Rail operators step up to new challenge

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Everyone agrees that moving more goods by rail is a good thing, but the industry has been facing the challenge of adapting to new markets as traditional coal traffic has declined. Malory Davies reports on progress.

There is no doubt that these are challenging times for rail freight operators – after years of steady growth the volume of freight moved in the financial year 2016-17 fell by 3.2 per cent to 17.2 billion net tonne kilometres.
But most of this decline is down to the collapse in coal movements. The movement of containers from the ports has been rising steadily, as has the movement of construction materials.
In fact, says Peter Graham, freight strategy manager at Freightliner: “Together container and construction traffic now accounts for nearly two-thirds of total rail freight volumes.”
He highlights the fact that one freight train can carry enough material to build 30 houses, and in London, over 40 per cent of construction materials are delivered by rail. “Projects such as HS2 demonstrate the Government’s commitment to invest in infrastructure to support long-term growth. There is an important role for rail freight to support the infrastructure projects around the country, as was the case when rail freight supported the delivery of, for example, Crossrail, the Olympics and Heathrow Terminal 5.”
And he points out that both Network Rail and the government are forecasting significant opportunities for rail freight to continue to grow. “A stable operating environment, including long-term efficient, stable and affordable access charges, a level playing field between road and rail and continued investment to improve the capacity and capability of the Strategic Freight Network, will help support this growth, enabling rail freight to continue to deliver significant benefits for the UK economy.”
Opportunities for growth abound. The opening of the New Silk Road is creating a new option for moving goods from China into Europe that is significantly cheaper than air freight and significantly faster than ocean.
In 2016, about 40,000 containers were transported by train along the route, known as the Silk Road, and the volume is expected to increase to some 100,000 containers by 2020.
At the beginning of 2017, the first ever train from China arrived in the UK. The train, operated by the InterRail Group, took 18 days to make the 12,000 km journey loaded with textiles and consumer goods – about half the time of transport by sea.
And in April, the first ever UK to China export train departed from DP World London Gateway to make the 7,500 mile, three-week-long journey to Yiwu in the Zhe Jiang province in eastern China. Products on board the container train included soft drinks, vitamins, pharmaceuticals and baby products.
Graham highlights the importance of the duelling of the line to Felixstowe in 2019, which will create the opportunity for a major expansion of container traffic from the port.
He points out that, “in terms of containerised freight, Freightliner offers not a ‘train load’ or ‘wagon load’ service but ‘container load’ options, making rail accessible to all potential customers. We have developed electronic interfaces to simplify the booking process and have a commercial team ready to provide rates and manage the transport movement from start to finish.”
And says Graham: “Strategically placed inland locations are also vital to assist the development of freight on rail whether that is deep-sea, short-sea or domestic flows. Cost efficient track access charges are critical as this is a key driver of cost which road haulage does not have to withstand. Modal shift to rail is encouraged by congestions, omission levels and capability but is really driven by price.”
GB Railfreight is also expanding its operations in the container market. It has just launched a rail service moving containers between the port of Southampton and the Hams Hall rail freight terminal north east of Birmingham.
Under the five year deal, the service will operate daily, Tuesday to Saturday, carrying goods for major high street retailers.
ABP Southampton has also undergone recent upgrades that will support the new contract. £2.4m has been invested in a new 5.8 acre facility operated by Solent Stevedores, which increased capacity and has seen turnaround times halved.
John Smith, GBRf’s managing director, says: “Over the next five years we will work closely with our new partners at Wincanton to ensure we deliver the services they require and provide their business with the certainty they need. We are sure that this is only the beginning of a long and fruitful partnership that will enable both organisations to flourish.”
DB Cargo, the UK’s largest rail freight operator, is emerging from a difficult process of readjustment to the collapse of the coal market.
Last year it reduced its workforce by some 893 jobs – about a third of the total following an agreement with the four trade unions – ASLEF, RMT, TSSA and Unite.
Chief executive Hans-Georg Werner said at the time: “We will now move forward with our plans to lead the next generation of rail freight which includes key investments such as new wagons, terminal enhancements and combining our core function of delivering goods by rail with bespoke in-house IT solutions, to give our customers the best service and make it easy for them to do business with us.”
A sign of these changes is the start of work on a £6 million logistics centre in Wolverhampton, which will increase the site’s capabilities to handle and store steel coil from 1,380 to 3,325 steel coils, which is 40,000 tonnes of steel.
DB Cargo transports the coils by rail to the site, where it is then distributed to manufacturers across the West Midlands to produce products such as white goods and cars.
Werner said: “The breaking of the ground is a major step forward in the development of the Wolverhampton Logistics Centre. We first opened our facilities in Wolverhampton in 1966, when the city was at the centre of steel and iron production. Now, over 50 years later, the industry has changed massively but the site is still of huge importance. Building the new centre will expand our capabilities and the number of rail services we can provide.”
Further challenges remain. At the end of last year, the government set out plans to give greater control of rail infrastructure to the passenger franchises – a move that has set alarms ringing in the freight industry.
The new rail strategy, set out in “Connecting People: a strategic vision for rail”, says: “We will roll out joint teams running day to day track and train operations focused on delivering for passengers.”
This move was described by the Rail Freight Group as “uncomfortable for freight businesses and customers, who operate across the national rail network, and who expect the infrastructure to be managed impartially”.
And Christopher Snelling, the Freight Transport Association’s head of national policy, said: “If the track operations are more closely intertwined with a passenger operator, there is a fear that when it comes to closures for works, or getting the tracks working again after a disruption, freight operators could lose out to the partner’s own passenger train services. Even the perception that freight might get a worse deal in future could discourage users from turning to rail.”
Both the RFG and FTA welcomed the government’s stated commitment to rail freight. Snelling said: “This strategy reiterates the government’s commitment to improving rail freight, including continued spending on freight-related infrastructure improvements in the next control period, out to 2024… We don’t want to see all the hard work undermined by even the perception that the future of the railways is only about passengers. Britain needs rail freight too.”
And Maggie Simpson, RFG executive director, said: “We will be encouraging the Department for Transport to consider explicit targets in partnership contracts, to require named senior individuals with responsibility for freight, and to support enhanced governance between different parts of the industry to ensure that Government’s vision for rail freight can be delivered on the ground.”

Can lorry platooning derail freight?

Trials of lorry platooning are due to take place on UK roads towards the end of this year (2018) and, if successful, could present a significant challenge to rail freight operators.
However, Peter Graham, freight strategy manager at Freightliner, points out that there are a number of reasons to believe that platoons of lorries cannot replace rail freight.
Platoons of lorries will only increase road congestion and have wider implications for road safety, he says, pointing out that rail freight reliability already exceeds road with 85 per cent of freight trains arriving within 15 minutes of scheduled time.
“In terms of reliability of road, 68 per cent additional time is now needed compared to free flow to ensure on time arrival on the Strategic Road Network and average delay is now estimated to be 9.0 seconds per vehicle per mile.”
And, he says: “Growing rail freight provides a real opportunity to unlock congestion on the road network. Research by consultants from Metropolitan Transport Research Unit (MTRU) on behalf of the Campaign for Better Transport and sponsored by the Department for Transport, highlights how a relatively small increase in modal share by rail can have a significant impact at relieving congestion on parallel roads.”
And there are also many rail freight commodities that would not be suitable or practical to consider moving via a platoon of HGVs, aggregates into central London being just one example, he says.

Changing product mix

Coal was once the mainstay of the rail freight business – as recently as 2014 it accounted for some eight billion net tonne kilometres (NTK). Today that figure is just 1.43bn.
The impact can be seen in the overall volume of goods moved. In 2013-14 it was 22.71bn NTK – in 2016-17 it was down to 17.25bn NTK.
The good news is that there has been growth in other areas – notably Construction and domestic Intermodal traffic.
Domestic Intermodal has grown from 6.19 bn NTK in 2013-14 to 6.81bn NTK last year. In fact, it has been growing steadily for the past 20 years – in 1998-99 it accounted for 3.53bn NYK.
Construction grew from 3.56bn NTK in 2013-14 to 4.25bn NTK in 2016-17.

This article first appeared in Logistics Manager, January 2018

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