In­suf­fi­cient recog­ni­tion of sec­tor’s eco­nomic ben­e­fits

Rail (UK) - - Contents -

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.”

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