Royal Mail ending rail services 'undermines' government's commitment to freight, DB Cargo CEO tells ministers

Royal Mail’s decision to scrap rail services “undermines” the government’s commitment to support the growth of rail freight, says DB Cargo Chief Executive Andrea Rossi. 

Rossi wrote to Transport Secretary Louise Haigh and Rail Minister Lord Hendy on July 10, after Royal Mail officially told the freight operator that it would be ending its contract in October (RAIL 1014).

In his private letter to the government (obtained by RAIL under Freedom of Information laws), Rossi said he was “concerned about senior commitment to the growth of our sector”. 

He put the spotlight on the dual role of Keith Williams, who is non-executive chairman of International Distribution Services (IDS), which owns Royal Mail, as well as chairing the Great British Railways Transition Team (GBRTT) board of directors.

He warned that scrapping postal rail services would lead to “job cuts across our sector, in areas where we have invested in training and development, particularly in low socio-economic regions”. 

The letter released to RAIL cited Royal Mail’s decision as a product of the “growing cost gap between rail and road” in freight haulage. Rossi has requested a meeting with Haigh and Hendy to discuss the impact upon freight traffic. 

Royal Mail was privatised in 2013, and ministers have repeatedly cited this as why they cannot intervene to reinstate postal trains.

But in his letter, Rossi spoke of “the leadership congruence between Royal Mail and Great British Railways” - referring to the fact that both Royal Mail’s owner International Distribution Services and the GBRTT.

Rossi defended DB Cargo’s “exemplary service”, but said Royal Mail had been driven away by “rising costs in areas such as EC4T and coupled with low road prices”.

He warned: “The existing 1,800 annual rail freight services will see an increase in 10,000 HGVs on the UK’s already congested road network.”

EC4T refers to the cost of electric current for traction, which Network Rail charges to all rail operators.

In a letter to Haigh, Williams, who said “the decision to end freight mail was an operational management decision, not a Board decision”, cited “the unreliability of freight” as a factor.

He said that the statutory requirement for Royal Mail to deliver 93% of first class post the following day had been undermined by the railway’s “operational issues” and by “the age of our trains, which are 30 years old”.

He added: “Put simply, we need greater reliability if we are to use rail more in the future.”

Drawing attention to Williams’ dual role, Rossi wrote: “It is widely understood that Royal Mail is facing mounting pressure to reduce costs in line with its proposed acquisition by a Czech investor.

“However, given the leadership congruence between Royal Mail and Great British Railways, and indeed the conceptualisation of the UK’s Plan for Rail, I am concerned about senior commitment to the growth of our sector.

“This latest move is a further undermining of our confidence in the true commitment of the UK government to support the growth of our sector and our desire to make significant inward investments into our UK operations.”

Hendy wrote back: “Royal Mail is a private company, not owned or controlled by the government. As such, the mode of transportation the company uses to move its mail is a commercial decision for the business.”

But he also wrote to Williams, stating that while he understood the reasoning for the decision, “moving the transport of mail to road will create more problems on our congested road network”.

Hendy asked Williams to “take an ambitious approach to the wider use of rail freight as part of its commitment to net zero alongside cutting your domestic air freight services”.

In another letter released to RAIL, Campaign for Better Transport Chief Executive Paul Tuohy urged Hendy to “leave nothing off the table” in working to retrieve Royal Mail’s custom.

He suggested unfreezing fuel duty, reducing track access charges, and subsidising electric current for traction.

In response, Hendy said: “Although a disappointment, Royal Mail’s use of their life-expired trains amounts to only six trains out of 600 daily freight trains. We are hoping that reduction will be eclipsed in due course by the growth in new operations for express parcels available to the whole sector.”

A Royal Mail spokesman said Williams “does not take part in commercial decisions which are delegated to the executive.

“The decision taken by Royal Mail to cease operating its own trains, while ensuring the continued use of rail for the transportation of mail where it makes sense, was an operational management decision, not a Board or Chairman decision.

“Mr Williams had no knowledge or involvement in this decision until the CEO of DB Cargo rang him to say that a press release detailing the proposal would be issued the next day. Mr Williams told Mr Rossi at the time he was not aware of the decision and that he would refer anything back to the Executive.”