Insufficient recognition of sector’s economic benefits
Rail freight deserves better.
It is easy to overlook that freight operations on the national network have a significant role, calculated by regulatory authorities to be worth £1.7 billion annually.
Of this, £1.2bn is generated by physical productivity in terms of the efficient movement of goods, and £ 0.5bn by noncash benefits such as improved air quality, and reduced road congestion and accidents.
These statistics have resulted in the Rail Freight Group - a trade body that represents freight operators, rail forwarders and wider stakeholders - reminding those conducting the Williams Review to ensure that the need for network access and efficient movement of traffic continues.
With the pendulum swinging towards greater integration of train operating companies and the Network Rail routes, it is an input that seeks to ensure freight operational needs are not drowned out by the declining day-to-day performance of passenger services, and by the continuing disruption caused by flawed timetables, engineering work and workforce disputes.
Coal-based electricity generation has all but gone, as a result of energy policies to reduce carbon emissions - the movement of coal reduced to 9.6 million tonnes in 201718 compared with a figure of 80 million tonnes 30 years ago. In the year there was a further decline of 13%, but there was a corresponding increase of 13% in the movement of intermodal containers between ports and rail- connected distribution terminals.
For overall freight traffic, there is the expectation of continuing growth during Control Period 6 (2019-24) of up to 3% annually. As examples of the role now occupied, there is a 25% market share in the movement of containers to and from ports, which is 90% greater than the level of activity at the time of privatisation. Traffic gains have also taken place in the market for construction aggregates, with an increase of 110% over 20 years that has resulted in 40% of demand in London and the South East now being carried by rail. Currently the value of goods conveyed is £ 30bn annually.
The regulatory framework has supported investment in the Strategic Freight Network ( SFN), and the new NR strategy to devolve decision-making to a route-based organisation has led to the establishment of a separate team to manage networkwide operations such as the CrossCountry and Caledonian Sleeper franchises, freight operations, and open access passenger services.
To date, £ 700 million has been spent on SFN infrastructure works to unlock capacity. And work is continuing, with double track to be provided on the Felixstowe branch that will allow 47 paths per day to serve the three container terminals within the port complex.
It has been assessed that projects associated with the SFN have delivered a benefit: cost ratio of between 4:1 and 8:1, greatly exceeding the economic benefit of network investment for many passenger services.
The freight operators have a record of increased productivity, with unit costs being reduced as a result of investment. Since privatisation, £ 2.8bn has been committed in traction, rolling stock, and terminals. Improved reliability has resulted, so that just 2.5% of delays incurred by passenger trains is attributable to freight operations. By comparison, 10% of delays on motorways and trunk roads are attributable to the use of heavy goods vehicles, and this rises to 45% on lower category roads.
The economic benefits of rail freight are (for a change) mainly outside London and the South East, with 87% of the total occurring elsewhere. The two regions gaining most are north west England (with direct benefits of £ 224m and socioeconomic gains of £106m annually), and Yorkshire & Humber (£ 220m and £104m). Scotland is also a big beneficiary, with figures of £130m and £ 62m, although there is concern that this will diminish as the Scottish Government has not delivered investment in the Highland Main Line while upgrading the parallel A9 road.
Freight usage studies indicate that the increased size of trainloads now means that on average 76 HGVs are removed from the road network by each service, which results in 7.8 million fewer annual vehicle movements travelling over more than one billion miles.
The conclusion is that efforts to attract greater rail volume should be concentrated on key road corridors, but there has been little intervention by the Department for Transport.
When Railtrack was first established, a regime was created to provide track access grants for Freightliner, as the initial charges set would have resulted in the loss of many shorter- distance traffic flows. Later, the scope of these payments was widened with the adoption of the Mode Shift Revenue Support (MSRS) grant.
This was available for all licensed operators and included both intermodal and bulk freight flows that had high environmental benefit, although being more expensive to move by rail. Over shorter distances the economics of these movements is challenging, because whereas road hauliers can deliver direct to customer premises the rail operator has to factor in the cost of terminal handling and road delivery. It is only over longer distances that lower rail haulage costs can offset terminal and delivery expenses.
In the recent past, it is a criticism that the budget for MSRS grants has been curtailed despite the certain result that flows would transfer to road movement.
Of greater concern to the freight operators is a threat to charge more for track access, which is based less on the actual cost of infrastructure wear and tear and more on perceptions that given types of traffic allow customers to be charged more. An example is biomass, where it is perceived that the volume could not realistically be conveyed by alternative means.
This continues to be at odds with the way road haulage access charges are calculated within the vehicle licensing system, where no account is taken of the very significant effect of wear and tear (which includes the upkeep of structures). Consequences in terms of congestion and pollution, as well as accident costs, are also not reflected.
The range of statistics available supports the case for greater intervention in favour of rail freight, rather than becoming wholly absorbed with the issues facing the passenger railway.
“It is only over longer distances that lower rail haulage costs can offset terminal and delivery expenses.”