Rich pickin from power switch
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By Karen Miles • Tipper operators could face a work bonanza if PowerGen goes ahead with its decision to quit its multi-million pound contract with British Rail for the carriage of 20 million tonnes of coal a year. PowerGen has already given notice to BR to quit And in an extra boost for road, the loss of the £70m-a-year contract looks set to hit the viability of the whole of BR's rail freight business while wounding the Government's ability to sell the freight businesses.
Coal haulier Bill Ellis of FW Ellis based in Worksop says he would welcome any opportunity to expand his business.
Coal is one of BR's most profitable freight movements and the PowerGen contract will end next spring as the rail network is privatised and liberalised. The notice to quit is underlined by a review of transport options at competitor National Power. Urged on by fears of privatisation and the rates charged by BR, the generator says: "The potential for road must be beckoning."
National Power's £150m-a-year contract with BR for the carriage of 37m tonnes of coal is due to expire in 12 months.
The half-price cost of road is certain to act as a powerful incentive as both generators look to cut transport costs. National Power says: "We're reviewing all our options against the background of the Government's aims to open up the rail market.... Rail freight charges represent around 10% of our total coal costs and we are therefore looking very seriously at how we can reduce them."
But Ellis doubts whether the tipper market in its current form would be able to cope with millions of tonnes of coal switching to road. Despite a recent increase in rate he says there is a shortage of tippers because operators have either gone out of business or switched to other markets.
The potential moves from both generators must also be viewed as a muscle-flexing exercise to brow-beat both BR over its rates and the Government as it decides on track costs post-privatisiation.
BR views the move by Powergen as "a bit of haggling".
The final tonnages going by road will be established as the generators weigh up the competition available from emerging private train operators and the weight of environmental uproar associated with a large-scale transfer from rail.