Europe gives with one hand, UK takes with other
Isabel Lesto | Monday, 25 June 2012
The European Commission is giving away millions to help reduce road miles while in the UK, higher rail access charges could increase them. What gives?
It’s all about the time I lose
Every morning in my truck
I sit here in traffic, I’m just stuck
Pollution and danger bringing me down
Oh baby tell me what should I do?
Can anybody help me too?
Marco Polo can, according to a new video clip from the European Commission designed to encourage companies to take advantage of the €60 million a year it still has available for funding new modal shift projects.
The initiative funds projects which shift freight from road to sea, rail and inland waterways and also provides grants to help companies find ways of improving loading volumes from semi-trailers. Some 164 grants have been awarded so far.
Among these are: Brittany Ferries for its direct shortsea shipping route connecting Santander and Bilbao in Spain with Portsmouth in the UK, amounting to a modal shift of 2.115.312.147 tkm.
Eddie Stobart also received a grant for its enhanced intermodal rail service to move fresh produce between Spain and the UK, with foreseen modal shift of 682.185.790 tkm. Kraft Foods Europe received a grant for avoiding road traffic by introducing a Load Control Centre platform to optimise transport from a network of 19 EU countries. Foreseen traffic avoidance was 1.047.642.523 tkm.
So, on the one hand Europe is giving away money to reduce road transport, but on the other hand the UK’s rail regulator (ORR) says it is prepared to allow up to 10% of traffic in certain industrial sectors to drift back onto the road network as a result of its new rail access pricing regime.
The ORR is proposing to levy an additional charge on operators moving power station coal, iron ore and spent nuclear fuel, which could amount to an additional £60m year, says the UK Rail Freight Group’s Policy Manager Maggie Simpson. ORR’s proposals also include making the charges different for each geographic area, as well as for each locomotive and wagon type, and introducing scarcity or capacity charges.
“The ORR’s analysis is that the impact on downstream power prices would be small, so therefore they asses that the market for power generation can bear an increase in charging. When they looked at other sectors, for example retail or intermodal, they saw that if you doubled the track access charge for intermodal traffic you’d see a 12% drop in volume because it would revert to road.
“Where they’ve got themselves in a knot is that they are not able to articulate why it would be okay for a 10% drop in traffic levels for coal, for example, but not in intermodal. It’s absolutely right not to apply the charge to intermodal traffic, but they’ve not been able to explain that properly, and so it remains an open question as far as I’m concerned.”
Besides the freight-specific charges, the pricing review is also looking at variable and capacity charges. The document states: “We are intending to implement a new track access charge to recover freight avoidable costs in order to make the structure of access charges more cost reflective, reduce cross-subsidy and to see freight operators make a greater contribution to the costs that freight operations impose on the network.”
Simpson cautions: “There is a whole raft of work going on that will impact on freight and passenger operators and to be honest not a huge amount of detail on some of that, which is another worry.
“There is some pressure on the ORR that they’ve got to put all these pieces of analysis together. You can’t take each piece of analysis in isolation; you’ve got to say, if we add all of this together what’s the situation for the freight sector? What’s the impact assessment for all of this in combination, rather than just saying, well the freight-specific charge does that, and the variable charge does this and the capacity charge will do that. How much risk are you putting on a company’s balance sheet?”
“The industry needs simple charges that make it easy for customers to calculate costs compared with road freight. We don’t want to make the whole thing so confusing that it puts people off.”
Unfortunately the generous Marco Polo fund won’t be able to help out any rail operators or their customers – unless the freight is carried on international routes.
If you would like to comment on this story or any other, contact us at firstname.lastname@example.org
Click here to Vote now for the Rail Freight Operator of the Year in the Global Freight Awards 2012