Memorandum by the Strategic Rail Authority
OPPORTUNITIES AND DEVELOPMENT PROSPECTS AT
MAJOR PORTS IN THE UNITED KINGDOM
The Strategic Rail Authority was established
by the government with purposes set out in Section 1 of the Transport
Act of 2000 as follows:
To promote the use of the railway
network for the carriage of passengers and goods.
To secure the development of the
To contribute to the development
of an integrated system of transport of passengers and goods.
In recognition of the statutory purpose to promote
the use of the railway network for the carriage of goods and to
achieve the objective laid upon us of growing railfreight by 80
per cent by the year 2010, the SRA established a dedicated freight
team. That team has laid out its strategy which is designed to
support growth through network and access investment and targeted
revenue support. The intention is to create a framework in which
pathways for freight trains that meet customers' requirements,
in terms of speed and reliability, are provided when and where
they are required for efficient operators who form an integral
part of a competitive supply chain, together with the requisite
interchange facilities to enable transfer between road and rail.
The structure of the railfreight industry, established
on privatisation, is different from the passenger sector. British
Rail's freight activities were sold outright to private purchasers
with five of the six businesses sold, ultimately, to English Welsh
and Scottish Railways (EWS), a subsidiary of Wisconsin Central
Transportation Inc. of the USA. This company now moves around
90 per cent of those goods moved by rail in the UK and also operates
trains through the Channel Tunnel. In 2000, 2.94 million tonnes
of freight was conveyed on through freight trains via the Tunnel.
The sixth business, Freightliner, went to a management buy-out
team backed by venture capitalists. This company specialises in
the movement of maritime containers but has recently moved into
other freight traffic areas as well. In addition there are other
small operators who are operating in the railfreight market and
a key part of the SRA's freight strategy is to encourage on-rail
There are five strands to the SRA's freight
strategy which are interlinked and designed to create the right
conditions to enable growth to take place:
Network: The objective is to identify
capacity and capability issues with a view to targeting investment
in railway infrastructure to meet future demand. In particular,
the aim is to ensure that ports are provided with links of adequate
gauge and capacity.
Interchanges: It is acknowledged
that the majority of railfreight growth in the general freight
market will inevitably come from customers who are not linked
to the rail network at the moment. The interchange strategy seeks
to create a framework within which an appropriate network of interchanges
can be provided.
Performance: Whilst the SRA has limited
influence as far as the quality of service is concerned, we can
ensure that new standards for speed, reliability, competitiveness
and flexibility are achieved by encouraging competition and innovation
and putting in place the right network to improve reliability.
International: The SRA has a specific
responsibility to develop international freight. The same factors
that impact on freight generally apply, but there are additional,
specific, challenges associated with developing competitive, high
quality international services.
Funding: The aim is to develop a
framework for the application of funds delivering the best value
for money for the taxpayer. There are five aspects to the funding
company-neutral revenue support
which focuses financial assistance on classes of traffic rather
than individual companies (described more fully later);
a continuation of support for
specific companies under a re-launched regime of freight facilities
grant and track access grants;
financial support for interchange
funding to encourage innovation;
As globalisation becomes a more prominent feature
of trade and products are sourced from the other side of the world
as readily as from local manufacturers, ports play an increasingly
important role in the supply chain. Global logistics are very
much a reality and it is vital, therefore, that the ports themselves
are provided with efficient and cost-effective transport links
to the market.
A key part of the SRA's freight strategy is
concerned with the movement of freight to and from ports and as
the economy grows, this traffic inevitably assumes an increasing
degree of importance. In order to achieve the government's freight
modal shift, as outlined in the 10 year plan, it is vital that
an increasing percentage of this business is moved by rail. It
is necessary, therefore, that appropriate and adequate links are
We have identified the following and addressed
the issues in our strategy:
(1) Container traffic
Rapid growth in container traffic very much
reflects the globalisation of logistics. Between 1993 and 1999
container traffic handled by UK ports increased by 43 per cent
to the total of 6.7 million TEUs. The deep-sea ports of Thamesport,
Felixstowe, Southampton and Tilbury accounted for two thirds of
these movements. All of these ports are rail-served and the following
percentage of containers currently move by train:
Southampton, 30 per cent(equating to 22
trains per day)
Thamesport, 15 per cent(equating to 6
trains per day)
Felixstowe, 20 to 25 per cent(equating
to 26 trains per day)
Tilbury, 25 per cent(equating to 10 trains
In order to increase the rail-borne proportion
and to cater for growth from these ports we have explored and
will be addressing through network investment, the issue of capacity
on routes between these locations and the inland terminals that
they serve. Furthermore, the question of loading gauge has been
recognised. At present some 19 per cent of containers in service
are 9'6" tall but this proportion is increasing as new boxes
are built to this height and not 8'6", the previous standard.
The concensus of opinion is that by 2020 over 90 per cent of containers
will be 9'6" in height. On rail routes to and from the ports,
all of which are loading gauge-constrained, these taller boxes
can only be carried on special well wagons which has the effect
of reducing the total number of containers per train and increasing
the cost, thereby reducing rail's competitiveness with road haulage.
Road hauliers can carry either type of container on the same lorries
within the 16'6" main route height limit in the UK.
The SRA has commissioned studies into the capacity
and gauge constraints on the Felixstowe to Nuneaton (for access
to the West Coast Main Line) route and on that from Southampton
to the Midlands, again connecting with the West Coast Main Line,
which is itself the subject of a major upgrade. The aim is to
identify the scale and cost of the work required to accommodate
the levels of traffic foreseen. This will then be compared with
the benefits accruing from movement by rail to assess the degree
of value for money achieved by such investments.
Port capacity in the South East is approximately
5.2 million TEUs per year, with the current market being some
4.8 million TEUs. It is anticipated that the market will grow
by some 30 to 50 per cent by 2010 (cf of the 42 per cent growth
between 1990 and 2000) to somewhere between 6.2 and 7.2 million
TEUs per year. With these growth predictions there will be a capacity
shortfall of between one and two million TEUs per annum by 2010.
A number of schemes is currently being considered to address the
future capacity problem; these are as follow:
(a) Dibden Bay, on Southampton Water
This proposal, by ABP, will create a new terminal
capable of handling around 2.3 million TEUs per annum supplementing
the existing port of Southampton which has a current capacity
of 1.5 million TEUs per year and is expected to run out of capacity
in 2005. At present about 11 container trains per day operate
into and out of Southampton; Dibden Bay would generate an additional
20 to 25 trains per day each way. This has significant implications
for the route to Reading and the West Midlands and this potential
demand has been factored into the study currently being undertaken
into capacity and gauge on that route.
(b) Bathside Bay, Harwich
Hutchison Whampoa are proposing a development
at Bathside Bay following their acquisition of the port of Harwich,
which will have the capacity to handle around 1.4 million TEUs
annually, requiring an additional eight trains per day to or from
the East Coast Main Line or West Coast Main Line. This demand
will be considered in the SRA's studies on the Felixstowe to Nuneaton
route, the cross-London routes and has implications for the gauge-restricted
tunnel at Ipswich.
This project, a joint venture between Shell,
the Port of London Authority and P&O proposes a new container
facility on the Thames estuary between Tilbury and Southend. It
is estimated that by 2015 annual throughput will have reached
4 million TEUs annually requiring around 30 train paths per day
each way via North London or via Ipswich and the Felixstowe to
Nuneaton line. Again, this has been factored into the studies
previously mentioned and also the London freight routeing study.
At Thamesport a small-scale scheme is in the
process of being planned, with a view to completion by November
2001 which will provide additional and operational flexibility
in the medium term with a view to more extensive investment within
the next five years.
Ports are commercially funded and there is in
operation an "open port" policy where shipping customers
are free to choose the port of loading and unloading. Nonetheless,
there is general concensus on the likely traffic growth levels
and a recognition that it is in the public interest that as much
of this as possible should be moved by rail. Indeed, such traffic
forms an integral part of the SRA's 80 per cent growth objective
and is a major target, reflected by our choice of the maritime
container business to be selected as the first to benefit from
the forthcoming implementation of the company-neutral revenue
support scheme, which is described more fully below. This is designed
to encourage competition and to grow rail's market share. For
rail to play this role, significant investment will be required
in network enhancement projects, in terminal facilities and in
port facilities. In order to attract public funding, these must
be accomplished within the overall ceiling of the environmental
benefits gained by the removal of lorry journeysthe "Sensitive
Lorry Miles" approach, used to justify Freight Facilities
Grants and Track Access Grants. If, for any reason, rail is not
able to achieve the levels of traffic for the increased volumes
of business, then the containers will need to be moved by road
with implications for investment in the UK's road network.
Ultimately the choice of port for container
vessels will be dependent on maritime considerations, primarily
draft available and on the ability of shoreside equipment, notably
cranes, to ensure the minimum dwell time in port for the ship.
"Post Panamax" vessels carrying 8,000 containers with
22 abreast are likely to be in operation in the foreseeable future
and it is possible that ships with capacities of more than twice
this figure will be operated in the future.
Currently, the majority of maritime containers
that travel by rail are moved by Freightliner. On privatisation
a deal was struck for the company to receive revenue support.
This deal ceases in May 2001 and a "rollover" grant
has been negotiated to support the company's container operations
after that date to bridge the gap until introduction of the new
company-neutral subsidy scheme. This new proposition is in line
with the SRA's desire to encourage competition in the railfreight
sector and is based on the principal of publishing a matrix of
destinations against grant per unit of movement in order that
any operator can bid for the traffic concerned. Consultants are
currently working up the scheme and it is proposed that, after
ratification by the EU Commission (in order to ensure compliance
with state aid regulations), it will be in place in early 2002.
It is proposed that the first business sector to benefit from
the new scheme will be that of maritime containers, with a view
to extension to other areas subsequently.
(2) Other Intermodal Traffic: Swap-bodies
The majority of other intermodal business is
conveyed by lorry which crosses the Channel by Eurotunnel HGV
shuttle or by ferry. In 1999 some 5.3 million HGVs were handled
by UK ports or the Tunnel (including Irish Sea Traffic) conveying
some 69 million tonnes of cargo.
It is probably unrealistic to expect that this
traffic will transfer to conventional rail services in anything
but the long term. As an alternative, road hauliers could be encouraged
to use "Piggyback" services where semi-trailers are
conveyed on flat rail wagons for the line haul part of the journey.
It is currently not possible to operate such services, conveying
4m high road trailers on rail wagons, in the UK because of loading
gauge constraints. A study is underway to assess the costs and
benefits of enhancing the gauge between the port of Dover and
the Channel Tunnel and London and beyond to accommodate piggybank
trains and high cube swap-bodies. In parallel, a private company
using private funds, seeks to construct and operate a new railway
between the North of England and Northern France with adequate
gauge to convey piggyback traffic. The Central Railway project,
if successful in obtaining the necessary powers and private finance,
would be in operation by around 2008. At present the SRA does
not have sufficient information to enable it to take a view on
the project and has commissioned a high level study to examine
the detail of the proposals in order to be able to do so.
The SRA is liasing with Dover Harbour Board
and other relevant parties on plans to reconnect the port to the
rail network to facilitate the transfer of swap-bodies and semi-trailers
between rail and sea. Phase 1 is a small-scale venture concerned
with the reconnection of the former freight yard adjacent to Western
Docks, the cargo being transferred between there and the ferries
in Eastern Docks by lorry. Phase 2 would involve reinstatement
of the train ferry (to and from Dunkerque) to its former berth
in Western Docks with a direct link to the rail network utilising
the linkspan currently in "kit form" alongside the docks.
The third phase is connected with Dover's long-term plans to construct
a new port, "Westport", between the current Western
Docks and Shakespeare Cliff with a direct link on to the Folkestone
to Dover railway line. All phases of the proposed development
would require gauge enhancement between Dover and the Channel
Tunnel to London routes, hence the inclusion of Dover in the study
for Tunnel traffic.
The port of Portsmouth has identified opportunities
for sea to rail intermodal transfer although direct rail access
to the docks is not possible. A site has been identified as a
possible location for intermodal interchange, which would involve
a short road journey between the ships and the railhead and discussions
are proceeding between the port authorities and the SRA on progressing
the plans. It is also possible that other business may be attracted
to the railhead which would add to the viability of the scheme.
In order to reflect the need to convey 2.9m high x 2.6m wide swap-bodies
on rail wagons, the route to Portsmouth (to Eastleigh or Southampton)
has been included in the study for container traffic between Southampton
and Reading and beyond.
(3) Other Traffic
In total there about 100 commercially active
ports in the UK handling a wide range of cargoes, half of the
tonnage being represented by oil and oil products. It is often
difficult for the smaller ports to justify a link to the national
rail network if there is not sufficient critical mass of traffic.
Freight Facilities Grant can be used to assist schemes where there
is public benefit but which may not be fully commercial. Recently
grant has been used to facilitate the provision of a rail service
to the port of Newport and the sum of £15.6 million was recently
awarded to reinstate the link to Portbury Docks. At the end of
March this year a new terminal, funded by grant through the Welsh
Assembly, will be opened in Wentloog which is designed to serve
South Wales ports. Discussions between the SRA and Associated
British Ports have been held with a view to submitting a grant
application to reconnect Kings Lynn docks to the rail network.
This would initially be predicted against East Anglian grain traffic
bound for the North West and Scotland (a business lost to road
haulage some years ago) but could be used to encourage other traffic
flows on to rail at a later stage. The same parties are also involved
in compiling a grant application to facilitate further development
of the Humber International Terminal at Immingham.
In may cases rail services can be provided which
are self-financing: the movement of coal in bulk from ports, such
as Hunterson in Scotland, for example, comes into this category.
In other instances there will need to be support in the form of
Freight Facilities Grant, to assist with investment in equipment
and facilities and Track Access Grant, paid to train operators,
to reflect the different extent to which the external costs of
road and rail are covered by pricing mechanisms. The SRA is now
responsible for the administration of these grants (in consultation
with the Scottish Executive and the Welsh Assembly) and will use
them to develop the freight strategy and to achieve the 80 per
cent growth target. Whilst the aspirations of smaller ports are
not necessarily easy to incorporate into a national rail strategy,
applications for grant can be made and will be considered individually
on their merits.
Again, traffic to and from other ports will
be an important factor in determining the need for capacity enhancements
and for example, the possibility of modal shift for traffic to
and from the Humber ports is being taken into consideration in
the Trans-Pennine franchise replacement process.
(4) Irish Sea Traffic
The surge in the Irish economy of the past few
years has generated substantial new business on the Irish Sea.
Traffic between the mainland of the UK and Northern Ireland and
Eire travels from a number of ports on the West coasts of England,
Wales and Scotland. The majority is conveyed by road on this side
of the Irish Sea and a significant volume "landbridges"
en route from Ireland to the continent. The less time-sensitive
traffic tends to travel direct from Ireland to the continent whilst
the cargoes that cross the UK mainland are predominantly time-sensitive
and often temperature-controlled. The latter cargoes are primarily
suited to HGVs and part of the SRA freight strategy will be to
examine possibilities for conveying such vehicles on "piggyback"
services. As with other such services elsewhere, the gauge of
the routes concerned will need to be considered carefully to ascertain
costs and benefits.
The SRA regards the securing of a greater proportion
of port traffic as being vital in our efforts to achieve the 80
per cent growth target laid down by the ten year plan. The elements
of our strategy, described previously, are designed to facilitate
growth in this sector. We shall be addressing, in particular,
the issues of gauge and capacity on key routes in order to enable
operators to run bigger, faster, heavier and longer trains on
a high quality, 24 hours per day, seven days per week network.
This will significantly improve the economics of railfreight operation
and its competitiveness with road haulage. In addition, there
are funding mechanisms available to assist port operators, shipping
lines, railfreight companies and others to achieve modal shift.
Furthermore, the deep-sea intermodal market will be the first
to benefit from application of the new company-neutral revenue
Strategic Rail Authority
26 February 2001