A Greener Supply Chain Requires More Effort and Investment
UK – This week saw the start of another successful Multimodalexhibition at Birmingham’s NEC and one of the hot topics was, as ever, the slow transition of freight, currently borne by road haulage vehicles, onto the railway tracks. A seminar conducted at the 2015 event heard that freight trains are now carrying more intermodal traffic, mainly fast-moving consumer goods (FMGCs), around the UK than coal. However more work is needed if rail operators are to wean more customers off road transport and ‘green up’ the supply chain.
Julian Worth, Director of Transworth Rail and Chairman of the Rail Freight Forum at the Chartered Institute of Transport & Logistics (CILT), said that when UK rail services were privatised 15 years ago, the main freight flows comprised heavy, low-value goods and FMCGs were barely on the radar. He highlighted the ‘three Cs’, cost, carbon and convenience, as the reasons for rail’s change of direction. He claimed goods could be transported from deep-sea ports to the so-called ‘Golden Triangle’ in the West Midlands up to 40% more cheaply by rail than by road, and argued the potential saving was 76% lower carbon emissions saying:
“[This is] an order of cost saving for which most people would bite your hand off [and] if you’re looking to de-carbonise your supply chain, there’s nothing more effective you can do. A truck driver would have to offload and turn around inside two hours to pay his way, with a rail box, within reason, you can call it in when you want it.”
Another aspect of the argument however came from Tim Wray, General Manager of Felixstowe headquartered Multimodal Logistics, who said he struggled with that 40% saving, commenting:
“With the merchant haulage market offering such low rates, rail is not a cost-effective option. Capacity when you need it is the issue. Huge vessels all arrive at same time, and coping with the volumes is difficult.”
Wray went on to say that rail infrastructure must improve and more lines should be electrified, as with electric trains having to switch to diesel on route to Felixstowe for example. The East Coast Main Line was not cleared for high-cube containers and transport was therefore cheaper by road. He was unhappy at the use of 60 foot wagons, saying 45 foot units were needed.
Rail freight providers must up their game if they want to compete with UK hauliers
Major UK shippers have called on the rail industry to improve reliability to remain competitive with a road transport industry that has focused on trimming prices to gain market share.
Justin Kirkhope, project manager of logistics strategy for UK grocery retailer Co-operative Group, told delegates at this week’s Multimodal seminar in Birmingham: “As the road industry’s marginal costs keep coming down, rail needs to keep pace. It’s critical, first and foremost, that we’re a successful business.
“Customers expect food to be on our shelves in store 24/7. I want to send the same products to our distribution centres (DCs) and to each store, but there’s a significant restriction if I can supply from Sunday to Friday and not on a Saturday night.
“Can we divert if there’s engineering work on a Saturday?” he asked. “Is there another path available?”
Rail providers need to offer a seven-day solution even if this does not mean seven days actually on the tracks, agreed Kevin Greenaway, national planning manager for Sainsbury. The supermarket recently opened a 1m sq ft facility at Daventry International Rail Freight Terminal, underlining its commitment to rail.
“When it works, it’s perfect; but it’s a tiny proportion of our movements, as it is for all our competitors,” Mr Greenaway said. Road transport was flexible and had its own green agenda, including dual fuel and double-deck trailers. Hauliers could drive from a national DC to a regional DC, and then on stores.
“Trains go from A to B, then back to A again,” he said. “Rail does journeys from ports to the Midlands or up to Scotland very well and are ‘greener’ than double-deck trailers can ever be, but on many routes it just doesn’t make sense.”
Rail operators must find complementary flows out of Scotland or force customers to underwrite the round trip, Mr Greenaway said. Sainsbury had looked into transporting products to Truro, Cornwall, by rail, “but it never happened. It was not a lack of willingness, but rail operators but can’t expect the retailer to both take the financial hit and lose flexibility”.
Paul McMahon, freight director for Network Rail, said the organisation supported the concept of the Freight Transport Association’s “Agenda for More Rail Freight”. The UK rail network carried almost 25 billion tonne-km of freight in 2013-14 with a sharp drop in coal volumes behind last year’s 2.8%, while intermodal and construction traffic was strongly up.
Chris Welsh, the FTA’s director of global and European policy, said that to achieve the growth targets set out in Network Rail’s forecasts, rail freight needed to increase by 6% a year. Reduced bulk movements meant much of this must come from intermodal sector, he said.
Seven-days-a-week availability was essential to intermodal’s growth, and rail operators must respond more quickly – the FTA target is six hours – to service requests, he argued.
Shippers are also calling for longer trains to produce the economies of scale retailers need to convert from road transport.
Mr Welsh welcomed the fact that Network Rail now accepts 775-metre trains as the planning standard for freight upgrade schemes.
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