Select Committee on Transport, Local Government and the Regions Appendices to the Minutes of Evidence

Memorandum by the Freight Transport Association (CHT 07)



  1.  The Freight Transport Association (FTA) represents the transport interests of over 11,000 British businesses. These include the interests of businesses responsible for 90% of the freight moved by rail in Great Britain. The FTA is also a member of the European Shippers' Council's Inland Transport Council and the European Rail Freight Customers' Platform. This membership enables FTA to comment authoritatively on both international and domestic rail freight issues.

  2.  The disruptions to rail freight services on the Channel Rail Freight Link (CTRL) have been a source of serious concern both to FTA and members of its Rail Freight Council since major disturbances began in November 2001. The evidence contained in this submission is based upon a survey of members of the FTA Rail Freight Council composed of both operators and shippers. FTA's respondents represent the most significant users of Channel Tunnel rail freight services. The purpose of this submission is to highlight the implications being experienced by businesses because of the continued disruptions to CTRL services. Moreover it is also intended to raise some of the potential medium-to-long term effects that will be faced by the rail freight industry as a result of the ongoing disturbances. Members were unable to provide large quantities of figures. However, a great deal has been ascertained from their comments and observations in response to our enquiry. In summary:

    —  The immediate term implications and costs are being borne by a small number of users and operators using the Channel Tunnel Rail Freight Link (CTRL).

    —  In the medium term some businesses may be forced to shift their operations to other means of transport. While many businesses are adopting short-term measures to circumvent the difficulties the medium term viability of their operations is being questioned.

    —  Long term it is FTA's contention that unless a permanent and full solution is found rapidly, yet another serious blow will have been dealt to the credibility of rail freight as a dependable and effective freight transport option.

  3.  At the time of this submission (May 2002) ongoing disruptions to the Channel Tunnel Rail Freight Link show no sign of relenting with asylum seekers becoming more persistent and desperate to reach the UK by freight train. A score of promises from the French government and the European Commission have failed to produce any effective action to restore services to normal levels. Meanwhile companies who are CTRL customers are becoming increasingly disillusioned. We are fast approaching a situation where those who can are abandoning the rail freight link and those who cannot are simply forced to absorb the extra costs while remaining unable to plan for future operations with any degree of certainty.


How have Channel Tunnel disruptions impacted upon day to day business? Is it sustainable even in the short term?

  4.  Evidence from the sector suggests that particular industry sectors have suffered disproportionately: notably the automotive spare parts sectors and consumables such as wine, water and whisky industries. China clay and paper supplies have also been hard hit. Moreover, evidence shows that many major wine retailers are feeling the full force of the disruptions and are rapidly shifting their operations to road. Bottled water companies are following the same course of action but have not always been so successful in finding alternative transport solutions. This has severely affected supply.

  5.  According to responses from members of FTA's Rail Freight Council it is clear that EWS has borne the brunt of initial costs and suffered significant loss of revenue due to the disruptions to CTRL services. However, there have also been significant losses to shippers who have shouldered additional costs and burdens resulting from supply chain disruptions and delays. For example; an FTA Rail Freight Council member who supplies paper to the UK national press has, since November, incurred extra costs of EUR 20-23 per tonne on an annualised flow of 280,000 tonnes. This equates to EUR 5.6-6.4 million per year. It is reasonable to conclude that similar costs to these are being felt by many more CTRL users and that the total costs for industry could amount to ten's of million's of Euros.

  6.  Another member experienced a temporary suspension of their service to customers in Italy. Previously their empty wagons were getting stuck on the French side of the channel preventing movements on the outward journey. This situation had improved during March to the extent that something approaching normal services was achieved. However, this member reports that the situation has deteriorated again and fluctuates subject to the presence or not of adequate French police forces. The current disruptions constitute a serious irritation for this member but not an immediate cause for excessive concern. Some freight is getting through. Nevertheless as a direct consequence of the disruptions two trainloads were lost and 2,000 tonnes of freight have switched over to road and sea at cost to themselves.

  7.  A member from the automotive industry informed FTA that the main impact on his business was "major disruptions to the supply chain and initially extra freight costs". The latter was quoted as running into millions of dollars. The company has since negotiated with its carrier a "train or truck" deal which has reduced the cost of using road haulage as an alternative mode. This has been very fortunate for the respondent in question but it is unlikely that all companies affected by the disruptions will be able to negotiate similar reductions with their carriers. The company's main concerns at present involve longer transit times and reduced availability of trucks or trailers for deliveries.

  8.  One company supplying bottled water to UK retailers explained some of the difficulties being faced. Currently of the 7-10,000 tonnes which is normally shipped via the Channel Tunnel only 25% is being moved by rail. The rest is being transported by road. The present dependence on road haulage is particularly unsatisfactory, not least because the company's loading sheds and yards are built to receive trains and rail track creates formidable difficulties for lorries attempting to drive up to these facilities. A further problem is anticipated over the summer months when continental road haulage firms are significantly undermanned by annual leave. There are real concerns that a resulting skills shortage in road haulage will leave the company unable to deliver three quarters of their consignments.

  9.  Other members of the FTA Rail Freight Council have not been directly affected by the Channel Tunnel situation because their operations are primarily or wholly domestic. Nevertheless, one UK shipper asserted that the severe financial and manpower drain which EWS was experiencing as a result of the Channel Tunnel problem was, in their opinion, beginning to have knock-on effects for their own domestic operations. He maintains that the Channel Tunnel crisis is "beginning to divert effort and resources away (from other EWS activities), which is becoming apparent in the service and development work that we are receiving".


Can operations continue by rail in the medium term? Are businesses developing plans for a permanent shift of these particular freight movements over to sea and road? Will overseas markets be lost to local competitors?

  10.  The medium-to-long term implications of the continuing disruptions to CTRL services is more serious and is felt more widely. Almost all our respondents cited the Channel Tunnel disturbances as yet another major blow to their confidence in rail freight as a logistics solution.

  11.  The member whose difficulties were described in paragraph 6 is still unsure about the medium-term viability of using rail freight for his continental operations. Should the situation in the Tunnel deteriorate again, and despite investments in railway infrastructure at the Italian end of the operation, there will be no choice but to drop their preferred method of transport and opt for road and sea alternatives. The supplier of paper to the UK newspaper sector has indicated that they will be assessing alternative and more reliable means of feeding to UK ports eg by sea.

  12.  The Bottled Water Company referred to in paragraph 7 will also have to reconsider the viability of rail freight operations to the UK. Due to the nature of their product (ie their large quantities, their bulk and the distances travelled), the company is to a large degree bound into using rail freight at least in the short to medium term. However, notwithstanding the established infrastructure at sites and depots on both sides of the channel, rail is no longer providing a stable means of assuring future business and there may be no alternative other than to consider a permanent shift away from rail at some point in the future.


Are long-term plans or commitments possible based on the CTRL? Has the perception of rail freight both international and domestic altered in light of the disruptions?

  13.  The member whose difficulties were described in paragraph 6 has acquired a very large potential new continental customer, and the decision about how to transport to this customer hangs in the balance at present. Both parties remain dubious in the extreme about using rail as a strategically sound choice. If rail is not a serious option there is a danger that UK businesses will lose out on overseas contracts when the competitiveness of their contract bids rest on rail freight services out of or into the UK.

  14.  FTA's Rail Freight Council cited several companies who in 1998-1999 as newcomers to rail freight were seriously interested in the mode for the transport of a variety of goods. In one case weekly services began transporting French paper amounting to 1,250 tonnes (equivalent to 48 articulated lorries) across the channel to the UK. After successful trial periods the company turned its attention to similar flow of paper from Spain. Both projects have now been aborted as the uncertainties introduced by the asylum seekers have made such projects untenable and high risk.

  15.  The examples cited above serve to illustrate the unseen effects on international rail freight of allowing the CTRL disruptions to continue. One respondent took pains to explain how he saw the CTRL disturbances affecting the credibility of rail freight for prospective users. "For it to be truly successful, a whole host of elements need to operate correctly, week in week out. Wagons themselves cost around £25 a day in hire; hence any disruption of more than a few hours to the transport schedule results in delay to the rest of the cycle, with highly damaging results to the economics of the whole exercise."

  16.  Subsequently it is evident that the delays and unpredictability of movements through Fréthun have not only proved costly for EWS and other rail freight users dependent upon the CTRL, but also damaging to the wider market appeal of rail freight generally. The absence of consistent services is perhaps the most damaging element in the present crisis. Infrequent or even slow trains though undesirable can be accommodated into a logistics chain, on the condition that they conform consistently to a regular schedule. Respondents to our enquiry maintain that without the two fundamental requirements of any shipper for any transport service—reliability and service performance—there can be no confidence in or long-term commitment to that service.

  17.  Domestically the implications for the wider freight market are harder to quantify, although one member commented that perhaps the recent Potters Bar rail crash would have the more damaging effect on the reputation of domestic rail freight than would the Channel Tunnel disruptions. EWS denies that the cross-channel rail disruptions have altered their attitude towards domestic onward movement by rail. However, other respondents to our inquiry maintain that the disturbances coupled with a perceived lack of involvement by the Government has undermined their confidence in the latter's true commitment to its rail-freight strategy and to the rail-freight option in general.

  18.  The Government's "10-Year Plan" rail strategy will require a great deal of careful cultivation if it hopes to attract new customers to the railways. Because of the sector's complexity, the requirements for specialist equipment and railfreight's existing credibility problems, attracting new business is a lengthy process with typical gestation periods of around 18 months. "Such traffic once won, can be lost very quickly as has been the case" because of the CTRL disruptions. To win back this custom will be very difficult. If businesses have had their fingers burnt by railfreight or have seen the effects on others, they are unlikely to make readily that huge leap of faith required to transfer their operations to rail.


  19.  The Channel Tunnel rail link should not be left to languish in the parlous state that it currently finds itself. Respondents told FTA that it would take considerable time to restore faith in the CTRL once the current crisis is resolved. This may have some serious impacts on UK businesses. Moreover, the growth in railfreight asked for by the Government in the 10-Year Plan will depend heavily on growth in international services to and from the UK. Representing as it does the only rail corridor between the UK and the continent the CTRL is not only a symbolic link for UK businesses with mainland Europe, but also a vital part of the future infrastructure capacity, that is integral to the UK's future trade with Europe.

  20.  The tragedy of the current crisis is the genuine desirability of the CTRL, and the inherent attractiveness of the services that it could offer. The present situation on the CTRL is unable to provide users with the predictability that is essential for businesses to confidently plan their operations. Critical to the future of Channel Tunnel Freight are the key requirements of predictability and reliability which customers demand. It is unlikely that there will be any growth in international rail freight without it. From the users perspective if services do not provide consistency the infrastructure itself may as well be absent. The ongoing disruption caused by asylum seekers has already damaged business confidence immeasurably, but this should not prevent the Government from acting decisively now to limit the extent of this damage.

  21.  Desperate incursions of asylum seekers on the Channel Tunnel at Fréthun the moment that French police are called away proves that adequate policing could if not remove the problem entirely, at least control it. The increased numbers of asylum seekers attempting to transit the tunnel between the 10 and 14 May this month (a period during which policing was absent) is a good example of the opportunism used by the clandestines and the opportunities afforded to them by lax security. It also ensured that many of our members rail operations ground to a halt. It clearly illustrates the fact that a permanent and capable presence is required to protect the Fréthun yard and the tunnel entrance.

  22.  From all the evidence that is available it appears that the French Government is still not committing resources sufficient to maintain law and order at the terminal. This failure to provide suitable security has undermined confidence in the CTRL and has resulted in considerable costs for industry. Furthermore, security should be tightened at all terminals involved in international rail freight.

  23.  It is evident that primary responsibility for resolving this crisis lies with the British and French governments and European authorities. FTA recognises the efforts taken so far by the British Government to resolve the crisis by applying pressure on the French but urges that efforts in this direction are redoubled. The primary concern of business is to see the Channel tunnel restored as a valuable trade link. For this the incursions by asylum seekers must stop and to do this a similar fence to that which protects the Euro-star terminal needs to be constructed and a sufficiently strong French policing operation needs to be installed. Without this industry will have to conclude yet again that international and possibly domestic rail freight is simply not a credible option for business.

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