Opinion: Rail freight stagnation

Although the most recent rail freight traffic figures published by the Office of Rail and Road, for the quarter between April and June 2024, reveal a year-on-year increase of 7% in net tonne kilometres (ntkm) hauled, it remains below the figure recorded five years ago.

Within the total of 4.18 billion ntkm, maritime intermodal movements serving rail-connected ports and inland distribution centres remained the largest component, making up 33.7% of traffic.

But there was a small decline in activity compared with a year ago. And the same applied to conveying construction materials, which is the second largest category (33.5% of what is hauled).

Two smaller elements of activity did show significant growth, with domestic intermodal growing by 89% to reach an 8.1% share of traffic, as a result of a switch to rail by the Tesco grocery chain.

The demise of coal as a source of fuel for electricity generation had led to a rise in demand for burning biomass at Britain’s largest power station at Drax, where three generating sets have been converted to burning imported wood pellets. In the Apr-Jun 2024 period, it amounted to 6.7% of rail freight activity.

Otherwise, there was no significant growth in traditional bulk haulage sectors such as metals, industrial minerals, and petroleum. And traffic through the Channel Tunnel declined by a further 10% to record a meagre 1.4% of tonne kilometres hauled.

Looking ahead, prospects for the steel industry look problematic, and the closure of primary steel making at Port Talbot is likely to result in traffic declining in this part of the market.

With rail freight holding a 7% share of freight hauled, it is a fact that while movement by rail can be the equivalent of 76 lorry loads, the market regards lorry-sized consignments as the most suitable unit of movement - as the deplorable rail market share of non-containerised international traffic bears witness.

The original expectation about the use of the Channel Tunnel was based on establishing companies that would aggregate traffic based on swap body technology, which is a more popular concept in European countries than in Britain. Significant sums were spent to allow these wider vehicles to reach a series of inland terminals, in order to complete their transit by local collection and delivery.

Train Ferries that had an established place in the market, but which required a network of wagonload services for movement to terminals, were not seen as viable in the future and the ships were withdrawn once the Channel Tunnel opened.

There was some success to start with, but unauthorised boarding of trains caused disruption, and delay reduced reliability which was not helped by a series of industrial disputes in France.

The market voted with its feet and reverted to either throughout road transit or using rail as far as the channel ports in France and Belgium for onward road movement.

Despite numerous efforts by the then-EWS Railway (later DB Cargo) and Eurotunnel itself, and although traffic potential was easily identified, it could not be secured from entrenched road haulage carriers - and that remains the position today.

Interventions to strengthen competitiveness and improve market share included grant schemes that are available such as the Freight Facilities Grant and Mode Shift Revenue Support (Analysis, RAIL 1018). But the former has been unfunded in England in recent years and MSRS has an insufficient budget to fund potential applications.

Network Rail has also recently offered to support new traffics by waiving track access charges for an initial period. This has been estimated to be worth an average of £1,000 for an out and back working.

These initiatives are welcome, but the financial performance of the rail freight operators leaves little scope to offer incentives for new business - the most recent figures available from the 2021-22 financial year reveal that the larger operators recorded a combined loss of £69 million on a turnover of £942m, which included £20m received in government MSRS grant.

The breakdown by company was losses of £20m by DB Cargo on a turnover of £329m; £3m by Direct Rail Services on a turnover of £98m; and £55m by Freightliner on a turnover of £314m. Only GB Railfreight secured a small surplus - of £3m on a turnover of £250m.

An issue for rail freight is that the design of the operational product is unsuited to anything other than high-capacity trainloads made up of either intermodal or bulk products, which leaves large geographic gaps where rail services are unavailable.

Haulage is mostly provided by diesel locomotives hauling maximum-length intermodal trains and bulk trains with typical payloads exceeding 2,000 tonnes.

At present, electric locomotives are uncompetitive because the increased cost of traction current has made it cheaper to use diesel fuel. The most recent statistics show that in a five-year period since 2019, kilowatt hours used has declined from 75 million to 59 million.

Distributed traction power is an innovation that has not been widely considered, with a lack of interest in the concept of a freight multiple unit other than the ageing postal units which are to be withdrawn as Royal Mail has found them increasingly costly to maintain.

Freight multiple units (FMUs), in the form of multi-purpose vehicles (MPVs) operated for engineering purposes, have been used successfully on commercial freight services. This was in response to a Forestry Commission requirement to move timber logs from a railhead at Aberystwyth to the Kronospan plant at Chirk.

The daily payload of 200 tonnes was uneconomic using a diesel locomotive to haul a handful of wagons, but an MPV was secured to operate a programme of trains in March 2005 with two-axle wagons marshalled between the unit master vehicles. A Welsh Government grant was provided to meet the set-up cost and restore the freight yard at Aberystwyth.

With a power capability of 800hp, the MPV handled the severe gradients on the Cambrian line with ease, despite Network Rail insisting that a locomotive was attached to the rear (not under power) as insurance.

A more widespread use of FMUs where sets can be coupled for trunk working would extend geographic reach by offering smaller consignment sizes, thereby allowing rail freight to return to centres such as Plymouth, Swansea, Llandudno Junction, and many others.