Tyne and Wear Freight Partnership – Rail Meeting The Rail Freight Market

1. Tyne and Wear Freight Partnership – Rail MeetingThe Rail Freight Market Geoff Clarke – Regional Director Monday 24th June

2. Topics to be covered • European Rail Freight News • UK Rail Freight volumes • Network Rail consultation • UK Rail Freight • Rail Freight Grants • ORR Survey Rail Freight User Survey

3. Rail freight growth Europe • The use of rail for freight transport in Europe will double by 2030 • Use of intermodal traffic to grow much more • Increased continental trade, fuel price rises and congested roads drive freight to rail • 30 percent increase in tonne/km between 2006 and 2015, with this figure expected to more than double by 2030

4. Rail freight anger over “megatruck” proposal • Proposals to allow road vehicles exceeding 40 tonnes and 18.75m in length to cross EU borders • Greater use of mega trucks goes against what the Commission is trying to achieve in freight transport • More investment should be made to rail transport to reduce the environmental impacts.

5. European rail freight update • Romania privatises its rail freight by selling the majority state in state run CFR Marfa to private sector competitor GrupulFeroviar Roman (GFR). GFR are to pay 202 million euro's and are planning to invest an additional 200 million to modernise. • Bulgaria is selling its state owned rail freight operations too. • DB Schenker Rail is continuing to expand its rail freight network, apart from Barking to Poland, its new Bosporus Shuttle will carry both container traffic and wagonload consignments; transit time Germany/Turkey is five days. • Russian railways are investing a lot in railways and have plans to build a Russian gauge route directly into Austria. They have recently announced plans to build a network of 170 intermodal terminals recognising the likely growth in this sector. • Spain has started a new Reefer train Murcia-Bilboa with special generator wagons and temperature monitors.

6. Excessive track access charges to train companies • Higher charges were being planned by ORR for certain commodities in Uk e.g. Coal, nuclear waste, biomass. But a recent announcement by ORR of a more modest settlement has been welcomed by the rail freight sector. • Channel Tunnel charges are too high and are discouraging the growth of traffic. • Rail freight companies cannot afford to send more freight through the Channel tunnel as a result its not being used to its full capacity resulting in more freight being carried by road.

7. Eurotunnel launches ETICA to help develop intermodal rail freight. • Railway operators found it hard to start new services through the tunnel. The start-up costs, marketing and controls at Frethun are part of the cause. • Eurotunnel has introduced an Incentive for Capacity Additions (ETICA) initiative to provide funding for operators launching intermodal rail freight services through the Channel Tunnel. • The scheme will be fully funded by Eurotunnel, with no public subsidy, and is based on the Marco Polo aid system.

8. UK Rail Freight • In 2011/12 there was 101.7m tonnes of rail freight • In Q3 of 2012 29.1m tonnes was moved (13.4% increase) • Of the above coal was 13.5m up 17.7% and other was 15.6m up 9.9% • In Q3 of 2012 there was 5.29 bn tonne/kms and this meant for Q1-Q3 this was 16.04 btk and is the highest since 2006 • Although the above is encouraging it is not all good news; • Freight Performance Measure (FPM) which records the % of freight trains arriving on time had an average of 75.3%. This compares with road freight which is around 95%. Rail Freight User Survey

9. Network Rail’s Value and Importance of Rail Freight Study • Rail Freight directly contributes £870m to the economy • But supports economic output worth £5.9bn • The value of the goods transported in 2011/12 was £30bn • Rail Freight is expected to grow by 30% in the next decade and by 140% over the next 30 years • Freight Market study is open for consultation and the deadline for this is 26th July so you have a month. Rail Freight User Survey

10. Network Rail’s Upgrading to the Rail Freight Network • Network Rail are targetting improvements on certain key freight arteries to allow longer and heavier trains to run thus improving rail’s competiveness with road freight • Nuneaton Chord (grade separated bridge) was finished allowing cross-country freight trains to cross over the WCML • The Ipswich Chord (bacon chord) is being installed to avoid delay of Felixstowe trains to Yorkshire and the North East • A new railway flyover at Shaftholme to the north of Doncaster will take freight trains up and over the busy East Coast Main Line, rather than across it, freeing space for extra passenger services and improving freight reliability. This £45m investment is part of a route-wide programme to improve capacity and reliability on the ECML between 2009 and 2014. Rail Freight User Survey

11. Recent Rail Freight Developments / Services • Freightliner’s Class 70 diesel loco which provides better traction allows longer and heavier trains in train paths. • The low height platform Davis wagons are running on routes which are not gauge enhanced e.g. Teesside to Widnes • The VTG Ecofret wagons allow more containers to be carried in the same length of train thus helping competitiveness • M&S has opened a rail freight terminal at Castle Donington and also plans a big distribution centre at London Gateway • A EU Last Mile project is being run by Stobart, Colas and a few retailers in London running from Rugby to Euston station • SITA has won a contract to take Merseyside waste from Potters Knowsley site to an EfW plant on Teesside Rail Freight User Survey

12. Rail Freight Grants • Low Carbon Dividend Fund - European Funding is available to SMEs based in the East of England to encourage them to do modal switch from road to rail. So if a container previously taken by road from Tilbury or Felixstowe or indeed a domestic producer in East Anglia sent a container to the North East then a discount of up to £90/box could be applied for subject to a quantity limit. Any interest? • DfT has this week appointed a consultant to review the Mode Shift Revenue Scheme (MSRS) which helps subsidise the cost of Rail Freight • Freight Facility Grants are still not available in England Rail Freight User Survey

13. ORR Survey Development and Dissemination • Development of questionnaire • AECOM study team discussions with ORR • Based on previous freight survey in 2010 • Shorter version for non-users • Collected qualitative and quantitative information • Dissemination of survey • Engagement strategy included media publicity and working with trade associations e.g. CILT, FSDF, FTA, BIFA. Launched at RFG meeting at Multimodal Show at the NEC in May • Contacted key personal in each organisation • Survey ran last summer • Low initial response rate prompted phone contact Rail Freight User Survey

14. Survey Response • In total, 61 responded up 20% from 2010 (51) • Response rate = 61/423 or 14% (32% in 2010) • Received an appropriate % from the North East but all were from bulk side and not intermodal • Although sample is small, it does contain a substantial proportion of freight lifted in the UK, representing about 50% of rail freight lifted • Included more shippers and shipping lines this time • Involved co-operation of FOCs and Network Rail Rail Freight User Survey

15. General Company Profile 75% of NE respondents use rail NE had: 3 terminal operators 1 Producer/Receiver All NE respondents moved bulk products Rail Freight User Survey

16. North East Respondees • 75% of NE respondents move freight by road and rail and all by coastal shipping • NE had 3 terminal operators and 1 Producer/Receiver • All NE respondents moved bulk products • 3 operators expect to see some increase in future rail traffic, one had it stipulated by planning agreement • Results from the survey will be posted once ORR has fully approved them (Situation pending July 2013) Rail Freight User Survey

17. Discussion... Thank-you