Memorandum by the Freight Transport Association
(CHT 07)
DISRUPTIONS TO RAIL FREIGHT SERVICES IN THE
CHANNEL TUNNEL
INTRODUCTION AND
EXECUTIVE SUMMARY
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.
SECTION 1: IMMEDIATE
IMPLICATIONS/COSTS
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".
SECTION 3-MEDIUM-TERM
IMPACTS
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.
SECTION 4-LONG-TERM
IMPACTS
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.
SECTION 5-CONCLUSIONS
AND RECOMMENDATIONS
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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