New rail freight report card for UK

The cost of rail freight has risen over three times faster than road haulage over the last decade. That's put the sector under even greater pressure, despite environmental benefits. The findings come in a report compiled for the industry's Rail Partners.

The lobby group claims to represent more than 99% of the UK industry. The freight sector today (Wednesday 22 January) called on the UK government to "supercharge" rail freight growth. According to the report, rail freight operators are eager to invest in the UK and to help decarbonise supply chains.

The report says a thriving rail freight sector can support the delivery of the UK government's policy, including kickstarting economic growth, achieving net zero and building new houses.

Costs must be addressed

New analysis, commissioned by Rail Partners in its report "A Greener Track", shows that market conditions have become increasingly challenging for rail freight operators. The cost of moving goods by rail has risen over three times faster than by road in the last decade. This, says the report, has partly been driven by government policy.

On the other hand, the road haulage sector may argue that their service has become more affordable, therefore widening the gap between the two modes.

Rail vs Road cost analysis from Rail Partners "A Greener Track" report. Image: (C) Rail Partners

That is acknowledged in the report. "To secure rail freight growth, the widening gap between road and rail freight costs must be addressed," says Rail Partners' synopsis. "The UK government has committed to setting a rail freight growth target, but concrete actions are needed to help rail freight compete with more carbon intensive modes of transport."

Legislation on the horizon

Rail Partners and freight operators are calling on the government to use the upcoming legislative consultation on rail reform, expected later this month, and other policy measures, to create a framework that builds on Labour's Getting Britain Moving document to actively champion rail freight growth. This includes retaining existing legal protections such as long-term access rights and a stable charging regime.

Each year the rail freight sector delivers GBP2.45bn in economic benefits to the UK economy[1], finds the report. Although the previous government's "levelling up" agenda (more equitably balancing economic growth across the UK) has been played down, the report emphasises that 90% of that economic benefit is invested outside of London and the South East. "Freight operators create jobs across the UK, directly employing 6,500 people," it says. "Many more roles [are] supported in the wider logistics supply chain."

Work with government

"Rail freight is one of the lowest-carbon forms of land transport," reiterated Andy Bagnall, Rail Partners chief executive. "With rail costs rising three times faster than road, Britain increasingly risks losing out on the benefits the sector has to offer in terms of growth and supporting government's wider missions."

A dusk picture of a Freightliner class 66 diesel at the head of a train of intermodal containers, about to depart a terminal siding under darkening skiesRail has the environmental edge, upon which it can capitalise, says the report. Image: (C) Freightliner

Bagnall echoed the report findings, that freight operating companies want to invest in the UK and work with the government to make rail more competitive, to help decarbonise the transport sector and reduce congestion on roads. "Rail freight growth will not happen on its own," he said. "Without measures to address the widening cost gap between rail and road, freight customers could be priced out of making the right decision for the environment and the economy."

Rising fuel costs, track access

"A Greener Track" report says there is a broad consensus among politicians and industry that more goods should be moved by rail.

This has led to successive governments committing to set long-term targets to grow rail freight. There are regulated targets to grow freight by 7.5% in England and Wales, and by at least 8.7% in Scotland by 2029.

The needs of rail freight in the UK, according to A Greener Track report from Rail Partners. Image: (C) Rail Partners

However, the report argues that these targets are set against a backdrop of more stable environments for other modes of transport. "While road freight operators face the challenge of rising fuel costs, governments have repeatedly chosen to freeze or reduce fuel duty to mitigate this," says Rail Partners[2] synopsis. "In contrast, there has been a 26% real terms increase in track access charges paid by freight operators since 2015. Affordability is key in a price sensitive, low-margin freight and logistics sector."

Policies make rail more competitive

Commenting on the report, John Smith, the chief executive of GB Railfreight, said there was a bias towards road transport expressed in government policy.

GBRf, as reported earlier by RailFreight.com[3], is investing in cleaner traction, but still faces an uneven task in growing the sector. "This report sets out the need for a level playing field between different modes of freight transport to drive growth," he said. Clouds are gathering over rail investment, as part of a wider review of government infrastructure spending. However, the rail freight sector still has considerable room for growth[4]. "Government policy decisions, such as the freeze on fuel duty, continue to benefit road freight over rail freight," added John Smith. "As rail freight operators, we want to continue to invest in the UK and stand ready to work with government on policies that will make rail more competitive to support growth and the delivery of their missions."

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References

  1. ^ economic benefits to the UK economy (www.railfreight.com)
  2. ^ Rail Partners (www.railpartners.co.uk)
  3. ^ reported earlier by RailFreight.com (www.railfreight.com)
  4. ^ considerable room for growth (www.railfreight.com)
  5. ^ See the offer (www.railfreight.com)