Opinion
Delivering the goods
A fee too far B
By Chris Welsh
ack in May, the Office of Rail Regulation (ORR) published a consultation on potential changes to rail freight charging for using Network Rail’s infrastructure, to wide industry concern and criticism.
FTA met with ORR in July to discuss the consultation and voice concerns over the effect we feel the changes would have on the rail freight industry as a whole.
The consultation includes a review of the variable usage charge paid by passenger and freight operators and proposals to introduce a freight specific charge. This would mean an extra levy charge for freight operators carrying power station coal, iron ore and spent nuclear fuel. The consultation also sets out plans to implement geographic disaggregation of charging, with different charges for the different Network Rail regions of Britain.
intentions to promote the shift from road freight to rail, ORR has said it would accept a 10 per cent reversal
in modal shift if these changes are implemented. FTA works hard to promote modal shift and encourage members’ switch to rail freight as an alternative to road where this is economically sustainable. And whilst ORR may think that a 10 per cent reversal is acceptable – we do not!
More heavy goods vehicles on the roads is something that we, as an association are trying to reduce, in recognition of EU transport policy objectives to shift goods from road to alternative sustainable modes and to lessen the environmental effects of our sector. Initiatives such as our Logistics Carbon Reduction Scheme lay out the issues of having more heavy goods vehicles on the road and how imperative it is that we as an industry reduce our carbon emissions. Moreover, the publication earlier this year of On Track and the launch of FTA’s Modal Shift Centre has been specifically designed to promote mode shift from road to rail, therefore, the apparent acceptance of a 10 per cent reduction in modal shift is a massive and unacceptable step backwards. Not only are the potential increases off-putting, but the fact that these are due to be reviewed every five years is another problem. FTA is aware that changes in charging levels will occur, but the possibility of a change in charging policy every five years is not acceptable. In rail, asset life and payback periods are far longer than road freight and investors are not likely to be interested if the goal posts are moved every five years. This will bring about uncertainty and a fear that investments cannot be justified with such a state of uncertainty. The current proposals mark a radical shift in policy from the previous five-year reviews.
FTA has many concerns over the potential changes laid out in the consultation. The possible increases are troubling in many ways, but mainly because they will reduce certainty and discourage long-term investment in rail. This is likely to result in existing shippers who have made the shift to rail freight reverting back to road, while deterring future customers. ORR asserts that the increase in charges would be to recover ‘freight avoidable costs’, however FTA is still concerned that these increases would end up being passed on to the customer. Despite the Department for Transport (DfT) expressing its
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The changes in the consultation also add complexity to the use of rail freight and not only make its use less attractive and more difficult to navigate, but also add to administration costs. Overall, FTA is extremely concerned that the new changes will mean a lack in industry growth and investor confidence. The consultation on the variable usage charge and a freight specific charge will run until 10 August. The FTA is urging members and anyone affected by the consultation to respond, setting out their concerns. It is, however, vitally important that all operators and users of rail freight make their objections known to the ORR, setting out the implications of the proposed charging regime to ensure that the ORR takes note of industry’s concerns. FTA will be submitting a response and if you would like to add to this we would be very happy to hear from you. For more information you can visit the website at
www.rail-reg.gov.uk/pr13/consultations/freight-charges.php. FTA can be found at
www.fta.co.uk and tweets at @newsfromfta. Chris Welsh is director of Global and European Policy at the Freight Transport Association.
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