Sunday 25th Sep 2016 - Logistics Manager

Over large, over ambitious and over here?

On the Continent and in the US intermodal works but for a small island like the UK is it really necessary?

Intermodal freight seems to be considered a panacea to the problems and frustrations that affect British logistics be that from the corporate, political or indeed public point of view.

The idea of getting freight onto rail has been so well worn into the national psyche that is comes as quite a shock to realise that so little of it actually does go by rail at present. According to statistics released by the Department of Transport, in 2010 freight moved by road was the equivalent of 151bn tonne kilometres while that moved by rail was only 19.1bn tonne kilometres.

The reasons for why there has been so little freight on rail are manifold but were succinctly summarised by Nigel Cook of Elddis Transport and Theo de Pencier of the Freight Transport Association giving evidence at a recent House of Commons Transport Select Committee.

Cook noted: “The demand now is for very short lead times. Unfortunately, one of the constraints of the rail network is that they can’t react as quickly as we can by road. We have scenarios whereby customers order in the afternoon requiring deliveries early tomorrow morning. The rail networks run on timetables, as they always do, but they are very rigid, whereas road freight has more flexibility built in.

“There are also certain products that are not efficient to run on rail. You need to have a certain value of product and it needs to be a weighty, bulky product. If you have a very lightweight, low-value product, then rail cannot compete as competitively as road.

“A lot of it [moving freight by rail] is distance-related. Yes, it works very well in Scotland and the Scottish freight operation has embraced rail. There are a lot of movements in and out of Scotland on rail. For the rest of the country, the shorter distance means it is very difficult to make it cost-effective.”

de Pencier added: “At the end of the day it will always boil down to economics on the degree of usage. While rail freight has become significantly more competitive over the last 10 or 20 years, there are still some handicaps as well as the flexibility/adaptability argument, which will always go against rail. There are also capacity issues, particularly running out of the Haven ports and southern ports up to midlands distribution centres although traffic flows are being addressed by the Government.

“Secondly, the way rail generally works at the moment is that the passenger timetable has primacy throughout. You do still get a lot of rail freight activity delayed by the need to ensure that the passenger timetable is adhered to by the train operating companies.”

However, the amount of freight moved by rail could increase if the government invested in increasing capacity and giving greater priority to freight on rail.

de Pencier says: “A significant shift could occur. If you broadly assume that rail carries something in the region of ten per cent of freight movements at the moment in terms of tonne-kilometres, there is a trend to shift from bulk products to containerised, and that is where the growth is. Let’s assume capacity was not a constraint, then there could be a significant increase of up to an additional 50 per cent, certainly in the short to medium term, in current rail freight traffic.”

There is definitely an underlying willingness to put more freight on rail. Gareth Osborne of developer SEGRO which is championing the 5.8 million sq ft iPort in Rossington, South Yorkshire with joint venture partners Helios Europe and Shepherd Alliance, says. “The initial outlay costs for developers are high, but with appetite from occupiers it makes it feasible.”

Indeed more and more retailers are taking the leap. Tesco and Asda are well documented, but Sainsbury’s is rumoured to be looking to secure an 850,000 sq ft plus rail connected scheme at ProLogis DIRFT II in the East Midlands. Other retailers including the Co-op and Morrisons are also thought to be assessing the situation.

Tim Johnson of Jones Lang LaSalle argues that intermodal and rail “will work and is working in terms of demand and incentive levels. Big occupiers think it’s a good idea, people are looking at ways to improve their supply chain CO2 emissions, and CSR for major corporates it is a big issue. If they can see a benefit from using intermodal then why wouldn’t they do it. It is a no brainer.”

However, the single biggest factor preventing more freight on rail is a lack of interchanges. Giving evidence at the select committee, de Pencier noted: “Access to rail freight is the other key issue and we feel as an organisation that, within the UK, there need to be significantly more rail freight interchanges to enable that transition to take place.”

Universal concern

This seems to be a universal concern. Mark Fitzpatrick of GVA notes: “The initial support disappears when people find out what having an SRFI involves. Basically the sentiment is fantastic, but the practicalities are somewhat different if you live close to them. Getting them through planning can be a political hot potato if local residents take against them.”

Freight On Rail pointed out, as part of its written evidence to the select committee, that: “SRFIs in the right locations would open up more markets to long distance rail which would reduce pressure on the congested road network.

“Therefore it is crucial that the forthcoming National Networks Policy Statement incorporates the existing DfT’s Strategic Rail Freight Interchange Policy in its current format and wording, (issued in November 2011) because it makes the planning policy case for SRFIs, which give developers the confidence to invest in intermodal interchanges and submit applications.”

That is certainly something developer Roxhill wishes to see with three rail freight dependent schemes in the offing. Its largest and possibly most ambitious is East Midlands Gateway, which Charles Blake of Roxhill expects will qualify under the government’s new planning rules as a multi modal scheme of strategic national importance and thereby eligible to be brought before the secretary of state.

The six million sq ft scheme has already been allocated for an SRFI in the draft North West Leicestershire Core Strategy. The six million sq ft SRFI warehousing complex is proposed on farmland by junction 24 of the M1 motorway near East Midlands Airport would be served by a new railway.

Johnson points out: “There is a lot of investment in to the projects and anyone serious about them will be spending a lot of money and will be looking for a return. Some have not been developed because the infrastructure costs are too high.”

Indeed, Blake says: “One of the big issues for getting sites rail connected is the cost of doing so, unless already there. There is a need to have schemes of a size to warrant the enormous cost in time, finance and administration to get them in.”

Severnside Distribution and Roxhill’s 640 acre Central Park scheme in Avonmouth benefits from an old set of sidings on site all linked in. All that has to happen is for there to be an upgrade of track and sidings. In addition National Rail recognises the link. The scheme could accommodate up to 1.3 million sq ft in a single unit and the first phases have planning for a total of 4.4 million sq ft. Letting agents are Knight Frank and GVA.

Gazeley also has a rail connected site G.Park Ashby in the West Midlands, which it recently secured planning for an 850,000 sq ft warehouse. Even though it already had an existing rail siding, Bruce Topley of Gazeley says: “It has taken four years to get to this position.”

Gazeley is also slowly pushing forward with its four million sq ft rail freight interchange scheme known as Magna Park Peterborough which will be linked via the Felixstowe-Nuneaton rail line, a designated freight route to the West Coast Main Line, giving access to the Midlands, the North and Scotland. Gazeley launched its proposals for its Peterborough scheme in 2008.

In the North West, Stobart got planning approval in April for its one million sq ft rail connected scheme at Widnes, Stobart Park 3MG. The site, which contains Stobart’s container port, has build-to-suit opportunities for units up to 850,000 sq ft. 

Other large schemes include developer ProLogis’ two million sq ft ProLogis RFI Park Howbury, which is near Dartford in Kent, as well as proposals in Corby, on a 217-acre site, ProLogis RFI Eurohub Main, with up to 3.5m sq ft of space.

Arduously difficult

Expensive, arduously difficult to get through planning and overly large they may be, but Jon Sleeman of Jones Lang LaSalle warns: “Intermodal sites are needed if the government wants to reach its CSR targets to get freight on rail. Indeed if you look at the fine print the forecasts will not be achieved unless there is more access to the rail network. You will not get growth if the infrastructure is not there.”

Johnson is advising on one of the most ambitious multimodal schemes in the UK, DP World’s London Gateway scheme which as well as providing a deep water port will also have a port-centric rail connected logistics park of up to 10,118,400 sq ft. The logistics park will be able to handle build-to-suit facilities from 100,000 sq ft to 1.3 million sq ft. In total, London Gateway incorporates over 1,800 acres, this includes the port and park and areas for environmental mitigation.

The current infrastructure will serve an initial Phase I of development with roads connecting to the A13 and Junction 20 of the M25 motorway as well as the port.