How rail reform could work to the benefit of logistics

While the rail sector experienced a significant financial impact as a result of the passenger decline, recent Office of Rail and Road (ORR) figures show that things are gradually improving, with three times as many journeys made in the first quarter of 2022 as the same period last year. However, as passengers return, and rail undergoes its biggest period of reform in decades, Logistics UK is focused on ensuring that the sector remains a key consideration for operators and government when planning and implementing rail services.  

In its response to the government consultation on the implementation of the Williams-Shapps Review, Logistics UK highlighted the need for the reforms to incentivise rail freight growth, protect rail freight interests and deliver the full environmental and productivity benefits of rail freight.  Key to this will be a core duty for Great British Railways to facilitate the delivery of high-quality, reliable freight services. Proposed core functions of Great British Railways (GBR) do not mention freight, and the consultation had a significant focus on passenger rail. And, while we welcome the consultation, there were areas of concern that could potentially threaten rail freight.  

THREATS  

Moving forwards, it is imperative that a competitive rail freight market receives fair and equal treatment with passenger operators. While this has previously been achieved via vertical separation – the separation of infrastructure management from train service delivery – and strong rules around access and performance, this has created a purely functional solution, not without problems. Despite track and train being separated, there has been some great collaboration both operationally, and on projects.   

While the reforms do not suggest vertical integration, the proposals do involve a much closer relationship between the infrastructure manager - under GBR - and the passenger operators. Their relationship will be intertwined through the proposed passenger services contracts and policy setting in GBR (including policies such as fares, for example). It will be vital for rail freight to advocate for protections to be put in place during the creation and implementation phases to ensure the industry remains a key consideration.  This will include influencing the reform of the complex rules and processes involved in running the network, to ensure there are adequate safeguards and incentives in place to not only help rail freight survive, but also thrive.   

To protect rail freight interests, Logistics UK recommends rail freight stakeholders should be statutory consultees for all proposals which have the potential to affect their interests, including access reforms. Also, rail freight protections such as Schedule 4 and Schedule 8 compensation regimes – which compensate operators for the impact of planned, and unplanned service disruption – should not be removed without appropriate replacement to protect rail freight commercial interests.   

The sheer scale of the reform required poses its own challenges. The consultation highlighted that changes will be implemented with as little primary legislation as possible. A pragmatic approach, but one that means that many changes – whether to the infrastructure manager’s licence or rules around planning – are on the table for industry to resolve. The rail sector is highly resilient and adaptable; however, it can also face time and workload pressures.  Rail freight is already lean; the sector’s busiest people will have to dig deep to make sure there is adequate representation of their interests during development.  

OPPORTUNITIES 

Despite this, with reform comes opportunity. We are already seeing positive, ambitious leadership within the GBR Transition Team which is keen to engage with industry and raise freight’s profile: the development of a Strategic Freight Unit (SFU) within GBR is also encouraging and could give greater prominence to rail’s role in the supply chain. This gives the freight sector greater confidence regarding safeguarding against some of the threats of greater integration of track and passenger services. A dynamic SFU could go further and help lay the foundations of a more strategic approach to the rail freight network and its development, an outcome that would be much supported by the rail freight sector.   

The proposed statutory rail freight growth target could also be a driver of success within GBR. An ambitious rail freight target in law will mean that colleagues in GBR – and across the wider industry – must ensure freight is an integral part of the discussion, and, on occasion, prioritise freight.  Embedding this target through the SFU and weaving it through the reforms is an opportunity for the sector.   

To make this target ambitious it is critical that not only freight operators, but also customers and potential users, are engaged in developing it. Customers drive demand – potential customers grow it even further. There appears to be an appetite to have this conversation, and Logistics UK will be making sure it is front and centre of any target development to help these voices be heard.   

SUCCESS 

How will we know if reform has been a success? Logistics UK will be considering the proposed changes in light of four key principles.   

1. Freight operators need access to high-quality, reliable paths and are treated fairly during the planning and operation of the railway.   

This will largely be a test as to whether the safeguards of integration of track and train have been successful. It will also measure whether enhancements to the railway delivered by GBR are releasing new paths to freight and facilitating growth.   

2. Customers must be able to make easy end-to-end multimodal journeys with rail at the heart. Consignments rarely make their whole journey just by rail.     

Customers tell Logistics UK that smooth multimodal journeys are critical to making rail more attractive. A reformed industry, committed to freight growth, will support seamless journeys for freight.  

3. There must be clear and predictable plans which support private sector investment in the railway.     

Rail freight drives significant private money into the industry. Certainty and clear plans mean that private investors are more likely to put money into rail and invest in major capital assets such as greener rolling stock or improved terminals. Reform of rail business planning could support this and bring continued investment into Britain’s railway.   

4. Policy and innovation are needed to support Net Zero rail. The Government has set ambitious, binding Net Zero targets and the rail industry is keen to play its part in meeting them.    

While rail is a significantly lower emission way of moving freight it can always improve. Reform should have sustainability at its core, and processes and regulatory changes must support this. Reform should also encourage and enable the innovation required to find technology solutions to our biggest rail Net Zero challenges.   

Members with comments or opinions on the ongoing reforms should email aherdman@logistics.org.uk so that these responses can be fed back into Logistics UK’s regular conversations with the Department for Transport and the GBR Transition Team to make sure the programme of reform is a success for rail freight, as well as passenger services. 

*www.logistics.org.uk/rail  

Published On: 25/08/2022 16:00:00

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