Monday 24th Oct 2016 - Logistics Manager

High prices hit operators in tunnel of woe

The Channel Tunnel was supposed to be a key factor in the revitalisation of the rail freight industry in the UK by opening up opportunities to run fast train services right across Europe. Unfortunately, the dream seems to have turned into a nightmare with operators closing services in the face of rising charges.

In February, Belgian company Unilog closed its service between Muizen (Belgium) and Daventry/Manchester because of a reported 24 per cent increase in traction rates. In a letter to customers Unilog said: “In the course of 2006 Unilog was confronted with a huge price increase for the rail haulage between Muizen and Daventry & Manchester via our daily shuttle services through the Channel Tunnel from December 2006 onwards. “The board of directors discussed the situation on Wednesday 24 January, and was obliged to note that the current business model of the company is not viable and that a new price increase for our customers was not a feasible option. Faced with the new situation, and seeing no alternatives in the near future, it was decided to halt all activities as soon as deemed appropriate.”

This leaves just three to four rail freight services through the Channel Tunnel each day. Tony Berkeley, chairman of the Rail Freight Group said: “Eurotunnel’s Network Statement demonstrates their thinking that, if you increase charges, you will increase revenue. These latest service closures clearly demonstrate the opposite – that the current charges are totally unsustainable (even with the payments from the Department for Transport).”

Berkeley called for the infrastructure to be priced at rates that the market can bear and removal of technical barriers to competitive service through the tunnel.

EWS points out that Euro Cargo Rail, EWS’s French rail freight subsidiary company, is expanding quickly in France and this is leading to growing volumes being transported through the Channel Tunnel.

“The key issue for Channel Tunnel rail freight is for the cost of using the Tunnel to fall. At the moment charges by Eurotunnel to use the infrastructure are higher than the wider market can afford to pay. Rapid growth in Channel Tunnel rail freight will occur once these charges are reduced.”

Derrick Potter, chief executive of The Potter Group, points out the low level of freight transport, currently some 5-6 trains each day at best

“The physical capacity of the Tunnel and the lines leading to it are obviously a constraint on the amount of traffic but there is capacity available for a large increase in international rail freight through the Tunnel.

“The UK government has done well in coming up with a temporary solution to keep trains running through the Channel Tunnel following the end of the Minimum Usage Contract, and setting out to EWS Railway the conditions applying to this. However, the sum total of CTRL, Eurotunnel and terminal and other charges, add up to much higher costs of moving freight between the UK and France. The EU Regulations clearly state that charges must not be higher than any market sector can bear in a competitive environment. It is now time for the regulatory bodies to enforce this.”