The government’s new National Planning Policy Framework has given the nod to the development of strategic rail freight interchanges and other ‘viable infrastructure necessary to support sustainable development’.
For many it is about time too, but one should not hold one’s breath; SRFIs are hardly going to be mushrooming around the countryside whatever some folk in St Alban’s would have you believe. They have been fighting the development of HelioSlough’s 3.5 million sq ft SRFI at the former Radlett Aerodrome near St Albans, for several years now and it looks like a decision will be made in June as to whether it can go ahead; a mere eight years after the first proposals were mooted.
The key problem is the fact that SRFIs, as well as being large land hungry beasts, also need to be close to the major road and rail networks as well as close to the larger conurbations, which in the main means that securing the land and getting planning permission can be an arduous and time consuming exercise. It’s not without its risks; developer Argent spent 10 years trying to bring the London International Freight Exchange (LIFE) to fruition only to fail at the last hurdle and went away with nothing to show.
A developer does not step lightly into the fray, for without the planning issues there is yet another major stumbling block says Kevin Ashfield of IM Properties: “the huge upfront capital investment required to bring rail infrastructure into a site”.
IM Properties is developing the 400 acre Birch Coppice site in the West Midlands which is served by the Birmingham Intermodal Freight Terminal.
Nigel Godfrey of Gazeley agrees. The developer has a 4 million sq ft rail freight interchange scheme it is promoting 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. “The cost of rail provision is high by anybody’s standard and as responsible developers we have to ensure that such an endeavour is financially deliverable.”
Gazeley launched its proposals for its Peterborough scheme in 2008, although now in the council’s core strategy, there have been no further moves on site.
Simon Lloyd of DTZ says: “[SRFIs] cost many millions of pounds to create and at the moment development can only be feasible with pump priming, add into that the cost of rail infrastructure and it is just not viable in the current market even if you do have planning.”
There is demand for rail freight and it is growing. Jon Sleeman of Jones Lang LaSalle says: “Intermodal traffic is growing fastest over the long and short term. Freight on rail peaked in 2006/7 in terms of absolute volume but since then traffic has fallen back. However, domestic intermodal rail freight has grown 20 per cent in that period. As a share of all rail freight intermodal freight is now higher than coal closer to 30 per cent of all freight moved by rail up from 18 per cent in 2002/3.
“It is the usual suspects making in-roads: Tesco and Asda, but a number of other companies are also looking and trialling it, for example, Morrison’s, The Co-op, Waitrose, and M&S are experimenting with it to see if it works.
“Combined with growth in port activity we will see growth in intermodal. Recent forecasts show that in general terms rail freight will grow 2.3 per cent a year, by extrapolation the growth in intermodal is at 7.6 per cent growth if there is no change in productivity.”
Lisa Fitch of BNP Paribas puts the renewed interest in intermodal freight down to the increasing flexibility of the rail freight companies many of whom are able to accommodate on demand booking which allows companies who are unable to charter a whole train to book space on a container by container basis.
In addition she says: “A lot of [them] want to be seen to be doing it.” Richard Butcher of Stobart Group agrees: “A lot of occupiers want to tick the CSR box.”
Stobart Group has submitted proposals for a further 1.4 million sq ft of warehousing at its Stobart Park intermodal freight park in Widnes, Cheshire. It secured planning for a 528,000 sq ft chilled and ambient RDC for Tesco a couple of years ago. Stobart runs the contract for the retailer next to its rail freight terminal handling up to seven freight trains a day from Southampton, Tilbury and Felixstowe. Butcher expects that occupiers of the new warehouses will take full advantage of the freight facility.
“With its close proximity to the M5 and M56 motorways, the west coast main line and port; this is the way the distribution market is going. And increasingly rail can be made to work; everyone is aware of the price of fuel and what happens when diesel becomes more expensive? It makes rail more competitive.”
It is good that there is so much interest and support but as Ashfield is quick to point out: “There is a shortage of rail served sites.”
In the West Midlands alone, he says: “[It was] estimated that in the period to [from 2009] to 2026 there would be a demand for rail served sites of between 758 acres and 1,082 acres, [roughly 47 acres a year] yet only three sites with rail facilities [were identified in the region], one of which was Birch Coppice. We are then left with a supply of rail-served land in the West Midlands of approximately 1.3 years.
“Reliance on a larger number of smaller Rail Freight Interchange Terminals is not the solution as these smaller terminals cannot provide the scale economies, operating efficiencies and benefits of facilities and linkages offered by SRFIs.”
Tim Johnson of Jones Lang LaSalle says: “Sites do take a long time to get through.” However, he notes that there an awful lot in the pipeline not least the London Gateway deep water port which has planning for a 10,118,400 sq ft logistics park which adjoins the port and is rail connected
Other large schemes include developer ProLogis’ 131 acre ProLogis RFI DIRFT II is at Junction 18 of the M1 motorway near Daventry which can take units from 274,489 – 824,550 sq ft. It has planning for a further two million square feet at 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.
Another large proposal is iPort in Rossington, South Yorkshire where SEGRO, Helios Europe and Shepherd Alliance are proposing a 5.8 million sq ft RFI.