Why Rail Freight is the Secret Weapon for UK’s Growth and Net Zero Goals

The freight sector today called on the government to supercharge rail freight growth to help deliver the UK government's national missions in its Plan for Change including kickstarting economic growth, achieving net zero and building new houses.

New analysis commissioned by Rail Partners in[1] 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 has partly been driven by government policy.

To secure rail freight growth, the widening gap between road and rail freight costs must be addressed. 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. Rail Partners and freight operators are calling on 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. A thriving rail freight sector will support growth. Each year the rail freight sector delivers GBP2.45bn in economic benefits to the UK economy, with 90% of these benefits occurring outside of London and the South East.

Freight operators create jobs across the UK, directly employing 6,500 people with many more roles supported in the wider logistics supply chain. Rail freight performs a critical economic and environmental function for Great Britain, transporting millions of tonnes of goods and materials around the country every year. For example, one freight train can carry enough material to build 30 houses, supporting the government's target to build 1.5 million homes. 

Every tonne of freight transported by rail freight produces 76% less CO2 than the equivalent transport by road. Rail freight also helps to reduce road congestion with a single service removing up to 129 HGV movements. A broad consensus among politicians and industry that more goods should be moved by rail has led to successive governments committing to set long term targets to grow rail freight.

As a result, there are now regulated targets to grow freight by 7.5% in England and Wales, and by at least 8.7% in Scotland by 2029. Such targets are set against a backdrop of more stable environments for other modes of transport. For example, while road freight operators face the challenge of rising fuel costs, governments have repeatedly chosen to freeze or reduce fuel duty to mitigate this.

In contrast, there has been a 26% real terms increase in track access charges paid by freight operators since 2015. Many businesses are looking towards rail freight as a low-carbon way to move goods, however affordability is key in a price sensitive, low-margin freight and logistics sector. Rail Partners chief executive, Andy Bagnall, said: 'Rail freight is one of the lowest-carbon forms of land transport, but 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. 

'Freight operating companies want to invest in the UK and work with government to make rail more competitive, to help decarbonise the transport sector and reduce congestion on roads. But rail freight growth will not happen on its own. 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.' 

GB Railfreight chief executive, John Smith OBE, said: 'There is broad consensus on the economic, environmental and societal benefits of rail freight to us all. This report sets out the need for a level playing field between different modes of freight transport to drive growth. 'Government policy decisions, such as the freeze on fuel duty, continue to benefit road freight over rail freight.

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.'  In addition to the legislative consultation on the Rail Reform Bill, Rail Partners has identified a series of measures to support the delivery of rail freight growth. For more information on the policy proposals, A Greener Track is available to download at railpartners.co.uk/GreenerTrack[2]

Image credit: Rail Partners

References

1. ^ Rail Partners in (railpartners.co.uk)
2. ^ railpartners.co.uk/GreenerTrack (railpartners.co.uk)