Memorandum from British Waterways (FT
37)
INTRODUCTION
The Transport Select Committee is examining
how successfully the Department of Transport is fulfilling its
responsibility to facilitate free movement of goods while limiting
harmful impact. As part of this inquiry it is weighing up whether
the Department's responsibilities should be extended, to developing
and implementing an integrated freight plan.
British Waterways' interest in this topic is
most closely linked to the request for information on what "more
can be done to promote modal shift from road and air freight to
inland waterway, shipping and rail?"
BACKGROUND TO
BRITISH WATERWAYS
AND FREIGHT
British Waterways is a public corporation which
manages and cares for more than 2,200 miles (3,540 km) of canals
and rivers in England, Scotland and Wales.
Our sponsoring government departments are:
— The Department for Environment, Food
& Rural Affairs in England and Wales.
— The Enterprise, Transport and Lifelong
Learning Department in Scotland.
We also liaise closely with:
— The Department for Economic Development
and Transport in Wales.
British Waterways' activities are largely governed
by the Transport Acts of 1962 and 1968. These oblige British Waterways
to maintain the commercial navigations suitable for carrying freight
while the Government's main policy document on canals (Waterways
for Tomorrow) stated the Government's aim to encourage the
transfer of freight from roads to water-borne transport, where
practical.
For more information about British Waterways
please go to www.britishwaterways.co.uk
BUILDING CONSENSUS
British Waterways is committed to seeing more
freight on its waterways where it is economic to do so and is
aware of widespread calls for more freight to be transferred to
inland waterways. These calls have in the past come from groups
wanted to see waterways used for their original purpose.
However, the climate change and carbon emissions
debate has given waterborne freight an added importance for the
UK and the prospect of more widespread carbon trading in the future
potentially will translate the limitation of carbon emissions
into not just good corporate social practice but good business.
British Waterways believes that the aspect missing
from current discussions of inland waterway freight is a full
understanding of the real costs of the industry and the true environmental
and social benefits it can offer, and that this crucially undermines
efforts to move the industry and mode to a more sustainable footing.
There is very little consensus on the problems
or solutions involved. This tends to dilute the efforts of those
who support growth of waterborne freight and results in disparate,
uncoordinated calls for more freight but very little inroads in
a policy sense or translation into an actual increase in waterborne
freight.
REPORT INTO
WATERWAY FREIGHT
COSTS AND
BENEFITS
British Waterways recognises this problem and
has recently been working closely with the disparate groups of
freight supporters to reach a position where all have a full understanding
of the dynamics of the industry (throughout its chain) and the
necessary components for the industry to be sustainable.
British Waterways has sought to achieve this
by commissioning the economic consultancy, Oxera, to study the
issue of waterway freight and to examine in particular the various
costs throughout the industry. "Cost" is the most important
factor to understand in the industry as it largely governs enthusiasm
for participation and thus expansion. This includes costs that
fall on the navigation authority, freight barge operators, freight
users and wider society.
British Waterways considers that unless we know
where the costs sit within the system and where the advantages
in comparison with road transport are (both in economic and wider
benefits), efforts to secure the proper policy and funding framework
for the industry will be poorly directed and ultimately ineffective.
The study then has sought to add clarity to
the ongoing discussions and has looked at the industry from three
core perspectives. These being:
— British Waterways perspective:
The study seeks to understand how freight
impacts on the navigation authority and looks at British Waterways
own experience as the basis of this. The study examines the costs
incurred in carrying additional waterway freight for British Waterways—for
example, operating lock gates and bridges. These marginal and
incremental costs are estimated and compared with the revenues
earned from freight traffic. Preliminary analysis suggests British
Waterways freight tolls cover marginal costs but not incremental
or fully allocated costs.
— Freight-user perspective:
Freight users of the waterway can generally
choose to transport freight by road, and in some cases rail. Thus
the demand for waterway freight depends on both the direct costs
to customers of operating barges and the costs of the alternative
modes of transport. These costs are examined and compared for
a selection of case studies across the waterways to determine
what cost advantages waterways offer and where these cost advantages
come from. Preliminary analysis suggests that waterborne freight
offers cost advantages in selected circumstances. These need to
be preserved.
— Environmental and Social perspective:
All transport modes generate environmental
and social externalities in the form of noise and pollution, for
example. However, in most circumstances, transporting freight
by waterways (or rail) generates substantially fewer externalities
under current conditions than road. Government grants for assisting
the switching of freight from road onto waterways (and rail) are
linked to the estimated value of the reduction in externalities
that this causes. However, the externalities associated with waterways
are currently assumed to be equal to those of rail, which is unlikely
to be the case. The externalities for waterways are estimated
and these values compared with current values. Preliminary analysis
suggests waterborne freight offers environmental and social benefits
but that they may be underestimated by current grant regimes.
LIAISON WITH
STAKEHOLDERS
British Waterways is aware that it needs to
avoid becoming just another organisation diagnosing the challenges
facing the industry and prescribing the solutions, while a range
of other organisations do the same with their own analysis.
Therefore we have begun a process of meeting
a number of stakeholders connected to the industry to talk through
the rough findings of the Oxera report and to get them to look
at the content and methodology with a critical eye. The aim of
this process is to achieve a position where a coalition of groups
can jointly buy into the issues that the freight industry needs
to overcome in order to move to a sustainable footing and the
policies necessary to allow the industry to grow.
The Oxera report is intended to be the first
step in this identification and a focus around which interested
groups can engage with each other to build a shared platform.
Initial meetings have included:
— the Commercial Boat Operators Association;
— the Freight Transport Association;
— the Chartered Institute of Logistics
and Transport;
— the Campaign for Better Transport
(Formerly Transport2000); and
— the Inland Waterways Association.
These groups have been asked to contribute their
thoughts on the initial draft of the report which are then being
fed into the final version. This process will continue as we meet
with other groups in the freight, navigation authority, business
and environmental sectors.
PUBLICATION
The publication date for the final study is
not yet set and is dependent in part on the series of meetings
with stakeholders and how much revision stems from this engagement.
Once the study is complete it will be published and British Waterways
and other interested parties will ensure that the Department for
Transport and the Transport Select Committee are made fully aware
of the report and its findings. If the report is completed within
the timeframe of this Committee's inquiry we will of course, submit
it as evidence.
October 2007
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