Rail Freight Operators’ Association

1. Rail Freight Operators’ Association “The collective voice of rail freight operators”

2. Rail Freight - strategically important to Scotland • Plays a vital role in supporting economic connectivity and Scottish business with the rest of the UK and the world. • 10 trains a day move between the Central Belt and the West Midlands moving everyday goods for retailers in both directions • Providing a gateway to the world for Scottish exports, notably whisky and other drinks moving in deep-sea containers to Felixstowe, Southampton, Tilbury, Liverpool and the Humber Ports • Moving Scottish mined coal to English power stations and supplying coal to Longannet and Cockenzie power stations to generate electricity

3. The Freight Market - A Competitive Sector • Rail operators compete directly with each other, road and ship • Competition helps drives efficient behaviour. • The Rail Value for Money study (McNulty) concluded that rail freight operators had achieved: • A 32 per cent improvement in staff productivity since 1998/99 • 48% growth with half the locomotives and two thirds of the wagons employed in the mid-1990s • In the future, more flexibility & efficiency is needed to keep up with competing modes and drive further modal shift: • Longer&/or heavier trains • Operating more days of the week • Simple, national access and planning regimes

4. Key rail freight markets in Scotland • Deep sea intermodal (both imports and exports) • Domestic intermodal • Coal (Anglo-Scottish and wholly Scottish flows) • Petroleum products • Chemicals • Cement • Waste • Nuclear • Pipes • Automotive products • Metals • Mail • Timber Coal currently accounts for 76% of movements Intermodal has been the fastest growing sector with 37% growth in container tonnes by rail to/from/within Scotland since 2004

5. UK Growth • Since 1994/95 UK rail freight has grown by 48% - to 19.23 billion tonne km • Coal for electricity generation has declined – although rising gas prices has increased volumes in the last year • Intermodal has become the largest sector in the market and has grown by 61% since 2003/4 whilst road movements have reduced by 14% • Investment in the Strategic Freight Network in England has enabled growth and increased modal share by rail: • Gauge clearance from major ports • Enabling longer trains

6. MDS Transmodal revised forecast freight tonnage to Scotland for 2010-2030 (based on agreed industry forecast but updated to take into account recessionary impacts) Growth in Scotland • Scottish Parliament announced January 2012 objective to increase exports by 50% by 2017 • Considerable continued growth in Intermodal sector • Coal decline but potential for biomass and extension to coal usage through fitment of carbon capture storage (CCS) at power stations • 2010-2030 forecast growth: • 604% growth in Domestic Intermodal • 877% growth in Waste (for energy) and Biomass forecast

7. Strategic Freight Network “a core network of trunk freight routes, capable of accommodating more and longer freight trains, with a selective ability to handle wagons with higher axle loads and greater loading gauge, integrated with and complementing the UK’s existing mixed traffic network.” • In CP4 the Strategic Freight Network has been funded in England and Wales only • CP4 interventions were mainly gauge clearance projects. These have unlocked immediate growth – gauge clearance from Southampton increased rail modal share from 30 to 35% • Key projects have been on time and under budget partly due to innovation – e.g. Southampton tunnel • The principles behind the Strategic Freight Network are designed to support value for money initiatives: • Maximising train lengths to minimise the paths needed and increase rolling stock utilisation • Flexible use of capacity • continue current practice of minimising operations during periods of peak passenger operation around major conurbations • Extended hours of operation to enable more services per week - increasing use of both capacity and resources

8. Proposed CP5 Strategic Freight Network Fund for Scotland • In CP5 Network Rail and RFOA propose a £50 million Strategic Freight Network fund in Scotland to support: • Economic growth • Modal shift to rail • Environmental benefit/reduce road congestion • One intermodal train removes on average 50 equivalent lorry journeys. • Scotland’s economy and sustainability targets to increase modal shift to rail • Key enablers to achieve this include • Improving freight access and capacity on the core Anglo – Scottish corridors (ECML/WCML) • Provide improved capacity and connectivity to locations north of the Central Belt such as Aberdeen and Inverness that could generate further growth.

9. Scottish Freight Aspirations for CP5 • Gauge Clearance • W10 ECML Berwick to Carstairs • Grangemouth • Dundee – Aberdeen – Inverness – Elgin • Glasgow and South Western • Capacity Enhancement Mossend Area: • Accommodation of 775m trains for intermodal traffic using Central Scotland terminals (allowing more efficient utilisation of network capacity) • Freight Capacity WCML/ECML: • Interventions required to accommodate forecast future Anglo-Scottish freight growth • Freight Capacity Central Belt – Inverness/Aberdeen: • Interventions required to accommodate future growth and improve access to the rail network for business in the North of Scotland • Infill Electrification: • Grangemouth • Edinburgh Suburban • Shotts Line

10. Justifying the Investment case for CP5 • Investment in the network infrastructure is needed to achieve the forecast growth and modal shift to support economic growth • CP4 Strategic Freight Network funding in England and Wales has delivered high Value for Money schemes, (business case for West Midlands – Doncaster has a BCR of 7.7:1). • Strategic Freight Network bid for £350m of funding for England and Wales with 2 projects already confirmed in the Autumn Statement to align with Scotland fund • Strategic Freight Network CP4 governance structure is being treated as best practice and likely to be rolled out to other “funds” in CP5 • A specific ring fenced freight fund for Scotland will enable: • Synergies with Strategic Freight Network Fund in England and Wales to enhance a national network • Assessment of CP5 freight proposals so the highest value for money schemes can be prioritised • Focus on freight (in a passenger dominated network)

11. Wider impacts of Periodic Review The Office of Rail Regulation is also reviewing access charges and incentive regimes for 2014-2019 • Policy alignment is needed to support modal shift to rail • Retaining access charges at existing level is vital to continue to compete with road • Opportunity to increase intermodal movements by rail further and faster if access charges reduced • Concern over impact to Scottish open-cast collieries of proposed increase in coal access charges • Opportunity for different approach by • Transport Scotland • Network Rail must be incentivised • to improve 7 day access • enable a reliable offering • Operators and Network Rail should be incentivised to work together to reduce each other’s costs