Rail Freight Group
The rail freight industry knows how to celebrate success and the opening of the new strategic rail freight interchange at East Midlands Gateway at the end of February was no exception. Despite the torrential rain, several hundred people came from the industry and across the region to mark the official launch of this brand-new facility which saw the start of services earlier this year.
Speaking at the event, Rail Minister Chris Heaton-Harris MP highlighted rail freight’s role in driving down UK emissions and supporting economic growth and international trade. Sir John Peace, chair of the Midlands Engine, emphasised the link between the new facility and the prosperity of the East Midlands region, both on a national and global basis.
The new rail terminal is indeed impressive, capable as it is of handling up to 16 freight trains, 775 metres in length, daily. It has storage capacity for over 5,000 TEU (twenty-foot equivalent units) of containers. Yet it is the on-site warehousing that will drive the long-term success, as we have seen at similar sites such as at Daventry. With new tenants on site already keen to use the rail facilities, and the adjacent airport offering further opportunities, there is every chance of continued growth.
Segro and Maritime Transport, which have developed and operate the site, are both large scale private sector companies and have made a very significant investment in the facility. As well as building the railhead and connecting it to the main line, Segro has created the on-site facilities, built the first phase of warehousing and constructed a new road, the Kegworth bypass, as well as alterations to the motorway junction. It has created a new bus terminal and operates a shuttle bus for on-site workers. In short, it has spent a lot of money and, quite reasonably, it expects to make a return on that investment. So, in his speech, John Williams, the CEO of Maritime Transport, spoke of the factors which he considers necessary for the business to thrive.
He highlighted the need for a consistent and fair pricing framework for rail, noting the comparison with road freight. This includes charges at ports and terminals, which can sometimes be more expensive for rail. Mr Williams also noted the need for long-term capacity on the network to support growth, highlighting the demand for more rail freight coming from customers.
These comments are timely with the Williams Review expected to be published soon. Although we do not yet know the details, it is widely expected there will be significant changes, including to the commercial model for passenger services, and this in turn could lead to changes in the fundamental building blocks of the industry, including capacity allocation and charging. If Government is to retain more of the industry financial risk for passengers, then it follows that it may wish to specify and contract services very differently.
However, the commercial model for freight is wholly different, and there does not seem to be any need or appetite for change to that. Freight operators will continue to be private sector companies, taking commercial risk on train services in conjunction with their customers and suppliers. So, it is essential that the right framework exists to allow these businesses to prosper and most importantly to continue investing.
The most fundamental part of this is the access framework which gives companies the right to operate trains on the network for the long-term and is an essential element of investor confidence. Today this is defined in law, and overseen by the Office of Rail and Road, with a formalised Access Disputes process, which freight operators have needed to use on occasion. Over time, and as the network has become busier, the process has sometimes struggled to cope, and the way that some franchises have been specified outwith the access process has compounded the issue. There is no doubt a case for some reform and a more strategic approach to identifying and safeguarding capacity, but there is also a danger that, in doing so, the case for freight investment is lost.
Speaking at the launch event, David Sleath, CEO of Segro, outlined its plans for further investment of around £1 billion across the Midlands, including the recently consented rail freight interchange at Northampton Gateway. This is welcome news for the economy and for local job creation, and in difficult economic times shows an ongoing commitment to the UK. Government must act to support such investment in rail, by creating the right environment. This commitment comes as warm words at official openings, but most importantly, it comes in the right legal and regulatory frameworks.
An opinion column of the Rail Freight Group, www.rfg.org.uk
