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Network Rail Kings Place 90 York Way London N1 9AG

April 2013

Value and importance of rail freight

01

Foreword

In recent years rail freight has undergone a renaissance: freight volumes have increased by 60% since 1995 and are now recovering successfully from the effects of the recession.

In 2011/12 alone rail moved 105 million tonnes of freight throughout the country. It has a market share of 11% of all surface freight transport.

Between 2001 and 2011 the number of containers passing through Felixstowe – the largest container port in the UK – has doubled to 750,000 equivalent container units. Over the same period the number of trains serving the port daily has increased by 25%.

The continued growth of rail freight Enabling rail freight to expand and thrive is a key responsibility of the rail industry, and will contribute towards rail playing its part in supporting economic recovery and long term sustainable growth.

Industry forecasts suggest that freight demand will grow by 30% over the next decade – the equivalent of an additional 200 freight trains per day. Looking further into the future and analysing a range of long term economic scenarios, Network Rail has forecast that rail freight could increase by as much as 140% by 2030. Even the most conservative scenario shows rail freight growing strongly.

Since the previous edition (2010) rail freight has:

• continued to grow

• developed further into the intermodal and retail markets

• started serving a new market for biomass to power stations

• improved its competitiveness through enhanced productivity and higher performance standards which beat road in key markets.

Credit is due to the train operators, freight customers, terminal developers and logistics companies who have collaborated to achieve this success.

Network Rail plays its part by enhancing the rail infrastructure via the “Strategic Freight Network” programme. The Strategic Freight Network consists of a series of linked schemes which improve the performance, economic efficiency and capacity of freight on rail. Governments have provided public funding for these projects and demonstrated their commitment to modal shift.

We are pleased that the Strategic Freight Network will benefit from further investment in our next funding period, 2014 – 19. We are also looking further ahead to develop longer term strategic plans for freight and maintain the momentum of the programme. However, we also recognise that Network Rail must continue to deliver a successful day to day operation to keep freight trains running on time and add to the productivity and value of the mode.

Rail’s environmental benefits have long been acknowledged but it is important to recognise its contribution to the economy. Rail freight helps economic growth through de-congesting the highway network and providing a productive and high performing competitive option for logistic operations in Britain.

This booklet goes into more detail about the success and benefits of rail freight – I hope you will find the story interesting and helpful. My team and I are committed to advising you further about logistics on rail and securing modal shift.

Tim Robinson,Freight Director,Network Rail.

Source: ONS and ORR data. From 1991 onwards the data is in financial years.

FIGURE 1

Rail Freight in Britain (1988-2012)

1987

-88

Frei

ght m

oved

(bill

ion

net t

onne

km

)

Coal Total

1989

-90

1993

-94

1995

-96

1997

-98

1999

-00

2001

-02

2003

-04

2005

-06

2007

-08

2008

-09

2009

-10

2011

-12

0

5

10

15

20

25

Financial Year

All other categories

FIGURE 2

Growth in Rail Freight at Felixstowe

2001

000’s

Cont

aine

r Uni

ts

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

0

50

100

150

200

250

300

350

400

450

500

Welcome to the revised edition of “The Value of Rail Freight”. Network Rail is bringing the story contained in this booklet up to date to reflect the continuing success of rail freight.

Whether it is transporting raw materials for manufacturing, fuel for electricity generation or consumer goods for our shops, businesses in the UK rely on rail freight to provide a faster, greener, safer and more efficient way of moving goods than road.

CASE STUDY

TATATata is Britain’s largest steel producer and generates high volumes of semi-finished products for inter-works movements. An example is the transport of steel coil between Margam and Llanwern. The steel is loaded and moved on rail wagons at temperatures up to 250°C – something that could not be safely contemplated via road transport. Rail therefore boosts the Tata production line by;

• movingbulkconsignmentsawayfromthemanufacturingareaquicklyandreliablyin order to keep the production line operating efficiently

• movingthehotsteelquicklytominimisestocklevels

• deliveringthesteelwhilststillhotwhichreducestheenergyneededtore-heat,saving money and carbon emissions.

Britain relies on rail freight

0302

The economy relies on rail freight

Since the privatisation of rail freight in the mid 1990s the industry has revolutionised itself in terms of:

• competition–bringingcustomerfocusand a high quality service culture to rail freight

• growth–reversingdecadesofdecline

• enhancingproductivityanddeliveringreal cost reductions across all activities

• investmentinmoreproductivelocomotives, wagons and terminals.

Establishing a rolling programme of investment in more effective infrastructure – branded as the “Strategic Freight Network”.

Rail freight has traditionally been associated with the transport of heavy bulky goods and construction materials. It continues to be extremely important for these goods but its role today is much broader.

More and more industries and major companies, like Jaguar Cars, Tesco and Sainsbury’s, are turning to rail as their first choice for transport.

During the last 15 years, rail freight has undergone a transformation and has taken an increasingly important role in the transport of consumer goods. Over the past eight years alone, consumer goods carried by rail have grown by 75%, the greatest growth of any freight market.

Road congestionRail freight plays an important role in reducing the number of lorries and congestion on the nation’s roads. Due to the greater capability of rail, each freight train can typically replace around 50 Heavy Good Vehicles (HGVs). In 2009/10 an additional 6.6 million lorry journeys would have been required if the equivalent of rail’s freight business were carried by road. This equates to 1.4 billion lorry km avoided or an additional 13,000 lorries travelling the distance between London and Manchester every day of the year.

ReliableThe ability to rely on goods and materials being delivered on time is critical to businesses.

Road freight is frequently delayed by congestion. Every year thousands of hours are lost due to congestion on Britain’s roads and over a quarter of all road freight journeys are delayed. Analysis by the Department for Transport found that congestion was the biggest external cost imposed by road freight.

The Eddington Study estimated that road congestion reduces gross domestic product (GDP) by around £7-8 billion every year and that it could amount to as much as £25 billion by 2025.

Compared to this, rail provides a disciplined network in terms of planning and management with sophisticated timetabling and signalling systems designed to optimise reliability. More than eight out of every ten freight trains complete their journey on time and for premium delivery such as Direct Rail Services/Stobart trains for Tesco, punctuality over the last 9 months of 2012 averaged over 97%. In many instances rail can match and often beat road freight in terms of reliability.

The more we can reduce congestion by shifting freight from road to rail, the better in terms of reliability for businesses and cost to the economy.

Cost effectiveMoving goods by rail is increasingly the most cost-effective way of transporting freight.

Rail haulage is more fuel efficient than road haulage. Less fuel is needed to transport a tonne of goods by rail than by road, saving both money and greenhouse gas emissions.

On average a gallon of fuel will move a tonne of goods 246 miles on the railway, but only 88 miles by road.

The unique role of rail freightIn a number of instances rail provides solutions which are not practical by road. This applies particularly where rail moves a vast bulk of material and the electricity generating industry is a case in point. Britain’s largest power stations were built around “merry go round” rail facilities so that their bulk fuel can be delivered at a

rate of millions of tonnes per year. The congestion and pollution which would be caused by moving these volumes on our roads is hard to imagine and the logistics involved would be unsustainable.

But rail also fulfils some other specialist roles which would be difficult to achieve using any other mode.

In addition to this, rail:

• iscompetitiveonpriceinmanymarkets

• mitigatestheimpactoffuelpriceuncertainty as less fuel is used per tonne transported

• buildsresilienceintosupplychainsby increasing the number of delivery options

• reducesoperatingcostsbyremovingbetween 43 and 77 HGVS per freight train

• canhelpkeepgoodssecurefromtheftand damage

• reducescarbonemissionsandhelpscompanies meet sustainability targets.

Rail freight plays a vital role in Britain’s economy. Every year it directly contributes £870 million to the economy but it supports an output of £5.9 billion, over six times its direct turnover. Rail freight transports goods worth around £30 billion annually.

246 MILES

88 MILES

FIGURE 3

Distance a tonne of goods can travel on a gallon of fuel

CASE STUDY

Supporting the car export marketRail freight contributes to the British export market, delivering cars such as Minis, Land Rovers and Jaguars to ports so that they can be shipped abroad. The use of rail helps enable the secure safe delivery of these prestige goods.

Jaguar operates railheads at both its Halewood and Castle Bromwich plants enabling more than 70% of its production to travel by rail. Jaguar estimates that these railheads save 4.5 million lorry miles a year. Jaguar also credits rail with improving distribution efficiency as it allows Jaguar to avoid the disruption associated with road congestion. 22 cars can be transported on each rail wagon meaning that 220 cars can be carried on a typical 10 wagon train. This same load would require 27 lorry transporters.

Cars for export to Europe are carried to Port Dagenham for transfer onto ships. Cars destined for further afield are transported by rail to Southampton from where they continue their journey to markets in Asia, America and the Middle East.

04

People & communities rely on rail freight

The wide range of goods moved by rail includes:

• RoyalMaillettersandparcels

• softdrinks,bottledwater,sugar,cakes,confectionery, washing powder and household cleaners

• wineandScottishwhisky

• carssuchasMinisandLandroversforthe domestic and export markets

• freshfruitandvegetablesdirectlyfromSpain to London.

Rail freight also makes towns and villages across the country more pleasant places to live and work by reducing the number of lorries on Britain’s roads.

Lorries contribute to a disproportionate number of accidents on our roads per km travelled. DfT figures suggest that between 1999 and 2009 there were 124,500 accidents involving HGVs.

By reducing the number of lorries on our roads and transferring freight to rail, people would benefit not only from improved safety in their local communities, but a reduction in noise and pollution.

Rail freight is an indispensable part of our everyday lives. It plays a pivotal role in supplying food to our supermarkets and delivering goods to our shops.

05

FIGURE 4

Potential for a fully loaded freight train to remove lorries

Commodity Fully loaded equivalent train Potential number oF Heavy Goods veHiCles

Coal 1,500 tonnes 52

Metals and ore 1,000 to 2,500 tonnes 60

Construction materials 1,500 to 3,000 tonnes 77

Oil and petroleum 2,000 tonnes 69

Consumer goods 600 to 1,100 tonnes 43

Other traffic 1,000 to 1,500 tonnes 43

Soft drinksBottled waterSpiritsSugarCakes and confectionaryWashing powder and household cleaners

M&S signature clothing

Sports equipment

Weetabix cereal

Baileys Irish Cream

Crusha milkshake mix

Tetley’s beer

Various Cadbury chocolates

Argos catalogues

Carlsberg lager

Panasonic flat screen televisions

Bell’s Whisky

Captain Morgan’s rum

Daventry

Scotland

FIGURE 5

Examples of products which are transported by rail between Daventry and Scotland

Daventry InternationalRail Freight Terminal

502km / 312m(14kg CO2)

Mossend Rail Freight Terminal

Method of transport - rail

Journey by rail

Journey by road

Method of transport - road

Wellington National Distribution Centre

Cash and Carryin Glasgow

Beans loaded into a container at Wholesaler’s national distribution centre along with other goods. Moved by road to the rail terminal

Container loaded onto a train for transport to Scotland

Wholesaler takes delivery of goods for final distribution to shops

560km / 350m(66kg CO2)

45km / 28m(5kg CO2)

21km / 13m(3kg CO2)

0706

The environment relies on rail freight

Rail freight has a vital role to play in tackling climate change and helping the Government meet that commitment. With road transport in Britain currently contributing 21% of carbon emissions, 7% of this originating from road freight, it is vital more freight is transferred to rail. This is all the more apparent given that per tonne of cargo, rail freight produces 76% less carbon dioxide than road freight.

In the extreme case that all freight currently carried by rail was transferred to road, there would be an additional 1.9 million tonnes of carbon dioxide produced each year. This is equivalent to the carbon saved by more than 230,000 solar panels.

Rail freight also produces fewer harmful gases than road freight in terms of other emissions that impact upon people’s health – less than a tenth of the nitrogen oxide and fine particulates of road haulage per tonne carried when compared to road transport.

CASE STUDY

Aggregates by railBulk commodities remain important to the rail freight sector despite the growth in consumer goods conveyed. Aggregates are found abundantly throughout most of Britain but their extraction can create an intrusive industry for its near neighbours. As a result, many local quarries and gravel pits have exhausted their consented reserves and gone out of production. Rail has stepped into the gap this has created in the construction market by moving bulk aggregate over longer distances from rail served super quarries using Britain’s heaviest trains – up to 5,000 tonnes gross weight from the Somerset Mendips to London. Long term demand for rail is still growing in this sector which has expanded its range over the last 30 years:

• 20–30yearsagoiswasmainlyaLondon and South East business

• 10–20yearsagoitspreadtootherlarge cities such as Manchester, Leeds and Birmingham

• morerecentlyrailterminalshavesprung up and more are being sought in medium sized conurbations such as Exeter, Preston and Hull.

The rail market for construction materials continues to develop with re-cycled products, imported aggregates, higher quality premium materials and cement all growing on rail. Britain’s construction industry has delivered major projects such as the 2012 Olympics Park by working in close partnership with rail suppliers.

FIGURE 6 The journey of a tin of beansThe figure shows the journey of a typical consumer item transported by rail. A tin of beans starts its journey by being loaded onto a container at the national distribution centre of a major supermarket chain. A number of other goods such as cleaning products, toiletries and other food stuffs will also travel with the beans. This container is then transported by road to a rail freight terminal. The container is transferred to rail for the trunk leg of its journey before completing the final miles by road.

It also shows the CO2 at each stage of the journey if the tin were carried by rail or a road alternative. Even after including the carbon cost of the road legs at either end, the rail option produces a third (22kg compared to 66kg) of the CO2 of the road route.

Climate change is a major challenge facing the world, and one the UK Government takes very seriously. We are keen to play our part in ensuring sustainable economic growth by enabling freight, and passengers, to travel with lower carbon emissions than other modes.

0 20 40 60 80 100 120grammes of C02 released per tonne km

FIGURE 6

Road and rail freight – grammes of CO2 per tonne km

FIGURE 7

The journey of a tin of beans

Source: 2009 Guideline to Defra’s GHG Conversion

Factors: Methodology Paper for Transport Emission

Factors, October 2009, Defra

(Photo – courtesy of Brian Ringer)

08

The future of rail freight

Over the coming years, the rail industry will continue to work with passenger users, business and government to prioritise those freight schemes that bring the greatest benefit to the network and the economy. This will involve delivering the vision of a “Strategic Freight Network” and providing value for money through:

• increasingcapacityformoretrains

• improving the efficiency of the network by rebuilding our infrastructure to allow trains to carry more containers

• enablingtheinfrastructuretocaterforlonger, more productive trains

• separatingflowsoffreightandpassenger traffic where this makes sense for both

• speedingupfreightjourneystoimprove productivity and profitability for operators.

CASE STUDY

Biomass – a fuel for the futureThe electricity generating industry faces substantial change as a result of the need to reduce its CO2 emissions and limit the damage caused by global warming. EU and UK legislation is creating a strong incentive framework to move the country away from burning coal to make electricity. Biomass is emerging as an important alternative fuel.

Most biomass consists of compressed pellets of waste wood from the timber industry – the plantation thinnings, smaller branches and sawdust which would otherwise be left to decay or be burned at the plantation. Supplies are sourced with extreme care to ensure

that they are truly sustainable. The sustainability case is strongly supported by the fact that, were the material left to decay, it would release methane – a worse greenhouse gas than CO2.

The majority of biomass is expected to pass through our ports and rail is proving to be the ideal mode of transport to carry it to power stations. The rail freight industry is adapting rapidly to the opportunity presented by this new traffic with investment in wagons and infrastructure. Biomass is emerging as a critical new contributor to the success of rail freight – and to rail keeping the lights on for Britain.

This is an exciting time for Network Rail and the freight industry. To cater for anticipated future demand and challenge the dominance of road haulage it is important that, together with governments, we continue to put in place the right plans to allow freight to be a successful part of a vibrant, growing railway. It is also important that we develop the railway to make this possible.

CASE STUDY

Enhancing the gauge to Southampton“Freight gauge” is the spatial envelope that a train needs in order to pass through bridges and tunnels safely. Britain’s railways were mostly built in the nineteenth century with arched structures to accommodate vehicles with rounded roof profiles. However, the freight market has developed strongly in favour of larger, rectangular loads - in containers. Enlarging the network to facilitate container traffic is known as “gauge enhancement”. And the containers have grown larger making the need for gauge enhancement much stronger.

The enhanced route to ABP’s Port of Southampton was commissioned in Spring 2011. This investment brought rapid gains in terms of business growth and productivity on rail for the port. Independent research by the University of Westminster found that, with in a few months of the commissioning date:

• marketsharehadrisenby6%

• traincapacityroseby19%–measuredacrossthesamenumberoftrains

• trainpayloadhadrisenby28%

The launch in early 2013 of the plans for Phase 2 of Britain’s new high speed railway “HS2”, serving Manchester and Leeds, is also beneficial for rail freight. By attracting the growth of inter city passenger rail travel, HS2 will free up essential capacity for more freight on the classic network. Building HS2 is vital for the future of rail freight.

Our vision is to increase the modal share of rail and to take freight off Britain’s roads, improving the economy, our quality of life and substantially reducing carbon emissions.

Rail freight is a success story. It is vital to our economy and helps make Britain a better place to live.