Season 4, Post 31: Move it like the Swiss
In case you missed it, yesterday marked Swiss National Day, commemorating the foundation of the Swiss Confederacy. Say Switzerland to most people and they might naturally think of mountains, chocolate and cheese. However, beyond this bucolic and culinary backdrop, the Swiss also have a deserved reputation for being hard-working and innovative. Amidst the celebrations of 1 August, it would have been easy to miss the formal commencement of a unique project: the build of Cargo Sous Terrain.
The logistics and transportation of goods is a massively complex and costly issue for all firms globally. Ever since the onset of the pandemic, it has been front and centre for executives, with a growing emphasis on just-in-case (as opposed to just-in-time) planning. Heightened geopolitical tensions, rising labour costs and an increasing awareness of environmental priorities have added extra complications into the mix.
Being an organised people, the Swiss have been contemplating these issues for some time. Indeed, with a train system that is often said to run like clockwork, it is perhaps no surprise that leaders first conceived of the idea of Cargo Sous Terrain (or CST) in 2016. The idea behind CST was to provide for long-term freight transportation without having to rely on an expansion of existing road and railing infrastructure. As the name might suggest, the idea is to shift cargo underground. Per the plans, a series of underground tubes full of automated delivery carts would be responsible for moving goods between cities and logistics centres across Switzerland at speeds of 30km/ hour. CST will also be 100% powered by renewable energy sources.
After much debate, the project finally received parliamentary approval at the end of last year. Formal planning and subsequent building will now commence. The estimated cost for the whole project is $30-35bn, which will be funded entirely by the private sector. When complete, the network would span the country, with the first phase (linking Zurich to a major logistics hub west of it) due to come online in 2031. It is hoped that the number of heavy trucks on Swiss roads could fall by 40%. Credit to the Swiss for pioneering such a project, which should yield the country (and its immediate neighbours) some considerable benefits. Whether the template is replicable elsewhere remains to be seen, but it represents to our mind a notable innovation which tackles multiple problems. It will also make visiting Switzerland as a tourist even pleasanter in the future.
2 August 2022
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
Alex Gunz, Fund Manager
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