Rail Freight: An Uncertain Future?

The Department for Transport has recently published its Rail Freight Strategy which suggests that a bright future for freight movement by rail is possible if policy-setting can lever in investment in skills, network capacity and publicising of rail freight’s potential. But is this the full story?

Historically, freight on rail in the UK has been dominated by heavy industry (e.g. metals and chemicals) and abstractive industries such as coal and aggregates. Prior to the 1960s the railways were a ‘common carrier’ with each local station having goods and parcel facilities. Use of trains by the Royal Mail was provided for by statute as far back as 1838 by the Railways (Conveyance of Mails) Act.

Examination of old timetables show large volumes of freight on the move; for example in the mid-1970s the Black Country in the West Midlands had around 450 trains each week serving steelworks, chemical plants, a couple of oil terminals, a freightliner container depot and a power station, none of which take rail traffic today.

In recent times, rail freight traffic has declined sharply with the Office of Rail and Road (ORR) reporting that in 2015-16 the total volume of freight moved was 17.8 billion net tonne kilometres, a decrease of 20% on 2014-151. This contrasts with gradual increases in traffic post the 1984 miners’ strike, triggered by imported coal travelling long distances from port to power station.

Currently, growth is only seen in the movement of containerised goods from port to market. Even in the current contracting market, DfT research claims that the UK economy sees an estimated £1.6 billion per year in productivity gains for UK businesses, reduced road congestion and environmental benefits created by rail freight. Each tonne of freight transported by rail is suggested to reduce carbon emissions by 76 per cent compared to road, and each freight train removes 43 to 76 lorries from the roads2.

Whilst the railway today is essentially a passenger railway, ORR evidence suggests that freight trains are increasingly reliable with delays now at their lowest level since rail privatisation in the mid-1990s. This again points to non-rail related factors driving success. In reality, a changing set of external drivers such as the economic cycle and emissions targets have significant influence over rail freight traffic levels.

As commercial enterprises, rail freight operators are fully exposed to this wider set of factors. This has led the rail freight strategy to consider that the current track access charging regime is ripe for reconsideration to give operators a fair and known cost base. A question posed by the new strategy is, should wider policy issues (e.g. climate change) require the track access charging regime to give, in effect, positive support for rail freight due to its efficiency and carbon friendly credentials? How this could be built into the access charging process is still to be resolved.

On balance, given the low point at which rail freight use is at in the UK, the DfT prognosis of an industry that can make a positive contribution to wider agendas is correct. The nature of the rail freight business now reflects wider societal requirements with growth in containerised goods and a decline in traditional markets.

The key to future success would appear to be a strong economy, but as highlighted in the DfT strategy, dealing with a range of internal rail industry issues, notably track access charging, will be essential to provide the environment for rail freight to be a cost effective and valid option for freight movement.

1 ORR Freight rail usage statistical release 2016-17 Q1

2 DfT Rail Freight Strategy September 2016