Journal of Cleaner Production xxx (2015) 1e12

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Business models for sustainable biofuel transport: the potential for

intermodal transport

n*, Jon Williamsson 1
Jonas Flode
Department of Business Administration, School of Business, Economics and Law, University of Gothenburg, Sweden

a r t i c l e i n f o a b s t r a c t

Article history: The use of solid wood biofuels for energy production in heating plants has increased drastically during
Received 29 May 2015 the last decades. Great interest has been shown in replacing unsustainable road transport of wood fuel
Received in revised form with more sustainable intermodal transport. This paper maps the common business models for biofuel
27 October 2015
transport in Sweden and suggests how these models may be developed to accommodate intermodal
Accepted 25 November 2015
transport. A view of the biofuel supply chain as five overlapping networks (industry, material, operations,
Available online xxx
transport, and infrastructure) connected by four transaction markets (sourcing, operations, transport,
and traffic) have been used. Four typical business models have been found: Regional/National Biofuel
Keywords:
Business model
Company, Local Biofuel Company, Heating Plant Own Account, and Wood Processing Industry. Cooper-
Intermodal transport ation and vertical integration among the actors are important to reach the large transport volumes
Biofuel required for intermodal transport. Key issues to increase the intermodal potential are: increased vertical
Heating plant integration and cooperation, sharing of transport resources and infrastructure, joint purchases,
District heating outsourcing to expert actors, building trust and open communication, and not underestimating the
Transport complexity of intermodal transport. The results have implications for any actor interested in developing
intermodal transport or policy measures. The contribution includes the new approach of developing
business models by using the five-layer network-market model.
© 2015 Elsevier Ltd. All rights reserved.

1. Background development towards more sustainable fuels was particularly

The goal of creating a more sustainable energy system has, in
many countries, meant the replacement of fossil fuels with
different types of forest based biofuels. In particular, the use of solid
wood biofuels for energy in district heating (DH) plants increased
drastically during the decades after the oil crisis in the 1970s
€rheden, 2006). A survey among the world's 30 largest DH
(Bjo
countries shows that 63% of the DH actors are involved in invest-
ment plants for renewable energy sources (Euroheat & Power,
2014) and the EU has required its member states to promote the
use of biofuels for DH (European Commission, 2013). The use of DH
is most widespread in Sweden and the other Scandinavian coun-
tries, accounting for about 40e60% of the residential heating
market, compared to 13% in the rest of Europe (Connolly et al.,
2013) and 3% in the US (Euroheat & Power, 2014). The
* Corresponding author. Tel.: þ46 31 786 5131.

n), Jon.Williamsson@
E-mail addresses: Jonas.Floden@handels.gu.se (J. Flode
handels.gu.se (J. Williamsson).
1 on securing a steady supply of fuel to the plants. As an example, a
Tel.: þ46 31 786 5932.
prominent in Sweden (Ericsson et al., 2004; Bjo €rheden, 2006),
which today largely utilises forest fuels in district heating plants
(HP) and combined heat and power plants (CHP). From practically
nothing in 1970, wood biofuels today account for about 24 TWh, or
37%, of the total energy for DH in Sweden (Swedish Energy Agency,
2014; Swedish Forest Agency, 2014), making Sweden the European
leader in the use of biomass for DH (Connolly et al., 2013). This is a
considerable feat considering Sweden has about 500 HP and all but
a handful of municipalities have DH (Andersson, 2012). In EU-27,
about 15% of DH energy comes from renewable sources (mainly
biofuel) (JRC, 2012), with 1% of Europe's biomass potential used for
DH (Ecoheatcool, 2006). The biofuels used are normally forest
residues (branches etc.) and other types of by-products from tree
harvesting and the forest industry with limited or no other uses.
Biofuel DH can be seen as an example of how value can be created
from waste in an industry (cf. Short et al., 2014) and thereby
contribute to sustainability, as the biomass used are waste products
from traditional forest operations.
This substantial and increasing demand for biofuel places focus

http://dx.doi.org/10.1016/j.jclepro.2015.11.076
0959-6526/© 2015 Elsevier Ltd. All rights reserved.

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
2 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12
large HP requires up to 17 000 tonnes of fuel per week (400e500
truckloads). Logistics are therefore considered a key challenge
when striving to further increase the use of biofuel (Rentizelas
et al., 2009; Gold and Seuring, 2011; Svanberg and Halldo
rsson,
2013). Savings in greenhouse gases amount to approximately 90%
when fossil fuel is replaced with biofuel. Biofuel also brings a very
positive energy balance, as the energy consumed to produce biofuel
represents only 2e5% of the energy in the biofuel, compared to 15%
for fossil fuel (Lindholm, 2010). Transport is significant as it ac-
counts for 37% of the energy consumed in the biofuel chain
(Lindholm et al., 2010) or 25% of the total cost (Brunberg, 2014).
Cost competitive logistical systems are thus of key importance in
reducing both dependence on fossil fuels and the greenhouse
effect.
Currently, 84% of the energy from wood biofuels to Swedish
CHPs is transported by road only and this is the traffic mode the
industry perceives as best meeting their requirements (Awais and
Flode
n, 2014). However, increasingly larger power plants with
challenges in sourcing enough fuel locally and environmental
concerns have sparked an interest in other traffic modes, such as
rail and sea; see e.g., Mahmudi and Flynn (2006) for a Canadian
setting, Tahvanainen and Anttila (2011) for a Finnish setting,
Eriksson (2008) for a life cycle energy perspective, Hamelinck et al.
(2005) for international long haul transport, or Svanberg et al.
(2013) for the special case of the new types of torrified biofuels.
Routa et al. (2013), in particular, highlight the need for more studies
into intermodal transport.
In general, rail and sea transport have a lower variable cost per
km and lower environmental impact than road freight, but rail and
sea transport suffers from high fixed costs and require both speci-
alised terminals and dedicated infrastructure. Intermodal roaderail
transport in particular has been the focus for the biofuel industry.
The concepts of intermodal and co-modality offer opportunities to
utilise the most appropriate traffic mode, or combination of traffic
modes, and so increase the efficiency and decrease the environ-
mental impact of a supply chain. Intermodality concerns the com-
bination of different traffic modes in one transport chain and co-
modality is the most appropriate use of each traffic mode (UN/
ECE, 2001; European Commission, 2006). Both approaches have
received much political interest in recent years (European
Commission, 2006). Intermodal roaderail transport has been
found to have less environmental impact than competing modes
(Kreutzberger et al., 2003; Lindholm and Berg, 2005) and is the
most sustainable transport option when considering all three pil-
lars of sustainability (economic, societal, and environmental)
(Flode
n, 2015). The main driver for intermodal transport is
increasing HP size, as this makes it difficult to source enough fuel
locally. An example is the region around Stockholm where there is a
shortage of biofuel (Roos et al., 2000; Bjo €rheden et al., 2010). The
size of the plant has, in previous research, been considered limited
by available fuel in the region and transport cost (Mitchell et al.,
1995; Kumar et al., 2003; Cameron et al., 2007). However, since
all DH grids are local for each city, there are positive scale effects
from having one large plant instead of several small ones in a city,
although the larger size also increases the impact of logistical costs
on the total costs (Dornburg and Faaij, 2001). As HPs are forced to
source further away, road transport becomes a less attractive op-
tion, both from a cost and sustainability perspective. Also, efficient
long distance transport brings a possibility to utilise price differ-
ences in raw material between different geographical areas,
although currently the domestic price differences are fairly low
(Swedish Energy Agency, 2015). However, despite the potential
benefits and increasing attractiveness, intermodal roaderail
transport solutions for biofuels only amass a market share of a few
percentage points (Flode
n, 2015).

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
It can be argued that intermodal transport constitutes a type of
service innovation (cf. B€ arthel and Woxenius, 2004). Business
research asserts that when introducing innovations it is paramount
that the innovation fits with the existing business model (BM) or
that the existing BM is adapted to the innovation (cf. Chesbrough
and Rosenbloom, 2002; Chesbrough, 2010). We therefore argue
that a contributing reason for the low market share of intermodal
transport is the lack of attractive BMs and that the expansion of
intermodal biofuel transports among existing or new actors must
be accompanied by contextually adapted BMs. BM innovation is
difficult in general but even more so for incumbent players
(Chesbrough, 2010). However, BM innovation requires no heavy
resource investments and thus represents “low hanging fruit”,
especially in markets with good logistical and infrastructure
conditions.
By critically examining prevalent BMs it is thus possible to
highlight areas with potential for improvement and in that way
strengthen not only intermodal transport for biofuels but also
improve the efficiency and sustainability of the DH industry as a
whole, given current conditions and regulations on the Swedish
market.
To support the growth of intermodal biofuel transport in Swe-
den and markets with similar characteristics we use this paper to:
 map the common BMs for biofuel transports in Sweden
 and suggest how these BMs may be developed to accommodate
and support intermodal transport, through the use of a network
based perspective on the biofuel supply chain consisting of five
overlapping networks connected by four transaction markets.
The paper starts with an introduction to BMs in this section,
followed by a method (Section 2) and an overview of the biofuel
supply chain and current business models (Section 3). This is fol-
lowed by a discussion of intermodal BMs based on the five layer
model (Section 4) before Section 5 analyses the findings, and the
paper is concluded in Section 6 with the key issues identified.
Due to a gradual move away from traditional production and
marketing strategies, the importance of the BM for the success of
companies has become more apparent during the last decades
(Chesbrough, 2010). Theoretically, it is thought that every company
active in a competitive market needs a BM to survive (Teece, 2010)
and it would thus be fair to assume that each individual company
that participates in an industrial value chain is dependent on a
viable BM. The BM defines what value is for the main stakeholders
and by doing so it can be viewed as an attempt at explaining what
motivates them to interact with the company (cf. Morris et al.,
2005). A BM is therefore more than a description of organisa-
tional flows or accounting data. It is a representation of the business
logic that a company builds upon (Margretta, 2002). Analytically
the BM is a concept separate from both business strategy and tac-
tics, but the line between these concepts is blurred (cf. Teece, 2010).
It has been suggested that strategy is the act of choosing BM while
the BM is the result of historical business decisions (Casadesus-
Masanell and Ricart, 2010).
Until recently the BM was largely an overlooked concept (Zott
et al., 2011), but it has proven its usefulness both to researchers
and practitioners in the effort to support sustainable development.
The relation between sustainability and BMs was established and
developed by authors such as Stubbs and Cocklin (2008) and Porter
and Kramer (2011). Later work by Boons and Lüdeke-Freund (2013)
advanced the understanding of the connection between the con-
cepts and innovation while stressing the importance of an inte-
grative research approach. Short et al. (2014) show how BM design
may drive company sustainability principles beyond efficiency
gains and opportunity exploration. The authors also assert that BM
 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12 3

innovation is a continuous evolutionary process in companies, a
result that can be viewed as supporting Demil and Lecocq's (2010)
argument for a path dependency in BM development. Boons et al.
(2013) suggest three aspects that are vital for sustainable BM
innovation: i) a value proposition based on the exchange of value,
ii) value creation that point towards the larger system, and iii) a fair
distribution of costs and benefits. Bocken et al. (2014) explore the
role of sustainable BMs further and suggest that sustainable BMs
may be categorised in three general archetypes: technological,
social, and organisational. Intermodal transport solutions often
improve resource and energy efficiency, striving to switch road
transport to rail. In general, intermodal transport solutions may
therefore be argued to be an example of the first, i.e. technological,
group of sustainable BM.
Despite the rising interest in BMs, no studies have been found
that explicitly study the BMs in the biofuel industry. Some research
has been done on BMs for district heating, presenting models for
wood heat production in Finland (Okkonen and Suhonen, 2010),
surveying the Swedish industry (Sandoff and Williamsson, 2015),
and intermodal transport, e.g. Levia €kango € as et al. (2007), Flode

n
(2009), Flode
n and Sorkina (2014).
A review by Baden-Fuller and Morgan (2010) shows that the BM
concept is largely used in three ways: i) categorising within a tax-
onomy for companies, ii) scientific inquiry in much the same way as
models are used in the fields of biology, mathematics, and eco-
nomics (i.e., exploring how changes to the model produce different
results), and iii) as a recipe for how a company ideally should be
configured in a particular context. This study relies on the BM in
order to pursue the two latter types of endeavours and for those
purposes it is common to utilise an analytical framework. One of
the most prevalent frameworks for BM analysis is the ‘Business
model canvas’, developed by Osterwalder and Pigneur (2009),
which builds on nine modular blocks. See Table 1.
While ubiquitous, the framework suggested by Osterwalder and
Pigneur (2009) also has demerits. A glaring issue in relation to
sustainability is the lack of third party stakeholder representation.
A recognition of a wide range of stakeholders is important for
sustainable BMs (Stubbs and Cocklin, 2008) and is, as indicated
above, one of three paramount aspects presented by Boons et al.
(2013). Unless value and costs allocated to such actors are
acknowledged by customers, suppliers or producers, they will not
be recognised in the framework. Consequently, the notion of ex-
ternalities (cf. Cohen and Winn, 2007) has to be acknowledged.
2. Method
The BMs for the supply chain in the industry were studied
through six telephone interviews, six face-to-face interviews, one
e-mail interview, and eight site visits. See Table 2.
The semi-structured interviews were made between the sum-
mer of 2012 and the winter of 2013, lasted about 60e90 min each,
and were recorded and transcribed. The interviews were supple-
mented with a literature study using the main scientific article
databases. During the site visits representatives from several steps
within the biofuel value chain, such as drivers, fuel quality con-
trollers, fuel purchasers and site managers, were approached and
interviewed. Due to the noisy environment recordings had to be
replaced by note-taking. The notes were reviewed directly after the
visit and the impressions summarised in writing. When allowed,
cameras were used to document the operations.
Based on the data collected, the main BM in the Swedish biofuel
industry is mapped in the Osterwalder framework. The BMs are
then analysed through a five-layer network-market model of the
biofuel supply chain (see Fig. 1), linking the supply chain networks
to the transaction markets in the supply chain. The BMs have been
validated through two workshops with industry representatives.
The suggested models were sent out beforehand to the eight par-
ticipants and were then presented at the meeting. The models were
discussed in a roundtable discussion. Based on the feedback, the
models were adjusted before the second workshop, which followed
the same setup.
The biofuel supply chain can be viewed as five overlapping
networks, which are connected by four transaction markets. The
different layers are connected and build upon each other. The
concept is a development from the generic models by Wandel and
Ruijgrok (1995) and its extension by Waidringer (1999). The top
level is the Biofuel industry, where the demand and sources for
biofuel are located; for example, forest areas and heating plants.
This is connected by the Sourcing market to the Material flows. The
sourcing market is where the material flows are determined by
matching the possible material flows with the sources and de-
mands of the industry, showing what type of raw material is
flowing from where and to what consumer. The material flows are
connected to the Operators through the Operations market. This is
where the operators meet the material flows and the flows are
allocated to the operators managing the flows, showing which ac-
tors are managing and controlling the flow. The operators are
connected to the Transport and Treatment through the Transport
market, where the operators manage the physical transport and
treatment activities through the available resources on the market
(e.g., by designing the physical transport flows, subcontracting the
physical transport, determining chipping location, etc.). On the
bottom layer we find the Infrastructure on which the activities are
performed, connected by the Traffic Market to the transport and
treatment. On the traffic market, the flows are allocated to the
possible infrastructure. The layers build upon each other and a
supply chain must function on all levels. For example, the material
flows rely on a suitable infrastructure. Through the layers, each

Table 1
The nine business model building blocks (Osterwalder (2004) and updated in Osterwalder and Pigneur (2009)).

Pillar Building block of Description

business model

Product Value proposition A Value Proposition is an overall view of a company's bundle of products and services that are of value to the customer.
Customer interface Customer segments An organisation serves one or several Customer Segments.
Channels Value propositions are delivered to customers through communication, distribution, and sales channels.
Customer relationship Customer Relationships are established and maintained with each Customer Segment.
Infrastructure Key activities Key Activities are the arrangement of activities and resources that are necessary to create value for the customer.
management Key resources Key Resources are the physical, financial, intellectual, or human resources required to offer and deliver value for the
customer.
Key partnerships Key Partnerships are the voluntarily initiated cooperative agreement between two or more companies in order to create
value for the customer.
Financial aspects Cost structure The Cost Structure is the representation in money of all the means employed in the BM.
Revenue streams Revenue streams result from value propositions successfully offered to customers and describe the way a company makes
money through a variety of revenue flows.

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
4 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12

Table 2
Interviews and site visits conducted.

Sector Number of interviews Site visits Approximate number of actors in the sector in Sweden

Road 1 e 10e15 larger actors and a large number of smaller independent haulers, often with only one truck.
Rail 1 e 2e3 involved in biofuel transport.
Sea 1 (e-mail) e 1e2 Swedish actors, in addition some international actors.
Terminal 1 2 Very few independent terminal companies. Most terminals operated by forest/biofuel or energy
companies (included in those interviews).
Biofuel provider 1 e 20e25 (Svenska tra€dbr€
anslefo€ reningen, 2015)
Energy company/HP 8 6 115 companies using biofuel for DH, of which 62 smaller than 100 GWh/annually and 90 smaller than
200 GWh/annually (Svensk Fja €rrva
€rme, 2015). Interviews include both large and small companies.

3. The biofuel supply chain

The biofuel supply chain is here described based on the in-

Fig. 1. The five-layer network-market model of the biofuel supply chain.
supply chain competes with other supply chains within the biofuel
industry and outside the industry for capacity and resources.
Each supply chain chooses a path through the layers, where the
path selected can be viewed as a vital part of the BM and thus the
interactions between the layers as pivotal points in the BM design.
The networks represent the potential options and the markets the
selection of path, thus providing a structure for the development of
intermodal BMs.
In Table 3 we present the main options that managers have
when making decisions related to the different layers.
Decisions related to the options in Table 3 are mainly influenced
by six key challenges that managers have to take into consideration
when shaping operations (see Table 4).
terviews and literature review. The HPs burn wood material, nor-
mally forest residues, and other by-products from tree harvesting,
that have been chipped into smaller pieces to generate heat and/or
electricity. A typical supply chain starts in the forest where the
wood biofuels are harvested. Normally, the biomass is left unpro-
cessed in piles by the harvesting site in the forest for 6e12 months
to dry before being picked up (cf. Lehtikangas, 1999). Another origin
of the supply chain is the wood processing industry (e.g., sawmills),
where by-products such as sawdust are collected. The biomass is
then transported by road, either directly to a power plant (49% of
energy) or to a terminal/storage (Awais and Flode
n, 2014). The
amount of fuel passing a terminal ranges from 20% to 60% for in-
dividual companies (Enstro €m et al., 2013). HPs try to keep the road
transport distance as short as possible due to the low value and
density of the fuels. As an example, one respondent stated that “at
100 km it starts hurting and at 150 km it is really painful”. Road
transportation is mainly used for the initial and final haul of the
wood biomass (Bjo €rheden et al., 2010). Rail or ship transport can be
used for long distance transport from the terminal to the plant/
other terminal, although 84% of the energy used in Swedish CHPs
are transported by road only (Awais and Flode
n, 2014). Storage is
present at locations such as at power plant, terminals, or along the
road in the forests. Chipping is carried out either at the forests or
terminals to increase the density of the biomass and improve
transport efficiency (Bjo € rheden et al., 2010; Eliasson and Picchi,
2010; Spinelli et al., 2011). Transport accounts for approximately
25% of total cost of the fuel delivered at the HP, or almost 60% of the
supply chain cost from pick-up of unprocessed biomass in the forest
to delivery of woodchips at the HP (Brunberg, 2014). Typically,
biofuel is sold by a biofuel company and includes delivery to the HP.
The biofuel company could be an independent company, but is
commonly a forest owner or association of forest owners. The
increased demand for biofuel in recent years has caused the forest
companies to become increasingly active on the energy market,
either directly or by starting biofuel subsidiaries. Since the demand
for heat is dependent on the daily temperature, contracts are often
signed per season with call-offs made each week for next week's
demand. See Routa et al. (2013) or Wolfsmayr and Rauch (2014) for
a more detailed description of a typical supply chain.
Main logistical challenges in the supply chain include: seasonal
variability, storage, chipping, low density, and dependency on po-
litical policies (Awais and Flode
n, 2014). Seasonal variability refers
to the demand for heat that is highest during the winter and very
low during the summer, resulting in unbalanced use of machinery
and equipment and a need for storage. Commonly, HPs shut down
in April and start again in late August, with peak demand Decem-
bereFebruary. Storage is essential to balance out uneven demand
due to supply chain disruptions and changes in outside tempera-
ture affecting short-term heat demand. The choice of chipping
location and equipment has a large impact on the supply chain, as

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12
Table 3
Network options available in the channel.
Network
Biofuel industry
Material flow
Operators
Transport and treatment
Infrastructure
Table 4
Main network challenges.
Market Main network considerations
Sourcing Where to source? What material to source?
Operations Which operators to use?
Transport Which transport modes to use? Where to chip?
Traffic How to route and schedule vehicles and equipment?
the biofuel has significantly different transport properties before
and after chipping. Chipped biomass is more compact than wood
residues, thus increasing transport efficiency. The industry is also
dependent on political decisions, such as subsidised investments in
DH grids. Particularly noteworthy is that a majority of the HPs in
Sweden are municipality owned (Svensk Fja €rrva
€rme, 2014) and are
thereby subject to political decisions and regulations on public
tendering.
The low density and low value of biofuel make it hard for biofuel
to carry any larger transport costs. Traditionally, the HPs have
therefore sourced their fuel locally, which in essence forms a local
monopoly where local suppliers often only have one potential
customer and the local HP only has the local forest owners to source
from (Westin and Lagergren, 2002; Mo €rner, 2010; Awais and
Flode
n, 2014). However, large HPs that have difficulties in sourc-
ing their demand locally have increasingly started looking into
long-haul intermodal transport solutions, normally with rail. The
reason being that rail can offer lower transport costs on longer
distances compared to road. However, these cost savings must not
be outweighed by additional costs for terminal handling and road
haulage to/from the terminals. Therefore, intermodal transport is
only competitive against road on longer distances with large
enough volumes to fill a train. Typically, distances of at least
200e250 km are mentioned (Flode
n, 2015). Load volume is the
limiting factor for rail transport of chipped biofuel, while weight is,
in most cases, constraining for road. An intermodal solution has
higher fixed costs and is less flexible than road, as it requires in-
vestments in terminals and rolling stock, or that long term con-
tracts for at least a full season are signed with the operators.
A reoccurring theme among the respondents is the fundamental
view of the industry as a business. Although most HPs are munic-
ipality owned and some forest and transport companies have state
interest, the focus is on doing business and delivering energy to
their customers at a low cost. This is of particular interest in the
sustainability balance between environmental effects and costs,
where the industry is not willing to pay extra for a lower envi-
ronmental impact. HPs emphasise that they have not been
instructed by their municipality owners to pay extra for this. Biofuel
is a generic commodity product with similar properties, irre-
spective of supplier. This puts competitive pressure on price as
there is little possibility for the supplier to segment the product or
market. The BMs are therefore very focused on the physical activ-
ities (e.g., transport), and less on intangibles such as marketing,
design, etc.
The HPs are not competing for the same customers as the local
heating grids are not connected. The HPs are considered to have a

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
5
Market framework
Location of raw materials; location of plants
Possible links
Available operators and partners, including company internal operations
Available options for transport and treatment
Available infrastructure
natural monopoly in the distribution area that they manage
(Westin and Lagergren, 2002; Mo € rner, 2010; Awais and Flode
n,
2014) and are competing against other heat sources such as heat
pumps, electric heating, etc. HPs view other HPs not as competitors
but as colleagues. However, there are few formal cooperation
agreements among the actors in the supply chain, other than
informal discussions and an exchange of information. For example,
one transport operator stated that their customers are not inter-
ested in receiving joint bids from cooperating actors. One biofuel
company respondent stated that when they build a terminal they
take the risk to get a competitive advantage, and have no interest in
sharing the terminal with a competitor. However, outsourcing and
subcontracting is very common in the industry, where one actor
holds the contract and then subcontracts to others. Transport is
commonly subcontracted since the biofuel companies have little
interest in investing in transport equipment as their demand for
transport is only seasonal (winter) and there are plenty of smaller
independent transport operators that can be subcontracted. Sub-
contracting can also be used to acquire extra capacity during peak
periods, both for fuel and transport resources. Municipality-owned
HPs are further limited by Swedish municipality law that states that
municipality activities can only concern the municipality's
geographical area or its citizens, which in essence limits their op-
erations to that municipality (Municipality law, 1991). For a further
description of the biofuel market, see e.g., Ericsson et al. (2004),
Olsson and Hillring (2013), Flode
n (2015), or for the Swedish DH
sector see Magnusson (2012), and for the historical development in
Andersson (2012) and Bjo €rheden (2006).
The biofuel market aimed at HPs is thus characterised by large
volumes (never less than a full truckload) of standardised forestry
by-products and seasonal contracts between industrial actors. This
makes the market for biofuels for HPs separate from other biofuel
markets due to different actors and the raw materials involved; e.g.,
wood pellets for household burners are of different quality and
utilise a different supply chain structure operated by the pellets
manufacturers aim at the consumer market, and biomass for
ethanol utilise different raw materials, such as agricultural
feedstock.
Each supply chain is coordinated by a channel leader that uses
his power to coordinate the channel and to prevent independent
channel members from operating only according to their own self-
interest. Power is, thus, commonly defined as the ability of one
channel member to make another channel member do what he
otherwise would not do (see e.g., Stern and El-Ansary, 1992;
Bowersox and Closs, 1996; Wilkinson, 1973). The origins of power
are multiple, but commonly mentioned factors are the level of
dependence between members (El-Ansary and Stern, 1972;
Wilkinson, 1973), the ability to reward and punish (Stern and El-
Ansary, 1992), expertise (Stern and El-Ansary, 1992), and
customer contact (Jensen, 1990; Lambert et al., 1998). See also Olsen
et al. (2014) for a review. The studied biofuel supply chain can have
different channel leaders depending on the BM chosen. From an
intermodal perspective, a channel leader is the actor that the cus-
tomers associate with the transport (Flode
n, 2007) or the actor that
(Levia€kango€as et al., 2007, p. 722): sets the service level for the
6 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12
channel, makes the agreement with the client, collects the freight
from the clients, negotiates rates with the railroads, credits the
subcontractors their shares, and carries the biggest economic risk
in the corridor. In a biofuel supply chain, this normally falls on the
biofuel company responsible for arranging the transport and
holding the contract with the HP.
Following the results from the interviews, literature, and
network description above, four generalised BMs can be created
with the business model canvas. The models represent the most
common models in the Swedish industry and focuses on the overall
model of the channel. The scope of the models starts after har-
vesting and ends at the HP. Most HPs' supply will be a combination
of several of the models, as the HPs commonly use several different
channels in parallel for their fuel. The models are Regional/National
Biofuel Company, Local Biofuel Company, HP Own Account, and
Wood Processing Industry. See Table 5.
The Regional/National Biofuel Company model is the most
common. A biofuel company sells the biofuel to the HPs and is also
responsible for managing the transport. The biofuel company often
has its own forests (or represents an association of forest owners),
but could also purchase biofuel from smaller forest owners.
Transport is outsourced. Terminals are used for transhipment and
storage to even out demand fluctuations. The biofuel company can
operate its own terminals or use external terminals. The HP is the
customer that orders fuel in a business-like manner and puts the
responsibility on the biofuel company to manage all practical de-
tails. Each biofuel company has several customers and operates
over a large geographical area. Due to their size, the companies are
flexible to balance demand from different customers and have the
possibility to engage in advanced logistical setups. This model has
the biofuel company as the channel leader.
The Local Biofuel Company model is common among smaller
HPs. The fuel is bought by the HP from a local provider who delivers
by truck from the local region. This is similar to the Regional/Na-
tional Biofuel model with the biofuel company as the channel
leader, but on a smaller scale where the local provider is often also a
forest owner or local association of forest owners. Due to the local
focus, transport is limited to road and smaller local hauliers are
frequently used. Terminals are not always used. The local biofuel
company can also operate its own trucks. The local monopoly be-
comes clear in this model where the local supplier regularly has
only one potential customer, which also brings a closer
relationship.
In the Heating Plant Own Account model, the HPs take a more
active role in the supply chain by arranging the inbound transport
themselves as their own account transport. This is more common
among large plants, in particular in supply chains involving large
volume transport modes such as sea or rail. Although the transport
is commonly outsourced, the plant becomes responsible for ar-
ranging and planning the transport and also, to some extent,
managing the demand fluctuations. The plant takes the role as the
channel leader.
In the Wood Processing Industry model, the wood processing
industry heavily influences the conditions. The industry sells waste
products, such as sawdust or bark from a sawmill, for biofuel.
Production pace is set by the demand for the industry's wood
products and not by the needs of the HPs. Supply Chain Manage-
ment distinguishes between push and pull chains (cf. Simchi-Levi
et al., 2008; Collier, 2010; Stevenson, 2012). This is a push chain
from the wood-processing industry where the contracts often state
that a biofuel industry must accept all waste products produced, as
compared to the other models where the HP demand “pulls” the
needed biofuel. This model can use storage at the industry or ter-
minals to even out the demand, but is most often used for the base
demand of a HP where demand fluctuations are managed through

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
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other suppliers. The most extreme example of this model found in
the study was a plant located next to a sawmill where the plant was
supplied by a conveyor belt directly from the sawmill. Although this
model is heavily influenced by the wood-processing industry, it
does not take on the role of channel leader as there is no wish to get
involved in the biofuel industry. For example, one manager at a
paper mill stated, in relation to investing to improve the quality of
their bark by-product, that they are in the business of making paper
and are not interested in doing other things (Johansson, 2005). The
transports and balancing the continuous fuel supply with the de-
mand of the HP is managed by the biofuel companies that take on
the role as channel leaders. A special case of this model is if an HP
sources directly from the forest industry using the heating plant
own account model. In that case, the HP would take over the re-
sponsibilities of the biofuels company as channel leader.
4. Business models and the five layer network
As previously discussed, intermodal transport requires large
freight volumes and longer transport distances to be profitable. Of
the generalised BMs, the Local Biofuel Company model cannot be
used for intermodal transport due to the local focus. Remaining
models have the potential to include sustainable intermodal
transport. A large plant could have an intermodal flow dedicated
for their plant. However, this would significantly limit the number
of possible intermodal flows. To be fully efficient, a full train of
approximately 2e2.3 GWh is preferably operated at least 3e5 days
per week. This represents an annual flow of
150 000e300 000 MWh, which is a very large plant. Only about
10e15 HPs in Sweden produce more than 300 000 MWh annually
(Energimarknadsinspektionen, 2014). Several of these already use
intermodal transport solutions while others are not located close to

n, 2015). From a risk perspective, it is also unwise to
a rail line (Flode
rely on only a single train service for all fuel. An increased use of
intermodal transport requires cooperation among the actors where
several actors share the intermodal solution to gain mutual benefit.
Increased cooperation is a key aspect in the intermodal BM, as
intermodal transport requires large volumes and a more compli-
cated logistics setup with more actors involved (Zomer and Krupe,
2009). As a consequence, long-term relations are required. Tradi-
tional intermodal container transport (e.g., container shipping)
have solved these issues by using the standard ISO-container and
by operating between destinations with large transport demand,
thus targeting a large number of smaller customers by allowing
individual customers to just ship a few containers in the system.
However, biofuels are constrained by a limited number of inter-
modal forest terminals (Kons et al., 2014) and a limited number of
HPs in each area, and are thus not able to easily reach a large
customer base for each intermodal service. Instead, the intermodal
services must be tailor-made to attract large enough volumes.
The BM view elevates the importance of the co-creation of value
that firms do together with suppliers, partners, and customers
(Nenonen and Storbacka, 2010). Co-creation can be exemplified in
the case of suppliers with time-related aspects of value creation
(having the right amount of raw materials or products available at
the right time), in the case of partners with aspects connected with
accessibility (being able to provide access to the product), and in
the case of customers with the attachment of values and attributes
to the product (i.e., environmental, cultural, and price aspects).
To achieve co-creation, companies involved in a supply chain
may either collaborate or integrate. Within BM research voices have
been raised that collaboration or openness should be thought of as
a key component of BM configuration (e.g., Chesbrough, 2006,
2007). With ‘open’, Chesbrough (2006) means a BM configuration
that relies on external sources for important functions such as
 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12 7

Table 5
Generalised business models in the biofuel industry.

Pillar Building The regional/national biofuel The local biofuel company model The heating plant The wood processing industry model
block of company model own account model
business
model

Product Value Timely delivery of required forest Timely delivery of required forest Timely delivery of Delivery of wood-processing industry
proposition biofuel. biofuel. required forest biofuel. by-products as biofuels.
Customer Customer All types of HPs. Sells to several A limited number of HPs in the Own HP. One or a few HPs.
interface segments HPs. local region. Sells to one or a few
HPs.
Channels Direct contact with the HP. Direct contact with the HP. Internal at the HP. Direct Contact with the HP through a biofuel
contact with the suppliers. company that acts as channel leader.
Customer A contractual relationship, often A contractual relationship, often A close internal A contractual relationship via the
relationship per season, where the supplier is per season, where the supplier is relationship, combined biofuel company, often per season,
often one of many suppliers to the often one of a few suppliers to the with a contractual where the supplier is often one of
HP. HP. Often repeated contracts with relationship with one or many suppliers to the HP.
the same local HP. several suppliers.
Infrastructure Key Sourcing and/or harvesting of Sourcing and/or harvesting of Sourcing of wood biofuel, Producing wood industry by-products.
management activities wood biofuel, managing wood biofuel, managing managing fluctuations in Coordinating the continuous fuel
fluctuations in demand, and fluctuations in demand, and timely demand, and timely supply from the industry with the
delivering chipped biofuel timely delivery to the HP. delivery to the HP. Supply fluctuations in demand of the HP and
to the HP. Supply Chain Chain Management. delivering to the HP. Supply Chain
Management. Management.
Key Access to wood material. Access to Access to wood material. Access to Access to terminals, Wood industry plant. Access to
resources terminals, storage, machinery, and storage, machinery, transport storage machinery, and terminals, storage, and transport
transport equipment. equipment, and sometimes transport equipment. equipment.
terminals.
Key Several road transport companies, A few road transport companies. A few road transport Biofuel company and its transport,
partnerships with rail and/or sea transport companies with rail and storage, and terminals partners.
companies sometimes occurring. sea transport companies
Terminal and storage companies. sometimes occurring.
Forrest owners.
Financial Cost Large share of outsourcing. Outsourcing common. Transport Large share of outsourcing. Large share of outsourcing. Transport
aspects structure Transport and raw materials are costs are the largest costs. Transport and raw costs are the largest costs.
the largest costs. materials are the largest
costs.
Revenue Price for delivered biofuel paid by Price for delivered biofuel paid by HP's internal allocation of Price for by-products and delivered
streams the HP according to contract. the HP according to contract. funds. biofuel according to contract.

innovation, delivery, or commercialisation. An open BM is therefore
a collaborative BM. The concept is commonly linked to innovation,
but is applicable in any situation where a company needs to
establish relations that allow for the development of shared
expertise or resources. Examples can be found in the car industry,
where platforms are developed in alliances between manufac-
turers, as well as in the software sector, where common software
platforms are used to cut costs. Standardisation is a key aspect in
such collaboration, but trust is also an important factor in making
collaboration work. Since an open BM creates dependency between
the involved parties, trust and communication are paramount for a
beneficial co-development of the BM. Collaboration is either formal
or informal (e.g., Powell, 1998) with the success of the latter type
often building on trust (cf. Gassmann et al., 2010). Formalisation of
collaboration is, however, essential for contractual arrangements
between actors and an increased formalisation of collaboration can
be used to increase efficiency, in particular arrangements but also
as a way to standardise relations with actors that are similar. The
standardisation of collaboration can be achieved through different
means, but is often conducted within frameworks such as ISO
standards.
BM research offers two motives for integration and cooperation
in a supply chain, namely the bundling (incorporating attractive
features) and unbundling (disassembling and separating unwanted
features) of BM components, such as production, distribution, or
different parts of the value proposition (cf. Hagel and Singer, 1999).
The terms bundling and unbundling can be exemplified with the
bundling of consumer-related goods (e.g., Bakos and Brynjolfsson,
1999) as well as the unbundling of services and production
within utilities due to regulatory changes (e.g., Birch and Burnett-
Kant, 2011). The options of bundling and unbundling expose the
fundamental question of whether there are parts of the BM that can
be performed more efficiently by combining or eliminating them
from the scope of the company.
Research on re-organisation and divestment shows that eco-
nomic value can be realised by managers to actively work with the
bundling and unbundling decisions as a strategic alternative (Hagel
and Singer, 1999). In so doing, managers may focus activities and
lead the company in a more favourable direction. Tangible benefits
of an organisational specialisation through unbundling may
include clearer responsibilities, improved cost management, and
higher efficiency. A disinvestment may also free up resources the
company can use in its core business.
In relation to supply chains in biofuels, collaboration can take
different forms as the key to an increased use of intermodal
transport. The five-layer model (Fig. 1) shows potential areas for
cooperation and bundling/unbundling.
4.1. Sourcing market
Cooperation can exist in the sourcing market where plants make
coordinated purchases. One example of such cooperation on this
level is the organisation EFO, which is a company jointly owned by
eight HPs with the purpose of reaching scale effect in the purchase
and import of biofuels, oil, coal, etc. and the chartering of ships
(EFO, 2014). Joint purchases help reach the volumes necessary for
intermodal transport. However, a challenge is that there are seldom
more than one or a few large HPs in a region, thereby limiting the

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
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transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
8 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12

possibility of finding a suitable joint terminal for deliveries. See

Fig. 2.
The joint purchasing can be performed by the HPs directly or by
a middleman, for example a forest company. In reality, this is what
many biofuel companies do when they purchase wood material
and sell to HPs, but since they operate in an open market it is not
necessarily true that two adjacent HPs use the same suppliers. A
purchasing cooperation among the HPs would secure larger vol-
umes (and thereby possibly lower prices), but bundling this in their
BM would increase their transaction costs by forcing them to take a
more active part in the process, increasing their workload, and
opening potential conflict areas.

4.2. Operations market

The operations market assigns the flows to the operators, who

have several cooperation options. The options can be divided into
horizontal cooperation, horizontal integration, vertical coopera-
tion, and vertical integration. The horizontal activities occur on the
same stage in the supply chain, e.g., when two transport operators
cooperate. Vertical activities occur between two stages in the
supply chain, e.g., when an HP cooperates with a road transport
company for its transport. With integration, the full control and
ownership of the resources is held by one actor, while in cooper-
ation there is only an alignment of direction and control across the
stages. Horizontal integration is a production-related expansion,
either through mergers, acquisitions, or organic growth, within a
stage of the supply chain where the company is already positioned.
Vertical integration is a combination of the decision about to what
degree to internalise the sales and the production of a product or
service (Harrigan, 1983). Just as with any strategic decision, making
the decision to integrate in a horizontal or vertical fashion should
be highly contextual and thus contingent on many, often idiosyn-
cratic, factors. Without integration or cooperation, there is only a
pure market exchange where each actor is responsible for its own
operations. The biofuel company that subcontracts the transport
operations today typically manages coordination of the transport
operations.
Horizontal cooperation or integration among transport and
biofuel companies could increase intermodal transport by
combining flows from several actors. However, the industry is
competitive e respondents have stated little interest in horizontal
cooperation, and few examples are found. The interest to cooperate
is larger among smaller actors who have more to gain from coop-
eration, but this also remains at a low level. For example, attempts
have been made of swapping fuel between suppliers to keep down
transport distances, e.g., a supplier in the north with a customer in
the south swaps fuel with a supplier in the south that has a
customer in the north. The northern supplier thus delivers directly
to the northern customer, under the southern supplier's contract,
and vice versa. The potential is large (Jo € nsson et al., 2014), but ac-
tors are reluctant, stating a lack of trust as a major issue and the risk
that the partner delivers low-quality fuel. However, it should be
noted that market-based subcontracting on the transport market is
common at the same stage, e.g., one road haulier subcontracting
another.
Horizontal integration is the merger of transport operators,
biofuel companies, etc. at the same stage in order to create larger
companies and thereby aim at larger flows and scale effects. There
have been few horizontal mergers in recent years, and it is unlikely
that the possibility of intermodal biofuel transport would be any
significant driver for mergers, as this would constitute only a small
part of the operations. Many companies are also very small; for
example, among Swedish road hauliers 48% have only one truck
and only 4% of the hauliers have more than 15 trucks (Sveriges
Fig. 2. Biofuel based heat production in Swedish district heating plants. Own map
based on data from Svensk Fja€rrva
€rme (2015).
Åkerifo€retag, 2013). Sixty-eight percent have less than 5 em-
ployees and only 2% have more than 50 employees (Trafikanalys,
2013). Some cooperation exists between road hauliers in local
road haulage associations. From a geographical perspective, the
industry is geographically dispersed and many companies are
operating in only one local region, which limits the number of
possible partners.
Vertical cooperation occurs but is seldom formalised. Re-
spondents state that they tend to use the same transport com-
panies and suppliers each year but look at the relationship as
business based on contracts and not as cooperation. Some HPs state
that they purchase too small volumes to develop any deeper re-
lations with the transport companies. Contracts are normally
signed per season, and actors claim to cooperate to solve any
problems once the contract is signed, but before that the rela-
tionship is pure business. If the cooperation does not work out, they
will not get the contract next season. The hierarchy is clear, with the
actor holding the contract to the next step in the chain having
absolute power.
Vertical integration occurs in the chain and common examples
are forest and biofuel companies owning terminals. For intermodal
transport, there are examples of HPs managing their own inter-
modal rail system. Note that the operations could be subcontracted.
Respondents state that vertical integration brings a competitive
advantage (e.g. by controlling a terminal), and could also bring
more concentrated goods flow suitable for intermodal transport by
not dividing it on several actors. For example, as the average CHP

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
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 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12
has 14 suppliers (Awais and Flode
n, 2014) that might be unwilling
or unable to cooperate, an HP can vertically integrate the transport
operations and take the role as coordinator. The transport would
most likely still be outsourced, but now by the HP and not the
biofuel supplier. However, by unbundling the BM the HP now buys
a different product, as they only buy fuel now and not fuel delivered
at the plant. It is important to not underestimate the complexity in
managing the transport system. Expertise and experience is
required for a successful implementation (Flode
n, 2007; Sorkina,
2012) and increased cooperation, and various consolidations in-
crease the complexity of the intermodal BM (Zomer and Krupe,
2009).
4.3. Transport market
Extensive subcontracting occurs on the transport market as
many of the operators do not own or manage their own transport
resources. Cooperation options around the transport relate to the
physical transport, such as sharing a train or a ship. HPs that do not
have enough volume to fill a train could share this with other HPs,
either as using the train e.g., every other day, or running the train to
a location close to both plants. By sharing resources, the operators
can improve the potential for intermodal transport. Of particular
interest is cooperation outside the biofuel industry around return
flows. Biofuel flows are unbalanced and vehicles often have an
empty backhaul. Cooperation with other industry could result in
return flows that could lower the total transport costs, although
studies have found the possibility of finding suitable return flows
very limited (Flode
n, 2015). Currently, all existing train services
have empty backhaul. A similar strategy is cooperating with other
actors in trying to extend the biofuel transport season, e.g., by
transporting other types of fuels to the HPs.
4.4. Traffic market
Cooperation options exist around the use of infrastructure and
in particular terminals. Intermodal transport requires, by definition,
access to a terminal and proprietary terminals limit the possibility
for other actors to use intermodal terminals. At the same time,
terminals are viewed as a competitive advantage, giving small in-
centives to allow competitors on the terminal. However, terminals
require large volumes to be economically possible, which opens the
potential for cooperation among smaller actors that independently
do not have large enough volumes in a region for a terminal.
Independent terminals also exist that are open to all actors and
operated on a commercial basis. Several respondents call for more
open terminals to simplify the use of intermodal transport.
5. Analysis
The key issue in developing suitable BMs for intermodal trans-
port of biofuel is reaching large enough transport volumes with an
even frequency to make intermodal transport economically sus-
tainable. Looking apart from the few HPs that, by themselves, have
large enough volumes, and to operate intermodal transport, the
main strategies are integration or cooperation with other actors
aiming at supporting the larger system.
Vertical integration or cooperation shows greater potential than
horizontal integration or cooperation. Although joining forces with
actors at the same stage of the supply chain can bring benefits, the
unwillingness to cooperate and the geographically dispersed loca-
tion of the actors makes vertical integration/cooperation the first
choice. By vertically taking control and aligning the supply chain,
the volumes to each HP can be consolidated and adapted to an
intermodal solution. However, this is not enough as it does not

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
9
bring additional volumes into the supply chain. These can be found
on the sourcing market or traffic market. On the sourcing market,
joint purchases can be made by close-by HPs in geographical lo-
cations where this is possible. On the traffic market, key resources
can be shared between different operators, either by sharing a train
to the same terminal or by using the train on different days. The
advantage of using the train on different days is that the
geographical constraint of being located in close proximity can
partly be overcome, as the train can go to different regions. Simi-
larly, terminals can be shared.
The vertical integration/cooperation decides who should be
responsible for the coordination between the actors. All actors
could take this role, but the most suitable are the HP or biofuel
company. An open BM based on collaboration can be adopted in
which the channel leader subcontracts key activities to actors with
the appropriate expertise. This is of particular importance in
intermodal transport that is more complex and requires more
logistical experience and expertise than traditional transport. It is
advisable for the HP not to take on a greater leader role in the chain
than what they have expertise for. Many HPs also express a desire
for simplicity, as is evident by the current practice to purchase the
fuel delivered at the plant, and are reluctant to take on a greater
responsibility in the supply chain. By bundling and unbundling the
BM, a combination of expert actors can be utilised, e.g., by
outsourcing the intermodal operations to a rail company. The in-
dustry is already very well familiar with subcontracting and
outsourcing. However, this increased collaboration requires more
trust among the actors. Currently, collaboration is formal and
contract based, but for an open BM to become successful trust and
open communication are key elements that must be further
strengthened, aiming at a more long-term relationships and sup-
ported by a fair distribution of costs and benefits. The cost structure
of the BM also sees a shift towards more fixed costs when intro-
ducing intermodal transport, which reduces flexibility and further
emphasises the need for cooperation. However, value sharing be-
tween the actors will still be based on the contractual relationships.
The key areas supporting an intermodal BM are linked to
Osterwalder's framework in Table 6. Aspects that separate an
intermodal BM from the conventional BMs are marked in bold.
In the Regional/National Biofuel Company model, the biofuel
company takes the role as channel leader and can horizontally
integrate the flows from several actors. The possibility for vertical
integration/cooperation towards the HP is limited as each HP has
several suppliers. As the horizontal integration for intermodal
transport is limited by geographical proximity, the challenge under
this model is for the biofuel company to have enough customers in
a region to reach large enough volumes. To some extent, this can be
counteracted by sharing traffic and infrastructure resources with
other operators. As the biofuel company traditionally arranges the
transport, they already have logistics knowledge and experience,
which facilitates the setup of a more complex intermodal
operation.
In the Heating Plant Own Account model, the HP takes the role
as channel leader by coordinating all volumes to the plant. The
vertical integration is clearly present here, with transport sub-
contracted. This consolidates more volume than in the previous
biofuel industry model. As a comparison, the biofuel company
would need to be the main supplier to 2e3 plants in a region to
reach larger volumes than in an Own Account model. This is un-
likely due to the low number of plants found in a region. This model
could be combined with sourcing cooperation to further increase
volumes and shared traffic and infrastructure resources. A major
drawback is that the HPs will be forced into managing complex
logistics setup, which is not their natural area of expertise. A
possible mix between the two models that could overcome the
10 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12
challenge for the HP as a channel leader is if the HP source from
only one biofuel supplier, thus increasing the volumes for the
supplier while not taking the role of channel leader.
In the Wood Processing Industry model, the possibility of hor-
izontal and vertical integration towards the HP is limited, as the
wood processing industry uses a push-chain based on their needs.
However, a large benefit for intermodal transport is that the wood
process flows are at one location that often also has storage pos-
sibilities, thus enabling large volumes to be picked up at once, but
with less frequency. This makes these flows excellent to combine
with other intermodal flows, e.g., by sharing trains. This model can
be combined with the Regional/National Biofuel Company model
and the Heating Plant own account model to further increase the
volumes.
The Local Biofuel Company model is not suitable for intermodal
transport. A possibility exists to combine a large number of local
HPs to reach larger volumes, but this is not deemed possible due to
the large number of HPs needed, their geographically dispersed
locations, their extensive need for coordination and management,
and low interest from the small HPs in advanced logistical setups.
Viable BMs for intermodal transport in the biofuel sector not
only fulfil the criteria of being what Bocken et al. (2014) calls a
sustainable BM by increasing material and energy efficiency, but
also enables DH firms to improve their fossil/non-fossil fuel ratio by
replacing non-renewable energy sources. In addition, the high de-
gree of renewable energy (generated mostly through water and
wind power) in the Swedish electricity grid, together with the high
utilisation of electricity for rail transport, means a dual-layered
environmental impact if such BMs conquer greater market shares.
From an environmental perspective it therefore appears as if policy
support for such BMs would be preferable. The suggestions made
above both highlight how managers may use the business model to
tackle the challenges presented in Table 4 and encourages the se-
lection of intermodal transports when managers consider their
options in the network-market model.
Policies impact the intermodal biofuel system on three levels:
local, industry, and national. On a local level, the HPs are often
municipality owned and subject to political regulations. Intermodal
transport would be favoured by political instructions for the plants
to place a higher importance on CO2-emissions and to pay more for
transport with lower emissions. Currently, most plants have no
specific requirements on transport emissions. Since intermodal
transport is naturally less flexible, flexible local regulation improves
the system flexibility and thus its competitiveness. On an industry
level, political policies impact the competitiveness of the industry
as whole; e.g., by taxing non-renewable energy, electricity
Table 6
Key aspects for an intermodal business model.
Pillar Building block of
business model
Product Value proposition
Customer interface Customer segments
Channels
Customer relationship
Infrastructure management Key activities
Key resources
Key partnerships
Financial aspects Cost structure
Revenue streams

n, J., Williamsson, J., Business models for sustainable biofuel transport: the potential for intermodal
Please cite this article in press as: Flode
transport, Journal of Cleaner Production (2015), http://dx.doi.org/10.1016/j.jclepro.2015.11.076
certificates, etc. Reduced competitiveness for the industry brings
down the fuel volumes needed, making it harder for intermodal
transport. Policies in favour of biofuels are therefore also beneficial
for intermodal transport. On a national level, political decisions also
impact the general competitiveness of transport modes; e.g., the
level of road taxes, fuel taxes, infrastructure fees, etc. Any political
incentive in favour of intermodal transport in general will also
naturally positively impact the potential for intermodal biofuel
transport. We see that in order to support these BMs it is possible to
form policies targeting these aspects, but further studies in how
such policies should be shaped and implemented are required.
6. Conclusions
An open BM can be applied to increase the potential use of
intermodal transport. The most important factor is to find large
enough volumes to support an intermodal setup. For the majority
of HPs too small to be able to utilise a full train, cooperation with
other actors is of high importance. Key issues to increase the po-
tential for intermodal transport are: (1) increased vertical inte-
gration and cooperation in the HPs channel where the supply chain
can be aligned and goods volumes consolidated to larger coherent
volumes. (2) Sharing transport resources and infrastructure where
large and expensive resources such as trains and terminals can be
shared among partners. (3) Joint purchases when possible to in-
crease the goods volumes coming from one location. (4)
Outsourcing to expert actors to manage the more complex logistical
setups needed for intermodal transport, as current biofuel actors
largely lack this knowledge. (5) Building trust and open commu-
nication is essential for the cooperation to work. (6) Not under-
estimating the complexity of intermodal transport, as this is
significantly different, with different challenges and opportunities
compared to the road transport the actors are traditionally accus-
tomed to.
The Regional/National Biofuel Company and Heating Plant Own
Account models are both deemed possible for intermodal trans-
port, with an advantage for the Own Account model due to its easily
consolidated volumes. The Wood Processing Industry model can be
used to complement the other models.
The results have practical implications for any actor interested in
developing intermodal transport or for public actors in the devel-
opment of policy measures. The results show key issues to consider
in order to support and develop the use of intermodal transport.
Findings are applicable in the biofuel industry, but could also be
extended to other industries with similar properties. The scientific
value includes a better understanding of the challenges with
Key aspects for intermodal transport
Timely delivery of required forest biofuel.
Large HPs.
Large involvement and commitment from the HP, possibly as channel leader.
Vertical integration in the channel preferred. Cooperation and commitment necessary.
Managing more advanced logistical setups. Sourcing or wood biofuel, managing fluctuations in
demand, and delivering chipped biofuel timely to the HP.
Access to wood material. Access to terminals, storage, machinery, and transport equipment, in
particular rail. Higher competence in logistics and supply chain management, in particular rail
transport.
A limited number of integrated partners, in particular close cooperation with the rail actors.
Road transport companies, terminal and storage companies. Forrest owners. Possible horizontal
integration with other HPs.
Large share of outsourcing. Transport and raw material costs are the largest costs.
Price for delivered biofuel paid by the HP according to contract.
 J. Flod
en, J. Williamsson / Journal of Cleaner Production xxx (2015) 1e12
introducing intermodal transport. Further, it includes a new
approach of developing BM in the context of sustainable inter-
modal transport by using a five-layer network-market model. The
five-layer network-market model of the biofuel supply chain helps
in highlighting potential areas of cooperation in the supply chain
and serves as a good tool in developing supply chain BMs. The five-
layer model can also be used for developing BMs in other supply
chain areas.
Acknowledgements
This research is funded by the Swedish Transport Administra-
tion (Trafikverket) through the Swedish Intermodal Research
Centre Sir-C and the project Sustainable Intermodal Supply Systems
for Biofuel and Bulk Freight.
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