Examination of Witnesses (Questions 440
- 459)
WEDNESDAY 22 MARCH 2000
MS DIANA
LINNETT, MS
TARA GARNETT,
MR ALLEN
MARSDEN AND
MR GEORGE
BOYLE
440. It was that if we try to create this level
playing field by increasing duty on road fuel, what evidence do
you have from the last few years' experience that we will actually
see freight going onto the railways?
(Ms Garnett) Just evidence from industry suggests
that they are now beginning to take steps to, for instance, reduce
empty running, improve routing and so on and so forth which suggests
that the rises that have occurred so far have had some kind of
impact upon their operations and are encouraging them to be more
efficient so it is evidence from the industry itself.
441. But we have not actually seen—have
we seen any increase in volume of freight on the railway over
the last two years?
(Mr Boyle) Could I just say EWS have seen a 30 percent
increase.
442. A 30 percent increase?
(Mr Marsden) I think the evidence is there in the
DETR figures for tonnages and distance and tonnes moved by distance
as published in the Transport Statistics Great Britain and the
quarterly updates. As Mr Boyle rightly says, EWS has seen volume
growth in 30 percent over the last few years and has actually
seen rail's market share modestly increase versus road which is
reversing a trend of several years and I think that is evidence
of various factors working, one of which I would say is the impact
of the fuel duty escalator.
443. May I just add something to my question
then? The previous set of witnesses made what I thought was a
very strong argument when Mr Stevenson questioned them, about
some of the difficulties with increasing freight on the railways
in the United Kingdom to do with things like sizes of tunnels
and physical restrictions. It seemed to me from what Mr Boyle
was saying these are going to require substantial infrastructural
investments to correct these things, and knowing how long it takes
to get substantial infrastructural investments in this country,
my guess is that the railways are not going to be in any position
to accept huge additional volumes of freight maybe for 10 years.
Would we not be better off as a nation making those investments
now whilst keeping fuel duty low, with a view to increasing fuel
duty and forcing the traffic onto the railway in 10 years when
we actually have a railway that can take it?
(Ms Linnett) May I just go back to one of your previous
questions which was what other benefits are there? I think the
effect and the cost of congestion at the moment, which is going
to increase significantly over the next 10 to 20 years, the DTI
estimates it costs UK PLC about £20 billion a year at the
moment. That is only going to get worse as congestion gets worse.
I think the opportunity to have the rail network as a parallel
network, particularly for long distance traffic, will actually
offer a reliability against a congested road network in the future.
But certainly when we talk to some of our industry members, they
are actually saying: "We want both. We do not want either/or.
We do not want road or rail. We want the opportunity to use both
for different types of traffic and therefore we need increased
investment in rail to give the capability of that for the future."
But coming on to your infrastructure investment question, yes,
these schemes do take a long time but I do not think they take
as long as 10 years. The work that Railtrack is doing at the moment
on gauge enhancement and producing a network which will accommodate
the higher grade traffic, the higher cube traffic, some of those
projects would be deliverable well within five years and it depends
how you phase them as to what you would have available first.
But I do not think we would have to wait 10 years before we see
the capability of being able to move those types of traffic. Obviously
there is going to be additional growth which is not just high
cube traffic, so there is other rail freight growth that we can
have on the existing network.
444. So how much of today's freight that goes
by road could be put onto the railway tomorrow without having
infrastructural investment? How much capacity is there left?
(Mr Boyle) Any type of container can be carried by
rail in this country today—it was rather a black picture
that the last person painted—admittedly not quite as efficiently
as on a straight-forward flat wagon where the container sticks
up in the air, but you have pocket wagons that can carry every
type of container.
Chairman
445. What about the train paths? Are the train
paths there? Are Railtrack prepared to be so flexible it responds?
(Mr Boyle) On certain lines, not. Rugby sits on the
West Coast Main Lines; Rugby southwards is very congested, but
there are alternative routes. It is an incremental thing; if we
start now investing in the railway as the traffic grows the two
can grow together. We do not need to have a 10 year moratorium
where we build a magnificent railway with nothing running on it
and then in year 11 transfer everything off the road onto the
railway. They both can move in parallel. Now either we have spent
quite a fortune on new locos and wagons, as have freightliner.
We need the corresponding expenditure by Railtrack in track enhancements
and the two can move in parallel.
(Mr Marsden) May I add that EWS and Freightliner have
been working very closely with Railtrack over the last two or
three years or so in order to put across to them our future requirements,
where we see the growth requirements of rail freight leading the
capacity needs of the railway network.
446. What was their response, Mr Marsden?
(Mr Marsden) Well, they have factored us in the network
management statement—
447. They have factored you in to the network
management statement?
(Mr Marsden) It is in their annual statement.
448. You mean they have given you one short
reference in their annual general report? Is that what you are
talking about?
(Mr Marsden) It is clearly not enough, Madam Chairman,
but work is being done. What I am concerned to do is make the
point that work is being done to improve capacity on the Railtrack
network.
449. Now, Mr Marsden, look. You may be pushing
on an open door, but we need to know the basis. I mean, there
is no point in saying to Government: "You must put an enormous
amount of taxpayers' money into investment" if there is no
demonstration that the rail industry itself is either capable
or interested or determined to encourage this rise in freight?
(Mr Marsden) I can assure you that we are putting
our money where our mouths are in rolling stock, locomotives and
systems and facilities and we are urging—
450. But the rails on which you run are not
owned by you and I say to you again, would you not require to
be slightly more than to be factored in to whoever's report it
is?
(Mr Marsden) Well, work is being done by Railtrack
to put in freight capacity as we speak. I can think of three or
four—
451. Where is that, Mr Marsden?
(Mr Marsden) On the East Coast Main Line they are
relaying and preparing to re-open the route between Ferry Hill
and the south side of Newcastle, the so called Leamside route,
which is one of the routes which we have argued should be re-opened
to provide freight capacity to meet our future growth. There is
work being done in the Doncaster area to improve capacity for
lines which will be used by freight trains. On the West Coast
mainline bridge enhancement work has been done to allow higher
containers to travel on conventional wagons so Railtrack is doing
quite a lot at the moment. Clearly they could do far more, clearly
they must respond to our projections for growth as well as those
of Freightliner and we will do our very best to make sure that
they do. Ultimately it is for them and for the issue of funding
to be resolved by all those concerned so that that capacity is
forthcoming, but I do not want to paint a picture that rail cannot
cope at the moment. There are pinch points at the moment, but
as I say capacity is being put in, capability is being put in
at the moment as we require.
Chairman: Dr Ladyman and then Mr Bennett on
this.
Dr Ladyman
452. You have made the case that the capacity
is there. Is the pricing policy of Railtrack there to freight
operators relative to passenger service operators?
(Mr Marsden) We are in the process of renegotiating
our track access contract with Railtrack at the moment. We argue
that Railtrack should be able to match international best practice
in their track maintenance regime and that that should allow them
to charge a much reduced rate for track access without necessarily
requiring subsidy in return for those reductions in charges.
Chairman
453. That may be your argument, Mr Marsden.
What is the response?
(Mr Marsden) I am not involved directly with the negotiations,
but they are continuing.
Chairman: Very tactful. Come back to us when
you have an answer. Mr Bennett, on this?
Mr Bennett
454. Are grants really needed in order to get
much more freight carried on the rail?
(Ms Linnett) I think there are certain things for
which grants are helpful. I think if the industry were to achieve
a lower track access along the lines that Mr Marsden was describing
there, it would make a significant difference. Certainly in Railtrack's
submission to the Regulator in their past and periodic review,
it is suggesting that its variable charge for freight needs to
be significantly higher than it has been at the moment. That is
a worry to us all and goes against the work that EWS have done
on best practice. But I think there are still opportunities for
us to be able to proceed.
455. So what sort of grants are needed, action
to put the infrastructure in or a grant per item carried on it?
(Ms Linnett) I think it is very difficult when we
do not know what the value of that grant would be, if the track
access—
456. Now wait a minute. Your evidence suggested
that these grants were necessary. Now convince me?
(Ms Linnett) At the moment, with the track access
deals that are in place—the track access agreements that
are in place—and the suggestion that going forward they
are not likely to be any more favourable to the operators, then
we still do believe we need a system of grants to enable people
to shift from road to rail. I think you need a capital grant to
enable them to make that decision, particularly where it involves
capital cost on the type of equipment they do not have at the
moment and particularly when they have a fleet of road vehicles
already it is a charge that they would not normally have to take
on. So I think they do need a capital grant and on certain flows,
particularly intermodal traffic, because of the cost structures
of intermodal, it is very, very hard to be competitive with road
haulage and therefore we proposed either the introduction of a
terminal grant or, in some cases, in some particular flows, you
might need additional track access grants.
457. Right. On a different topic, the other
witnesses we had this afternoon which I think you heard, were
talking about the role of e-commerce and the fact that you would
need lots of little delivery vans in towns. Now does that pose
a threat to rail or because one of the problems with e-commerce
is that you have to be in to receive the goods, is there a scope
for re-invigorating or bringing back to life a parcels service
within the rail system?
(Mr Marsden) Perhaps I should take that? In a sense
we already do that. We take goods to serve one particular High
Street retailer who is in almost every High Street and we service
him with fast, overnight transits moving small items in large
quantities. This of course is the Royal Mail Post Office. I could
see very easily the same techniques that we use for the Post Office,
namely systems like roll cages, trains which run at passenger
train speeds, roller shutters, cross docking, fast transfer from
train to small van being applied to other users as well, other
High Street retailers. This could easily be used as part of a
supply chain for e-commerce. One of the things I think e-commerce
does offer is there needs to be a break of bulk at some stage
in the supply chain between the trunk operation—moving the
goods in bulk—and the onward delivery to the High Street
front door in small white vans and I think where you are doing
a trans-shipment operation that can easily be done, given the
right sites, at Rail-Served locations and that I think is where
that gives rail the opportunity to participate as part of the
supply chain.
458. Do you think it is logical for there to
be small white vans rather than individuals going to a warehouse
to collect the items which people ordered?
(Mr Marsden) I cannot foresee clearly at the moment
how that market is going to turn out. It is very early days. Rail
I do not think participates in that end of the market. We would
be very keen to play our role in the trunk haul, but how the goods
actually reach the end-user, whether they are collected or whether
they are delivered, is a matter, I think, to see how the market
develops.
(Ms Linnett) I think in the past a lot of intermodal
terminals have been placed on the periphery of an urban conurbation.
I think there is something which needs to be looked at—and
we have not looked at it in any detail yet—of actually looking
at urban distribution centres in the centre of an urban conurbation
instead of around the edge, because I think particularly with
e-commerce and while we might not be very developed in how we
will deal with e-commerce, I do not think the road haulage industry
has actually worked out how they are going to deal with it either.
I think the impact of distribution on our communities of e-commerce
is something that none of us have really got to grips with yet.
(Mr Boyle) May I just say, Madam Chairman, that the
present logistic system is not necessarily as efficient as you
might think. A Marks & Spencer 40 tonne lorry goes through
the back streets of Stockport to drop off one pallet. It then
fights its way out of Stockport and goes to Manchester and drops
off one pallet. It then goes to Bolton and drops off one pallet.
If those pallets were delivered to a central rail depot and taken
out in a small van, that is far more efficient than this great
big 40 tonner trying to find its way through the back streets,
which is what happens now to all the big retailers. Very rarely
does that 40 tonner drop off a complete load at Marks & Spencer
at Stockport. It will often drop one, two pallets at the most
and it goes all around the North West blocking all the back streets
up in each town that is visited. So it is not necessarily quite
so efficient as you might think, even now.
459. I am not arguing that it is efficient at
all.
(Mr Boyle) Sorry, I appreciate that.
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