Thursday 29th Sep 2016 - Logistics Manager

Rail: Staying on track

Everyone wants to see more freight moved by rail, but there are big challenges involved with achieving that – notably the creation of more capacity on the rail network. The recent Rail Logistics conference was the perfect setting to discuss the issues facing rail freight today. Lisa Townshend reports…

This article appears in the January 2016 issue of Logistics Manager

This article appears in the January 2016 issue of Logistics Manager

The development High Speed 2 (HS2) is critical to the growth of rail freight in the UK. Not surprisingly was central to the discussion at the Rail Logistics conference in November. It was particularly timely since the same day saw chancellor George Osborne announce that the high speed rail link connecting Crewe to Birmingham will open six years ahead of schedule in 2027.

The chancellor also confirmed the government’s commitment to the full ‘Y-shaped’ network servicing Manchester, Leeds and Sheffield. He set out £55.7bn of investment for the HS2 programme in the 2015 Spending Review.

Coinciding with the announcements, Osborne visited rail freight carrier Freightliner’s Basford Hall depot in Crewe. The Chancellor was accompanied by chief executive HS2, Simon Kirby; newly appointed chair for Transport for the North John Cridland; and Martin Frobisher, route managing director, Network Rail. The group took the opportunity to tour the site and chat to Freightliner staff.

Freightliner chief executive officer Russell Mears commented on the day: “Increasing freight movements on the West Coast Main Line will improve connectivity for businesses in the North and Midlands, and enable them to better connect with worldwide markets through the UK’s major ports.

“There is a strong economic rationale behind reserving the ‘released capacity’ to grow freight volumes on the West Coast Main Line. Rail freight has grown 80 per cent since privatisation in the mid-1990s, now transporting goods worth over £30 billion a year and the number of deep-sea containers moved by rail has more than doubled.

“HS2 is critical for delivering continued economic growth and rebalancing the economy, and opening Phase 2a to Crewe at the earliest opportunity will be essential in achieving this.”

With the news from Crewe firmly at the forefront of delegates’ minds, the scene was set in Birmingham’s Hyatt Regency Hotel for a day of debate at Rail Logistics 2015. The conference was chaired by UK Warehousing Association chief executive Peter Ward, who posed to both speakers and delegates the following questions to try and answer – what does HS2 mean for freight logistics; what effect will it have on the existing network; and what does long term success look like for HS2?

Kicking off the presentations was Terry Morgan, chairman of Crossrail. As head of one of the biggest rail projects in recent memory, Morgan was well placed to give context to HS2 and share lessons and experiences from the project. He was rightly proud of the fact that six years into the project Crossrail remains on time and in budget – a situation that ensures the autonomy of the decision makers at Crossrail. He discussed the challenges which having to both integrate with and avoid the existing infrastructure poses; citing the environment at Tottenham Court Road, which has involved trying to build a station for a railway system with trains twice as long as tube trains, that will carry twice as many passengers per train, at the same place as an existing extremely complex infrastructure – even getting within 30 inches of existing Tube network as they built.

Morgan’s presentation shone a light on three major themes that he wanted those at HS2 to take home – safety and sustainability; skills development; learning lessons and sharing the knowledge. He emphasised the need for good safety protocols and training as well as ensuring compliance of lorries using any Crossrail sites, especially in terms of cyclist safety. He also looked at the issue of what you do with seven million tonnes of spoil when you have dug it out of the ground. One solution – create a RSPB nature reserve at Wallasea Island in Essex.

The issue of skills development is fundamental for Crossrail. The project originally set a goal of 400 apprentices by the end of 2018. Morgan announced that, as of November 2015, the number of apprentices stood at more than 500, and by the end of the project he expected more than 700 apprentices at Crossrail. To help with the up-skilling of the workforce there are now three National Colleges: Northampton (rolling stock), Birmingham (digital focus) and Doncaster (heavy engineering) providing courses and education with an emphasis on the need to be able to transfer skills and knowledge across large projects will help to create value.

Following Morgan was Peter Sollitt, project director – route wide logistics & utilities HS2. He provided an overview and key points to consider concerning the HS2 project. Key construction statistics for the project include:

  • A 230km total route length broken into two phases. Phase one constitutes the line between Euston and the new station of Birmingham Curzon Street. The phase also includes the building of stations at Old Oak Common in Northwest London and Birmingham Interchange, east of the NEC. Phase two will connect Birmingham with Leeds and Manchester and include upgrades and new stations at Manchester Airport, Manchester Piccadilly, Leeds, Sheffield, East Midlands Hub and Crewe.
  • 53km of the route will be tunnels – with the challenges of excavation and spoil management. It is estimated that 12 million cubic metres of spoil will be left over from the excavation of the tunnels that won’t be required within the project (for building embankments and so on) and so one of the issues will be what to do with it.
  • It is estimated that more than 10,000 people will have worked on delivering HS2 over the course of the project with 60 per cent of the contract opportunities expected to be awarded to SMEs.

Sollitt discussed issues such as safety and standards as well as the need to budget wisely because it is taxpayers’ money – the planning parameters mean that it is not just a case of has to be done, it’s how the project leaders want to do it. He also promoted the National Colleges and the need for world leading skills training.

The topic then turned to the impact that HS2 can have on rail freight capacity with a presentation from David Legge, head of HS2 Development at DB Schenker Rail.

In the wider context, the world of UK rail freight is not looking great. According to the most recent figures produced by the Office of Rail and Road (Freight Rail Usage 2015-16 Q2, Nov 2015), the total freight moved was 4.43 billion net tonne kilometres, the lowest Q2 since the start of the quarterly time series and the fifth lowest total in any quarter since the start of the quarterly time series in 1998- 99 Q1. Of the seven commodity sectors used in the statistics (Coal, International, Oil & Petroleum, Metals, Domestic Intermodal, Construction, Other) only two are showing an increase in freight movement – Construction and Other.

The construction freight sector is where Legge could see the most growth – in his presentation he claimed a 22 per cent growth rate. This seems down to large projects in recent times such as Heathrow Terminal five, Bow East Logistics Centre for the 2012 Olympics and the on-going Crossrail project. Legge emphasised the need for careful planning before implementation. Preplanning, he said, was equal to success.

With his emphasis on preplanning and early engagement, Legge discussed the potential for rail freight to be key to the HS2 project; looking at running six trains a day during the main section of the excavation time to deal with up to 35,000 cubic metres of spoil/excavated material at any one time.

Toby Rackliff then showcased what was needed to integrate HS2 with the existing network in the West Midlands. Rackliff is the rail policy and strategy manager for West Midlands Integrated Transport Authority. His presentation was titled HS2 and the West Midlands: Maximising the Benefits of High Speed, and he brought into context how core the HS2 project was to the future transport system in the UK. His main message was that HS2 must be considered in a wider rail context and as a key part of the transport system as a whole… and also as part of the broader economic development, social and environmental agenda.

 

Growth

He looked at how fast the network was growing, citing figures including:

  • Virgin West Coast: 16m trips in 1999 – now there are 34.5m
  • 2014/15 to 2024/25, patronage is forecast to grow by: West Midlands – London +35 per cent; West Midlands – Manchester +40 per cent; West Midlands – Glasgow +65 per cent. These are considered conservative estimates bearing in mind passenger growth stood at +8.2 per cent last year alone
  • Freight growth will require an extra 80 trains per day per direction by 2030

With figures like these, it’s easy to see why Rackliff sees HS2 as putting Birmingham and the West Midlands at the heart of the rail network.

A panel discussion debated the issues surrounding HS2 and what it means to the West Midlands and the UK in general. It featured David Legge, Toby Rackliff and principal development planning officer at Birmingham City Council Craig Rowbottom. Chair Peter Ward lead the discussion which looked at issues from the building of a station at the Ricoh arena near Coventry, that has still yet to see a train stop at it, to the question of will HS2 just cause more problems by increasing demand on an already pressured network? Logistics was also discussed, notably Black Friday and Cyber Monday, and the need for parcel companies to move large amounts of goods in a short space of time. Can/will the extra capacity provided by HS2 on other networks be used for this kind of freight?

The afternoon session was kicked off with a more international focus as TC Chew, owner of Chew Transit Consultancy, looked at practical examples of logistics and tendering using the transit extension in Hong Kong. Again spoil movement was a big issue within the project, as well as the challenges presented in trying to build a tunnel in a ‘hostile’ environment.

Lastly Craig Rowbottom discussed the developments within Birmingham to welcome HS2. With growth expected within Birmingham to include 51,100 new homes and 100,000 new jobs by 2031, the needs for good connectivity within the Midlands is paramount. Rowbottom highlighted the focus on four key strands:

  • Connectivity to the stations
  • Integrated HS2
  • Midlands Connect
  • International Connectivity

He also outlined plans for the new Birmingham Curzon station and the plans the Council have for making it a world class destination.

 

Rail freight demand set to grow

 

With so many column inches given over to passenger rail and large-scale projects such as HS2, it is easy to assume that rail freight has had its day. This is not necessarily the case. According to Network Rail it is expected that freight demand will grow by at least 30 per cent over the next ten years – the equivalent of 240 additional freight trains a day – and by as much as 140 per cent over the next 30 years. Some of the key facts Network Rail cite include:

  • The UK rail freight sector contributes £299 million in profits and wages to the UK economy
  • On average a gallon of fuel will move a tonne of goods 246 miles on rail, but only 88 miles by road
  • Each freight train takes about 60 HGVs off the roads

A soon to be published report into the global oil and gas logistics sector has claimed that rail is the preferred mode of transport where there is no existing pipeline, citing the better flexibility and lower implementation costs. The report states: Optimum utilization of rail has created a surge in the demand for cars that can carry crude oil. New production sites, which do not have pipeline network use rail cars, for transporting crude oil and natural gas from the exploration site to the refineries. Pipelines are costly and time consuming to build and are often subject to construction delays as it requires numerous permits. Rail car companies are reaping the benefits, experiencing a backlog of orders for petroleum carrying cars and are reporting strong financial results.

Railway has to build additional infrastructure to keep up with demand in some shale producing regions. The Bakken shale field in North Dakota is the best example. In the year 2013, Bakken oil output hit a record of 727,149 barrels per day and the majority of the oil was carried out by trains. Rail has become the most favoured mode of transport in the area as it is cheaper than trucking and is more flexible than pipeline. (Oil and Gas Logistics Market – Global Industry Analysis, Market Size, Share, Growth, Trends and Forecast 2015 – 2023 – Transparency Market Research)

In the UK, haulage associations are ensuring that the needs of the rail freight sector are not forgotten in the wave of infrastructure enhancements. The release of November’s Bowe review into the planning of Network Rail’s enhancements programme 2014-2019 provided a great opportunity for the Freight Transport Association (FTA) to push forward rail freight’s agenda. Chris MacRae, FTA’s rail freight policy manager, said: “Managing the delivery of what are increasingly complex network enhancement projects is a very challenging task. But it is essential that Network Rail understands what has led to the delays and cost overruns so that it can avoid repeating the same mistakes on forthcoming projects.

“The Strategic Freight Network Fund plays an essential role in enhancing Britain’s mixed traffic railway network to meet the needs of freight so as to help improve economic competitiveness and connectivity of the British economy. Projects delivered under this fund in the previous control period have helped to remove some of the constraints on rail freight and Britain’s supply chains – for example gauge clearance on main and diversionary routes into and out of the major haven gateway ports which have delivered growth in rail freight with attendant economic and societal benefits.”

The Rail Freight Group (RFG) has also been pressing the case for equal consideration of freight and passenger agendas. A recent survey of its members (representing around 120 companies) shows widespread unease over potential changes to the structure of Network Rail, with 72 per cent of respondents fearing that regionalisation would not be beneficial for freight.

The survey also revealed that members see the lack of available train paths (58 per cent) and shortage of suitable terminals (47 per cent) as the biggest barriers to the growth of the rail freight sector, and called for continued support from Government, including on-going investment in rail infrastructure (50 per cent). Respondents also highlighted the key reasons why businesses are choosing to use rail as part of their supply chains. Although 61 per cent of respondents named environmental considerations as one of the main reasons customers choose rail over road, some 73 per cent cited cost-effectiveness as a key factor.

Maggie Simpson, RFG’s executive director, said: “Our members are concerned that freight should get fair and equal treatment in any future restructuring of Network Rail and that safeguards are put in place for businesses to grow their use of rail freight. This includes a strong central system operator function to ensure the continued uninterrupted movement of nearly 800 freight trains a day throughout the UK across all Network Rail’s routes.

“Rail freight is expanding in new markets as more and more customers recognise its benefits in terms of speed, reliability and cost-effectiveness. These customers need confidence that the rail network will continue to meet their requirements however it is structured.”

It looks like rail freight will be staying on track for a good while yet.