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Response to the rail freight section of the RAC Foundation report: 'Motoring towards 2050'9th May 2003 The rail freight element in the RAC ‘Motoring towards 2050’ report has been appraised by Freight on Rail members and found to be frequently factually inaccurate. It appears to be based on outdated prejudices rather than a proper analysis of the relevant statistics. The report also demonstrates a poor knowledge of today’s rail freight industry. Rail freight has been one of the transport sector's success stories of recent years and the RAC Foundation's rehashing of various misleading myths about rail freight cannot be allowed to go unchallenged. This leads the report to a series of conclusions which are mostly unjustified and sometimes contradictory. We summarise the main conclusions of the report and Freight on Rail’s response below, followed by a detailed analysis of the rail freight element of the RAC report. (Please
note that statements taken directly from the RAC report are initalics) Executive Summary of Freight on Rail’s response to the rail freight section of the RAC report ‘Motoring towards 2050’ Two
thirds of existing rail freight is bulk commodities like coal,
metals, construction, oil and petrol which have been in decline
over the 1990s. Construction traffic has experienced a 45 per cent increase in volumes lifted since 1997. Coal traffic fluctuated in the 1990s but there is no overall pattern of decline with the 41 per cent increase on billion tonne-kilometres carried for the year 2001/2 against an average figure carried for the 1990s. Metals traffic did decline slightly during the nineties but has now regained its 1991/2 figure. Coal, a quarter of all tonne kilometres, will decline further, although the SRA's plans show growth from bulk traffic. However much bulk traffic is trainloads over short distances, often not sharing track with passenger trains and not up against capacity constraints. Coal traffic figures for 2001/2 show that coal carried has increased by 41 per cent compared to average figures for the 1990s. Much bulk traffic is trainload but is not over short distances. The average journey length for EWS freight trains is now 102 miles with its average bulk traffic journey now 79 miles. The vast majority of freight trains do share track with passenger trains and are therefore up against capacity constraints of varying degrees of severity. The report contradicts itself by stating here that freight trains often do not share track with passenger trains and are not up against capacity constraints. Yet again shortly afterwards the report incorrectly states that increases in freight traffic disproportionately reduce the capacity for carrying passengers. The planned increase is concentrated on construction and general freight traffic, but rail is really only competitive over long distances ideally from siding to siding. General traffic does not meet these criteria and the benefits of rail are rapidly eroded by journeys to and from rail depots. The
argument that rail is only competitive over long distances is
one of the most commonly propagated myths about rail freight.
Break-even distances are market specific. Traffic like aggregates
and waste can be profitable over distances as short as 19 miles
shown by the following examples:- We also note that the assertion that rail is only competitive over long distances is flatly contradicted in the report's earlier conclusion that much bulk traffic is 'trainloads over short distances.' Rail freight is already competing successfully in non-bulk cargoes including premium parcels, first class mail, high value car components and food stuffs. Figures for 2001/2, where the railways carried 3.5 billion net tonne kilometres of domestic intermodal freight, prove that the benefits of rail are not eroded by journeys to and from rail depots. Both the existing and potential rail freight distribution centres are private-sector enterprises which could not exist if rail was unable to provide a competitive service. The cost of carrying freight by rail is high and will become higher. Railtrack has argued that rail freight does not meet the marginal costs of carrying freight by rail. Freight trains are often particularly heavy and impose severe wear and tear costs. Nevertheless rail access charges have been reduced to short run marginal costs yet the Freight Transport Association maintains that rail freight is too expensive for it to increase its market share significantly. If the cost of carrying freight by rail was so high as to be uncompetitive then rail freight wouldn't have expanded its market share (compared with road) from 8.5% in 1994 to 11.5% in 2001.12 Nor would rail freight have attracted more than £1 billion of private investment in locomotives, wagons and facilities since 1995.13 Rail freight does meet its marginal costs as the Rail Regulator’s review of track access charges means that access charges do cover marginal infrastructure costs, which has been accepted by Network Rail. The Regulator's new regime for track access charges ensures that charges levied on freight trains do reflect their weight and impacts on the infrastructure. Increases in freight traffic disproportionately reduce the capacity for carrying passengers. Freight trains are usually slower than passenger trains and often cross over passenger routes to a great extent, thus reducing the system's ability to carry passenger traffic. Since freight traffic by rail has less effect on road congestion than switching passenger traffic, there is a strong social, congestion and environmental case for increasing the effective carrying capacity of the railways to carry passengers by replacing freight trains by passenger trains on most routes. The typical freight train matches the speed of semi-fast passenger trains and thus takes a similar amount of capacity. A freight train utilises less capacity than either a typical stopping passenger train or high speed passenger train. Independent research for EWS into the net social, environmental and economic benefit of different types of train shows that freight trains always deliver a positive benefit. Although peak passenger trains give a higher value, off-peak passenger trains deliver a negative benefit. This is because off-peak passenger trains are less well-used than trains that run at peak times and do not relieve congestion on the roads.17 Replacing freight trains with passenger trains would have enormous negative social, environmental and congestion impacts. For example more than 250,000 containers are carried by rail to and from the Port of Felixstowe by rail every year - this equates to 1,000 lorries a day removed from the congested A14.18 The reduction of road congestion likely to be achieved by shifting freight to rail is small and will be achieved much less cost-effectively. The average subsidy cost of saving a vehicle hour of road congestion is £25 a year, compared with £11 for passenger rail, and £5 for direct investment in road improvement (source: DETR 10 Year Plan, Background Analysis). Although it is true that rail freight is unlikely to make much impact in reducing light van traffic (which makes up the majority of road freight trips) it can make significant in-roads into long-distance HGV trips. Only 10% of HGV trips are more than 150 kilometres yet they account for nearly 50% of total lorry mileage and half total tonne kilometres.19 It is these HGVs trips which most affect the trunk road network and contribute towards traffic congestion. Apart from reducing road congestion the case for subsidising freight largely depends on the adverse environmental impacts of HGVs by comparison with rail. If this were to change as trucks become more fuel efficient and cleaner, the case for rail freight subsidy would be much reduced Rail freight currently enjoys considerable environmental and social advantages over road haulage. The International Railway Union conclude that rail freight’s external costs (ie excluding congestion) are eight time less per tonne kilometre than air freight and four times less than road.32 The shipping industry is moving towards 9'6" containers as standard, which cannot be carried efficiently by rail under the existing load gauge. The investment to modify bridges and tunnels, particularly for rail lines to ports, to enable these containers to be carried is significant but is generally viewed as a worthwhile investment. More and more freight is of a low density requiring large vehicles to be carried efficiently and the industry would ideally like the rail loading gauge to allow 3m high pallets to be carried, which would require an even larger gauge than for 3.1 metre containers. As with other forms of transport, rail has some constraints in the size of the loads it can carry. However, the rail freight industry, through innovation and judicious investment, is constantly opening up more of the network to larger loads. Overall the prospect for significant switch from road freight to rail is therefore unlikely and rail should focus on moving bulk products where it has a significant advantage. Rail freight has grown by 50% (in tonne-kilometres) since 1994 – the new traffic alone is equivalent to over 300 million lorry miles removed from the roads every year.34 The RAC's pessimistic conclusions cannot be justified as:
Detailed response to RAC Report ‘Motoring towards 2050’1.
Two thirds of existing rail freight is bulk commodities like coal,
metals, construction, oil and petrol which have been in decline
over the 1990s. This is largely due to changes in the way the oil industry operates
in the UK - with the big oil companies now pooling refinery outputs
to reduce transport costs. Coal traffic has not been declining (see above) - and is not expected to decline significantly in the short to medium term. Much bulk traffic is trainload but is not over short distances. The average journey length for EWS freight trains is now over 100 miles (102 miles in 2002 compared with 95 miles in 2000). This includes lengthening journeys for bulk traffic, including metals traffic (average journey length increased from 60 miles in 2000, to 79 miles in 2002) and coal traffic (average journey length increased from 92 miles in 2000, to 106 miles in 2002).6 The
vast majority of freight trains do share track with passenger
trains and are subject to similar capacity constraints of varying
degrees of severity. The report contradicts itself by stating
that freight trains often do not share track with passenger trains
and are not up against capacity constraints. Yet later, the report
incorrectly states that increases in freight traffic disproportionately
reduce the capacity for carrying passengers and that freight trains
are usually slower than passenger trains. This theme is developed
further in section 5 below5. 3. The planned increase is concentrated on construction and general freight traffic, but rail is really only competitive over long distances ideally from siding to siding. General traffic does not meet these criteria and the benefits of rail are rapidly eroded by journeys to and from rail depots. Rail competitive only over long distances? The argument that rail is only competitive over long distances is one of the most commonly propagated myths about rail freight. In reality break-even distances are market-specific. Traffic like aggregates and waste can be profitable over distances as short as 19 miles, and there are many examples across the network of short, viable freight journeys including containers between Felixstowe and Tilbury, aggregates from Greenwich to Kings Cross and waste removal from Cricklewood to Bedfordshire7 and from Edinburgh to Dunbar. We also note that the assertion that rail is only competitive over long distances is flatly contradicted in the report's earlier conclusion that much bulk traffic is 'trainloads over short distances.' Rail cannot compete effectively for general traffic? Rail freight is already competing successfully in non-bulk cargoes including premium parcels, first class mail, high value car components and food stuffs. Rail is often the preferred mode where fragile prestige goods such as cars need to be delivered in perfect condition. For example:
As road congestion grows the greater reliability and speed of rail freight will enable rail to compete for more non-bulk traffic. This is one reason why demand modelling for the SRA suggests growth in non-bulk traffic of between 6.5 billion (base case) and 26.6 billion (best case) tonne-kilometres by 2010.8 The benefits of rail are eroded by journeys to and from rail depots? In 2001/2 the railways carried 3.5 billion net tonne kilometres of domestic intermodal freight. This makes it the biggest single market sector after coal and greater than any of the bulk oil/petrol, construction or metalssectors.9 Freightliner Ltd carries more than 600,000 containers a year which are collected from, or delivered to, its inland terminals. Detailed assessment of the environmental benefits gained from the rail trunk haul shows that these advantages considerably outweigh the disadvantages of the collection and delivery movements by road.10 Further growth can be expected as more freight shippers take advantage of rail's ability to provide a fast and reliable long-haul service to regional distribution centres - where goods can then be delivered to their final destination by road. Evidence for this can be found in the growing number of successful rail freight distribution centres, as well as a wave of proposals for future similar developments. Both the existing and potential rail freight distribution centres are private enterprises which could not exist if rail was not providing a competitive service. For example, the Potter Group now has three rail freight terminals (East Anglia, the North East and the North West) handling products as diverse as paper, timber, food, coal and hazardous chemicals. As one of the largest independent terminal operators in the UK, it competes in a market dominated by service levels and cost, and combines intermodal handling and conventional wagon transhipment with shared-user warehousing, stock management and distribution. It currently takes the equivalent off around 100 lorry loads of the roads per day and has ambitions to raise this to 350.11 Where appropriate rail freight providers are also finding new ways to reduce terminal costs to win new traffic.
New technologies and innovations could also boost rail's ability to compete for general traffic. Projects currently being trialled include:
These
systems create all sorts of new opportunities - for example opening
up the potential for freight to be brought into the heart of major
cities by delivering freight to major stations at night. 4.
The cost of carrying freight by rail is high and will become higher.
Railtrack has argued that rail freight does not meet the marginal
costs of carrying freight by rail. Freight trains are often particularly
heavy and impose severe wear and tear costs. Nevertheless rail
access charges have been reduced to short run marginal costs yet
the Freight Transport Association maintains that rail freight
is too expensive for it to increase its market share significantly. Rail freight currently enjoys considerable environmental advantages over road haulage. Technological improvements will slowly improve the environmental performance of lorries, but rail freight's environmental performance is also improving, and overall rail will still be significantly 'greener' than road for the foreseeable future. C02
emissions Although other emissions may fall lorry CO2 performance is unlikely to improve significantly. Other
emissions
Noise
and vibration And
rail freight's performance goes on improving
Not just an environmental case The case for moving freight from road to rail does not rely solely on the adverse environmental impacts of HGVs. Rail is 27 times safer than road.27 Although accounting for only 6% of vehicle kilometres travelled, lorries are responsible for 18% of road deaths. In 1999 HGVs caused 617 out of 3423 fatalities.28 Lorries also cause significant damage to the roads. In 1998/9 central and local government spent £2.1 billion on maintaining the road network, of which local authorities spent £1.6 billion.29 Lorries are almost entirely responsible for road wear and tear. A 40 tonne, 5 axle lorry causes tens of thousands of times more damage than an average car.30 The high environmental, safety, congestion and road maintenance costs of lorries has led most independent assessments to conclude that lorries impose a net cost on society. For example Oxford Economics Research Associates calculate that heavy goods vehicles only pay for around 59% to 69% of the full (including the social and environmental) costs they impose upon society.31 These costs include greenhouse gas emissions, air pollution, noise, congestion, accidents and deaths. The
International Railway Union conclude that rail freight’s
external costs (ie excluding congestion) are eight time less per
tonne kilometre than air freight and four times less than road.32 8. The shipping industry is moving towards 9'6" containers as standard, which cannot be carried efficiently by rail under the existing load gauge. The investment to modify bridges and tunnels, particularly for rail lines to ports, to enable these containers to be carried is significant but is generally viewed as a worthwhile investment. More and more freight is of a low density requiring large vehicles to be carried efficiently and the industry would ideally like the rail loading gauge to allow 3m high pallets to be carried, which would require an even larger gauge than for 3.1 metre containers. As with other forms of transport - rail has some constraints in the size of the loads it can carry. However, the rail freight industry, through innovation and judicious investment, is constantly opening up more of the network to larger loads. Standard international maritime containers are 9'6" high and 2.5 metre wide - which equates to W10 loading gauge on Britain's railways. Key corridors like the West Coast Main Line are already W10 gauge (the upgrade to W10 costing just £2 million). There is also a growing market for 9'6" high, 2.6 metre wide 'swap-bodies'. The extra width requires a W12 loading gauge and SRA's freight strategy envisages upgrading key corridors to W12 gauge. EWS estimate that such a network could be established for around £250 million - roughly equivalent to the cost of five major road junction upgrades. However,
special low floor wagons already allow both variants on the 9'6"
container to be carried on the majority of the network and these
wagons are already in wide spread use. In the meantime the industry is finding ways of incrementally improving loading gauges at marginal cost.
Wagons
capable of carrying 3-metre high pallets are already in use on
Britain's railways. These 'hi-cube' wagons use an in-built floor
lift to lower the pallets into position. As well as carrying car
components for MG Rover, these wagons will soon be in use between
the rail freight distribution centres at Daventry and Grangemouth. 9. Overall the prospect for significant switch from road freight to rail is therefore unlikely and rail should focus on moving bulk products where it has a significant advantage. Rail
freight has grown by 50% (in tonne-kilometres) since 1994 –
the new traffic alone is equivalent to over 300 million lorry
miles removed from the roads every year.34 Rail's prospects in both the bulk and non-bulk markets are good with the SRA forecasting growth of between 6.5 billion (base case) and 26.6 billion (best case) tonne-kilometres by 2010 for non-bulk products.36 The RAC's pessimistic conclusions cannot be justified as:
In
conclusion, we are disappointed that the RAC, which has a reputation
for service to its members, has published a report which does
the disservice of spreading incorrect information about the important
and positive role that rail already performs in reducing road
congestion and environmental pollution. 1.
'National Rail Trends', Strategic Rail Authority, December 2002
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