Shaw Review must not throw freight baby out with Network Rail bath water

Source: RTM Dec/Jan 16

Philippa Edmunds, manager of Freight on Rail and a member of the Campaign for Better Transport, says a continued centralised ‘system operation’ function within Network Rail is crucial for the freight sector.

The industry should be in no doubt about the importance of the Shaw Review – ‘The future Shape and Financing of Network Rail’ – which has been tasked with recommending a revised structure and funding model for Network Rail. 

The Freight on Rail response to the government will set out why and how rail freight, which is a network-wide industry, must not be overlooked in any restructuring or devolution of Network Rail. Furthermore, we will state that whatever the structure, it needs to be incentivised to take into account the needs of rail freight and explain why we do not support passenger operator-led infrastructure management. 

Network Rail is in charge of signalling and the track and has an overriding command and control function. In railway terms its functions are operations, maintenance, renewals and enhancements. The importance of rail freight in terms of its considerable socio-economic benefits to UK plc must not be underestimated in any structural changes in this review. 

Further fragmentation would be a major challenge 

Fundamentally, any restructuring must not undermine the sector. We believe that further fragmentation would be a major challenge for an efficient and productive rail freight industry, as well as overall safety on the railways. 

A continued centralised system operator function within Network Rail that takes in the national co-ordination and system planning needs of all the different users, including rail freight as well as open access passenger operators, is crucial. 

As Network Rail’s routes become increasingly autonomous, and the ambitions for political as well as geographical devolution of transport increase, the need to better define and structure these functions is ever more pressing.  

The move towards devolved control of local passenger services and more autonomy for Network Rail routes poses serious challenges for rail freight. The vast majority of rail freight flows across route boundaries, which is why nationwide access, timetabling and possession planning must be managed through a central system operator. 

Graphing and possessions 

We believe that graphing rules should start with long-distance passenger and freight services. In the case of possession planning, freight customers must be offered alternative diversionary routes. Planning and management of services across the network is vital, as are consistent safety standards across the network. Without a strong and clearly defined central system operator function, greater safeguards will be required to protect rail freight access. 

Timetables need to be co-ordinated between different train operations as well as other modes of transport. Similarly, investment needs to be co-ordinated with integrated transport planning across the rail and road networks. We believe that future strategic planning for investments in parallel rail and road corridors needs to be integrated to maximise the socio-economic benefit of new or enhanced infrastructure. Therefore, the next stage of the Road Investment Strategy (RIS2) and CP6 HLOS (high level output specification) processes should identify the corridors with the largest opportunities for rail freight to relieve road congestion.

Trends in freight haulage 

Rail freight is worth £1.6bn per year to the UK economy. Each year the rail freight industry carries goods worth over £30bn, ranging from high-end whiskies and luxury cars to supermarket and automatic products, cement and construction materials.  

While coal, steel and Channel Tunnel traffic has declined sharply in the past six months, long-distance consumer (intermodal and deep sea) and construction traffic can bridge these gaps if the required additional freight capacity is built. 

Currently a quarter of consumer goods imported into the UK are transported by rail, and London alone receives 40% of its construction materials by rail. Furthermore, consumer traffic grew 5% last year and is forecast to quadruple by 2034 and construction traffic grew 10% last year and is forecast to grow 2.5% per year. 

It is well known that there is suppressed demand for rail freight services out of the ports of Felixstowe and Southampton, particularly where the provision of additional freight paths would be used immediately. So it is crucial that the current Strategic Rail Freight Network CP5-funded schemes to upgrade the Felixstowe branch, Southampton train lengthening and access to Liverpool Port are urgently implemented, as well as the train lengthening work at Buxton to grow more construction traffic. 

The true costs of HGVs 

The Hendy Review, which was tasked with reviewing the status of Network Rail enhancement projects, acknowledged rail freight schemes deliver very high value for money. It stated that the average benefit cost ratio for rail freight schemes is between 4:1 and 5:1, which demonstrates that rail freight upgrades offer significant socio-economic benefits to the UK. Any structural changes that disadvantage rail freight and cause ‘reverse modal shift’ will result in extra costs elsewhere for the government – HGVs impose far higher costs on society in terms of congestion, road crashes, pollution and road damage. 

HGVs impose nine times higher external costs than rail freight. For example, in 2013, HGVs were six times more likely than cars to be involved in fatal collisions on minor roads. Research carried out by MTRU for the Campaign for Better Transport (using DfT values) found that HGVs pay less than a third of their costs when considering road congestion, road collisions, road damage and pollution, which equate to an annual subsidy of around £6.5bn. These conclusions are in line with a MDS Transmodal study in 2007 that found a very similar amount of underpayment: £6bn.  

The government needs to recognise HGV costs in discussions about rail freight costs, so that policy implications can then be understood in both directions, with road and rail being examined across the piece. The level of HGV subsidy makes a compelling case for supporting rail, which imposes much lower costs on society and the economy, equivalently. 

Centralised system operation has provided a stable and consistent framework that has resulted in the rail freight industry having the confidence to invest over £2bn in the past 20 years. The experience of devolution to date has been challenging for freight, which makes the case for a system operation even stronger as more of the system is broken up. Network Rail’s operations can be improved but we must learn from both the successes and mistakes of the past.


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