Memorandum from English Welsh & Scottish
Railway Ltd (FT 04)
INTRODUCTION
1. The House of Commons Transport Committee
has announced an inquiry into Freight Transport. This is the response
of English Welsh & Scottish Railway (EWS) to the Select Committee's
call for evidence.
2. EWS is the largest haulier of rail freight
in Great Britain. It moves freight within Great Britain, through
the Channel Tunnel and in France. EWS is both cash positive and
profitable.
3. EWS has responded to the Committee's
call for evidence into the Government's 30-year plan for rail.
The points that we raise in that evidence are equally applicable
to this inquiry and we suggest that Committee considers the evidence
together.
Is the Department's investment in logistics programmes—including
the Sustainable Distribution Fund—good value for money and
meeting the objectives?
4. Rail freight in Great Britain moves over
100 million tonnes of goods a year or 22.7 billion tonne kilometres.
This represents a 12% market share of surface freight transport;
higher for journeys over 100 kilometres. Freight moving by rail
means that 1.8 million tonnes of Carbon dioxide generation is
avoided (each tonne-km of freight by rail generates five times
less CO2 than the equivalent journey by road). Industry forecasts
endorsed by Government predict a 50% increase in rail freight
by 2014 and a nearly 20% market share, leading to a total saving
of 2.7 million tonnes of Carbon Dioxide.
5. The report by the Logistics Research
Centre of Heriot-Watt University for the Climate Change Working
Group of the Commission for Integrated Transport has examined
recent emissions data for the domestic freight transport market.
In 2004, the best year for analytical results, all modes of domestic
freight transport emitted a combined total of 33.7 millions tonnes
of CO2 into the atmosphere. The emissions by mode were:
|
| Heavy Goods Vehicles | 78.5%
|
| Vans | 13.3% |
| Waterway | 6.8% |
| Rail freight | 1.1% |
| Pipelines | 0.3% |
| Air | 0.1% |
|
| |
6. The report also stated that freight transport is responsible
for just over 21% of all CO2 emissions in the transport sector
and roughly 6% of the total CO2 emissions in the UK. In examining
opportunities to cut CO2 emissions, the report states that average
CO2 emissions per tonne-km are substantially lower for rail and
waterborne transport than road and air. The reports author, Professor
McKinnon, writes that "shifting freight to these more environmentally-friendly
modes can therefore cut CO2 emissions".
7. Environmental grants for rail freight amount to around
£20 million a year and encourage the transfer of traffic
from road to rail where environmental benefit is demonstrable.
The year-on-year decline of grant funding is at odds with Government's
expectation of rail freight growth and its environmental benefits.
Grant funding needs to recognise that rail can generate strong
cost/benefit ratios.
International distribution patterns involving air freight increase
carbon dioxide by up to 30 times that of sea transport—what
more can be done to promote modal shift from road and air freight
to inland waterway, shipping and rail? How can the Government
encourage and incentivise further efficiency improvements
8. To achieve modal shift to rail the rail industry needs
to have:
— High quality of service.
— An fit for purpose network with sufficient capacity
(paths on the network) and capability (ability to operate longer
and heavier trains with a larger loading gauge).
— A level playing field with competing transport
modes.
Low rail industry costs
9. Rail freight operators have consistently reduced costs
through reducing headcount (eg EWS has reduced headcount by 25%
in the last three years) and improving asset utilisation (eg EWS
has reduced locomotives by 40% and wagons by 28% in the last three
years). Operators' costs per tonne-km have reduced by 12% but
the margins generated are small. In 2006 the combined profit before
tax of the rail freight operators was £14 million on turnover
of nearly £1 billion; a return of just over 1%.
10. Rail freight operators face external costs that are
determined by Government and the industry administrators. These
include track access charges and fuel duty. Track Access charges
are over 20% of freight operators' costs and are the largest single
cost over which they have no control. The ORR is reviewing track
access charges as part of the Control Period 4 review and it has
indicated that charges could increase by up to 25% despite UK
freight track access charges being the second most expensive in
western Europe. Track access charges must be reduced to trigger
a step change in rail freight growth.
11. EWS has undertaken extensive research that demonstrates
that Network Rail's costs are more than double those of world-best
practice—widely regarded as being found in North America.
Implementation of EWS's findings would reduce the costs of the
industry to Government and we are working with DfT and ORR to
justify a challenging efficiency target for Network Rail in CP4.
EWS's findings should be adopted enabling a high efficiency target
for Network Rail.
12. The fuel duty paid by freight operators has tripled
in ten years. Each penny on fuel duty increases freight operators'
costs by £2 million—the 2p duty increase on 1 October
will cost £4 million a year. We are seeking a reduction in
fuel duty to enable it to be more competitive with other transport
modes. Given rail freight's environmental and congestion reducing
benefits rail freight should be carved out of fuel duty increases
and the duty paid reduced.
13. Freight operators are searching constantly for ways
of reducing costs. EWS is currently trialling a range of fuels
including heavy fuel oil and bio-diesel, which generate less CO2.
Government should support EWS's research and trials, which includes
resisting European legislation that would prevent EWS using lower
cost fuels.
High quality of service
14. Freight operators use modern locomotives and have
introduced predictable train operations to deliver the quality
of service that is agreed with each customer. Service quality
is, however, undermined by Network Rail's performance. In 2006-07
Network Rail missed its freight performance target by 18%. Freight
must become as important to Network Rail as passenger services
if freight operators are to get the quality of service necessary
to achieve the growth potential. Network Rail should have freight
performance targets, improve responsiveness and recognise freight's
needs in timetable and capacity planning.
A fit for purpose network
15. Rail freight requires a network that can accommodate
50% growth in the next seven years and doubling in the longer-term.
Our views on this issue are given in response to the question
on the Transport Innovation Fund.
A level playing field
16. In the White Paper Government acknowledged the need
for it to be a "good neighbour" to freight. The Government's
proposals for Crossrail will take significant capacity on the
important freight routes of the Great Western Main Line and the
Great Eastern Main Line. Government is also seeking access rights
lasting 50 years and the ability to remove freight access rights
that it believes conflict with Crossrail. The Government will
also retain powers in the Crossrail Bill to override freight rights
and the independence of the Rail Regulator. Any freight growth
before 2016 will be lost to rail when Crossrail commences operation
and there will be insufficient capacity for freight growth after
2016. The Crossrail Project must accommodate freight growth and
should not sterilise capacity by booking access rights that last
to 2066.
Air freight in the South-East is forecast to grow from 2.2
million tonnes a year in 2003 to 14 million tonnes by 2030. Has
the Department adequately planned for the capacity and access
implications of this very significant growth? How will transport
networks need to adjust to serve the growing air freight market?
17. There are no rail connections to UK airports that
can accommodate freight. The attempt to create a rail freight
terminal adjacent to Heathrow Terminal 5 was rejected by the Government.
Rail is capable of being part of the distribution chain from airports
building on its currently expanding role in serving supermarkets
and parcel traffic. There may also be opportunities for rail to
replace air for freight traffic from western Europe through use
of the High Speed rail links that are being created.
Should the Department have more responsibility for planning
and delivering integrated infrastructure which might promote "free
movement of goods"? How is this to be balanced with the Department's
other commitments? What should be the priorities for the Transport
Innovation Fund productivity stream?
18. Freight is forecast to grow by 50% in seven years
and to double in the longer term. Capacity is limited by the constrained
operation of the network compared with North America and Europe.
Freight operators have pressed for more responsive network operation
(such as Single Line working, use of mobile phones and bi-directional
signalling). These changes are also the levers to a "seven-day"
railway.
19. Increased efficiency and low cost is the key to growth.
EWS has argued for the introduction of the "Big Freight Railway",
which includes:
— Increasing train length to a standard of 775 metres
with 1000 metres on key routes.
— Increasing axle weight to 35 tonnes, which provides
an increase in 50% in carrying capacity.
— Increasing loading gauge to a standard that accommodates
deep-sea boxes and European swap bodies but with the intention
to extend mainland European loading gauge beyond the Channel Tunnel
Rail Link.
— Government has recognised the need for a Strategic
Freight network that builds on the Transport Innovation Fund expenditure.
Environmental and congestion benefits justify additional funding
beyond the £200 million in the White Paper.
20. The Transport Innovation Fund will be used to increase
network capacity and capability for freight through five schemes:
— Capacity improvements from South Humberside ports.
— Gauge enhancement across London.
— Gauge enhancement from the East Coast ports.
— Gauge enhancement from Southampton to the West
Midlands.
— Increased capacity on Merseyside.
21. We advocate the further use of the Transport Innovation
Fund to create more capacity for rail freight and propose that
it should be specifically focused on creating a mainland European
gauge cleared route from London to the West Midlands. We are not
convinced that the Transport Innovation Fund is an appropriate
source of funding for Crossrail.
How successfully has the Government influenced European negotiations
regarding freight operations? How could the Government help to
ensure a level playing field between UK and overseas freight companies?
22. The UK rail system has an open access environment
that can be utilised by any European rail operator with the appropriate
administrative approvals. We support the Government's efforts
to ensure that other countries of the European Union adopt, and
put into practice, the European Directives relating to access
to the rail network. International rail freight is a major opportunity.
Government had played an important role in creating the right
economic conditions for the increase of freight through the Channel
Tunnel. These commitments have not been matched by the French
Government creating continuing uncertainty for international freight
customers. This uncertainty is compounded by the pricing proposals
for the use of the Channel Tunnel Rail Link Pressure should be
maintained on the French Government and on the Channel Tunnel
Rail Link to create a positive climate for international freight.
How can the road safety record of haulage vehicles be improved?
23. The introduction of Longer, Heavier road vehicles
(LHVs) of up to 84 tonnes in weight and 34 metres in length will
not enhance the safety record of road haulage vehicles.
Collision damage
24. The kinetic energy of an LHV coming into contact
with another road vehicle or a structure such as a bridge support
is a function of speed and weight. Even assuming that LHV braking
systems are as efficient as those of conventional HGVs, the greater
weight of a LHV—up to 40 tonnes more—will inevitably
add to the energy which is transferred to an object struck in
collision. Unless the crash-worthiness of all other road-users—pedestrians,
cycles, cars, buses and other goods vehicles—is commensurately
enhanced, all will stand suffer greater damage when struck.
25. The Association of British Insurers (ABI) already
acknowledges the issue: in March 2007, the ABI advised its members
involved in road vehicle insurance to raise the premiums paid
by users of heavier "4 by 4" motor-cars due to their
greater weight—and thus kinetic energy—than ordinary
passenger cars. This advice reflects the results of research and
analysis undertaken by the ABI into collision damage claims.
Manoeuvrability
26. In normal operation on the public highway, HGVs are
unlikely to be required to reverse—but a suitably qualified
driver can reverse a full-size articulated vehicle should the
need arise. Off the highway and at depots, reversing movements
often take place. However, LHVs over twice the length of today's
lorries and with additional sections (whether draw-bar or semi-articulated)
they become far more difficult to reverse unless individual sections
are first detached. It might be feasible to detach sections at
purpose-built locations off the public highway, but on the public
highway under abnormal conditions, the need to reverse an entire
LHV could be unavoidable. Then, time and space may not afford
the luxury of detaching sections to allow a reversal. Vehicle
fires and multiple "pile-ups" could be exacerbated when
LHVs are involved. The consequences of collisions and or vehicle
fires involving LHVs in tunnels, cuttings, on bridges and other
confined stretches of roadway are unpleasant to contemplate.
Intrusion
27. Suggestions have been made than LHVs may be permitted
on UK roads—but subject to restrictions on which roads may
be accessed. For example, LHVs might be confined to motorways
and dual-carriageways where their greater length and lower manoeuvrability
would cause fewer problems. This approach brings problems of its
own which must be addressed before it can be applied:
— On many trunk routes, provision of dual-carriageways
/ motorways is not continuous and intermediate stretches of single-carriageway
remain. Presumably, LHVs would need to be permitted to use these
sections no matter how unsuitable.
— Junctions and interchanges on dual-carriageways
(and some motorways) are frequently at-grade, just as they are
on single-carriageway roads, necessitating the negotiation of
roundabouts and crossroads. The constraints of space and costs
often make such junction layouts cramped and ill-suited to HGVs,
let alone LHVs.
— Diversionary routes may include long sections
of single-carriageway, forcing their use whenever a motorway or
dual-carriageway is out of use for maintenance or due to a mishap.
— Many end-destinations such as ports, factories,
power stations, quarries and RDCs are only accessible via single-carriageway
roads, even when relatively near to dual-carriageways and motorways.
Presumably, LHVs would need to be permitted to use these sections.
28. The overall effect of the above is that it is quite
unrealistic to expect LHVs to be confined to dual-carriageways
and motorways. Other road users must expect to encounter LHVs
on many single-carriageways, in rural and industrial areas and
on a regular and infrequent basis. It is clear to EWS that it
would prove difficult—if not impossible—to define
an "LHV accessible" road network, let alone enforce
its use.
29. A recent DfT report revealed that foreign lorries
caused 44 deaths, 119 serious injuries and 1203 slight injuries
with half the foreign lorries checked having safety faults. This
reinforces concerns about high levels of non-compliance with vehicle-use
and related road safety legislation that are found when official
road-side checks are made of HGVs. We can see no reason why LHVs
should be more likely to comply with regulations, and it is inevitable
that they will be found using single-carriageway roads that are
quite unsuited and unsafe for their use.
30. A change in road haulage regulation of the scale
proposed by the various options in a study by TRL / Heriot-Watt
University (to which EWS has responded) will reduce lorry operating
costs. This will render road haulage cheaper than rail to the
carriage-paying customer across all the sectors in which these
modes compete. Rail has no captive markets: all the sectors in
which rail is active are also those where road competes. Road
and rail compete in various ways, including reliability and flexibility,
but ultimately, price remains a dominant criterion, if not the
most dominant one.
Effect on rail freight
31. Modal shift from rail to road will take place. The
pace and extent will vary between market sectors and will in part
be determined by factors including: (i) the remaining duration
of existing contracts, (ii) technical constraints such as road
access to loading and unloading facilities, and (iii) the degree
of rail's overall competitiveness with road. There is the prospect
of a vicious circle occurring, due to the "bundled"
nature of many market sectors. Rail freight infrastructure—such
as terminals, marshalling yards, and depots—is often fixed
and only viable when large volumes are handled. The loss of marginal
traffic will place these costs on a few remaining flows which
are then made unviable themselves.
32. We have assessed that the introduction of LHVs will
remove all intermodal traffic using rail and cause a significant
loss of bulk material by rail including a loss of 50% of aggregates
using rail.
33. The withdrawal of rail from much of the UK freight
market will remove modal choice from end-users, even in sectors
where rail could remain viable. Price apart, road haulage has
drawbacks (such as unreliability and extended journey times) that
some customers seek to avoid by using rail. The loss of a viable
rail alternative will not serve these customers or their end-users
well and the overall impact may be a loss of competitiveness for
the UK economy as a whole.
34. A further effect would be the generation of additional
road freight traffic. This is due to the impact of lower transport
costs afforded by LHVs. End-users will respond to this price-signal
by realigning their supply-chains in order to take advantage of
the step-change reduction in transport costs. An increase in vehicle-kilometres
will be the consequence and in turn this threatens to put more—not
less—road freight on the UK road network.
35. All this would be a high price to pay for the introduction
of LHVs, but there are further costs that other road users, and
the UK economy and society as a whole, would have to meet. These
are the external costs that are not met by those that pay to have
their goods moved by road—and will amount to well over £900
million net per annum.
October 2007
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