Memorandum from Freightliner Group Ltd
(FT 07)
INTRODUCTION AND
SUMMARY
This is the response of Freightliner Group Ltd
("Freightliner"). Freightliner is the second largest
rail freight operator in the UK, which has successfully developed
its rail freight business from £90m turnover in 1996 to over
£250m today. Freightliner has two core companies that specialise
in the movement of deep sea containers and bulk materials respectively,
by rail. Freightliner believes that its success is due to high
levels of customer service and increased reliability of services
attributable to considerable investment.
We welcome the government's aims of transferring
freight to more sustainable and socially acceptable modes of transport.
This evidence document details how we believe this can be achieved.
To yield the most positive results, in terms
of greater modal shift to rail, the industry needs:
— Affordable track access charges (the
UK has close to the highest charges for freight in western Europe)
— Equitable pricing of environmental
and safety related externalities across modes, in the form of
emissions and road pricing which treats all modes the same
— Planning mechanisms to support the
development of new terminals
— Further infrastructure investments
to increase capacity, capability and reliability of the rail network
— A modest increase in the budget of
the Sustainable Development Fund to encourage growth
The white paper published on 25 July 2007 entitled
`Delivering a Sustainable Railway' stated "it remains
the Government's aim to see greater use of the rail network for
both passenger and freight movements. The critical first step,
which is at the heart of this white paper, is to increase the
capacity of the railway so that it can actually accommodate increased
demand". As part of the white paper, £200m has been
provided by Government to commence work on a Strategic Freight
Network (SFN) to successfully facilitate the movement of goods
to and from ports as an integrated part of the overall growth
in freight demand. "The key conclusion is that, in addition
to good direct links to ports, there is a need for a Strategic
Freight Network linking key freight destinations".
This much needed investment commitment is welcomed
by Freightliner and we look forward to working with Network Rail
and the Government to ensure that best value for money schemes
that enable real growth in rail freight are taken forward.
1. Is the Department's investment in logistics
programmes—including the Sustainable Distribution Fund—good
value for money and meeting the objectives?
1.1 Summary
The Sustainable Distribution Fund (SDF) represents
excellent value for money to the Government as grant money is
only paid when the containers or other freight is moved by rail
rather than road, resulting in considerable environmental, congestion
and safety benefits.
1.2 The SDF and other preceding grant schemes
have contributed to modal shift from road to rail. Modal share
has increased parallel to increases in volumes across the industry:
1.3 From privatisation to 2006-07, Government
revenue funding has proved to be a great success in the deep sea
sector as volumes moved by rail have increased by more than 70%,
whilst unit rates of grant have fallen by 47%. Freight operators
have undertaken large scale investment programmes which has helped
drive further efficiencies, thus allowing them operate on a lower
level of grant.
1.4 From 2007-08 a new scheme (REPS) was
introduced, with a significantly reduced budget, being more than
30% less than previously, and fixed for three years. This limiting
of funds severely constrains the availability of grant for new
traffics to rail and is therefore restricting new modal shift
from road to rail. An increase in budget of £5m per annum
could make a step change in the ability of rail freight operators
to achieve modal shift from road to rail.
1.5 Further Detail
REPS bestows the benefit of moving volume with
less pollution and congestion, and in greater safety. delivers
excellent value for money, since it only pays for the environmental
benefits when such benefits are delivered, rather than speculatively
subsidising traffic that may not subsequently materialise. If
the REPS budget is insufficient to support rail, the volume moves
by road and associated disbenefits increase. There are no risks
that the benefits will not actually be achieved, unlike capital
grants which are more speculative.
1.6 If funding is capped, the environmental,
congestion and safety benefits are lost beyond that point, and
modal choice decisions will be based purely on price. Freightliner
consider that since the benefits being purchased by REPS are only
funded when delivered, and at a cost less than the alternative
of expanded road provision, that a capped regime is counterproductive.
We believe that REPS is insufficient for today's volume let alone
the future growth predicted.
1.7 Value for money achieved by REPS and
its predecessors has improved through investment and efficiencies
on the part of rail operators. Real grant per box has fallen steadily
and virtually halved in a decade as a result, however since grant
support has declined over this time, the full potential benefits
of the scheme have not been exploited.
Real Value for Money (Freightliner only @ 2005
prices):
Year | Grant
| EB | Value for money
|
1996 | £26.7m |
£34.4m | 1.29 |
| 2005 | £16.6m | £46.5m
| 2.81 |
| 2008F | £11.5m | £46.9m
| 4.54 |
| |
| |
1.8 Overall grant levels have gradually decreased whilst
volume has increased. Whilst Freightliner would expect to continue
to offer better value for money per unit in the future, the absolute
level of overall budget has been cut at an excessively dramatic
rate (£24m 2006-07 to £18m 2007-08). Such a rapid decrease
means that there is no budget available for new to rail traffic,
and when bids are made for REPS there is no certainty about how
much (if any) grant funding will be available. This means that
potential rail traffic (and associated benefits, of at least rail:road
1.5:1 ratio) will continue to be transported by the least beneficial
mode of road. An increase of £5m in the fund's budget would
remove current constraints and potentially induce considerable
modal shift from road. The overall net gain to the UK economy
through improvements in congestion and safety, along with wider
environmental benefit, is obvious.
1.9 Since transferring to the private sector, investment
in rail freight on the part of the operator has risen dramatically.
Mixed-use locomotives and elderly rolling stock have given way
to modern, purpose built equipment, delivering benefits not only
to operators and their customers but to the network as a whole
in improved hauling capacity (meaning fewer trains required to
carry the same volumes) and reliability.
1.10 Investment in terminals has also taken place, often
to support "new-to-rail" flows for a variety of sectors.
1.11 Since 2000, Freightliner Group has invested over
£270m in a new and enlarged fleet of rolling stock. Of 160
locomotives, 120 new "Class 66" diesels have been purchased
in this timescale, along with 1,400 new specially designed wagons
for a variety of commodities, bringing the total wagon fleet to
some 2,800 vehicles.
1.12 Other new entrants to the market post-privatisation
include DRS, First GB Railfreight, Jarvis-Fastline, Victa-Westlink
Rail and Colas Rail; choice for customers and a competitive environment
to drive service and efficiency are prevalent.
1.13 Capping the available SDF budget at too low a level
is discouraging future investment from operators, customers and
terminal operators, for "new to rail" flows. Considerable
volumes of investment are often required by customers to shift
road based supply chains to rail. Previous operator investments
have substantially improved levels of service quality. Any continued
SDF under-funding is likely to endanger such investment.
1.14 In the light of the Eddington report, under-funding
of the SDF would further fail to deliver the optimum level of
benefits in servicing key networks and international gateways,
primarily in this case deep sea shipping.
1.15 The other main component of the SDF, aside from
REPS, is the Freight Facilities Grant (FFG). In principle, Freightliner
support the FFG, but recognise that competition issues have inhibited
its' potential benefits. DfT forecast to spend only £2m out
of a budget of £7m in 2006-07, despite having applications
for grant in excess of the allotted budget.
2. 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?
2.1 Freightliner welcomes the restructuring of DfT along
`Eddington' lines and the move towards an integrated transport
policy that links gateways through port and network policy initiatives.
2.2 The Eddington report calculated that the cost of
congestion to UK GDP will rise to £22bn. The marginal cost
of congestion increases with each additional lorry on the road.
2.3 By under-funding the SDF there is the real danger
of volume transfer, or at least growth related traffic, moving
by road and hence increasing congestion.
2.4 The Stern review on climate change attaches great
importance to the cost of carbon and the future economic cost
if urgent mitigating action to reduce carbon dioxide emissions
is not taken. We consider it vital to future calculations that
environmental externalities be equitably quantified across modes,
such that the relative environmental impact of modal choice is
explicitly clear and incentivised accordingly.
2.5 DEFRA is currently consulting on the "carbon
reduction commitment" (CRC). One key proposal being considered
is the imposition of an environmental levy which would affect
only those rail operators who use electric traction, but across
their entire fleet's emissions (diesel locomotives included).
As proposed, the scheme does not apply to road hauliers. This
is a perverse incentive that will clearly discourage modal shift
from road to rail.
2.6 Freightliner have invested in new low-emission locomotives,
increased train capacity resulting in significant improvements
to the carbon efficiency of of rail-hauled freight, and is currently
leading a joint study with other operators to collate accurate
emissions data for our diesel fleet.
2.7 Modal shift can further be promoted by a cut in track
access charges for freight. Indeed some EU member states offer
free track access for freight in order to promote modal shift
to rail. Access charges in Britain compare unfavourably with other
EU member states in western Europe.
2.8 Freightliner are supportive of road user charging
which would cause road transport to pay for its environmental
externalities.
2.9 Further increases in Red diesel duty would jeopardise
modal shift to rail.
2.10 Freight-carrying road vehicle compliance is currently
poor, especially compared to the safety compliance that is mandatory
for rail operators. Enforcement and tightening of standards in
respect of road vehicles could assist in reducing the need for
SDF funding by raising the cost of road transport above that which
currently prevails in part due to poor technical and operational
compliance on the part of unscrupulous road operators.
2.11 Lorry bans through towns and villages are not currently
well enforced. Generally police do not see lorry enforcement as
one of their priorities. "All weight limits carry `except
for access' and it is very difficult to enforce restrictions and
to prosecute breaches of them... We also have to consider, in
the face of other priorities, whether investigating these offences
is the best use of police time and resources." —West
Mercia Police's Sgt Mark Roberts to Worcestershire County Council.
("Action Plea on Lorries", Express and Star,
20 April 2006)
2.12 When exercises undertaken on enforcing road restrictions
have taken place, a high percentage of lorries are found to have
broken rules. VOSA's effectiveness report 2005-06 states that
the prohibition rate for UK vehicles increased to 7.8% for fleet
checks and from 9.7% to 13.1% for overloading in the period reviewed.
Foreign vehicles were recorded to have a much higher incidence
of defects warranting prohibition. It is of serious concern that
against this backdrop, the number of roadside checks being performed
has dropped markedly.
2.13 DfT's 2005 statistics also showed that HGVs were
the only vehicle type which were found to have an average actual
speed in excess of their speed limit; on derestricted single-carriageway
roads the average speed of HGVs in the "5+ axles" category
was 46mph against a speed limit of 40. Almost a third of such
drivers exceeded their speed limit by over 10%, as compared to
2% of car drivers. Dual carriageways also saw an average speed
in excess of the limit for every category of HGV recorded, the
number of vehicles being observed in the study exceeding 3.5 million.
2.14 Even on motorways, vehicles were found to be exceeding
the speeds to which they are supposedly mechanically limited.
2.15 There is currently no dynamic acceptance testing
of trailers in this country (although there is in Europe). DfT
sponsored research undertaken by MIRA (Motor Industry Research
Assn) indicated that the paper exercise which is undertaken to
determine the suitability of trailers allows trailers with inadequate
braking capability to be used.
The project concluded that:
"It has been shown that the current UK process is not
entirely satisfactory... The UK process is much less stringent
than that adopted in most Northern European countries. The investigation
has shown that the current process is unable to cover many aspects
of the brake system design and installation, such as brake reaction
time and system function. It therefore fails to identify a number
of faults that may affect road safety."
2.16 Government could further support modal shift by
categorically ruling out any increase in existing HGV lengths
and weights. The case for longer, heavier vehicles (LHVs) is currently
being considered by DfT. Similar studies in Europe have prompted
the German government to specifically cite protecting rail freight
as a reason for not increasing the size of road vehicles.
2.17 Rail will be promoted further if the government
continue to fund the SFN's development to give the capability
to for rail to deliver the full benefits of increased modal share
during a period when demand for transport is continuing to rise
inexorably.
2.18 Freightliner consider that a national policy statement
for rail terminals should be developed and added to the other
policy statements proposed by the current planning white paper,
"Planning for a sustainable future". Such policy
should be binding upon planning choices at local, regional and
national level to protect the interests of freight by rail, recognising
that terminal provision and capacity is scarce and requirements
for successful terminals exacting.
2.19 The current lack of planning guidance means that
regional and national benefits are not taken into account at the
planning stage, hampering the development of new facilities.
3. 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?
3.1 Rail-Air freight interchanges are uncommon in this
country, however a model is being developed in continental Europe
for a range of high-speed freight services linking airports, which
will obviate both road haulage and some air legs.
3.2 In seeking to provide such interchanges, government
must provide support for the creation of suitable facilities,
mainly through planning processes. A national policy statement
on rail freight terminals would assist in this respect.
3.3 It is likely that traffic transferring from air transport
will require a more capacious gauge; the Channel Tunnel rail link
("High Speed One") to east London is the only route
that could accommodate such traffic.
3.4 Freightliner consider that rather than accepting
exponential growth in air freight as inevitable, further development
of the initiatives referred to in section (2) above, could mitigate
the environmental disbenefits of air freight.
4. 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?
4.1 Freightliner believe that the £200m funding
to commence work on a Strategic Freight Network represents a welcome
and promising opportunity. Further support to expand the capacity
and geographic breadth of this network over coming years will
help to promote the free movement of goods in a sustainable manner.
4.2 We look forward to working with DfT to identify the
best value for money solutions with which to begin the SFN.
4.3 Free movement of goods should not be at the expense
of wider environmental and social considerations. Promoting "free
movement" by sustainable modes as identified by the government
will require common methodology to calculate environmental and
social impact across all modes, and will be achieved through network
investment and economic support to encourage sustainable transport
choices.
4.4 The Transport Innovation Fund (TIF) productivity
stream is a welcome source of funding for projects which will
stand to deliver some of the above mentioned investment. We would
welcome the future augmentation of the SFN funding with targeted
TIF funding for further schemes beyond those currently before
the government for consideration.
4.5 Priorities for investment that could be encompassed
by productivity TIF, outlined below, are crucial to the development
of deep sea intermodal traffic as volumes continue to rise and
the proportion of higher 9'6" containers increases. The priority
schemes are:
4.5.1 Felixstowe—Peterborough—Nuneaton: Capacity
upgrade
4.5.2 Capacity upgrades and a gauge cleared diversionary
route from Southampton to the west midlands.
4.6 These schemes are consistent with both the Eddington
report and the Stern review as they would contribute to a significant
reduction in road congestion, notably on the A14 from Felixstowe
and the M27/A34 from Southampton. The associated modal shift from
road will also represent a significant reduction in emissions
per container, reflecting the improved carbon efficiency of rail
transport.
5. 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?
5.1 Track access charges in Britain are amongst the highest
in Europe.
5.2 Further to para. (2.16) above, LHVs represent a pan-European
issue. Freightliner consider that it would be desirable for this
country to press for the rejection of LHVs throughout the EU,
as opposed to letting individual member states choose.
5.3 Freightliner fully support EU moves to liberalise
Europe's railways, and as such considers that effort should be
concentrated upon preventing the former nationalised businesses
from pursuing anti-competitive behaviour towards new entrants.
Infrastructure operators should be encouraged to contribute towards
these efforts.
5.4 Implementation of ERTMS (a new pan-European signalling
system) is on the horizon and is about to begin practical trials
on the Cambrian lines. There exists the potential that member
states may specify sufficient localised alterations to the ERTMS
standards that true interoperability may never be achieved.
5.5 Furthermore, financial support will be required to
support the implementation of ERTMS equipment, since there is
no business case for such installation costs for freight operators,
some of whom have invested heavily in locomotives in recent years.
Locomotives are a circa. 30 year asset and hence introduction
of this technology when assets are replaced is not possible.
6. How effective are the Freight Quality Partnerships
in improving the local experience of freight and deliveries? Are
the restrictions on night-time deliveries still appropriate? What
impact would weakening the restrictions have on quality of life
and other factors?
6.1 Freight Quality Partnerships (FQP) are primarily
concerned with local issues of such scale as to not be relevant
to rail operations, which are by their nature on a greater geographical
scale.
6.2 FQPs also tend to encourage road solutions to road
problems, a fact which is likewise connected to their scale.
7. How can the road safety record of haulage vehicles
be improved?
7.1 The primary method to improve the road safety record
of haulage vehicles is clearly to progress modal shift such that
volumes conveyed by road transport decrease.
7.2 Rail freight enjoys a safety record which is incomparable
with road; standards are more rigorous, compliance is total. By
its very nature, the railway is able to convey freight faster,
in a manner which is physically separated from the public.
7.3 Compliance with road industry regulations is proven
by DfT's own statistics to be poor, particularly from foreign
vehicles.
7.4 In 2005 there were 11,162 accidents on UK roads involving
HGVs. 520 HGVs were involved in fatal accidents in 2005 with 2,168
accidents involving an HGV in which the injuries incurred were
fatal or serious. There were 2,843 HGV user casualties (ie drivers
and passengers) of which 55 were killed and 340 seriously injured.
There were 655 pedestrian casualties in HGV-related accidents,
of which 65 were deaths and 159 serious injuries.
(Source: Road Casualties Great Britain: 2005, DfT)
7.5 The comparable number of deaths caused by rail freight
is minimal. There are no directly comparable figures published
by the DfT for rail freight but for all of rail (including all
passenger trains) but according to Rail Safety and Standards Board's
Annual safety performance report, there we no passenger or workforce
fatalities in 2005. There were 13 non-trespass deaths in 2005
on the railway, the majority on level crossings.
7.6 Rail freight movements are strictly enforced. Both
speeding and overloading simply do not occur, and there is no
question of a train moving over a route that it is unauthorised
to traverse. National computerised systems prevent a container
train from being a released if the containers it is carrying exceed
the weight limit for any individual wagon or the whole train.
Speeding is simply not acceptable in the rail industry and drivers
know there are severe consequences if it incurs. Indeed, data-logging
is now mandatory on railway locomotives and as such the actions
of drivers are comprehensively recorded and routinely analysed.
7.7 The TPWS (Train Protection & Warning System)
automatically puts the brakes on trains if they pass signals at
over the permitted speed and each incident where the TPWS equipment
activates to slow down a train is investigated. Train operators
have policies for professional driving which means that they approach
yellow or red signals cautiously in order to prevent any signals
past at danger (SPADs) or TPWS activations. Each operator has
its SPAD record carefully monitored by the Office of Rail Regulation
and has to explain any increases in the levels of SPADs that occur.
October 2007
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