16.07.08
Rail freight and retail – logistics, the environment and corporate social responsibility
Rail freight has great potential to grow and to reduce road congestion. Congestion on the roads currently costs British business £17 billion per annum – as road congestion from cars and vans increases, rail’s competitive advantage will grow. Also, greater regulatory restrictions on lorry drivers’ hours of duty and work via the Working Time Directive and Drivers’ Hours Regulations, and rising road vehicle fuel costs, together with a shortage of lorry drivers are all leading to a growth in the use of rail freight as an economic alternative. A further contributory factor is the competition between the private rail freight operators that has brought a greater customer focus and consequentially better service. This is helping to attract new traffic to rail.
The retail sector now is increasingly looking to rail to offer environmentally sound logistics solutions as part of its supply chain package. This represents a considerable future potential growth for rail freight. Rail produces less than 1% of total UK CO2 emissions whereas road produces 21%. A typical freight train can remove 50 lorries from Britain’s roads. Over the last six years, rail freight is estimated to saved two million tonnes of pollutants, 6.4 billion lorry kilometres and 31.5 million lorry journeys. Importantly, when compared with carrying the same tonnage by road, rail produces less than a tenth of the carbon monoxide, around a twentieth of the nitrogen oxide, and less than 9% of the fine particulates and around 10% of the volatile organic compounds. Every tonne of freight carried by rail produces at least 80% less carbon dioxide than if moved by road.
Few retail stores are rail connected, but distribution centres can be. Therefore a number of retail companies have been experimenting with intermodal rail freight services delivering on the key trunk haul routes into Local Distribution Centres for onward road distribution to the stores.
According to statistics, ASDA Wal-Mart has suggested that it saves some four million road vehicle miles per annum by using a rail freight service. Marks and Spencer claim 40% of goods arrive by rail at their National Distribution Centre
Gauge clearance for the intermodal market
The Freight RUS recommends a proactive strategy for development of priority core and diversionary/capacity generating routes to W10 gauge. This would facilitate the growth of rail’s share of the market for haulage of 9’6” containers enabling it to carry a significant volume of traffic that would otherwise be carried by road. The RUS identifies routes from the Ports of Southampton and Felixstowe that have a positive business case for this.
The recent announcements of gauge enhancement funding for the routes covering Southampton to the West Coast Mainline, Gospel Oak to Barking diversionary route around London, and Peterborough to Nuneaton diversionary route are all very welcome in this regard.
The Freight Operating Companies have expressed aspirations to expand the coverage of W12 gauge (and electrification) and European gauge to specific parts of the network. This would allow more “swap body” traffic (important to retail logistics) to be carried by rail and thus bring business efficiencies and relieve road congestion. Network Rail recommends that these additional aspirations are taken into account whenever a structure is renewed, as this may be achieved by either replacement by higher structures or lowering of the track whenever a structure is renewed. Achieving W12 clearance in many cases involves only a small amount of incremental work over that which would be required for W10.
Beyond the Freight RUS – the Rail White Paper and the future needs of rail freight
Industry is predicted to change its trading and logistics patterns. Retailers will continue to source consumer goods from lower cost economies such as China and India. Therefore longer and more sophisticated supply chains will be created to serve UK outlets. Short domestic distribution journeys from UK manufacturers are being replaced by container shipments from abroad, delivered inland from UK ports by road and rail. However, movement of freight in heavy goods vehicles has remained stable despite this economic growth, due in part to better vehicle utilisation, but rail freight has seen steady growth reflecting in part its prominent role in moving containers to and from ports.
As the needs of UK business evolve, the rail freight service in the UK needs to evolve with it. There are three key things that the rail freight community needs to provide to make rail more competitive with road:
• Seven day a week service – the lack of this provides a distinct disadvantage compared to road operations.
• Reducing costs – despite rising fuel costs, the road haulage market is constantly trying to reduce its costs to the user. This is the environment in which rail needs to compete.
• Access – a greater spread of terminals available so that users have facilities locally to them that can be accessed.
For much of this the onus is on the private sector to deliver – but there is a key role for the public sector too in terms of planning policy, which I will return to below.
In the Rail White Paper published in July 2007, the government proposed the creation of a Strategic Freight Network, with an additional £200m being allocated to this work. As the government itself acknowledges, this will take far longer than the next five years, but we believe it is a useful longer term goal.
We believe that the ultimate network should focus around the key containerised freight corridors that UK business requires.
In detail, we recommend the initial resources be focused as follows:
• Prioritise improvements that will provide the most value for money in terms of benefit they produce for ‘UK plc’ – i.e. business generally
• To this end, and in line with the recommendations of the Eddington Report the main priority should be international and domestic container traffic, as this is a proven and reliably increasing market for rail freight
• This will mean a focus on connections from the Greater South East ports and north/south across the UK
• Efforts should concentrate at this stage on upgrading existing facilities to acceptable standards (providing network to European gauge to be left to period beyond 2014, though planning should be done now)
• Policy on rail terminals needs to be incorporated into any SFN plan – vital to the success of such a network
• The SFN label must mean something – a standard should be set for what can be included under this term
Routes
The key corridors FTA would propose for inclusion in an identified SFN are:
1. Channel Tunnel to London
2. Southampton to West Midlands/WCML
3. Felixstowe to Yorkshire/ECML and West Midlands/WCML
4. London ports to West Midlands/WCML
5. WCML to Scotland (central belt)
6. ECML to Scotland (central belt)
Routes from outside these corridors should not be excluded from bidding process for funding from the £200m – rather, SFN should be developed as a label which has meaning in the wider UK business community.
Criteria
FTA is keen for the SFN label to have meaning – to be a set of standards for usefulness to freight needs that a route has to comply with before it can be part of the Strategic Freight Network.
The core requirement would be:
• seven day a week operation
• low cost base
• accessible (i.e. terminals available)
To deliver this, FTA would propose the following standards:
• Size: gauge cleared to W10
• Speed: capable of 75mph for lighter freight loads (RA8), 60mph for heavier (RA10)
• Signalling: modern signalling, permitting shorter headway times
• Availability: a fully gauge cleared diversionary route for emergencies and maintenance work
Conclusion
The potential for rail freight growth has never been so great. It therefore is vital that the correct conditions, whether they be costs of access, planning processes or infrastructure enhancements, are put in place to ensure that rail freight growth can take place to meet the challenges of the Eddington and Stern Reports.
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