Published: 16th November 2014
Network Rail (NR) has revoked leases on 105 freight yards across the UK in a deal that reverses the land gifted to freight companies 20 years ago under privatisation. These yards were leased on a long lease to the British Rail freight companies which were sold to private investors at knockdown prices to ensure they were sold.
The yards were leased to three of the UK’s biggest freight operators, taking back 87 sites from DB Schenker, 15 from Freightliner and three from GB Railfreight. It has not been made public how much was paid by NR to buy out the leases.
This project, codenamed Project Mountfield by NR, was due to complete on October 31 and took back sidings and yards that had been allowed to fall into disuse or were inoperable due to a lack of maintenance despite lease obligations.
NR says that this land take-back represents a change in the strategic management and development of the UK's rail freight estate and that the freight sites involved will be made available for the growing number of rail freight operators and end users. The stated intention is to boost competition and support freight growth.
It has been estimated that the UK freight rail sector contributes £900m to the country's economy every year supporting an economic output of £6billion. It is understood that this deal was originally due to be delivered at least a year ago but following objections, was revised to enable it to be finalised.
Network Rail freight director Paul McMahon said: "This represents one of the biggest changes to the rail freight sector in this country in decades and is a bold strategic move by the industry. "It will help drive continued rail freight growth, give customers greater transparency and equality in property arrangements, allow Network Rail to make more efficient use of the network and release capital for freight operating companies to invest in their operations." Within this acquired sites, majority are in regular freight or other rail use, while a small proportion is not seemingly capable of supporting rail traffic
He added that by consolidating the ownership and management of our key freight sites puts us in the best possible position to promote a more efficient and effective use of the rail network by freight traffic in coming years. Tellingly he also said that; it will also mean redundant land can be redeveloped and provide a valuable additional source of revenue for us [NR].
Releasing capital means that some sites will be sold for development and the proceeds be split between operators and NR. Whether this is a sensible way forward remains to be seen as the freight market is forecast to more than double in the next 30 years and could mean currently disused sidings and yards could have been brought back into use.
The deal brings a cash windfall for freight companies being self financing and is the first substantive change in the strategic management and development of Britain's rail freight estate in 20 years.
Many freight yards are a legacy of the steam era and up to 15 years ago when huge yards were a feature of the UK rail system. Most of these are now longer required but remain as part of the railway estate while other redundant yards have been redeveloped.
For example, the British Library between St Pancras and Euston used to be a goods yard and the ‘Kings Cross lands’ development is regenerating the area as the railway owned land fell into disuse. This is now a prime property location and companies such as Google have moved in.
Other disused yards are where there used to be engine sheds in use until maybe a decade ago but are now abandoned but technically leased and in use. One of these was in Cornwall at St. Blazey where the depot was leased by DB Schenker. They allowed the turntable there to fall into disuse but after a campaign was mounted, they allowed West Coast railway to take over the operation rescuing steam charter services in Cornwall. But at the end of the lease, DB Schenker would have been expected to return the asset to Network Rail in full working order which was most unlikely.
Another example is at Wellingborough where a disused shed has been turned into an engineering train depot for NR. Had this been sold for development, the facility would have been lost.
This situation (excluding turntables) with yards is replicated across the network with the lessee not maintaining the yard so it becomes unavailable to anyone else stifling competition.
There are worries though that freight facilities will be lost and not be able to be brought back into service like St. Blazey and Wellingborough so consequently business will suffer should the expected freight expansion call for reactivating a closed yard that has been sold off.
Rumours have been circulating for the last month that Freightliner may be up for sale. The company has been owned since 2008 by Bahraini based Arcapita and if sold, could fetch around £350 million. The company also operates in mainland Europe as well as across the UK.