06.07.17
Rail freight: part of the solution
Source: RTM Jun/Jul 17
The limitations of rail freight dictate that it can never be the total solution to supply chain challenges, but Chris MacRae, rail expert at the Freight Transport Association (FTA), argues its many benefits are often overlooked by shippers as a cost-effective and efficient link in the logistics chain.
Britain’s exit from the EU will open new trading opportunities with far-flung markets, making rail an even more attractive option. Non-perishable cargoes, such as clothing and electrical goods, can be transported more quickly and cheaply than by sea despite the issue of gauge changes as trains cross country borders.
The recent establishment of a freight train service from China to the UK highlights the opportunities available to shippers. The operator claims the 16-day, 7,500-mile route across nine countries is 50% cheaper than shipping the goods by sea – and offers an even bigger saving than air freight.
Frequent loading and unloading to facilitate gauge changes may be a barrier but with China identified as a key post-Brexit market, rail freight’s benefits will be hard to ignore.
Promoting rail freight
FTA’s rail freight policy is driven by ‘The Agenda for More Freight by Rail’, which was drawn up in 2014 following a request by the DfT for the association to take on its activities for the promotion of rail freight, along with wider responsibilities for mode shift. However, it has now been recognised that a new approach may be needed to drive new rail freight traffic, particularly in the retail sector, as progress has been slow.
Some of the UK’s major retailers within FTA membership contributed to the creation of the agenda, giving greater visibility to their then current use of rail freight. FTA’s ‘On Track’ publication provides a series of illuminating case studies showing the extent to which these retailers were using rail freight, including the CO2 savings associated with this.
The same retailers provided FTA with data giving details of their flows over 200 miles, providing the opportunities for load matching and greater potential to use rail freight. At the same time, the UK’s leading retailers identified key areas where progress was needed if rail freight was to carry more of their traffic.
The areas identified for improvement were broken down into four key themes: costs and competitiveness; service availability and flexibility; network access; and international services. These were subsequently endorsed by FTA’s British Shippers’ Council, which includes a much wider range of shippers from other sectors of the economy who are eager to move more freight by rail if the conditions are right.
Key targets
FTA launched the agenda at the 2014 Multimodal Show and subsequently discussed progress at the 2015 and 2016 exhibitions. The aim was to engage in a wide-ranging inclusive debate with the rail freight industry, rail freight logistics interests, regulators and government to help take forward and implement the agenda’s key asks.
The largely retail sector-driven agenda was developed by existing and potential customers who stated that these must be delivered if the 30% estimated growth in the Network Rail Long-Term Plan was to be realistically achieved, given that the retail sector was seen at the time as having the largest growth potential of different freight sectors.
Seven key targets were identified by those customers to meet their requirements to achieve this retail sector-driven growth:
- Cost reduction by 15% based on current costs plus innovation
- Six-hour response time to service and alteration requests
- Seven-day railway capability
- Standard train lengths should be increased by 17.5%
- 400% increase in terminal capacity
- Reduce intermodal transfer costs by £50
- Reduce Channel Tunnel rail freight charges and rates by £50
FTA produced subsequent iterations of The Agenda for More Freight by Rail aimed at identifying the industry or regulatory barriers to achieving each of these targets and setting out the actions necessary of government(s), regulators, Network Rail, FOCs, customers and the FTA.
However, none of this has delivered any extra retail trains on rail. Mode Shift Revenue Support Grant cuts in England are also impacting the economics of some retail services. This is now thrown into sharper focus by the quicker-than-forecast ending of coal rail traffic – until the current decade, rail’s largest commodity market – and the DfT and Transport Scotland’s current rail freight strategies looking to fill the gap in the market with growth in other areas.
Despite the recession, deep sea intermodal container traffic has grown to be the largest commodity on rail, overtaking coal (even before its recent premature demise), while bulk construction aggregates traffic has grown in line with the construction industry’s fortunes on capital infrastructure projects. The infrastructure investments designed to optimise the use of the rail network for freight via the (England and Wales) Strategic Freight Network Fund, and the Scotland Freight Investment Fund are centred around these traffics.
Meanwhile, the retailers have increasingly realised that focusing upon road vehicle routing, loading and driver training will deliver easier and more tangible environmental and logistics efficiency benefits quicker than trying to develop rail. There is also the issue that the intrinsic economics and organisation of the rail industry mitigate against the targets (certainly those on cost) of The Agenda for More Freight by Rail.
A new approach?
Currently, 90% of rail freight network traffic growth has come from adding to existing traffic flows rather than new retail traffic. A policy shift is suggested of efforts to concentrate on maximising and growing the use of rail freight in realistic areas focusing upon:
Lobbying
- Government: DfT, Transport Scotland, English and Welsh devolved regional funders
- NGOs: Rail Delivery Group, etc.
- ORR Access Charging Reviews, Planning System
- End-to-end strategic freight corridor performance, wagons and locomotives, higher HGV Gross Vehicle Weights on rail-intermodal combined transport journeys
- Freight customer delivery metrics, etc.
- Key route strategies and recovery plans
- FTA shipper guide on how to use rail freight, etc.
Rail is good for certain freight traffics, but it is equally important to be realistic about its limitations in other areas. It is also generally only part of a supply chain solution along with other transport modes (and generally including road as one leg) rather than a total solution in isolation. It is important for all parties involved in policy regarding rail freight to be realistic about what it can – and equally cannot – achieve.
© Joshua Brown