Column - August 2013
Freight Industry Times - The case for targeted support for rail freight
Road and rail transport of freight each have strengths and complement each other; rail has a key role in providing the long distance trunk haul which reduces road congestion, pollution and exposure to road accidents whilst road is more flexible and can make final mile deliveries. That is why the mode shift revenue grants from the Government, justified by the economic and social benefits of removing lorry traffic from the roads, remain crucial if existing services are to remain on rail and more new services are to commence.
The current regime which delivers excellent value for money, and is only awarded for actual containers removed from roads ,and therefore risk free for government, ends in March 2015. We are urging the Government to retain and adequately fund the scheme so that operators and customer have the confidence to carry on investing in the industry.
Around 80-90% of the current grant supports the movement of deep sea containers on rail. Major investment in this sector, on the network and at ports and terminals has led to a step change in efficiency over the past decade which has resulted in increasing volumes moved by rail and increasing value for money for Government from the scheme. Average value for money now achieved is over 5:1 whilst the total annual budget has decreased from > £40 million to £19 million.
A sudden cessation of the scheme will abruptly force back onto the roads significant rail flows and customers will lose confidence in the user of rail; estimates indicate that the direct impact would be flows to the Midlands reverting to road causing around 250,000 containers to shift back to road with further knock-on impacts on other routes. There is now a chance to increase movements by rail following considerable investments by all the major ports in increased rail terminal capacity, linked with the government investment in the Strategic Rail Network. This is an opportunity on the back of these investments to make a modest increase in the scheme’s annual budget to enable growth by rail at very high value for money.
Vitally the scheme also supports the domestic intermodal sector such as the services for Tesco and other retailers. This sector has grown significantly from a low base, and is competing effectively with road on core flows; the grant support remains essential as economy of scale is established. This sector is also dependent on high quality rail linked facilities many of which are delayed due to planning constraints and the economic downturn.
The road congestion relief benefits of rail are universally recognised. Each freight train can remove around 50 HGVs. Network Rail calculated that if the equivalent of rail freight’s business was carried by road it would equate to 1.4 billion lorry kms. In fact the Freight Transport Association claimed that congestion claimed cost businesses £24 billion per annum and the DfT estimate the cost of congestion is £1 per lorry miles on the most congested roads. Rail is also safer than road a point made in the DfT Reforming our Railways Report March 2012 - On average rail is greener than current road-based forms of transport and aviation, and safer than road. Government figures show that HGVs are four times more likely than cars to be involved in fatal collisions because of their size and weight 1.
Rail remains a success story; overall, the amount of freight moved increased by 65% between 1995 and 2006 and although volumes dipped as a result of the financial crisis, it has now largely recovered. Between 2001 and 2011 the amount of containerised goods transported by rail increased by 80%. At Felixstowe, Britain’s largest container port, the proportion of containers leaving by rail has jumped from 14% in 2002 to 27% now with 60 trains to and from the port each day. The newly opened third terminal should double the number of containers sent out by rail by enabling longer trains to operate.
Rail freight, which produces 70% less carbon dioxide than the equivalent road journey, has a crucial role in helping the Government to achieve the low carbon economy and green jobs we all need. The Government’s Rail Reforming our Railways Report of March 2012 expressly made the case for grants and spelt out the considerable benefits of rail freight as part of the intermodal logistics solution. The congestion and environmental harm from transferring such traffic to road would be enormous and there would be significant road safety concerns as well... Not all external costs of road freight are paid by users of the road network so there is a strong case for Government to continue providing support for the rail freight industry to create a level playing field. Targeted funding through the mode shift revenue support scheme to assist with the operating costs of running rail freight services where there are environmental and social benefits from doing so 2.
Most of the country’s major ports now have a strategy for transport which involves modal shift from road to rail with the greater rail market share being a key component of the sector’s drive towards sustainability. In support of these plans there is over £500 million investment in rail committed or under way. The full benefits of the Strategic Freight Network which has focussed on improving links to the ports, might not be realised without the grants which reflect the wider benefits of freight going by rail:
1. Traffic statistics table 2010 TRA0104, Accident statistics Table RAS 30017, DfT
2. DfT Reforming our Railways Report 4.43 4.44 P49 4.46 P50