Peer review: Chris MacRae
Manager – Rail Freight Policy, Freight Transport Association
Nick’s article outlines interesting opportunities for rail freight in high-value, time-sensitive freight markets. However, for rail to compete in this high-value and time-critical FMCG (fast-moving consumer goods) market, a number of key challenges need to be overcome by the rail industry collectively. While these apply to the FMCG market, they also apply to other existing freight markets in respect of retaining and increasing traffic.
In 2012 the Freight Transport Association published On Track - a series of case studies provided by retailers to demonstrate their commitment to reducing the environmental impact of their transport operations through greater use of rail. The same retailers subsequently identified seven targets for the rail freight industry in order to expand their use of rail significantly. These targets were endorsed by FTA’s Rail Freight Council, and by FTA’s British Shippers’ Council, which includes a wider range of shippers engaged in other sectors of the economy.
To achieve Network Rail’s rail freight growth forecasts, rail freight will need to increase by 6% per year. The Agenda for More Rail Freight sets out the following targets:
Cost reduction by 15% based on current costs plus innovation: The McNulty report into the efficiency of Britain’s railways estimated that Britain’s railways were between 20%-30% less cost-efficient than their continental counterparts. Increasing train velocity from 25mph to 35mph and creating a stable charging regime is needed to reduce rail freight’s cost base.
Six-hour response time to service and alteration requests: Shippers have identified a six-hour response time to be the industry target, but recognises that different response times may be appropriate for different kinds of supply chain. Enquiries regarding incremental traffic on existing services should be responded to immediately. Delivery of a Digital Railway vision will facilitate planning and scheduling, leading to enhanced response times.
Seven-Day Railway Capability: Shippers require a seven-day rail freight capability if they are to use rail, to avoid having to retain a road fleet capability themselves if a route is closed (due to maintenance, for example). Therefore the service offering to them needs to be a one-stop-shop by the service provider inclusive of any rail replacement road freight operation requirements.
Standard train lengths should be increased by 17.5%: Shippers have identified that train lengths need to be increased to 775 metres as the industry planning standard, with heavier trains and higher axle weights for bulk traffic to reduce unit costs, achieve economies of scale, and reduce the cost of rail freight.
400% increase in terminal capacity: Increased capacity in strategic rail freight interchanges and rail-connected warehousing is crucial to expanding access to the rail freight network, and to achieving Network Rail’s Freight Market Study forecasts of 5.9m2 terminal capacity.
Reduce intermodal transfer costs by £50: Transfer costs are dependent on terminal size, throughput and handling equipment. Enhanced efficiency in inbound and outbound road operations and optimisation of fleets and drivers is needed to reduce costs.
Reduce Channel Tunnel rail freight charges and rates by £50: Track access charges have historically been set at a level which has dissuaded serious take-up in international rail freight services. Recent reductions in track access charges by Eurotunnel in response to EU legal proceedings have resulted in reduced charges. These reductions need to be made permanent. Further cost reductions can be achieved by making costs and management more visible, by collaboration between service providers on operations and equipment, and by non-discrimination between freight shuttles and through freight trains.
