21 June 2017

On 8 June, the ORR published its quarterly Rail Freight statistics. They show that total volume freight in 2016/2017 has fallen to 17.2 billion net tonne kilometres, a 3% reduction on the previous year. This is the lowest figure the industry has seen since the late 1990's. In part this may be a symptom of the changing nature of rail freight with intermodal transport continuing to rise and take the place of more traditional services.

Unsurprisingly the commodity to fall the most, by 39%, was coal. Declines in coal have been attributed to the increase in carbon tax, government environmental policies and targets, switching to biomass by power stations such as Drax and the closure of rail served coal fired power stations.

In addition to coal, international, oil and petroleum and metals all recorded a decrease on last year's figures. International fell by 9% and had the lowest share of total freight moved in 2016-17 at just 3%. Oil and petroleum has fallen by 3% to account for a 8% total share and metals have fallen by 2% and now account for 9% of total freight moved in 2016/2017.

On the positive side, the report shows domestic intermodal and construction have increased and now account for almost 65% of total freight moved in 2016/2017. Domestic intermodal accounts for 39% which is a 6% increase on last year. Construction has seen a 7% rise to account for 25% of total freight moved.

Freight appears to be continuing to find a different market and different solution. Freight on Rail have commented that the figures simply represent an expected "period of transition" as the industry adapts to the decline in coal. Freight remains a safe, cleaner way to transport goods and can be very efficient provided that necessary access is available. The challenge remains to ensure that charging, network upgrading (in times of pressured funding and multiple demands on Network Rail) and access allocations properly balance the needs of changing freight services with those of passenger demand and maintenance.

Uncertainties remain about how the freight industry will be affected by the terms of future international trade arrangements, the potential for new arrangements at ports to ensure tariffs are paid on goods imported from the EU and the opportunities to grow terminals for intermodal freight use.

If you would like to discuss any aspect of this article or would like further information, please contact Ian Tucker or your usual Burges Salmon contact.

Key contact

Ian Tucker

Ian Tucker Partner

  • Dispute Resolution
  • Procurement Disputes
  • Procurement and Subsidy Control

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