Scotland’s freight fears

Questions are being asked about the future of Scottish freight. 

Transport Scotland says that people and communities rely on rail freight - it is part of their everyday lives, with mail, parcels, goods and consumables all transported on the iron road. 

The industry in Scotland carries goods worth more than £30 billion per annum, ranging from high-end whisky to produce for supermarket shelves. 

In 2013/2014 around 14 million tonnes of freight was transported by five freight operating companies (FOCs) - DB Schenker, Freightliner, GB Railfreight, Direct Rail Services and Colas Rail. This figure is predicted to rise to 26 million tonnes by 2043. 

There is also a £30 million Scottish Strategic Rail Freight Investment Fund that is ring-fenced and governed by the industry. 

But set against this apparent good health, there are also concerns. The coal market is dying. Currently two million tonnes of coal are transported by rail in Scotland each year, but that is predicted to fall to just 500,000 tonnes by 2020. And that prediction was made before the news on November 18 that all coal-fired power stations will close by 2025, with restricted use by 2023 (RAIL 789). 

Data from Scottish Transport Statistics reveals that between 2002 and 2006 the movement of minerals - predominantly coal - accounted for between 75% and 80% of the total rail freight market in Scotland. This market share has fallen to around 50%. 

When the decision regarding the power stations was made, GB Railfreight Managing Director John Smith said that it would place rail freight at an “important crossroads”. 

He adds: “The closure of coal stations raises considerable challenges for the rail freight industry. A reduction in coal has long been anticipated and is clearly important to help the UK meet its carbon targets. 

“However, coal stations are closing sooner than intended due to the impact of the carbon tax regime. Together with the demise of the UK’s steel industry, the rail freight sector is seeing the reduction of bulk commodities that have been the core of our business and allowed us to speculate in other markets.”

Overall, rail freight has been in a dark place in recent months. Figures from the Office of Rail and Road released on November 25 show that freight lifted totalled 21.1 million tonnes during the three-month period from July-September 2015. This is down 18.4% on the corresponding period last year (RAIL 789). There were declines in all but two of the seven main markets, with the amount of coal moved dropping a massive 61.6%. The only areas showing growth were domestic intermodal and construction.

Even so, despite the strong growth in the intermodal market, the decline of coal contributed to a net reduction in the total rail freight market of around 40%. 

These are worrying times, and it is against this backdrop that Transport Scotland issued its Delivering the Goods: Consultation towards Scotland’s Rail Freight Strategy document, which asks the industry to provide its views on the market.

Writing in the foreword, Scottish Minister for Transport and Islands Derek Mackay states: “This is undoubtedly a challenging time for the rail freight industry in Scotland. Its predominant market, coal, is declining rapidly with the closure of Longannet and reductions in flows to power stations in England.”

Longannet Power Station will close on March 31 2016. Its owner ScottishPower announced earlier this year that the closure was likely, and it confirmed the news in August. It blamed the “need to close” on National Grid’s decision not to award the station a contract for grid balancing services.

It also said that a combination of high carbon taxes and high transmissions charging means running a thermal plant north of the Border was uneconomic. At the same time, ScottishPower also confirmed it would be progressing with developments at Cockenzie for the same reasons.

Despite this, Mackay remains upbeat: “I see a positive, sustainable future for Scottish rail freight, where it plays a significant role in Scotland’s economic growth through providing a safer, greener and more efficient way of transporting products and materials.”

Mackay wants to support the market as it looks to grow through new opportunities, while continuing to develop existing markets. 

He adds: “Despite imposed austerity measures by the UK Government, we have a proven track record of investment in our railways with over £5bn committed between 2014-2019, including a £30m Scottish Strategic Rail Freight Investment Fund.”

Page eight of the consultation document states: “Without co-ordinated intervention the rail freight industry in Scotland is likely to severely decline.” It states that this “amplifies the need for other existing markets to grow and new markets to emerge”. 

Key to future success, says Mackay, is creating an environment where the industry has space to innovate and work together for the benefit of customers, where companies are clear on the benefits of using rail and where funders are assured of optimum value for their investment.

He acknowledges that there are a number of barriers, but says these are not insurmountable. However, he warns: “The Scottish Government cannot do this alone, particularly in the current fiscal climate. To make this work, we need firm commitment from the rail freight industry and its customers. Not just in words, but also in positive action and investment.”

The Transport Scotland consultation document claims that a vibrant rail freight sector has a vital role in supporting economic growth in Scotland, by supporting increased exports overseas and the efficient movements of goods across Scotland and the UK. 

Helping businesses of all sizes to grow is also something rail freight can do. TS wants to work with the rail freight industry to particularly focus on small to medium-sized businesses, to grow their existing markets and access new ones. 

The organisation highlights that each freight train can remove up to 76 heavy goods vehicles from the roads (although it doesn’t specify the size of the train). It also highlights that per tonne of cargo, rail freight produces 76% less carbon dioxide than road freight. It also emits less than one-tenth of the nitrogen oxide and fine particulates of road haulage per tonne. 

The Scottish Government believes that a shift from road to rail freight, where this is viable, can help meet European Union targets for modal shift from road to rail of 30% by 2030, and 50% by 2050 for distances of more than 300 kilometres (187 miles).

Scotland can also become an attractive place to invest for companies, according to Transport Scotland. It says rail freight has a proven track record of moving goods efficiently, which helps “create underlying conditions” that attracts businesses. 

The consultation document includes a map of Scotland showing that there are 40 strategic and supplementary freight sites across the country. Most are located in the Central Belt, but there is a spread - for example, there are terminals in Inverness and Aberdeen, and a depot between the two cities in Keith. The furthest south is Auchinleck, which is deemed a strategic freight site.