Opinion: Royal Mail's decision was a setback but rail freight can grow

Guest columnist Maggie Simpson OBE, Director General of the Rail Freight Group, says its essential for private sector to invest in rail freight.

I’ve worked in rail freight for almost a quarter of a century, and have seen customers come and go.

The shifting economic tides mean that commodities that once moved at scale no longer exist (think power station coal), while others have grown both in importance and volume (think intermodal). The freight network is a supplier to industry and commerce, and we must take our fortunes alongside those of our customers.

Take the steel industry. Rail has supported steel production from the very beginning, moving raw materials such as coal and ore, and later finished and part-finished materials.

Today, that industry is changing. Blast furnaces are set to close, replaced by electric arc production.

This means that rail freight has to change too, and the industry is working hard to accommodate both the interim stages where more slab will need to be imported, and the future where scrap metal will need to be conveyed at scale into new facilities. That collaboration is vital to the future success of both sectors.

In that context, the decision by Royal Mail to end rail operations is particularly disappointing - not least because it bucks the trend.

Parcels and time-sensitive goods are an economic sector where we see high potential demand for rail. Varamis Rail’s operations are going from strength to strength, and several other operators are also looking with interest.

The reasons behind Royal Mail’s decision are no doubt complex, perhaps linked to its own impending sale, and we can only hope it will take a new look at rail and seek to rebuild its reputation.

In the meantime, colleagues are working hard to make sure that access to its many terminal locations remains available for use by others, while it remains to be seen whether any party will take an interest in the Class 325s.

Since the announcement of the decision, many parties have been calling on government to do something to reverse it.

This is a decision between two private sector companies, so the opportunity to intervene is small, but the situation does highlight some areas where government could support the sector in future.

So far, we have seen positive messages from the new government, with the promise of a statutory duty for freight and a renewed commitment to growth, both of which we strongly welcome. We look forward to seeing more details on this.

At the same time, the Royal Mail decision has highlighted how essential it is that private sector companies can continue to invest in rail, be they customers or operators.

Choices around new rolling stock, terminals and technology are expensive, and the industry will need certainty. The potential changes to the track access framework, and potentially the role of the Office of Rail and Road, create a significant risk to this and will need to be navigated very carefully by the Shadow Great British Railways.

Another area that government needs to support is encouraging more use of electric haulage by rail freight.

As Royal Mail highlighted, the costs of using overhead line equipment can be significant, which is counter-intuitive at best.

Worse, many routes simply do not have enough power for additional trains, with Network Rail warning of potential restrictions at several points on the West Coast Main Line.

Electric trains go faster, accelerate better, and are far more sustainable. This is an area that needs urgent attention.

We all need to better understand the markets our customers face, and how we can support them.

This means helping existing customers grow, bringing new locations onto rail and extending the products we move. It also means supporting new industries to use rail, be that hydrogen producers, carbon capture or new manufacturing.

There is a huge role here for the government as it works to define its new industrial strategy and, as Great British Energy starts to develop, to ensure that rail freight is at the centre of its logistics plans.

The Royal Mail decision is not what anyone wanted, but the ability of rail freight to grow continues and we will overcome this setback.