FREIGHT
Rail freight could double over next 30 years
RTM’S David Stevenson reports on a startling fi nding from the Rail Delivery Group. O
ver the next 30 years it has been forecast that rail freight volumes in the UK could more than double – largely driven by the intermodal (container) sector which will see rail increasingly compete with road.
According to DfT Transport Statistics, rail currently moves 11% of the UK’s inland surface freight, with road dominating the rest of the market with 89%. But rail has the potential to cut into road freight’s dominance by doubling in volume to 45.2bn net tonne km by 2043.
In recent years coal has been the dominant commodity, accounting for 32% of all the goods moved by rail, 2013 ORR Freight Moved fi gures show. But this is forecast to change signifi cantly as forthcoming environmental legislation is expected to result in an 80% fall in the volume of coal transported by 2023.
But Network Rail’s 2013 Freight Market Study suggests that this decline in coal being moved will be “more than offset” by the forecasted growth of the intermodal and biomass markets.
One of the key fi ndings highlighted in the Rail Delivery Group’s recent report – ‘Keeping the lights on and the traffi c moving: Sustaining the benefi ts of rail freight for the UK economy’ – was that British businesses are saving £1bn a year – or £2.7m a day – by using rail to transport goods.
The study, carried out by accountants KPMG, also revealed that the rail freight industry is estimated to be worth £1.5bn a year in benefi ts to the UK economy – equivalent to nearly double the annual revenues of the main rail freight operators.
There are also other benefi ts to be had. For instance, transporting freight by rail also cuts CO2 emissions by 76% compared to road. In 2011, HGVs produced about 23m tonnes of CO2, or 5% of the UK’s carbon emissions, while transporting those goods by rail in 2011 would have produced about 17.5m tonnes less of CO2 emissions.
Recent change
Prior to privatisation in the mid-1990s the rail freight industry was in steady decline, with the move towards a service economy, rather than
84 | rail technology magazine Jun/Jul 14
A further £200m has been allocated for the development of the SFN in England and Wales in CP5, and £30m has been committed to the Scottish Strategic Rail Freight Investment
an industry-fuelled one, reducing the size of many of rail freight’s traditional markets.
Simultaneously, rail freight proved unable to compete for the growing containerised freight market following the heavy investment in, and complete liberalisation of, the UK road network. “During this time rail freight pricing was fi xed, meaning that the industry was unable to respond effectively to new competition,” the report notes.
However, since freight was opened up to private competition and investment in the mid- 1990s, billions of pounds have been invested in the sector and to date 70% of investment has
been directed at enhancing capacity
and capability; for example longer, heavier trains.
Now, each year, rail freight carries goods
worth more
than £30bn, from high-end whiskies, to fuel for power stations, to luxury cars for export, and this is usually done by the fi ve largest operating
companies:
Colas Rail, DB Schenker Rail
(UK), Direct
Rail Services (DRS), Freightliner and GB Railfreight.
During the last 20 years, rail
freight operators have invested well over £2bn in new locomotives, wagons and other capital equipment. And over the next fi ve years the operators plan to invest hundreds of millions of pounds. This will be equally split between enhancing capacity and improving performance on the network.
Improving capacity
During CP4, Network Rail, via the Strategic Freight Network (SFN), government, through the Transport Innovation Fund (TIF), and other funding sources invested over £500m to improve freight capacity and performance.
rai l
Fund. These investments cover a range of capacity, capability and performance enhancements that benefi t rail freight. This includes improving the gauge clearance to allow deep sea containers to be transported along main lines and via diversionary routes and allowing longer freight trains to operate by extending loops, enhancing the signalling and adding additional chords.
Currently, rail freight companies do not operate with many of the fi nancial protections afforded to passenger operators in franchise agreements. FOCs are exposed to changes in the charging regime and assume the risks associated with rolling stock and other infrastructure investments.
Employing more than 5,000 workers, rail freight operators have an annual turnover of over £850m. And since privatisation, revenue has grown by a nominal £260m, or 44%. Today, two-thirds of this revenue comes from the
this revenue comes from the industry’s traditional markets, including generation customer
coal and other
for power single
bulk commodities,
where rail is typically the best suited mode of transport.
As the intermodal market becomes an increasingly greater proportion of the sector’s traffi c, it is expected that freight will increasingly be competing
directly with road. Operators will need as stable a cost base as possible.
The RDF report concluded that stability gives confi dence to operators and investors.
Peter Maybury, chairman of Freightliner and the RDG freight group, said: “Rail freight has been transformed over the past two decades and is set to keep growing. By continuing to drive effi ciency and improve performance, operators could help more than double the size of the sector over the next three decades and increase the economic benefi ts of rail freight to over £4bn a year.”
www.raildeliverygroup.com FOR MORE INFORMATION
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