Rail freight’s potential for Scotland

Maggie Simpson OBE: 'Despite route capacity, policy and infrastructure pressures, rail's case is strong if the Scottish economy is to adapt to new markets.'

Scotland is, and has always been an important country for rail freight. Unlike most regions of the UK, Scotland is a net exporter of goods with a trade balance of over £9bn in 2021, the most recent year for which figures are available. Businesses in Scotland therefore need access to efficient and reliable transport routes to get their goods to market, and rail is a major part of this. And it isn’t only export goods, but products which are sold into the rest of the UK too.

Over time of course the products transported by train have changed. Domestically mined coal was replaced with imported coal, and then by no coal at all.  Petrochemicals are also a shadow of the past as are other industrial products.

But construction products and intermodal products have stepped into that space and now provide the backdrop of Scottish rail freight movements. Some of the key flows include intermodal services to and from the English midlands to the central belt and beyond, port services from Teesside, and bulk cement from the production facility at Dunbar.

There are also flows of cement and calcium carbonate slurry through Aberdeen, crushed rock and rail ballast quarried from Lanark, and more recently, bottled water from the newly connected facility at Highland Spring.

While it is not immediately obvious to the viewer, intermodal trains convey a huge range of different products, from supermarket and consumer goods, forestry products and of course, Scotch whisky. These trains operate from many different terminals across Scotland, with a cluster in the central belt including Mossend, Coatbridge and Grangemouth amongst others.

Scope for development

Looking to the future, the potential for rail freight growth is significant. For retailers often warehoused in the English golden triangle, Scotland is a key market and one where they are keen to collaborate to create new services.  The parcel carriers also see Scotland as critical, as witnessed by the Varamis rail service now operating from Birmingham to Mossend.

In both cases, businesses are looking to decarbonise their supply chains and see rail as an obvious alternative to road and in some cases air freight.

Even further ahead, rail can play a key role in new products which will drive the Scottish economy, such as green fuels and green hydrogen which needs to be moved around the country. Rail can also have a role in carbon capture and storage schemes, which may take advantage of underground storage in extinct oil fields.

Scottish markets are distant from the significant supply chain networks based in the English midlands and include more rural areas which will be hard to serve with battery HGVs, at least based on today’s technologies. The opportunity is ripe for a combination of long distance rail, and shorter haul road legs. It could be transformational.

Scottish Government has recognised the opportunity for freight and over the last five or so years has been the ‘poster boy’ for how Government can support growth.  It has set targets for Network Rail for the last and upcoming control periods, and supported new flows with freight facilities grants.

Network investments are approached in a ‘freight friendly’ way by default – a major behavioural change benefit of implementing the freight growth target – where there is a case for doing so, and there have been good examples of collaboration and flexibility to adjust passenger services and network paths. Yet it may not be as easy as it sounds, with a number of challenges along the way to achieving growth. 

Economics of rail vs. road

The Scotland to England market has the advantage of distance, but there is an effective and efficient road market to compete with, often using double deck or longer articulated trailers.

Road costs have fallen significantly in the last year as the cost of living crisis has impacted on freight volumes; this will change as the market recovers, but for now it is a real issue as rail costs have simultaneously risen with track access increases and the cost of electric traction both creating cost pressures.

In addition, some of the rail paths are not as fast as they might be, particularly during the day time, which can lead to poor asset productivity. Several major rail freight users are also the major Anglo-Scottish road freight operators and bring the advantage of having volume to switch, but this goes both ways if the economics for rail aren’t there.

Some customers have therefore been able to benefit from the mode shift revenue support scheme which provides a small grant to help freight services that otherwise would not be able to compete with road.

Risks ahead

The mode shift revenue support scheme is operated jointly by the Department for Transport and Transport Scotland for cross-border flows, but recently we have been advised that the budget for the 2024-2025 financial year has been abolished by Scottish Government, meaning that claimants will only be able to get grant support to the Scottish Border from England.

This not only leaves DfT in a difficult position, it risks the wholescale loss of traffic back to road if the grant is not sufficient to cover the financial gap. This would be a crying shame at a time when the opportunity for growth is so high, and we can only hope that sense will prevail.

There is also the challenge of capacity on the cross border routes, which is not helped by the uncertainty over the post HS2 service pattern. The East Coast Main Line is also constrained and it can be hard to find well timed paths for new services, and there is insufficient power for electric haulage. There are also capacity and capability constraints on routes across Scotland which can hamper efficient and productive services from being established.

Appetite for growth

Yet despite these issues, the case for growing rail freight in Scotland remains strong, as does market interest to explore rail based solutions as companies respond to calls from Government and increasingly their own customers, to decarbonise their supply chains. Indeed essential if the Scottish economy is to adapt to new markets and maintain its strong position.

We look forward to debating these issues, and many more next month at our Annual Scottish Conference, which this year will be held in Grangemouth, including a visit around the port. The conference will give our members, and non-members who wish to attend, an opportunity to learn more about the recent developments in Scottish rail freight, and the challenges that are being faced.

Maggie Simpson OBE is Director General at Rail Freight Group, the representative body for rail freight in the UK

Main image caption: Almost a year to date, owing to a landslide on the West Coast Main Line near Carstairs, several freight services were diverted at short notice over the Glasgow and South Western line between Dumfries and Mauchline in order to reach Mossend in central Scotland. On January 2 2023, 68007 passes through Falkland Yard (Ayr) with the 4Z43 0800 Carlisle to Mossend containers. STUART FOWLER