FREIGHT ROAD TO RAIL
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Rail's comeback continues apace with British Steel's decision to switch thousands of tonnes of steel from road to rail. Should hauliers look for other work or join the bandwagon? John Laight reports.
British Steel's decision to switch 400,000 tonnes of its Welsh traffic from road to rail is another step towards the eventual restructuring of a large part of the UK's distribution systems. The impact on the mainstream haulage sector in South Wales will be immediate in an area where other options have declined in line with traditional industries. It also confirms the changes that have resulted from the reorganisation of railfreight. After years of hibernation the sleeping giant is finally flexing its muscles, and we are beginning to see the first effects.
In the principality British Steel is one of the major providers of work and the impact of this latest decision will be far reaching. Major regional operators such as Owens (Road Services) have a large fleet occupied on a variety of contracts and can re-work their strategy to a certain extent. Even so this represents the loss of a major contract. Smaller hauliers and owner-drivers with just the one customer and equipment specified for the long-distance heavy-end market are in a different position.
Most are reluctant to be quoted directly on their reaction to the news. People who have spoken out in sensitive situations in the past have sometimes felt that they may have burnt their bridges. In the current situation the feeling is that a more pragmatic approach is called for to keep relationships, and options, open for as long as possible. However, a common view is that with rates in general at rock bottom, there will be no alternative for many but to give up and leave the industry.
In the words of one older owner with more than 30 years' experience: "This game's played out. We had vehicles on Bell Lines but just got
out in time. Where else do you go? The only work around here now seems to be courier vans and some people are working all hours for less than 20 pence a mile."
Bryn Hall lost his job as a driver in general haulage last winter and is about to move away. He still has relatives and a friend involved with British Steel contracts, and sees what is happening now as inevitable.
Finance ageements
"The old days are finished. The only reason most operators have stayed on this long is because they're stuck in finance agreements and have to keep the wheels turning, even for peanuts. Most of them would be better off cutting their losses and getting out anyway" Locally British Steel is guarded in its response. Spokesman Brian Sims in Newport was unable to say how many operators would be affected or what might come next. However, off-the-cuff opinion in the company was that haulage rates had been squeezed as far as possible and the rail deal was the only way to safeguard against impending cost pressures on road users. It is also seen as having given them a chance to demonstrate a practical commitment to environmental considerations. There seems little doubt that the strategic decision has been taken in favour of rail, and that further change is inevitable.
Certainly rail operators hold some powerful cards. For the first time they have freedom of commercial action, and can count on the active support of a government prepared Louse taxation as a tool to reduce road traffic levels. They also have the weight of the increasingly vocal anti-road and environmental lobbies on their side, and have the propaganda upper hand. Neither the public, nor the politicians want to listen to reasoned argument in support of mad transport, not that there has been much of that in recent years.
The rail network may be much reduced but its new owners are sharply focused on making the most of what they have left. A general review is currently under way, one result of which has been to fuel speculation on the re-opening of some abandoned tunnels on the Trans-Pennine routes. Railtrack denies that this is a firm proposal as yet, but it is an option which would provide it with an obvious and attractive alternative to the M62. This is a view shared by train operator English Welsh and Scottish Railways. No one will admit to having identified specific product movements yet hut if the idea actually becomes a project, grant assistance will be needed and clear evidence of commitment by users will be required. It's reasonable to expect preliminary marketing initiatives to be already taking place as part of the overall review.
It is possible to look over Railtrack's shoulders to some extent. Anyone can spend an hour with a map of the present rail system, mark in the existing freight facility projects, pinpoint where the new ones may be located and draw their own conclusions. Hauliers should realise the rail strategists have no preconceptions when it comes to targets, and are not limiting their thinking to obvious large-scale hulk movements. The results of investment in rail-linked freight facilities are beginning to show through. Traditional cargoes such as steel, timber, fuel and aggregates are now being scheduled alongside stock movements on behalf of major supermarket and retail chains, and there is more of the same to come.
Distribution strategy While this change in distribution strategy spells bad news for many, it also provides areas of opportunity. Effective railfreight systems depend on a partnership with the road sector. Terminals require feeder services at both ends of the line, and many hauliers are investing in the equipment needed to handle inter-modal and piggyback traffic.
For those with the resources, there are TAGs (Track Access Grants) and FFGs (Freight Facilities Grants) available to encourage the development of raillinked storage and distribution. So far the main beneficiaries have tended to be the larger companies offering total logistics packages, but the option to apply is available to anyone who can meet the admittedly stringent qualifying requirements.
One factor which could put a brake on these initiatives is the rate at which old BR sites with track access are being sold off, often to be lost for future commercial use. Railtrack says it has an agreement with the property services agency to vet all disposals, but also admits it has no real power to block a sale.
With 90% of freight still travelling by road, we are at an early stage in the changes. However, hauliers should make sure that they are ready to adapt to the future, and its opportunities. Unfortunately this advice will be a little too late for many in South Wales.
RAILGRANTS: WHO CAN HELP Information on Rail Freight Grants is available from the Department of the Environment on 0171 271 5651, the Welsh Office on 01222 825111 and the Scottish Office on 0131 244 0867. Full grant details and a whole range of I reports on every aspect of proposed rail r policy can be downloaded from the Internet at the Open Government web site: http://www.open.gov.uk/dot/rail/ rail 1..htm