Peer review: Nick Gallop
Managing Director, Intermodality
I’ve spent a great deal of time with senior management in the rail freight industry over the past 25 years. I’ve sat through some occasionally patronising conversations where it was explained to me that “the future is all about the bulk stuff - coal, aggregates, steel, petrochemicals - and not all that other stuff like intermodal, general merchandise and parcels”. Fast forward to today - intermodal has managed to trump coal as the biggest single part of the rail freight market, just at the point that coal has fallen off the graph.
There has been a tendency since privatisation for the industry to continually ask for a “level playing field with road” (whatever that means), and to react every time Government instigates any policy measure that doesn’t automatically entitle rail freight to have a large chunk of traffic fall (or stay) conveniently in its lap.
We were told that 44-tonne lorries would be the end of the world for rail freight, which proved as wide of the mark as national rail freight targets (80% or 300% growth in ten years, depending on who was speaking at the time) or indeed the promise of the Channel Tunnel. We are now told that unless Government keeps our energy policy focused on coal, and our steelmaking capacity protected against the slings and arrows of the Free Market (the same Free Market that was supposed to free rail freight from narrow-minded state control and public sector mindsets), it will again be the end of the world.
Yes, it may very well be the case that changes to the wider economy (and the rail network itself) are falling out of step with rail freight’s traditional commodities, economics and operations. But in other sectors of the economy, the response to such changes has been (to put it bluntly) adapt or die.
Woolworths didn’t die because it was stitched up by
Government retail policy, it simply didn’t react in time to changing market conditions in the way that Aldi, Lidl and Amazon clearly have. The turnaround of Jaguar Land Rover and Mini is not due to a sudden swing from Government towards making car ownership more affordable and driving more enjoyable (or by pumping in massive amounts of public money in subsidies). Instead, both companies have learned to adopt, adapt and improve.
So, I am concerned at the suggestion that for rail to find new foundations it will require “Government support, investment and long-term certainty”. Governments never have and never will provide any of these to the rail industry for any more than a few years at a time. Beeching, Serpell, McNulty, Hendy, Bowe and Shaw highlight Government’s regular cycles of frustration and tinkering.
Frankly I’m amazed at the level of support the post-privatised railway has been given by successive administrations (of red, blue and mixed parentage). Unless the industry, including Network Rail and its supply base, can do something about cost control, Government’s patience and funding won’t be sustained. The early termination of BR’s Modernisation Plan in the 1950s is a warning from history, one from which it took the best part of 40 years for Government confidence (and investment) in rail to recover.
If the economy continues to grow, along with population and supporting infrastructure (housing, sewers, airports, railways and, yes, highways), then construction materials should still fall nicely into rail’s lap. Assuming we continue to offshore manufacturing, the ports and (eventually) the Channel Tunnel should also continue to deliver more and more intermodal traffic to the railways. The current shortage of lorry drivers, the surfeit of road congestion and the spectre of tighter vehicle emissions limits (level playing field?) should help bring more business to rail, without requiring much effort or initiative to go and find it. So the current maxim for rail freight - out of the rock or over the dock - should still allow the trainload-heavy haul economic structure to exist.
Hindsight is always 20:20, but given how much notice there’s been that coal is on the way out, where’s the industry plan for mass conversion of coal wagons for other traffic? Where’s the innovation that could turn a fleet of coal wagons into aggregates hoppers, intermodal flats, or 4x4 carriers? Where’s the marketing push into opening up new markets - such as the 155 million tonnes of food, general merchandise and parcels traffic that currently moves more than 150km (93 miles) by road?
Talking of “parcels”, there are 26 million tonnes moving around Britain by road, of which nine million move more than 150km. The market is worth over £8 billion per annum, which suggests a headline rate of £300 per tonne. Even if the true value is significantly less, surely this is at least worth a second look?
No one is suggesting that the economics of trainload coal or container traffic could be applied here. But as with GBRf’s previous role with the Royal Mail, Colas and DB (and us) have put a toe in the water, such that customers are coming forward now that they know what no one told them they could have – a perennial failing for the rail industry, which perhaps reflects the focus (some might say complacency) on “dependable” sources of traffic.
For sure, this part of the market will never plug the coal hole (pun intended, sorry), but it could provide a more profitable alternative source of traffic, in a market where suitable trains can belt along at up to 125mph to within a mile or two of most city centres, while lorries trundle along at less than half this speed on the motorway, and a quarter of this speed inside city limits. Freight trains that can perform as well on the network as passenger trains should then get a greater choice of paths.
Intercity Railfreight (with which I now have a part-time proper job) has secured a parcel-load business with East Midlands Trains, which will be expanded onto another TOC network from the end of this month. Having proved the parcel-load/TOC business can work even at low volumes, work is now in hand to expand this to an intermediate model and on towards dedicated trainload services, using a large amount of “windfall” rolling stock that will be displaced by the Hitachi IEPs. One of the big property developers has now made space for an “express freight interchange” within their proposals for a major new distribution park, complementing the proposed on-site intermodal facilities.
I’ve always admired the work that GBRf has done, coming into existence without the momentum given to the ex-BR companies at privatisation. Since then, GBRf has proved to be a valuable presence in challenging the larger incumbents, through innovative measures such as giving drivers a greater range of skills and technology, repositioning them as frontline ambassadors for rail freight at the sharp end. It would be great to see that pioneering spirit of innovation continue in cracking open new markets and/or revisiting old ones, even if this will require short-term pain and adjustment as core markets decline and traditional business models are increasingly challenged.
If the rail freight industry is to offer more than a “we woz robbed” epitaph as its historically “dependable” sources of traffic dry up, a new era of enlightenment is required from the industry, as much as Government keeping the faith with policy and funding support. This is not the time for sentimentality or blaming government policy while simultaneously looking for it to prop up indefensible markets in coal and steel.
