Written evidence submitted by InterCity RailFreight (URB0099)

1           Introduction

1.1               InterCity RailFreight Ltd (ICRF) has been invited to make a written submission to the Transport Select Committee (TSC) outlining how we believe rail transport can play a greater and significant role in tackling urban congestion and pollution.

1.2               This submission draws on its unique experience in utilising passenger trains for the movement of goods between cities, integrated with zero-emission road vehicles at either end for urban collection and delivery trips.

1.3               ICRF has been operational since 2011, moving a wide and growing range of small-volume, time-critical deliveries on a daily basis to and from London. ICRF has also been involved in trials in 2012 and 2014 operating dedicated freight trains into London Euston station overnight, in a way not seen since the end of the Royal Mail’s “Travelling Post Office” services in 2004.

1.4               In 2016 the Rail Minister, reflecting on how best to create a more sustainable rail sector, noted:

One of the key contributors [of emissions] is road freight and the need to bring goods from out-of-town distribution centres into city centres. Yet our rail lines already reach into stations located in the heart of the city. Imagine if we could run electric freight trains into stations outside peak hours. Or run passenger trains that can be partly converted to carry freight. Goods could be offloaded onto electric vehicles, for distribution across the city. Let’s set ourselves the challenge of investing in new freight technology and joined up logistics.[1]

1.5               In the same year the Department for Transport (DfT) published a report on the market potential for the transportation of freight using existing and potential capacity on passenger trains.  This report identified considerable potential for using rail services in this way, creating substantial new revenue opportunities for train operators.

1.6               We concur with the Minister’s view that the combined use of passenger and freight trains to and from city centres could be part of a bold strategy to decongest urban areas, both in terms of traffic and air quality. However, we have yet to see any major response from DfT to the challenge, either to support investment in new freight technology or help promote such joined-up logistics.

1.7               This submission focuses on helping reduce urban congestion through greater use of passenger trains and dedicated high speed freight trains. The passenger train component outlines how ICRF has evolved the model since 2010, the challenges it has faced, and the potential opportunities which could be realised. The high speed freight train component looks at the challenges and opportunities to move bulk freight at up to 125mph utilising passenger rolling stock.


2           Carrying goods on passenger trains: a brief history and our experience to date

2.1               From 1963 to privatisation in the mid-1990’s, British Rail operated a service known as “Red Star”, which used the national network of passenger and freight trains to move parcels, newspapers and other time-sensitive products by rail, connecting with delivery vans at either end. Senders could despatch their consignments to selected stations at which the parcels were collected by the recipient.

2.2               In 1999, Red Star was acquired by a private courier company, Lynx Express Ltd. The breakup of national rail services into separate passenger and freight companies made the Red Star operation impossible to maintain, rail services ending shortly after acquisition by Lynx, which was itself acquired by US-based courier company UPS in 2005.

2.3               In mid-2009 discussions opened between our original company 5PL Ltd (5PL) and East Midlands Trains (EMT). 5PL was effectively created as a supply chain management company, looking to provide a route-to-market for a range of small to medium sized companies based in the East Midlands and Yorkshire.  Discussions with EMT centred on whether available capacity on rolling stock could be effectively utilised as part of a supply chain development programme for a range of commodities.

2.4               In order to be able to carry freight on the EMT services, 5PL would need to design processes that would ensure compliance with railway health & safety requirements and the security regime overseen by DfT’s Transport Security division (Transec, now Landsec).  Equally, the freight service could not have any impact upon train performance, or adversely affect passengers.

2.5               Upon completion of the necessary safety/security processes, and with approval of the EMT team overseeing the process, it was agreed to run a series of trials between Nottingham and London St. Pancras stations, using one High Speed Train (HST) in each direction daily. These trials took place in October 2010. Courier partners were engaged for both stations and 5PL secured a launch customer with a legal firm based in Nottingham and London, the focus being on the same day transfer of documentation between offices at each end. A wide range of operational and security scenarios were incorporated into the trials and the processes were shown to be robust.

2.6               On the basis of the successful trials EMT agreed to the launch of a more extensive service between Nottingham and London commencing in April 2011 utilising only those services operated by HSTs, exploiting space in the HST power cars originally designed for this purpose in the 1970s, as well as other discreet and secure storage areas within the train sets.

2.7               In 2012 trials were undertaken at Leicester to assess whether freight operations could be incorporated into stations where the platform dwell time of services would be two minutes or less; the handling of freight, even small parcels, therefore posed a significant performance risk. The trials proved however that even two minutes was sufficient for most consignments despite 5PL having to load to a designated space within the train.

2.8               In October 2014 5PL was invited by The Doctor’s Laboratory (TDL) to enable it to move pathology and clinical trials samples by passenger train. After initial trials and achieving the relevant compliance measures for moving such items, a service between Sheffield, Nottingham, Leicester and London commenced with up to five trains per day being utilised for the conveyance of these time critical and highly sensitive samples.

2.9               Early in 2015 negotiations with EMT centred on the expansion of services to incorporate the use of Class 222 “Meridian” diesel multiple units for the transportation of freight. Whilst space on these units is considerably smaller than that available on an HST, the Class 222s have proven invaluable for the movement of pathology samples.

2.10           In 2014 discussions commenced with other train operating companies (TOCs) including Virgin Trains West Coast, Abellio Greater Anglia, Northern, Grand Central and Great Western. Responses to date have been mixed, with only Great Western joining EMT in actively engaging on the service proposition. Other TOCs have either refused to engage or cited various obstacles related to performance or security (in some cases arising from trade union concerns rather than management), or having unrealistic commercial aspirations for their share of available revenue.

2.11           Discussions with various elements of the market place at this time revealed an appetite among some retailers to examine the use of rail for the delivery of high end e-commerce consignments. Likewise, there was a degree of recognition with others that opportunities were being lost because of the inability to replenish stores cost effectively by road during the day, either due to problems on the inter-urban road network or within cities themselves.  The principal caveat was that rail would only be considered if 5PL could deliver a more comprehensive national network.

2.12           In November 2015 the company was relaunched as InterCity RailFreight (ICRF) to better reflect the nature of the business and growing interest for high speed, shared user services on key corridors exploiting unused capacity on passenger trains. This coincided with the launch of services between Penzance and London using Great Western Railway (GWR) services.

2.13           Since launch in April 2011, there have been no safety or security incidents, no performance issues for the TOCs, and no inconvenience to passengers. From the thousands of deliveries made, only four have not arrived within the expected schedule (due to emergency line closures).


2.14           In recognition of our achievements over the last 5 years, we were delighted to be recently honoured with the Rail Industry Award 2017 for Service Innovation.

2.15           Nearly six years on, our services have proven to be fast, reliable, cost effective and a more sustainable alternative to the road equivalent.  Stations have proven themselves to be ideal urban interchanges, as they previously did in years gone by. The timetabled nature of trains makes for much easier planning and integration of first and last mile transport, and the short distances from stations to delivery points creates a perfect environment for the use of cycle logistics and electric delivery vehicles.

2.16           Use of rail has allowed ICRF to offer some customers the opportunity of having fresh food delivered early in the morning straight to their chill rooms (couriers have keys to the premises) obviating the need to compete for space to park and unload at peak times. Similarly, we can offer manufacturing or processing businesses a much later cut-off time for collection compared to road carriers: in many cases these additional hours can make a big difference to productivity and profitability, critical factors in a competitive global environment. Being able to ship into London frequently and cost effectively offers businesses outside the capital an opportunity to compete for London business at much lower prices.

2.17           Another major advantage for the current system is that it does not utilise centralised (often automated) national and regional sortation hubs, where significant levels of damage and loss can occur. Instead, a courier loads the train at one end and another collects on arrival, and for this reason ICRF is able to fully insure consignments.  For customers sending highly valuable items such as artwork, live shellfish and life-saving medical supplies, this is a significant benefit.

2.18           Railway industry IT systems provide a wealth of information to enable micro-management of consignments.  ICRF uses some systems that are in the public domain, but also some to which we have been granted access by the train operator.  Thus, supply chain control can be effected from a mobile phone anywhere there is a signal. This level of control has proved a major asset in terms of winning highly perishable and/or very time sensitive consignments, and in being able to monitor and react to incidents in a more effective manner than might be possible by road.

2.19           The expansion of IT systems, to the point where individual rail vehicles can be identified by either a barcode or “QR” code, underpins the compliance requirements that would see more sensitive or tightly controlled medical consignments (including life-saving deliveries) able to be transported by train.  ICRF is already active in this field and has demonstrated that a rail-based supply chain for cell therapy treatments could see costs reduced by up to 800% compared to specialist (road) couriers. With the NHS seeking major reductions in costs and emissions from its supply chain, this represents a huge opportunity.

2.20           ICRF has demonstrated that passenger trains can play a significant role in the field of e-commerce, with scope to dramatically reduce the dependency on diesel vans for deliveries to, from and within urban areas.  Many retail distribution centres are located in the Midlands and North of England, which creates the need for multiple road movements to serve same-day delivery expectations, some of which could be switched to passenger trains, giving business an opportunity to realign their pick/pack operations accordingly.

2.21           Yet the existing capacity on the trains that ICRF currently utilises are likely to disappear once new rolling stock is introduced – especially on the GWR route from Paddington. ICRF is currently engaged with its train operating partners to explore how freight can be carried on new trains but there is considerable uncertainty at present. We are therefore attempting to broaden the debate to determine scope for more flexible use of passenger vehicles when not required for passenger conveyance, eg locking empty carriages out of use and dedicating these to carriage of goods within the available space, in a manner which does not damage the vehicle interiors.

2.22           The security protocol agreed with Landsec enables ICRF to load freight into public spaces on passenger trains.  Security is a double-edged sword, in that Landsec is concerned with public safety but equally the freight customer needs assurance that the consignment will not be tampered with or stolen.  A wide choice of load units are available to satisfy such requirements.

2.23           As a rare example of DfT support in this area, engineering company 42 Technology has been funded by DfT to develop a concept design for creating flexible space in passenger carriages.  This will provide seating areas that can be converted into space for goods when required.[2] The inclusion of dedicated (or flexible) space within trains on key routes represents a small step forward in terms of making better use of infrastructure capacity.

2.24           It is also worth mentioning luggage. Whilst this is not directly relevant to the issue of urban congestion, it has important synergies with the discussion about the movement of goods by rail. It is apparent that the dramatic and welcome renaissance of rail travel brings with it an increasing volume of passenger luggage, for which many of the existing (and in particular the latest) designs of passenger rolling stock do (or will) struggle to accommodate. This undermines the passenger experience, and during peak periods may also create safety risks from overloaded overhead racks, or baggage blocking access to aisles and doorways. This reinforces the need for a rethink of the layout of passenger rolling stock for new-build and mid-life refurbishment, to provide flexible space for luggage, catering modules, Persons of Restricted Mobility - and goods.


2.25           The railway industry previously operated urban delivery services to complement the long-distance passenger and freight services, using road vehicles for first- and last-mile legs. The retail undercroft at St Pancras station used to store beer barrels delivered by rail from the Midlands. Alongside, the British Library occupies the site of the former Midlands Railway goods depot (see below), which urban policy-makers would now refer to as a highly sought after “Urban Consolidation Centre”. Is it so inconceivable to suggest that the railways could or should be capable of providing such services again?

 


3           Carrying goods in express freight trains

3.1               It is worth noting at this point that the development of higher-speed train services was driven not by passengers, but by the need to get time-sensitive goods to and from cities. The Liverpool & Manchester Railway opened on 15th September 1830, and within two months the Royal Mail agreed a contract with the railway to move its mail traffic. In 1848, the oldest named train in the world, the Irish Mail, ran for the first time between London Euston and Holyhead, the railway gradually introducing faster and more powerful steam locomotives, and non-stop water replenishment (using scoops on the locomotives to collect from water troughs laid between the running rails) to respond to the demands of time-sensitive freight traffic, rather than passengers.

3.2               The Royal Mail continued its relationship with the railways over the next 133 years, culminating in the £150m investment in “Railnet” in 1993, which featured new purpose-built 100mph electric trains, new rail terminals and handling technology. The investment was short-lived, as contractual disputes with the freight train operating company (EWS), restructuring issues within Royal Mail, and wider concerns with the railway (including the impact of the accidents at Hatfield in 2000 and Potters Bar in 2002) saw the company announce its intention to abandon rail altogether in June 2003. In the event, the Royal Mail retained its own mail trains and gradually reintroduced services on the West Coast and East Coast Main Lines, which still run today.

3.3               Yet beyond the Royal Mail, neither the rail industry nor the wider logistics industry has yet fully understood or exploited the express freight opportunity. In 2000, EWS launched an express parcels service for courier company Securicor Omega Express (SOE), which operated successfully between the Midlands and Scotland, but ceased after a couple of years when DHL acquired SOE and ceased all rail-related activities amongst its various acquisitions. In 2004 a new start-up company Advenza Freight attempted to launch an open-access express service for palletised freight, but struggled to achieve a suitable level of service from the freight operating company or to secure sufficient traffic, the “FreightBus” service lasting only a matter of weeks.

3.4               In Spring 2012 Eurotunnel and French Railways organised a demonstration at St Pancras station using one of a small fleet of dedicated high-speed (186mph) “TGV” parcel trains moved from France via the Channel Tunnel and High Speed 1. Despite positive publicity, nothing further came of the trial and the unique TGV sets have reportedly since been scrapped.

3.5               In Autumn 2012 Eddie Stobart Ltd (assisted by one of the ICRF Directors working in a consultancy role) organised a trial with rail freight operator Colas Rail to deliver products for Sainsbury’s from Rugby to 6 central London stores. For this, Colas rescued 6 former car-carrying “Motorail” coaches that were due to be scrapped and reinstated these to traffic. The train ran overnight on 31st October / 1st November 2012, using an electric locomotive to haul the train into London. Eddie Stobart provided a small delivery vehicle at Euston (driving onto the platform as Royal Mail vehicles did previously) to ferry the goods between the station and the stores. The trial (pictured below) successfully demonstrated the role of rail, urban stations and out-of-hours deliveries to help reduce daytime road congestion. Larger articulated lorries that would otherwise have made these deliveries to store were (temporarily) removed from the trunk road network, and no complaints were received from residents about the overnight operations at Euston.

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3.6               The first trial generated interest from other parts of the freight market, with TNT asking if the trial could be repeated. A second trial was organised by one of the ICRF Directors who, faced with an impasse between Colas Rail and TNT about who should fund the trial, covered the entire £6,000 cost of the service through his own rail freight consultancy business (Intermodality Ltd). The train ran overnight on 5th / 6th June 2014, carrying deliveries from Rugby into Euston for TNT and its customers, TNT providing several zero- and low-emission vehicles to make the deliveries. The service attracted national media interest, with ITV News broadcasting the trial the following day.

3.7               Yet despite the success of the two trials in proving the concept, development of a regular service has to date proved challenging for a number of reasons, including:

4           The challenge of urban deliveries and contribution to traffic congestion

4.1               Since commencing operations in 2011 we have gained a first-hand critical insight into urban distribution and how this contributes to (and is affected by) the traffic congestion and pollution faced in many UK towns and cities.

4.2               It is acknowledged that the arrival of the internet and the rapid growth in online e-commerce has been a major factor in driving up levels of van use on the road network. Retailers have sought to compete in part through offering ever-quicker fulfilment of orders, which in turn has raised customer expectations towards receiving faster deliveries across a growing range of products.

4.3               Payment of a small sum (around £6.99) will facilitate an online grocery order being delivered within an hour of the order being placed and this can, realistically, only mean one thing in the short term: more vans on the road in urban areas, often operating well below their maximum capacity as a reaction to customer demand, rather than vehicle utilisation. “Free delivery” has set expectations among consumers at grossly unrealistic levels when it comes to achieving a fair price for delivery. Retailer and road carrier profitability (and impact on delivery driver pay and conditions) is therefore being placed under extreme pressure.

4.4               This downward pressure on delivery rates has intensified, especially with the huge amount of competition in the courier market place. Most of this is due to use of self-employed drivers who hire their vehicles, pay for fuel and hire IT equipment from the courier company in return for a scaled mileage rate. The market is seeing the increased use of “lifestyle couriers” who work part-time using their own cars and vans to supplement their income. This often means that the easiest and cheapest means of delivery is using a diesel-powered vehicle.

4.5               In London where competition is arguably at its fiercest, couriers trade on speed of response and the ability to cover any assignment.  For that reason, they will seek to keep their (retained) drivers gainfully and profitably employed: cross-town deliveries are considerably less profitable to a driver compared to long haul, despite long (unregulated) hours and wear and tear on vehicles.

4.6               A delivery pattern could easily include a London collection for delivery to Leicester; a collection in Leicester for delivery to Birmingham; a collection in Birmingham for delivery to Glasgow.  The diesel van is the workhorse of choice for drivers needing to minimise costs: switching to petrol vehicles will increase costs whereas electric vehicles will severely curtail the ability to complete long distance assignments within a time that is profitable. This also creates an inbuilt resistance to using rail for these more profitable longer-distance hauls.  A further consideration here is that van driver hours are unregulated, which begs the question as to the extent to which tired couriers contribute to road accidents.

4.7               Delivery times are another contributory factor to congestion.  ICRF has been delivering to London restaurants where delivery is typically expected between 07.00 and 10.00, the worst time of the day for traffic flow and parking availability. With so many delivery vehicles trying to achieve the same thing, and with a proportion of these delivering at the end of a journey that might have been hundreds of miles, the cost of delivery can be significant in terms of driver time, fuel costs and lost opportunities.  Pollution levels will also be higher as a result of the density and slow stop-start nature of the traffic flow.

4.8               Simple observation in any town or city (or even village) will reveal a myriad of delivery vehicles throughout the day. Despite offering opportunities to deliver goods to stores and other “click and collect” facilities in the neighbourhood, delivery times to consumers are invariably driven by when people are in, which will tend to concentrate deliveries to daytime and early evenings, further contributing to traffic levels at peak times.

4.9               There is currently little co-operation between carriers that could see a higher degree of consolidation resulting in less vehicles on the road and less pollution. Again, there is an inbuilt resistance to industry collaboration on load-sharing over fears regarding loss of control, commercially-sensitive information or business.

4.10           The “traditional” way to price a consignment for same day delivery is on a £ per loaded mile basis; some carriers are now moving to a £ per hour basis to reflect the costs of congestion, which will mean higher costs for businesses needing to use these services. If so, we would hope that this, combined with other cost pressures (eg greater charges for / restrictions on diesel vehicles in urban areas) will incentivise retailers and distributors to seek greater collaboration and use of alternative means of transport.

4.11           Without intervention from Government, the market forces of consumer and retailer interaction will continue to unwittingly drive up van traffic levels and associated traffic congestion in urban areas, along with all the indirect impacts on society and the environment that market forces tend not to factor into business models and profit margins. As part of the solution, our fragmented rail industry needs to be encouraged to step up and once more provide an integrated alternative to urban gridlock.


5           Tackling the urban congestion challenge – unlocking the rail opportunity

5.1               It is apparent that highway capacity in urban areas is finite and increasingly over-subscribed. In most towns and cities, there simply is no practicable means of physically increasing the amount of available road space. A number of steps will therefore need to be taken to avoid urban areas becoming gridlocked for large parts of the day. Such measures could include:

5.2               In terms of the latter solution, passenger trains provide a predictable offer, operating high-frequency, high-speed services from early morning to late evening, with trains timetabled to the minute. With most of these services retaining spaces either previously designed for goods, or which have no other useful purpose, we can offer delivery solutions to business which (like Red Star previously) no other mode of land transport could achieve for the same cost.

5.3               In terms of congestion, our deliveries remove or reduce courier vehicle trips that would otherwise travel between city centres, and help reduce the need for use of larger delivery vehicles that are increasingly incompatible with the urban environment, in terms of scale or emissions.

5.4               Currently, most of our services use diesel-powered trains, which bring their own emissions to and from the urban environment. Our argument is that as these trains are running anyway for passenger conveyance, the additional emissions from moving small-volume consignments as “bellyhold” traffic (to cite the airline analogy) would be extremely small, and lead to a reduction in the equivalent road vehicle traffic and emissions which otherwise would have run in parallel.

5.5               The gradual expansion of electrification over the network will bring more of our current services “under the wires”, while we continue efforts to persuade other passenger train operating companies already using electric trains to engage, not least as a way to earn additional revenue from marginal space.


5.6               Beyond this, trainload freight services offer further opportunities to achieve large-volume movements of goods to and from city centres, with DEFRA data indicating that, per tonne-km, diesel and electric freight trains generate less than one-quarter of the emissions of the equivalent freight moved by road.[3]

5.7               Stations can, and should, once again play a significant role as urban freight interchanges.  ICRF has shown that even at peak times the handling of freight within the station can be accomplished safely and without hindrance to passengers. A large number of stations still retain the capability to bring goods vehicles close to (or in some cases onto) platforms, and/or to store goods above, below or alongside platforms for call-off during the day. Euston uniquely still retains a major urban logistics facility on a deck across the northern part of the station, with road access to street and platform levels. There is a real risk that this critical facility at the base of the West Coast Main Line will be destroyed as part of the Euston station / HS2 redevelopment.

5.7.1         The opportunity exists to achieve the following broad objectives:

5.8               The Committee may therefore wish to pursue the following issues with DfT, Transport for London, Transport for the North, Network Rail, the Rail Delivery Group and other stakeholders, in order to help rail make a meaningful and lasting contribution to reducing urban congestion:

5.9               We would like to thank the Committee for the opportunity to present this submission. We hope that our contribution helps provide an insight into the challenges and solutions for addressing urban congestion.

March 2017

 


[1] https://www.gov.uk/government/speeches/we-need-a-sustainable-railway

[2] Further information at http://www.42technology.com/case-studies/adaptable-carriage/

[3] 2016 DEFRA statistics suggest per tonne-km, freight moved by rail generates 0.02831 kg of CO2 equivalent emissions, compared to 0.1232 kg CO2e for all road vehicles