How can freight be a major part of rail’s future?

Great British Railways will need to focus on nationalised passenger services - freight could lose out. Heads of the two largest companies talk to Paul Clifton.

In this article:

• Freight operators welcome the Railways Bill and Great British Railways but express concerns about access and funding challenges.
• Both Freightliner and GB Railfreight stress the need for clear freight representation in the new regulatory structure.
• They advocate for bi-mode locomotives over electrification, citing costs and competition with cheaper road transport as key issues.

“A Railways Bill. At last! That is my overwhelming response,” enthuses Tim Shoveller, managing director of Freightliner.

“The journey is starting. Relief, some excitement, and more than a little bit of trepidation.”

John Smith, his equivalent at GB Railfreight, points out: “What we pay is but a pimple on the backside of Network Rail’s overall costs. We are a minority player. My fears are about perverse outcomes.”

They’re in a tricky situation. Freight operators are in the private sector and receive no subsidy. They welcome the new enthusiasm in government for rail, and they welcome the establishment of Great British Railways.

But GBR will encompass both infrastructure and passenger operations, as most gradually come under full public sector control. How will freight fit in?

The larger Freightliner has a fleet of ageing diesel locomotives. It needs to invest if it is to fight off strengthening competition from road haulage.

But without long-term guarantees about access charges and train paths, banks won’t offer their money.

The smaller GB Railfreight has taken a punt on the future and ordered a fleet of 30 new bi-mode Stadler locomotives that cost dramatically more than its near life-expired old ones. It knows customers won’t pay more for the same service, so the higher leasing costs will have to be covered by winning more work.

They are asking for help. Help to secure access to the network, and help to change the way freight pays its way, so they can balance the books.

Both largely dismiss the calls for infill electrification schemes to enable all-electric services across more of the network (see RailReview’s electrification analysis and interview with Julian Worth on pages 56-59, RAIL 1020).

Rather than more wires, they think greater growth is more reliably sparked by making bi-mode diesel and electric locomotives more affordable in the decades ahead.

Both also point out that while road fuel duty has been frozen for 12 years, making lorries cheaper to run in real terms, freight charges to access the rail network have risen in line with inflation.

Freightliner and GB Railfreight are very different beasts operating in the same market. We will hear from each in turn.

Tim Shoveller, Freightliner

“The real hook for me is the establishment of GBR,” Shoveller asserts.

“I am very clear: I am a big supporter. The industry needs leadership and GBR is the best way to achieve that.

“Franchising has been fading for many years. The model for the way the railway runs has clearly been in huge distress. The government has moved fast - and is clearly serious about it. That will all play very nicely to a section of the Labour Party.

“That’s all good. The job is breathtaking in its size and scale. It would be really easy, among the huge decisions they have to make, to forget freight and accidentally do something which causes a problem.

“It’s really important that freight has a clear and distinct voice. But who is talking about freight?”

Shoveller points out that Rail Minister Lord Peter Hendy will focus on establishing a new structure.

Network Rail Chief Executive Andrew Haines will focus on reorganising the infrastructure.

Alex Hynes, director general of the rail services group within the Department for Transport, does not have responsibility for freight.

“I don’t want freight to be seen as a block to passenger rail being successful. We need a very strong, independent regulator.

“We need it because this is private sector capital at risk. The only way I can possibly invest in new terminals and locomotives is by having strong track access rights. Without that, no one would lend me the money. I would have no guarantee that I could use those assets.

“The huge benefits of rail freight can only happen if the economic structure works well. That must not be missed.”

Hang on. There will be a statutory duty on GBR to promote rail freight. The previous government aimed at steady long-term growth, and the new administration has done nothing to contradict that.

“I’m grateful for that. But does promoting rail mean you print a leaflet and run an advertising campaign? Or does it mean actually making sure more freight travels by rail?

“The amount of freight on rail has been falling slightly for years, whereas the amount of traffic on the road has been increasing alarmingly.

“That is because road is cheaper. Decarbonisation is expected to be a required output from all government departments. And there is an ageing Class 66 diesel locomotive named after the man who is now Rail Minister - full credit to John Smith for that one!”

The East Coast Main Line is a big bottleneck that needs easing. Major investment in infrastructure has been unable to deliver promised benefits. A new timetable to bring more and faster passenger journeys has been repeatedly postponed. And the need to fit in slow, old freight trains has frequently been blamed.

“There is clearly a problem of capacity,” Shoveller explains.

“LNER needs to run more trains to meet demand, and it wants to run them faster. That would raise more passenger revenue. Good!

“The reason the December 2024 timetable is not going ahead is that the way it was put together is incompatible with some freight needs.

“That is a really bad place to end up - where the passenger railway is being compromised, and neither the passenger railway nor the freight railway are getting what they need.

“It’s a lose-lose situation. It can be turned into a win-win. We should be encouraging and supporting expensive bi-mode freight locomotives, especially where capacity is constrained.

“You have to get freight moving fast. What you don’t want is a worn-out Class 66 with 2,000 tonnes behind it - that will take forever to get to 60mph. That’s the incompatibility with Azumas running around at 125mph.

“But a bi-mode freight locomotive can accelerate like rocking horse whatsit and get out of the way. That’s how we all win. That is only affordable if there is a guarantee of access.”

What about short-distance in-fill electrification? The diesel-only gaps in the network that prevent existing electric trains getting out of London Gateway, Felixstowe and Southampton to reach the East and West Coast Main Lines.

“Rather than spending £100 million of public capital on infill wiring, why wouldn’t GBR help freight companies to upgrade to bi-mode locomotives? That solves the problem!” Shoveller replies.

That’s not easy when freight trains are privately owned and privately operated. You can’t just bung them some public money.

Shoveller has an answer: “I would use track access fees to provide support. The paths on East and West Coast are more valuable than paths elsewhere. So, if you want freight off the cheaper roads, run it faster and reduce the track access fees for that, or give a track access credit if you run the train in a manner that increases cost but releases capacity.”

But rivals GB Railfreight have ordered 30 new bi-mode trains anyway. They arrive next May and will enter service the following autumn.

“They are £6m each. Full credit for doing it. John can drop out some of his legacy British Rail locomotives that are really expensive to run. I don’t have any to get rid of. But we both face the same issue - the incompatibility of a slow-moving Class 66 is an increasing problem on a growing passenger railway.”

Will this message land sympathetically with a new administration that has made a lack of cash for the railway abundantly clear?

“I hope so. It is in passengers’ interests for freight to run faster, without adding more cost to freight.

“The difference now is Lord Peter Hendy as Minister of State. You do not lightly say ‘no’ to him! He’s a bit of a godfather of rail.

“Rail Minister, in itself, isn’t a particularly powerful position in government. But with Peter in that role, it could be transformational. He has all the levers, because he has the relationship with Andrew [Haines, Network Rail chief executive], Bernadette [Dame Bernadette Kelly, permanent secretary at the Department for Transport] and Alex Hynes. And he has incredible ability to persuade people.

“There is every reason for optimism. But when I ran my alliance between South West Trains and Network Rail there were enormous difficulties. The demands were too great.

“It took Sir Robert Reid ten years, from the mid-1980s, to transform British Rail from a regional production-oriented business to one that was market-savvy. He started with a unified business. Peter’s starting with a disunited business. The challenge is greater.”

John Smith, GB Railfreight

“The King’s Speech reiterated the need for growth in rail freight. Hopefully the legislation will reflect that,” says John Smith, GB Railfreight’s forthright and long-serving chief executive.

“And that’s positive. They can adjust things to accommodate growth with very little impact on overall funding, but making a massive benefit to our ability to compete against road - especially in the deep-sea market. Road is getting cheaper. We are getting more expensive.

“I think that is getting recognised. The Office of Rail and Road is involved in setting charges, so there are mechanics to work through.”

Smith makes a similar point to Tim Shoveller about East Coast timetabling. But he goes further.

“It is unresolved. The infrastructure to support freight trains, such as four tracks north of Huntingdon, didn’t happen. Those extra loops support 75mph trains being passed by 125mph passenger trains. Without those added bits, the easiest solution is to prevent freight access. That’s not on - and we are protected under the current legislation.

“My fears are about how that pans out. With train operators subsumed within GBR, the interfaces and access agreements will change.

“It’s time for a review after 30 years, but there will be tensions - and we are a minority player.

“Someone has got to finish HS2. Even if it is just the bypass around Stafford to Crewe, Phase 2a. Even if the spec is reduced to 150mph and ballast is used instead of slab track to cut costs. Otherwise, the whole business case is undermined and freight will be as much affected as anyone else. It doesn’t work. There won’t be any more capacity. They’ll end up with eight platforms at Curzon Street serving two trains an hour. Which would be bizarre!”

With his new bi-mode locomotives on the way, Smith is equally uninspired by calls for filling in the gaps between electrified routes. Although the new locomotives will not be without their challenges.

“The diesel is designed for the tractive effort at lower speeds. Six axles will put the power down to shift 2,500 tonnes. But the power wanes a bit when it gets above 50mph. Many of the gaps the diesel power has to bridge rarely get above 50 anyway. Felixstowe to Ipswich, for example - it will be two minutes slower than a Class 66.

“Put the pantograph up, and it’s 20 minutes quicker to Stratford on a clear railway. A completely new ballpark. The ability to accelerate will change the way they integrate with stopping services on the Slow line out of Euston.

“This is about longer, heavier trains accelerating quicker, getting better utilisation out of the asset and reducing train crew hours. That is how we get our money back.

“Purely on diesel on the WCML they’re going to be slower than a Class 66, but that’s not what they were bought for.

“On electric power, these are 8,000 horsepower! The lights will dim in Morpeth and Lockerbie as they pass. We would like money to be spent on better power supplies rather than new ones.”

GBRf took a risk on the new order because it looked at the government’s record of committing to railway spending and then having a change of heart. It decided it could not rely on small electrification projects ever happening.

Despite the high cost of bi-mode, it could not risk going all-electric to replace trains that cannot keep going for many more years.

“If we don’t decarbonise, we have no future,” says Smith.

“The R&D [research and development]that is going into road lorries is massive. They will catch up on emissions if we are not very careful.

“We can put HVO [hydrotreated vegetable oil] in the new locomotives and electrify wherever we can. Some of the high carbon-emitting customers will buy it, because they want to be seen as green. But most customers are very price-sensitive, and they won’t pay a penny more than they have to. They will go to road.

“Freight locomotives are 40-year assets. Steam to diesel happened in the 1960s. The next step-change came at privatisation with the Class 66s. Now it’s time to go again.

“We need a regime that makes it possible. If battery lorries start to undermine that, we are in trouble and have a bleak future.”