Opinion Delivering the goods Chris MacRae
ORR has crossed the line
This time, ORR has set its face against advice from the industry and has damaged confidence in rail freight, says Chris MacRae
T
he Freight Transport Association (FTA) remains concerned at the change of approach to freight track access charging and
consequential longer-term implications for rail freight caused by the Office of Rail Regulation’s (ORR) periodic review. While we have already said this in the October edition of Rail Professional, at that stage the periodic review by ORR was at the draft determination stage, now it is a final determination published on 31st
October. This sets the fiscal
determination for Network Rail for the five-year Control Period 5 from 2014 – 2019.
In our response to 31st October’s
announcement by the ORR regarding its decision on the change to track access charges for CP5, FTA has said that there is still the need for better understanding
of the rail freight market and the expectations of existing and potential new customers. FTA believes the ORR’s final determination which will increase freight rates by 21 per cent over the control period, or four per cent per year, will be a major setback for promoting future growth for the sector if this is passed through in full to end users. And inevitably it will be. Previously FTA has voiced its concerns to the ORR over the proposed higher track access charges citing that this could lead to intermodal and retail traffic being pushed back off rail and onto roads. In reply the ORR appears to have listened to and responded to the Association’s and industry’s serious concerns which were articulated during the consultation process, and capped the proposed increases below that initially intended,
thereby reducing the impact of the new charging regime.
Forcing attention back to roads However, FTA remains concerned that the new higher freight track access charging announced in the ORR’s final determination could still cause future uncertainty as to the direction of rail freight policy. We believe fundamentally that rail must find ways of becoming more price competitive with road where costs to customers have gone down in real terms.
Regrettably, ORR’s decision on freight track access charges has followed months of significant and very public uncertainty, as rail freight operators and customers have tried to understand and come to terms with the proposals that would, at the higher end of what was consulted upon, have added significant costs to moving goods by rail and potentially forced companies that had invested in rail to turn their attention back to the roads. FTA has noted that in the
determination the ORR has taken on board comments made by the Association
We believe fundamentally that rail must become more price competitive with road where costs to customers have gone down in real terms
December 2013 Page 47
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