As we approach the end of the summer, the stress and uncertainty of the year to date and the months ahead continue to play heavily on many people and businesses. Those of us who have managed a summer break have seen plans disrupted and there are further restrictions in areas with local lockdowns. There is still no date for the reopening of remaining businesses and with the end of the furlough scheme approaching there are many facing unemployment and reduced hours.
This uncertainty is taking its toll across business and the railways are far from exempt. The situation in the passenger railway has been well documented in this magazine, although it is good to see ridership starting to increase. The freight sector has its challenges too, with traffic still not back to where it should be and continuing cost pressures for operators and customers.
Yet it is not all bad news, and there are many reasons for optimism too. So here are our five reasons to be cheerful.
TRAFFIC IS COMING BACK
Across the different market sectors, rail freight traffic has picked up as the economy has unlocked and consumer and business demand has started to resume. Today, the number of trains sits at around 87% of normal, allowing of course for the usual seasonal variation. That level of recovery puts rail freight ahead of many economic sectors, albeit that the 13% of revenue drop is still painful for operators to bear. Nonetheless, the sector has done well to get back to this level, and it positions us well to drive for growth.
NEW SERVICES ARE STARTING
Despite the challenges of the last few months, new services are starting across the network. Most recently, GB Railfreight has started a new intermodal service from Southampton into the newly opened East Midlands Gateway, working with Solent Stevedores and Maritime Transport. With intermodal one of the most severely affected sectors during lockdown, this is a particularly welcome development and a sign that there is continued appetite for more rail with customers. There has also been a flurry of new construction services, as well as a round of contract extensions and awards including for Drax Power and Royal Mail.
INNOVATION IS HAPPENING
Lockdown has highlighted the need for businesses to innovate, and it has been good to see real progress. Victa Railfreight has recently led a trial of moving timber by rail in Scotland, using new equipment to try and stimulate a market that has favoured road for many years. Orion held a press launch of its prototype unit for moving consumer goods by high-speed rail, and GB Railfreight also trialled the use of passenger units for this sector. The most recent round of funding from Innovate UK saw a number of projects in the rail freight sector, and a number of RFG members including 3Squared and Fraser Nash are developing new systems to benefit freight operations.
INVESTMENT IN THE RAILWAYS CONTINUES
With the fall away of passenger traffic, there are concerns that sentiment towards railway investment may be waning in Government. Yet on the ground, rail investment is continuing to happen, and development of new schemes accelerated. With the notice to proceed for HS2 given during lockdown, work is already starting to feed through to the supply chain, with new construction services supporting the enabling works, and throughput at existing terminals supplemented by demand for construction aggregates and cement.
Government has also announced a further £589 million for the trans-Pennine route upgrade and committed to an integrated rail plan that will conclude how freight can be accommodated alongside the scheme. This is long overdue. It is good to see real progress towards getting freight included – albeit that the full funding is not yet secured.
DECARBONISATION IS MORE IMPORTANT THAN EVER
Finally, and perhaps most importantly, it is clear that the pressure in business and Government to decarbonise the economy has not gone away, indeed it is arguably receiving more attention than ever. Network Rail has made good progress on the industry strategy for decarbonising the network; technical research on freight is progressing. Operators are pushing to use more electric haulage, with Freightliner taking on further Class 90 locos to supplement its existing fleet. The case for rail electrification has never been stronger, and we are promoting the case for small sections that would unlock more electric haulage today, as well as the longer-term programme.
Most importantly, modal shift to rail today is key to decarbonising freight transport now, ahead of any future innovations in rail or road. For this we need a strong return to sustained growth over the coming months. The good news we are already seeing in the sector gives hope that this will become a reality, delivering more reasons to be cheerful.
An opinion column of the Rail Freight Group, www.rfg.org.uk