The Office of Rail Regulation yesterday (28 February) issued its advice to the Government on the setting of track access charge caps. The Freight Transport Association welcomes the setting of theoretical caps, however it must be remembered that these caps do not determine what rail freight users will be charged in future.
In particular FTA was pleased to see ORR state in their announcement that 'we consider there is a strong possibility that final charges will be below current levels.' This is the message the rail freight industry and its customers needed to hear.
FTA's Head of Rail Freight and Global Supply Chain, Christopher Snelling commented, 'The real debate starts now – what will Network Rail actually be able to charge the freight operating companies? We are pleased to see that ORR has stated an expectation that reductions in Network Rail's costs, and thus track access charges, should be possible.
'Due to its highly competitive nature, there are continuing efficiencies being created in the road freight market. Companies using, or considering, rail freight expect to see similar efficiencies being delivered by the rail industry. We have seen some good returns from efficiencies within the freight operators, it is now up to Network Rail to join in this.'
Less welcome in the document is ORR's decision that certain sectors can bear the full cost of freight only lines. FTA believes this is a mistake, as it creates the impression that those industries reliant on rail are captive targets for Network Rail to raise revenue from.
Snelling said, 'We believe that these full charges may see a shift towards increased road freight in industries like coal, as users may seek to minimise their exposure to freight only lines by using longer road links to reach passenger/freight rail lines. This would have negative consequences for the environment and the UK's congested road network.'
The variable track access charge for freight currently costs the industry £88m per year. The theoretical upper limit on any increase in this (the 'cap') has been set by ORR at £99m. The lower limit, beyond which charges will definitely not fall, has been set as £41m per year.
The ORR's decisions have been published in 'PR08 Advice to Ministers and framework for setting access charges'. This is available on their website – www.rail-reg.gov.uk
The next stage will see Network Rail make proposals for the new levels of TACs by the autumn of this year. ORR will then consult on these. The final level will be set by the end of 2008.
The Freight Transport Association represents the transport interests of companies moving goods by rail, road, sea and air. FTA members consign over 90 per cent of the freight moved by rail and over 70 per cent of sea and air freight. They also operate over 200,000 goods vehicles – almost half the UK