The A-Team: Freight-talking

Domestic rail freight has undergone a renaissance of late, with large high-street retailers embracing it to reduce their transport costs and improve their environmental performance. Quite simply, rail freight is comprehensively better than road when it comes to keeping down carbon emissions, and with a typical freight train capable of removing 50 lorries from our congested and creaking road network, it is little wonder that it seems to be becoming the mode of choice for those in the know.

Crucially, rail offers an increasingly competitive package on price as the distance increases. However, imagine how much greater the benefits would be if the Channel Tunnel, the one rail line connecting the UK to the continent, was used to full capacity rather than the 10% currently being used.

That’s right, 10%. Still, after more then 15 years of operation, the space reserved on this major asset for freight is massively under-utilised. Freight does make substantial use of the tunnel through Eurotunnel’s shuttle service for lorries – but rail freight has not yet been able to match this success.

Much has changed in recent years and there is cause for some optimism now. Previous decline has been halted and disappearing wagonload traffic is being replaced with more sustainable intermodal services. New services have been established running to destinations in Spain and Italy. But still we are talking small steps forward, compared with the substantial capacity for freight movements that is being wasted.

Many things may need to change to make a full success of Channel Tunnel rail freight services. A route cleared to the UK Midlands (or beyond) for European gauge would be a huge benefit, given the constrained sizes of the UK’s standard rail network. Improved services from liberalised rail freight operators in mainland Europe – especially France – would make a big difference. Eurotunnel would contend there are service issues beyond its control that others need to resolve.

But still it is hard to avoid the thought that cost may be the key factor here. That has certainly been the opinion of members of the FTA’s Rail Freight Council. It has to be said that if you operate an asset over a number of years that is only used at 10% of its capacity, the first assumption you would make, as a businessman, would be that the price you are charging cannot be borne by the market. The access charges for the tunnel have come down significantly in recent years, but they still do not seem to have reached a level that has enticed new operators.

Eurotunnel clearly believes in the potential for rail freight through the tunnel as a business – its move into rail freight operations through subsidiaries such as Europorte Channel and GB Railfreight is evidence enough.

But it is an interesting comparison to note that in the tough environment of cross-Channel road traffic competing against the ferries, its shuttle service is able to succeed through keen and flexible pricing. I assume that the shuttle would never be allowed to operate at only 10% utilisation for any period of time. Rail freight is of course different, as Eurotunnel does not operate or control the rail freight services – just provides an open access facility for them, but the principle of asset utilisation is the same.

What rail freight needs to make a real success of the tunnel is critical mass. Services need to reach a certain level of frequency and there needs to be a range of providers in order to the point where logistics buyers feel they have the service and options they require. And users would want to be sure that services are sustainable – they must be here to stay.

But it seems hard to see how this step change will prove possible at current levels of charges. Maybe Europorte Channel will be Eurotunnel’s way of showing us that we, and the market, are wrong.

Christopher Snelling is the FTA’s Head of Global Supply Chain Policy