Rail Freight Group News October 2012 news 96 www.rfg.org.uk October 2012

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Fears for effects on freight P.01 - 04 RAIL FREIGHT after DfT’s franchising fiasco NEWS

New questions raised over reform after WCML mistakes P.05 competition is run for an interim RFG OPINION franchise agreement. This interim agreement, which will be open to any bidders, will then run until the P.06 - 08 new long-term West Coast fran- RFG EVENTS chise is ready to commence. The Transport Secretary has also ordered two independent P.09 reviews to be undertaken urgently: GUEST ARTICLES the first into what went wrong with the West Coast competition and the lessons to be learned; the second P.10 into the wider DfT rail franchise pro- POLICY UPDATE gramme. On 3 October, Transport Secre- Thameside and Thameslink fran- The first independent review is tary Patrick McLoughlin MP, chises has also been sus- an urgent examination into the P.11 & 12 threw passenger franchising into pended. The flaws uncovered re- lessons to be learned from the WESTMINSTER a state of disarray when he an- late to the way that the procure- Department’s handling of this COLUMN nounced that the competition to ment was conducted by the competition. Conducted by inde- run trains on the West Coast Department of Transport (DfT), pendent advisers and overseen Main Line (WCML) had been and relates particularly to the by Centrica chief executive Sam P.13 cancelled. The decision, which way that the risk, and financial Laidlaw and former Pricewater- SPONSORS came following the discovery of protection required in the bids houseCoopers strategy chair- significant technical flaws in the was calculated. Three officials man Ed Smith, both DfT non- PAGE way the franchise process was have been suspended while an executive directors. This review conducted, means that the hand- investigation takes place. The will look as soon as possible at P.14 over to First Group, expected on DfT has subsequently an- what happened and what went EUROPEAN 9 December, will no longer take nounced its intention to negoti- wrong, with a view to delivering place. Furthermore, bidding on ate a short-term contract exten- an initial report by the end of UPDATE the Great Western, Essex sion with Virgin Trains, while a October. Continued on page 2.

ment of the open access approach implemented by Eurotunnel. I am Prima II loco tests through Tunnel very pleased that our close cooperation with Alstom is opening up new avenues for freight whilst at the same time significantly reducing Eurotunnel has successfully completed initial tests with the Alstom CO2 emission”. Prima II locomotive through the Channel Tunnel. The tests on 29 - 30 Henri Poupart-Lafarge, Chairman of Alstom Transport, added: “We September focused on checking the compatibility with the Tunnel’s are very pleased with the results of these tests which open up new systems and compliance with safety standards. The Prima II, set to a and promising perspectives for European rail freight and are proof of standard configuration and hauling wagons with a total weight of 950 Alstom's active support for the sector.” • tonnes, entered the Tunnel via the French portal at 22:20 before con- ducting a series of traction, brake and pantograph tests. Exiting the Tunnel at Folkestone, at 03:00, the train then departed for a second series of tests on the return journey to France, ending at 06:00. Eurotunnel said it hoped to further develop stan- dard rail freight services that do not necessarily need to use the Class 92 locomotives. The Prima II can operate on all the European freight corridors and is compatible with both ERTMS and ETCS systems, using four different power supplies. Jacques Gounon, Chairman and CEO of Groupe Eurotunnel, said: “Gaining authorisation for new rolling stock is an essential part in the develop- 1 Rail Freight Group News October 2012 Chairman’s Comment: Tony Berkeley email your comments to: [email protected] This is RDG’s moment – can they grab graphic charges and scarcity charges, both critically important to freight. it? The current crisis in franchising offers a big opportunity for RDG - but also a big challenge. There will be a need for clear reasoned argu- The Rail Delivery Group (RDG) was founded on the ments on the role of the private sector in providing passenger ser- back of the McNulty study and has been up and running vices, the different models which might be investigated and of course for around a year now. The Group, chaired by First the detailed construction of future franchises or whatever they may Group Chief Executive Tim O’ Toole, has representa- be. The constituent members of RDG represent the current franchise tives from all the major rail owning groups, including for freight DB operators, including Government owned Directly Operated Railways, Schenker and Freightliner. Its aim is to provide a guiding mind for the but also represent open access passenger operators and freight. development of the UK rail industry, but in particular to lead and co- Who better to understand the situation, and the options for reform. ordinate cross industry workstreams to drive efficiency and reduce RDG’s input into the Brown review, to the political debate and to Gov- costs. ernment will be vital. There is no doubt that in the last year, RDG and its numerous sub Yet its strengths, if misplayed, could also be its weakness. Consen- groups have been busy addressing some of the key issues. The sus may well be hard to reach, and the on-going hiatus will be a ma- minutes of its meetings, available on the website at http:// jor distraction for those who actually run businesses reliant on fran- raildeliverygroup.org/Home.aspx give some indication of the work chises. The notes of the first meeting since the start of this debacle underway. Recently, ORR have concluded on proposals which put give some clues to the difficulties faced, noting that ‘RDG should RDG onto a formal basis, with a fixed constitution and permanent identify where there was common ground between the owning staff. groups’. How easy will this be in practice? Yet RDG has thus far been light on outputs, and for those not inti- This is a critical test for RDG, and its credibility in the industry. Can it mately involved in the work, it can be difficult to see the extent of its rise to the challenge? influence. Communication outside of the parties involved has been limited, and there are no reports, or progress updates available for RFG News is happy to publish comments, opinions and letters. general consumption. This is a shame, because RDG has been in- Please email comments to [email protected]. creasingly influential ; - for example its input on the future of access charges appears to be helpfully shaping emerging thinking on geo- continued from page1. my department in the way it quality assurance. its approach, particularly on risk managed the process. “I am determined to identify and evaluation, and simplify the The second independent re- “A detailed examination by my exactly what went wrong and process while delivering better view will be undertaken by Eu- officials into what happened why, and to put these things value for money and improved rostar chairman Richard has revealed these flaws and right so that we never find our- services. Franchising private Brown CBE, and examine the means it is no longer possible selves in this position again.” companies to run train services wider rail franchising pro- to award a new franchise on Rutman has subsequently writ- has delivered for passengers, gramme. It will look in detail at the basis of the competition ten to Justine Greening to taxpayers and the country, with whether changes are needed that was held. apologise over the errors rail travel more popular now than to the way risk is assessed “I have ordered two independ- which were made whilst she at any time since the 1920s and and to the bidding and evalua- ent reviews to look urgently was Secretary of State. He re- near record levels of satisfaction tion processes, and at how to and thoroughly into the matter mains in post. and punctuality. With the right get the other franchise compe- so that we know what exactly There has been widespread framework in place for franchis- titions back on track as soon happened and how we can comment on the situation po- ing, train companies will continue as possible. This will report make sure our rail franchise litically and across the indus- to deliver these results.” back by the end of December. programme is fit for purpose.” try. ATOC said that “It is in eve- At this stage, it is unclear what McLoughlin said: “I have had DfT permanent secretary ryone’s interests that the Depart- any implications for rail freight to cancel the competition for Philip Rutnam said: “The er- ment for Transport (DfT) solves are. the running of the West Coast rors exposed by our investiga- the significant flaws in its overall franchise because of deeply tion are deeply concerning. franchising process as a matter of For RFG comment, please see page regrettable and completely un- They show a lack of good urgency. There is an opportunity 5 and also the Westminster Column acceptable mistakes made by process and a lack of proper here for the DfT to look again at on pages 11 and 12.

Network Rail to re-use £25m Peugeot car plant at Ryton for its National Delivery Service

Network Rail has announced plans to open a new 300,000sq ft national distribution centre on the site of the former Peugeot plant at Ryton in the West Midlands. The £25m logistics centre is set to create around 100 jobs and is set to become a signifi- cant hub for Network Rail’s National Delivery Service (NDS), positioned at a conven- ient location for access to major main lines and with direct access to the A45 and the motorway network. NR said it would also help reduce costs by centralising previ- ously leased properties in Lichfield, Worcester and Ludgershall and cut road fleet mileage. Martin Elwood, director of Network Rail NDS, said: “Network Rail’s first preference is to transport goods by rail. This is not always the right solution so we have an exten- sive road fleet to transport goods and equipment to our work sites and depots. By bringing the logistics for this together at Ryton we can offer a more effective and efficient service for Network Rail. This will mean reduced costs and faster turn- around times when we do work on the railway.” The site is set to open in July 2013. • 2 Rail Freight Group News October 2012 New Transport team after yet another freight sector, as well as highlight News in Brief: Cabinet reshuffle its benefits to the wider UK econ- omy. • Freightliner Group has He added: “We will be writing to RFG welcomed the recent appointment of Rt Hon Pat- been placed in The Sun- brief the Minister shortly, outlining day Times Grant Thornton rick McLoughlin MP (pictured right) into his new post the key priorities for the rail freight as Secretary of State for Trans- Top Track 250, published sector including the forward devel- on 14 October 2012. This port, following a Cabinet reshuffle opment of the Strategic Freight Net- that has seen Justine Greening is the seventh year in suc- work, the planning framework for cession Freightliner has MP, Theresa Villiers MP and Mike rail freight interchanges and ensur- Penning MP moved out of Trans- been placed in the ranking ing that rail freight can continue to improve its efficien- tables for Britain's biggest port. cies as reform of the railways progresses.” Tony Berkeley, RFG Chairman, mid-market private compa- RFG also welcomed Simon Burns MP (pictured left) as nies. said: “We look forward to introduc- Minister for Transport and Stephen Hammond MP as ing the work of RFG to Mr Parliamentary Under-Secretary of State for Transport, • Marks & Spencer (M&S) McLoughlin and to brief him on the who will work alongside Norman Baker MP. • current demands placed on the rail has announced 1,000 new roles at its new 900,000 sq ft rail-connected distribu- Tesco expands rail use port their own freight by rail at a was 23·8% up on Q1 2011-12, and tion centre in Castle Don- reduced rate. Stobart Rail Freight, was the highest figure for any quar- ington, due to open in Tesco is shifting more freight from which manages the train, is now ter since 2·08bn tonne-km in Q4 early 2013. road to rail on certain routes as it looking for other companies in 2008-09. Metals were down 18·5% looks to halve the carbon emissions South Wales to take advantage of and construction down 2·4%. • • Freightliner has set what for each case of goods delivered by the service. Tesco already has four it says is a new daily the end of the year. The supermar- dedicated rail services, which it Second Poland service throughput record of 481 ket has partnered with local busi- estimates save 15,000 tonnes of for DB launched containers at its Tilbury nesses to run a new rail freight ser- CO2 equivalent per year by remov- terminal on 26 September. ing the need for 14m miles. • vice in Wales operating six days-a- DB Schenker Rail (UK) has intro- week moving swapbodies to the rail duced a second weekly service • DB Schenker Rail (UK) freight depots by lorry and then Rail freight traffic at between the UK and Poland. The has received three highly- lifting them onto track. pre-recession levels new service left Barking on 8 Octo- commended awards at the The trains travel between Magor ber at 23:36 for Wroclaw, Poland, National Rail Awards, held and Daventry, where Tesco has its hauling a range of manufactured in London on the evening main rail-connected UK DC. According to the Office of Rail of 20 September 2012. Regulations’ (ORR) National Rail retail goods. Since November 2011 Each journey is estimated to take DB Schenker Rail has been operat- 40 lorries off the road, not only re- Trends data, the amount of rail • Freightliner has launched freight moved in Q1 of 2012-13 was ing one weekly rail freight service ducing traffic congestion, but also between London and Wroclaw. The two new rail head gantry cutting emissions significantly. 5·49bn net tonne-km, a 6·8% in- cranes at the company's crease on the previous year, the introduction of the second weekly HGVs typically produce 63g of CO2 train has met increased customer Southampton Maritime for every tonne of freight trans- highest amount moved in a single Terminal, the culmination quarter since Q3 2006-07. ORR demand for additional rail capacity. ported per km, which drops to just This train has also become the sec- of a £9m investment by over 26g CO2 for rail freight – a said the Q1 figures have been pri- Freightliner. marily driven by an upsurge in coal, ond regular rail freight service to reduction of nearly 60%. The return use the HS1. • trip also provides opportunities for dominated by electricity power de- • Tyne and Wear Freight South Wales businesses to trans- mands. At 1·87bn tonne-km this Partnership Quarterly Meeting. The Tyne and Rail freight major contributor to HS2 the direct carbon savings from HS2. This is such a Wear Freight Partnership carbon benefits strong advantage that it will be worthwhile examining quarterly meeting was complementary measures to ensure that a major held at AECOM's offices switch from HGV road haulage to rail freight is on 5 September 2012. The Research published on 20 September by Greengage achieved as a consequence of HS2.’ group is a key working 21 has demonstrated the significant carbon benefits Commenting on the report, Maggie Simpson, RFG group for freight develop- which could be achieved by allowing capacity released Executive Director, said: “This research demonstrates ment in the region. For by High Speed 2 (HS2) on the existing network to be the carbon benefits for the UK which can be achieved details visit: used by rail freight. For capacity released on the West through modal shift to rail freight, as part of the devel- www.tyneandwearfreight.i Coast Main Line (WCML), the report states that ‘the opment of HS2. Government must commit to ensuring nfo/. carbon savings from using the additional unclaimed that a fair share of the released capacity is protected capacity of three train paths per hour in each direction for freight use, as the work to develop HS2 pro- for freight are considerably larger still, adding 55% to gresses”. • • The application by Net- work Rail Infrastructure for a Development Consent director of track infrastructure pro- we renewed a set of points at Wool Track renewals and Order for North Doncaster jects, said: “We have committed to overnight in 8.5 hours and our track Rail Chord (Shaftholme repairs faster than ever keeping the railway open for busi- renewal system recently re-laid 968 Flyover) has been granted ness as much as possible, and with yards in one evening. by the Secretary of State Network Rail’s high output track re- the intensive way it is used we have The fastest track relaying system, for Transport. laying system, its new method of re- had to innovate to keep the track known as system 4, consists of two placing points, has allowed it to re- maintained. He added: “Our new trains: one to dig up the old track pair and renew track faster than method of replacing points is one and relay it, the other to replace ever, reducing delays on the net- way we can tackle jobs overnight and clean the ballast. Both were de- work. In one August possession, midweek possessions that would signed to Network Rail’s specifica- the new system allowed more than once have caused the railway to be tion to work in the restrictive loading a mile of rail and sleepers to be re- closed for a weekend. We have re- gauge of the West Coast main line placed in 16 hours. Steve Feather- cently set new records for using that enables us to work while keep- stone, Network Rail’s programme these new innovative methods as ing adjacent lines open. • 3 Rail Freight Group News October 2012 Pickles seeks third — despite the inquiry ruling that it cently-published National Policy the planning inquiry into it which should be allowed to go ahead — Framework. But the most recent had been due to open in October inquiry at Radlett and HelioSlough appealed to the Sec- announcement of September 19 2012’. The letter points out that St Albans retary of State. This appeal was adds a further complication. The ‘the two schemes raise similar subsequently turned down on 8 letter says that the Secretary of and inter-related issues’ and the In a letter dated 19 September, July 2010. HelioSlough then chal- State ‘also had regard to the fact Secretary of State now ‘considers the Secretary of State for Com- lenged this decision. A year later that in March 2012 an appeal it likely that their comparative munities & Local Government on July 1 2011 a High Court against the refusal of planning merits will be a significant mate- Eric Pickles MP announced that a judge quashed it on the grounds permission was submitted for a rial consideration in his determi- third public inquiry would be held that the Secretary of State had Rail/Road Interchange at nation of the Radlett proposal’. to examine the project to build a not explained properly his rea- Colnbrook’. Efforts to create an Given this, he is of the view that Strategic Rail Freight Interchange sons for disagreeing with the SRFI at Colnbrook south of the ‘reopening the inquiry into the at Radlett. Planning Inspector’s recommen- Great Western Main Line near Radlett appeal and conjoining it Developer HelioSlough would dation that the proposed develop- Heathrow have been ongoing for with the planned inquiry into the spend £250m to build the SRFI ment should be allowed. The at least 12 years, and Pickles proposed SRFI at Colnbrook is on the site of a former airfield on Secretary of State then invited all ‘also had regard to the fact that in likely to lead to a more coherent the west side of the Midland Main parties to the appeal to make fur- March 2012 an appeal against and consistent decision-making Line, close to the M25. The sec- ther representations. In March the refusal of planning permission process overall’. • ond public inquiry had taken this year Pickles informed them was submitted’. That appeal ‘was Follow the link below to read the min- place in November and Decem- that he had decided to defer his recovered for determination by ister’s letter in full: ber 2009, but when St Albans decision again until he had re- the Secretary of State and on www.stalbans.gov.uk/Images/12-09- City & District Council refused ceived representations from all September 7 2012 the Planning 19%20Consultation%20Reopening% 20Letter%20Radlett_tcm15-26889.pdf planning permission for the SRFI parties to the appeal on the re- Inspectorate agreed to postpone

Southampton welcomes Freightliner’s latest ampton handlings increase by 28% and this year is expected to move investment at the port more than 220,000 containers. The new cranes were erected over the Au- Freightliner has officially launched its two new rail head gantry cranes gust bank holiday just three days. at the Southampton Maritime Terminal, the culmination of a £9m in- Adam Cunliffe, MD of Freightliner Ltd, vestment by the group. Customers, industry partners and the Mayor said: “Today, the launch of these and Mayoress of Southampton attended the ceremony, which cele- magnificent new cranes in Southamp- brated the launch of the new cranes and 40 years of operations at ton is the culmination and the celebra- the Southampton Maritime rail freight terminal. Mayor of Southamp- tion of a great deal of effort, pride, ton, Councillor Derek Burke, passion and investment. The new launched the first official box lifted, cranes prove our capability to provide which was liveried to celebrate both the infrastructural backbone our cus- the inauguration of the new cranes tomers require to have certainty of and the 40th anniversary. The £9m sustainability for the future. As the investment, together with the associ- new berth 201 and 202 are completed ated groundwork, represents the Freightliner can provide up to 13 largest single-item capital invest- roads under the cranes to continue ment by Freightliner in terminal or providing any required services as ports infrastructure since the privati- volumes increase. The new cranes will eventually increase lift capac- sation of the business in 1996. ity by up to 80%, although the overall capacity will be increased in Freightliner said it has seen South- stages.” • Chiltern Railways given green light to build new of commuters and businesses in Oxfordshire and Bucking- rail line between Oxford and London hamshire. The Oxford to Lon- don link is the latest in a long The Secretary of State for Transport, under the Transport and Works line of innovative Chiltern-led Act, has granted permission for Chiltern Railways to start work on a projects to upgrade the rail new line between Oxford and London. The groundbreaking £130m infrastructure, fuelled by our project will result in the train company running services between Lon- understanding of rail’s potential to make a significant contribution to don Marylebone and Oxford from 2015. economic growth and prosperity.” This work brings Chiltern’s total investment in the line to £600m since The recently announced East West Rail project will also benefit from the start of their franchise. As part of the project, Chiltern Railways Chiltern’s new line from Oxford to London with both routes using the will build new stations in Bicester and in north Oxford. line between Oxford and Bicester. Chiltern Railways will now work in Graham Cross, Business Development Director of Chiltern Railways partnership with the East West Rail team to determine a joint project said: “We are pleased to have been granted the power to proceed approach. • with this significant railway investment, which will benefit thousands Sainsbury’s pulls into the centre would be part of the increasingly important to the lo- at Sainsbury's said: “The distribu- supermarket’s drive to create a gistics sector and we have in- tion centre at DIRFT II is a signifi- Daventry rail-connected distribution net- vested in strategic rail-connected cant investment for Sainsbury’s. work. Prologis expects to start sites. As Sainsbury’s decision We are always looking at ways to Prologis has signed a deal to work on site in early 2013, com- demonstrates, the move towards serve our customers better and build a 1m sq ft distribution centre pleting in autumn 2014. rail freight is now gathering mo- this depot will provide us with a at the Daventry International Rail Andrew Griffiths, Prologis UK’s mentum.” central location to support our Freight Terminal (DIRFT II), for MD, said: “We understood some Roger Burnley, MD, General Mer- growing general merchandise Sainsbury’s. The developer said years ago that rail would become chandise, Clothing and Logistics business.” •

4 Rail Freight Group News October 2012 RFG OPINION ARTICLE Encouraging progress for Channel Tunnel The European Rail Freight Corridor concept also offers opportunities for improvement. Arising from a European Directive, rail freight corri- freight traffic dors aim to streamline cross border movements between Member States, and focus management attention onto resolving barriers to Rail freight traffic between the UK and continental Europe is far from growth. UK Government has until the end of November to determine reaching its full potential and has been dogged by difficulties over the whether it wishes to participate in such a corridor – which is the basis years ever since the Channel Tunnel opened. of the recent consultation. Of course, there is no expectation that establishing a corridor is the Barriers are cited as; golden bullet which will solve all the issues for increasing volumes. Yet the Governmental and management focus will help bring pres-  UK trade balance with continental Europe, which makes it sure to bear, and the benefits of an aligned approach to access, ca- difficult to triangulate loads pacity and operations will also be felt by operators. As any corridor is  Non inter-availability of wagons due to both physical network likely to involve up to three Member States, and link into other corri- constraints and approval regimes for non TSI / TSI derogated dors across Europe, it might be considered to be a Europe wide ver- wagons sion of the Strategic Freight Network – a concept which has worked  Restrictions on locomotives in the Channel Tunnel well domestically. It may also help with European funding for any  Costs associated with the Channel Tunnel future infrastructure upgrades – akin to that received under the TEN- T corridors for the Felixstowe to Nuneaton upgrade.  Security requirements, and costs, at Channel Tunnel terminals Establishing a corridor may seem like an additional burden, but to a  Service quality in some parts of continental Europe which has very large extent the necessary framework already exists through the been at best variable. corridor management of other routes already being undertaken by European infrastructure managers. It is of course imperative that the There has however been steady progress in tackling some of these administration burden is kept to an absolute minimum, to avoid add- issues, and in addressing the future of the market. The successful ing costs into the system, but, if well designed, this should be easy to test of the Prima II locomotive through the Tunnel (see front page) is achieve. one such example. Indeed, changes to the rules under review by the RFG has supported the concept of the corridor, and hopes that UK Channel Tunnel Safety Authority should soon permit any TSI compli- Government will add its support at the end of November, allowing ant electric locomotive to be used, and the possibility of some diesel more detailed development work to commence to help support the traction in the future. This will enable a wider range of operators to other measures aimed at growing freight on this corridor. • offer services, not just those with Class 92’s, and will also encourage through running.

Franchising Fiasco – Will it Affect Freight? Now the passenger service requirement remains an open question. It would surely be inconceivable that ORR would permit further ossifi- Freight is not franchised. It operates on an open access basis, with a cation of the timetable until a new, permanent franchisee was found? licence from ORR, and an access contract with Network Rail. Certainly we would not expect freight’s longer term needs to be held The operators, responding to their private sector customers, take a back indefinitely. long term perspective on their operations, and invest, change, reform Away from the West Coast, affordability and costs are likely to be- to deliver to a changing market place. And, aside from a small come an issue again, if the long term projections for the income from, amount of grant for some intermodal flows, there is no direct subsidy and costs of, franchising are significantly different from those ex- to the business. pected. With the periodic review 2013 due to conclude next summer, Franchising is a different world. Complex contracts specify almost how will ORR assess affordability, and will there be calls to reduce every detail of the operation, from stopping patterns, to fares levels, the expected outputs, as set out in the High Level Output Specifica- to ticket office opening hours. Progressive reforms by Government tion? We will be fighting hard to ensure that freight schemes are not have ratcheted up the detail, and reduce commercial freedom, so affected by changes in affordability. that ever more complex risk sharing mechanisms have been neces- RFG will be pressing to ensure that the impact on freight from these sary. And despite good progress in passenger growth, and satisfac- events can be minimised, as the various reviews progress during the tion, it has perhaps come as little surprise that the basis of the fran- remainder of the year. • chise model has proved unsustainable in long term propositions such as the 15 year West Coast deal, cancelled by DfT. Associated statement from Maria Eagle MP: Of course, the freight and passenger markets are very different and it is rational that the basis on which they operate is also different. One “The Government’s new franchising policy, which requires risks might therefore hope that the dialogue about the form and nature of to be calculated 15 years into the future, was designed by the franchising can be conducted without impacting on the freight sector. current Secretary of State for Northern Ireland, announced by But seismic events in one part of the sector inevitably affect all parts, the current Secretary of State for Defence and implemented by and there are real risks of being caught in the cross fire. the current Secretary of State for International Development; Firstly, although the remit of the Brown review is reasonably tightly and it has shamefully been left to the former Chief Whip to try focussed, the clamour to consider other models, including renationali- and deflect the blame for it on to three officials in the Depart- sation is already growing. Maybe this is irrelevant to freight operators, ment for Transport. It is just as well it has not been left to the but a return to publically owned passenger services will heighted current Chief Whip to deal with, or he would probably have calls for re-integration, with associated risks to open access freight. blamed it on the police at the gates of Downing Street.” In the short term, the West Coast timetable was expected to be re- Maria Eagle MP, 15 October 2012. solved with the new franchisee, meaning that freight rights, presently held only till 2013 at ORR’s requirement could be finally resolved. Join the Rail Freight Group (RFG) and help ensure the continued success of the UK’s rail freight sector

For more information on the work of the RFG or to attend one of our events please visit www.rfg.org.uk or see page 14 for all contact details.

5 Rail Freight Group News October 2012

EVENTS email: [email protected] RFG Awards Dinner 2012 huge success impact on the environment as well as controlling costs. He received high praise from management for his outstanding approach and the judges were impressed by level of drive, effectiveness and innovation This year’s awards were held on 11 September at The Oxford Cen- shown. tre, Oxford and saw a record number of entries for rail freight projects and initiatives from across the UK. Sponsored by Burges Salmon Special Commendation: DP World, London Gateway and GB Railfreight , the RFG Awards are particularly popular for their In a slight departure from tradition, the judges decided that instead of informal atmosphere and are now established as the key event cele- having a runner-up, there would a 'Special Commendation' in its brating success in the rail freight sector. The Awards Dinner contin- place. While the winning entry was deserving of recognition, the as- ues to grow in size and this year’s event attracted more than 150 of sociated rail freight operations were yet to commence, and unfortu- the top decision makers in the sector. nately the award criteria could not be met. This caused a great deal Below is a list of this year’s winners, runners-up and special mentions of debate among the judges but the project singled out for special - congratulations to everyone who won and a big thank you to our mention is the environmental activities carried out on the realignment judges and everyone who supported this fantastic and friendly and upgrading of the rail corridor feeding Britain’s next major con- awards dinner. tainer port. The work undertaken was part of an extensive ecological programme commenced three years ago under which over 350,000 Customer Care Award - Winner: DP World Southampton animals have already been relocated and the impact of a major pro- Judges called DP World Southampton’s unique ‘Sprinter’ feed ser- ject lessened on the environment thanks to their efforts. vice, which moves containers between the port's operational stack and loading cranes, “essential to the rail freight industry”. They said the port operator had focussed on “providing utmost reliability in meeting its clients’ needs” and had achieved a 100% success rate over the past 12 months of operation. While handling more than 3,000 boxes per week and loading on average 18 train services each day, DP World Southampton had received excellent feedback and support from its clients.

Runner-up: Colas Rail /Captrain UK/ Port of Boston Runner-up was Colas Rail & Captrain UK for their operations at the Port of Boston. The group of companies co-operated to develop a service for the movement of steel from ship to storage. Judges said that what had began as a one-off movement in 2008, was now regu- larly involving a fleet of 20 wagons providing up to daily services to meet the growing needs of the client. A key point was the develop- ment of flexible work patterns and transit plans to enable full optimi- sation of available resources. In particular, the judges cited a number of the entry’s novel features, including: extensive co-operation be- Technical Development Award tween all parties involved and the initiative of using transit plans and Winner: Europorte Channel working with London Carex shorter trains to increase flexibility and effectively deal with fluctua- tions in steel production. In March, Europorte and London Carex collaborated to demonstrate the capability for continental high speed rail freight. The trial took Environmental Innovation Award - Winner: DB Schenker Rail place over a 24-hour period and involved the movement of a high- DB Schenker Rail won the Environmental Innovation category. Its speed train laden with freight from the South of France via Paris to entry focussed on an initiative started by a single member of its staff, London St Pancras and back. This was a unique event which re- Andrew Hogan, who had the motivation to establish a components quired the arrangement of a complex sequence of consents and recycling facility. Andrew is a member of DB Schenker Rail’s ground timetabling within a very tight timescale. staff and his daily duties involved him not only in preparing trains for The technical developments which caught the judges’ attention in departure and ensuring a safe working environment in the yard. particular were; the introduction of a new product in very a short time- During 2011, he went the extra mile by developing a cutting shop to scale and using state-of-the-art technology, the unification of border enable damaged stanchion pins used on steel trains to be re-used. control and signalling, as well as the future potential of such a pro- Rather than see them scrapped, he cut out the damaged section and ject. then shortened the rest of the pins so they could be used again. He Continued over the page then turned to collecting discarded loading straps. This had a positive

6 Rail Freight Group News October 2012 tainer terminal and the northern supply lines. This involved the clear- ance and alteration of 27 ‘foul’ structures on the line over a two-year period, at a budgeted cost of £41m. The judges considered this pro- ject particularly deserving of an award because of its collaborative partners and it being an excellent example of a project brought in on time and under budget (by £9m).

Outstanding Individual Contribution Winner: DB Schenker Rail – Adrian Hibbard, Production Man- ager Judges were impressed by the success Adrian Hibbard has achieved in exceeding customer expectations as he continued to develop ways to increase the tonnage moved by each train.. He was appointed to review an entire operation to ensure that both people and wagons Runner-up: Hunslet Engine Co. and Tata Steel Port Talbot were available at the right time leading to a dramatic improvement, The runners-up prize was awarded to a joint entry which attracted the and addressed a critical component of success which was planning judges’ attention because of the practical usefulness of its technical wagon maintenance ahead to ensure trains did not run short. His developments; and the comprehensiveness of the submission. The entry was supported by a very strong testimonial from the client in- Trojan Locomotives project was carried out by the locomotive de- volved. signer, manufacturer and maintainer on behalf of Tata Steel, whose purpose-built locomotives were unfortunately not fit-for-purpose. The eventual solution involved a significant amount of testing, designing as well as time and effort.

Rail Freight Project of the Year - Winner: Lafarge Cement UK The winner of Project of the Year went to Lafarge Cement UK for its part in the Northfleet Rail Connection Partnership. Judges were very impressed by what was an outstanding project that involved the re- connection and regeneration of what was once the UK’s largest ce- ment producing plant. The project is already playing a key supporting role on Crossrail and promises to have a significant impact in the future. It involves the re-connection of the cement works, on the south bank of the River Thames, back to the main network and the establishment of a tunnelling logistics centre for Crossrail. This was achieved as a fast-track initiative which was brought in on time and on budget. Runner-up: HPUK, Port of Felixstowe – Justin Phillips, Senior Manager, Rail Operations Judges awarded Justin Phillips in recognition for improving rail opera- tions at one of the country's busiest ports since his appointment in May 2010. Even with day-to-day responsibility for some 280 staff and 56 daily rail services, he has still been able to deliver a huge raft of initiatives which have improved the effectiveness and efficiency of rail operations at the port through a host of initiatives including; develop- ment of the in-house Train Planning Operation System, a planning and monitoring system covering all movements. His entry was sup- ported by strong client testimonial which demonstrate the tangible benefits delivered.

Business of the Year - Winner: DB Schenker Rail DB Schenker Rail won the overall Business of the Year award and had demonstrated a broad and consistent ability to deliver projects of varying sizes with the same high degree of commitment and client focus. Judges said that equally important, it has been the company’s Joint Runner-up: DB Schenker Rail evident appetite for encouraging its employees to develop their own The first runner-up was DB Schenker Rail for the introduction of the schemes and the promotion these initiatives for the benefit of industry first regular rail freight services to HS1; the result of five years of and the environment. • planning, nine months of trials and the modification of a Class 92 locomotive. The judges were im- pressed by the potential long-term industry and environmental benefits. In particular, its use of modal shift benefits and the opening-up of trading links with the continent, especially Poland.

Joint Runner-up: Network Rail & Funding Part- ners The second runner-up prize was awarded to Net- work Rail & Funding Partners for their gauge clear- ance work on the Peterborough to Nuneaton Line. The project is part of an overall package of works which it is estimated will transfer 750,000 lorry journeys per year by 2030 from road to rail. Funded by DfT and three Regional Development Agencies, the project required the gauge clearance of the main route between the UK’s largest con-

7 Rail Freight Group News October 2012 RFG Board appoints Maggie Welcoming the new appointment, Tony Berkeley said: “Maggie has led RFG’s policy work for several years, gaining the respect of Gov- Simpson as Executive Director ernment, regulators and our members for the quality and strategic thinking she contributes to this work, as well as her knowledge of the On 12 September the Board of the Rail Freight industry. We wish her every success in her new role.” • Group appointed Maggie Simpson as Executive Director. Building on her previous role as Policy Contact: Manager, she is now responsible for leading Maggie Simpson, RFG Executive Director the strategic direction of the Group, RFG Chairman Tony Berkeley will concentrate 020 3116 0007 / 07737 007 957 his focus particularly on political and European [email protected]/www.rfg.org.uk issues. Demystifying Rail Freight: Become an informed user of rail freight services

The RFG in conjunction with the Chartered Institute of Logistics and Transport (UK) CILT UK, have re- cently run a number of our very successful Demystifying Rail Freight training courses . If you would like more information on setting up an in-house training session, please contact Maggie Simpson at RFG at [email protected] or Dorothea Carvalho at CILT (UK) [email protected].

Held by industry expert Julian Worth, the high level one-day training programme can be run on a bespoke basis for your company. RFG is looking to offer some open dates during 2013 so please feel free to get in touch to discuss.

Tony Berkeley, RFG Chairman, said: “From talking to a lot of people, including many of our members, we have identified a clear need to better inform the wider transport industry of the benefits of the sec- tor. We wanted to help cut through the incredible complexity that seems inherent to the rail freight sector, so we thought we would launch a very interactive course as a start to that process” •

RFG EVENTS CALENDAR 2012 / 2013 Autumn Group Meeting 7 November 2012 - Middlesbrough The RFG’s Autumn Group Meeting 2012 will take place on 7 November at the Parkmore Hotel Eaglescliffe. Confirmed speakers for this event include Gary Dawson, Managing Director of AV Dawson, PD Tessport, John Smith GBRailfreight who will be presenting on opportuni- ties for rail freight in biomass. Emile Naus, M&S will provide an update on their use of rail freight as part of their logistics strategy, and Guy Bates, Freight Interchange Manager at Network Rail will discuss the proposals for rail freight land sites currently held by DB Schenker. The afternoon tour will take in the rail facilities at AV Dawsons, and at PD Tessport, returning to Middlesbrough railway station and the Parkmore Hotel. On the previous evening 6 November there will be an evening social kindly sponsored by AV Dawson. For booking information please see the website or contact [email protected] •

RFG Christmas Lunch 12 December 2012 - Central London The crackers have started arriving at the RFG offices and eve- rything is in place for the 2012 RFG Christmas Lunch, which will be held on 12 December at The Lancaster London. Only a few tables now remain at this key annual event. To check availability please contact [email protected].

Scottish Conference – Glasgow Our first meeting of 2013 will be our Scottish Conference, to be held in Glasgow on Wednesday 13 Feb 2013. The evening social on Tuesday 12 February is kindly sponsored by The Malcolm Group. On the Wednesday afternoon there will be a tour of WH Malcolms rail-linked facilities. Further details on the venue and speakers will be available in the new year.

RFG Group Meeting – Multimodal Exhibition Following last year’s success, we will again be holding our Group Meeting within the Multimodal exhibition, on Wednesday 24 April. Places will also be available for delegates at the Multimodal dinner on the evening of Tuesday 23 April, kindly sponsored by Multimodal 2013.

We are working on dates for the remainder of the year, which will be available soon. For all RFG event details, please see our website at www.rfg.org.uk/events

8 Rail Freight Group News October 2012 GUEST ARTICLE: Retrack Harnessing the potential of Single Wagonloads duction in train load factors until the wagons were declared fully By Phil Mortimer operational again. Following the resumption of base load traffic the service frequency was ramped up to three departures per week in each direction leading to a significant increase in asset productivity Single wagonload traffic (SWL) is a category of rail freight activities and increased traffic activity. Much of this was SWL and wagon many incumbent railway operators in Europe are seeking, almost group traffic, including a high proportion of chemical and hazardous desperately, to reduce or withdraw from on the basis of alleged cost, commodities, which was able to exploit the weight advantage of rail. product and service deficiencies - preferring instead to concentrate The project was able to attract and retain traffic from both road and on large block trains of commodities such as coal, minerals and large waterborne competing options as part of the requirement to achieve flows of containers. These appear to the train operators to be more and sustain modal shift in line with EC aspirations. Other key com- profitable and generally less troublesome in terms of organization modities induced onto the Retrack service included grain, soya, alu- and service delivery. minium ores and car components. Inter-modal traffic was at best SWL has been a major part of rail freight traffic in Europe with many intermittent and proved to be a much lower component of total traffic industrial spurs, sidings and terminals still in operation for a wide activity than had been anticipated. spread of commodities and traffic flows. Competitive pressures, pol- icy initiatives and a predatory focus on costs have tended to reduce Starting a new rail freight service in the depths of a major economic the value of this sort of traffic to rail operators, which in aggregate recession might have appeared foolhardy but traffic volumes and has in the past accounted to a substantial share of individual rail- revenue increased modestly once the service frequency was way’s income and traffic activities. Potentially siding to siding traffic increased. One development which proved invaluable was the devel- could be very competitive in terms of unit movement costs, particu- opment of “satellite” operations feeding on/off the main corridor larly in high-capacity modern vehicles operating in a highly disci- operations. Being able to service intermittent flows on a flexible basis plined and tightly managed envelope. proved to be a significant and positive advantage. This proved to be Many SWL operations do not comply with this model and have of considerable interest to SWL and wagon group traffic operators. become vulnerable to competitive pressure (primarily road transport) The trains were operated with widely varying load factors. Some and seen to be lacking in product and service terms. Alleged low trains were operated at full weight and length limits. There were productivity, often linked to excessive dwell times in marshalling occasions when very short trains were operated but this was justified yards, and high costs associated with local trip workings has made to deliver maintain service integrity and to balance rolling stock this category of traffic less attractive to incumbent rail operators in movements. The bulk of the traffic has been predominantly west- Europe which have, as a consequence shed services and de- bound based around core base load contracts of agricultural products commissioned infrastructure. Shippers formerly served by rail have such as grain. little option as a consequence but to use road transport. Once this process is begun then a downward double unsynchronised spiral of Key to the success of the project was the simplicity of the administra- capacity reduction and reactionary cost cutting is induced. The major tion (booking, pricing, operational monitoring and invoicing) and a beneficiaries in all of this are the road freight service providers. faster transit time than established rail and road services. The alloca- The freedoms endowed by the railway reform packages instigated, tion of specific roles between the major players (TransPetrol, LTE & but by no means fully implemented and applied, has induced a num- CER) established a model that served the project well and could be ber of new rail freight services into operation. replicated in other scenarios and routes. The business systems which were employed were very orthodox in terms of planning, train The Retrack project, which was developed under the EC’s FP6 pro- performance monitoring, crew resource allocation and train path gramme is one of these. One of the major results from this project is acquisition. A new IT system was developed and originally intended that SWL and wagon group traffic has been and can continue to be as an integral part of the project. In reality this was not available at an attractive and commercially competitive service option on a long the start up and was subsequently side lined until the project had international corridor between the Benelux countries and Southern reached a greater degree of commercial and operational credibility. Europe. Rail has been able to develop traffic which plays to its inher- Marketing was limited to known freight shippers. The project was ent strengths in terms of weight advantage, speed, operation in a close to a break even position in mid 2012 and would probably have controlled environment and the use of electric traction on the main achieved this at an earlier stage had the grain wagon issue not arisen axis of the corridor between Cologne and Gyor in Hungary where and seriously compromised the operation. Certainly the support of trains are assembled and dispersed. Train service frequency has the EC in developing and underwriting the demonstration was of now been established at three rotations per week on this axis. great value and the project is unlikely to have been undertaken with- The project grew from pressures from within key shipper markets, out this. Indeed it suggests that for any serious new entrant rail ser- primarily chemicals, and from emergent groups of new rail operator vices financial support in the form of working capital to move the pro- interests seeking to develop new services. ject through to a positive cash flow may be needed. Existing sources One key issue in the development of the project was the lengthy ges- such as Marco Polo would not have been adequate to support the tation period from the formal inception to the emergence of a credible Retrack project to the present level of development and hand over operating entity. This reflected a massive difference in experience of into a fully commercial position. the development of collaborative consortium operations between It was found that following a spot approach to the application for train parties which compete in other scenarios. The model ultimately paths was more effective than a contracted forward position. There adopted was for a lead partner to control commercial and operational were no occasions when applications for train paths were denied. planning together with train crew and train path planning. Some of The Retrack service did experience weather related delays (as did the original partners withdrew leaving a key team based in Germany other operators) and delays induced by infrastructure problems such linked to an Austrian traction leasing company and a private railway as derailments. There were some concerns that new market entrants undertaking in Hungary. were constrained by major planned and unplanned infrastructure The project also changed profoundly in terms of scope and shape programmes compared to the incumbents. Equally open access to ahead of the start of commercial operations. The project was being terminals and sidings was not always assured. Getting access to a developed as a major economic crisis was developing and existing group of sidings for regular traffic in Hungary proved particularly diffi- service providers were reducing capacity. Originally planned to oper- cult. ate from the Benelux countries (with an anticipated high proportion of The evolving regulatory regime was helpful despite the variability in inter-modal traffic) to Constanza (Romania) train services were the application of the required reform measures along the Retrack started in early 2010 between the hubs in Cologne and Gyor. Train axis. This variability in powers and willingness of the regulators to activity was limited to a single rotation per week. Shortly after the enforce equable rules of engagement remains a concern. start up (June 2010) a major technical issue arose with leased grain wagons deployed on a major base load flow leading to a severe re- Continued on page 10.

9 Rail Freight Group News October 2012

RFG POLICY & CONSULTATIONS: Maggie Simpson email: [email protected] Recent weeks have seen a brief freight in detail, the principles of transparency their proposals for managing their land and period of calm with industry con- are expected to read across all sectors in due property estate . RFG will send details to all sultations, although more are course. Our response sought to make a dis- members in due course. promised as we move towards tinction between information that operators in the end of the year. a competitive market might be expected to Contact: make available to customers, and that which Maggie Simpson, RFG Executive Director is in the public interest to publish. Further 020 3116 0007 / 07737 007 957 work will be required to understand freight [email protected]/www.rfg.org.uk Periodic Review customer needs in this area. The Periodic Review (PR13) continues ORR have also consulted on proposals to apace. The next milestone is the publication formalise the Rail Delivery Group (RDG) by ORR of its conclusions on freight charges, which we broadly support – see Chairman’s which is expected in November. In the early Comment on page 2. new year, Network Rail will publish its Strate- gic Business Plan, which is their response to European Rail Freight Corridor New RFG Members the High Level Output Statement, setting out RFG has responded to the consultation from their view on affordability and deliverability. Network Rail, in association with RFF, Infra- ORR will seek views on this, and during the The Rail Freight Group would like to welcome bel, Eurotunnel Group and HS1 Ltd on the its latest new members. For more information Spring move towards their draft determination potential development of a European Rail in July. on the companies please visit their respective Freight Corridor linking UK and continental websites; Europe. RFG has responded to recent consultations Overall RFG strongly supports the develop- linked to PR13 including on Network Rail’s ment of the corridor as a way of bringing fo- • ERMEWA UK outputs (for example, targets on freight per- cus and management attention to the growth www.ermewa.com formance, on network availability and such in cross channel rail freight. Care must be like). We have also responded to Network taken in the corridor design to minimise costs, Rail’s consultation on the capacity charge, • Morgan Tucker ensure efficiency and interface with the exist- www.morgantucker.co.uk which is an additional payment made to com- ing frameworks in each Member State. pensate Network Rail for extra performance costs of traffic growth. • Astra Rail Network Rail / DB Schenker www.astrarail.com Office of Rail Regulation (ORR) ORR have consulted on proposals to in- Property crease transparency in the rail sector. In the next few weeks we are expecting Net- Although the consultation did not consider work Rail and DB Schenker to consult on

Continued from page 9 Retrack is effectively a highly disciplined “hook & haul” model of op- erations. Some of the regulators still appear to be open to intervention and The project has demonstrated that it is possible to operate a competi- pressure from the incumbent rail operators and government agen- tive and commercially viable international rail service based around cies. Train crew availability has been a routine issue in terms of se- single wagon and wagon load groups exploiting the freedoms en- curing competent and accredited personnel and remains an on-going dowed by the railway reform packages. The model developed for focus of the new commercial project operators. Retrack could potentially be re-deployed and adapted into other do- The ability to track train movements using the systems supported by mains and lines of route. It is based on orthodox commercial and the incumbent German and Austrian rail infrastructure operators operational methods but involves a highly disciplined service model proved to be a significant advantage in terms of resource monitoring, with an interventionist management approach to asset productivity. planning and re-assignment of resources in the event of delays and For rail the use of a consortium model to manage revenue and cost disruption. sharing finally proved to be a major advance. SWL should not be Retrack has been able to offer faster transits along the main route written off as an obsolescent product and service offer. The Retrack compared to existing services. This has been accepted positively by project demonstrated that it can be made to work and work well. shippers. There was no major adverse response from the incumbent rail operators in terms of commercial pricing and discounting for the Contact: duration of the demonstrator project. The client base grew slowly Phil Mortimer, Research Associate over the demonstrator period and has stabilised at 12-14 core ship- NewRail, University of Newcastle on Tyne pers. The wagons for the operation are all the responsibility of the 01243 86911 / [email protected] shippers.

Have you received your free copy of Rail Freight: Moving Forwards? Rail Freight: Moving Forwards is a round-up of the top developments from across the UK rail freight sector and is our way of recognising some of the amazing efforts that freight operating companies and other key stakeholders make on behalf of the sector.

If not, please contact [email protected] for your .pdf copy

10 Rail Freight Group News October 2012 WESTMINSTER COLUMN: JRC Consulting DfT financial competence under scrutiny well.” Following his statement of 3 October accepting significant flaws in the West Coast procurement process, Mr McLoughlin took the By Jonathan Roberts, JRC Consulting. brunt of Parliament’s concerns on the Commons’ first day back after the Party Conferences, on Monday 15 October. MPs’ remarks set out There is only one really critical rail topic facing Westminster at pre- below are highlighted because they raise the general issue of DfT sent (and particularly DfT and Treasury) – whether the InterCity West credibility to the private sector, not because they might highlight spe- Coast franchising debacle has severely wounded private sector confi- cific West Coast issues. Quotes below are from an uncorrected Han- dence in investing in rail operations and infrastructure, or caused a sard proof. general loss of confidence in the Department of Transport, or whether Mr McLoughlin said “I have paused the ongoing franchising pro- it is just a four months’ standstill which is bad enough? gramme, including live competitions on Essex Thameside, Great The rescheduling of the West Coast franchise into stop-gap then in- Western, and Thameslink … I also asked for two urgent investiga- terim and then long-term franchise suggests it may not be just a four tions to be carried out. Both reviews are now well under way. The first month pause. There will be financial impacts on DfT’s budgeting, and of these is an inquiry led by Sam Laidlaw, the chief executive of Cen- for investment. trica. He is the lead non-executive director on procurement across Government and the lead non-executive director of the departmental The initial risk is disbelief in the Department for Transport’s bidding board. His review is examining what happened during the west coast appraisal processes, which underpin the validity of all investment procurement and why. It will establish the lessons to be learned. I calculations and provides assurance to FTSE companies and others have asked for the initial findings of the review by the end of October that shareholder funds and management time are well spent. The and expect the full report by the end of November.” cost of funding franchise investment risk could just have risen signifi- cantly. Here it will be the ‘Brown Review’ which will provide long term “The second review is looking at the implications of the flaws on the options. west coast procurement for the rest of the franchising programme. This review is being led by Richard Brown, a highly respected indus- A larger question is whether the Department is a fit state to oversee try figure and the chairman of Eurostar. My expectation is that the not just franchising in whatever form it re-emerges – with many fran- Brown review will report no later than the end of the year on lessons chises queuing to be re-let between now and 2015 – but also HS2 for the future franchising programme, so that it can be resumed as and its Hybrid Bill, airport capacity decisions, and a talked-about re- soon as possible.” invention of a large-scale roads programme? [The list excludes Net- Mr McLoughlin restated the Government’s commitment to ensuring work Rail because that is subject to independent ORR appraisal.] In “that we continue to have private sector innovation and investment in an adverse scenario, rail freight would be a participant, not just a the railways … We will restart our refranchising programme … as bystander. soon as possible.” Mr McLoughlin announced that “The Department was commencing The new Transport Secretary, Patrick McLoughlin MP, had previously negotiations with Virgin Rail Group with a view to it remaining as op- stated during his first appearance at Transport Select Committee on erator of passenger services on the west coast main line … for a 12 September that “I am content with the way in which the Depart- short period of about nine to 13 months. In this period, we will run a ment exercised its review of that contract.” He had set the general competition for an interim agreement. This interim agreement, which scene that “although there have been some ministerial changes at will be open to any bidders, will then run until the new long-term west the Department for Transport, there is no change in what the Govern- coast franchise is ready to commence. I will keep this approach un- ment seek to do in achieving our transport infrastructure. Our focus der review so that it can be informed by the Brown findings and rec- on growth, efficiency, affordability, passenger experience and safety ommendations and so that it will ensure value for money … Britain’s remains as strong as ever.” railways are a great success, and I am determined that this incident will not get in the way of the Government’s record. We have launched In reply to John Leech (LD, Manchester Withington), Mr McLoughlin the biggest programme of investment since the Victorian era”. had remarked that the West Coast “is a very important line in the Shadow Transport Secretary Maria Eagle commented: “The reality is national rail infrastructure … a huge and significant amount of invest- that Ministers are responsible. It was Ministers who redesigned fran- ment in it has been made by the Government” so a new 14-plus year chising policy… It was Ministers who slashed faster than any other contract “is a decision for the long term”. He had responded to Julie Department the expertise and staffing available to carry out the Hilling (Lab, Bolton West) on her general concerns about franchising task… and it was Ministers who reportedly cancelled an external au- that “it is very important that we have the confidence of the industry”. dit that was routinely done in other competitions.” The DfT’s Permanent Secretary, Philip Rutnam, also commented on Mr McLoughlin rebutted the franchising point by quoting Lord Adonis, 12 September: “The process that we are adopting in this round of Labour’s former Transport Secretary: “Ten year franchises, with the refranchising has developed from the process that was used by previ- possibility of longer contracts [up to 22 years] should bidders make ous Administrations in franchising, in that we are trying to take a sensible and affordable proposals, will allow operators to invest and more sophisticated and more evidence-based approach to the as- suggest new innovations.” Departmental staffing reductions were a sessment of risk. That involves more detailed financial models being consequence of the economic climate. supplied by bidders and a more detailed scrutiny of those financial models by the Department.” So this should have been a better proc- Sir George Young (Con, North West Hampshire), a former Transport ess this time around. Mr Rutnam observed that the processes for the Secretary during the early period of privatisation and who had just left Greater Western franchise “are essentially very similar, as far as I am Cabinet, asked Mr McLoughlin to consider that “at the beginning, aware” to the West Coast franchise. franchising was done not by his Department but by an independent, arm’s-length body? Twenty-four franchises were issued in some 18 The Transport Select Committee chair, Louise Ellman, had asked months, none of which was subject to a legal challenge, and this led about financial assistance to transport providers under the new Infra- to the major investment in the railways to which he has referred. structure (Financial Assistance) Bill. Mr Rutnam replied that “There is Franchising was subsequently brought in-house to the Department. the new UK Guarantees programme that the Treasury have an- Can he confirm that the Brown review will consider whether franchis- nounced, for which they are seeking legislative provisions. We are ing should continue to be the job of his Department or whether we already exploring possibilities under that”, eg discussions in relation should revert to the initial model?” to some of the big local authority projects such as the Mersey Gate- Patrick McLoughlin deferred to Sir George’s “great expertise in this way bridge. Patrick McLoughlin added: “You can take it very much matter … I am sure that Mr Brown will have heard my right hon. that the Prime Minister is keen to ensure that we make the most use Friend’s comments and that he may well want to investigate that so- of this availability. I am very keen that the Department does so as lution further.” Doubts about the Department’s accurate Continued over the page

11 Rail Freight Group News October 2012 Continued from page 11 following the discovery of significant technical flaws in the way the franchising process for ICWC was conducted which resulted in the predictions on passenger levels and on other risks, in relation to High cancellation of the ICWC franchising process on 3 October 2012, in Speed 2, were raised by Frank Dobson (Lab, Holborn and St Pan- particular: cras) and by Mrs Cheryl Gillan (Con, Chesham and Amersham), the a. The course of events in DfT that led to these technical flaws in second former Coalition Cabinet member to speak. Gisela Stuart order to identify what happened and why it happened up to the point (Lab, Birmingham Edgbaston) welcomed HS2 but wanted “to ensure that the intention to award the contract was announced on 15 August that it is based on accurate and reliable figures. Will the Secretary of 2012; State ensure that his review will identify any errors and miscalcula- b. The roles and responsibilities of different advisory and decision- tions, and whether or not they relate to HS2, and will he ensure that making parties within DfT and externally in relation to these flaws, this is a sound calculation?” including the Board Investment and Commercial Committee, the Con- tract Awards Committee and the Rail Refranchising Programme Nick Raynsford (Lab, Greenwich & Woolwich) and Chairman of the Board; how well these committees performed their roles, and what All Party Infrastructure Group, went to the public sector heart of the can be learned from this about the appropriate structure for govern- matter by questioning Mr McLoughlin’s aim to seek “best value for ance and assurance of major contract awards; taxpayers” in the interim arrangements. “He will understand that there c. The arrangements for ensuring appropriate review of the technical is a degree of scepticism in the House about his ability to deliver that. elements of contract award and appraisal and appropriate quality Will he please tell us how he intends to achieve that best value and assurance. what comparators he will use? How can he believe that a short-term, The Inquiry should make recommendations on the basis of its find- nine-to-13-month deal followed by an interim arrangement before the ings. [long term] tendering process begins can possibly deliver best value The Inquiry will be led by Sam Laidlaw, DfT’s lead Non-Executive for the taxpayer?” Mr McLoughlin temporised: “The right hon. Gentle- Board Member who also leads on procurement among Government man will have plenty of time to check whether we have done that”. Non-Executives. He will draw on others as he sees fit, including from Concerns about short term lack of investment in the West Coast line other Non-Executive Board Members. By agreement, Linklaters and were also raised by Tim Farron (LD, Westmorland and Lonsdale) and Ernst & Young have been appointed to provide an external perspec- Brian Donohoe (Lab, Central Ayrshire), who queried the absence of tive to the Inquiry. “any contingency funding that will need to be put in place as a result The Inquiry should be completed as soon as possible. Initial findings of this debacle. Is it proper to suggest that it is possible for this shall be made available to the Department by 26 October. amount to be as much as half a billion pounds—half a billion pounds The Inquiry will be taking place in parallel with the Department’s HR that taxpayers will have to pay?” investigations. The Laidlaw Inquiry Report will be published no later than end November 2012. The Transport Secretary would only acknowledge £40m, but ac- cepted that “the position in which we find ourselves is not the position Terms of Reference: Richard Brown Review of the Rail Franchis- I would have wanted to be in. What I am trying to do is to move for- ing Programme ward with some certainty so that when we learn the lessons from the Brown review, they can be implemented and acted on.” The review should consider the implications for the remainder of the MPs raised the responsibilities of the civil service for the problems rail franchising programme of the position reached on the InterCity arising. David Mowat (Con, Warrington South) asked “This decision West Coast competition. was one of the two or three major pieces of work done in the Depart- ment for Transport this year. If the permanent secretary will not hold This review should take careful account of the points and lessons himself accountable for this, what is he accountable for?” Mr learned identified in the Laidlaw Inquiry and should also consider: - McLoughlin referred to the inquiries now under way. How to structure risk transfer between the Department and rail fran- chisees in order to create optimum incentives in the long-term inter- Derek Twigg (Lab, Halton) raised wider concerns about the DfT’s ests of passengers and taxpayers, and the ability to adapt to chang- competence in relation to other infrastructure. “Given that the Secre- ing circumstances. tary of State has been in the job only for a few weeks, is he confident How to structure the bidding and evaluation processes to ensure a that the financial information that he is getting throughout the Depart- robust and fair competition, including evaluation of the risk presented ment for any major projects—including the Mersey gateway project— by different bids as a basis for decisions that take these risks appro- is robust and can stand up to scrutiny in the future?” “Yes”, was the priately into account. Transport Secretary’s full reply. Barry Sheerman (Lab, Huddersfield) The timing of the remainder of the franchising programme, so that it suggested that the topic of procurement should be considered by the can be resumed on a robust basis as soon as possible. Public Accounts Committee. How the Department can take the learning points from the Laidlaw Inquiry and facilitate a clear and proportionate framework for franchis- John Stevenson (Con, Carlisle) asked about the consequences af- ing which balances Government's administrative and commercial fecting “the investment decisions of a rail company … Will the length judgements with the need for the market to have predictability, trans- of the new franchise be the same as that initially proposed?” Mr parency and a proportionate application of legal rules. McLoughlin noted that “it was commonly accepted that longer fran- - The review should make recommendations on the basis of its find- chises would lead to more investment and a better return for the tax- ings. payer. We will need to look at this properly and to investigate what went wrong with this particular process before we come to long-term The Terms of Reference may be refined further following the publica- decisions.” tion of the Laidlaw Inquiry. The review shall be completed by 31 De- Patrick McLoughlin faces oral questions in the House on 18th Octo- cember 2012 and published thereafter. ber, and then appears before the Transport Select Committee with the DfT’s Permanent Secretary, Philip Rutnam, to give oral evidence The review will be led by Richard Brown, Chairman, Eurostar. on the cancellation of the competition to run the West Coast Main Line franchise, on Wednesday 31 October at 2.45 pm. The review team should include external expertise as well as exper- tise from within Whitehall, and some cross-membership as appropri- Terms of Reference: Inquiry into the Lessons Learned for DfT ate with the review of lessons learned. • from InterCity West Coast (“ICWC”) competition (the Sam Laid- law Inquiry) Contact: Jonathan Roberts, MD The Inquiry shall identify the lessons to be learned from the Depart- Jonathan Roberts Consulting ment’s handling of the franchising process for ICWC in order to en- [email protected] / 07545 641 204 sure the Department maximises benefits to transport users and value for money for taxpayers in future franchise competitions. The Inquiry will comprise an immediate study of the lessons learned 12 Rail Freight Group News October 2012 RFG SPONSOR PARTNERS 2012

The Rail Freight Group (RFG) has always been about involving its members at every level and giving everyone new opportunities to promote their services. Welcome to the following companies who have become RFG Sponsor Partners for 2012.

Bircham Dyson Bell is a leading UK law firm and consul- BNP Paribas Real Estate is Europe’s leading real estate Cargotec UK owns four main daughter brands: Kalmar, tancy with a particular focus on the promotion of rail and consultancy, with over 3,300 employees in 150 offices, Navis, Hiab and MacGregor As a manufacturer of such other infrastructure projects. Our team of lawyers, public and is part of the BNP Paribas group, one of the largest leading brands, Cargotec UK can tailor solutions to meet policy and communications advisers is uniquely placed to companies in the world. In the UK our services are deliv- the needs of container and materials handling customers help you, from successfully negotiating the complexities of ered through a network of 10 offices covering every major using one or all of our product ranges. With a brand dedi- the ever changing UK planning system through to delivery city. BNP Paribas Real Estate is primarily comprised of cated after sales and support network, Cargotec UK are of your project to new or re-opened rail lines. Chartered Surveyors, many of whom have considerable the fastest growing, dynamic company of its kind in the UK Contact: Robbie Owen, Head of Major Projects experience and expertise in the rail and logistics sector. today. Cargotec’s core values are: Global presence — www.bdb-law.co.uk local service, working together and sustainable perform- ance. These values are the essence of Cargotec and they

DB Schenker is Britain’s largest and best performing rail DP World London Gateway, the new global shipping Hunslet Engine Company is renowned throughout the freight operator. Winner of three Institute of Railway port and logistics park, will open in the fourth quarter of world as a designer and producer of the highest quality Operators “Golden Whistles” awards in 2011 for best and 2013. By locating Britain’s most environmentally friendly shunting, industrial, tunnelling and specialised locomo- most improved operational performance, DB Schenker is major new port and what is set to become Europe’s tives. Today, the company provides a bespoke design and truly Britain’s most punctual and reliable rail freight opera- largest logistics park on London’s doorstep, UK busi- manufacturing service for the UK and export markets. Our tor. With nationwide coverage across the UK in all tradi- ness will soon be able to take advantage of a more cost team of experienced engineers, designers and profes- tional and rapidly expanding logistics sectors, DB Schen- effective, greener way of getting the nation’s goods to sional business specialists can provide a wide variety of ker is unsurpassed in its ability to offer customers a rail consumers. innovative products, designed and built to the highest solution that works for them. This also extends across possible standards to meet every conceivable need. Europe, with the DB Schenker Rail pan-European network providing UK based customers with rail freight options to any part of Europe by rail via the Channel Tunnel.

Hutchison Ports (UK) Ltd comprises the Port of Felixstowe We are the specialist team of railway experts within the Malcolm Rail, a division of The Malcolm Group, was offi- (PFL), the UK’s largest container port, London Thames- Lloyd's Register Group. From our offices in the UK, cially launched in 2001 and since its launch has delivered port (LTP) the UK’s only automated container port and Europe, the Middle East and Asia we provide a range of ‘sustainable’ railfreight development and growth. The ser- Harwich International Port (HWH), one of the UK’s leading advice and assurance services to improve the safety, vice benefits a wide range of users, providing reliable daily multi-purpose facilities. Twice winner of the RFG Business performance and asset management of rail systems and overnight transit between our strategically positioned of the Year Award since 2008, PFL offers more intermodal across the world. In addition to our renowned independent rail links. Currently, 70 train services are operated each rail services, to more inland destinations, than any other assurance and certification services, we offer expertise in week from three terminals nationwide, providing a crucial UK port. In 2011, HPUK handled 550,000 containers on rolling stock design, signalling systems, safety engineer- link between ports, production facilities and distribution 33 daily services and in 2012 will construct a third rail ing, human factors, energy efficiency, project manage- terminals. terminal at Felixstowe. ment, software testing, power systems, civil engineering and management systems.

May Gurney is a support services company. We are com- Railway Vehicle Engineering Limited is a specialist VTG Rail UK Ltd is a subsidiary of VTG AG, Europe’s mitted to helping our clients in the public and regulated rolling stock maintenance, overhaul and engineering leading wagon hire and rail logistics company, with around sectors deliver sustainable improvements to front-line company based at the Railway Technical Centre, Derby. 50,000 wagons, plus rail and tank container logistics services across the UK. We make sure that the road, Our impressive engineering facilities include three ex- operations. As part of this group, VTG Rail UK has access utility, rail and waterways networks and public buildings tensive workshops as well as a sizeable yard. We can to huge experience and resources, underpinning its UK are well maintained and that household refuse is col- undertake heavy overhaul of an entire fleet of trains or operations. The UK fleet comprises of a Bulk sector, with lected, managed and recycled. These essential mainte- one off modifications to a single vehicle, depending on wagons for dry and solid products, and a Tank sector nance services, which are based on long-term contracts, requirements. RVEL is the UK and Ireland exclusive containing specialist wagons for liquids, chemicals and are the ones that are visible to local communities and distributor for NREC manufactured parts for EMD 645 compressed gases. New wagons are added regularly as make a very real difference to the quality of life. They keep and 710 engines. We hold a wide range of parts and part of a continuous replenishment process and are cho- the country running. We believe that we can be the lead- consumables ready for instant despatch. sen to meet customer’s specific requirements, with inter- ing support services business in the UK, in our chosen We are ISO 9001 and 14001 certificated and have Link- faces designed to speed the flow of goods through loading sectors, by delivering these services in a way that’s up approval for a wide range of product groups. and unloading points. smarter, more client-centred, more outcome focused and more efficient than anyone else

For more information on our Sponsor Partners, please visit www.rfg.org.uk/rfg-sponsor-partners-2012 13 Rail Freight Group News October 2012 EUROPEAN NEWS News in Brief:

European Update • Astra Rail Industries has By Tony Berkeley, RFG Chairman taken over the core freight train wagon and rolling In September, when politicians and officials returned to Brussels after the summer break, it became clear that stock business of Astra the Commission would make a final decision on what it wanted in the Fourth Railway Package by Christmas Vagoane Marfa Arad, Me- 2012. In addition to proposals to open the passenger train services to competition, and increase the powers of vaDrobeta Turnu Severin the European Rail Agency to create a truly interoperable and technically harmonised network, the big challenge and Romvag Caracal. This is clearly the future structure of the European rail network; is there to be total separation of the infrastructure is the first investment in managers from any train operator (as ERFA, EIM and customer groups want), is it to continue to allow the hold- Romania made by Ger- ing company model (as DB wants), the muddled responsibilities favoured by France (separate infrastructure man private investor Tho- manager but with the train operator SNCF responsible for timetabling, possession planning and maintenance) mas Manns. or, as proposed by CER (the Community of European Railways and Infrastructure Managers) to allow each member states to have the structure that they chose! • Charles André has bought Novatrans from So the autumn sees an unrivalled range of conferences promoting one or other of these structures. The Euro- SNCF-Geodis. SNCF pean Economic and Social Committee started with one in which DB had most of the speaking slots, allowing Geodis took over Nova- SNCF a few, all arguing that any change to their structures would be a disaster, from a safety, capacity, techni- trans in 2009, but was cal etc points of view and that, anyway, there was full liberalisation in their countries already. So European unable to stem the classic Commission Vice President Kallas issued a call to arms at the next conference. He noted that the relationship ferroutage operator's between the infrastructure managers and the rail operators is critical; ‘Experience shows us numerous exam- losses. The company lost ples of restrictions of competition that would not exist in a separated structure and can only be explained by the €35M in 2010 despite a conflict of interest that exists in an integrated structure….Infrastructure management functions which are poten- capital injection of €60M tial sources of discrimination should be kept apart from the operation of transport services. These have to be by SNCF, and lost another exercised in an independent and neutral way.’ Turning to financial transparency, he noted that ‘It is very difficult €18.6M in 2011 on a turn- to ensure separation of accounts within integrated groups, which makes it possible to cross-subsidise railway over of less than €87M. operators of the holding with government money or track access revenues from competitors. This is unaccept- able for market newcomers and makes it very difficult for them to compete. So there must be legal, commercial • Proxio Train has said it and financial independence.’ will postpone its planned He concluded that the separate structure favoured by the Commission is not about ‘having competition for 2013 market launch serv- competition's sake. It is about providing a better service and making sure that rail is able to fulfil its underused ing major ports and air- potential so that it becomes a real and attractive alternative. Our railways deserve better. European citizens ports in Finland. The deci- also deserve better.’ sion to delay means that Meanwhile the presidents of SNCF and DB wrote a joint letter to Kallas complaining in the strongest terms that the state railway company, the Commission had not asked these companies to organise this conference and provide speakers! In fact, it Valtion Rautatiet (VR), was a welcome change to hear speakers from around Europe, from Romania to Poland to the UK, all support- retains a virtual monopoly ing the separation of infrastructure from train operations and the consequential move to transparency of deal- over rail freight in Finland, ings between them. despite the sector being opened to competition in The programme of conferences and lobbying seems supported by the publication of all kinds of ‘independent’ 2007. consultants’ reports inevitably supporting the views of the organisation funding them. No surprises here! How- ever, one of the more interesting ones was published by the European Commission and therefore has some • Sweden’s Transport Min- credibility. It is a survey of 26,000 people across the EU on their attitude to the railways and competition. istry has presented an (Special Eurobarometer 388). It applies to passenger traffic, but there is no reason to support that attitudes to ambitious Skr55bn freight would be much different. http://ec.europa.eu/public_opinion/ 71% favoured competition! (€6.5bn) national rail- Finally, on 16 October the third conference in the European Parliament offered little new, although Guilliaume network transport moderni- Pepy, President of SNCF, suggested that for SNCF, freight was the main concern – ‘what do we do for the sation plan to upgrade rail freight business in Europe’. Tony Berkeley suggested that he could start by ’welcoming other operators; most lines, with two-thirds ear- independent ones will not even considering entering the French market because of the obstructions, risk and marked for primary rail uncertainty of operating there. Surely SNCF as the largest operator should have no role in timetabling, mainte- freight corridors serving nance and its planning etc? ports and airports. Why does SNCF not accept that full separation will help create the competitive European network that he sup- ports?’ The conference concluded with strong words from Brian Simpson MEP, chairman of the EP Transport Commit- tee, criticising the continuing delay in getting safety standards in the Channel Tunnel to be the same as those in the rest of Europe, as well as the continuing very high cost of using the Tunnel. Finally, Siim Kallas repeated his comment that the national restrictions and conflicts of interest inherent in the present European rail structures must go; the infrastructure managers must have control of all the necessary essential functions to enable fair competition to flourish. •

Contact the RFG Team:

Tony Berkeley, Chairman, 07710 431542, [email protected] Phillippa O’Shea, Administration Manager, 07931 763081, [email protected] Maggie Simpson, Executive Director, 07737 007957, [email protected] James Falkner, Media Officer, 07950 535886, [email protected] Robin Smith, Wales Representative, 07968 488905, [email protected] David Spaven, Scotland Representative, [email protected], 07917 877399

Rail Freight Group (RFG) News is published by the Rail Freight Group, 7 Bury Place, London, WC1A. Tel: 020 3116 0007 Fax: 020 3116 0008. www.rfg.org.uk RFG News welcomes comments, letters and short articles. Opinions expressed in these articles are of the author only. RFG News is published primarily for online distribution but we will continue to send hard copies to those readers who request them.

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