250 UK Freight Yards to Close?

Published 22nd November 2012

London - Consultation launched over reform of rail freight property

Network Rail (NR), owns all the UK’s main line railways and most of the freight yards which are sub-leased to DB Schenker (DBS), the huge freight company. These leases were granted from NR at a minimal rent under 125 year leases agreed at privatisation under Government policy at the time. This has been identified by the Sir Roy McNulty report as a less than efficient way of operating the railway.

DBs can sub lease their yards to their rail industry ‘partners’ who have to pay a commercial rate for storage of privately owned wagons as well as for loading and unloading wagons using their facilities. NR has launched an industry consultation aimed at reforming the management and ownership of rail freight property.

The plan being consulted on is the proposed transfer of the majority of the DBs leased 250 property interests across the rail network to NR. The documentation suggests that the intention is to:

• Promote freight network capacity on the railway and enable improved timekeeping for freight trains, making the railway a more attractive option for freight traffic

• Facilitate competition between rail freight operators by making a number of key sites more accessible

• Allow Network Rail to introduce around a dozen strategic staging yard locations across the network - the motorway service stations of the rail network

• Identify surplus brownfield land that has the potential to be promoted for economic regeneration

This last recommendation has worried railway professionals as it could lead to selling off rail linked sites not used currently but could be required in the future.

The consultation closes on 28 November 2012 and all interested parties are invited to provide their views on the proposals.

They said

The man behind the proposals for NR is Tim Robinson, their Director of Freight, said:

"These proposals represent the biggest change in rail freight for decades. If implemented, they will meet objectives of the McNulty report and the Office of Rail Regulation's Market Study into rail freight by enhancing open access, and promoting a more efficient and effective use of the railway network by freight traffic in coming years, as well as enabling redundant land to be redeveloped."

Alain Thauvette, Chief Executive of DB Schenker Rail UK, said:

"By transferring the majority of our property interests to Network Rail, we will modernise the rail freight industry. This is a progressive proposal and is good news for all users of freight trains and the entire rail freight industry. This will allow DB Schenker Rail UK to invest in new terminals and rail freight facilities, increasing the volume of freight moved by rail. Our direct competition is with road haulage, and these reforms enable the rail freight industry to compete more effectively to secure modal shift to the railway and reduce carbon emissions in the process."

Finances

It is understood that the leases will have to be bought out by NR and DBs will bank the proceeds which will presumably help fund the development of new sites mentioned in the official statements.

We are seeking stakeholder views on the proposed acquisition of a number of property interests of DB Schenker Rail (UK) limited (DBS). The key objective of the proposed acquisition is to unlock the significant operational potential which may be realised through a change in DBS's property rights.

The consultation document sets out the rationale and objectives of the proposal, summarises the different categorisations of freight sites and explains the proposed operational and legal mechanisms to be used to change DBS's property interests.

DB Schenker Cancellations and Industrial action

DBs has been struggling over the last four months with industrial problems with their drivers. They are claiming that recruitment has been lacking and they are being relied on to work overtime to cover shortages.

Many charter trains have been cancelled at short notice and NR’s engineering and railhead treatment trains have been similarly affected which have meant engineering works have been compromised, as has train punctuality if slippery rails are not treated.

Industry Insiders say:

Rail.co.uk has been asking Railfreight insiders about these proposals and they are a mixture of good and bad. But mainly bad!

Currently the apparent commercial rent for these Railfreight sites is not realised and under these plans, this rent could be charged to users of the yards. On the other hand, DBs can and do charge heavily to use their yards for a simple train movement and this practice presumably would be regulated.

Rail Regulator Findings

The Rail Regulator has carried out a study into private yard charges and found that there was a lack of transparency around capacity and Freight Operating Companies (FOCs) expressing a preference for using independently controlled sites as opposed to those controlled by competitors.

Perhaps more tellingly, that arrangements that give (Lease) beneficiary FOCs the opportunity to levy access charges on competitors whose business cause them to pass over so-called “ransom strips”.

What non DBs freight operators fear is that this will push the cost of moving freight by rail upwards making trains uneconomical to run. For example, it is reckoned that only the last three to five containers on a train are the ones that generate a profit and the extra charges that some forecast, could alter this radically.

Contact Network Rail with your comments

Network Rail has asked for any comments to be emailed to them at: propertyconsultation@networkrail.co.uk

If you have a view, remember the closing date for comments is November 28.

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