in the consumption and production of goods. Some regions such as Berlin
                                    receive a large number of incoming goods but generate a considerably smaller amount
                                    of outgoing freight due to the low level of industrial production. In 2010, for example,
                                    three times as many goods were transported into Berlin by truck than were transported
                                    out.15 Similarly mismatched transport flows are observable for areas dominated by
                                    logistics and services with low industrial production.

                                    2.1.4     Summary of the effects of globalization
                                    In summary, traffic will increase in the years ahead, and create major challenges,
                                    especially for road transportation, but also for rail.
                                    The share of international traffic, particularly transit traffic, is expected to increase
                                    further in the coming years. The most important factors here are the general growth in
                                    transport levels, especially in freight, and the close correlation with economic growth.
                                    However, the importance of cross-border cooperation between logistics service
                                    providers is also reinforcing this trend. Although road will remain the most important
                                    mode of freight transportation in the future, there are also trends that will support rail
                                    transportation and cause the share of cross-border international traffic to increase. The
                                    challenges resulting from globalization and the growth of freight transportation can be
                                    summarized as follows:

                                    11
                                         ProgTrans 2007, p. 118
                                    12
                                         BMVBS 2011, p. 6
                                    13
                                         HHLA 2013, p. 3
                                    14
                                         Antwerp Rotterdam and Amsterdam
                                    15
                                         BGL 2010

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Developments influencing road
       Congestion of infrastructure reducing quality of transportation                                     and rail transportation

       Merging of individual logistics regions

       Transportation corridors with mismatched transport flows

2.2         Demographic change
Demographic change means the change in age distribution. It results from the ratio of
birth and death rates and shows population trends. Demographic change is an
indicator of how a country's labor force is developing.

2.2.1       German population trend
A declining and aging population is being seen in Germany. This is a result of rising life
expectancy combined with a falling birthrate, which are not currently being
compensated by migration.16 Figure 3 below shows a population pyramid illustrating
the expected demographic change. It compares the years 2060 and 2008, divided into
men and women.

Figure 3: Population pyramids for 2008 and 2060 in comparison17

The illustration clearly shows the increase in life expectancy and the aging of the
population caused by a declining birthrate.

16
     Destatis 2009, pp. 12 et seq.
17
     Destatis 2009, p. 15

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Developments influencing road       2.2.2      Development of the labor force in the logistics industry
and rail transportation
                                    Demographic change is having an enormous impact on the labor market and the
                                    supply of qualified labor in the industrialized countries, especially in Germany. In the
                                    years from 2010 to 2025 alone, the labor force is expected to reduce by around 6.5
                                    million to 38.1 million economically active individuals.18 By 2020, more than 50% of
                                    the population will be aged over 50, accounting for over 60% of total income.19 There
                                    is therefore an acute shortage of skilled labor, which will increase further in the years
                                    ahead. Occupational groups in the areas of engineering and the natural sciences,
                                    technology, IT and health will be particularly affected.20 By 2020, the shortfall of
                                    engineers will reach 200,000. The average age of an engineer is already 50, meaning
                                    that one in two will retire by 2020.21
                                    The logistics sector remains an important part of the job market in Germany,
                                    employing more than 2.6 million people and currently remaining vibrant.22 The sector is
                                    short of qualified skilled employees, for example in operational areas such as truck
                                    driving. One of the reasons for this is the often unattractive design of workplaces in
                                    operational logistics, especially in the areas of production and warehousing.23 Logistics
                                    will record high growth rates in future and also create jobs in other industries thanks to
                                    its role across the whole economy. The importance of logistics in Germany is reflected
                                    in the World Bank's Logistics Performance Index. Germany has returned to the top spot
                                    since 2013,24 having previously fallen to fourth place.25 In order to avoid endangering
                                    growth, it is increasingly important to train skilled employees, improve the
                                    attractiveness of careers in logistics and win foreign labor for the German market.26
                                    A survey in several companies, which looked at the obstacles to improving the supply
                                    of skilled labor in the logistics industry, found that 27.6% of respondents did not view
                                    the shortage of skilled labor as the responsibility of the industry itself, or did not see
                                    any obstacles from this corner. This means that many businesses are not providing a
                                    vigorous or proactive response. 19% of those questioned believed that they had little
                                    ability to exert influence here as they considered the issue to be dominated by political
                                    corporate interests. A further 27.6% of respondents were not in a position to provide
                                    information on the shortage of skilled labor, while the remaining 25.8% described high
                                    costs, insufficient technical and scientific progress or lack of market relevance as
                                    obstacles. 27

                                    2.2.3      Attractiveness of the workplace
                                    Finding qualified specialists and retaining them in the company for the long term is a
                                    difficult challenge for businesses. Greater competitive pressure is raising the demands
                                    and pressures on staff too. Reinforced by the development of the internet and mobile

                                    18
                                         Brücker 2010
                                    19
                                         McKinsey 2008, p. 8
                                    20
                                         VDI 2012, p. 22
                                    21
                                         VDI 2012, p. 22
                                    22
                                         BMVBS 2008, p. 10
                                    23
                                         TU Berlin 2008, p. 37
                                    24
                                         World Bank 2014
                                    25
                                         World Bank 2012
                                    26
                                         McKinsey 2008, p. 12
                                    27
                                         TU Berlin 2008, p. 35

        12          Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030
end devices (smartphones, tablet PCs, etc.), many companies now demand that their                                  Developments influencing road
employees are reachable outside of their normal working hours. This often makes it                                 and rail transportation

impossible to fully switch off and overcome occupational stress. Employees are
experiencing physical symptoms of illness ever more frequently. Figure 4 illustrates the
continual increase in sick days caused by burnout between 2004 and 2012.

     120                                                                                                 4.19

     100
                                                                                                      3.26
                                                                                           3.22
     80
                                                                                                             3.8
                                                                             3.2         3.3
     60                                                        2.18       2.16                 2.17

     40                                           2.2        2.3                   2.4

                                     1.21      1.24                1.24
                            1.13  1.16                1.17
     20                  1.10 1.7       1.11
           1.4 1.6 1.3
      0
             2004          2005      2006        2007         2008          2009          2010          2011

                                     Total            Women               Men

Figure 4: number of days of incapacity to work per 1,000 members (excluding retired)28

The requirements for workplaces have changed considerably in recent years and often
demand a balance between professional and private life. Enabling such a balance and
offering employees an attractive place to work will be an important task for companies
in future.
In addition, logistics generally suffers from a rather poor image in society at large.
Statements such as, "The boom industry suffers from a negative image: packing,
transportation, warehousing: the usual boring attributes that mean logistics is rarely a
prized job," or, "The industry is not exactly considered sexy. It lacks glamor," illustrate
some of the many preconceptions.29 The image problem does not so much relate to a
possible shortage of skilled labor in senior and executive positions,30 but rather the
industry's general working environments, for example the warehouse or truck.31 It was
not least for this reason that the pro-trucking group "Initiative ProLkw" began the "Mit
Bock auf’n Bock" (up for a truck) campaign in 2011.32 Companies have also launched
marketing strategies to make the public more aware of the logistics industry's
attractiveness as an employer. Such initiatives and the general improvement of the
industry's image aim to counter the shortage of labor.

28
     BKK 2013, p. 39
29
     BVL 2010, p. 9
30
     Verkehrsrundschau 2012
31
     Verkehrsrundschau 2013
32
     Süderelbe 2012

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Developments influencing road       2.2.4      Summary of the effects of demographic change
and rail transportation
                                    Demographic change and the appeal of the workplace are already serious challenges
                                    for the logistics industry. The workplace itself is increasingly becoming a competitive
                                    factor. There are currently a lack of options for training specialist staff, and the industry
                                    suffers from an unattractive public image. The challenges can be summarized as
                                    follows:

                                           Skills shortage on the labor market

                                           Image problem of the logistics industry

                                           Increasing age of employees working in logistics

                                    2.3        Urbanization
                                    Urbanization means the spread of urban lifestyles to surrounding areas and large-scale
                                    migration from the countryside to the cities, causing a major increase in city
                                    populations. Reurbanization is a return to the cities following a period of depopulation.
                                    It leads to higher populations and employment in downtown and inner city areas. This
                                    trend is currently observable in Germany and around the world, and will lead to
                                    changing social demands in future.

                                    2.3.1      Reurbanization
                                    Rural areas and suburban towns are often no longer people's first choice of place to
                                    live. In future, the process of urbanization will lead to a renewed importance of cities33
                                    and cause the population in many urban areas to increase, despite the fact that
                                    Germany's overall population is declining. One reason for this is the flight from the
                                    countryside. Ever more people are leaving rural regions and returning to major cities. 34
                                    Figure 5 below illustrates this change from a rural to an urban population in relation to
                                    the development of total world population.

                                    33
                                         Brake 2012, pp. 12,14 et seq.
                                    34
                                         Globe Scan 2011

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10                                                                                                                                                       Developments influencing road
                                                                                                                                                                                      and rail transportation
                              9
                              8
     Population (billions)

                              7
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                              4
                              3
                              2
                              1
                              0
                                  1950
                                         1955
                                                1960
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                                                                                                                                                          2035
                                                                                                                                                                 2040
                                                                                                                                                                        2045
                                                                                                                                                                               2050
                                         Urban population                                 Rural population                             World population

Figure 5: Urban and rural populations compared to world population35, 36

Some 50% of the world's population today lives in cities. By as early as 2030, this share
will have risen to 60% or some five billion people. In Germany, for example, the major
cities such as Munich, Hamburg and Berlin, and the areas immediately surrounding
them, are facing high growth rates.37 A side-effect of reurbanization is the growth in
traffic levels in the city's core. In future, the fastest growing cities will be confronted
with an increase in traffic jams, environmental damage and capacity choke points.38
The results will be dense land use, bottlenecks in supply and waste disposal, high
resource consumption, and air and noise pollution.39 Together with societal trends such
as increasing and more individualized patterns of consumption, these developments are
already placing demands on infrastructure that will become ever more complex in the
years ahead. In future, the challenge will be both to manage the increasing traffic in
cities and shape it in an environmentally friendly way.

2.3.2                         Social development and individualization
The diversity of different lifestyles in global society requires a variety of development
options. Maintaining and further developing these individualized lifestyles is a difficult
challenge for the future. Consumer behavior and the equally rapid changes and
individualization of customer demands increasingly require customized solutions. For
example, ever more customers expect next-day delivery when ordering goods, resulting
in smaller consignments and increasing traffic levels. Growing online sales of clothing
are often associated with return consignments for wrong sizes or colors. Consumers
are increasingly turning to internet purchases, presenting new challenges for logistics.
The consequences of this greater individualism are already becoming evident as
traditional economic models show signs of breaking down. In future, the logistics

35
     Bpb 2010
36
     United Nations 2012
37
     Ifmo 2005
38
     Globe Scan 2011
39
     EffizienzCluster 2010, p. 7

                                  Fraunhofer IML | Daimler AG | DB Mobility Logistics AG                                        Visions of the Future: Transportation and Logistics 2030                       15
Developments influencing road       industry's main task will be to create the conditions for maintaining this individuality
and rail transportation             and to offer more customized delivery concepts and logistics services.

                                    2.3.3      Summary of the effects of urbanization

                                    Urbanization and increasing individualization are presenting logistics with important
                                    questions. In the context of the call for greater sustainability, systems should be
                                    developed that are resource-efficient, economic and adapted to the individual. Central
                                    elements of the strategy for sustainable city logistics are innovative mobility concepts,
                                    dynamic coordination of different modes of transport within small areas, more
                                    productive use of existing infrastructure and more efficient networking of urban areas,
                                    especially in supply and waste disposal.40 The city logistics of the future therefore faces
                                    the following challenges:

                                           Increase in transport volumes in the cities due to urbanization

                                           Reduction in space for traffic

                                           Individualization requiring customized solutions

                                    2.4        Sustainability
                                    A central issue in today's world is that of sustainability. Companies, the environment
                                    and society should develop in a way that meets current needs without endangering
                                    future development. The three pillars of sustainability are the environment, the
                                    economy and social factors.

                                    2.4.1      Environmental sustainability
                                    Environmental aspects are of great importance for the logistics industry. Logistics, and
                                    especially the transportation sector, account for a considerable 18% share of global
                                    CO2 emissions.41 Experts predict that, in future, attention to carbon emissions in the
                                    design of transportation chains will represent a decisive factor in competition as the
                                    demand for "green supply chains" will increase further. The costs of freight and
                                    passenger transportation will increase as a result of both higher personnel and energy
                                    costs and greater consideration of environmental impacts, pushing noise and air
                                    pollution and CO2 emissions to the fore. Companies will become more open with
                                    regard to environmental aspects and reduce their carbon emissions.42
                                    In order to be a successful market player over the long term, it is important continually
                                    to develop these approaches further and implement improvements. From today's
                                    perspective, investments in research and development, modernization of vehicle fleets
                                    and training of employees in logistics companies will become increasingly important.43

                                    40
                                         EffizienzCluster 2010, p. 7
                                    41
                                         ten Hompel 2009, pp. 10 et seq.
                                    42
                                         TU Darmstadt 2008
                                    43
                                         Deutsche Post 2009, pp. 53 et seq.

        16          Fraunhofer IML | Daimler AG | DB Mobility Logistics AG    Visions of the Future: Transportation and Logistics 2030
2.4.2      Economic sustainability                                                                         Developments influencing road
                                                                                                           and rail transportation
Soundly run companies are the economic pillar of sustainability. Entrepreneurial
activities should provide for a company's stable financial performance and continued
existence. Political guidelines relating to employment and the prosperity and
competitiveness of businesses can serve this purpose. Competition generally drives
quality and efficiency.
An efficient strategy enables economic sustainability by allocating resources in
accordance with the basic economic principle of profit maximization.44 However,
companies do not always exploit this approach to its full extent today as greater
capacity utilization normally conflicts with greater flexibility and customer satisfaction.
Businesses aim to find an optimum balance between these aspects in competition with
other companies. However, they can further optimize resource deployment with the
help of sustainable technologies.45 High levels of quality and efficiency are decisive here
in achieving long-lasting customer loyalty. Competition between different companies
produces greater incentives to offer the customer the best possible product at an
economic price.
Companies' long-term survival can also be the outcome of cooperation in logistics
management, which can create synergy effects and involves specialization among
collaborating companies.46

2.4.3      Social sustainability
The third pillar of sustainability comprises social factors, i.e. corporate social
responsibility. It includes a company's responsibility to its employees and its wider duty
to society.47 The design of the workplace plays an important role here. The more
satisfied employees are with their place of work, the more productive they become.
Companies should therefore aim to promote the human capital of trained staff, which
represents a major competitive factor, and retain these employees in the company.
Rising energy costs, resource scarcity and development costs are making individual
mobility more expensive. From a social perspective, however, this individual mobility
must remain affordable for employees. Increasing environmental awareness is leading
to a growing demand for "green logistics" throughout society. Companies that offer
green logistics in freight or public transportation can improve their corporate image
and showcase their social responsibility. This can give them a market advantage and
improve their revenues. Social sustainability is therefore become increasingly important
against the backdrop of demographic change, the shortage of skilled labor and
growing environmental problems.

2.4.4      Summary of the effects of sustainability
Sustainability is already an important topic in public life and its significance is
continually increasing. The logistics industry, and especially transportation providers,
are key players in this area. Transportation must increasingly be designed with

44
     Gabler 2010
45
     Baldauf 2010, p. 29
46
     Baldauf 2010, p. 32
47
     Baldauf 2010, p. 28

            Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030       17
Developments influencing road       environmental aspects in mind, without neglecting the economic factors facing
and rail transportation             businesses. In terms of its social role, transportation should enable all individuals to
                                    participate in public life. This means working, not least at political level, to ensure the
                                    safety of transport and good working conditions in the transportation business. 48 The
                                    challenges can be summarized as follows:

                                           Working conditions as a competitive factor in career choices

                                           Growing demand for "green logistics" throughout society

                                           Competition as a driver of quality and efficiency

                                    2.5         Resource scarcity
                                    There is a limit to what a balanced ecosystem can sustain. Given the increasing scarcity
                                    of certain commodities such as oil, a modern way of thinking is needed in order to
                                    design sustainable and efficient processes and preserve the balance. The recycling
                                    economy is an important aspect of this. The recycling rate of many commodities must
                                    be considerably improved to reduce the demand for further extraction. This can both
                                    reduce environmental impact and present a decisive competitive advantage for the
                                    companies involved.49
                                    Germany has decided to implement an energy transition with the objective of
                                    environmental sustainability. In addition to switching to sustainable energy sources,
                                    Europe has introduced CO2 emissions rights trading in selected industries. From an
                                    economic perspective, trading in emissions rights represents an efficient instrument for
                                    achieving environmental targets.50 By limiting a country's total CO2 emissions,
                                    companies are to be forced in future to implement measures for reducing their own
                                    contributions. Trading enables the lowest-cost opportunities to be realized here.
                                    In addition, renewable energies will become an increasingly important component of
                                    the energy mix. Political motivation is currently growing, especially in Germany, to
                                    make use of regenerative energy sources. A multitude of research projects are being
                                    carried out to make alternative energies practical and affordable. Various studies
                                    forecast that renewables will reach a 31% share of German energy production by
                                    203551 and an almost 60% share by 205052. This will be accompanied by falling costs
                                    of investment in, and use of, alternative energies, making renewable energy sources
                                    cheaper in the long run than fossil fuels.53
                                    The choice of fuel for the vehicles used is a crucial aspect of environmental
                                    sustainability in the logistics industry. Road freight transport has an important role to
                                    play in the context of the growing scarcity of oil reserves. There are now more than

                                    48
                                         BMVBS 2008, p. 16
                                    49
                                         EffizienzCluster 2010, p. 7
                                    50
                                         ISI 2009
                                    51
                                         MWV 2013, p. 9
                                    52
                                         BMWi 2013, p. 7
                                    53
                                         UBA 2012, pp. 19 et seq.

        18          Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030
700 million automobiles on the road around the world, and experts expect this number                       Developments influencing road
to double by 2030.54 The majority of vehicles are currently driven by gasoline or diesel                   and rail transportation

engines, however the price of oil is expected to increase.55 These prognoses will require
logistics providers to use alternative propulsion in future. The German government set
itself the target in 2004 of increasing the use of alternative fuels on the roads.56 This
tendency towards alternatives is reflected in the increase in global production of
biofuels.57 Electrical propulsion provides another option, especially in city logistics and
by the year 2050 some 50% of the cars sold in Germany are expected to be hybrid or
electric vehicles.58 This trend will extend to city center delivery concepts and call upon
the use of electric commercial vehicles.
In some cases, producing alternative fuels requires mineral commodities only available
on the world market from a few countries. Moreover, the global commodities sector is
characterized by increasing market concentration on the supply side. A small number
of providers dominate the market and are forming commodity oligopolies that
determine prices. A study in 2011 already described the supply situation in Germany as
critical for 13 mineral commodities.59 Access to many of these commodities is
absolutely essential for the development of future technologies.
The following points summarize the challenges for logistics in relation to resource
scarcity:

       Energy transition intends greater use of alternative energy sources

       Increasing scarcity of fossil fuels is leading to rising energy costs

       Commodity oligopolies are creating scarcity on the world market

54
     Eberl 2011, p. 125
55
     ADAC 2013 b
56
     Bundesregierung 2004, p. 137
57
     BP 2013, p. 39
58
     Bundesregierung 2009, p. 13
59
     na Presseportal 2011

            Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030       19
Solutions                        3
                                 Solutions

                                 This chapter identifies individual solutions based on the challenges described. These
                                 approaches can be divided into three areas: digitization, flexible management and
                                 technology (see Figure 6). While digitization enables optimized planning based on real-
                                 time data, improving technology leads to optimized, energy-efficient and safe
                                 processes. Flexible management supports collaboration within and between
                                 companies.

                                 Figure 6: Areas of innovation and solutions

                                 3.1       Digitization
                                 Interconnectedness and digitization are increasingly influencing all areas of life, driven
                                 by processes of globalization and mediatization. Cell phones, for example, have long
                                 been used for more than just phone calls, serving as a platform to surf the internet and
                                 enable users to remain always online. For the transportation sector, too, increasing
                                 interconnectedness and digitization offers new opportunities and solutions to tackle
                                 growing traffic flows. The Internet of Things, intelligent traffic guidance systems on the
                                 roads and intelligent freight cars on the rails represent a new approach to
                                 transportation.

                                 3.1.1     Internet of Things
                                 The processes of globalization and urbanization in Germany and Europe are increasing
                                 the volume of freight traffic and already creating infrastructure bottlenecks. At the
                                 same time, calls for greater sustainability are leading to a rethink in transportation
                                 planning. The Internet of Things, or cyber-physical systems, enable more efficient use
                                 of resources and offer an opportunity to address these issues.
                                 The Internet of Things is a vision in which all types of physical objects are integrated
                                 into a universal digital network. Different products can identify and control themselves
                                 using radio-frequency identification (RFID) – a communication-capable localization
                                 technology. This involves implanting miniature tags into objects in order to store data.
                                 In combination with a reader, these devices are then able to communicate via radio

            20   Fraunhofer IML | Daimler AG | DB Mobility Logistics AG        Visions of the Future: Transportation and Logistics 2030
waves.60 The tags are equipped with microprocessors and can detect their                                    Solutions
surroundings, process information and interact with other devices. Some of the
envisaged uses for this technology are in vehicles, electricity meters and consumer
goods.61 Trucks, for example, could automatically notify freight forwarding companies
of their location and whether any delays are likely. 62
Vehicle-to-vehicle communication is a further option for using the Internet of Things in
future. By independently exchanging information on their status and surroundings,
vehicles themselves have the potential to improve the safety and efficiency of
transportation. However, there are a number of problems involved in implementing the
Internet of Things in its various forms. The potential dangers and scope for misuse of
the data collected are one possible obstacle and will require solutions to be developed
to ensure comprehensive data protection. Despite these issues, the Internet of Things
will offer diverse solutions to some of the problems of modern industrialized societies.63

3.1.2      Intelligent traffic guidance systems
The constant rise in traffic levels and increasing urbanization in Germany and Europe is
pushing infrastructure beyond its limits. The result: long delays caused by traffic jams,
inefficient use of working time and higher fuel consumption. Traffic control, data
collection and forecasts based on intelligent traffic management systems offer potential
here.
The main challenge is to develop navigation solutions which, unlike existing systems
based on navigation for private cars, offer individually customized navigation for
diverse industries and users. Traffic control options to make better use of capacity
could involve separating freight traffic from private transport or offering route
recommendations adapted to the relevant situation. In such a scenario, these route
calculations should not only include major highways but also more minor roads. Static
features such as environmental zones and preferred routes for trucks, as well as
dynamic information like congestion reports and road closures should be factored in.
On many traffic arteries, jams can be avoided not only by taking an alternative route,
but also by travelling at a different time of day. Route planning should in future be
harmonized with the daily rhythm of traffic flows and take advantage of periods when
traffic levels are lower. This would make traffic volumes more homogeneous
throughout the day, reducing or avoiding congestion. It would also enable arrival time
to be predicted more precisely and thus provide more efficient route scheduling.
Equipping sections of the highway with telematics systems would bring an additional
benefit in the medium term: better use of parking space. Information on parking
availability could be displayed directly on navigational devices in the vehicle rather than
on highway signs.64
Developments and ideas in rail freight parallel those seen in road freight transportation
and extend to a common European Rail Traffic Management System. In rail freight, the

60
     Schoblick 2005, p. 15
61
     Horvath 2012
62
     Malaka 2009, p. 43
63
     Horvath 2012
64
     BMVBS 2011, pp. 14 et seq.

             Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030   21
Solutions                        European Train Control System (ETCS) is a component of this rail traffic management
                                 system, which is intended to replace the many different train protection and control
                                 systems in use across the EU. The main objective is to simplify European cross-border
                                 traffic, making it faster and more cost-efficient. In order to enable safe and reliable rail
                                 transportation, ETCS takes over various functions, some of which are carried out by
                                 trains and some by route infrastructure. These include monitoring the train's maximum
                                 speed and identifying its direction of travel and suitability for the respective route.
                                 ETCS is being implemented in different "ETCS levels," so that the most suitable variant
                                 can be selected depending on the different route requirements.65 ETCS Level 3 is the
                                 highest level. As with ETCS Level 2, trains determine their positions themselves with the
                                 help of sensors ("Eurobalises"). This means, for example, that permission to proceed
                                 can be transmitted to trains automatically. In addition, trains are able to monitor their
                                 own integrity and report their position to the signaling center, which can identify what
                                 section of the route the train has successfully cleared. The advantage of this technology
                                 is that the following train can then be granted movement authority up to this point.
                                 Line-clear authorization can be provided continuously and the route is no longer
                                 divided up into fixed signaling blocks.66 In Germany, no routes have yet been equipped
                                 with ETCS, however implementation is planned as rapidly as possible on the German
                                 section of Corridor A (Rotterdam-Genoa).67

                                 3.1.3       Intelligent freight cars
                                 Rising traffic volumes call for better use of the resources offered by rail freight
                                 transportation. Optimizing processes, minimizing unproductive elements such as empty
                                 runs and reducing energy costs are important steps here. Intelligent freight cars enable
                                 better use of existing capacity.
                                 The cars are equipped with special telematics systems, which collect, save and process
                                 data and communicate with each other within telecommunications networks. The data
                                 must be continuous, comprehensive and reliable. Generating and transmitting it cost-
                                 effectively is vital.68 Complex processes at dispatching and receiving offices, as well as
                                 at changeover points for wagonload freight – for example, car sequence data collection
                                 – also show major potential for optimization. RFID could automate wagon departure
                                 checks, for instance. As these systems develop, RFID will be connected with sensor
                                 technology in order to automatically identify technical data relating to the freight car –
                                 e.g. closed doors and vents and the status of the brakes. Readers fixed in the track bed
                                 are able to capture data from the RFID chips on the bottom of freight cars passing at
                                 speeds of up to 140 km/h.69
                                 Freight services do not currently have an electricity supply running the full length of the
                                 train. This rules out the use of sensors in each freight car and satellite tracking of
                                 individual cars. However, sensors with low power requirements could be installed on
                                 each car if suitable power management is provided. Alongside other functions, sensors
                                 can monitor loads and thus offer added value and security for transportation

                                 65
                                      DB 2013
                                 66
                                      SBB 2013
                                 67
                                      Heinrici 2013
                                 68
                                      Stopka 2009, pp. 81 et seq.
                                 69
                                      SBB 2009

            22   Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030
companies, who face the additional challenge of theft protection. In this area too,                        Solutions
location devices and sensors can help to make rail freight transportation more
attractive. Key functions include detecting the opening of doors or unloading of
containers, as well as temperature monitoring and light sensors.

3.2        Flexible management
Flexible management enables capacity utilization and processes to be improved
through internal and cross-company cooperation and consolidation of transport
volumes. It also includes realizing organizational solutions to improve logistics systems.

3.2.1      Quiet nighttime transport
Moving transport to the nighttime is an attractive option for reducing traffic during the
day, especially when it comes to supplying cities. Ever more people live in or close to
cities, meaning that the population of metropolitan areas is continually growing.
Systems need to be developed to ensure comprehensive supply without disrupting
everyday life. One option is to move delivery processes to the nighttime, however this is
restricted by law. Current technology often creates too much noise for use in nighttime
delivery.
There are various options for reducing noise emissions that address the individual
delivery processes. The noise of delivery vehicles, which is largely generated by the
engine, can be reduced using electric or hybrid vehicles, for example. The noise created
when vehicles are stationary and unloading (e.g. movement of lifting ramps) can be
countered by structural measures such as erecting noise barriers or by ongoing
development of quieter loading technology. Behavioral aspects should also be
considered. Staff need to use technologies as quietly as possible and not create more
noise than the devices themselves (e.g. through communication, movement and other
behavior).
Quieter technologies and logistics systems are needed for deliveries at night.

3.2.2      Integrating modes of transport and consolidating transport volumes
Globalization is presenting companies with the challenge of securing their market
position and expanding at international level. This means adapting corporate strategy
accordingly and making efficient use of the available resources. Probably the most
important change in this context is specialization on the most profitable product areas,
which will mean reducing the breadth and depth of operations. To remain able to offer
individualized products and respond as well as possible to customer requirements,
collaboration and integration into value chains will be vitally important to companies in
the future. This will give rise to new ideas of competition.70 One option is to
consolidate transport volumes and thereby reduce traffic levels. Different providers may
cooperate to transport cargo over long distances, consolidating supply flows.
Cooperation in consolidating transport volumes and integrating the different modes of
transport will make it possible to expand the number of services offered and reduce

70
     Deutsche Post 2009

            Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030   23
Solutions                        costs through synergy effects, to transport goods in a more environmentally friendly
                                 way and to make better use of capacity. The role of companies in some areas will be
                                 completely transformed by 2020. Logistics service providers will ultimately only be able
                                 to survive in the market if they intensify cooperation with competitors, manufacturers
                                 and suppliers. They will also form regional clusters responsible for many links in the
                                 value chain. Unlike today, logistics processes will not adapt to production processes.
                                 Instead, it will be the logistics processes that form the basis for planning and managing
                                 production.71
                                 A further option for reducing traffic levels is the use of attractive combined
                                 transportation (CT) networks, i.e. shifting transport flows and finding a sustainable,
                                 balanced distribution of transportation between the different modes. Intermodal
                                 transportation will play an important role here. This is also one of the main objectives
                                 anchored in the European Union's White Paper on the objectives of transport policy in
                                 Europe.72

                                 3.2.3      Deceleration
                                 Another factor driving change is the deceleration of transport. In the Internet age,
                                 when everyone is connected with "smart" mobile end devices, it can seem that
                                 people's environment is continually speeding up, both in private and professional life.
                                 Goods ordered online have to be delivered on the same or following day. The traffic
                                 this generates involves unnecessary costs and is detrimental to the environment. In
                                 future, consumers will be persuaded to forego unnecessary quick deliveries in some
                                 cases, or not to regard this as a decisive factor for making an online purchase. It is not
                                 essential for every order to reach the customer the following day.73 This will enable
                                 logistics providers to better utilize truck capacity or use combined transportation.

                                 3.2.4      Attractive workplace design
                                 The requirements for workplaces have changed considerably in recent years, often
                                 demanding a balance between professional and private life and necessitating redesign
                                 of workstations. This issue is often described as the work-life balance.74 The impact of
                                 this is already being seen in calls for sufficient childcare places and flexible working
                                 hours with individual training options.
                                 A model calculation by the German Federal Ministry of Family Affairs, Senior Citizens,
                                 Women and Youth shows that integrating ideas of work-life balance into corporate
                                 policy has an positive effect if implemented successfully. As well as creating around
                                 221,000 new jobs, it could lead to an increased birthrate. This would increase
                                 consumer demand and raise workers' hourly productivity, improving companies'
                                 competitive positions internationally.75 Ideas of work-life balance thus not only make
                                 sense at company level, but are already showing a positive impact at macroeconomic
                                 level too.76

                                 71
                                      TU Darmstadt 2008, p. 57
                                 72
                                      Schmidt 2008
                                 73
                                      Breitinger 2012
                                 74
                                      Prognos 2005, p. 3
                                 75
                                      Prognos 2005, p. 5
                                 76
                                      Prognos 2005, pp. 5 et seq.

            24   Fraunhofer IML | Daimler AG | DB Mobility Logistics AG   Visions of the Future: Transportation and Logistics 2030
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