Developing Rail Freight Policy in Scotland

Response from Rail Freight Group

December 2009 

1.      Rail Freight Group (RFG) is pleased to respond to Transport Scotland’s consultation on Developing Rail Freight Policy in Scotland. 

General Comments

2.      RFG’s forecasts for rail freight growth suggest that, across Great Britain, rail freight could double its market share by 2020, such that it has around 20% of the surface transport market.  To achieve this requires strong political support across all Governments and co-ordination of approaches.  We are therefore pleased that Transport Scotland is undertaking this consultation and is considering the appropriate support that it should provide.

3.      However, we are concerned that some elements of the consultation appear contradictory.  For example, the document acknowledges that rail freight cannot always compete on price with road, yet states that Transport Scotland expects to make a return on investment from rail freight schemes.  It identifies infrastructure interventions that may be required yet states that the Forth Replacement Crossing is the transport priority.  It infers that the rail freight operators are not offering the correct service to customers yet fails to recognise the ground breaking domestic intermodal services that are thriving to, from and within Scotland.  Although it discusses the existing grant support schemes there is still no confirmation of budget provision beyond April 2010.  Given that Transport Scotland has stated its commitment to modal shift we would have expected to see unequivocal support for rail freight growth underpinning the consultation.

4.      We recognise that Transport Scotland, like the rest of UK Government, is facing fiscal pressures which are likely to adversely affect rail investment beyond CP4.  In such times, it is even more important that there is a clear vision for rail freight growth which can be progressed as and when funds become available.  This vision will also ensure that opportunities are not missed as other work is undertaken – for example the ability to provide enhanced loading gauge in parallel with electrification schemes.  The DfT’s Strategic Freight Network – the Long Term Vision document is a good example of such an approach in England, and RFG would hope to see a comparable document being produced for the Scottish Rail network.

5.      The consultation does not mention in detail the role of private investment in rail freight.  Many RFG members are willing to invest significantly in rail facilities for example at ports and terminals but need a supportive and efficient planning system to deliver their schemes.  Transport Scotland should determine whether improvements in the planning framework could help to deliver further modal shift.

 Specific Comments

Introduction

6.      We are pleased to see that the Scottish Government is committed to encouraging the transfer of freight from road to rail.   As noted, rail freight offers significant carbon savings compared to road,  and also helps to reduce road congestion and improve road safety.  We also agree that mode choice is a matter for the private sector.

Current Market

7.       We would have expected this section to summarise the successful rail freight services that are operating to, from and within Scotland.  This includes;

a.      The domestic intermodal services moving supermarket and other products within Scotland, including the Highlands, and between the English Midlands and the Central Belt generally operated by rail freight operators and logistics providers in co-operation;

b.      Longer and more efficient coal services from Scottish deep water ports and domestic mines to destinations in both Scotland and England;

c.      The only regular rail postal services operating in the UK.

8.      Whilst it is recognised that in some sectors rail is not cost competitive with road without environmental grant, it is unhelpful to suggest that rail cannot compete outside of long distance bulk flows.  Medium and long distance intermodal services generally receive no grant, and from next April, rates are falling on most routes including the English Midlands to Scottish Central Belt domestic services.

9.      Whilst rail is not as flexible on a day to day basis as road for sudden changes in demand, it is certainly not the case that it cannot cope at all with changes in demand.  Seasonal coal flows, peaks in demand of supermarket goods and mail traffic, and ad hoc projects such as major constructions are managed perfectly well.  For services operated in conjunction with a logistics provider, and for deep sea intermodal services, the customers and volumes may well change on a daily basis.

How does Modal Shift Contribute to the Aims of the Scottish Government?

10.  We have no comment on the content of this section.  However, as described above, we would like to see a network vision for rail freight in Scotland which sets out the priorities for delivering the Governments aims.

What are the benefits of moving freight by rail?

11. Rail Freight contributes to the Scottish Economy in a number of ways, including but not limited to carbon reduction.  This includes reduced road congestion, improved road safety, and efficient transit times.  In the latter case, the domestic intermodal services mentioned previously are delivering over 95% on time delivery which improves reliability and end to end journey times for the export of Scottish goods.  Rail freight is also a significant employer.

12. We are somewhat perplexed by the suggestion that further research is needed to determine the damage caused by rail freight on the rail infrastructure.  Significant research has already been undertaken by Network Rail and ORR into this area as part of the review of access charges for CP4.  The variable access charges paid by freight operators to Network Rail are set at a level which covers the incremental damage caused by those services.  A sophisticated model allocates different charges to different wagon types and locomotives depending on their specific ‘track friendliness’.  Since April 2009, coal services also pay for the fixed cost of the freight only lines which they use.  Overall therefore there is no evidence that rail freight traffic is not covering its costs for track damage.

13. If Transport Scotland is unhappy with this position then it should make a case to ORR as part of the next review of charges.  We recognise that on the road network work may be required as this level of sophistication may not exist.

What are the Obstacles to Moving Freight by Rail?

14. Infrastructural – we would add limits on train length and axle-weight, lack of diversionary routes, inability to offer a 24/7 service to customers.  Under rail freight terminals we would include planning difficulties.

15. Administrative – we are unclear what element of the charging regime is inferred.  Certainly reduced charges would improve rail’s efficiency, as would reduced handling charges at ports.

16. Logistical – Some particularly specific points are raised, and these may be relevant for smaller customers seeking to use rail.  However for larger customers such as supermarket chains, and those working through third party logistics providers, it is unlikely that these particular issues are the main ones.

17. Operational – We are unclear what wider industry culture means in this context.

Current Interventions and Incentives

18. We note the recommended schemes from the Strategic Transport Projects Review. 

19. We support schemes to improve the rail capacity and capability into Grangemouth including gauge clearance, and also enhancements between Aberdeen and the Central Belt.

20. We would also include gauge clearance between Berwick and the Central Belt to align with the DfT funded work currently being progressed south of the border.  This adds an important through diversionary capability to the West Coast as well as offering additional opportunities to and from East Coast destinations.

21. Across Scotland, small schemes to increase capacity at strategic locations should be progressed.  This includes looping facilities in the Mossend area and between the Central Belt and the Highlands.

22. However we are concerned at the suggestion that all available funding will be diverted to the Forth Replacement Crossing.  A small fund to develop rail freight schemes should be maintained particularly where they can ‘piggyback’ onto other schemes. 

23. We support the Mode Shift Grant Schemes; however budget must be confirmed at a sufficient level beyond April 2010.

Options for Intervention

24. Generally, we support the type of interventions listed.  However we think that an overarching network vision for rail freight would help to ensure actions were co-ordinated. Whilst Transport Scotland may have a role in facilitating contact between major potential customers and rail operators, we think that generally the private sector is best placed to progress such discussions. Logistics operators can also play a key role in this process.

 Proposals for Action

25. We support the proposed vision statement. 

26. The identification and protection of freight capacity on strategic corridors is important to give customers assurance that their traffic will be able to move on rail now and in the future.  Measures to increase freight capacity can include a move towards 24/7 operation as well as measures to increase train length and weight.

27. We are unclear why Transport Scotland expects to make a return on rail freight investment when it has already acknowledged that rail freight struggles to compete on cost in many cases.  It is unclear quite how this objective helps to deliver the stated vision.  We also question whether Transport Scotland makes a return on investment in road freight, passenger rail, short sea shipping etc.  We would be particularly concerned if rail freight alone was targeted, and if the proposed approach increased rail’s cost base compared to other modes.  We suggest that this objective should be dropped.

Proposed Action Plan

Scottish Government

28. As stated above, for domestic movements, rail freight operators and logistics companies have been successfully targeting both internal Scottish and Anglo Scottish traffic and this is an area which should be supported and progressed.  The DfT’s Logistics Sounding Board is a forum which seeks to facilitate improvements in logistics, including rail, and may be a useful model for Transport Scotland to consider adopting. 

Rail Freight Industry

29.  It is in the commercial interests of rail freight operators to grow their business where it is viable to do so.  We consider that the major logistics companies also have a major role to play.

Network Rail

30. Rigorous application of ‘use it or lose it’’ will only be helpful to rail freight growth if those paths are then made available for other freight services.  If paths are used for additional passenger services then this will be to the detriment of both existing freight flows and potential freight growth.  As such, we would say that this action is only fully helpful if coupled with the development of Strategic Freight Capacity on key routes.  We note that this is an action for ORR, and also note that Transport Scotland opposed the consultation on this matter.  We consider that this is therefore an area for greater consideration.