Swedish furniture powerhouse Ikea has taken freight transport into its own hands, founding Ikea Rail to get goods from Sweden to Germany. The company says this is just the beginning of an IKEA pan-European rail network.
Ikea products from Sweden, chugging to a store near you.
Want to pick up another "Billy" bookcase for your study? Maybe an "Ängby" sofa and a "Jökel" floor lamp while you’re at it? Chances are, if you’re in Europe, the products traveled part of the way from Sweden to your local store by rail, Ikea Rail.
The Ikea Rail trains started rolling this week from the central warehouse Älmhult in southern Sweden to the junction station in Duisberg, Germany. There are five runs a week planned for the beginning, which will save the company 65 trips with conventional freight trucks on Europe’s already overcrowded highways.
"There are two aspects to the project," Wilfried Müller of Ikea Germany ZDF television. "First is the ecological aspect. It relieves congestion on the highways and helps the environment. Secondly, it secures our transport capacity in the future."
The company says it plans on increasing its rail volumes from 18% to 40% over the next five years.
Ikea is the largest company to take advantage of the so-called "Freight Freeways" that have been created to improve the efficiency of cross-border rail transport and are part of Europe’s deregulation of its railways.
Since the first Ikea Rail run travels through three countries, IDEA had to sign an agreement with three European rail administrations: Banestyrelsen in Denmark, Banverket in Sweden and DB Netz AG in Germany. It was the first agreement of its kind and gave Ikea Rail a licence to act as a train operator but use the tracks of the three systems.
The company saw important competitive advantages in starting its own rail operation. It rents the tracks at reasonable rates, is in total control of logistical operations, and its trains will have a much higher average speed than current transnational freight transports, which gets its products to stores - which are multiplying rapidly – in shorter time.
Competition for German Rail
Ikea’s taking of the freight ball into its own hands means Germany’s rail cargo transport system, DB Cargo, has lost a client, at least partly. (At present, Ikea ships some containers via DB Cargo beyond Duisberg.) Not good news, since DB Cargo is already expected to see a 2% loss of revenue this year, largely thanks to intensifying competition in European rail freight transportation.
"When you have as much going on as Ikea does, (the rail network) is an attractive possibility," said Hartmut Mehdorn, chairman of Deutsche Bahn, the German rail system. "But that’s OK. That’s competition. We have a good relationship with Ikea and we’ll see how (the rail project) develops. If we improve our services, maybe we’ll be able to win them back."
But if things go according to the Ikea Rail plan, the company will be shipping even less with Deutsche Bahn in the future. It has expansion plans and says it will press forward with developing an Ikea pan-European rail network. Next stops: Italy and Poland.