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Rail freight faces a major structural challenge, as coal traffic declines steeply in the face of Britain’s move to cleaner sources of power generation.
The impact has been keenly felt by the biggest of Britain’s freight operating companies, DB Cargo, which had the largest coal-carrying contracts - in October 2016, it announced 893 job losses out of a British workforce of 2,974.
This follows almost two decades of steady growth in rail freight since the mid-1990s, and compounds the uncertainties that Brexit has created. No one knows what the technical, regulatory or commercial impacts of Brexit are likely to be.
Chris MacRae, Head of Rail Freight Policy at the Freight Transport Association, says: “There will be no immediate impact from a technical or regulatory point of view until Britain leaves the EU. All rules and regulations continue to apply. In fact, more will apply as some are already in the pipeline.”
But what will it mean for customs clearance? How will tariffs affect volumes? Will the opportunity be taken to introduce a long-talked-about levy on foreign road hauliers? Would a relaxation of competition law allow some sensible sharing of resources between companies and between freight operators?
These questions come at a time of severe challenges for rail freight. The collapse of coal traffic has focused attention on the need to address the constraints on expanding the modal share of rail freight, and made it imperative to develop other core markets to replace the commodity that has been a source of bedrock profits for almost two centuries.
Rail freight growth is UK government and EU policy, because rail effects substantial reductions in congestion, carbon and other pollutants. The UK Government has not set modal shift targets, although it has set overall carbon emissions reductions of 57% by 2032 and 80% by 2050, based on 1990 levels. In contrast, the EU has set targets for freight transfer: using 2005 as the baseline, the 2011 EU Transport White Paper set a target of achieving a shift of 30% of road freight over 300km to rail or waterborne transport by 2030, and of more than 50% by 2050.
Since these ambitious targets were set few continental countries have managed any increase at all in rail freight, and the DfT’s Rail Freight Strategy: Moving Britain Ahead (published in September 2016) joins a series of consultant and EU reports in trying to identify the reasons and suggest practical responses.
The DfT’s analysis
Groundwork for the DfT’s report was carried out by AECOM. In assessing the potential for growth by commodity, it found the most promising to be deep-sea container movements and construction, with scope for growth in others such as domestic intermodal, biomass and automotive. The AECOM study (Future Potential for Modal Shift in the UK Rail Freight Market - AECOM, Arup, SNC-Lavalin, September 2016) and industry consultations informed the DfT Strategy with four priority areas:
- Innovations and skills: Rail freight can never hope to match the flexibility of road haulage, so the nature of its longer-term commitments and contracts means that it has to offer a dependable and timely service. Equally it has to match the information systems offered by road hauliers, and use IT systems to refine train operations and efficiencies. The Rail Delivery Group (RDG) is working with the National Skills Academy for Rail to raise skill levels.
- Network capacity: Advice from NR’s Freight Network Study towards the end of 2016 will inform the DfT’s planning for Control Period 6 (CP6, 2019-24). To meet a recommendation of the Shaw Report and provide better support for the national operations of FOCs, a new ‘virtual route’ team has taken over responsibility for CrossCountry (which operates across seven of the eight current routes) and freight. Paths and the mechanism for their allocation for both passenger and freight are being examined, together with the impact on freight of passenger franchise specifications. Protection for new paths created by freight-specific investment in capacity is being considered.
- Track access charging: The increase in track access charges over CP5 (2014-19) of £15 million per year is recognised as a constraint on growth by raising costs. The strategy accepts that the environmental, air quality and reduced congestion benefits of rail freight are “not currently recognised in the track access charging regime”. Consideration is being given to changes that would rectify that, any support being “subject to the identification of future funding”.
- Telling the story of rail freight: The rail freight industry has not been good at selling its collective benefits, either to the public or even others within the rail industry or DfT. The RDG has co-ordinated recent efforts to showcase these benefits, but more needs to be done - in particular, creating a single “portal” for information about rail freight.
The DfT’s strategy follows Transport Scotland’s Delivering the Goods, published in March 2016, which identified four priorities: innovation; facilitation and partnerships; promotion of the benefits of rail freight; and investment. Devolved administrations such as Transport for the North and Midlands Connect are also devising rail freight strategies.
