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Orr’s final determination presents potential mixed news for rail freight

The Freight Transport Association says that the announcement on 30 October by the Office of Rail Regulation (ORR) of its final determination of Network Rail's outputs and funding for 2009-14 presents the potential of mixed news for the freight industry.

ORR has said that freight's Track Access Charges – the cost to rail freight operators of using the rail network – should fall by more than a third under their final determination, compared to current levels.

This would be good news, reducing the cost of rail freight to the customer and helping make rail an effective offering for more companies, further supporting the growth in rail freight seen in the last 10 years.

However, Network Rail has yet to give a full response. This is crucial as its cost estimates still differ from ORR's by approximately £2.5 billion and it therefore remains to be seen if it now believes the regulator's targets can be met. This is the potential bad news: committed infrastructure enhancements for freight might have to be cut back if agreement on funding cannot now be reached. Network Rail has until February to respond to ORR: it could appeal to the Competition Commission, but ORR's settlement would remain in place until the appeal is decided.

Chris MacRae, FTA's Rail Freight Policy Manager commented:

“Resolution needs to be quick to avoid damaging uncertainty about freight costs for using the network.

“What is crucial now is for the determination to be made to work. Committed infrastructure improvements that will enable further growth in rail freight must not be sacrificed in this process – this would frustrate the development of rail in the UK's supply chain at the very time when companies are seeking to improve their environmental and logistics performance by potentially making long–term investments in rail freight within their logistics supply chains.”

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