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Rail Freight customers warn if rail cannot compete we will truck it

Companies which currently use the railways to move goods around the UK have said they will have to switch to the roads if rail cannot compete on price. The Freight Transport Association's Rail Freight Council was discussing proposals from the Office of Rail Regulation (ORR) at its quarterly council meeting in London last week (7 November). The proposals, which could see charges to rail freight operators for accessing the network double in some cases, are in the process of consultation by ORR before it presents its advice to transport ministers in February.

On behalf of the Rail Freight Council, FTA's Deputy Chief Executive James Hookham said, 'ORR appears to be approaching the issue of network charges with no consideration that rail freight operators must compete against other modes. Increases in charges to freight traffic as outlined in ORR's proposals would have a devastating impact upon the industry. If it is beyond ORR's remit to consider factors outside the rail network – although it is supposed to make considerations of affordability – then FTA looks to the Government to honour the commitments made in its statement to Parliament in July 2005 which indicated encouragement for the growth of rail freight.

'Rail freight has a critical role to play in the UK's economy and a major contribution to make in reducing CO2 emissions in the future. But the margins are slight, and if we start seeing charges of the order being discussed by ORR then it is unsurprising that customers would be discouraged from using rail, or worse still that existing rail customers will move back to the already congested roads.'

FTA says that operators and customers alike remain unclear why this review is taking place at all. The freight charges were last reviewed in 2001 when they were supposed to be set until 2012 unless there was material change in circumstances. 'Never mind the value of the charges,' said Hookham, 'the industry needs certainty in the charging regime. If customers can't be sure what the costs of rail are going to be five years hence, they are not going to be prepared to make the necessary infrastructure investment required to make use of the benefits in speed and service reliability that rail should be able to offer.' Stability and affordability of access was another of the Government's pledges in its 2005 statement.

1. The Freight Transport Association has some 12,000 member companies involved in freight logistics or which procure freight services to move their materials and products. Within this number are rail freight operating companies and many of their customers that consign in the region of 90 per cent of rail freight in the UK.

2. ORR is currently undertaking the Periodic Review of Charges for 2008. It will report its recommendations to Ministers in February 2007.

3. There are no firm proposals on the levels of charging but suggestions have been in the order of a rise from £100 million pa currently, to £130 million. In addition, proposals suggest the charges for freight only lines – currently paid by DfT – would fall to the freight operators. This could be a rise from £14 million currently, to up to £120 million.

4. The total profits of the four main freight operating companies last year was around £30 million.

5. Other proposals include an environmental fee, a 'scarcity' or 'reservation' fee, and geographical breakdown of charges.

For further information call:

Christopher Snelling
Head of Rail Freight & Global Supply Chain Policy
dtel: 01892 552245
mob: 07881 772388

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