Memorandum by the Rail Freight Group (RH
41)
THE ROAD HAULAGE INDUSTRY
INTRODUCTION
1. The Rail Freight Group is the representative
body of the rail freight industry. Its membership includes rail
infrastructure providers, terminal and train operators, property
developers, engineering and construction companies, local authorities
and customers of the railway. Its objective is to grow the amount
of freight carried by rail.
2. RFG has a number of comments in relation
to its main competitor, road freight. We accept that road freight
has a major role to play in the economic life of the UK and Europe
generally, and we are not seeking to promote the use of rail freight
for all services currently operated by road. That would plainly
be unworkable.
3. However, we do see the potential for
significantly increasing the amount of freight carried by rail,
on those journeys for which rail is suitable. It will require
both increased efficiency within the railways industry, an issue
on which RFG continues to campaign and a competitive environment.
It also requires the two industries to be able to compete on a
fair basis.
4. On that basis, rail freight can provide
the improved environmental benefit and services to increase traffic
by doubling market share in 10 years, a policy in accordance with
the 1998 transport White Paper.
5. In this Memorandum we discuss the present
and potential future market share for rail, and then set our short
responses to four issues set out in the Committee's Notice of
Enquiry.
THE MARKET
SHARE OF
RAIL FREIGHT
6. The market share of rail freight is currently
between 7 and 8 per cent measured in tonne-miles. This compares
with between 15 and 20 per cent in some other European countries.
We suggest that the low value in the UK is largely due to government
policies over two decades of encouraging and liberalising road
transport and, until recently, seeking to close down rail freight.
7. However, it does indicate that it should
be quite possible to increase market share in the UK to 15 per
cent and, in the very long term, we see a market share of up to
25 per cent being achievable.
8. Since these figures are based in tonne-miles,
this means that, since most shorter journeys will be made by lorry,
the share of longer journeys by rail, say of over 100 miles, will
be of the order of 50 per cent. Again, we believe this to be achievable
in the long term.
MEANS OF
ACHIEVING A
HIGHER MARKET
SHARE FOR
RAIL FREIGHT
9. In order for rail freight to achieve
these higher market shares in line with government policy, measures
are required to reduce the present imbalance between road and
rail freight charges and costs, since:
— the heaviest road freight only pays
60 to 70 per cent of the true costs of the damage it causes (see
paragraph 15).
— proper enforcement of road freight
regulations would probably increase costs of road freight operations
by some 30 per cent (see paragraph 15).
— 44 tonne lorries will now provide
a further 10 to 20 per cent advantage against rail for certain
traffic. (see RFG's evidence to the Commission for Integrated
Transport, November 1999).
10. Mitigating measures on road vehicles
must include:
— weighing of all incoming lorries
at ports and other major distribution points, as well as spot
checks elsewhere.
— proper enforcement of all other road
freight regulations, including speeding, construction/use, drivers
hours to a similar level as for rail freight.
11. In addition, until the road measures
are in place and operational, and the overall costs of operating
road transport brought into line with the costs that it imposes
on society as a whole, rail freight will require support for this
limited period with the following mitigating measures to complement
the efficiency gains that will occur in the rail industry in the
next decade:
— Increase the rail freight grants
to provide higher values of lorry miles saved in congested motorways
and other urban areas.
— Widen the scope of rail freight grants
to allow applications for scheduled services without end customers
signed up.
— Introduce an infrastructure grant
for intermodal terminal costs.
12. The rail measures are not described
in more detail here, since the ETR Committee enquiry is into road
transport.
THE ROLE
OF THE
ROAD HAULAGE
INDUSTRY AND
ITS IMPACT
ON THE
ENVIRONMENT
13. The road freight industry has a crucial
role in providing for the transport needs of the UK economy. Even
when the rail freight market share increases, as described above,
this role for the road freight industry will remain. However,
its impact on the environment is large, both in perception and
reality.
Damage to roads and bridges
14. Roads have to be constructed to a much
higher specification and therefore cost to carry the weights applied
by heavy lorries. Similar comments apply to bridges. Such comments
apply both the weight of individual vehicles as to the effect
of repetitive application of such loads—ie both the weight
of lorries and the number of them.
15. The Armitage Report on Lorries and the
Environment, (1984?) concluded that damage to road surface from
road vehicles, based on static tests was:
| Vehicle | Damage factor
per axle
|
| Medium family car | 0.40
|
| 1 tonne axle | 1
|
| 10 tonne axle | 10,000
|
| 15 tonne axle | 50,626
|
| 20 tonne axle | 0,000
|
16. The effects of dynamic loads will depend on the suspension
of the vehicle, whether it is adjusted correctly, and on the quality
of the road surface. With poor suspension on a badly maintained
road, the dynamic effect can be many times greater than the static
values set out above.
Does road freight pay the full cost of the damage it causes?
17. Compared with rail freight, per tonne mile of freight
carried, the lorry also causes a much greater damage to the environment
that rail freight, and pays very much less, for the heaviest lorries,
probably about 50 per cent of the total cost that they impose
on society. We arrive at this figure by combining the conclusion
of the OXERA Report (1999) that freight only pays 59-70 per cent
of the total costs of its operation (calculated on the same basis
as rail transport) with the finding reported by Prof Alan Mackinnon
of Heriot Watt Univeresity two years ago that, if lorries in France
complied with all the legislation affecting them, costs of road
transport would increase by about 30 per cent. We have no doubt
that little has changed since then and that similar figures would
be applicable to the UK.
Accidents
18. Accidents involving lorries are generally more serious
than those not involving them, because of their greater weight.
This imposes not only a cost to the nation but also causes human
tragedies for many families every year.
19. Again, because of their size and weight, they instil
more fear in pedestrians, cyclists and other road users, who perceive
them as a great threat and which may cause them to avoid using
roads and streets which they would otherwise have done.
Emissions
20. Furthermore, comparing the emissions from road and
rail freight, the European Environment Agency's Dobris Assessment
(1995) set out the carbon dioxide emissions by alternative freight
transport modes, in grammes per gross tonne.mile:
— Electric hauled freight train, 23
— Diesel hauled freight train, 63-77
THE IMPACT
ON THE
INDUSTRY OF
RATES OF
VEHICLE EXCISE
DUTY AND
FUEL DUTY
21. For reasons stated above, RFG does not support the
argument that VED and Fuel duty are both too high per se.
If all road freight is subject to the same levels of VED and fuel
duty, then there can be no argument about unfair competition;
in fact we have argued that the fuel duty escalator should continue
to be raised at the previous year's rate in order to close up
the gap between what the road freight industry pays and the cost
that it imposes.
22. Furthermore, we are not persuaded about the effect
of such high rates on UK's competitiveness. The cost of transport
is a very low proportion of the total cost of a manufactured good
(we believe generally about eight per cent). Thus, even a moderate
increase in the cost of transport will have a very small effect
on the UK's competitiveness, much less than other costs of manufacture,
such as land prices, state aids, wage rates and exchange rates.
23. However, there is an argument about the difference
in rates between UK and continental registered hauliers although,
again, we believe that the effect is nothing like as great or
as widespread as the road freight industry has sought to make
out.
24. The biggest problems is the difference in the price
of fuel which can bring significant savings to those lorries who
cross the Channel, particularly if they have fitted extra large
fuel tanks. This problem could be solved by better enforcement
of Construction/Use Regulations to ensure that the fuel tanks
comply.
25. As a means of mitigating the effects of lower VEDs
and other costs, it would be quite possible (and comply with EU
regulations) for the Government to introduce a "vignette"
systems for all vehicles, both UK and foreign registered lorries,
and reduce the VED for UK lorries by the same amount. We cannot
understand why the government has not taken action this.
26. Secondly, there is an increasing number of lorries
operating with drivers who are non-EU residents. Again, this could
be enforced by the Home Office as part of a package of measures
discussed below.
REGULATIONS GOVERNING
THE INDUSTRY,
AND THEIR
EFFECT ON
PROFITABILITY
27. In our opinion, there are no regulations in the industry,
with the exception of the possibly unfair competition from continental
hauliers in a small segment of the market, which can be blamed
for adversely affecting the profitability of the industry. There
is much evidence that many in the industry are operating at very
low levels of profit, but the same can be said about the rail
freight industry.
28. In the road freight industry, the low levels of profitability
are due to oversupply within the industry and the low level of
entry cost for new operators. Many operators are owner-drivers
with very low overheads who may not maintain their vehicles adequately
and who sell out of the business when the vehicle is no longer
reliable or it requires a new set of tyres for example.
29. The lack of enforcement can lead to drivers ignoring
the regulations governing driving hours; excess hours and fraudulent
use of the tachograph is said to be widespread. This has serious
safety implications, since driving for long periods is a major
contributing factor in accidents. The most recent example was
the driver who, in his eleventh hour at the wheel, killed a pedestrian.
He was found to have several hundred partly used tachograph cards
in his cab, and was convicted. His employer was convicted on corporate
manslaughter, we believe the first time which such a charge has
been brought for such an offence. While welcoming this and hoping
that it will teach the industry a lesson, we were saddened that
the owner received only a suspended sentence for knowingly allowing
his driver to exceed the permitted drivers' hours.
30. During much of the past decade, there have been too
many lorries chasing too little business. This has resulted in
rates that have probably changed little during that period. Now
there are reports of driver shortage, because of an increasing
unwillingness to accept the long hours, frustrating driving conditions,
nights away from home sleeping in the cab and low rates of pay.
These are resulting in rates beginning to rise. This is probably
good for the industry.
31. Nonetheless, we see no cause to lay any of these
ills at the door of government.
CHANGES TO
GOVERNMENT POLICY
32. The most important changes of government policy in
relation to the road haulage industry would be to enforce the
existing legislation properly, to increase the severity of penalties/charges
and increase the range of offences for which impounding of lorries
was possible.
33. Impounding of a lorry is the greatest deterrent,
since it prevents the lorry continuing on its journey and also
prevents the owner or driver from continuing to ply for business.
34. Lord Attlee's Private Members Bill, sadly defeated
in the last parliamentary session, would have helped this, but
the range of offences which it included was, in our view, still
not wide enough. The offences should include overweight lorries,
speeding, construction/use and drivers' hour's offences.
35. In addition, these offences should be subject to
hypothecation of the charges to ensure that the authorities, be
the police or local authority officials are assured of the necessary
funds and resources to operate effectively. In particular, overweight
lorries entering the UK are reported to be an increasing problem.
We believe that it is necessary for all lorries entering the country
to be weighed at port of entry and it would be quite practicable
to do so.
36. Such changes would enable the responsible majority
of the industry to compete without being undercut by those who
operate illegally. It might cause the rates charged to customers
to rise, but we believe that there is a strong case for this to
happen in any event, so that the overall charge made and costs
incurred in the industry move closer to covering the overall costs
that heavy lorries impose on society and the environment.
11th February 2000
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