The Strategy overlooks one impact of the low margins common to freight transport: the inability to fund market development. FOCs respond to tenders, but cannot employ logistics experts to discuss the requirements of each sector over the next decade and find ways to enlarge the role for rail. Says Smith: “You have to have core traffics to generate profits to speculate in developing new traffics.”
Contradictory policies
It is known that new roads generate additional traffic, so it cannot be logical for the Government to have a £15bn road construction programme (by 2020) while citing climate change mitigation and pollution reduction as priorities.
Looking purely at investment in measures that can bring about the desired modal change, while also lowering costs, the disparity between road and rail freight is stark. Over CP5, the sum available for the Strategic Freight Network Fund has fallen from £253m to £235.9m.
To put this in perspective, £3bn is being lavished on a single road - dualling the remaining two-way parts of the A9 in Scotland. This can do nothing but harm to rail’s competitiveness, and flies in the face of stated policy. The Hendy Review acknowledged the very high value for money that rail freight schemes deliver, giving an average benefit:cost ratio of between 4 and 5:1.
The 2015 EU study Freight on Road: Why EU shippers prefer truck to train concluded that the principal reason for the failure of EU measures to effect modal change was “the generally small scale of the investment in rail and intermodal transport relative to investment in roads, and to a lack of co-ordination of rail freight policy initiatives at the EU and national levels… co-ordination of rail and road policies is also needed as any measures affecting the competitive position of one mode have repercussions on the other.”
Leading climate economist Sir Nicholas Stern says the crucial issue is the nature of our investment in infrastructure: “If it is dirty and high carbon, it will lock us into that technology for a long time. We will be sentenced to live in cities where we cannot breathe or move or be productive… the next 20 years are going to be the most decisive two decades in human history.”
The policy mismatch is much the same when it comes to costs. The Office of Rail and Road is sending out signals that can only damage the prospects for an expansion of rail freight.
“The rail regulator’s interventions on track access charges have not helped and the last Periodic Review did tremendous damage, not just to existing flows,” says MacRae.
“It sent jitters round rail shippers or potential shippers thinking of using rail freight, who came away with the message ‘this is risky, let’s keep away from it’. The FTA has repeated to the DfT and Transport Scotland the negative impact of this.”
Rumours of further increases in the track access charges set by ORR exacerbate the position. But as Edmunds observes: “The guidance to ORR also notes that the Secretary of State wishes to be advised by ORR of, and to discuss with ORR, any changes to the charges which ORR proposes to pursue which would adversely affect the competitiveness of rail freight compared with other modes.”
This would matter less if road haulage met its full costs, but research by the Campaign for Better Transport (using DfT values) found that HGVs pay less than a third of their costs - such as road congestion, collisions, road damage and pollution - which equate to an annual subsidy of around £6.5bn.
These conclusions are in line with an MDS Transmodal study in 2007, which found a very similar amount of underpayment, of £6bn (Addendum to Metropolitan Transport Research Unit MTRU 2014 report February 2015. Heavy Goods Vehicles - do they pay for the damage they cause? 2014).
Given the ability of rail freight to reduce emissions on a significant scale (23 million lorry miles a year by rail movements to and from DIRFT alone), it is high time the investment ratio swung firmly in favour of more sustainable transport.
