ORR massivley raising freight prices

[GB]

Possibly. I'd argue not, as would some at your employer infact. Diesel is going, fact, we can't ignore that. All those intermodals that stagger down the WC to Ipswich, that'd be a start.

There isn't much in terms capacity of loco availability, timetabling or access to suitable locations for loco swaps to make it viable. Even less so when the WCML intermodals get routed via Ely and Peterborough.

Your right, we do run some services that are electric hauled (class 92), however this is the cross channel division where the infrastructure is already in place.

 

[Pumbaa]

There isn't much in terms capacity of loco availability, timetabling or access to suitable locations for loco swaps to make it viable. Even less so when the WCML intermodals get routed via Ely and Peterborough.

Your right, we do run some services that are electric hauled (class 92), however this is the cross channel division where the infrastructure is already in place.

Throw some £££ at the job then, some Vossloh Eurolights would do nicely.

Turning UK freight transport and pretty much all passenger as well is classic case of "can't do = won't do". All it takes is a pair of balls to start the domino effect...

 

[GB]

All it takes is a pair of balls to start the domino effect...

Well as DRS have started it we will have to see how well it goes.

 

[Pumbaa]

I hope well

 

[Metroland]

There's really nobody who can justify big business paying a fraction of their true cost to the railway for freight?

Except that's not the case. Railfreight, is an entirely commercial operation, except one or two very small grants for providing freight facilities for environmental reasons that what otherwise not be commercial. They amount to a few million a year for specific capital projects.

The problem with the proposal, is one again the same is not applied to road. If you were to take the true cost of damage to the roads, a lorry causes 16,000 times (on average) more damage than a car. In an accident, an HGV causes far more damage than a car, they are also far more polluting. Is anyone seriously suggesting we hike road tax up for HGVs to reflect this?

The aim of the document is to reduce cross subsidization, yet all networks tend to have some degree of this in order to survive as a service. For example, is it not cost effective to lay water pipes to a remote house, or take post to the north of Scotland, and do remote roads really pay their way? This is effectively cross subsidization.

Likewise HGV traffic is heavily cross subsidized by motor cars. It would be unaffordable for the road haulage industry to finance and build a separate network, yet that is exactly what rail freight is expected to do.

http://www.rail-reg.gov.uk/pr13/PDF/freight-charge-consultation-may2012.pdf

 

[tirphil]

Except that's not the case. Railfreight, is an entirely commercial operation, except one or two very small grants for providing freight facilities for environmental reasons that what otherwise not be commercial. They amount to a few million a year for specific capital projects.

The problem with the proposal, is one again the same is not applied to road. If you were to take the true cost of damage to the roads, a lorry causes 16,000 times (on average) more damage than a car. In an accident, an HGV causes far more damage than a car, they are also far more polluting. Is anyone seriously suggesting we hike road tax up for HGVs to reflect this?

The aim of the document is to reduce cross subsidization, yet all networks tend to have some degree of this in order to survive as a service. For example, is it not cost effective to lay water pipes to a remote house, or take post to the north of Scotland, and do remote roads really pay their way? This is effectively cross subsidization.

Likewise HGV traffic is heavily cross subsidized by motor cars. It would be unaffordable for the road haulage industry to finance and build a separate network, yet that is exactly what rail freight is expected to do.

http://www.rail-reg.gov.uk/pr13/PDF/freight-charge-consultation-may2012.pdf

An excellent post. Couldn't have put it better myself.

 

[Bald Rick]

Lets look at the coal market.

In good ol' BR days, coal traffic was priced at (roughly) a level that was just cheaper than the competition. The competition - road - was (and still is) an expensive alternative. So coal made big profits for the railway (in economic terms super profits), because as a monopoly supplier of rail freight BR could screw the customer (CEGB and it's successors). As an aside, for many lines in the Midlands, North and Wales this is what kept them open. A former BR coal manager may correct me here.

Come the advent of a multitude of freight operators, the market changed. The competition was now other freight operators, who compete viciously for every flow. Naturally, this eliminates the super profits as the freight operators price at a level to get the contract with just sufficient profit to remain a viable business. Or if they got their sums wrong, not quite viable. Great for the coal customers, but in reality the power generators were generally going to buy the rail service anyway so long as it was cheaper than road.

So the net effect is that money flows out of the rail industry and into the pockets of the shaeholders of the power generators, or if you believe the power generators into our pockets in (slightly) lower energy bills.

My take is that by raising the access charges for bulk flows, where the alternative modal competition is much more expensive, some of that former 'super profit' comes back to the rail industry. Yes there may well be some traffic at the margins that is priced off, but overall it means more income for broadly the same amount of traffic. This can only mean that farepayers / taxpayers (the only funders of the industry) pay less. Which for me (as both) is a good thing.

 

[tbtc]

Except that's not the case. Railfreight, is an entirely commercial operation, except one or two very small grants for providing freight facilities for environmental reasons that what otherwise not be commercial. They amount to a few million a year for specific capital projects.

The problem with the proposal, is one again the same is not applied to road. If you were to take the true cost of damage to the roads, a lorry causes 16,000 times (on average) more damage than a car. In an accident, an HGV causes far more damage than a car, they are also far more polluting. Is anyone seriously suggesting we hike road tax up for HGVs to reflect this?

The aim of the document is to reduce cross subsidization, yet all networks tend to have some degree of this in order to survive as a service. For example, is it not cost effective to lay water pipes to a remote house, or take post to the north of Scotland, and do remote roads really pay their way? This is effectively cross subsidization.

Likewise HGV traffic is heavily cross subsidized by motor cars. It would be unaffordable for the road haulage industry to finance and build a separate network, yet that is exactly what rail freight is expected to do.

http://www.rail-reg.gov.uk/pr13/PDF/freight-charge-consultation-may2012.pdf

I can see the need for urban households to subsidise infrastructure in rural areas for political reasons, in the way that I can see the justification for commuters in big cities to subsidise rural train services.

(insert generic argument about "the south" subsidising "the north" etc)

However, whilst you can argue a social need for me paying extra for things so that people in Ulapool can have the same utilities at the same price as me, we are talking about normal passengers subsidising massive businesses.

Given the huge cost of UK rail (compared to the continent etc), can you justify freight paying 1% of the bill but having 7% of traffic? Maybe when it was local companies sending goods to the market, but its harder to feel sympathy for enormous energy companies.

You say that Railfreight is an entirely commercial operation but the heavy trains do a lot more damage to infrastructure than a DMU, Network Rail is having to spend huge sums on infrastructure improvements to accommodate freight... passengers are having to pay a greater share of the railways' costs, why aren't these big firms paying their share?

 

[ivanhoe]

Nobody wins here. The price of energy will further rise which will be passed onto All taxpayers. Understand the arguements about paying your way but if you want to fly the flag of sustainability , you will not engage the population of the UK if the price to pay is yet more increases in your day to day costs whilst most of our wages are being frozen at best. Do we really need the ORR? I'm not sure

 

[Metroland]

I can see the need for urban households to subsidise infrastructure in rural areas for political reasons, in the way that I can see the justification for commuters in big cities to subsidise rural train services.

(insert generic argument about "the south" subsidising "the north" etc)

However, whilst you can argue a social need for me paying extra for things so that people in Ulapool can have the same utilities at the same price as me, we are talking about normal passengers subsidising massive businesses.

Given the huge cost of UK rail (compared to the continent etc), can you justify freight paying 1% of the bill but having 7% of traffic? Maybe when it was local companies sending goods to the market, but its harder to feel sympathy for enormous energy companies.

You say that Railfreight is an entirely commercial operation but the heavy trains do a lot more damage to infrastructure than a DMU, Network Rail is having to spend huge sums on infrastructure improvements to accommodate freight... passengers are having to pay a greater share of the railways' costs, why aren't these big firms paying their share?

But as I said, equally the full costs of road freight are not covered either in many cases. So why should large companies get a free ride on that? The fact of the matter is, we'll end up paying through higher bills in any case.

My main concern is freight switching to road as a result of hikes, the net result is there is an even bigger hole in rail industry finances. Which means 1) the tax payer will have to pay 2) and/or passengers will have to pay 3) and/or freight will switch to road meaning more pollution and congestion for the rest of us.

The UK already has one of the lowest modal shares on freight in the world, I don't see any gain for the nation's competitiveness if yet more is switched to already congested roads with expensive fuel prices.

 

[yorksrob]

According to the Rail article, the current charging regime for railfreight leaves between £192 and £241 million pa of "avoidable costs" unrecovered - defined as costs that Network Rail would avoid if freight didn't run.

As far as I'm concerned, if freight charges can be raised to cover this without pushing too much freight on to the roads, I'm all for it. Alternatively, if such an increase is likely to lead to an unacceptable lorry increase on the roads, then obviously it makes sense to continue charging at a lower level. However, if this is the case, I'd be very wary of describing railfreight as an "entirely commercial venture" as it tends to suggest in peoples minds that the £192-£241m costs are the result of other parts of the railway which are then expected to take the cuts. Far preferable to describe railfreight as something which although not entirely free of subsidy, is vastly beneficial to the environment.

Of course, as Metroland points out, were roadfreight not subsidised by other road users, the higher railfreight charge would in turn probably become more viable.

 

[Metroland]

Actually I don't think many things can be described of 'entirely free of subsidy'. Large companies gain an awful lot through the tax credits systems, where low wages are topped up. Parts of energy, farming and manufacturing tend to be very heavily subsidized. I doubt the city of London could operate in the way it does without it's somewhat subsided commuter trains bringing 80% of the passengers in every morning and so on...

There's also indirect subsidies through companies through companies avoiding certain taxes, cross subsidization with public infrastructure, tax breaks for set ups in certain parts of the country and so on.

The free market, rarely, if ever exists. If often not a bad thing if certain things are favored that would not otherwise be commercial viable: The health and education system are classic examples, but also things like heritage, arts and museums.

I doubt a policy of shifting more freight to a congested road network, thus to avoid politically unpopular moves to close vast swaths of rural branch lines (which gets the lion's share of government money) is very popular either.

 

[GB]

According to the Rail article, the current charging regime for railfreight leaves between £192 and £241 million pa of "avoidable costs" unrecovered - defined as costs that Network Rail would avoid if freight didn't run.

That doesn't really explain much. How have they come to this figure and what exactly is the break down? What "unrecovered" costs are they talking about?

 

[yorksrob]

The free market, rarely, if ever exists. If often not a bad thing if certain things are favored that would not otherwise be commercial viable: The Health, education system are classic examples, but also things like heritage, arts and museums.

I agree wholeheartedly - subsidy is an inevitable part of public life but the railway seems to be beholden to public perceptions.

Railfreight is perceived as commercial and therefore good. The passenger railway is perceived as subsidised by Government and therefore bad (even though both are subsidised and commercial to an extent). Guess which gets the chop.

I still feel that were the playing field between road and rail freight not so uneven, it would be relatively easy for railfreight to cover the costs mentioned in the article, whilst probably increasing market share.
--- old post above --- --- new post below ---

That doesn't really explain much. How have they come to this figure and what exactly is the break down? What "unrecovered" costs are they talking about?

Quoting directly from the article:

"freight loops, chords, quadruple track where passenger services only need two, structures such as bridges strengthened for freight and associated signalling"

 

[Metroland]

I had a quick look at the ORR document, and the Settle to Carlisle was used as example. This seems to me to be a can of worms. NR claimed freight trains had done a lot of damage to bridges and embankments that would not have occurred if they didn't exist.

Hang on a minute? Didn't BR go on a 30 year maintenance holiday in anticipation of the closure of the line? Even when the track was relayed cheap steel sleepers were used that had to be taken out. And what about the costs of new signalling added to accommodate new freight traffic? Surely this was because of kit taken away by BR because the line was run as a very basic passenger railway of no strategic importance?

Surely these costs were incurred by the railways because of 1) political decisions to run down the line 2) political decisions to close UK coal mines and import coal 3) political decisions to build and improve the road network using cheap public money as opposed to more expensive money borrowed privately by NR, and the decision to allow road users to incur flat charges to use the network instead of variable ones taking into account other external and marginal costs?

 

[GB]

Fair enough about structure strengthening, but quadruple tracks are not necessarily necessary and loops and chords allow more freight to run and thus produce an increased income for NR.

If NR really take that view then they might as well not invest at all or bother to run any trains. Would save a fortune!

 

[yorksrob]

I had a quick look at the ORR document, and the Settle to Carlisle was used as example. This seems to me to be a can of worms. NR claimed freight trains had done a lot of damage to bridges and embankments that would not have occurred if they didn't exist.

Hang on a minute? Didn't BR go on a 30 year maintenance holiday in anticipation of the closure of the line? Even when the track was relayed cheap steel sleepers were used that had to be taken out. And what about the costs of new signalling added to accommodate new freight traffic? Surely this was because of kit taken away by BR because the line was run as a very basic passenger railway of no strategic importance?

Surely these costs were incurred by the railways because of 1) political decisions to run down the line 2) political decisions to close UK coal mines and import coal 3) political decisions to build and improve the road network using cheap public money as opposed to more expensive money borrowed privately by NR, and the decision to allow road users to incur flat charges to use the network instead of variable ones taking into account other external and marginal costs?

I don't disagree with any of that. I'd just rather someone at least attempted to properly attribute freight's costs so that we can have a sensible discussion as to whether those costs can be recovered from the freight business or whether they need to be subsidised.

The alternative is to carry on pretending that freight is entirely commercially viable whilst the passenger railway has to bear all of the costs/cutbacks/negative scrutiny associated with being subsidised from the public purse.

 

[tbtc]

Nobody wins here. The price of energy will further rise which will be passed onto All taxpayers

The cost shouldn't be that great in the grand scheme of things, given that the cost of the fuel for the trains will remain the same, the cost of staffing the trains will remain the same. the cost of leasing/maintaining the trains will remain the same, the cost of getting the coal out of the ground will stay the same etc.

But at least the cost would be shared between taxpayers, not disproportionately subsidised by rail users.

My main concern is freight switching to road as a result of hikes, the net result is there is an even bigger hole in rail industry finances

As mentioned above, the track access charges are surely fairly small compared to the overall cost of transporting heavy freight long distances. If freight takes up 7% of paths (and presumably requires disproportionate infrastructure spending due to the weight of the trains on the track etc) but only pays 1% of the bill then would there really be a big hole in finances if it left?

 

[Metroland]

I don't disagree with any of that. I'd just rather someone at least attempted to properly attribute freight's costs so that we can have a sensible discussion as to whether those costs can be recovered from the freight business or whether they need to be subsidised.

The alternative is to carry on pretending that freight is entirely commercially viable whilst the passenger railway has to bear all of the costs/cutbacks/negative scrutiny associated with being subsidised from the public purse.

Again, I suspect this is a can of worms. The freight companies are obviously reliant on NR to provide a service, and I suspect (but don't know) they may point to the ORRs assertion that NR is an inefficient organization compared the best practice abroad. A point, I hasten to add is hotly disputed by NR.

In fairness to NR, the UK rail network suffers from some particular disadvantages compared to railways abroad, principally the tight loading gauge which increases (especially freight) cost considerably. We have a backlog of past underinvestment, meaning bridges and other structures are not perhaps as good as they should be. We still have a lot of mechanical signalling on many lines which increases operating costs considerably, which isn't the case in many other countries, especially the USA.

Part of the debate should be whether a few freight trains per day removing several hundred trucks from the road and 1/5 of the pollution is more valuable to the economy than a lightly loaded DMU carrying a handful of passengers with similar pollution levels to a small car.

The problem with this debate is I can see politicians opting to remove the freight trains, because being a hidden part of the economy, it's the easy option. Axing branch line passenger trains is a far more "touchy feely" subject, and may be more unpopular.
--- old post above --- --- new post below ---

As mentioned above, the track access charges are surely fairly small compared to the overall cost of transporting heavy freight long distances. If freight takes up 7% of paths (and presumably requires disproportionate infrastructure spending due to the weight of the trains on the track etc) but only pays 1% of the bill then would there really be a big hole in finances if it left?

Because in a country of highly congested roads, which are frequently shut by accidents involving HGVs, where we are becoming increasingly reliant of foreign oil (where they is no technical solution to power trucks via other methods) where the justification to keep some lines open because the traffic has been 'priced off' becomes thinner onto a road system which also doesn't reflect true prices it's nothing short of economics of the madhouse.

 

[WatcherZero]

The consultation document explains it all in detail.
Essentially Freight costs £192-£241m in annual ongoing costs of usage (this doesnt include construction of freight only lines, just its track maintenence and capacity provision)
Freight currently pays £55m a year in track access charges
ORR want to increase this to £105m per year, freight is still only paying half its true cost so it is still subsidised.


You can compare this to the passenger rail side, the revenue generated through ticketing collectivley is a just a tiny bit more than the cost of operating all passenger services. Essentially its enough to keep the trains, fuel, stations and staff expenses covered and the annual maintenence of the damage they cause. However it is about £4bn per year short of the cost of new and expanded infrastructure like new stations, new lines, capacity improvements, longer platforms, station expansion, etc (Your Thameslinks, Crossrails, Birmingham News Street, Northern Hub as well as the hundreds of minor capacity improvements each year)... so essentially meeting future demand is subsidised by the Government.

A good hypothetical analogy might be Airlines pay all the costs of flights and operating airports but the Government itself pays the cost of building and expanding airports in the first place.

 

[GearJammer]

Again, I suspect this is a can of worms. The freight companies are obviously reliant on NR to provide a service, and I suspect (but don't know) they may point to the ORRs assertion that NR is an inefficient organization compared the best practice abroad. A point, I hasten to add is hotly disputed by NR.

In fairness to NR, the UK rail network suffers from some particular disadvantages compared to railways abroad, principally the tight loading gauge which increases (especially freight) cost considerably. We have a backlog of past underinvestment, meaning bridges and other structures are not perhaps as good as they should be. We still have a lot of mechanical signalling on many lines which increases operating costs considerably, which isn't the case in many other countries, especially the USA.

Part of the debate should be whether a few freight trains per day removing several hundred trucks from the road and 1/5 of the pollution is more valuable to the economy than a lightly loaded DMU carrying a handful of passengers with similar pollution levels to a small car.

The problem with this debate is I can see politicians opting to remove the freight trains, because being a hidden part of the economy, it's the easy option. Axing branch line passenger trains is a far more "touchy feely" subject, and may be more unpopular.
--- old post above --- --- new post below ---


Because in a country of highly congested roads, which are frequently shut by accidents involving HGVs, where we are becoming increasingly reliant of foreign oil (where they is no technical solution to power trucks via other methods) where the justification to keep some lines open because the traffic has been 'priced off' becomes thinner onto a road system which also doesn't reflect true prices it's nothing short of economics of the madhouse.

I can say from observation that congestion is caused by the amount of cars on the road, not trucks/freight, and as for roads being frequently shut due to accidents by HGVs, i would argue that more roads are shut on a daily basis by cars crashing than by trucks, also most trucks crashing is most of the time caused by some tit in a car anyway!

I would also argue that trucks do not pollute anywhere near as much as people would have you believe, with truck manufacturers continually producing better and cleaner diesel engines (currantly up to EURO 6 standard) and with big fleets replacing their fleets every 5-10 years the situation will only get better, you never hear of ANY road transport company putting 50 year old trucks into service, unlike a certain rail opperator who is overhauling and putting into traffic 37's + 47's at the expense of modern 66's!

 

[yorksrob]

Again, I suspect this is a can of worms. The freight companies are obviously reliant on NR to provide a service, and I suspect (but don't know) they may point to the ORRs assertion that NR is an inefficient organization compared the best practice abroad. A point, I hasten to add is hotly disputed by NR.

In fairness to NR, the UK rail network suffers from some particular disadvantages compared to railways abroad, principally the tight loading gauge which increases (especially freight) cost considerably. We have a backlog of past underinvestment, meaning bridges and other structures are not perhaps as good as they should be. We still have a lot of mechanical signalling on many lines which increases operating costs considerably, which isn't the case in many other countries, especially the USA.

Part of the debate should be whether a few freight trains per day removing several hundred trucks from the road and 1/5 of the pollution is more valuable to the economy than a lightly loaded DMU carrying a handful of passengers with similar pollution levels to a small car.

The problem with this debate is I can see politicians opting to remove the freight trains, because being a hidden part of the economy, it's the easy option. Axing branch line passenger trains is a far more "touchy feely" subject, and may be more unpopular.

The realistic comparison to those few freight trains a day is more likely to be several passenger trains, some of which are likely to be very heavily used, most of which are reasonably well used and a few of which are lightly used.

Trying to sort out which bit of the railway costs what is a can of worms - but it's one that was opened a long time ago. There's certainly no point trying to attribute costs to one part but not another.

With regard to freight, I think there are enough environmental/road safety benefits to make the case for keeping it on rail even taking into account costs. There's also a large proportion of the population who couldn't care less if Doris down the road can't get in to town to do her shopping, but would balk at suddenly finding hundreds of extra lorries in front of them. It might help these to accept the concept of a publicly subsidised railway system if they understand that it removes lots of lorries from their path as well as just helping other people to move around.

 

[455driver]

Once they get all those horrible, slow freights off the railway they will be able to run more passenger trains.

Cheap and easy way of "increasing" passenger capacity.

Me, cynical, never!

 

[DownSouth]

Once they get all those horrible, slow freights off the railway they will be able to run more passenger trains.

Cheap and easy way of "increasing" passenger capacity.

Me, cynical, never!

Capacity is actually higher at lower speeds. Slow down the passenger trains and there's room for everybody with an even higher number of seats per hour available, along with the reduced energy usage not wasted on so much pointless acceleration and the reduced wear and tear on braking systems!

 

[455driver]

It is a balancing act, up to a certain speed capacity increases, above it capacity decreases.

The best capacity is when all trains have a similar average speed, freight will trundle along at about 50 and the stopping services will accelerate to 70 before braking for the next station. Problems start when you have long distance/ fast services that eat into the line capacity.

 

[tbtc]

Capacity is actually higher at lower speeds

Its all about similar speeds. HS2 is supposed to get eighteen paths an hour because all trains will be running at the same speed, for example.

The problem we have is when one line contains 100mph+ Intercity services plus normal stopping services plus slow freight - which sadly happens on too many two track lines - a line can be congested with only a handful of services an hour because of the significantly different speeds.

If you can ensure that everything runs at least at 50mph and no faster than 100mph then you will have a lot more paths available than the current situation on some lines.

 

[ainsworth74]

If you can ensure that everything runs at least at 50mph and no faster than 100mph then you will have a lot more paths available than the current situation on some lines.

Though of course whilst that gains you a lot more capacity it costs you in journey times on your long distance passenger services which will cost you passengers and therefore revenue.

The ECML is real balancing act trying to fit in 125mph inter-city services, along with 90-100mph inter-regional/commuter/suburban services and of course plenty of freight at varying speeds (one of the main reasons 140mph is not going to happen).

 

[tbtc]

Though of course whilst that gains you a lot more capacity it costs you in journey times on your long distance passenger services which will cost you passengers and therefore revenue.

The ECML is real balancing act trying to fit in 125mph inter-city services, along with 90-100mph inter-regional/commuter/suburban services and of course plenty of freight at varying speeds (one of the main reasons 140mph is not going to happen).

Absolutely - which is one of the reasons I'm in favour of HS2 (because there's no way of getting fast services on the current main lines.

A fast train on the ECML eats into several "normal" passenger paths, but then the same could be said of one slow freight train (which similarly takes up a few paths).

No easy way of giving everyone all the paths they want.