DEVELOPING RAIL FREIGHT POLICY IN SCOTLAND

Stakeholder Engagement
Final Replies due by 23 December 2009

This document is also available in PDF format

CONTENTS

1. Introduction: Rail Freight Policy
2. Current Market
3. How does modal shift contribute to the aims of the Scottish Government?
4. What are the benefits of moving freight by rail?
5. What are the obstacles to moving freight by rail?
6. Current interventions and incentives
7. Options for intervention
8. Proposals for action
9. Intended outcomes

Annex A How to respond to the consultation, including guidance questions and contact details. (also available as MS Word and PDF)
Annex B Overview of policy context.
Annex C General information on this consultation

Respondee Information Form (available as MS Word and PDF)

1. INTRODUCTION: RAIL FREIGHT POLICY

Transport Scotland is producing a framework for the development of a rail freight policy that aims to encourage increased modal shift to rail for freight.

The aim of this consultation is to determine the key challenges and opportunities that exist to further develop rail as a mode of transport for freight. It will add to the evidence base for rail freight policy to assist in strategic planning for the rail industry, to inform decisions on Government investment in rail and to contribute to the planning of Network Rail’s High Level Output Specification (HLOS) in Scotland in future.

The Scottish Government is committed to encouraging the transfer of freight from road to rail where this would be a viable alternative. The movement of freight by rail produces fewer emissions per tonne than road-based distribution, therefore modal shift will support the Scottish Government’s target to achieve an 80% reduction in overall emissions by 2050.

While the mode of transport for freight is a commercial decision for the freight service provider and customer, the Scottish Government seeks to allow rail to compete with road as a viable option.

This consultation considers the benefits and obstacles facing modal shift, and the actions that the Scottish Government, industry and other stakeholders can take to encourage modal shift for freight to more sustainable transport modes.

We would welcome your comments on the identified obstacles and proposals for action. Guidance on how to respond and a list of questions to assist you are included at Annex A however, comments are invited on any matter within the scope of this consultation.

2. CURRENT MARKET

The efficiency of freight movement is key to the success of many sectors of Scotland’s economy. The current demand for freight is a derived demand as goods are transported through the supply chain in response to business needs. Both suppliers and users of freight transport are clear that, to compete effectively, Scottish businesses need to have reliable and efficient routes to local, national and global markets.

Like all businesses, the freight industry has been affected by the current economic downturn. The relatively high cost of rail transport to the end customer can limit its success as a mode of transport for freight. Rail is a more competitive option for heavier, non time critical loads travelling over longer distances, such as coal. Local industry, markets, loads and geography are defining factors in whether a rail freight operation is commercially viable. Rail is less able than other modes to cope with large increases in demand in the short to medium term as the capacity for rail freight is constrained by infrastructural and operational factors, as well as the availability of paths, capability and geographical coverage of the network.

In contrast to domestic passenger rail services, which are publicly specified and privately delivered, strongly competitive markets determine the demand of freight services: what goods are carried, where and by which mode. This acts as an incentive to efficiency and Government interventions will seek to preserve this competitive market.

While the trunk road network will remain the predominant means of moving freight for the foreseeable future, there is scope for moving a higher proportion by rail.

3. HOW DOES MODAL SHIFT CONTRIBUTE TO THE AIMS OF THE SCOTTISH GOVERNMENT?

The Scottish Government’s Economic Strategy sets out how we will support businesses and individuals and how, together, we can deliver the following Purpose:

"to focus the Government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth."

The Scottish Government’s Economic Strategy states a desire to increase sustainable economic growth through the achievement of five key strategic objectives, to make Scotland:

• Wealthier and fairer;
• Smarter;
• Healthier;
• Safer and stronger;
• Greener.

The movement of a greater proportion of freight by rail will contribute to the Government’s targets by making Scotland’s transport network smarter and greener.

The world-leading Climate Change (Scotland) Act 2009 sets an ambitious statutory emission reduction target of 80% by 2050, with an interim target of a 42% reduction by 2030. In Scotland, transport is the second largest contributor to emissions levels behind energy supply, and these emissions are quickly growing. This growth contrasts to the decline experienced by most other sectors of the Scottish economy and is the result of a significant increase in travel, particularly by road vehicles. The Scottish Government must therefore focus on the opportunities and potential environmental benefits of modes of transport with lower emissions, such as rail.

Our aim is to increase the proportion of freight and passengers moved by rail in Scotland. The Scottish Government’s rail policy document, Scotland’s Railways, set out a vision that the railway in Scotland should provide a reliable, customer-focused service that supports our economy and environmental aspirations.

The railway must offer a high quality service, be affordable, accessible, reliable and competitive with road and air journey times in order to ensure that an increasing proportion of products are delivered through rail freight.

The Freight Action Plan (FAP) sets out the Scottish Government vision for "Scotland to be a place where the movement of freight through the supply chain is efficient and sustainable, on a transport infrastructure that is integrated and flexible. This will allow Scotland’s businesses to compete and grow in a global economy". The FAP committed Transport Scotland to work with the rail industry to ensure best use is made of the existing infrastructure and network capacity.

This rail freight policy is considered not only in the context of current Scottish rail policy, but also within a framework of Scottish, UK and European policies, which are outlined at Annex B. It is important that the evidence base produced through this consultation can assist in providing a response to developments in rail freight policy at UK and EU levels. Comments are welcome on any relevant aspect of these wider policies.

4. WHAT ARE THE BENEFITS OF MOVING FREIGHT BY RAIL?

The drivers for modal shift are the need to reduce transport emissions and the desire to reduce congestion from roads. Achieving modal shift will contribute to achieving the Scottish Government’s ambitious targets on emissions reduction.

• Rail transport produces less emissions per tonne transported when compared with road, therefore modal shift from road to rail will contribute to emissions reduction targets;
• Removing freight vehicles from roads may contribute to reducing congestion, journey times and noise;
• Shifting one lorry from road to rail is anticipated to have greater environmental benefit than removing one passenger vehicle.

Transport Scotland estimates that rail transport produces around 10% of the emissions per tonne km when compared with road transport. The Department for Transport, along with the Scottish Government Transport Directorate, calculates Freight Mode Shift Grants on the basis that rail transport produces between 25% and 30% of the emissions produced by road transport per lorry mile, depending on road type. The two figures are not directly comparable, however both calculations are clear evidence of the impact of modal shift on transport emissions levels.

Further research will be required to determine the damage caused by road and rail freight to their respective infrastructures and the actual value, to the public purse, of a shift for both passengers and freight. Although corridors with particularly high emissions levels have been identified in the Strategic Transport Projects Review, further work will be necessary to determine appropriate, alternative rail routes.

5. WHAT ARE THE OBSTACLES TO MOVING FREIGHT BY RAIL?

There are a number of reasons why the uptake of rail freight is limited. Not all freight will be suitable for movement by rail, such as irregularly shaped loads and infrequent flows. Some of the barriers that we have identified are listed below:

Infrastructural, such as:

• Loading gauge;
• Rail freight terminals;
• Availability of paths (may be operational issue also).

Administrative, such as:

• Charging regimes;
• Financing rail freight enhancements.

Logistical, such as:

• Rail services perceived to have little retail presence or visibility;
• Rail operators quote for moving train, not door to door as customer requires;
• Expectation of rail operators that customer will provide container in most cases.

Operational, such as:

• Higher cost of rail;
• Containers are not routinely back-loaded by operators, so potential responsibility of customer to cover round-trip;
• Wider industry culture.

6. CURRENT INTERVENTIONS AND INCENTIVES

The rail freight industry has a key role in increasing rail use through the delivery of a service that meets the needs and preferences of the customer. Increased modal shift is predicated on the co-operation of a wider group of operators, hauliers, customers, suppliers and retailers with a shared desire to reduce carbon emissions.

Whilst the responsibility of achieving market growth lies with operators, the Scottish Government and its agencies are committed to taking forward the desire of Scottish Ministers to increase the proportion of freight moved by rail for environmental benefit. A number of Government interventions act to achieve this through incentivising rail use and modal shift, providing information and improving the capability and capacity of the rail network.

Rail Infrastructure Projects

The Strategic Transport Projects Review makes recommendations for a range of transport interventions across Scotland. A number of these proposals will facilitate more efficient movement of freight by rail. Projects include:

• Grangemouth road and rail upgrades;
• Rail service enhancements between Aberdeen and the central belt;
• Enhancements to rail freight on the West Coast Main Line;
• Inverkeithing to Halbeath line improvements.

Projects will be delivered in accordance with the Scottish Government’s investment hierarchy of firstly maintaining and safely operating the existing network, making better use of existing capacity, then targeted infrastructure improvements. Delivery of the Forth Replacement Crossing is the strategic transport priority for Scotland. It will be the priority for our investment programme until its opening in 2016. Alongside this, we will progress rail interventions such as improvements on the Highland Main line, Aberdeen to Inverness line, and the Edinburgh to Glasgow Improvements Programme.

Freight Mode Shift Grant Schemes

The Scottish Government Transport Directorate operates 3 Freight Mode-Shift Grant schemes - which have EU State aid clearance - aimed at generating environmental benefits by enabling rail and water to compete with road on cost. These were recently reviewed: the Freight Facilities Grant scheme will remain unchanged; the Rail Environmental benefits Procurement Schemes, which provide operating subsidy, will be replaced by new Mode Shift Revenue Support schemes on 1 April 2010.

Details can be found at:-
http://www.scotland.gov.uk/Topics/Transport/FT/freightgrants1

Freight Best Practice

The Scottish Government has funded access to Freight Best Practice Scotland for all freight operators in Scotland. The programme, which was initiated by the Department for Transport at a UK level, promotes operational efficiency within the freight industry and in Scotland is managed by the Scottish Government’s Transport Directorate. The website, www.freightbestpractice.org.uk, offers free, impartial information and a range of tools to assist operators in saving fuel and information on the freight mode shift grants schemes.

Strategic Timber Transport Fund

The Strategic Timber Transport Fund, managed by the Forestry Commission, is planned to operate until March 2011. Each year, £5 million is available in grant funding to facilitate the sustainable transport of timber in rural areas for the benefit of the environment and local communities. More information is available at http://www.forestry.gov.uk.

7. OPTIONS FOR INTERVENTION

In order to determine the need for intervention to encourage modal shift consideration must be given to areas of the transport network with high carbon emission levels, and the type of intervention that may be required.

The Strategic Transport Projects Review examines key transport corridors in Scotland with high carbon emissions. Research has also been carried out to determine capacity and constraints on the rail network. Consideration could now be given to the corridors with high emissions, available network capacity, and loads suitable for rail transport that are currently moved by less sustainable modes. A robust evidence base will be critical as we prepare the High Level Output Specification for delivery in the next Control Period.

We have compiled a list of possible types of intervention, however we are keen to hear from stakeholders the actions they consider are necessary to increase the use of rail for freight.

Possible Interventions:

• Infrastructural enhancements in addition to those recommended by the Strategic Transport Projects Review;
• Information schemes, in addition to those in place, to assist in modal shift;
• Facilitated discussions between rail freight service providers and users;
• Further financial incentive schemes.

8. PROPOSALS FOR ACTION

Complementing the existing vision for the freight industry overall, we propose that our vision for the future of rail freight should be:

‘A Scotland where the infrastructure and the co-operation between Government, wider industry and customers is conducive to the expansion of rail freight movements, with a focus on modal shift away from less sustainable transport.’

To realise this vision, the Scottish Government through Transport Scotland will work towards achieving the following objectives:

• To establish available freight capacity on the rail network and how this might best serve the needs of customers;
• To establish any necessary improvements to infrastructure, where capacity and potential freight traffic for rail are identified;
• To secure a return on investment in rail freight infrastructure enhancements in line with the amendment of EC Directive 2001/14/EC;
• To consider the need for incentives going forward, to complement existing schemes within the Scottish Government;
• To persuade consumers, retailers and producers of the commercial, environmental and public relations benefits of rail as a mode of transport for freight.

PROPOSED ACTION PLAN

The rail freight industry must take responsibility for mitigating the difficulties experienced by potential customers. We believe that there are benefits to the industry in addressing the obstacles or perceived barriers, to bring about the expansion of the rail freight business as a whole. Such expansion would be good for industry and good for Scotland’s economy.

The Scottish Government, through Transport Scotland, will have a key role to play in assisting the rail industry to address the challenges it faces. The output from this consultation will feed into our strategic planning for the rail industry, to inform decisions on Government investment in rail and to contribute to the planning of Network Rail’s High Level Output Specification (HLOS) in Scotland in future.

We have identified key stakeholders who will have a role in taking forward the actions required to ensure that the outcomes of the policy are met.

Scottish Government

• Increase the evidence base, for use in the development of future HLOS:
• • Fill any information gaps, such as those identified at section 4 of this consultation document;
  • Conduct comparative case studies considering operations in various markets and countries;
  • Consider the findings from available evidence and research;
  • Consider possible options for intervention;
  • Facilitate additional discussions and offer policy advice.
• Support wider industry:
• • Consider incentive schemes and provide information;
  • Facilitate communication between industry, customers and Government.

Rail freight industry

• Consider identified operational and logistical weaknesses and offer practical value for money solutions.

Freight customers

Where practicable:

• Ensure that internal policies acknowledge use of rail as environmentally responsible in certain circumstances;
• Consider options for consolidation of loads, back loading and compliance with timetabled rail freight services.

Network Rail

• More rigorous application of ‘use it or lose it’ principle on uptake of freight paths;
• Consider options for facilitation and promotion of rail freight operations on the network;
• Consider options for scheduling of maintenance closures with a view to reducing impact on freight operations.

Office of Rail Regulation

• Consider findings of working group on ‘Managing Strategic Freight Capacity’.

9. INTENDED OUTCOMES

Our aim is that these actions will achieve:

• A robust evidence base that informs–
• • Decisions on investment in rail freight enhancements, particularly through future High Level Output Specifications and,
  • Scotland’s response to developments in rail freight policy at UK and EU levels;
• A reduction in transport emissions levels;
• A culture where people and business see the benefits to the environment, communities and Scotland’s economy, of modal shift to rail freight;
• A reduction in congestion on key routes used by road hauliers and improved journey times on key congested routes.

ANNEX A

Respondents must complete the Respondent Information Form (available as MS Word or PDF). This form, along with consultation responses should be sent to: Gillian.hastie@transportscotland.gsi.gov.uk

Or

0141 272 7588

Comments or complaints concerning this consultation can be sent to Gillian Hastie at the above addresses.

(The questionnaire is also available as MS Word and PDF)

ANNEX B
BASIC OVERVIEW OF POLICY CONTEXT

ANNEX C
GENERAL INFORMATION ON THIS CONSULTATION

The consultation can be made available in alternative formats. Please contact Gillian Hastie on 0141 272 7588 or at Gillian.Hastie@transportscotland.gsi.gov.uk with your requirements.

Handling your response:

We need to know how you wish your response to be handled and, in particular, whether you are happy for your response to be made public. Please complete and return the attached Respondent Information Form as this will ensure that we treat your response appropriately. If you ask for your response not to be published we will regard it as confidential and we will treat it accordingly.

All respondents should be aware that the Scottish Government are subject to the provisions of the Freedom of Information (Scotland) Act 2002 and would therefore have to consider any request made to it under the Act for information relating to responses made to this consultation exercise.

What happens next?

Following the closing date, all responses will be analysed and considered along with other available evidence to inform the development of the Scottish Government’s policy on rail freight. Where respondents have given permission for their response to be made public, and after we have checked that they contain no potentially defamatory material, responses will be made public on Transport Scotland’s website.