Value added services at intermodal inland terminals and the importance of choosing a moderate innovation path

Abstract

After a stage of growth, in which terminals competed primarily by expanding their capacity, we observe a transition into a stage of quality and differentiation by offering value added services (VAS). This paper presents a generic System Dynamics model in order to analyse the impact of offering VAS on a terminal's operational performance. The developed Stock & Flow model allows understanding mid- and long-term consequences of strategic decisions as it deals with the characteristics of a growing system. We investigate the implementation of two VAS, train OCR gates and a fast lane service for trucks. The results show that terminals benefit from an increase in demand, due to reputational gains caused by improved efficiency. The efficiency increase outweighs the downside of higher investment and transhipment costs. However, it is vital to choose a moderate innovation path and to invest step by step to cope with an increase in demand.