Rail 2020

Written evidence from Freight on Rail (ROR 15)

Freight on Rail, a partnership of the rail freight industry, the transport trade unions and Campaign for Better Transport is pleased to respond to the inquiry into the Reform of the Railways.

The impacts on rail freight do not easily fall into the suggested questions so the submission explains the positive and negative implications to rail freight of the reforms. Rail freight needs a national network which is managed nationally both because most rail freight flows are inter-regional and its competition has access to a national network by and large. Any new structure needs to incentive the promotion of rail freight by all parties to ensure that rail freight’s interests are safeguarded.

1. Impacts on rail freight of Command Paper

While the Rail Command paper recognises rail freight’s value in economic, environmental and safety terms, the restructuring plans to trial full vertical integration within the privatised model would be highly damaging to rail freight and will lead to more fragmentation. Rail freight’s interests need to be safeguarded if the Coalition Government is to be able to meet its climate change and economic targets.

We support the Rail Command Paper’s strong support for both existing and future rail freight services. It sets the scene for funding in the next rail spending round (HLOS) by recognising what rail freight needs to thrive and grow ie expansion of Strategic Freight Network including diversionary routes, gauge and capacity upgrades. It also highlights the need for the right planning policies to get terminals of all sizes and the need for protection of strategic freight capacity, all of which is very welcome.

Rail Command Paper paragraph 3.15 One of the key future roles of the existing rail network will be to continue to support the growth of freight services, particularly for inter-modal containers. Our strategy is set out in the department’s Strategic Rail Freight Network policy. We aim to fund a targeted programme of investment designed to make the best use of the existing rail infrastructure and to support continued private sector investment in the industry. Where there is a business case, and subject to affordability, we propose to increase network capacity to accommodate forecast freight growth. HS2 will also release capacity on the existing network to enable more freight services to operate.

Rail Command Paper recognises that road freight does not pay all its costs,

Paragraph 4.49 Page 49 Not all external costs of road freight are paid by users of the road network so there is a strong case for Government to continue providing support for the rail freight industry to create a level playing field.

2. Current charging regime
Increases in rail freight charges would make it even harder for rail to compete with road freight. Rail freight charging principles set out in EU Directive 2001/14 state that freight operators should pay charges which reflect the costs that they impose upon the network.

3. Restructuring threats to rail freight

However, as part of the re-structuring of the railways, its commitment to trial vertical integration in the privatised railway is a huge threat to rail freight. A fragmented model with more interfaces is no use for rail freight. Network Rail needs to work to ensure that freight’s interest are safeguarded. Under the present privatised model, separation of track and train must be retained to avoid passenger operators being put in charge of the track. The competition, ie road, does not face these complicated structures which will make it more difficult for rail to compete. 

In particular, singling out Anglia routes for vertical integration tests is very worrying for freight given the importance of freight services out of Felixstowe and North Thames side to the economy. Changes which could threaten performance and thus the ability of the Focs to supply reliable services to their customers could be very damaging to rail freight. In some parts of the country this model could lead to conflicts of interest. The proposals for the Wessex franchise could be equally worrying for Southampton port.

There are fundamental questions on how services would be prioritised if the Tocs were in charge; Tocs would need to be incentivised to promote and increase rail freight flows. Any new structure must guard against intermodal freight trains sitting at red signals waiting to come out of Southampton and Felixstowe Docks. If the Focs are not able to provide a reliable and robust service to their customers, the traffic will revert to road leading to more road congestion and pollution.

It is therefore disappointing that Government is to continue to support trials of full vertical integration, going much further than the current proposals for alliancing which in themselves risk more interfaces and fragmentation. 

The report considers a number of alternative structures for the infrastructure and train operator integration. The third option states that there is an option ‘to place responsibility for train operations and infrastructure management in an area in the same hands (table 4.1 paragraph 4.6). Later, the report states ‘we agree that vertical integration could offer promising benefits in the longer term (paragraph 4.27). We are strongly opposed to this type of vertical integration, as it could reintroduce all the issues of unfair competition, as well as potentially put one government funded train operator in charge of capacity allocation, that current European and UK legislation is designed to avoid.

4. Relationship with ORR

Although third parties have the ability to appeal to ORR in certain cases, an approach which relies on appeals and arbitration is unlikely to deliver the commercial service which freight needs.

Regulatory protections for freight

Both Government and the ORR are determined that any changes proposed to the structure of the industry continue to protect the interests of freight and other operators on the network. P45.

5. Rail freight needs a national network

It remains crucial that the system operator ie Network Rail keeps all the timetabling, possessions and maintenance planning central. A key question is at what level in the chain of these operations are responsibilities devolved locally.

6. Rail devolution consultation

Questions remain on how to manage a devolved structure and what features

would be retained centrally. At the moment devolution relates to specifying franchises. However were the DfT to start talking about devolving the network grant that is potentially serious for freight.

7. Alliancing

It should be noted that although the proposals as described for Stagecoach South Western Trains consultation do not constitute vertical integration, it clearly moves in that direction and risks splitting up the national railway network resulting in more interfaces.

8. Why rail freight is so important to the economy, environment and society

Congestion benefits Road congestion is now costing around £24 billion per annum according to the Freight Transport Association based on Government figures; a single aggregates train can remove a staggering 160 HGVs from our roads 3. 

Environmental benefits

Rail freight creates 70% less carbon dioxide than the equivalent road journey and a gallon of diesel will carry a tonne of freight 246 miles by rail as opposed to 88 miles.

Rail freight is safer than long-distance road freight using major roads, as HGVs are over 3 times more likely to be involved in fatal accidents than cars due to a combination of size, lack of proper enforcement of drivers hours, vehicle overloading and differing foreign operating standards. Source: Road Statistics 2010 Traffic statistics table TRA0104, Accident statistics Table RAS 30017, both DfT

Rail freight is breaking out of its traditional markets into consumer business
Last year for the first time, consumer rail freight traffic was greater than coal traffic; it grew 29% in the past 5 years, despite the recession, its eighth consecutive year of growth. The industry predicts that rail freight overall will have doubled by 2030 with consumer rail freight growing 7.6% per annum during this period.

18 April 2012