The Rt Hon Lord Adonis, Secretary of State for Transport

GROWTH OF RAIL FREIGHT

From a speech by Rt Hon Lord Andrew Adonis, Secretary of State for Transport, 2 June 2009.

Rail-freight traffic in Britain was — before the recession — at a level not seen since the 1970s: 59 per cent up since 1995, which is among the highest increases in the EU.

This phenomenal growth was fuelled in part by a buoyant national economy. However, there are significant transport factors at work — notably sustained government investment to boost rail capacity in general and rail freight in particular, alongside rising road congestion and an increasing focus on greener forms of transport and logistics.

Rail freight has become a vital driver of UK economic growth, moving coal for electricity generation; aggregates for construction; making just-in-time deliveries for the manufacturing sector; and increasingly taking a share of the domestic retail and supermarket supply chain.

In the short term, of course, the economic downturn has reduced demand for all forms of distribution and logistics. Historically, freight is always among the first sectors of the economy to feel the drop in consumer confidence that signals the start of a recession, and this time is no different. I know how tough it is for many companies at the moment and for many rail-freight employees who are worried about their job security.

But there are good reasons to be confident that this industry will recover quickly from recession once the upturn comes, as it inevitably will. It is well positioned as the most sustainable form of freight transport and to make a growing contribution to our climate-change objectives.

Government support/CP4

The government remains fully committed to supporting a robust and expanding rail-freight sector through the development of a Strategic Freight Network, announced in the 2007 Rail White Paper. We have already announced £200mn for the SFN programme for Control Period 4 between now and 2014.

There will be a core network of trunk freight routes, capable of accommodating more and longer freight trains and handling wagons with greater loading gauge and perhaps higher axle loads. We are working with the industry — including the RFG — to ensure that the Strategic Freight Network is fully integrated with the UK's existing mixed-traffic network.

A list of schemes was included in April 2008 Network Rail Strategic Business Plan and in the Productivity Transport Innovation Fund scheme. Between them, they provide more than £350mn of funding. The schemes being taken forward include:

• £50mn for capacity and signalling enhancements on the Ipswich to Nuneaton line
• £55mn for gauge clearance of the Southampton diversionary route via Laverstock and Andover
• £10mn for signalling modifications on the Channel Tunnel route via Redhill to London, which will allow freight trains to be hauled by electric freight locomotives
• £40mn for selective train lengthening schemes, which we are currently identifying
• £40mn for selective in-fill gauge schemes, which we are also currently identifying
• £80mn to enhance gauge and capacity on the Peterborough-Nuneaton route
• £42mn to enhance the gauge on the Southampton to Nuneaton corridor
• £8mn to increase capacity on the link between the Humber Ports and the East Coast Main Line
• £1.67mn to improve access between the West Coast Main Line and Liverpool Docks
• £18.5mn for gauge clearance and freight capacity work on the Gospel Oak to Barking line
• And £5mn ring-fenced for studies to further develop the Strategic Freight Network vision for CP5 and beyond.

Over and above this, we recently announced a further £54mn as part of the fiscal stimulus package for long-term freight enhancement of the North London line.

All these investments are ring-fenced as part of £15bn of funding for the railway up to 2014 to significantly increase capacity.

Recently, Network Rail committed, over the same period, to a 20 per cent reduction in freight-delay minutes per 100 train kms, which should deliver substantial reliability benefits both to freight operators and customers.

CP5 and longer term goals

What about longer term, as we move towards CP5 and beyond?

On 12 May 2009, we published a paper called ‘SFN: The Longer Term Vision’, which very clearly sets out our determination to make the fullest use of our predominantly mixed-traffic rail network beyond 2014.

Access and capacity on the network is vital to ensure on-time deliveries and to maintain the competitiveness of operators. It is not in the nation's environmental or economic interest that passenger traffic should grow at the expense of freight, or vice versa. So the network will seek to better meet our rail-freight needs and to resolve conflicts between passenger and freight requirements where they occur.

What we want to achieve for your benefit is a consistent and effective framework for investment in both infrastructure and services.

The Strategic Freight Network schemes for CP5 and beyond will be developed as an integral part of the planning process, underpinning the next High Level Output Specification and emerging strategies for meeting passenger demand on mainline routes.

To make better use of routes and capacity, longer and heavier trains will be required where the business case makes sense. W12 gauge should be standard for all strategic container routes. And we will study proposals for the development of a European gauge freight link from the Channel Tunnel via HS1 to London and on to the Midlands.

At the same time, we will seek to develop freight capacity, particularly on key intermodal routes. We are also looking at greater electrification of the railway, including potentially key freight routes to improve resilience and provide incentives for electric traction. The development of strategic rail-freight interchanges will be supported by our national networks and ports policies.

As an operating principle, Network Rail should be aiming to achieve through-running of freight trains and seeking timetabling and signalling solutions in preference to looping. This has the potential to deliver significant environmental and economic efficiencies. The industry will increasingly offer a 7-day, 24-hour capability, which will be essential for growth, especially in the domestic intermodal market serving the retail sector.

Freight should also be regarded as critical to the roll out of the GSM-R radio system and ERTMS in-cab signalling system, recognising the industry's requirement to offer a more flexible 'go anywhere' service where possible. All of the rolling stock being procured by the department will either be delivered with the latest signalling and communication equipment or has been specified to have provision for this equipment to be fitted as part of the national implementation plans.

We will give greater weight to rail freight within the context of the wider freight and logistics industry. Planning and defining goals needs to become less focused on each different mode, bringing forward a range of solutions that harness the advantages of each form of transport while prioritising those schemes that are sustainable and that promise the highest returns.

Europe

Our vision to build a more flexible and competitive rail-freight sector does not apply solely to this country, but also to Europe.

For many decades, European rail transport was dominated by national, vertically integrated state monopolies rather than competitive corporate operators. That's why we very much support the EU's objective of encouraging a more sustainable, efficient and customer-focused rail-freight industry across Europe, including the first EU Railway Package from 2001 and the principles of the draft Freight Orientated Rail Network Regulation.

Progress in other EU countries on this issue has not always been rapid. Much of the EU has yet fully to implement the first railway package, never mind the second or third.

What I want to see is a more open structure, with companies having access to international markets and competing to raise standards across the industry. High speed

One of the biggest issues facing the railway at the moment is whether to move ahead with plans to build a new high-speed line.

I am clear that if rail is to successfully compete with road and air transport on major intercity routes in the decades ahead, we need to consider a new high-speed rail network in this country.

In recent months, I have been to study the rail modernisation programmes of Japan, France, Germany, Spain and Italy. All five of these countries are investing in national networks of high-speed lines. The rate of construction is remarkable, and it is accelerating. In all, 3,600 miles of high-speed line are in operation in Europe, with a further 2,000 miles under construction and another 5,300 miles planned.

Japan, which of course started the high-speed revolution 45 years ago with the bullet trains from Tokyo to Osaka, is continuing not only to build new lines to complete the national Shinkansen masterplan but is now also preparing for a second Tokyo to Osaka line as the first one reaches saturation point.

Even President Obama has put high-speed rail firmly on the Washington policy map with a major stimulus package, following the successful Californian ballot last November for a $10bn bond to start work on a San Francisco to Los Angeles line.

As for its impact, high-speed rail has led to dramatic increases in rail traffic. And in Europe, as successive lines develop into national and cross-border networks, so the broader benefits become ever more apparent.

High-speed rail isn't just about faster services; it's about higher capacity rail systems, designed to cope more effectively with the full range of demands on the network, including commuter, freight and inter-city services; it's about being inter-operable with existing networks and neighbouring countries; it’s about greener transport and carbon reduction and getting people out of cars and planes. In short, country by country, high-speed rail is — or is becoming — a key driver of modernisation (economic, environmental and social) and not simply a better, faster means of transport.

Although there is high price involved in building high-speed lines, there is also a high price not building them where additional rail capacity is required anyway — a price that must be measured in lost economic and social benefit — but also the direct cost of upgrading existing congested rail lines, which is significant.

It is in this spirit that the government set up in January the High Speed Two company, asking it to report back to the government by the end of the year with a firm route plan for a line from London to the West Midlands, with corridor options for extending it beyond to the North West, West Yorkshire, the North East and the central Scottish conurbations.

We intend to consider the report intensively, immediately after its receipt, and to consult the other political parties upon it, with a view to indicating a definite way forward in the early part of 2010. The decision we take — on whether, and how, to proceed — will be the most important transport decision we make over the next year.

Although a new high-speed line should be viewed principally as a passenger line, HS2 will also investigate the costs and benefits of building such a new line to be freight capable.

Crucially, the development of a high-speed line will also free-up capacity on the existing network for additional and more easily flowing rail traffic.

Proceeding with high-speed rail will be enormously challenging not only on a political level, in terms of decisions about investment and phasing, and generating the cross-party consensus which I believe is vital to such a major long-term infrastructure project, but also in terms of planning and engineering. Considerable imagination and ingenuity will be needed on a par with the imagination and ingenuity that built Britain's first railways. But I look forward to working closely with Lord Berkeley, the Rail Freight Group and the wider freight business to make sure that the interests of freight operators and customers are fully reflected in our final high-speed strategy.

Conclusion

But it is clear that this industry is in much better shape than it was at the time of rail privatisation in the mid-1990s.

More than £1.5bn of private funding has been invested since 1997, but at the same time the industry has done a remarkable job of stripping out costs, improving efficiency and delivering a better service for customers.

And, indeed, the long-term prospects for rail freight remain very strong, with some forecasting a 30 per cent growth through to 2014/15.

We will continue to work with the industry to build on the foundation created over the past 15 years and to improve its competitiveness in the future, particularly as we seek to reduce carbon emissions across freight transport.