The Freight Transport Association has today called on the Office of Rail Regulation (ORR) to set Network Rail on a path to reducing costs for rail freight. This is to ensure the future competitiveness of rail freight relative to road, and lock-in to supply chains the benefits of reliability and payload offered by rail. The call comes as FTA responds to ORR's consultation on caps for freight track access charges for the period 2009-2014.
While welcoming ORR proposals for a theoretical cap on any possible increases in the track access charges that freight train operating companies have to pay, FTA wants ORR to make clear that it expects Network Rail to actually reduce costs throughout the period under review and therefore reduce charges for freight accessing the network. The 'caps' should be purely a theoretical maximum for any increase, not a figure for Network Rail, the infrastructure provider, to work to. Talk of potential increases in access costs for freight train operating companies will cause concern for both existing rail freight customers and those considering using rail as a means of shipping their goods.
Chris MacRae, FTA's Rail Freight and Global Supply Chain Service Manager said, 'The long term contractual nature of rail freight flows – which can often be for ten years – means that rail customers must be confident that Network Rail's culture is of cost reduction. Rail needs this to stay up with the liberalised road freight market where carriers are constantly innovating and run on wafer thin margins. FTA's Rail Freight Council on 1 February identified widespread interest from existing customers to move more by rail and from new customers looking at rail for the first time. However, the debate over setting a theoretical cap on any increase in freight track access charges creates the impression that this key element of train operator costs is going up, and could put these potential customers off.
'We believe reducing costs is not an unreasonable expectation. There is evidence from the infrastructure provision of other countries and networks that indicates Network Rail's costs could be brought down, leading to a more competitive network that will win business.'
Freight train operating companies (FOCs) pay variable access charges based upon their marginal cost usage of the network. The Office of Rail Regulation (ORR) is in the process of deciding on the level of this Track Access Charge (TAC) for the period 2009-2014. This submission by FTA was in response to a consultation on setting a theoretical 'cap' on any potential increase in these charges. A decision on this issue is expected in February. The actual level of the charge will be consulted on by ORR later in the year.
The Freight Transport Association represents the transport interests of companies moving goods by road, rail, sea and air. FTA members operate over 200,000 goods vehicles – almost half the UK fleet. In addition, they consign over 90 per cent of the freight moved by rail and over 70 per cent of sea and air freight.