The Logistics Impact of The Channel Tunnel

The Logistics Impact of the Channel Tunnel
Author(s): Philippe-Pierre Dornier and Ricardo Ernst

Source: Interfaces, Vol. 27, No. 3 (May - Jun., 1997), pp. 39-59
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The
Logistics Impact
of the Channel Tunnel
Philippe-Pierre Dornier
Ricardo Ernst
Department of Logistics
and Production
ESSEC
Cergy
Pontoise
France
School
of
Business
Georgetown University
Washington,
DC 20057
The tunnel
linking England
and France is remarkable in its im
pact.
As the
global logistics
network
grows,
the tunnel
improves
travel for
people
and
goods moving
between the UK and the
continent.
Although
many
speculated
about the financial
impli
cations of the
tunnel,
no one
had done
a serious
study regarding
the
logistics implications
of this
new rail infrastructure. This
study
was motivated
by
the French train
company
dedicated to
freight
(Fret SNCF)
in their need to
explore
commercial
oppor
tunities
through
the tunnel. We started
by performing
a
survey
(in
cooperation
with
Coopers
&
Lybrand)
with
European
ex
porting
and
transportation companies
of
expectations
and stra
tegic
evaluation for the channel tunnel
as a
logistics
alternative.
We then
develop
some
analytical
models to offer
guidelines
for
defining
the
range
of values that would make
one
transporta
tion alternative
superior.
In the
study
we
worked with data
pro
vided
by
Fret SNCF
as
well
as with consultation with
many
Eu
ropean
companies
to validate the models and
present specific
solutions from different
areas in the continent to the UK. In
par
ticular,
we
examined nine feasible scenarios for
going
to London
from
seven
different
areas in the
European
continent.
Copyright
?
1997,
Institute for
Operations
Research
and the
Management
Sciences
0092-2102/97/2703/0039$05.00
This
paper
was refereed.
DECISION ANALYSIS?APPLICATIONS
TRANSPORTATION?ROUTE SELECTION
INTERFACES 27: 3
May-June
1997
(pp.
39-59)
DORMER,
ERNST
The
channel tunnel
(Chunnel)
linking
England
and
France,
which
opened
in
1994,
greatly improves
travel for both
peo
ple
and
goods moving
between the UK and
the continent. The tunnel connects the rail
systems
of the UK and France and indi
rectly
their road
systems.
It adds
an
impor
tant
component
to the economic
integration
of
Europe
which
(unlike
the
US,
which has
not built a
railroad in
decades)
is
building
a network of
tunnels,
bridges,
and
high
speed
railroads
[Sloan 1991].
The Chunnel
is
important
for
linking
the
European
conti
nent,
not
just
France and
England.
It con
sists of two
rail-only
tunnels and one ser
vice tunnel
running
the 50 km between the
terminals located at Folkestone in the
United
Kingdom
and
Sangatte
in northern
France. The
respective ports
of
entry
are
Dover and Calais. Each of the twin rail tun
nels is used
exclusively
for trains
(capable
of
moving
cars and their
passengers,
trucks,
freight,
and
just passengers)
which
operate
in one direction
only.
There are
some cross-over sections between the main
tunnels to allow for
repair
of the rail lines.
The smaller service tunnel lies between the
two rail tunnels and
provides
access for
routine
maintenance, ventilation,
and safe
refuge
in the event of an
emergency
[Merchant, Knowles,
and Acheson
1991].
The Chunnel will affect
European
busi
nesses in three
major
areas.
First,
it will
change
travel
patterns
for business and lei
sure
purposes, particularly
between the
South of
England,
and the North of France
and
Belgium,
since the travel time between
London and Paris is no more than three
hours.
Second,
it will affect the location of
new business and commercial centers as
traffic increases.
Third,
it will alter the or
ganization, management,
and control of lo
gistics
in
companies
that move
goods,
since
the Chunnel offers shuttle services for
freight
trains and trucks.
The Chunnel offers an
interesting
new
option
to be considered in
evaluating logis
tics alternatives in
Europe.
It has advan
tages
that
go beyond any advantage
in cost.
It offers
continuity
in
service,
that is trans
port
service will not be affected
by stormy
weather or
ship
timetables. The Chunnel
will
always
be
open
(365
days
a
year),
with
three trains
departing per
hour in each di
rection
during heavy activity
and at least
one
departure per
hour otherwise. The
quality
of
transport
has also
improved
with
the reduction in transfers
among
modes of
transport,
since it is now
possible
to load
freight
on a train in a
location at the south
of France and unload it in the northern UK
without the
exchange
from train to
ferry
and back at the channel
(Figure
1).
These
conveniences have to be considered in com
paring
the Chunnel to other
alternatives,
instead of
using only simple transportation
cost calculations based on distance.
From a financial
point
of
view,
the Chun
nel has not been a
successful
project.
Euro
tunnel
(the
publicly
traded British-French
company
that
manages
the
tunnel)
has
spent
more than double its
$7.5
billion
pro
jection
to build the
tunnel,
and
only
in the
summer of 1995 was it able to cover its
op
erating
costs and
capital expenditures
out
of its cash flow for the first time. It is still
far from able to meet interest
charges
on its
$12
billion
debt,
which are
accumulating
at
a rate of
$90
million a month. The
company
expects
to have sufficient revenues in six to
10
years
to
pay
its interest bill.
By
the end
of
1995,
it had
captured
41
percent
of the
INTERFACES 27:3 40
CHANNEL TUNNEL
Figure
1: The Chunnel offers
a new alternative for
linking
the continent and the UK. Should a
Spanish company shipping goods
to the UK use its current
existing
Route
3,
or the Chunnel with
the combination Route 1 and Route 2? The same
question applies
to a German
company going
to
the North of the UK. Should it use its current Route 3' or the Chunnel with the combination
Route V + Route 27
cross-channel market for
cars,
45
percent
of
the coach
market,
and 47
percent
of the
freight
market.
The Channel Tunnel as a
Logistics
Alternative
The tunnel links Calais in France to Folk
stone in the United
Kingdom, joining
the
European railway
of
240,000
km to the Brit
ish
railway
network of
15,000
km. The tun
nel is 50 km
long:
38 km are under the
sea,
three km
are in
France,
and nine km are in
the UK. The
freight
traffic
crossing
the
channel at the
beginning
of the 21st
century
is
expected
to be 122.6 million tons each
year,
of
which,
21.1 will be
through
the
Chunnel
(Table 1).
The tunnel
system
is
designed
to accom
modate shuttles that can
transport
180 cars
every
15 minutes
during peak periods, giv
ing
it the
capacity
to
transport
10,080
car
passengers
in each direction
per day.
There
are also 40
high-speed passenger
trains
(no
cars)
per day
in each direction. It is also
ex
pected
to
transport up
to 28 trucks travel
ing
each
way daily.
In
addition,
trains car
rying freight
accommodate 35 shuttles that
May-June
1997 41
DORMER,
ERNST
Opening
Channel Traffic
94/95
2003 2013
Passenger
cars:
Million
cars/year
67.1 93.6 118.7
Chunnel share 29.7 39.5 46.6
Freight:
Million
tons/
year
84.4 122.6 170.4
Chunnel share 14.8 21.1 27.8
Table 1: The 1993 Eurotunnel forecast for
channel traffic
predicts
an increase for
passengers
and
freight
between 1994 and 2013.
are allocated as follows: 22 for combined
transportation,
that
is,
carrying
containers
of merchandise that
are
transferred from
trucks to the train and at the other end of
the Chunnel transferred back to trucks
(about
4 million tons
during
the first
year);
five for conventional
freight
(about
2 mil
lion tons
during
the first
year);
and
eight
for new
cars,
that
is,
trains
moving
new
cars,
such as
Renaults (about
0.5 million
tons
during
the first
year).
There are
sepa
rate
loading platforms
for
freight
and
pas
senger
traffic,
and
separate
custom facilities
to
expedite
the
processes.
Since Britain
joined
the common market
in
1973,
its
exports
to the continent have
grown
from
$6
billion in 1973 to
$42
billion
in 1986
[Project
Cost-CEE
1993].
Currently
exports
to the continent account for
ap
proximately
65
percent
of Britain's
foreign
trade in services and
goods, excluding pe
troleum
products
[Merchant, Knowles,
and
Acheson
1991].
According
to customs data
for
1992,
the total flow of
merchandise,
in
cluding petroleum products,
is
56,363,000
tons from the continent to the UK and of
79,962,400
tons from the UK to the conti
nent.
Excluding petroleum products
(which
are
generally
moved
by pipe),
the numbers
change
to
47,016,200
and
35,671,800
respec
tively (Figure
2).
For almost all the
exchanges
between the
largest
continental countries and the
UK,
the balance favors the continent. This bal
ance
depends
on several factors:
?It
depends
on
the nature of the
product.
For
example,
the flow of
agriculture
and
food
products
from the continent is twice
that from the UK. For
cars, chemicals,
and
health care
products,
the ratio
goes
down
to 1.5.
?It
depends
on
the
country,
with France
exporting
40
percent
more than it
imports
from the
UK,
the Netherlands 80
percent,
Germany
30
percent,
and
Spain
20
percent.
?It
depends
on
the
country
and the
prod
uct. The ratio between
exports
from and
imports
to for France in
agricultural
and
food
products
is
4.6,
while for
Germany
it
is
only
2.2.
?It also
depends
on
the mode of
transpor
tation.
Forty-six percent
of the
products
coming
into the UK are in
containers,
while
38
percent
of those
leaving
the UK
going
to
the continent are in containers.
These
figures explain why transportation
prices
and commercial conditions differ be
tween the UK and each
country
in the con
tinent.
Today
for
example,
the
prices
are 40
percent higher
from France to the UK than
from the UK to France. This
study
was mo
tivated
by
the French train
company
dedi
cated to
freight
(Fret SNCF)
in their need to
explore
commercial
opportunities through
the channel tunnel. We worked with data
provided by
Fret SNCF and in consultation
with
many
of the
logistic providers
in Eu
rope
to validate
our ideas. We started the
INTERFACES 27:3 42
CHANNEL TUNNEL
Figure
2: The
figures
at the head of the arrows show the merchandise that flows between the
continent and the UK in millions of tons
(excluding petroleum products).
The
percentages
refer to
types
of
products:
A indicates
agriculture
and
food,
B indicates intermediate
goods,
and C
indicates chemicals (Customs data from
1992).
study
with a
survey
of
expectations
for the
Chunnel with
exporting
and
transportation
companies.
The
survey
was
performed
in
cooperation
with
Coopers
and
Lybrand
Eu
rope during
the
period July
1993 to March
1994.
Logistics Opportunities
of the Chunnel
Using
the tunnel has
advantages
and dis
advantages:
In terms of
service,
measured
as the time it takes to
go
from the continent
to the UK or vice
versa,
the tunnel
crossing
is fast and reliable
(London
to Paris in
three
hours),
35 minutes from Calais to
Folkstone
(versus
two hours
by ferry),
and
80 minutes from the French
highways
to
the British
highways.
For
passenger
traffic
(those
traveling by
train
through
the Chun
nel without
cars),
the time
advantage
is
even
greater
since the train
goes
to train
stations situated inside the cities
(the
train
station in France is in
Paris).
For
freight,
a
difference of less than 1.5 hours makes little
difference
except
in
special
cases. The dis
advantages
are
mainly
the
problems
of mo
nopoly
in case of a strike
(highly unlikely)
and that the transit time does not allow
May-June
1997 43
DORMER,
ERNST
truck drivers much rest time so
trucks
might
need a
second driver.
For truck
drivers,
the Chunnel's
quicker
transit
gives
no
significant advantage
over
Moving
containers
required
five
handling steps
on
average.
the
ferry. Ferry companies
offer services on
board,
such as restaurants and
private
cab
ins.
Therefore,
price
is the factor available
to obtain the truck drivers' business.
In terms of
quality,
the Chunnel
requires
fewer
changes
of modes of
transportation
(relative
to the
ferry)
for merchandise trav
eling directly by
train from factories on the
continent to final clients in the UK. That
is,
with the
ferry
the merchandise
might
need
to be transferred from the train or
truck to
the
ferry
and
then,
at the other
end,
to the
train or the truck
(each
mode of
transporta
tion is called
a
platform).
With the Chunnel
the intermediate
exchange
of
platforms
for
crossing
the channel is
avoided,
and there
fore there is less
manipulation
of the mer
chandise,
which reduces the
opportunities
for accidents. In
addition,
orders could be
consolidated at different
points
on the train
network. In
fact,
the
Transport Develop
ment
Group
(TDG)
has invested over
$10
million in the construction of the UK's first
distribution center
(250,000
square
feet)
dedicated to rail and road
transport
and lo
cated next to the Chunnel rail terminal to
offer customers direct access
throughout
the UK and
Europe.
In terms of
cost,
experts
foresee a
price
war between the tunnel and the
ferry.
The
cost of ferries from the north of
Europe
to
the south of the UK has decreased
by
20
percent
between
January
1994 and
July
1996. The Chunnel
competes
with the
ferry,
especially
in the Calais-Folkstone area
[Journal
de la Marine Marchande
1994].
Even
if
enough
market exists to
support
the two
modes,
a
price
war
for market share is ex
pected.
In
fact,
the current
figures
on mar
ket share for the Chunnel are below
expec
tations because of
delays
in the
delivery
of
trains,
railway
strikes in France and Bel
gium
in December of
1995,
and
aggressive
fare
cutting by ferry companies.
The tunnel can serve the
following po
tential markets
[Coton 1994]:
Companies
that
currently ship by
train
will find it attractive to continue into the
UK without
having
to break their trains
down to
get
them into the
ferry.
This is
particularly important
for
companies
that
ship
bulk
products
in
big
volumes
(for
ex
ample,
sand, cement, steel,
and
paper).
The
Chunnel
permits complete
trains to
pass
at
specified
times
(mid-day
or
nights).
Companies
that
currently ship
full con
tainers to the harbor
by
train,
transfer them
to
ships
to cross the
channel,
and then
transfer them
again
to train or truck to
get
them to their final destinations
(such
prod
ucts as
whiskey
and beer from north En
gland,
Scotland,
and
Ireland,
or wine from
France).
Companies,
such as Bell
Lines,
cur
rently
run
freight
ferries twice a
day.
Trains
running
from
source to final destination
may provide advantages
of
time,
quality,
and service.
The Chunnel train can also serve
compa
nies that move small volumes in trailers
(containers
with wheels that can be con
nected to
trucks),
carrying just
the trailer
across the channel. Other markets for the
Chunnel are
companies
that use isolated
INTERFACES 27:3 44
CHANNEL TUNNEL
freight
cars for
long
distances
(for
example,
from
Italy
to
England),
those who
ship
small and
high-value parcels
to be deliv
ered
quickly
or automobiles or fresh
prod
ucts in
refrigerated wagons.
For
example,
the rail service
operator European
Passen
ger
Services
(EPS)
introduced four-hour
parcel delivery
services from London to
Paris and Brussels
using
the Chunnel
trains.
Container Movement: Now an
Improved
Alternative
The Chunnel makes the container move
ment with a
combination of modes of
transport
an
improved
alternative. That is
one of its most
important
contributions.
Trucks
(or trains)
can load containers on
any
location linked to the train
system
in
the continent
(not
necessarily
at the channel
crossing point),
and cross
(through
the tun
nel)
to the UK where the container can be
delivered closer to a final destination and
picked up by
another truck
(or
linked to
another train
system).
The UK train
system
has invested in
underslung
coaches,
that
is,
flat cars that
carry
containers and are low
enough
to
pass through
the
existing
tun
nels in the
UK,
to increase the
scope
of ac
cessible cities.
Before the Chunnel
opened, moving
con
tainers was not
very
efficient: it
required
five
handling steps
on
average
and three
modes of
transport
(truck, train,
and boat
or
ferry).
For
instance,
a container
traveling
from the south of France
by
a combination
of modes
(truck and/or train)
might
be
transferred in Ostende or
Zeebrugge
from a
train
(or truck)
to a boat and then reloaded
on a truck
(or train)
for the final destina
tion.
In our
study
we found that
combining
modes of
transport
is a
competitive
alterna
tive
(relative
to the other
options
to be dis
cussed
later)
for
freight coming
from
Italy,
eastern and central
Spain,
the
majority
of
France,
and eastern
Germany
and Austria.
Reduction in
Exchange
of Platforms
A boat or a
ferry
used to be
necessary
for
all but air
transport
between the continent
and the UK.
Transferring freight
from train
or truck to
ship
adds cost and affects
qual
ity
without
any
value added. Direct
linkage
by
train or
combination of modes
may
change
the
logistics
network for
many
com
panies.
Renault,
for
example,
sells between
80,000
and
120,000
automobiles
per year
in
the UK. Their distribution is affected
by
such issues as
seasonality
(25
percent
of
sales take
place during
June
and
July),
the
high
value of the
product,
and the
high
risk
of
damage during transportation.
Renault
transports
the cars in several
steps.
First
they ship
the cars
by
boat or train to the
port
of Le Havre in France.
Then,
"jockeys"
drive the cars onto
roll-on,
roll-off
ferries,
which
carry
them to
Southampton
for de
livery
in the south of the UK or to Goole
for
delivery
in the north. In each of those
ports,
Renault maintains a distribution cen
ter that handles deliveries to dealers.
The
trip
from the
plant
in France to the
UK distribution centers takes 10
days
and
involves a
high
risk of
damage
and other
problems
associated with
changing
modes
of
transport.
With the
Chunnel,
Renault
could
ship directly
to its distribution cen
ters,
which it could relocate closer to its
customers. The Chunnel would reduce the
transportation
time to two
days requiring
less
inventory
in the
pipeline.
Electrolux/Distrilux
in
Italy exports ap
May-June
1997 45
DORMER,
ERNST
proximately
850,000
appliances per year
from five
plants
in
Italy
to five distribution
centers in the UK. This
represents
about 10
freight
cars a
day. Currently,
90
percent
of
the
freight goes
to Le Havre
by
train where
it is off-loaded into a
company
warehouse,
from which it is
shipped by ferry
or boat to
the different distribution centers in the UK.
The
company
is
considering shipping
di
rectly
to its customer markets in the UK via
the
Chunnel,
which will mean
changes
in
costs,
quality,
and
speed
of
delivery.
This is the
type
of
analysis
that Fret
SNCF was interested in
quantifying
in their
need to offer
logistics
solutions to different
companies. Working
in collaboration with a
team from the French
company,
we devel
oped
the models
presented
in this
paper
as
a
tool for
evaluating
alternatives. Before
we
did this
study, many
ideas existed about
the financial
implications
of the tunnel.
However,
no one had made a serious at
tempt
to
study
the
of
this new rail infrastructure.
European Companies' Perceptions
of the
Chunnel
As
part
of our research
project,
we col
laborated with
Coopers
and
Lybrand
Con
sultants to
survey
companies
in
France,
En
gland,
and the Netherlands. The
objective
was to
gather
information about how these
companies perceived
the Chunnel and
what
they expected
from it. For each coun
try, Coopers
&
Lybrand
divided the
sample
into
exporting companies
and
transporta
tion
companies
to discover
any
differences
between
companies
that sell
products
and
the
companies
that deliver them.
They
ob
tained 83
responses
from
transporters
(17
French and 66
English,
39
percent
of the
sample)
and 136
responses
from
exporters
(59 French,
56
English,
and 21
Netherlands,
18
percent
of the
sample).
The results of the
survey
revealed that
the
or carriers are
more
directly
involved with the Chunnel
than the
exporters.
The
majority
of those
sending goods
from the continent to the
UK subcontract their
shipping
and have no
interest in its route. The
exporters
then,
have
no
realistic view of the current
prob
lems or
future
opportunities.
Even
more,
are
usually
free
to select routes
(66
percent),
and those
an
swering
the
survey questions recognized
twice as
many ports
in
Europe
as those
representing
the
exporters.
With
respect
to
informants' awareness about the
Chunnel,
we found that 88
percent
of the French
ex
porters
and 63
percent
of the French trans
porters
were not aware of the services of
fered
by
Eurotunnel,
as
opposed
to 27
percent
of British
exporters
and nine
per
cent for the British
transporters.
As a
consequence, exporters
do not con
sider the
opportunities
available with the
Chunnel in
evaluating
their
logistics
alter
natives. As
might
be
expected,
the trans
porters
better understand the current
prob
lems with the
ferry
than do
exporters.
When asked how satisfied
they
are with
current
transportation
methods
(excluding
the
Chunnel),
63
percent
of the French ex
porters
answer
they
are satisfied versus
only
53
percent
of the
transporters.
The
fig
ure for British
exporters
is 69
percent
ver
sus 58
percent
for the
transporters,
and for
Dutch
exporters,
it is 95
percent
versus 81
percent
for the
transporters.
We considered the most
important
fac
tors related to the use of the Chunnel to be
cost,
delivery
time,
weather
dependence,
INTERFACES 27:3 46
CHANNEL TUNNEL
A TRANSPORTER
High
Medium
Weak
Cbst
Weak Medium
High
EXPORTER
4
French
^-
English
Figure
3: French and
English exporters
and
transporters
differ in their
perceptions
of the Chunnel
concerning
cost,
delivery
time,
weather
dependence,
labor
conflicts,
fixed
schedules,
frequency
of
service,
speed
of
service,
and
exchange
of
platforms.
On the horizontal axis
we
present
the
per
ceptions
of the
exporters
and on the vertical axis the
perceptions
of the
transporters.
When both
observations
are on the
diagonal,
the
perceptions
of
exporters
and
transporters
coincide.
labor
conflicts,
fixed
schedules,
frequency
of
service,
speed
of
service,
and
exchange
of
platforms.
We charted the results for ex
porters
and
transporters
in France and the
UK
(Figure
3).
Based
on the
figure
we ob
tain the
following general
results:
?Cost is an
important
factor for both
transporters
and
exporters.
Because the
ferry
has had a
monopoly crossing
the
channel,
people
believe its
prices
are
high.
May-June
1997 47
DORMER,
ERNST
?The issue of
frequency
of service and de
livery
time was classified as intermediate in
importance.
?Weather is more
important
to
transport
ers than to
exporters.
?Labor conflicts are
important
to French
companies
in
particular.
This
might
be be
cause the French
ports
have had labor
problems
over the last four
years
in re
sponse
to
government attempts
to
imple
ment new laws and
regulations.
?Changing
modes of
transport
is not con
sidered a
problem by
the British since
they
do it for all their
exports.
The French are
used to
shipping directly
to other markets
on the continent. The
opportunity
to
ship
direct thanks to the Chunnel seems to be
extremely important
to the
French, British,
and Dutch
transporters
but not to
export
ers.
Sixty-one percent
of the British
exporters
and 41
percent
of the French
exporters
think that the tunnel
gives
them an
oppor
tunity
to
modify
their
logistics
networks.
For French
transporters,
the
response
is 88
percent
versus 40
percent
for the British.
Here are some of the reasons that
might
ex
plain
this:
?The tunnel alters the
competitive
situa
tion and will attract new
transporters
and
third-party companies
[Vicherman
and
Craven
1986].
Seventeen
percent
of the
French
exporters,
28
percent
of the
British,
and 14
percent
of the Dutch believe that
they
will use new
or
third-party logistics companies by
the
time the Chunnel is
fully operational. They
expect
to reallocate
freight
to different
modes,
particularly
the British
(22
percent
of the
exporters
and 32
percent
of the trans
porters).
This
change
should benefit train
companies.
?Suppliers
will
increasingly
send
goods
just
in time.
Exporters
(77
percent
of the
French,
87
percent
of the
British,
and 48
percent
of the
Dutch)
expect
to increase the
frequency
of their deliveries.
Transporters
expect
this increase in demand and there
fore are
planning
to increase the number of
trips they
make
(74
percent
of the
French,
90
percent
of the
British,
and 71
percent
of
the
Dutch).
Finally
the most
interesting
contrast in
responses
between British and French
par
ticipants
was to the
question:
Do
you
think
about the
logistics impact
of the Chunnel in
your organization? Seventy-seven percent
of the French
exporters
and 63
percent
of
the French
transporters
answered "no"
while 88
percent
of the British
exporters
and 80
percent
of the British
transporters
answered
"yes."
Given the current flows of
freight
between the continent and the
UK,
and
among
the countries on the
continent,
the British have a more
urgent
need to in
clude the Chunnel in
evaluating
their
logis
tics since the continent is their main
market.
Optimal
Selection of
Transportation
Alternatives
We constructed a model to
permit
com
panies
to determine the
optimal transporta
tion alternative for
moving
a defined
quan
tity
of
products
between the continent and
the UK. We assume that the
company ships
its
products by
either train or truck and
therefore must choose between
a
ferry
or
the tunnel. To
capture
the different
possi
bilities
available,
the model allows for
changing
modes of
transportation
(from
train to truck or vice
versa)
before and after
crossing
the channel. This
generates
four
INTERFACES 27:3 48
CHANNEL TUNNEL
possible
intervals
(two
for each
side)
plus
the one
crossing
the
sea,
resulting
in 32
combinations or alternatives. Some of these
alternatives are
very
inefficient a
priori.
We
compare,
in
particular,
the
option
of
using
a short route that includes a
ship
or
ferry
(the
current
alternative)
with a
longer
route that includes the tunnel.
Then,
for
ex
ample,
a
company
in
Spain
that
currently
loads its
freight
on a
ship
in a
nearby
har
bor
might
benefit from
a
longer
route that
includes the tunnel. The main trade-offs for
that
company
would be
greater expendi
ture for land
transportation (possibly
in
cluding
the cost of extra
drivers)
versus the
savings
from
avoiding changes
in
logistics
platforms
(to
use the
ferry, shippers
must
transfer their
goods
from either truck or
train to the
ferry,
and back to truck or train
on
shore).
When the
ferry
used is close to
the Chunnel the distance over land
may
be
the same. The model
quantifies
the differ
ent
options
available and selects the
option
that minimizes total
transportation
cost
while
satisfying
a
predetermined
level of
service measured as the
required
time to
deliver the
predefined freight quantity.
We
made the
following general assumptions:
(1)
The
shipper
can move the
predefined
freight quantity by
either train or
truck,
that
is,
in each
interval,
it will use
only
one
mode of
transportation.
(2)
Every
time the
shipment changes
mode of
transport
(from
truck to train or
vice
versa),
the
company pays
a fixed cost
and a variable cost for
changing platforms.
(3)
If the
company
uses a
ship
or
ferry,
it
will
always pay
a fixed cost for
changing
from either the train or truck to the
ferry
and then back. If it uses the tunnel without
changing
mode of
transport,
it
pays
no
such cost.
We formulated the
problem
as a mixed
integer problem
that minimizes total trans
portation
cost. The model
incorporates
no
charge
for transit time. In
theory,
the time
in transit is
inventory being kept
in the lo
gistics pipeline
and therefore should be
part
of the decision
process.
However,
we
assumed that the difference in time
among
the
transportation
alternatives
(for
the
type
of
products
to be
moved)
would not result
in
significant inventory
costs.
Companies
can use the model to discover
which
way
is the
cheapest, using
a
ferry
or
the
Chunnel,
train or
truck,
and to examine
sensitivity
on
price
increases. The results
can be used as a benchmark for
comparison
purposes.
The model's
application
is lim
ited,
given
its
specific assumptions.
For ex
ample,
in addition to the two
alternatives,
train or
truck,
a
company
could use the
combined mode.
Modeling
this alternative
Transportation companies
are
more
directly
involved with
the Chunnel than
exporters.
is
complicated
because the stations that ac
commodate
change
of
platforms
for com
bined mode
may
not
necessarily
be those at
which
changes
of
regular transport
mode
are made.
Also,
in the model we assume
that the routes
by
train and truck are of the
same
length,
which
might
not be the case.
To
study
the
hypothetical implications
of
the different
alternatives,
we
performed
a
sensitivity analysis
on two different scenar
ios
(Figures
4 and
5).
One scenario is for a
company
in
Spain moving products
to the
UK with two
possible
routes,
a short one
May-June
1997 49
DORMER,
ERNST
using
the boat and a
long
one
using
the
Chunnel. The other scenario is for a com
pany
in
Germany moving products
to the
UK with the same two
possible
routes. We
started the
analysis
with a base case for
each scenario
(Tables
2 and
3).
Our
objec
tive was to find out how
changes
in the dif
ferent
parameters
would
change
the solu
tion. In
particular,
we wanted to know
what increase or decrease in the fixed and
variable costs for the Chunnel versus the
ferry
would make it
optimal
for
shippers
to
switch between alternatives. We
performed
the same kind of
analysis
for train and
truck
options.
We didn't include
a sensitiv
ity analysis
for the service level constraint.
Coming
from the South
For the first
scenario,
we obtained the
following
results
(Table 2).
The
company
currently ships goods
from
Spain
to the UK
by
train on
the
continent,
boat across the
channel,
and truck in the UK. Train service
in the UK is not as
good
as that in France.
For the
company
to switch to
using
trucks
^
Figure
4: We used the
analytical
model to
perform
a
sensitivity analysis
and
compare
two trans
portation
alternatives for a
company
in
Spain moving products
to the UK. One alternative is us
ing
a short route combined with the boat and the other is to use a
long
route
crossing
the chan
nel. Lll and L12 are the two
segments
of the
long
route on the
continent,
and L21 and L22 are the
two
segments
in the UK. The intersection
point
in each case allows
(if
necessary)
a
change
in
mode of
transport.
The same
applies
to the short route
(Sll, S12, S21,
S22).
INTERFACES 27:3 50
CHANNEL TUNNEL
Figure
5: For
goods coming
from the
north,
we use the
analytical
model to
perform
a
sensitivity
analysis
and
compare
two
transportation
alternatives for a
company
in
Germany moving products
to the UK. One alternative is
using
a short route combined with the
ferry
and the other is to use a
long
route
crossing
the channel. Lll and L12 are the two
segments
of the
long
route in the conti
nent,
and L21 and L22 are the two
segments
in the UK. The intersection
point
in each case allows
(if
necessary)
a
change
in mode of
transport.
The same
applies
to the short route
(SU, S12, S21,
S22).
for the entire
route,
the truck
company
in
Spain
must reduce its variable cost to
just
four
percent
over the variable cost of the
train.
To obtain the business of this
company,
the UK train
company
must reduce its vari
able cost to
just
two
percent
over the truck
cost in the UK. The
company
could then
use train
transport
for the entire route.
These results are based on the
assumption
that the variable cost for the boat is 25
per
cent
higher
than the variable cost of the
Chunnel.
We next
explored
what
happens
when
the variable cost of the boat increases. It
has to be 50
percent higher
than that of the
Chunnel for the
company
to switch from
the boat to the Chunnel for the channel
crossing.
If the variable cost of the boat is
just
20
percent
over that of the
Chunnel,
the
company
is better off
using
the boat. It
will, however,
use the train for the first
three intervals
(the
first two in the conti
nent and one in the
UK)
and
change
to the
truck
only
for the last
one;
that saves the
additional
charge
for
changing
modes of
May-June
1997 51
DORMER,
ERNST
Continent UK
Interval 1 Interval 2
Crossing
Truck
Fxi
=
10
VKQl
=
1.0
VKDl
=
1.1
Fpju
=
10
S?
=
250
Ln
=
750
Train
FTl
=
6
VTQl
=
1.0
VVdi
=
1.0
FPT1
=
10
Truck
FK2
=
10
Vkqi
=
1.0
VxD2
=
LI
FPK2
=
10
S12
=
250
L12
=
900
Train
Fn
=
6
VTQ2
=
1.0
yTD2
=
lo
FPT2
=
10
Ferry
Ff
=
5
Vfq
=
1.0
yfD
=
1.25
FPf
=
10
Df
=
1,000
Chunnel
Fc
=
7
VCQ
=
1.0
yDC
=
lo
Fpc
=
10
Dc
=
50
Truck
Fks
=
10
VkQ3
=
LO
VKD3
=
1.0
Fpx3
=
10
S21
=
100
Ln
=
150
Train
fr3
=
6
VTQ3
=
1.0
yTD3
=.
1.05
Fpt3
=
10
Truck
FK4
=
10
Wq4
=
TO
V*D4
=
LO
FPK4
=
10
S22
=
600
L22
=
800
Train
FT4
=
6
WQ4
=
1.0
VTD4
=
1.05
FpT4
=
10
Table 2: In
evaluating
the
analytical
model,
we used this base case of
parameters
for the scenario
for
freight coming
from the south of
Spain
and
going
to the north of the UK.
transport
at the
crossing point
(there
is an
incremental cost for
changing
from train to
truck before
crossing).
The
company
will
use the Chunnel instead of the boat if the
variable cost of the boat is maintained at 50
percent
over that of the
Chunnel,
but the
Continent UK
Crossing
Truck
Fxi
=
10
VKQ,
=
1.0
VKDl
=
1.1
FpKi
=
10
Sn
=
250
L?
=
650
Train
FT\
=
6
Vtqi
=
1.0
V-rm
=
1.0
FP71
=
10
Truck
Fk2
=
10
Vkqi
=
1.0
VkD2
=
1.1
Fpx2
=
10
S12
=
250
L12
=
500
Train
Fn
=
6
Vtqi
=
1.0
Vtto
=
1.0
FPr2
=
10
Ferry
Ff
=
5
Vfq
=
1.0
yFD
=
1.25
FPF
=
10
Df
=
900
Chunnel
Fc
=
7
Vcq
=
1.0
yDC
=
l.o
Fpc
=
10
Dc
=
50
Truck
FK3
=
10
VkQ3
=
1.0
VKD3
=
1.0
Fpk3
=
10
S21
=
100
L21
=
150
Train
Fi3
=
6
VYQ3
=
1.0
Vtd3
=
1.05
FPT3
=
10
Truck
FK4
=
10
VKQ4
=
1.0
VKD4
=
1.0
Fpx4
=
10
S22
=
300
L22
=
800
Train
FT4
=
6
Vtqa
=
1.0
VTD4
=
1.05
FPT4
=
10
Table 3: In
evaluating
the
analytical
model,
we used this base case of
parameters
for the scenario
of
freight coming
from the north in
Germany
and
going
to the north in the UK.
INTERFACES 27:3 52
CHANNEL TUNNEL
variable cost of the train is reduced to
just
two
percent
truck.
If,
on the
contrary,
the variable cost
of the truck
on
the continent is reduced to
just
one
percent
over the variable cost of
the
train,
the
company
will
ship
its
goods
by
truck and Chunnel for the entire route.
As
expected,
the cost of the train or truck
affects the choice of train or boat since
companies
look at total
transportation
costs.
Coming
from the North
Under this
scenario,
currently
the com
pany
uses the train for the entire route with
the
ferry
for the channel
crossing
(Table 3).
If the truck reduces its variable cost to
just
four
percent
over that of the train on the
continent,
the
company
will switch to
using
the truck for the entire route. The UK train
should then reduce its variable cost to three
percent
over that of the truck to make it at
tractive for the
company
to switch
again
and use the train
through
the entire route.
If we
keep
the costs of the base
case
(Ta
ble
3)
and
change
the variable cost of the
ferry,
the
company
will switch to the tun
nel when the variable cost of
using
the
ferry
is 35
percent higher
than the variable
cost of the Chunnel. In this case the
opti
mal combination for the
company
is to use
the train for three intervals and
change
in
the last interval to the truck.
If the variable cost of the
ferry
is 35
per
cent
greater
than that of the tunnel and the
variable cost of the truck on the continent is
reduced to two
percent
above that of the
train,
the
company
will switch and use
the
ferry
and the truck for the entire route. The
variable cost of the
ferry
has to be 40
per
cent over that of the Chunnel for the com
pany
to use the tunnel instead.
If the train reduces its variable cost to
four
percent
truck in the
UK,
the
company
will use the
train over the entire route and the
ferry.
Again,
the variable cost of the
ferry
has to
be 40
percent
over that of the Chunnel for
the
company
to use the
tunnel,
but if the
trucking company
makes an additional re
duction in its variable cost to
just
two
per
cent over that of the
truck,
the
company
will use the train over the entire route.
As we can
see,
the
options
for
freight
coming
from the north are
highly
sensitive
to
changes
in the variable cost of the
ferry
relative to the Chunnel. For all the scenar
ios
examined,
we
changed
the variable
costs as a function of distance while
keep
ing
other costs fixed. More than to obtain
normative
results,
our
objective
in the sen
sitivity analysis
was to determine the
po
tential outcomes for different
possibilities.
We didn't
explore
a scenario for
shipments
coming
from
Italy,
because in that
case,
the
short and
long
routes
coincide,
and the
comparison
is
simply
between fixed and
variable costs for the different
transporta
tion
modes,
that
is,
given
the fixed costs for
the
ferry
and the
Chunnel,
the variable cost
for the
ferry
has to be at most four
percent
over the variable cost of the Chunnel for it
to be attractive.
The model was
very
useful in
helping
us
to understand the trade-offs
among
the dif
ferent
transportation
alternatives. We could
analyze
different scenarios with the
model,
but the base cases
require
detailed valida
tion.
Although
it doesn't
provide
exact re
sults,
the
analytical
model offers
guidelines
for
defining
the
range
of values that would
make one alternative
superior.
In
making
a
decision,
companies
would consider addi
May-June
1997 53
DORMER,
ERNST
tional variables not included in the model
formulation.
Empirical Approach
We could extend the
analytical
model to
include
many
realistic restrictions. How
ever,
to obtain
specific
and
precise
results,
we
compiled
a database of actual costs re
lated to
distance,
exchange
of
transporta
tion
modes,
and
physical
locations for dif
ferent
alternatives,
including
conventional
train, truck,
or combined
transport
(that is,
when the container is transferred from one
mode to
another)
and a
ferry
or
boat,
or the
Chunnel. In each
case,
we obtained data for
nine different scenarios
(combinations
of
transportation
modes).
The database con
sists of 41
possible departure
cities in the
continent and three destinations in the UK
(London, Manchester,
and
Glasgow).
We
chose the
departure
cities for their
impor
tance in
Europe.
The entire database is
pre
sented in the IHEL
report
[1994].
For each
linkage
(one
continental
city
to
one UK
city),
we
examined nine scenarios:
(1)
Truck-Ferry
1
(departing
from the
most often used
port)-Truck.
(2)
Truck-Ferry
2
(departing
from the
second most used
port)-Truck.
(3)
Train-Ferry-Truck:
The continental
train transfers the
goods
to a truck at the
ferry port;
the truck crosses
by ferry
and
makes the
delivery
in the UK.
(4)
Train-Shuttle-Truck: As in scenario
3,
but the truck crosses the channel
on the
Chunnel shuttle.
(5)
Train-Boat-Truck: The continental
train transfers the
goods
to a boat at the
most
popular port.
A truck
picks
them
up
at the UK for final
transport.
(6)
Truck-Boat-Truck.
(7)
Train-Chunnel-Train.
(8)
Combined: Containers travel from
the
departure city
to the closest combined
platform
station
by
truck,
travel
by
train
through
the Chunnel to the combined
plat
form nearest the final
destination,
and then
by
truck.
(9)
Truck-Shuttle-Truck: The truck trav
els
through
the Chunnel on a
special
car.
For two
scenarios,
from
Milan,
Italy
to
London,
UK and from
Porto,
Portugal
to
London, UK,
we
calculated the
transporta
tion costs as the
aggregation
of all the lo
gistics
costs
(transportation, handling
costs
when
necessary, exchange
of
platforms,
and so
forth) (Tables
4 and
5).
Then we cal
culated a
global
cost
by adding
the inven
tory pipeline
costs. We
adjusted
the inven
tory pipeline
cost for the
delay
incurred in
each case
(the
opportunity
cost of the in
ventory
in the
pipeline).
We obtained data on costs from
transpor
tation
companies
(train, trucks, boat,
ferry,
combination),
industrial
companies
with in
ternational
activities,
and
specialized
con
sulting companies.
We
hoped
to obtain re
alistic costs
by taking
into account the
commercial conditions. For each of the nine
scenarios,
we used a combination of trans
portation
and
handling
costs. We obtained
empirical
results for the entire
sample
and
can draw some
general
conclusions as to
the best alternative:
?For western
Spain
and
Portugal,
trans
porting freight
to the UK
by ship
is the
cheapest option.
Truck or combined modes
cost 40 to 50
percent
more. For areas east of
a
North/South
axis
going through
Madrid,
the various
options
are in close
competi
tion;
the worst solution is
only
15
percent
more
expensive
than the best.
?For the Atlantic and areas
bordering
the
INTERFACES 27:3 54
CHANNEL TUNNEL
MODE
Continent Channel
Total Cost Total Cost
-
Transportation for20FF/Kg
for
150FF/Kg
UK Cost
(in FF)
Delay
(in FF) (in FF)
Truck
Ferry
1 Truck
10,189
3
10,456 12,162
(Zeebrugge)
Truck
Ferry
2 Truck
10,189
3
10,456 12,162
(Calais)
Train
Ferry
Truck
9,958
3.5
10,370 12,259
Train Shuttle Truck
11,416
3.5
11,728 13,717
Train Boat Truck
22,452
9
23,253 28,370
Truck Boat Truck
20,288
9
21,039 26,206
Train Chunnel Train
10,204
2
10,383 11,549
Combined
(Milan) 9,776
2
9,954 11,091
Truck Shuttle Truck
11,700
3
11,962 13,673
Table 4: We
compared
different
transportation
modes for
freight coming
from
Milan,
Italy
and
going
to
London,
England.
channel between
Nantes,
France and the
Netherlands,
truck is the best
option.
The
further north the final destination is in the
UK,
the more attractive the combined
option
becomes.
?For
Italy,
all modes are
competitive,
but
shipping by
train is
usually cheapest.
Com
panies
must
weigh
the cost
advantage
care
fully,
because the train offers
poor
service
in the UK.
?For East
Germany,
Austria,
and the rest
of
France,
truck and the combined mode
compete closely.
?For most of
Germany,
truck offers an ad
vantage.
However,
for final destinations in
the north of the
UK,
sending freight by
MODE
Continent Channel UK
Transportation
Cost
(in FF)
Delay
Total Cost
for
20FF/Kg
(in FF)
Total Cost
for
150FF/Kg
(in FF)
Truck
Ferry
1 Truck
13,424
4
13,780 16,054
(Cherbourg)
Truck
Ferry
2 Truck
14,202
4
14,558 16,832
(Calais)
Train
Ferry
Truck
15,169
4.5
15,570 18,127
Train Shuttle Truck
15,367
4.5
15,767 18,326
Train Boat Truck
10,702
7
11,325 13,304
Truck Boat Truck
8,072
7
8,695 12,675
Train Chunnel Train
17,082
3
17,349 19,055
Combined
(Bordeaux) 12,090
3
12,357 14,063
Truck Shuttle Truck
15,729
4
16,085 18,359
Table 5: We
compared
different
transportation
modes for
freight coming
from
Porto,
Portugal
and
going
to
London,
England.
May-June
1997 55
DORMER,
ERNST
Figure
6:
Transportation
alternatives
vary
for
goods going
to London from different locations in
the Continent. Each area indicates the
transportation
alternative that minimizes total cost. For
Area
1,
the boat and truck combination dominates. In Area
2,
the best
option
is boat with either
truck or train. In Area 3 all
options
are
competitive.
For Area
4,
the
ferry-truck
combination domi
nates. In Area
5,
the combined
(Chunnel)
option
is the best. In Area
6,
the combinations truck/
ferry/truck,
all
train,
or combined mode are
competitive. Finally,
in Area
7,
the best
option
is
truck/ferry/truck.
INTERFACES 27:3 56
CHANNEL TUNNEL
ship
is more attractive. The state-owned
train
company
in
Germany
and the harbor
in the north of
Germany provide
combined
low-cost service.
For
shipments
to
London,
we identified
seven areas in the continent
(Figure
6).
For
area
1,
boat and truck
(scenario 6)
and less
often boat and train
(scenario 5)
are the
cheapest options.
For area
2,
boat with truck
or train is
usually
most
competitive.
For area
3,
all
options
are
competitive.
For area
4,
the
only competitive option
is
ferry-truck
(sce
narios 1 and
2).
For area
5,
the combined
op
tion dominates. For area
6,
truck/ferry/truck,
all
train,
and combined are all
competitive.
For area
7,
the best solution is
truck/ferry/
truck
(scenarios
1 and
2),
but the combined
option
(scenario 8)
is also
competitive.
Conclusions
There are no
generic
solutions to the lo
gistic implications
of the Chunnel. Each in
dustry
and each
company
within an indus
try
will have its own limitations and
constraints. In some
companies,
distribu
tion costs are
high
and
significant
(relative
to
sales)
and in
others,
they
are not. How
ever,
by developing general
frameworks for
the issues and
analytical
models for
specific
cases,
we offer a
tool that will allow com
panies
to evaluate and understand the ad
vantages
and
disadvantages
of the Chun
nel. The
analytical
models
supported
with
empirical
data allow
companies
to
quantify
the
impact.
One
company heavily
affected
by
this
study
is the French train
company
in
charge
of
freight
(Fret SCNF).
The head of
its international
department recognized
that our results are
very
useful for its stra
tegic thinking
and
permit
it to refine
some
of its
marketing
and commercial decisions.
The
opening
of the channel tunnel offers
an alternative that can
improve freight
dis
tribution in
Europe. Transportation
solu
tions are not better or worse in isolation
but in the context of the overall
logistics
function. Our research summarizes the
issues that are relevant from a
global
logistics point
of view.
APPENDIX
The
general analytical
model
requires
the
following
notation.
Define:
/
=
subscript
that indicates the
intervals,
i
=
1,2,3,4.
;
=
subscript
to indicate the mode of trans
portation
where t is for train and k is for
truck.
/
=
subscript
to indicate the
linkage
be
tween the UK and the
continent,
that
is,
/
for the
ferry
and c for the Chunnel.
Q
=
predefined quantity
to be
shipped
be
tween the Continent and the UK.
Qji
=
quantity
of
shipment
with the mode
;
for interval i.
Qi
=
quantity
of
shipment through
the
linkage.
Dji
=
distance on mode
;
for interval i.
Di
=
distance on the
linkage,
that
is,
ferry
or Chunnel.
Fji
=
fixed cost for
using
mode
;
in interval i.
Ff
=
fixed cost for
using
the
linkage
/.
Vjqi
=
variable cost for
using
mode
j
as a
function of the
quantity
Q
in interval i.
V?i
=
variable cost for
using
mode
;
as a
function of the distance d in interval i.
Su, S12
=
are the two short intervals in the
Continent.
S2i, S22
=
are the two short intervals in the
UK.
Lu, L12
=
are the two
long
intervals in the
Continent.
?21/ ^22
=
are the two
long
intervals in the
UK.
6j
=
binary
variable
equal
to 1 if the com
pany
uses mode
/
of
transportation,
0
otherwise.
May-June
1997 57
DORMER,
ERNST
?f
=
binary
variable
equal
to 1 if the com
pany
uses the
ferry,
0 otherwise.
ytki
=
binary
variable
equal
to 1 if there is a
change
of
platform
from train to truck at
the end of interval
i,
0 otherwise.
y
m
=
binary
variable
equal
to 1 if there is a
change
of
platform
from truck to train at
the end of interval
i,
0 otherwise.
Fpji
=
fixed cost for
changing platforms
us
ing
mode
;
at the end of interval i.
(??i
=
speed
of mode
/
in interval i.
Ti
=
time it takes to cross between the UK
and the continent
by linkage
/.
Minimize
3 4
FkiSk
+
X
(hi
+
Fpk?jtki
+
X
VkqtQki
+
I
VMiDki
+
Fn6t
+
X
(Fti
+
Fpti)ykti
i=\ i=2
4 4
+
1
VtqiQti
+
I
VtdiDti
1=1 1=1
+
(Ff+VfdDf)?f+VfqQf
+
(Fc
+
VcdDc)(l
-
6f)
+
VcqQc
+
Fpf?f
+
Fpcytk2
+
Fpcjka.
Subject
to
Qn
s
Q6t,
Q*i
s
Q?k,
Qf
=
Q6f
Qn
+
Qh
*
Q,
Qa
+
Qn
=
Q,
Qf
+
Qc
*
Q,
Qo
+
Q?
^
Q,
On
+
Qh
s
Q
Qn
-
Qt2
s
QTfH,
Qm
-
Qk
^
Qr?i,
Qf2
-
Qn
^
Qy?t2/
Qki
-
Qk3
=?
Qym,
(3)
Qt3
-
Qt4
^
Qjtk3,
Qks
-
Qk4
^
Qjkt3
Dn
+
Dkl
>
SuSf,
Dt2
+
Djt2
^
Su6f,
Dn
+
Dtt
^
L?(l
-
6f),
Dt2
+
Dk2
>
L12(l
-
?,),
(4)
Dt3
+
Dt?
>
S2l?f/
D?4
-h
Djt4
>
S226f,
D?3
+
Df?
^
L2i(l
-
?f),
Dt4
+
Dk4
>
L22(l
-
?,).
(5)
Q Lm
Vi,/Am
=
11,12,21,22
sm Q
IZ^
+
i/T/+(l- fi/)Tc
i=l
j=t,k
?fi
(6)
<
Required
Time.
?f
A
?,-
G
{0,1}
V;
7f;iG{0,l}Vf
=
l,2,3A
V;.
(7)
The first
part
in the
objective
function
cap
tures the fixed and variable costs of
using
the
truck in each of the intervals. Wlien the truck
is used for
any
two consecutive
intervals,
no
extra fixed costs are
incurred
(only
the vari
able
costs).
This condition is
captured by
the
binary
variable
6t
and
ytJd.
The same is true
for the train in the second
part
of the
objec
tive function. The third term in the
objective
function
captures
the cost of
using
either the
ferry (6f
=
1)
or the tunnel
(?f
=
0).
The re
maining
terms in the
objective
function
cap
ture the costs incurred for
changing
the
logis
tics
platforms
at the
crossing.
Constraints
(1)
and
(2)
make sure that the
INTERFACES 27:3 58
CHANNEL TUNNEL
predetermined quantity
Q
will be delivered
by any
of the
possible
alternatives. Constraint
(3)
captures
the
changing
of
platforms
and
constraint
(4)
determines the distances
by
mode of
transportation according
to the
pre
defined short or
long
distances. It is assumed
that S
- -
is smaller than L for
any
subinter
val. Constraint
(5)
makes sure that if
quantity
Q
is
going
to be delivered
by
train
(or
by
truck)
in interval i then the
corresponding
distance will be traveled
by
train
(or truck).
Constraint
(6)
is a service constraint for the
rninimum lead time
required. Finally,
con
straint
(7)
is the
binary
constraint.
References
Journal
de la Marine Marchande
1994,
"ADPF: Les
liaisons
transmanche/'
No 393
(February).
Bonnaud,
L.
1994,
Le Tunnel sous la Manche: Duex
Si?cles de
Passion, H?chete,
Paris.
Coton,
M.
1994,
"La
manche,"
FRET
Magazine,
No.
Special
Tunnel,
No. 60
(May), pp.
38-47.
Institut des Hautes Etudes
Logistiques
1994,
"Logistics impact
of the
Chunnel,"
cahier de
IHEL,
No. 2
(November), ESSEC,
Cergy
Pontoise,
France.
Merchant, J. E.; Knowles, J. B.;
and
Acheson,
J.
M.
1991,
'The Chunnel and the
changing
face of a UXunified
European
market,"
Pro
ceedings of
the seventh International
Logistics
Congress, Society
of
Logistics Engineers,
French
Chapter,
Paris,
pp.
198-208.
Project
Cost-CEE
1993,
"Rapport
final d'action:
Evaluation des effects du tunnel sous la man
che sur le flux de
trafic,"
Office of Official
Publications,
European Community,
Luxem
bourg.
Sloan,
A. K.
1991,
"Eurotunnel vision: The new
focus on site
selection,
shipping
routes,
and
business
travel," Journal
of European
Business,
Vol.
2,
No. 3
(January-February), pp.
8-12.
Vicherman,
R. W. and
Graven, J. 1986,
"The
fixed channel link:
Consequences
for
regional
growth
and
development," Regional
Studies
Association
Conference, London,
March 21.
Marie France
Lagraulet,
Chef du
D?par
tement
International,
Direction du
Fret,
SNCF, 44,
Rue de
Rome,
75008
Paris,
France, writes,
"Professors Dornier and Ernst
developed
a
study
for the
Logistics Impact
of the Chan
nel Tunnel in
Europe.
Before this
study
was
done,
many
ideas existed about the
economics and financial
aspects
of the
Channel Tunnel but no serious
approach
had been taken to the
of this
new rail infrastructure.
"The
study
allowed
a
close interaction
between academics and
logisticians
in Eu
ropean companies,
and I would like to ac
knowledge
that the results
presented
are
very
useful for our
strategic thinking
and
permit
us to refine some of our
marketing
and commercial decisions."
May-June
1997 59

The Logistics Impact of The Channel Tunnel

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The Logistics Impact of the Channel Tunnel

Author(s): Philippe-Pierre Dornier and Ricardo Ernst

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