Rail based Logistics: the Future
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1 Rail based Logistics: the Future Taking Cost and Carbon out of the Supply Chain Julian Worth Chair, CILT Rail Freight Forum
2 UK Rail Freight - Context Worth more than 1.5bn a year to UK plc Moves goods worth 30bn a year Keeps 7.6m lorry journeys p.a. off the roads Prevents c.600 road casualties a year Cuts CO2 emissions by 76% for every tonne No subsidy - very small Modal Shift grant FOC s turnover 850m p.a. & pay 150m in tax
3 Seismic Change Traditional commodities in steep decline Coal down 64% year on year Was 60% of total freight, now 13%, 7% in Q2 More wind & solar than coal in Summer 2016 Many days in summer 2016 no coal at all Only four coal-fired stations nil by 2023 Metals - 15% down year-on-year Used to be c.20% of total, now 8% Tata exiting UK - fragile prognosis for steel
4 Growth Sectors Construction - zero in 1970, now 26% of total Continued growth - up 8% in Q2 to new high Automotive - export & import Intermodal biggest sector - 40% of total Up 6% in Q1, 4% in Q2 Intermodal + Construction = ⅔ of Freight Freight overall down only 4%(cf 64% in Coal) Coal decline is NOT the end of rail freight! New freight geography- Main Lines not Ft Only
5 Rail Freight: Evolution The Railway was the supply chain until 1950 s FMCG switch to road in the 1960 s Rail focused on bulk freight esp in 1990 s Highly efficient & profitable Since privatisation 70% growth Market share up from <6% to 11% Investment - 2bn on new locos, wagons etc Innovation train size up by 50% in 10 years Bigger tonnages but a third less train paths
6 How the railfreight marketplace has developed it s a tough environment Efficiency through: 1. Single manning 2. Improved rostering 3. Multi skilling All driven by competition
7 Aggregates New market for rail in 1970 s local exhaustion London & SE (25%), E. Anglia, Manchester West Midlands and Yorkshire emerging Mendip & Peak limestone, Leicester granite Sea dredged ex Thames; Gritstone ex S.Wales Classic heavy haul 2000t+, megatrains 4000t+ Needs capacity into cities Reading/Sundon Terminals key simple & major: planning policy Major growth potential: existing & new areas
8 Automotive UK industry flourishing nearly 2m cars p.a. Components to Dagenham Imports: Dagenham,Avonmouth,Southampton to North West, Yorkshire & Scotland Exports: BMW Cowley to Purfleet & Sthampton JLR Halewood & Birmingham to Southampton 2015/6 up 10%: considerable scope for growth Toyota & Nissan no rail; Honda occasional Import potential Avonmouth & Southampton Channel tunnel could again become important
9 Consumer Goods Revival Deindustrialisation of the UK - offshoring Asian Tiger manufactured imports Port concentration v dispersed UK factories Channel Tunnel terminals DIRFT Road congestion / cost of derv/driver shortage Carbon footprint Less CO2 EU/Central Government/Local Authorities
10 Current Situation Intermodal - almost doubled in 10 years Now 40% of all UK rail freight Over 5000 consumer goods loads per day Deep Sea Imports increasing - bigger market Rail market share growth 1 in 4 boxes go by rail Bigger boxes infrastructure investment Gauge enhancement W10/W12 Capacity enhancements Soton/Felixstowe Take far too long and cost too much West Coast Main Line crucial HS2 essential
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14 Deep Sea Clearing boxes from ports in volume Felixstowe 33 trains = c.3000 boxes per day Over 2500 lorries a day off the A14 Price-sensitive, low margin business 30+ wagons per train = boxes average Felixstowe, Southampton, London Gateway Prime - Midlands, North West, Yorkshire Secondary - Scotland, South Wales, North East New Bristol terminal for wine 2/3 trains/day
15 European Short Sea Rail very small market share UK s biggest international trading partner Post-Brexit change of trading patterns? Big East-West opportunity for rail Shortsea box revival Ro-Ro Maafi trailers Tilbury: DB Cargo Purfleet: DRS/J G Russell Teesport: new terminal Scotland (N.West) Cross dock into trailers Tilbury DBS/P&O
16 European Channel Tunnel Good start in mid 1990 s Service quality problems - SNCF strikes + illegals Much improved 2014 Open Access esp France Reduced Eurotunnel charges big improvement Hi gauge capability and directness of HS1 Slipped back again with migrant crisis in 2015/6 Strategic attraction for Pan European logistics China Train 18 days - renewed interest Premium market for high speed mail/airfreight
17 Domestic Supply Chain Highly quality sensitive: well-honed road ops Price sensitive but also very carbon-aware Lorry-size consignments need aggregation Pariah curiosity mainstream option Rail service quality good matching road Me too factor following Tesco/Stobart Trunking plus remote store deliveries
18 Current Position Six trains-a-day DIRFT to Scotland and back 500 lorry journeys a day off M6/M74 Tesco/Asda/M&S/Sainsbury/A.G Barr/Weetabix Tesco 1m sqft Daventry Rail DC Sainsbury direct replica alongside DIRFT 3 major expansion - 8m sqft with rail New Rail NDC hubs in Golden Triangle + North? E.Mids Airport, Etwall, Four Ashes + Rossington
19 Rail 3PL Operations WH Malcolm: DIRFT Central Scotland WHM/Asda: Central Scotland Aberdeen J.G Russell: DIRFT - Central Scotland (+Dourges) Stobart/Tesco: DIRFT- Central Scotland Stobart/Tesco: Central Scotland Inverness Stobart/Tesco: DIRFT South Wales Stobart/Tesco: DIRFT Barking/Purfleet DB Cargo: Teesport - Central Scotland DIRFT-Teesport;Tilbury-Teesport;Mids-Scotland
20 Equipment Swap bodies 13.6m/45 : Malcolm s 50 box Ambient box/curtain sided Reefer chilled/frozen Double decker: 10 6 high Super Lowliner W10 Conventional wagons High capacity vans 56 tonnes, 52 pallets More efficient for heavy ambient (water,beer) Good for cross-docking to lorries for deliveries
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25 Rail Terminals Key element in rail-based supply chain Simple cross docking facility Location remains the key NDC/RDC hubs Intermodal & where possible Conventional Site layout intermodal terminal + sheds Main line connection hugely expensive Must bring NR costs down from 10m per site Brownfield sites power stations, MOD depots Planning Authorities are key Radlett
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28 Fundamentals Unit of production is a train Consolidation usually required Volume on a route is key for viable trains Key is on-cost at either end of rail haul Intermodal transfer costs c 20 per load Road one end - 80 min; both ends 160 Use tail-enders to shunt to terminal Reduce/eliminate on-cost
29 Breakeven Distances One end rail connected miles One end near rail terminal miles Neither end rail connected miles Depends on balance of trade/backhauls Key is to be as close as possible to railhead Optimum site is AT/ADJACENT to railhead Tesco Daventry ideal - direct shed to train
30 Urban Logistics Not consolidation centres Midlands/North DC + short swaps: 30 /7.82m Peripheral railhead: North Circular etc LPG/electric rigids for store delivery into CBD Vans for home delivery and collection points Roll cages into stations at night Euston trials All three Routes to Market on same train
31 Thank you For further information Julian Worth
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