Charterail friend or foe?
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• Just a few days ago it seemed that the road transport industry had got rid of yet another competitor from the rail freight sector. Many hauliers were doubtless pleased to see the back of it.. The competitor in question, the joint venture company Charterail, was a fledgling organisation carrying only 2,000 tonnes a night, but it had planned to poach a great deal more.
And then operators getting ready to celebrate Charterail's demise had to change suddenly out of their party clothes when the directors of the company announced they had reversed their decision to put the company into liquidation.
Instead, they said, they would try to secure both new funding and the "necessary" agreements with British rail to allow it to restart trading. The change of heart came when potential investors and Charterail's customers, which include Pedigree Petfoods, Safeway, Heinz and Coca Cola, heard about the company's crisis and did not want it to collapse.
Nonetheless, the spectacle of Charterail floundering must boost morale in the road transport camp, at least in the short term. Charterail admits that one of its problems was — and is — competing against a highly professional and efficient road transport industry that is offering rock-bottom rates.
Whether road transport oper ators should gloat over Charterail's problems is another question.
Taylor Barnard and McGregory Cory, which carried the road/rail Tiphook Piggyback trailers for Charterail between customers' premises and railheads at Warrington and Cricklewood, north London, are hit hardest in the short term.
But the increasing number of operators becoming interested in working in tandem with rail will suffer if Charterail finally closes, leaving the rail freight stable without its most dynamic partner. The gap left if Charterail dies could only increase with the opening of the Channel Tunnel and the rising pressure on manufacturers to appear environmentally friendly.
It could also be argued that operators need a healthy rail freight industry to relieve congestion, allowing them access to a relatively traffic-free road network.
Unreliable
Confidence in rail freight's ability to perform efficiently and competitively was already low among many manufacturers and road transport companies. General complaints of a slow, expensive and unreliable service and a lack of resolve by either BR or the Government to make it work were exacerbated by BR's decision to close its wholly owned and loss-making rail freight division Speedlink in December 1990.
Manufacturers and road transport companies, tied into Speedlink through millions of pounds of investment in railheads, realised angrily that they had been let down by rail to a new degree. That almost nonexistent confidence has now been pole-axed by the threatened loss of Charterail. The Rail Freight Group, which represents rail users, underlines that point. Director Julia Clarke says: "The confidence in rail freight is already so fragile... I don't know how people can go back to the likes of Safeway and Heinz and say, 'why don't you use rail?"
Taylor Barnard is also scathing. Managing director Harley Barnard says: "By allowing the collapse of Charterail we must question both the Government and BR's commitment to their stated aim of supporting the development of a rail freight system."
Charterail also admits to the toll its problems will take on confidence.
Managing director Robin Gisby says if Charterail does not continue "it can only be unhelpful to developing the rail freight business in the UK".
As the service ground to a halt it had 15 customers and a further five were pledged to join within six months. It was moving 2,000 tonnes of freight on two trains travelling overnight between Glasgow, Warrington and London, and wanted to boost levels to 30,000 tonnes. It planned a larger network of regional rail heads that could also link with Channel Tunnel.
Much to the Government's embarrassment now that Charterail is in difficulty, transport secretaries seemed to be its greatest fans. The present incumbent, John MacGregor, has used its existence as apparent proof of the Government's commitment to getting freight off roads and on to rail.
Launching Charterail's London to Glasgow service in June, MacGregor said: "The equivalent of 10,000 lorry movements a year will be removed from motorways and trunk roads between London and Glasgow. But that is only a start. Charterail plans to extend its service to Aberdeen in the Autumn, and then much further afield, and of course into Europe. These plans will be instrumental in removing even more lorries from the roads. This is obviously very good news."
Crippled
The very bad news for Chuterail was that BR and the Government refused to reduce the high cost of using the track, and. This, combined with the effects of the recession and BR's refusal to cheapen locomotion costs, crippled the company.
BR, as a 22% shareholder of Charterail, also refused to agree to a refinancing package which would have helped the company through larger than expected
losses and allowed it to develop further. Some of the factors which contributed to Charterail's problems remain and do not bode well for the development of rail freight in the UK. Despite repeated calls from organisations such as the Rail Freight Group and Transport Development Group for money to alleviate the high cost of the track, the Government looks unlikely to move. This means that despite the benefits of privatising BR's rail freight businesses and liberalising operations — allowing private operators to provide services — rail looks set to remain more expensive than road freight.
Diminish
Also, BR's willingness to let Charterail die can only diminish its perceived role in the railfreight sector. BR, as chief shareholder in Charterail and provider of track and locomotives. also held `'a basic lack of belief' in what the company was doing, according to Charterail.
This lack of belief was a de cisive factor in the decision to put the company into liquidation.
The spectre of BR will not vanish with privatisation. Under the name "Railtrack" it will become the track authority res ponbsible for operating all track and infrastructure. Within hours of refusing to sanction Charterail's refinancing plan, BR raised eyebrows by launching two road/rail services. BR subsidiary Railfreight Distribution launched Haulmark, a revamped European door-todoor container road/rail service. Allied Continental Intermodel aims to provide road/rail transport services between rail terminals in the UK and mainland Europe using intermodal wagons. However, Combined Transport Limited, the swap body and container road/rail company 10% owned by BR and backed by 39 UK road transport companies, says it has no problem with locomotion or track costs.
Whether BR's latest freight launches and CTL's positive outlook will be enough to pick up the collapsed confidence in UK rail freight remains to be seen. Ironically road operators should hope that it will be — otherwise doubts over their future strategies and ability to move on the congested road network could hit them harder than any threat posed by a privatised rail system. 0 by Karen Miles