Rail Freight Group
Over the last three or so years the rail freight sector has struggled to adjust to the signiicant market changes that arose from the near cessation of coal-ired generation in the UK.
An unexpectedly sudden decline in electricity supply industry coal trains undermined the inancial stability of the three main operators, leaving them needing to restructure their businesses and look for growth in other sectors. Equipment and staf resources have been redeployed, and in some cases there have been signiicant losses for the parent companies. This change has also had implications for some leasing companies that were exposed to now redundant coal wagons, and Network Rail, whose track access income dropped.
Yet these challenges have largely been dealt with by the sector, and over the last year there has been every sign that the issues are behind us, with new investments, terminals and services. This is in sharp contrast to the passenger franchise sector, whose own breakdown is now in full force. Sadly, the response to these problems also risks undermining the freight sector, as it seems the answer must now involve structural reform. Keith Williams, appointed by Government as independent chair of the review, will need to try and reconcile a great many diferent views and challenges in his deliberations. On the face of it, many of the issues, such as fares reform and how franchises are protected against macroeconomic factors, do not seem in themselves to justify complete structural reform of the industry. Yet there is a strong political sentiment on both sides that some kind of change is now required to restore the reputation of the industry with its passengers and indeed with Government itself. Most people within and without the industry have some view on what that structure should be. Strong amongst those are a desire for moving back to a vertically integrated railway, more regional devolution, having an arm’s-length body from Government to oversee railway planning and the establishment of a ‘guiding mind’.
There are elements of this which make good sense for freight as well as passenger, but models which bring greater alignment between passenger trains and track, or which increase the commercial elements of infrastructure management, are causing some concerns.
There are several key factors. Firstly, the beneits of the railway are not only measured in cash, but in economic growth, the environment, social inclusion and health. Models such as private sector concessions will be less able to consider these areas, focusing as they will on business returns. How then can freight and regional passenger services prosper and grow? Certainly, a strong incentive framework is needed along with regulatory and legal protection, but unless it has teeth it is unlikely to be suicient to drive behaviour. Freight services also operate on a nationwide basis and need a strong central control of areas such as timetabling, access and charges. A properly independent System Operator is vital but cannot inluence every decision on engineering planning, day-to-day timetabling and short-term changes. How can freight services prosper across the multiple boundaries if a regional model is chosen?
These and many other questions will be occupying the freight sector as the review progresses. Ultimately success will be measured by our ability to grow and thrive in the long term. For any new structure to be a success for rail freight it must therefore:
■ place freight customers at the heart of the industry, alongside passengers;
■ encourage and deliver rail freight growth;
■ maintain a national network for freight;
■ maintain fair and equal access for freight services;
■ ensure freight operator costs do not increase, and that freight services can be delivered eiciently; and
■ enable public and private sector investment for freight.
And to achieve that any new structure must clearly:
■ have an incentive framework embedded which encourages and rewards freight growth;
■ have a strong system operator with authority over timetabling and access;
■ have a national system of freight charges based on current principles;
■ have the right legal, commercial and regulatory levers to deliver freight needs; and
■ have lexibility to meet the changing needs of freight customers.
Keith Williams and his team will need to seek ways that deliver for freight users as well as for passengers if the review is truly to lead to the revolutionary improvement the Secretary of State wishes to see. How the conlicting needs of multiple parties can be aligned will be challenging, and we must hope that freight is not unduly compromised in pursuit of a political solution to the passenger railway.
An opinion column of the Rail Freight Group, www.rfg.org.uk