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Targeting the treble

Freight Industry Times sat down with Tim Shoveller, CEO of Freightliner, to find out how the UK’s largest maritime intermodal logistics operator plans to meet the Government’s new target to grow rail freight by 75 per cent by 2050.

FIT: How does Freightliner propose to achieve this ambitious target of trebling its rail freight volumes by 2050, and what specific initiatives does the company recommend for the government to support this goal?

TS: While we consider that the target itself could have been more ambitious, establishing a long-term target is welcome and meeting it will be crucial for the UK to achieve its net-zero commitments, supporting economic growth and delivering prosperity for all regions. We have long advocated for an ambitious growth target to give confidence to the private sector to make the significant private sector investments in long-term assets that will be required to achieve such growth. These are investments in new facilities, including new container terminals, in new locomotives and rolling stock, in technology and of course in our people. To be an effective catalyst for growth, a clear policy framework is necessary to ensure that the economics of rail freight support rail being the mode of choice for trunk haul and heavy haul movements. That’s why we’re calling on Government to: Half the track access charges that freight pays to run trains on the network. Double the modal shift grant that businesses can access to support using rail where the costs are higher than road. Keep investing in the rail network to ensure that there is sufficient capacity on the busy rail corridors to enable more freight trains to be timetabled.

FIT: How would these proposed measures contribute to the growth of rail freight, and what impact do you anticipate on the industry and the broader economy?

TS: The policies that we are calling on government to introduce will significantly help address some of the recent cost challenges and ensure that the economics of moving freight by rail work for customers. It is essential that we leverage the strengths of each mode and build policies that support trunk haulage and heavy haulage freight movements by rail. Reducing track access charges and increasing modal shift grants for movements where the cost of rail exceeds the road equivalent will help to build confidence and enable customers to move their logistics to rail. In addition, for rail freight to grow there needs to be sufficient capacity on the network for more freight services to operate. We have to think about how freight and passenger trains co-exist on a congested, mixed-use, network.

We were disappointed about the decision to scrap Phase 2 of HS2. For us, HS2 was always about increasing capacity by moving intercity passenger trains onto the high-speed network to free-up capacity on the existing lines for more freight trains to be timetabled. It is important that appropriate mitigations are out in place to ensure that this decision does not hinder rail freight’s ambitions. Further upgrades will also be necessary to relieve some of the pinch points across the network, which is why we strongly welcome the green light given by Government to upgrade the junction in Ely to grow rail volumes to the Port of Felixstowe. Addressing the cost challenges and investing in the network will give confidence to the private sector to make the investments necessary in long-term assets that unlock the growth.

FIT: Could you elaborate on the economic challenges faced by the rail freight industry, particularly in comparison to road haulage, and how addressing these challenges would make rail a more competitive and sustainable choice for businesses?

TS: Currently only around 9 per cent of UK freight moves by rail and it is crucial that rail’s share increases in order to meet the UK’s sustainability targets. To make rail the mode of choice for trunk haulage and bulk movements, the economics must work for customers. That means that rail must be able to compete with road haulage. The economics of rail freight have been getting more challenging in recent years – as an example fuel duty (one of the largest costs for road hauliers) has been effectively frozen or cut for 14 years – whereas in that time the track access that we pay to run trains on the network has increased by more than 35 per cent in inflation alone.

On top of that every five years the track access charges paid by freight operators to run services on the network are reset and this typically results in further increases in the charges that are paid in real terms. The other challenge we face when competing with road is the cost of running electric locos. Freightliner is the largest freight operator of electric trains in the UK with 23 electric Class 90 locomotives in our fleet. They emit virtually zero carbon emissions and minimal air quality particulates, and as the national grid is decarbonised there is a clear route for rail freight and therefore UK logistics chains, to become net zero with the increased use of electric freight trains.

However, the cost of running the electric trains is considerably higher than diesel trains. In the recent energy spike, the cost of running a freight train was around £17 per mile to run an electric freight service – this compares to around £6 per mile for diesel freight trains. For rail to increase its modal share, it is essential that we work with Government to address these challenges. These are not costs which can be easily absorbed by businesses nor can we absorb them as we already work on thin margins. We would like Government to actively support the use of electric and other low-carbon traction - through either higher grant rates for businesses using rail or reduced track access charges - to help to equalise the price and drive the right incentives. It would also help to have access to electricity with some pricing certainty so that we can lock in prices for competitiveness in the future.

FIT: Louise Ward, Freightliner’s Safety and Sustainability Director, has said Freightliner is setting its own sustainability targets and roadmaps. Could you provide more details on these targets, especially in terms of expanding the use of electric freight trains, investing in alternative fuels, and developing new technologies for locomotives?

TS: Growing the amount of freight transported by rail will be vital to meet our net zero greenhouse gas emission targets by 2050. While the sustainability credentials of rail freight are clear, rail freight itself does need to decarbonise and we are working to two key targets: Like the rest of the economy, we need to be net zero by 2050. We have also set ourselves a near-term target of 55 per cent reduction by 2033.

Government has said that there should be no diesel only trains on the network from 2040. Rail freight is still primarily a diesel operation – so we need to consider how we take diesel out of the operation. Freightliner is the largest freight operator of electric traction in the UK, but we can only run our electric freight trains where the lines are electrified. Today this means every route we operate on requires a loco switch, putting costs and inefficiency into the business as effectively you need to double-up on the assets.

We would like Government to commit to fill in some of the gaps in the electrified network to increase the amount of freight that can be transport by electric freight trains. Just 60 miles of electrification would enable two million more miles each year by electric freight trains. These are places like the Felixstowe and London Gateway branch lines, where a few miles of electrification would significantly increase the number of electric services that we can run.

It is clear, though, that the whole of the rail network won’t be electrified and therefore we’re doing a lot of work looking at alternative fuels and new technologies for future locomotives. For instance, we have run services with alternative fuels – such as hydrotreated vegetable oil (HVO) – and we are working with suppliers that are fully certified and traceable on their products. These are drop-in fuels that can be used in existing engines without any impact on performance and can reduce carbon emissions by over 90 per cent. It is clear though that future locomotives will need to have bi- or even tri-mode capability to bridge the gaps where the network isn’t electrified. That may be battery, it could be alternative fuels or may even be hydrogen.

To ensure that we are developing the right technology we do need clarity over future plans to electrify the network to ensure that what we’re designing is compatible with the future design of the network. Using an existing asset with cleaner fuel is better than purchasing new assets. There is a five-year lead-time to buy new locomotives and it is a huge investment, so we need to be confident we are investing in the right assets.

FIT. Considering the impact of climate change on rail network resilience and the need for increased capacity, how does Freightliner plan to address these issues internally, and what role does the company see itself playing in the broader context of the rail freight sector's response to climate change and infrastructure development?

TS: We are starting to see the impact of climate change on the network. The number of severe weather events is increasing and over recent years we have seen more heat-related, flooding, the impact of strong winds and landslip events. This has affected access to and the reliability of the network and has led to restrictions being imposed across parts of the network. It is crucial that the network is able to adapt to the challenges posed by climate change to ensure a reliable product for customers – so that we build improved resilience into the network, to avoid imposing significant restrictions on freight movements.

We are currently reviewing and testing climate hazards that have the potential to impact our operations in years to come. This involves using external scenarios of temperature increases and climate hazard data to model what the future impact could be to our assets, infrastructure, property and our workforce. The outcome of the modelling will provide updated physical climate-related risks and opportunities to inform strategic planning and investment choices to continue to move freight on rail.

To respond to climate change, collaboration between all parties is key and we want to bring our experience, expertise and modelling insight to focus on the material risk to enable investment, adaptation and innovation where it matters.

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