Consistent growth in Consumer and Construction markets.
Despite the fact that it has been a challenging year for rail freight with the deep decline in coal traffic, the two key sectors acknowledged to have real potential, consumer and construction, continue to show consistent growth. Furthermore, there is considerable suppressed demand for services because of capacity limitations, so it is crucial that the Government continues to develop the Strategic Rail Freight Network to cater for this traffic.
Consumer traffic grew 7% in quarter 1, the highest level since 1998 1; and 4% in quarter 2 of 2016/17 compared to corresponding quarters in the previous year. Overall, it has grown by 30% in last 10 years and is forecast to grow fourfold by 2043 if the network is upgraded and additional road/rail transfer points obtain planning permission. Construction traffic increased 2.2% in quarter 1 and 8.3% in quarter 2 against the previous year with the sector realising a 25% increase since 2012.
However, the Government’s latest proposal to reform railways structures yet again give cause for concern. Rail freight is a nation-wide service which normally crosses several regional and route boundaries so giving more operational control to the train operating companies could marginalise rail freight. Unless there is a framework which incentives integrated franchises to support rail freight growth it could get left sitting in loops and at red signals. Freight needs the national system operator to retain responsibility for timetabling, capacity management and co-ordination of engineering works. Therefore, it is crucial that the Network Rail’s Freight Route has appropriate status and powers.
Strategic Rail Freight Interchanges (SRFIs) are an intrinsic element of shifting more freight to rail as they enable rail to compete in the consumer market by reducing the transhipment costs between the modes and reduce competitive distance for rail below 150 miles. For example, Daventry SRFI removes 23 million lorry miles per year largely from strategic road network. Developers want to invest in SRFIs as the growing number of proposals such as East Midlands Airport, Etwall Common near Derby, and Four Ashes near Stafford demonstrate; I-Port including a rail freight terminal at Doncaster is under construction.
Congestion, air quality violations and increased attention in cycling safety are changing urban logistics policies. So it is important that key city authorities understand that rail can offer the long distance trunk haulage element of consumer urban deliveries for onward transhipment into low emissions vehicles, if consolidation centres and terminals are rail connected. Similarly more aggregates terminals are needed in our major cities to facilitate the greater use of rail for construction projects so this message is being broadcast and related to the need to build more housing with the simple statistic that each train can carry enough materials to build 30 houses.
I continue to make the case for affordable rail freight access charges emphasising how rail freight must be compensated for the market distortion which sees HGVs only pay 30% of the costs they impose on society.
All these points will be high on my agenda when I meet the Rail Minister in February.