CITY REGION COMBINED AUTHORITY

To: The Chair and Members of the Combined Authority

Meeting: 17 March 2017

Authority/Authorities Affected: All

EXEMPT/CONFIDENTIAL ITEM: No

REPORT OF THE LEAD OFFICER: TRANSPORT

LIVERPOOL CITY REGION FREIGHT AND LOGISTICS STRATEGY

1. PURPOSE OF REPORT

1.1. The purpose of this report is to present for adoption by the Combined Authority a strategy for the development of the Freight and Logistics sector within .

2. RECOMMENDATIONS

2.1. It is recommended that the Liverpool City Region Combined Authority:

(a) Notes the contents of this report, and comments as appropriate; (b) Agrees that the City Region Freight and Logistics Strategy set out in Appendix One to this report be adopted as a strategy of the Combined Authority for implementation; and (c) Requests that officers develop a shared, costed brief for strategy implementation support for 2017/18 and beyond.

3. BACKGROUND

3.1 In August 2016 , on behalf of the Liverpool City Region, commissioned Mott Macdonald and MDS Transmodal to develop a Freight Strategy for Liverpool City Region. The Strategy was intended to build upon and be consistent with the Northern Transport Strategy produced for Transport for the North, and to compliment the focus given to the Maritime and Logistics sector as part of the Single Growth Strategy. A copy of the Strategy can be found in Appendix One.

3.2 The Strategy‟s objectives are to:-

a) Ensure the freight and logistics sector maximises its contribution towards achieving the economic development aspirations for Liverpool City Region, including creating additional GVA and employment opportunities; and b) Minimise, as far as possible, the environmental and social impacts of freight and logistics activities on local communities and business in the City Region, to enhance the quality of life for residents and expand the capacity of the environment to absorb increased economic activity.

4. CURRENT AND FUTURE FREIGHT FLOWS

4.1 Within the City Region, the main concentrations of HGV movements on the strategic road network on east-west links are notably the M56 through Runcorn, the M62 to / from Liverpool city centre, the A580 East Lancashire Road, the A5036 Dunnings Bridge Road to and from the of Liverpool, the Mersey tunnels and the M58 to junction 26 of the M6. On the north-south axis, the main routes for HGV movements are the M6 through St Helens, the A557 Runcorn Expressway linking the M56 to the Mersey Crossing, the A5300 Knowsley Expressway and the M57 linking to junction 6 of the M62. Forecasts produced as part of the strategy development show an increase of traffic on a number of roads, including the A5036 Dunnings Bridge Road, on the M58 and M57, on the M62/ Edge Lane towards Liverpool City Centre and on the M56 through Halton.

4.2 The West Coast Main Line (WCML) is the dominant route for rail freight in and out of the LCR, with the Liverpool branch of the WCML providing access to the main intermodal terminals at Freightliner Garston and 3MG in Ditton. There are also significant flows to and from the via the Branch and the Chat Moss Line (Liverpool to Manchester via Newton-le-Willows) to access the WCML. Since the end of July 2015, biomass traffic from the Port of Liverpool to Drax power station has required the routing of trains across the Pennines, while coal traffic has now ceased completely from the Port as inland power stations close. No container traffic is currently loaded to rail at the Port of Liverpool, with containers transported by road to the Freightliner Garston terminal before onwards transport by rail. However, the Liverpool 2 container terminal development is expected to generate significant volumes of intermodal rail traffic in the future and this will require more paths on the Chat Moss route to access the WCML. The results of the modelling suggest that the main increase in the requirement for train paths for freight services is likely to be on the Bootle Branch Line to the Port of Liverpool and on the Chat Moss route and its connections northbound and southbound onto the WMCL, as well as the Chat Moss Line beyond Earlestown towards Manchester.

4.3 The modelling shows that the City Region can secure a significant amount of additional economic activity through the development of deep sea and short sea container traffic, ferry traffic and the further development of its network of Multi Modal Distribution Parks (MDPs) with associated warehousing at rail and water-connected sites. This will provide efficiency benefits for the freight and logistics industry in the City Region, the North and the rest of the country, reduce the amount of road freight traffic on the strategic highways network (particularly in the Midlands and the South of ) and generate additional GVA and employment in the City Region. Analysis of the forecasts increases in traffic flows highlights the following key issues:

a) Rail is forecast to raise its share of City Region traffic from 6.7% to 12.9%, at a faster rate than for the North as a whole. This is because the City Region is less exposed to the forecast decline in the coal market, whilst developments at the Port of Liverpool and the increase in capacity of MDPs in the City Region are forecast to result in significant additional intermodal traffic; b) Forthcoming step changes in container port capacity from the scheme, if allied to the availability of network capacity to accommodate a network of intermodal services, will lead to significant increases in intermodal rail freight services to and from the Port of Liverpool, requiring additional capacity on the Bootle Branch Line and the Chat Moss Line to secure access to the WCML; c) Forecast increases in biomass traffic by rail from the Port of Liverpool to Drax in North Yorkshire will lead to an increasing requirement for additional capacity on the Bootle Branch Line and the Chat Moss and then across the Pennines; d) A consequential need for an estimated 13 hectares of land each year for warehousing located on MDPs so that the user cost of distribution to and from the City Region is reduced, attracting more activity; and e) Road freight volumes to and from the Port will put additional traffic onto the already capacity constrained A5036 route to Switch Island.

4.4 Analysis of the current and likely future context of freight activity in the City Region has indicated that there is a strong rationale for a partnership between the public and private sectors to set out a new, long-term strategy for freight and logistics in the City Region. The SWOT analysis carried out as part of the development of the Strategy has shown that the City Region‟s position within the North of England and the national market is already strong, and a number of schemes under construction will provide a further step change for the City Region‟s ability to attract private sector investment – most notably the Liverpool 2 deep-water container terminal. Yet, at the same time, it is also clear that a well-articulated, forward-thinking strategy from the public sector will be required to facilitate this growth in the largely private freight and logistics sector, whilst minimising the environmental and social impacts on the City Region‟s residents. It would be a mistake to adopt a completely „laissez-faire‟ approach, where the future form and function of the freight and logistics sector is left entirely to private sector operators.

4.5 To address important issues such as the lack of rail network capacity and congestion on the main highway link to and from the Port of Liverpool, and thus keep the City Region‟s Freight and Logistics sector competitive, a range of public sector interventions will be required. Such interventions should consider the strategic needs of the City Region as a whole, balance economic and environmental objectives and provide synergies with the investment plans of the private sector.

5. PACKAGE DEVELOPMENT

5.1 This Strategy therefore presents a suite of interventions for the City Region, to be delivered as eight packages by the public sector in partnership with the private sector, to capitalise on the region‟s existing strengths and help realise the objectives of the new Growth Strategy. Each package addresses a key component of the City Region‟s freight and logistics system; taken together, they can act as a long-term guide for public sector activity in support of the Growth Strategy.

Package 1: Multimodal Distribution Parks and supporting infrastructure

5.2 Despite the strategic location of the City Region at the cross-roads of the North Sea, and long distance rail lines, the vast majority of goods continue to be distributed by road. Given the relative peripherality of the City Region for national distribution, it is only through the greater use of lower cost forms of freight transport that the City Region can secure additional market share. To achieve this, the LCR will need to develop Multi-modal Distribution Parks of sufficient size, and providing good access by road, rail and water. An importance aspect of this is the need to ensure resilience within the supply chain and to ensure that the city region is able to withstand the negative impacts of adverse weather conditions. Interventions which could be delivered as part of this package include:

Rec 1.a. Public sector support for the development of MDPs through the planning system. This could include support for the acquisition and assembling of land, and / or entering into active partnerships with private parties to develop plans for the site; Rec 1.b. Provision of new or enhanced link roads to facilitate suitable HGV access to the MDP. This could include the construction of new link roads, combined with capacity upgrades in the local area to accommodate the effects of increased HGV traffic; Rec 1.c. Provision of new rail connections to the MDP. This could include connections to the national network, reception lines and an intermodal terminal within the MDP; and Rec 1.d. Provision of HGV parking facilities, located at MDPs and close to the Port and supported through the planning system by the public sector.

Package 2: Urban logistics policy measures

5.3 It is highly likely that the distribution of goods in urban areas will increase as the level of economic activity increases and deliveries may become increasingly fragmented, as a result of the retail trend towards e-commerce. This package therefore proposes a suite of policy measures to encourage more sustainable forms of „last mile‟ goods distribution in urban areas within the City Region. The package includes:

Rec 2.a. A feasibility study to investigate the potential for a Low Emission Zone/Clean Air Zone. Restricting access for older, polluting HGVs could be a powerful way of improving air quality, without introducing a blanket ban. Such a scheme will be developed in a way to ensure that it enhances the attractiveness of the LCR to investors and does not negatively impact on our competitive advantage when considered against other City Regions; Rec 2.b. Public sector support for an Urban Consolidation Centre (UCC)/Urban Distribution Centre (UDC). Such a centre would maximise load factors in delivery vehicles so that fewer trips have to be made in busy areas and could also use ultra-low emission vehicles for last mile deliveries; Rec 2.c. Designated loading / unloading bays within the Clean Air Zone for Low / Zero emission vehicles. This would provide a „carrot‟ for the private sector combined with the „stick‟ of access charges for polluting vehicles; Rec 2.d. Preferential access to pedestrianised zones with time restrictions for Low/Zero emission vehicles. Similar to the measure above, this would complement the implementation of a Low Emissions Zone/Clean Air Zone by providing positive incentives for delivery companies; and Rec 2.e. The installation of further e-commerce pick-up points at stations and Travel Centres. Already in place at some stations through private sector initiatives. Merseytravel could build on this trend by providing e- commerce pick-up points at all its central stations and Travel Centres.

Package 3: Port facilities

5.4 The City Region‟s largest freight and logistics asset is the Port of Liverpool. Together with the Airport, it is Liverpool‟s main gateway to the world, and provides the focal point for a significant proportion of all freight and logistics activity in the City Region. Whilst the Port does have a direct connection to the national rail network, a number of improvements within the Port complex itself have been identified which would further encourage sustainable distribution, alleviate air quality concerns in the Seaforth area, and make the Port more competitive for private operators. The package includes:

Rec 3.a. Public sector support through the planning system to facilitate the assembly of additional land in and around Seaforth docks and along Regent Road for the development of port-centric warehousing; Rec 3.b. Expanding intermodal terminal facilities in the Port adjacent to Liverpool2. The current rail terminal at the port is not located close to the new Liverpool2 container terminal and has limited capacity. The opportunity exists to develop a new intermodal terminal capable of handling longer trains and with greater capacity; Rec 3.c. A new rail connection from Alexandra to . This measure would open up more parts of the Port to direct rail connectivity and reduce costs for operators; Rec 3.d. Public sector support for Liquid Natural Gas (LNG) bunkering and cold ironing infrastructure, offering a cheaper and more environmentally friendly alternative to the current maritime bunker fuels and improving air quality in and around the Port; Rec 3.e. Development of a riverside Roll On Roll Off (RORO) berth, providing lock-free access to the Irish Sea. This would reduce congestion through Gladstone lock and allow the RORO vessels to secure cost savings; and Rec 3.f. Facilities for the assembly of 1500m long freight trains, including the safeguarding of suitable space to facilitate the assembly and joining up of wagons, to provide long-term future proofing of the City Region‟s rail freight capacity.

Package 4: Improved access to the Port of Liverpool

5.5 In addition to supporting development of economic activity and encouraging more sustainable distribution patterns within the Port complex itself, the public sector should also secure enhanced landside access to the Port to ensure it remains competitive as an international gateway to the rest of the world for deep sea container services. This package proposes a series of short- and long-term measures to ensure the main access routes by road and rail to and from the Port will be able to cope with growing traffic levels.

Rec 4.a. Enhancing road access to the Port of Liverpool from Switch Island. This route is the most important route for freight traffic to and from the Port, and congestion on the route is forecast to increase over the next two decades. Two options for enhanced road access are the subject of an ongoing study by Highways England; Rec 4.b. Electrification of the Bootle Branch Line, providing access to the Port of Liverpool for freight trains powered by electric locomotives. This would off-set the negative localised air quality impacts around the line that would result from a shift from road to rail; Rec 4.c. Improving the connection between the Bootle Branch and the rest of the national rail network, such as by grade separating the (onto the Chat Moss line. Such measures would complement enhanced rail facilities within the Port estate; Rec 4.d. A Port Access traffic management system to improve the reliability of the existing road network, using variable message signs and other Intelligent Transport Systems (ITS) technology. This could potentially start as far back as the M6 / M62 junction, the M58 near Wigan and the M53 near Chester. A comprehensive ITS traffic management system would likely be best delivered in conjunction with or shortly after the completion of the planned road enhancements between the Port of Liverpool and Switch Island; Rec 4.e. An integrated Port routing and signing strategy, as a shorter-term alternative to a comprehensive ITS solution. The aim is to improve signage to encourage drivers to make better use of roads with available mainline capacity such as the M57, whilst directing as much traffic as possible away from highly congested roads such as Queens Drive; and Rec 4.f. Improved access to the Port of Liverpool for active modes, building on the active travel investments that are being delivered in the Seaforth area through the Sustainable Transport Enhancements Package (STEP). This would improve access to jobs at the Port for local workers, and improve staff attraction and retention.

Package 5: Rail network capacity (east-west and north-south)

5.6 This package focuses on delivering greater capacity for freight traffic on the rail network to and from the City Region, which will accommodate the anticipated demand from the private sector and deliver economic, environmental and decongestion benefits for the region. It consists of a combination of „hard‟ rail infrastructure investments, and „softer‟ measures which do not have a direct capital cost:-

Rec 5.a. Network capacity optimisation in line with Network Rail‟s aspirations, including the use of 750 metre trains on intermodal routes, the use of 20% more operational hours per week, as well as continued changes to maintenance regimes; Rec 5.b. Securing additional paths for freight trains on the WCML. The analysis of rail freight demand has indicated that there is a need to secure 3 paths per hour in each direction north of Wigan, 6 between Wigan and Crewe, and 6 south of Crewe. The development of HS2 may provide some additional capacity in the longer term on the WCML, if it leads to a net reduction of passenger services on the existing tracks. A further effective local measure may be provided by Northern Powerhouse Rail (NPR) providing a new high speed passenger link on to HS2; Rec 5.c. Securing additional paths for freight trains crossing the Pennines. The analysis has also indicated a need for two paths in each direction along the Chat Moss route. Similar to the situation on the WCML, the delivery of Northern Powerhouse Rail (NPR) may provide some additional freight capacity in the longer term on trans-Pennine routes, if it leads to a net reduction of passenger services on the existing tracks; Rec 5.d. Capital investment in support of optimisation measures could include grade separation at Earlestown West Junction to allow freight to move between the Chat Moss line and the WCML without needing to cross other tracks; Rec 5.e. Similarly, there is the potential to deliver grade separation at Winwick Junction south of Earlestown, to resolve conflicts between through traffic on the WCML and the Chat Moss Line, which would benefit both freight and passenger services; Rec 5.f. Upgrading the loading gauge between Warrington and Wirral. The loading gauge through Runcorn, Helsby and Ellesmere Port is currently only W6a / W8. Upgrading the loading gauge to at least W8 (ideally W10) would open up industrial areas in Wirral to intermodal rail freight services; and Rec 5.g. The optimisation of Weaver Junction, likely to be the busiest junction in the City Region by 2033. The junction is already grade separated, but there could be scope for minor signalling and track speed optimisation.

Package 6: Freight specific highways interventions

5.7 A small number of potential highways interventions have been identified which would primarily benefit the freight and logistics sector only. These highways interventions have been included in this package:

Rec 6.a. The designation and signposting of specific freight routes to concentrate freight traffic on the most suitable roads, focussing resources on fewer routes, and reducing HGV traffic on 'inappropriate' routes; Rec 6.b. Different highway ownership and management approaches at major distribution sites and MDPs, resulting in Red Diesel compatible highways. This would enable private sector operators to operate red diesel vehicles (with significantly reduced tax levies) on internal roads, creating a competitive advantage for the City Region;

Rec 6.c. Improved access to the Port of Weston in Runcorn, which has a Harbour Revision Order in place, but is currently derelict. Improved road access would remove a constraint to development and unlock the potential of the site as a short sea port close to the Mersey Gateway Bridge. However, the final decision to invest and the case for re- development would rest with the owners of the site; and Rec 6.d. Improved access into major logistics sites for active modes through the planning system, for example by requiring major new freight and logistics developments to be accessible by cycle and foot and to public transport from all sides.

Package 7: Other access improvements

5.8 A number of interventions have been identified which would deliver significant benefits, but do not fall under any of the six packages described above. These interventions are mainly specific investments that would benefit a certain sub-set of the LCR‟s freight and logistics sector. These include:

Rec 7.a. The reinstatement or new creation of rail sidings to large manufacturing sites, such as Unilever and Vauxhall, to bring about a shift from road to rail; Rec 7.b. An alternative refuelling station for HGVs located close to the port, providing alternative fuels such as LNG to the freight sector. This would reduce cost for the road haulage sector and also help to reduce carbon emissions and improve air quality; and Rec 7.c. Escorts for HGVs carrying hazardous materials through the . This measure would implement a similar policy to that of the Dartford Tunnel, where hazardous freight can be escorted through the tunnel and would reduce costs for road hauliers and shippers.

Package 8: Investment in education and skills

5.9 Finally, in order to resolve the issues regarding the provision of relevant education and skills training for the freight and logistics sector, the following recommendations also form part of the Strategy:-

Rec 8.a. The provision of informative careers advice in schools to resolve the image problem surrounding the freight and logistics sector. During consultations, several stakeholders stated it would be beneficial for employers to send representatives to secondary schools and colleges to give presentations about potential careers in the freight and logistics sector to encourage interest; Rec 8.b. A continued effort from both providers of education and skills and employers to communicate more regularly and effectively. The cluster system that is currently in place (i.e. formalised engagement with multiple parties at one time) was highlighted during the consultation process as the preferred method for this form of communication; and Rec 8.c. The provision of „soft skills‟, such as communication and customer service skills, was also seen as important by several stakeholders. There is an opportunity for both providers of education and training, as well as employers, to include these skills in their training programmes to ensure that the current and future workforce is well-equipped to meet the future demands of the sector.

6. APPRAISAL

6.1 The estimated net benefits from the Strategy for the LCR are £1.30 billion over the 60-year appraisal period. This is the sum of the estimated user benefits of £1.46 billion (related to the reduction in total freight transport costs that are experienced by transport operators) less the non-user dis-benefits of £0.16 billion (externalities associated with transport flows in the LCR such as congestion, emissions, and accidents). There are non-user dis-benefits in the LCR because the Strategy has the effect of attracting significant volumes of freight to port and rail terminals within the LCR that would otherwise have arrived into the region along road routes such as the M6 (therefore providing overall significant non-user benefits for Great Britain as a whole).

6.2 Additionally, it is forecast that the Strategy will deliver £0.44 billion Gross Value Added (GVA) to the City Region economy, and about 8,000 additional jobs.

6.3 The appraisal of benefits is summarised in the table below.

Benefit type Total User benefits £1.46 billion Non-user benefits -£0.16 billion Total £1.30 billion Jobs created (gross) 8,000 Gross Value Added (GVA) £0.44 billion

7. DELIVERY

7.1 The timescales for strategy implementation have been categorised as short-term or „quick wins‟ (2016- 2021), medium-term (2022-2027) and long-term (2028-2033) (see table overleaf). Each measure has been phased in alignment with the appropriate delivery timescale, taking into account the level of development work required, external influencing factors, available funding and alignment with national public sector agency processes for rail (Control Periods) and road (Roads Investment Strategy periods). This is set out at Appendix Two.

7.2 Potential funding streams are available at the City Region, national and European level (although access to European funding streams will most likely no longer be available post-Brexit). Some of these funding streams, particularly at the City Region level, are open to all transport investment, or indeed all economic sectors for which the Liverpool City Region Combined Authority has responsibility. Freight related schemes may be put forward for these funding streams on the grounds that they support economic growth and development in the City Region. National funding is available for Highways England and Network Rail projects, as well as bespoke DfT funding for schemes which are of national importance.

7.3 In addition, the private sector will be able invest in its own infrastructure and equipment in response to the public sector interventions set out in this Strategy. In the City Region, this will likely be focused on investment in infrastructure at the Port of Liverpool and the development of MDPs in the City Region. Providers of skills and training will also be important delivery partners to the success of the Strategy.

7.4 Given the scope of work to be undertaken and the alignment with the City Region‟s Growth Strategy commitments, the Combined Authority will need to consider the resource implications arising from the implementation of the Strategy, as well as the most appropriate delivery mechanisms to ensure implementation. Transport Advisory Group had previously provided support to the City Region‟s freight agenda from the Integrated Transport Block Core budget allocation, in addition to support provided to the sector from the LEP. Officers will look to develop a shared, costed brief for strategy implementation support for 2017/18 and beyond.

7.5 This Strategy cannot be implemented by the Combined Authority acting in isolation, and it will be important to engage closely with colleagues in local authorities and other parts of the public sector to ensure that priorities do not overlap, and to avoid duplication of effort. The City Region is already participating in Transport for the North‟s freight (and other) work streams, and will explore mechanisms by which some of the larger, more long term measures identified in the Strategy can be delivered in partnership with Transport for the North and the Department for Transport. Some measures, such as securing additional capacity on the rail network require urgent action to ensure that the growth of the freight and logistics sector is not constrained, and close, active engagement with Network Rail, Highways England, and local authorities will be necessary to provide the private sector with confidence that network and development land capacity will be available, which will be a precursor to investment.

7.6 Close engagement with the private sector will also be key, and given its role within the freight sector, there are obvious opportunities to develop jointly funded projects. Freight operators and skills providers have already been engaged as part of the development of this strategy, and that engagement will be harnessed by establishing a more permanent consultation „forum‟, potentially building on the pre- existing Superport architecture to provide feedback and buy in as the strategy moves to the delivery stage.

8. RESOURCE IMPLICATIONS

8.1. Financial None as a direct impact of this report

8.2. Human Resources Officers will look to develop a shared costed brief for strategy implementation support for 2017/18 and beyond, building upon the developing Combined Authority structures.

8.3. Physical Assets None as a direct impact of this report

8.4. Information Technology None as a direct impact of this report

9. RISKS AND MITIGATION

9.1. The is a risk that if this strategy is not adopted and implemented, the City Region will fail to capitalise on developments within the sector, including the completion of Liverpool 2, and the economic opportunities it provides.

10. EQUALITY AND DIVERSITY IMPLICATIONS

None as a direct impact of this report

11. COMMUNICATION ISSUES

11.1. None as a direct impact of this report.

12. CONCLUSION

12.1 The Liverpool City Region Freight and Logistics Strategy sets out how the City Region can harness the strengths of its freight and logistics sector to achieve the aspirations outlined in its Growth Strategy “Building Our Future”; namely to help deliver 100,000 new jobs, 20,000 new business and more than £20bn of GVA in the City Region by 2040.

12.2 The packages set out within the Strategy provide a strong basis for the Combined Authority and its partners to work with the private sector to deliver on the Growth Strategy objectives, and once adopted, officers will begin to develop the case for the short term investments, whilst working with others to put in place the conditions to deliver on its longer term objectives.

FRANK ROGERS Lead Officer: Transport

Contact Officers: Darren Kirkman, Merseytravel (0151 330 1107)

Appendices: Appendix One – Liverpool City Region Freight and Logistics Strategy Appendix Two – Schedule of Actions

Background Documents: None