Guide. Choosing and Developing a Multi-modal Transport Solution

Transcription

1 Guide Choosing and Developing a Multi-modal Transport Solution

2 Acknowledgements The Freight Best Practice programme would like to thank the following two organisations for their significant contributions to the case studies in this guide: Rail Freight Group Freight by Water (formerly Sea and Water), now part of FTA The Freight Best Practice programme would also like to thank the following people and organisations for their contributions to the case studies and photographs in this guide: Alan Woodburn British Waterways Frank Worsford Freight on Rail Freight Transport Association Gavin Roser Mike Browne Neil Stevens Network Rail Plc Port of London Steve Mulvey The Freight Best Practice programme would like to thank the large number of companies and organisations featured in the case studies. A full list of these can be found in the Contents Page. Front Cover Photograph A Fastline locomotive at the head of a container train at Birmingham Intermodal Freight Terminal, one of the newer freight terminals and featured in Case Study 31. Due to problems with its Parent Group Fastline ceased trading in March Disclaimer: While the Department for Transport (DfT) has made every effort to ensure the information in this document is accurate, DfT does not guarantee the accuracy, completeness or usefulness of that information; and it cannot accept liability for any loss or damages of any kind resulting from reliance on the information or guidance this document contains.

3 Foreword Freight Best Practice is funded by the Department for Transport and managed by AECOM Ltd to promote operational efficiency within freight operations in England. Freight Best Practice offers FREE essential information for the freight industry, covering topics such as saving fuel, developing skills, equipment and systems, operational efficiency and performance management. All FREE materials are available to download from 3

4 Contents Acknowledgements 2 Foreword 3 1 Introduction 8 The Aim of the Guide 8 What Is Multi-modal, Inter-modal and Co-modal Freight Transport? 8 Who Is the Guide for? 9 Structure of this Guide 9 2 The Modal Markets 10 Resurgence in the Rail and Water Markets 10 The Rail Freight Market 10 The Water Freight Market 12 A Strategic View of the Transport Market 13 3 Strategic Considerations for Modal Shift 14 Modal Shift Suitability 14 Market Dynamics 16 Rail and Water Freight Policy 17 Environmental Considerations 18 Organisational Priorities - Putting Strategy into Practice 20 4 Operational Factors Affecting Your Modal Choice 21 Cost 21 Supply Chain Resilience 22 Reliability and Punctuality 24 Customer Service 25 Access to Rail Network and Waterways 27 4

5 Flexibility of Services Offered 29 Volumes 30 Commodity Type 31 Distances 32 5 Co-modal Case Studies 33 Logistics Service Providers 33 Retailers 34 Bulk Commodities 35 Container Operations 37 6 How to Make the Modal Switch 39 A. Access Sustainability 39 B. Find Partners and an Operator 40 C. Feasibility Study 40 D. Grants 43 E. Business Case 46 F. Review 47 G. Operate 47 Appendix 1 Glossary of Terms 48 Appendix 2 Relevant Contacts 50 Appendix 3 Map of Port Locations and Main Inland Waterways 53 Appendix 4 Rail Freight Network Including Terminals (W8 Gauge and above) 55 Appendix 5 National Rail Infrastructure 56 5

6 Case Studies Case Study 1: Feederlink BV 13 Case Study 2: Derbyshire County Council 17 Case Study 3: Tesco s Rail Service Replaces Over 13,000 Lorry Journeys per Year 19 Case Study 4: Olympic Demand for Sustainable Distribution 19 Case Study 5: Cemex Starts Traffic Flow on the River Severn After a 10-year Gap 22 Case Study 6: Reliable Services - Potter Group, Rosebys, Medite, GB Railfreight 23 Case Study 7: ASDA Improves Resilience in Supply Chain by Taking to the Water 23 Case Study 8: Technology Improves Resilience in the Supply Chain - Tata and Dawsons 24 Case Study 9: A Step Approach Based on Service by Kuehne & Nagel 24 Case Study 10: Achieving CO 2 Reduction and Avoiding Congestion in Central London - J Sainsbury s Use River Transport 25 Case Study 11: Daily (7 Days a Week) Rail Freight 26 Case Study 12: Royal Mail Chooses Rail to Help Customer Service 26 Case Study 13: Cory Provides Excellent Service Levels for Local Authorities in London 27 Case Study 14: Hutchison Ports Benefit from Gauge Enhancement 28 Case Study 15: Westmill Foods Operation Benefits from Flexible Access 29 Case Study 16: The Tesco / Stobart Train 29 Case Study 17: Corus Steel (now Tata) 30 Case Study 18: Mendip Rail Choose Longer and Heavier Trains 30 Case Study 19: Abnormal Loads - Last Journey of Concorde 31 Case Study 20: Bulk Movements 31 Case Study 21: Short Distance Train Movements 32 Case Study 22: Short Distance Water Freight Movements 32 Case Study 23: Logistics Service Providers - The Malcolm Group 33 Case Study 24: Rail and Water as Part of a Supply Chain - John G Russell (Transport) Ltd 33 Case Study 25: ASDA Operates Several Rail Services 34 6

7 Case Study 26: ASDA Saves Road Miles by Using Coastal Shipping 34 Case Study 27: Tesco s Green Train 35 Case Study 28: Tesco s Wine by Barge 35 Case Study 29: Corus (now Tata) - Steel by Rail 36 Case Study 30: Tata Uses Water Freight for Steel Movements 36 Case Study 31: Roadways Container Logistics Limited 37 Case Study 32: OOCL Offers Feeder Services 38 Case Study 33: K-Line Short Sea Shipping 38 Case Study 34: Days Aggregates 43 Case Study 35: Lafarge Aggregates 44 7

8 1 Introduction Every mode of transport whether it is road, rail, inland waterways or short sea shipping has its own inherent advantages and, of course, limitations. Companies choose to use the mode that provides them with the best solution for the market and environment in which they operate. However, changing markets, increasing concern over the environment (especially CO 2 emissions), higher levels of congestion, rising fuel prices, and changes in taxation and direct grants for certain freight movements, all mean that the boundary between which mode provides the best economic and environmental solution is changing. Historically this has always been the case. For example, the development of the rail network in the mid-nineteenth century fundamentally altered the balance between rail and narrow-gauge canals, and we may well be in a period when a similar process is more noticeable now than in the recent past. Freight operators are increasingly looking for opportunities to reduce costs, improve service and reduce their impact on the environment so these variables are understood and are being acted upon. Therefore, when choosing the most efficient and sustainable freight solution, a customer focused freight operator needs to look at all the different modal options possible before a route and mode are selected. Once the choice is made the performance of the new freight service must be kept under close scrutiny to make sure that the chosen option remains the best solution given changing circumstances. It is important that sustainability and profitability are not seen as mutually exclusive goals. The Aim of the Guide This guide aims to explain to freight transport providers and users of transport services, via practical steps, how to approach a consideration of the use of rail or water transport as part of their supply chains in the UK. The guide: Explains in simple terms the water and rail freight sectors Shows examples of where rail or water services can be used successfully Helps you to make a decision on modal shift for a particular transport leg Explains the availability of financial assistance such as grant funding What Is Multi-modal, Inter-modal and Co-modal Freight Transport? This guide defines multi-modal freight transport as operations where more than one mode of transport is used. Typically this might include road as well as rail or water transport. Multi-modal freight transport is often described as the use of more than one mode of transport in a supply chain. Within the UK, multi-modal freight transport is often employed by the use of road, water and / or rail. This is the context within which it is taken in this guide. Where multi-modal differs from inter-modal is in the operational specifics. The term Inter-modal is often associated with international container traffic. Inter-modal can use one or more modes, but crucially, the goods being transported are not handled each 8

9 time they change vehicle or mode. For example, where containers are being transported inland from port via rail, the goods in the container are not handled, therefore the operation is intermodal. Equally, as the transportation comprises both water and rail transport, it can be described as multi-modal. If the same transport route was utilised for the flow of coal, the coal would have to be handled to remove it from the ship and into rail wagons; in this case, the flow is not inter-modal, it is only multi-modal. Co-modal is a term first used by the EU in 2006 and refers to the intelligent use of two or more modes of transport on their own and in combination to get the biggest benefit from each of them so that the overall journey is the most sustainable that it can be. This optimising in the use of resources has economic, environmental and societal benefits. A number of examples of companies using a range of different modes of transport are featured in Chapter 5. All three terms are used within different examples in this guide. Who Is the Guide for? This guide is for anyone interested in understanding if their transportation network or flows are suited to rail or water and whether this Modal Shift is appropriate for their business. To clarify this decision, the guide highlights the steps to be considered, the benefits to be gained, and uses case studies to illustrate examples. Structure of this Guide The guide is constructed around the following five chapters and utilises case studies to illustrate points. Where the case studies are concerned with rail they are displayed with a green background, where the case studies are concerned with water they are displayed with a blue background. If you already have a good understanding of the rail and / or water markets, you may wish to go straight to Chapter 6, which explains how to make a modal switch. Figure 1. The structure of this guide Real-life Case Studies Understanding Multi-modal Freight Transport Chapter 2: The Modal Markets Chapter 3: Strategic Considerations for Modal Shift Chapter 4: Operational Factors Affecting Your Modal Choice Chapter 5: Co-modal Case Studies Implementing Multi-modal Freight Transport Chapter 6: How to Make the Modal Switch 9

10 2 The Modal Markets Resurgence in the Rail and Water Markets Rail and water freight account for 24% of the UK s freight tonnes per kilometre. The rail and water markets have always played an important role in freight transport within the UK. Since the privatisation of rail in 1994, rail freight has grown by 66% (tonnes per kilometre moved) and water transport is similarly seeing a revival with the undertaking of a variety of projects including container moving feeder services. The Rail Freight Market In 2008, the rail freight market lifted 103 million tonnes, which is around 4.5% of the total goods lifted in the UK. Whilst steady growth has been shown between 1996 and 2006, rail freight actually declined in 2007 and 2008, moving 21 billion tonne kilometres, down from its peak of 22 billion in There are currently a number of rail freight operating companies (FOCs) all vying for business ( images shown on this page and contact details are in Appendix 2) and this competitive environment has pushed up service levels and reduced costs to the benefit of the market. A map of the UK s rail infrastructure is shown in Appendix 4 and 5. Whilst growth and investment serve to increase the attractiveness of rail and water, there are external factors that are increasing the potential benefits for modes other than road. The increasing cost of fuel, drivers hours regulations and the commitment of the industry to reduce emissions have all increased the opportunities for rail and water transport operators and their customers. To take advantage of the resurgence in rail and water, a balanced view of the multi-modal market is necessary because all modes have disadvantages and these are important to identify and compare against the possible advantages. 10

11 Key Facts for Rail Freight Rail freight has attracted over 1.5 billion of investment from the private sector since privatisation in 1994 Since 1994, rail freight tonnes per kilometre have grown by around 66%, increasing its market share of inland surface transport to 11.5% In 2008, rail freight moved the equivalent of 6.34 million lorry journeys Since 2000 Britain s rail freight companies have bought over 400 brand new diesel locomotives and over 3000 new wagons which has improved service levels significantly (Courtesy of the Rail Freight Group) Many of the rail freight operating companies are keen to demonstrate their customer focus through their publicity, as these quotes from three of the major FOCs show. DB Schenker is Britain s largest rail freight operator and operates its services with highly reliable locomotives and wagons. Over half the DB Schenker locomotive fleet was built in the last fifteen years, therefore providing efficiency and reliability in the delivery of trains. In 2007 Freightliner were operating with over 1,700 staff, 175 locomotives, including 127 new Class 66s, and more than 2,300 wagons, including newly built coal hoppers, flats and aggregate wagons. We carried up to 3,000 inter-modal containers per day and ran over 1,200 heavy haul trains per week attaining 97+% ontime deliveries and were awarded the prestigious Rail Freight Award and Business Improvement Award by IFW (International Freighting Weekly). 11

12 GB Railfreight has swept away decades of outdated working practices. GB Railfreight s success is built on an unrivalled record for reliability and punctuality both locomotive availability and service reliability run at around 99%. The Water Freight Market The water freight market in 2009 amounted to 542 million tonnes of which 369 million tonnes lifted was international sea freight. The balance of million tonnes was domestic water freight resulting in 49.7 billion tonne kilometres of goods movement and was comprised of the following: 41.4 million tonnes on inland waterways million tonnes by coastal shipping 24.1 million tonnes was one-port traffic (mainly to and from oil rigs and dredging operations) The busiest inland waterway was the River Thames where 18 million tonnes were lifted. The domestic water freight market for the purposes of this guide is spilt into two types, inland waterways and coastal shipping. Inland Waterways There are about 5,100km of fully navigable waterways in England and Wales, of which around 450km are tidal. The main inland waterways and canals of the UK with good freight potential are shown in Appendix 3. The bulk of freight movements on inland waterways are found on larger canals and rivers which allow the use of bigger vessels. Domestically, water freight accounts for 6% of tonnes lifted and can be cost-effective especially for bulk and outsized loads where economies of scale can be taken advantage of. There are four categories of waterways classed by size of vessel (dead weight tonnes, dwt). These are: Principal Freight Waterways (>1350dwt.) - This covers the main waterways such as the Thames, the Humber, the Ouse and the Trent, the Manchester Ship Canal and the Severn Main Freight Waterways ( dwt.) - This covers the Aire and Calder, the Caledonian Canal, the Sheffield and South Yorkshire Navigation, and the Weaver Intermediate and Freight Potential Waterways ( dwt.) - This covers waterways such as the Rivers Hull and Great Ouse Smaller Waterways (<100dwt.) - This includes most narrow canals such as the Grand Union Canal. Much of the movements on the narrow canal network is of leisure craft but there is current investigation to see if there is some scope for freight traffic Coastal Shipping There are 11,072 miles of coastline and 300 ports around Britain (118 of these are shown in Appendix 3) and consequently coastal shipping represents a serious opportunity for developing multi-modal transport solutions. Lloyd s List reported that in 2004 the UK accounted for 347 million tonnes moved by short sea shipping, which was 16% of the total short sea shipping of the EU. In general, the advantages of short sea and coastal shipping are that it is: Often cheaper by tonnes per kilometre than road transport Reliable, with guaranteed transit times Flexible - as there are more than 300 major European inland and coastal ports 12

13 Environmentally friendly on a tonne per kilometre basis Several services have begun offering a choice to shippers on the eventual route a container might use. For example, it is possible that a Chinese container could be unloaded at Rotterdam and be placed on a coastal feeder for delivery into Immingham, Hull or Teesport rather than being offloaded at Felixstowe and moved onward by road. B&Q (the DIY retailer) took the decision to move most of its imports from south coast ports to Immingham as it is nearer their main distribution depots in Scunthorpe and Doncaster. Case Study 1: Feederlink BV Feederlink BV, part of the ICG Group, operates several services linking Rotterdam and UK ports. It is a pure feeder operator whose customer base is the main deep sea container shipping lines. It runs ships on a port rotation including Rotterdam, Felixstowe, Tyneside, Teesport and Grangemouth. Generally ships run in both clockwise and anti-clockwise directions. These services allow the movement of containers in the clothing, automotive and general cargo markets plus the re-positioning of empty boxes. A Strategic View of the Transport Market Road freight has become the mode of choice for many transport operators and this has resulted in significant growth over the last three decades. While operators moving heavier commodities such as aggregates, coal and steel have kept their traditional association with rail and water transport, other operators have found the flexibility, cost, ease of market entry and reliability of road transport much more favourable than the other modes. This trend is shown in Figure 2 which shows three mode volumes from ; whilst clearly showing the marked rise in road. There are also positive trends for both rail and water, particularly after 1994 privatisation. Figure 2 Goods Moved by Domestic Freight Transport: By Mode As well as feeder services from mainland Europe there are feeder vessels that supply links between UK ports, for example, Southampton to Teesport. Many of these services offer a choice of four or five port destinations around the British Isles. For example, there is a flow of containers from Southampton up the Manchester Ship Canal which may offer an alternative to road or rail services. The uptake of such services and the likely change in supply chain is unknown but they could have an effect on potential demand for road or rail services as they can make additional journeys and deliveries when required. (Source: Transport Statistics Great Britain, DfT, 2007) 13

14 3 Strategic Considerations for Modal Shift The change from the use of one mode to another (modal shift) cannot be based on one factor alone. A strategic view is required and there are five main considerations that must be addressed: 1. Modal Shift Suitability 2. Market Dynamics 3. Rail and Water Freight Policy 4. Environmental Considerations 5. Organisational Priorities - Putting Strategy into Practice These considerations are discussed in more detail throughout this chapter. Modal Shift Suitability Location Having a good location is one of the most important factors in influencing transport costs. Before considering modal shift you should ask yourself some important questions: What existing links to rail and water can you have access to? If considering new premises is it near more than one type of transport infrastructure? Are there any new multi-modal developments in the area that may be to your advantage? This strategic thinking could provide long-term benefits by future-proofing your organisation against changes in legislation or market conditions as well as offering flexibility to your business in the shortterm. Types of Commodity You Move Transport by rail and water is already present in a variety of sectors and therefore whatever your commodity it is likely that there is a flow of goods already in existence. The following list provides some examples: Bulk commodities, e.g. steel by rail from Scunthorpe to Hartlepool and from Rotherham to Goole by barge Containerised deep sea freight between ports and container terminals, with a final road leg, e.g. containers from Southampton to Widnes Intermodal Terminal by rail, and the Irish Sea and Manchester Ship Canal to Irlam, a wharf near Manchester Waste from Manchester to Roxby in North Lincolnshire by rail and within London on the Thames 14

15 Automotive products, e.g. BMW Minis from Oxford to Purfleet by rail and from mainland Europe to various ports around the coast of the UK by short-sea shipping Petrochemicals from Immingham refineries on the Humber estuary to Kingsbury by rail and from Immingham to Castleford by barge This list is far from exhaustive and this upward trend in domestic inter-modal freight is shown by Figure 3 (which refers specifically to rail freight). Figure 3 Rail Freight Commodity Types Moved Figure 3 shows the growth of tonnes per kilometre for the rail freight industry in general. The UK s reliance on coal imports has seen this commodity grow the most but in general the trends are positive. This is especially true for domestic inter-modal services which have seen significant growth since Suitability Assessment To help you assess if your goods are suitable, for modes other than road, Table 1 (below) highlights those commodities that currently flow on parts of the rail and water infrastructure. The colour coding indicates where there are regular movements, trial and irregular flows or where products and modes are badly matched and hence are considered to be unsuited. Key Regular Movements Trial Flows or Irregular Movements Not Suited * = Short sea Ferry Crossings (Source: AECOM market analysis, 2010) (Source: Transport Statistics Great Britain, DfT, 2007) Table 1 Mode Sustainability Assessment Mode/Commodity Type Rail Inland Waterways Short Sea Shipping Aggregates Coal Retail (non food) Retail (perishable food) Container Automotive Parcels Home Delivery Waste Oil and Petroleum Steel / Scrap metal Forest Products 15

16 Market Dynamics To allow for a long-term view in planning, this section describes: The factors affecting the road haulage industry s dominance Expected growth in the rail and water markets Factors Affecting the Road Haulage Industry s Dominance Despite significant efficiencies achieved in the road haulage industry in recent years, vehicle fixed and variable costs have increased at a greater level than inflation, for example, in 2006 costs rose by 8.2%. This has been predominantly due to escalating fuel prices, the cost of new vehicles and staffing costs but the road industry has been proactive enough to improve its efficiency so as to contain some of the impact of price rises. However, whilst the road haulage industry will need to continue to address rising operating costs by introducing measures such as new vehicle technology, vehicle design and driver training, there are some factors which cannot be controlled. The following factors all have a significant bearing on the current cost of road haulage (some of them also affect rail and water freight but in different ways). Increasing Fuel Price Whilst load sizes by road remain relatively small compared with rail and water, the price of fuel will continue to have a significant effect on the price per Tonne of road haulage. The larger load capabilities of water and rail lessen the effect of fuel price fluctuation on costs in all but the final road leg of the journey. Congestion Increasingly busy roads often mean longer journey times and this has an impact on a driver s ability to cover the required distance within the hours allowed. Working Time Directive Notwithstanding the elevated level of safety brought about by stricter drivers hours limits, legislation of this type has placed pressure on the road industry. Combined with congestion, this presents a challenge to maintaining service levels in road freight transport. Driver Shortages The shortage of fully competent drivers means that those that are competent can command higher wages. Should demand outstrip supply, higher wage bills could make road haulage more expensive. A further factor that is having a bearing on the availability of drivers is the need, as of 2009, to hold a valid Driver CPC (Certificate of Professional Competence). Economies of Scale for Rail and Water The ability to ship quantities far greater than a single truckload with a fraction of the manpower provides a distinct cost benefit for water and rail. In the case of rail, one trainload, for example, operated by one driver can replace around 30 truckloads (30 drivers) which can be moved over a vast distance. Green Logistics (An Engineering and Physical Sciences Research Council funded research project into sustainable logistics) report that an average container train carries 30 containers. Similarly two staff on a barge can deliver 750 tonnes or 30 truckloads. Expected Growth in the Rail and Water Markets Network Rail Freight Route Utilisation Strategy 2007 predicts a 30% growth in tonnes lifted over the next ten years. The greatest increase in freight is expected to be in coal, inter-modal and construction traffic and the railway has gradually been making inroads into the market for transporting ambient products, such as supermarket goods. Further growth is expected, for example, between Scottish terminals, such as Grangemouth, and West Midlands inter-modal terminals. Moreover, with the biggest intermodal growth expected to come from the deep sea ports in the south east, the opportunities for growth in rail and water moving goods North could be significant. 16

17 Rail and Water Freight Policy While regional and national policies will be the major influence, EU policies are also likely to affect both rail and water freight in the UK. For example, there is now greater emphasis on reducing the adverse environmental impacts of road freight at both UK and European level. Rail Freight Policy National Policy The Department for Transport (DfT) has been funding rail infrastructure improvments with a commitment of 200m of funding to Network Rail up to 2014 for the development of a Strategic Freight Network (SFN). What this amounts to is a progressive programme of network enhancement to increase the logistical efficiency of rail. In addition, over 150m of funding has been allocated through the Productivity Transport Innovation Fund for infrastructure enhancements. These schemes include: 80m to enhance the gauge and capacity on the Peterborough - Nuneaton route, providing a crucial alternative to the busy rail routes via London 42.8m to enhance the gauge on the Southampton - Nuneaton corridor, completed April m to increase capacity on the link between the Humber ports and the East Coast main line 1.6m to improve access between the West Coast main line and Liverpool Docks 18.5m for gauge clearance and freight capacity work on the Gospel Oak to Barking line Regional and Local Rail Freight Policy Many regions and Local Authorities (LA) have relevant policies that seek to promote sustainable transport. For example, the East Midlands Regional Freight Strategy seeks to promote: Regional and local partners to work together to identify and promote opportunities to achieve a significant shift from road to rail freight. The document goes on to say: By 2015, the tonnage per annum carried by freight trains originating or terminating in the region should increase by 4.5 million tonnes over 2005 levels, represented by an extra 30 trains per day. A favourable council can be an important and influential partner when trying to achieve modal shift. For further information please contact your local council. For more information, obtain a free copy of the publications Freight Quality Partnerships and the Local Authority Freight Management Guide. These are available via the website at freightbestpractice Case Study 2: Derbyshire County Council Derbyshire County Council s policy is to encourage existing freight to switch to rail where practicable and to encourage new freight on to rail. There are two main areas where positive council intervention helped, firstly, by providing a smooth planning process and secondly, assisting and supporting grant applications. The Council believes it has helped shift over 25 million tonnes since 1993 onto rail, and it is running at around 8 million tonnes per annum. Also it has helped other LAs with similar issues arising from setting up rail-fed distribution sites to understand the local factors of lorries running to / from a depot versus the long-term gain of trunk haulage by train. 17

18 Water and Port Policy The DfT has published several reports in recent years, all of which highlight the importance of a sound ports policy. The Ports Policy Review of 2006 forecasts that for the period the rate of growth for containers and Roll-on / Roll-off (Ro-Ro) will be 71%, compared with a more modest 16% for bulk freight. The growth rate for unitised freight (Ro-Ro and containers) is predicted to be substantially higher than the rate for total HGV traffic as predicted by the National Road Traffic Forecasts (NRTF) for the same period. Unitised freight traffic currently accounts for 16% of all UK lorry freight tonnes per kilometre and is predicted to represent 24% by This will lead to an increase in road freight traffic from UK ports, potentially increasing congestion making the use of rail or coastal shipping more attractive. Environmental Considerations Corporate Social Responsibility (CSR) CSR is becoming a driver for change in many businesses and environmental impact is one important part of CSR. Addressing your carbon footprint can offer a win-win situation, i.e. improving operational efficiency can save you fuel and reduce CO 2 emissions, which benefits the environment. As companies seek to quantify their carbon footprint and realise that the quantity of CO 2 from road transport is a significant factor in the whole greenhouse gas calculation, there is an increasing need to find solutions to the problem. A shift to non road based modes of transport can offer substantial benefits in this area. The Department for Transport estimates that overall freight traffic between 1990 and 2005 grew by 20% and transport-related CO 2 emissions grew by 11% over the same period. Unless there is a move to different modes of transport, CO 2 levels will only decrease as fast as new technology and efficient driving allow. With the increasing awareness of Corporate Social Responsibility (CSR) the environmental credentials of rail and water are sometimes cited by companies seeking to enhance their image. Water transport emits 80% less carbon dioxide than HGVs and 35% less nitrogen oxide (Source: The Case for Water, Sea & Water, 2006) Rail transport produces 80% less carbon dioxide per Tonne carried than road transport. (Source: Association of Train Operating Companies) However, it is recognised that more research is needed in this area to ensure valid comparisons are made. The regulary updated Guidelines to Defra/DECC s GHG conversion factors for company reporting this is a good place to start comparing emissions form different frieght transport modes. ( 18

19 Case Study 3: Tesco s Rail Service Replaces Over 13,000 Lorry Journeys per Year The service from Daventry International Rail Freight Terminal (DIRFT) to Grangemouth Rail Terminal in Scotland began in September Eddie Stobart Ltd collected goods from Tesco sites around the Daventry area, delivered them to DIRFT where they were loaded on Swap Bodies (see Appendix 1) for the train bound for Grangemouth. Tesco provide 100% of the goods volume travelling north and 90% of the southbound volume, with other Eddie Stobart customers providing the remaining volume. The Stobart / Tesco collaboration means that for every train used, 28 truckloads can be taken off the road which will prevent approximately 19,600 road miles and save 7,962 litres of fuel. Although this service has now changed to run between Rugby and Mossend, the environmental benifits continue to accrue. Case Study 4: Olympic Demand for Sustainable Distribution Some of the construction materials for the Olympic Games have been allocated to be brought in by rail and water to minimise the extra road congestion brought about by the Olympic Zone construction. British Waterways, the Olympic Delivery Authority (ODA), Department for Transport (DfT), Transport for London (TfL), and London Thames Gateway Development Corporation combined to invest 18.9 million (source: British Waterways, April 2008) in a new lock which would counter the tidal limitations of the River Lea in East London. It is hoped that Prescott Lock could remove up to 140,000 lorry movements from London s congested roads during the Olympic building phase and 12,500 thereafter. This shows the willingness of the water freight industry to invest and take opportunities similar to any other mode and whilst the need was to provide sustainable distribution for a one-off event, it is estimated that the cost will be one-third of what the road infrastructure improvements would have been. Also, the development of new water-based infrastructure will leave a legacy plan for post movements. 19

20 Organisational Priorities - Putting Strategy into Practice Finding the balance between the four strategic considerations (suitability, market dynamics, freight policy and environmental considerations) can only be done through the understanding of your organisation s priorities. There is a trade-off to be made between operational suitability, going green and maintaining profitability. Determining the mix of priorities and where the trade-offs lie within your organisation is at the heart of the modal shift debate. The following chapter goes into detail regarding the operational factors that can affect your decision and contains case studies on how companies have done this in the past, including obtaining grants that can help with capital and resource costs. 20

21 4 Operational Factors Affecting Your Modal Choice Pre-conceived ideas about rail and water transport can be the most significant hurdle to understanding the suitability of modal shift for your business. This may arise from poor previous experiences or simply a lack of knowledge of what is on offer in the current market. This chapter looks at the main factors affecting the decision for modal choice, and explains in general terms the current offer of rail and water transport. Practical examples have been included to show how the switch to another mode has resulted in positive results. The factors relating to your modal choice will be unique to your operation, but can be generalised as: Cost - Can you afford the change? Supply Chain Resilience - Will your operation become more or less resilient from changing mode? Reliability and Punctuality - Are rail and water reliable for your operation? Customer Service - Will you still meet your contractual obligations to your customers? Access to Rail Network and Waterways - Are they in close proximity to your operations? Flexibility of Services Offered - Are the other modes flexible enough for your operation? Volumes - Have you sufficient volumes to make it worthwhile? Commodity Type - Are your commodities suited to other modes? Distances - Are sufficient distances involved to make it worthwhile? Cost It is important to remember that the vast majority of rail and water freight services are operated on a commercial basis without grant support. This is because where there is sufficient volume, particularly between fixed locations, the nature of rail and water freight will produce significant economies of scale. REMEMBER: Look at all the potential long-term benefits of switching mode. A grant should not be seen as the only justification for modal shift. 21

22 Case Study 5: Cemex Starts Traffic Flow on the River Severn After a 10-year Gap Thompson River Transport and British Waterways have enabled Cemex to transport its construction materials for the local market via water rather than road, giving both economic and environmental benefits. The further development of Ripple quarry could have had an adverse effect on the quantity of road movements in the area. Cemex has made a modal shift to water using Thompson River Transport s specialist barges to transport 200,000 tonnes of gravel and sand per year. The shift to water is an environmentally sustainable solution as well as being commercially viable. A further 65,000 tonnes (a year) of processed material will be transported back down the River Severn to Cemex s ready mixed concrete plant south of Gloucester. By using the water mode, and carrying out four journeys per day, it is the equivalent of 116 road journeys per day. As well as journeys saved, a barge will consume less fuel than the fuel required for the same road freight movement. The fuel cost to operate a single barge is per journey compared to the cost of fuel to transport the same tonnage by road haulage which would total This equates to a saving of around 35,000 per year. The Difficulty of Obtaining Costs Notwithstanding the cost savings gained from operating the services, as demonstrated in Case Study 5, the rail and waterways sectors often find it difficult to respond quickly on cost issues because certain factors are out of their hands. In addition, they are often unable to give door to door estimates, only quoting on the leg of the journey which rail or waterways cover. This can be a significant barrier. Therefore, the real problem is that if potential users find it difficult to get a prompt response to a request for a quotation, both for segmented and / or door-to-door services, they may just continue to use road freight operators who are used to giving a quick response. To avoid this issue it is advisable to accept advice from a variety of different sources such as the Rail Freight Group, the FTA, other rail and waterways users, and the mode operators themselves (Information on these types of organisations can be found in Appendix 2). REMEMBER: The cost of lifting products on and off transport can be between per container. This can mean that although the cost per mile by rail is cheaper it can make the overall cost less attractive. This reinforces the importance of door to door costing. Supply Chain Resilience While cost is, of course, a major factor, maintaining and enhancing the resilience of your supply chain is vital. Without a reliable supply chain in place all your efforts to drive down cost and increase efficiency can be easily undone. It is important to assess the robustness of your existing supply chain and understand how other options for transport can improve its performance. Rosebys, the home furnishings retailer, wanted to build resilience into its transport supply chain as it was aware that there were often journey disruptions occurring on the roads between the port of Felixstowe and its northern distribution centres. As Case Study 6 illustrates, The Potter Group and Rosebys were able to improve the way they operate by turning to rail for some parts of their distribution requirements. 22

23 Similarly, ASDA was concerned about congestion on the road leg of its supply chain bringing products from the south-east ports to its Northern Regional Distribution Centres. Case Study 7 shows how the introduction of coastal shipping to ASDA s operation has provided it with a reliable alternative to road. Case Study 6: Reliable Services - Potter Group, Rosebys, Medite, GB Railfreight The Potter Group invested 8.5m to set up a new rail connected terminal at its Selby site which now handles three trains a day: a container train from Felixstowe, a train carrying road stone from Derbyshire and a train loaded with a range of different products. It operates a road fleet, warehousing and rail interchange facilities for various industry sectors including drinks retail, home furnishings, non-food retail, paper, and construction. The inter-modal train runs from Felixstowe to Yorkshire on behalf of the Mediterranean Shipping Company (Medite). Rosebys based its National Distribution Centre at the Selby site and used the train to transport around a third of its containers that normally arrive into the UK at Felixstowe, with the remainder moving by road. Such was the reliability of the train service operated by GB Railfreight that Rosebys gradually entrusted more and more of its freight to being rail hauled. Container trains may carry up to 72 twenty foot equivalent units (TEUs) and in this case a train may save around 30 lorry movements Case Study 7: ASDA Improves Resilience in Supply Chain by Taking to the Water ASDA had found that the lead times involved in road collection of containers from the south-east ports to its predominantly northern RDCs were becoming increasingly unreliable due to congestion at the ports. This in turn was affecting on-shelf availability of imported non-food lines. In response, ASDA developed a new 20 million import centre at the regional port of Teesport, near Middlesbrough, creating up to 300 jobs in the local economy. Now over 70% of import containers from the Far East are moved directly to the port of Teesport from various European ports by feeder vessel, to be discharged in the import centre for processing and onward distribution. The port development not only significantly improves the flow of goods for imported lines but also ASDA estimates it saves over 2 million road miles a year by routing its import containers via Teesport rather than the south-east 23

24 Case Study 8: Technology Improves Resilience in the Supply Chain - Tata and Dawsons Technology is increasingly being adopted in a collaborative way with companies sharing information from point of manufacture to end-user. Dawsons runs an inter-modal terminal at Teesside, with access by water, rail and road, and has a high quality, temperature controlled steel holding warehouse that keeps the product in perfect condition before onward delivery to Tata (DB Schenker bring in the steel products by rail). The company is computer networked to Tata computer so that all transactions are completely transparent, and details of consignments are logged accurately. The system allows tracking of products through the whole supply chain, allowing flexibility in ordering, a reduction in stockholding and hence cost of working capital and a reduction in returns. The computer system allows immediate confirmation of successful deliveries thus making invoicing quick and accurate. Reliability and Punctuality Supply chains demand a reliable service throughout and the rail and water industries are keen to show they understand this. Through a renewed focus on customer service and significant investment in infrastructure they are making up considerable ground on reliability. For example, over the last few years, the rail industry has put in place contingency plans to minimise delays to services should an incident occur. These include: Train drivers learning diversionary routes that they can operate over should there be delays on their planned route Standby locomotives positioned strategically around the rail network to assist any trains that break down Multi-skilled staff deployed around the clock, to enable a range of repairs to be carried out quickly, outside planned maintenance schedules However, it is very important that trains depart from their originating point on time. The rail network operates to a tightly timed schedule of train services and any train that misses a scheduled departure may have to wait some time for a spare path in the timetable and may delay other customers services in the process. On some parts of the rail network there is priority given to passenger trains over freight trains and a freight train running late may be routed into passing loops until a passenger service has gone by. The rail freight industry monitors its punctuality and, indeed, some of its postal and container trains run to exacting timetables. One of the reasons behind this is the increase in time sensitive goods where, for example, the train is met by a fleet of lorries ready to make urgent supermarket deliveries. The timetabled nature of rail freight means that a robustly configured and well-managed operation will provide regular, predictable and reliable services. In pure performance terms, train speeds vary from 60mph to 110mph for some parcel freight, and with improving technology, wagon design and investment in locomotives, service speeds are increasing all the time. Case Study 9: A Step Approach Based on Service by Kuehne & Nagel Deep-sea inter-modal shipper, Kuehne & Nagel, started a Felixstowe to Daventry rail service with Freightliner s Logico division in Initially the service ran five days a week with 18 wagons. Kuehne & Nagel monitored the reliability of its rail freight service and decided to increase the service frequency and amount to six days a week and 22 wagons. The success of the scheme has resulted in Kuehne & Nagel claiming that box movements by rail are now more reliable than road. According to Kuehne & Nagel, rail freight movements are 95% on time whereas road movements are 80-85%. Rail is more reliable than road. Peter Ulber, Chief Executive - Keuhne & Nagel 24

25 Rail is not the only answer to congestion on the roads. Sainsbury s wanted to test how water transport would compare to road transport in terms of reliability, due to difficulties it was experiencing from congestion in central London. Case Study 10: Achieving CO 2 Reduction and Avoiding Congestion in Central London - J Sainsbury s Use River Transport Sainsbury s in 2007 completed a successful trial for consumer goods from its South Eastern Warehouse to one of its stores in central London. The use of a traditionally slow mode actually saw lead time improvement over road haulage and helps towards their target of 25% CO 2 reduction by Such a trial as Sainsbury s would often be overlooked by supply chain professionals who dismiss any transport by water, particularly inland waterways, not only as a slow and unreliable but also as one which is not predisposed to time-sensitive goods. However, organisational priorities are creating new opportunities for other modes and this is fuelling growth in the rail and water markets Customer Service It is undeniable that rail or water movements cannot fully match the flexibility of road transport. But if they are to form part of your supply chain you must maintain or improve the levels of customer service that you provide. As with any logistics contract, individual customers can contractually specify key performance indicators. Royal Mail (see Case Study 12), for example, has very tight performance criteria, which include hitting time windows (arrival within 10 minutes of schedule) at various points in the network and not just at the final destination. 25

26 Case Study 11: Daily (7 Days a Week) Rail Freight Business pressures to provide timely and efficient delivery of goods will continue to increase for the foreseeable future. Logistics companies working in conjunction with rail freight operating companies are now offering reliable daily freight services. In some cases these operate seven days a week. In April 2004 DRS in conjunction with the Malcolm Group, Craibs and ASDA started a daily intermodal service moving ambient grocery, general merchandise and clothing by rail from Grangemouth to Aberdeen. This service runs to a timetable with punctuality running at 94% (better than many passenger trains). The logistics company Craibs, then handles the forward movement of containers around Aberdeen. Slow moving ambient food lines, clothing and general merchandise for the Scottish stores move up from the Midlands each night on a Daventry to Grangemouth train and ASDA is continually evaluating further opportunities for switching freight to rail, either long term or for specific seasonal flows. Case Study 12: Royal Mail Chooses Rail to Help Customer Service The Royal Mail totally reconfigured its supply chain some years ago, and substantially reduced its reliance on the rail network, citing both cost and performance as its reasons for so doing. Royal Mail did, however, want to keep a presence on rail and sought service providers on the open market. GB Railfreight was awarded the service between London, Warrington and Glasgow, initially for the Christmas peak, and then for a longer period. The rail contract was renewed with the service this time being awarded to DB Schenker. The rail network has proved its use especially on the West Coast Main Line long haul route and in times of high volume and as a contingency option which can be quickly deployed when other networks are compromised. The use of rail in overall terms is always under scrutiny by Royal Mail owing to the need to be certain that the additional cost of maintaining a rail option is justified in quality terms. 26

27 Case Study 13: Cory Provides Excellent Service Levels for Local Authorities in London London road network, leading to a reduction in pollution, noise and traffic congestion. Cory Environmental disposes of waste on behalf of the Western Riverside Waste Authority (which handles waste for the City of London, Westminster City Council and the London Borough of Tower Hamlets). Cory, the largest barge operator on the Thames, runs a daily service along the river Thames in London. The service enables 700,000 tonnes of waste per year to be transported along the River Thames to Essex and this has resulted in removing 100,000 lorry movements per year from the Away from time-sensitive freight, the waterways, can be a viable solution for the transportation of waste and recyclable materials. Access to Rail Network and Waterways The rail network is almost entirely operated by Network Rail with the exception of a few private sidings, terminals and preserved lines. UK waterways have no central governing body but around half are managed by British Waterways (a Government agency), a quarter by the Environment Agency and the remainder by around 30 other public, private or voluntary interests. Rail Network There are a number of aspects to consider when wanting to access the rail network: Access to rail terminals Availability of train paths Track access payments where Network Rail charges for the use of its infrastructure The gauge of the rail route you want to use The increasing need for more passenger paths has put pressure on the availability of freight train paths but generally they are still available on the network. Improved planning, use and allocation of freight paths mean that rail can increasingly accommodate efficient logistics operations. Dedicated private sector FOCs are now well established and a genuine open access market is beginning to emerge. The European Union is actively encouraging open access to the European rail network and wants to see a growth in international rail freight. DB Schenker has recently started additional, direct intermodal services between Mainland Europe and the UK via the Channel Tunnel, for example from Duisburg to Manchester and Grangemouth. Rail Freight Freeways In Europe Freight Freeways are currently being created. The 2,500 kms freeway from the Netherlands to Italy will be covered at km / h when it becomes operational, compared to km / h now. The ambition is to make freeways into one-stop-shops, where an operator can purchase a single timetable slot from A to B even if the points are in different countries. The onestop-shop approach also means that documents only have to be shown once and paperwork is minimised. Freeways are also expected to mean the end of inspections at borders. The job of the one-stop-shops is: To market capacity for freight trains on international routes, partly via the Internet 27

28 To react quickly to rail companies which want to use the freeway, especially by providing information on: Prices for the use of infrastructure in all countries concerned Additional services available The current status of the trains Technical information on the rail lines and other facilities to be used Gauge Size Another factor that rail companies have to consider is the rail gauge required to move different sizes of containers and wagons through the rail network. The gauge reflects the width of the track, the clearance heights in bridges and tunnels, tight corners, station canopies and platform edges. The gauge has been categorised simply as a W followed by a number and in simple terms the lower the number, the smaller the gauge (see Appendix 4 and 5). are the best source of advise for route availability (RA) and gauge. Case Study 14: Hutchison Ports Benefit from Gauge Enhancement Hutchison Ports (HPUK) is a member of the Hutchison Port Holdings (HPH) Group, the world s leading port investor, developer and operator, with interests in a total of 47 ports in 24 countries. In the UK, HPUK operates the Port of Felixstowe, Thamesport and Harwich International Port. Over 40% of all UK import and export trade is handled at the Port of Felixstowe, which is the UK s largest container port. Of the containers arriving at Felixstowe in 2007, onward movement market share was as follows: road 59%, rail 23% and transhipment to other vessels 18%. The number of container trains from Felixstowe has risen significantly in recent years, and the Port s two rail terminals handle 26 trains a day each way, operated by three FOCs. There has been a marked growth in trains since the gauge enhancements (to W10 gauge) at Ipswich Tunnel and on the West Coast Main Line were completed in This work enables the high-cube 9 6 boxes to reach their destinations on standard flat wagons. demand. A new rail terminal is also planned at the Port. In December 2005, HPUK submitted an Application for a Transport and Works Act Order to increase the capacity of the Felixstowe Branch Line and this will involve the dualling of a 4.25 mile stretch of the existing single-track branch line and 3 extra sidings at Ipswich. In parallel with these local rail improvements, HPUK is working closely with Network Rail to fund gauge and capacity improvements to the route between Ipswich and the East Coast Main Line, and its diversionary routes to South Yorkshire. The capacity enhancement would allow up to 40 freight trains per day to the Port of Felixstowe to achieve a rail modal share of 26%, thus taking 500,000 lorry movements off the road per year. This equates to a 3% growth in rail freight each year. The Port of Felixstowe commenced work to extend three of its lines at the South Rail Terminal in March 2008, and is buying two new rail-mounted gantry cranes with a view to boosting rail capacity to cater for increasing 28

29 Inland Waterways Britain has a useful network of inland freight waterways and there is potential for this to be used much more (see Appendix 3). Apart from the perceived slow speed of the distribution flow (about 4mph) access to waterways has been an issue. Despite this, some of the inland waterways have undergone considerable infrastructure improvements and many companies are finding the service provided extremely reliable. Most vessels are self-propelled but some barges are unpowered and require a tug to move them to their destination. This is illustrated by Case Study 15 which shows how rice loaded into a barge in the USA can access a river wharf in the UK without being handled again. Case Study 15: Westmill Foods Operation Benefits from Flexible Access Around ten loaded barges are discharged every 12 to 14 days at a jetty in Immingham that have been transported across the Atlantic by a sea-going mother ship. Of these, three full barges carry approximately 1,000 Tonnes of rice from the Mississippi region USA to the Westmill Foods Mill in Selby. Each barge holds approx 380 Tonnes of rice and can remove the need for 50 lorry trips per week in and out of the mill. A pusher tug operated by John Dean then pushes two LASH (Lighter Aboard SHip) barges up the River Ouse. The barges are loaded for the return journey to the USA with export goods. Transport by barge gives a financial benefit of approx 4 per Tonne of rice in comparison to road transport and allows handling of rice via an automated process, compared to the bagged rice arriving in containers which has to be handled manually. Transport by barge also helps reduce congestion, relieving the town and the site of two thirds of the road transport required to maintain supply at the mill. Flexibility of Services Offered Both rail and water freight are often thought to be inflexible in terms of quantities carried and the number of services that can be offered. A common feature of freight operations is that if a customer does not require the movement of freight on a certain day then that service can be cancelled or postponed. This is often done at very short notice in the road freight market but it can also be done in the rail and water industry too. Case Study 16: The Tesco / Stobart Train The Eddie Stobart service for Tesco between Daventry International Rail Freight Terminal and Grangemouth Rail Terminal uses a new environmentally friendly Class 66 locomotive and pulls 28 specially designed 45 curtainsided containers. The company could have specified 9 6 swap-bodies but decided on a lower 8 6 height specification, meaning that they can travel on most of the rail network in the UK (see Appendix 4 and 5). This flexibility chosen by the operator paid dividends only months after the service started when the regular West Coast Main Line route became closed due to a derailed passenger train. The freight train was able to be rerouted over a relatively convenient alternative route thus avoiding too much delay and extra expense. 29

30 Volumes There is a trend towards longer and heavier trains and where this is possible it makes good business sense to do so. Trains can carry anything from 100 Tonnes of express parcels to over 3,000 Tonnes of bulk commodities. REMEMBER: Increasing the size of wagons in order to carry larger quantities can provide good economies of scale but may mean that this restricts the routes that the trains can use. This may be because of the axle loadings or due to the physical size of the loaded rail wagons exceeding the permissible width (gauge). In Case Study 16 Tesco was concerned when specifying the design of its train (operated by DB Schenker and Stobart), that it might be limited to lines that were able to carry maximum size wagons. Although a larger train can carry more volume, it could get stuck more easily if there were to be a problem on the normal route. As a result, some operators decide to use smaller wagons that would be able to re-route over most of the rail network. This compromise on size of wagon increases the likelihood of supply chain resilience. Case Study 17: Corus Steel (now Tata) Following the inbound movement of rice from the USA on an ocean-going mother ship in Case Study 15, empty LASH barges are either reloaded in Immingham with engineering steel products from Tata at Rotherham and special profiles from Tata Skinningrove, or taken to Hull for loading at an undercover terminal with wire rod in coil from Tata at Scunthorpe. All of these steel products are bound for Mississippi upriver destinations in the USA. Although aggregates, grain and petroleum products are the commodities most frequently carried by barge, this steel traffic demonstrates that barges are not restricted to carrying bulk cargoes. The main advantage of the LASH barge system is found in the USA, where deliveries to customers hundreds of miles inland can be made without transhipping or further handling at New Orleans. In addition, Tata has a direct loading facility at its Rotherham site, Thrybergh Wharf, developed about three years ago, which is used for steel exports by barge to Goole and potentially Immingham. Case Study 18: Mendip Rail Choose Longer and Heavier Trains Mendip Rail runs six jumbo-trains each day carrying limestone from Merehead and Whatley Quarries in Somerset for use in the London and south-east construction industry. The trains convey up to 44 x 102 Tonne gross weight wagons representing a payload of 3,300 tonnes, and are the heaviest freight trains in the UK. They run from Somerset to Acton in West London, where they split with portions going forward to a number of different railheads. The ability to move these tonnages with one driver on each train compares favourably to the equivalent use of over 100 road journeys, bringing significant operational efficiencies and environmental benefits. 30

31 Case Study 19: Abnormal Loads - Last Journey of Concorde Concorde was able to be transported from London to Scotland via the River Thames and North Sea. The vessel used at 80 metres long and 6.5 metres wide, was loaded at Isleworth with the aircraft and floated down the Thames past the Houses of Parliament before travelling up into the North Sea. If the aircraft had been transported by road, it would have had to be cut into smaller sections, with a longer period of time for restoration needed, once it reached its destination. Commodity Type Sectors moving heavier commodities such as aggregates, coal and steel have often kept their traditional association with rail and water transport. The Freight Route Utilisation Strategy published by Network Rail in 2007 states that coal, metals and construction account for 82% of tonnes lifted and 60% of rail freight moved (tonnes per kilometres). Petroleum constitutes 7% of tonnes lifted and 6% of freight moved. Similarly, water freight has tended to be used for the movement of bulky commodities. Case Studies in this guide show Tata as the largest user of rail freight and Lafarge as the largest user of water freight in the UK. Despite the two biggest users of rail and waterways moving bulk products there are significant opportunities for most commodities to move by rail or water, as illustrated by the case studies throughout this guide and the mode suitability assessment table. Case Study 20: Bulk Movements The rail network in North Lincolnshire centres on a rail line which stretches from Cleethorpes through Scunthorpe to Doncaster. The vast majority of movements are freight trains and over 25% of all the rail freight moving in the UK runs on this route. About 330 freight trains each week depart from the Immingham area and of these, over 150 consist of coal for the power generators and around 100 serve the steel works at Scunthorpe. Of the rest, 33 are oil trains from two oil refineries and 28 trains are wagon load trains including containers. Tata is the largest user of rail freight in the UK and the Scunthorpe steel plant receives 9 million tonnes of raw material annually from Immingham, 6.5 million tonnes of iron ore and 2.5 million tonnes of coal. The construction of Humber International Terminal 2 at ABP s Port of Immingham saw a large investment resulting in faster and more flexible rail movements in and out of the port. In addition, a rapid loading system was constructed which is able to load 23 -wagon trains with approximately 1,500 tonnes of coal in just 23 minutes. The speed of the process means that, every week, this facility now regularly handles over 100 trains. 31

32 Distances Journey distance has a bearing on the relative costs of different modes of transport. Part of the reason for this is that rail and water have higher levels of fixed costs than variable costs, which tends to mean that the additional variable cost of going an extra mile by rail or water is much lower once the costs of loading on and off the train or barge has been paid. However, bulk traffic flows can be economic over a very short distance, often of less than 10 miles. It is estimated that for non-bulk rail to break even against road transport it must travel at least 200 miles, and of the 850 million tonnes that is transported on the roads, around 17% moves this distance or more. That being the case, around 150 million tonnes could in theory, be moved onto rail which would increase the tonnage moved by rail by nearly 200% Case Study 22: Short Distance Water Freight Movements KD Marine handles grain movements on the Manchester Ship Canal, which is owned by Peel Holdings. The grain travels from the terminal at Seaforth, Liverpool, and travels to flour mills in central Manchester. Two vessels are currently working on this service which runs a distance of just over 35 miles in each direction. The vessels carry between 700 and 1,000 tonnes of grain on each movement which saves around 26 lorry trips per day. Case Study 21: Short Distance Train Movements The Malcolm Group launched a daily inter-modal service in November 2004 between Grangemouth and Elderslie near Paisley. This train is significant in that it is a journey of just 41 miles each way, a distance not usually economic for rail. Due to the unreliability of journey times on the road systems around Glasgow, the reliability of rail has made the service a success. This service is efficient because it makes use of rolling stock that has already made an Anglo-Scottish journey earlier in the day and would otherwise have been standing in a siding. Further examples of short distance movements by rail include: Immingham-Selby (paper), Powderhall-Oxwellmains (domestic waste), Cliffe-Battersea (aggregates), Boulby-Tees Dock/Middlesbrough (potash/rock salt), Hope-DDB Schenkerbury/Weaste (cement). 32

33 5 Co-modal Case Studies As demonstrated throughout this guide none of the benefits of modal shift can be taken individually nor is it likely that one company s blueprint for modal shift is the same for another. Successful multi-modal operations stem from correctly identifying the set of circumstances affecting your company. This chapter demonstrates the effective use of rail or water in conjunction with road haulage as part of a total supply chain. The use of other modes has brought each company featured a variety of different benefits and operational flexibility. The following case studies have been put into four distinct groups of companies: logistics service providers, retailers, bulk commodity movers and container movers. Logistics Service Providers Multi-modal logistics service providers offer a variety of services to companies wishing to transport goods and are especially useful when considering multi-modal distribution, as they have much expertise in different modes and can manage the whole process for you. Both of the following case studies illustrate well established logistics providers which are offering integrated multi-modal solutions in a competitive market. Case Study 23: Logistics Service Providers - The Malcolm Group The Malcolm Group, best known for its warehousing and road haulage fleet, decided to add a new dimension to its logistics services. In 2001 it started operating express rail freight services in conjunction with Direct Rail Services (DRS) between Scotland and its South Midlands base at Crick (Daventry International Rail Freight Terminal). Malcolms run regular timetabled services that offer customers flexible load configurations for a variety of goods including food and drink, glass and paper. Malcolms saw the benefits of a rail trunking operation as part of the supply chain and offers rail connected warehousing. It uses a diverse range of equipment for efficient loading / unloading of containers and inter-modal equipment and has covered areas for the handling of high capacity freight wagons. From small beginnings of just two trains a week, in just six years the company now runs 58 train services. These services complement the total logistics package the company is able to offer its customers. Case Study 24: Rail and Water as Part of a Supply Chain - John G Russell (Transport) Ltd Russell s investigated the possibilities of introducing rail and water freight into its supply chain where these modes of transport offer service advantages. Russell s started in rail in the late 1970s, and by 1984 was contracting daily full trains using conventional rail vans. In 1998 it started an inter-modal rail service between Daventry and Central Scotland bringing together goods belonging to a number of different customers into economic trainloads. Russell s has carried a range of commodities including household items, ambient food and drink and has back-loaded Scottish products to the Midlands terminal. In 1998 Retailers didn t have rail as part of their supply chain but by 2007 we have seen a large swing and a number of retailers are now actively using rail and the indications are that this use of rail will grow. Ken Russell, John G Russell (Transport) Ltd 33

34 Retailers In recent years a number of retailers have begun to use rail and water as part of their logistics strategy. Many have found that these trials have showed improvements in a number of areas including cost, service level and reliability. ASDA has used rail since 2001 and water since The environmental benefits that ASDA has realised from both its rail and water services are significant and are examples of the possibilities that multi-modal operations provide in the UK. Case Study 25: ASDA Operates Several Rail Services ASDA transports groceries, general merchandise and clothing products from distribution centres in the Midlands to stores in Scotland. The daily rail service has saved more than 22 million road miles since it was launched in Switching more of its freight to rail has helped ASDA reduce the overall number of road miles travelled by its fleet transport by over 20% since January ASDA is on course to reduce the amount of carbon it produces by 40% by the end of The ASDA train started running from the Lutterworth, Corby and Brackmills depots in 2001 via the rail terminal at Daventry to a terminal in Grangemouth, adjacent to the retailer s Scottish Distribution Centre. Since then ASDA has sent an average of 26 containers per day north (totalling 30,000 containers). Case Study 26: ASDA Saves Road Miles by Using Coastal Shipping In addition to ASDA s train service, ASDA looked to coastal shipping following research into the movement of goods destined for its northern consumers. ASDA found that lead times involved in the road collection of containers from the south-east ports was not only affecting customer service but also the availability of general-merchandise lines. As a result, ASDA opened its Import Deconsolidation Centre in March 2006 at Teesport. ASDA s decision to establish a base at Teesport was aided by PD Ports plans to develop the Northern Gateway Container Terminal (NGCT) - a 300 million deepsea container terminal. This development helped to reduce the lead times for ASDA by enabling deep-sea vessels to call direct to Teesport rather than by transhipment from southern UK ports. ASDA was able to improve its customer service, have a more direct route for products, and reduce lorry miles in the UK, and now 70% of ASDA s non-food imports go directly to the north by sea, rather than by road from Felixstowe, saving more than 1.5 million road miles each year. In 2004 the supermarket also began running a daily train from Grangemouth to stores in the Aberdeen area, saving a further 2 million road miles. 34

35 Case Study 27: Tesco s Moves Goods by Rail The 3.2 million project moves non-food products daily from the Midlands to its main Scottish distribution centre in Livingston, saving an estimated 4.5 million road miles and around 6,000 tonnes of CO 2 a year. Two new state-of-the-art green trains have been specially imported from Canada to make sure the goods are transported in the most environmentally friendly way possible. The trains have also been designed to reduce noise and vibration. The wagons are curtain sided swap bodies and as already described in this guide are only 8 6 high thus enabling them to travel over a greater proportion of the rail network (see Appendix 4 and 5.) Case Study 28: Tesco s Wine by Barge Tesco s use of waterways to ferry wine by barge from Liverpool to Manchester cut carbon emissions by 80%. It also, removed 50 lorries off the road every week. The new cargo service started in October 2007 and involves three journeys a week, delivering an estimated 600,000 litres of wine on each journey along the 40-mile stretch of the canal. The containers of wine from Australia, California, Chile and Argentina are then transported by road to a bottling site less than half a mile away where it is bottled and packed for supermarkets across the country. Bulk Commodities Bulk commodities have often been seen to be the most suited to rail and water modes. The economies of scale over longer distances, the increased weight capability and the ability to transport a greater volume in one journey all suit the rail and water markets. Tata has a turnover of 10 billion and employs 47,000 employees. It uses multi-modal rail / road distribution within the UK with hubs at Bristol, Brierley Hill and Wolverhampton and is a heavy user of water freight from its sites in Rotherham, Teesside and Port Talbot. Tata typically transports bulk materials either in ore, coal, steel bar, ingot or bloom. Such products are particularly suited to the use of rail and water due to their relatively high weight and volumes. Case studies 29 and 30 detail Tata s use of rail and water for its steel products. 35

36 Case Study 29: Corus (now Tata) - Steel by Rail Tata is significantly served by rail for both inbound and outbound flows, particularly for transportation of raw materials within the UK (with traction provided by DB Schenker). For example, the Scunthorpe site receives 9m tonnes of raw material annually from the Port of Immingham by rail (6.5m tonnes of iron ore and 2.5m tonnes of coal) with the inbound and outbound flows moved around the site on 105 miles of internal track by Tata own locomotives (In fact, the predominant mode of transportation within each of Tata s integrated steel plants is internal rail systems). Tata Rotherham receives six trains of scrap steel per week. This consists of 1.4m tonnes of scrap of varying grades and 1m tonnes of rod and rail annually. Inbound steel is gathered from a variety of sources, and the following companies have invested in their own rail head for Tata purposes: TS Thompsons Tyne Dock Smethwick EMR Northampton Crossley Evans BK (Newcastle) There are some other interesting rail movements including: 300,000 Tonnes per year of steel bloom from Scunthorpe to France via the Channel Tunnel (one train per day) 250,000 Tonnes per year of steel slab from Scunthorpe / Teesside to Dalzell (Motherwell, Scotland) 350,000 Tonnes per year of steel bloom from Scunthorpe to Skinningrove 150,000 Tonnes per year of steel bloom and billet from Scunthorpe to Rotherham Over 1 million tonnes per year of steel slab movement from Port Talbot to Llanwern Tata s relationship with the FOCs coupled with the demands of its industry has at times seen outbound material sent seven days per week by rail. Case Study 30: Tata Uses Water Freight for Steel Movements Tata uses deep sea vessels directly serving both the Teeside and Port Talbot works. They also bring a lot of raw materials into Immingham. As well as this Tata exports a lot of steel through a number of ports including specialist steel-handling terminals. Tata does make significant use of inland waterways in mainland Europe and its longterm strategy is to transport more volume along Europe s inland waterways. It recently built a wharf at Thrybergh near Rotherham which benefits from an internal crane, and, when the market situation is right, loads have been, and could again be sent by water to Goole and beyond. One of the issues facing Tata along with other users of inland waterways is the width restriction on some of Britain s inland waterways. The navigation serving Rotherham can only handle vessels of 300 tonnes because of the width of a lock. However, steel is handled at river wharves, for example, on the River Trent at Flixborough and on the River Humber at Goole which is the most inland port in the country. 36

37 Container Operations There are a number of logistics operators that just move containers and will often use direct movements from ports by road, rail or coastal feeder vessel. Roadways Container Logistics has used a mix of trains and lorries to optimise its service whilst maintaining flexibility. Its use of regional terminals has provided an efficient supply chain and an opportunity to utilise hub and spoke operations but with rail as the inter-hub leg. Case Study 31: Roadways Container Logistics Limited Roadways Container Logistics (RCL) is one of the UK s leading container transport companies. Its national network comprises three rail-linked inland terminals aligned with depots servicing the major southern container ports of Southampton, Felixstowe, Tilbury and Thamesport. With a fleet approaching 600 vehicles (including dedicated subcontractors), the company also operates an extensive fleet of modern trailers as well as container lifting equipment. region s motorway network with capacity to handle up to eight trains each day into a fast-expanding commercial area. RCL s standard service objective is to deliver within 15 minutes of a stated time. Achieving this target, considering the high container volumes involved, clearly relies on a well defined network and developed expertise. Roadways uses a hub and spoke distribution system. The clear advantage with this method is use of an environmentally friendly mode for the long haul (rail), which can be dovetailed with the time sensitive local haul (road) to achieve flexible short distance container placements. Birmingham Inter-modal Freight Terminal (BIFT), the company s relatively new Midlands terminal, typifies this approach. BIFT is a modern rail terminal, well located close to the A number of operators are providing container services by short-sea feeder vessels and coastal shipping. The companies offer links between mainland European ports and the UK and / or domestic services between two or more UK ports. The operators involved are either divisions of larger deep-sea lines or smaller niche market carriers, and examples include BG Freight Line, K-Line, Feederlink, Unifeeder, OOCL and the Mediterranean Shipping Company and two of these are featured overleaf. 37

38 Case Study 32: OOCL Offers Feeder Services This is an example of a deep-sea line offering an end-to-end service for customers. OOCL was one of the first Main Line Operators to offer their customers in-house feeder services rather than the third-party services which tended to dominate the market. In February 2002 OOCL added a Grangemouth call to its service which linked the UK and Continent to the Baltic. Owing to growing volumes the service is very much stand alone linking Grangemouth with the OOCL main UK hub at Southampton and on the northbound leg calling at Hull prior to returning to Grangemouth. In Greenock OOCL has a slot-sharing arrangement with another line (X-Press) which makes a weekly call at Greenock. They also stop at Southampton, Dublin and Belfast. Slot-sharing is used by a number of shipping lines where space is booked on ships belonging to other lines and this allows customers a greater frequency of service than would otherwise be the case. Case Study 33: K-Line Short Sea Shipping An example of a smaller, but effective operation is K-Line that runs two ships on a multi-port service which calls at Rotterdam, Felixstowe, Teeside, Aarhus, Rotterdam, Bilbao and Leixoes in Portugal. This coastal ship route has flows of wine, paper, whiskey, textiles and retail goods for supermarkets. 38

39 6 How to Make the Modal Switch Figure 3, below shows the seven main tasks you will need to conduct in order to make an informed choice as to whether you should or can change mode to help improve your operations. Figure 3 The 7 Practical Steps of Modal Change A. Assess Suitability Before you do anything else, you need to understand how the product that you wish to move can be moved using multi-modal operations. Essentially you need to investigate the following areas: Product features (volume, tonnage, dimensions) Bulk product loading method (unitised, palletised, loose) Frequency of despatch Operational days and timings Source and destination Assess Suitability Find Partners Feasibility Grants Business Case Review Operate Appoint a Project Manager / Champion After doing some initial thinking about your current operation you may want to consider appointing a project manager to take on your potential modal-shift project. Of course, whether this is a full-time post or whether it is an element of someone s current job will depend on the size of the operation and how complicated the change might be. Whether a full-time or part-time role, whoever is appointed should have the authority to drive the change forward within the organisation, but also have the personal qualities to communicate the benefits at all levels. For more information on introducing change, obtain a free copy of the publication Saving Fuel Through People available via the website at 39

40 B. Find Partners and an Operator It is at this point that you should seek those contacts within the industry that can provide you with advice to check and analyse your assumptions and add to your findings with specialist advice (see Appendix 2). You need reliable, responsive logistics providers that offer cost-effective services. Across the sector there will be differences in level of service and experience and therefore a body that can give independent, objective advice is highly recommended. Rail Freight Operators The rail freight industry is a competitive sector which is customer focused and now offers potential clients a real choice. The two original companies that emerged following privatisation have altered their businesses to address the new competitive industry. For example, DB Schenker has three customer focused sectors and Freightliner has two separate businesses called Heavy Haul and Inter-modal which includes a division called Logico for container bookings. The Rail Freight Group website is a useful point of reference for potential operators. (see Appendix 2). Water Freight Operators The water freight industry is far more fragmented than the rail industry, with a large number of smaller operators which are generally more regionally focused in their operations. The website gives information on water freight barge operators coastal shipping lines and much more. The British Waterways website holds the contact details of regional offices as well as its Head Office in Watford (see Appendix 2). C. Feasibility Study A feasibility study draws together all of the information gathered so far and pits your requirements against the possibilities. This phase of project implementation can be either wholly outsourced to a consultant, or done in-house with external support. The following lists the advantages of each method. Whichever method you choose the feasibility study should include: Confirmation of the service details (volumes, timings, loading methods, frequency, special handling characteristics etc) The types of rolling stock / vessels to be used Explanation of the tariffs Assessment of the operator / shipper s competence and experience Indicative costs Contingency plans should the service fail Selecting a Service Package The easiest way to obtain rail or water freight services is to buy the package through an FOC, shipping line, freight forwarder or other thirdparty logistics company. All can offer you a range of options, from a stand-alone service that collects from one terminal and delivers it to another, through to a complete package that might include transport, terminal facilities, road collection and delivery and appropriate documentation. Identifying Terminals / Wharves Having determined the volume of traffic likely to be shipped, the next step is to determine the best location. The options available are: 40

41 Use the nearest terminal(s) at each end - these may or may not have the right facilities on site to handle or store the traffic. If not, the customer will need to explore with the terminal operator whether facilities can be provided within time or budget constraints. Grants may be available to offset the costs of installing these facilities (see page 28) Use the nearest terminal(s) with the right facilities - this may be more distant than the first option. The additional road haulage costs at each end will need to be considered against any savings in investment in facilities that might have been incurred in the first option Develop a dedicated terminal(s) at either / both ends - if a direct link is possible at either the ultimate origin and / or destination for the service, this option should be explored to determine the likely investment and lead time, and potential grant availability. In some cases, there may be scope for relocating from an existing site to an alternative rail / water-linked site, to remove the road haulage that would otherwise be required Interactive Multi-modal Map The online, interactive Multi Modal Map was developed for the Freight Best Practice website showing the location of all open user, UK based: Rail Terminals Rail Connected Ports Sea Ports River Ports Clicking on each interactive symbol on the map displays the address and contact details for the site along with a brief explanation of the commodities that can be handled by the terminals. The Multi Modal Map also contains a CO 2 calculator that compares the CO 2 emissions or road, rail and water freight. The screenshot shows the CO 2 calculator. The interactive Multi Modal Map can be accessed at 41

42 Timetable and Tide Rail The National Rail Timetable (NRT) is one of the most important and complex components of the railway system, co-ordinating thousands of train movements per day across the network. Depending on the volume and pattern of demand, freight trains may only operate as required, and / or may operate between different terminals. Coastal Water and Inland Waterways Coastal water freight is constrained by tidal movements. This does not create the same barriers as slots in a rail network but is crucial to timing of delivery and pick-up. Inland waterway movements are affected by lock opening times and tidal rivers. Day-to-day Operation Customers are advised to discuss contingency plans with their service provider, allowing for scheduled maintenance and for dealing with incidents when services may be unable to run. This may involve agreement to alter schedules on specific days to avoid planned maintenance, or to provide stand-by road haulage via local call-off agreements, to keep traffic moving. Services Services can be configured to meet the needs of any customer but they are broadly split into four types: Single Customer Dedicated Services (usually full load volumes) The one-to-one relationship between customer and service provider allows for flexibility in service and the optimisation of routing and timings. Hauling similar products on single routes allows for the development of more suitable equipment to better facilitate loading and unloading. Scheduled Inter-modal Services These typically serve the ports and the Channel Tunnel, with loads being consolidated by the freight operating company. The advantages include set timings between major intermodal hubs, leading to good reliability. Recent developments have seen major shipping lines take a greater interest in rail, procuring their own services on a haulage-only basis and selling any spare capacity to others. Scheduled Less than Trainload Network Services The flexibility of this type of service means it can accommodate a variety of traffic types, connecting a wide range of different terminals, including those in Europe. Outside the core network there are limitations on the suitability of the service for inter-modal containers, especially 9 6 containers (see Appendix 4 and 5). International Services The Ro-Ro and Lo-Lo (Lift-on-Lift-off) shipping services between the UK and Europe are well established. Since the opening of the Channel Tunnel in 1994, there has been a significant number of HGVs using Le Shuttle service but as yet the volumes between the UK and Europe via the tunnel have not reached original targets. Establishing European supply chains using high capacity freight wagons on Channel Tunnel services could prove to be a costeffective solution for trunk movements into UK distribution centres. Identifying Wagons, Loads and Vessels Matching your commodity to the right rail wagon on vessel is crucial to an efficient transport operation. The Choice of Rail Wagons There is a wide range of modern railway wagons available to suit most traffic requirements. The decision on the type to be used will depend on the freight to be carried, the length of contract envisaged, and the relative costs. In some cases, a bespoke design may be required for specialised traffic, however, lead times for nonstandard designs can be significant for design, construction and technical approval. 42

43 Conventional wagons are normally designed for a specific purpose or traffic type, such as hopper wagons for coal or aggregates, tankers for petrochemicals and covered van wagons for palletised traffic. Inter-modal wagons are designed to carry various units (e.g. containers, swap bodies) which may require a low freight flat deck or a pocket wagon with a dropped deck. Conventional wagons tend to offer the best payload, but inter-modal wagons tend to offer a better match on height and width to road trailers and only standard equipment is required to load and unload them. There are various websites that can be visited to find more information on the types of rail wagon, and here is an example of a link to the rail wagon page from the website of one of the Freight Operating companies. It does not cover all of the types of wagon that operate on the UK network but provides a photographic illustration of some. aspx?pageid=106 Choice of Water Vessels The choice of water vessels is based on the width, the depth (draft) and commodity type. For inland waterways the restrictive nature of many canals requires the use of 300 Tonne barges, whereas transport on major estuaries such as the Thames, Severn, Humber and major man-made navigations such as the Manchester Ship Canal, the Aire and the Calder allow the use of 750 Tonne barges. Currently, the majority of inland waterway freight is to be found on the latter because of the economies of scale that can be achieved. Typical types of barge include tankers and bulk carriers which cater for bulk liquids and dry bulk respectively. Coastal ship types include bulk carriers from 1,000 Tonnes upwards, and container feeder vessels from 200 TEUs. D. Grants Grants are available where significant environmental savings can be achieved through the use of alternative transport modes and where the cost of road freight is less than rail or water. They are designed by the Government to buy environmental benefits through modal shift and can help you establish a more sustainable solution (one that maximises benefits for the economy, society and the environment) which allows each mode to reach its full potential. The Sustainable Distribution Fund is the main source of grant funding and offers direct grants to encourage modal shift from road to rail or water freight. Case Study 34: Days Aggregates Days Aggregates operates a number of terminals in the London area catering for the construction industry including one of the few active tri-modal terminals that offers a choice of road, rail and water. The company actively seeks to use sustainable means of transport to bring the bulky commodities from source to a terminal near to their point of use. Days received a Government grant in 2001 towards the cost of mobile handling equipment. More recently a 1million grant given to Days Aggregates from the Aggregates Levy Sustainability Fund managed by Department for Environment, Food and Rural Affairs (DEFRA) has delivered 11 million of environmental benefits in removing lorry journeys from the busy streets of London. This 11:1 ratio has mainly resulted from reductions in congestion and improved air quality. There are various places to look for descriptions and more information on vessels. Visit the following website for diagrams and specifications of different vessel types and much more: 43

44 Freight Grants - April 2011 Following the Comprehensive Spending Review (CSR), the Department for Transport (DfT) closed the Freight Facilities Grant scheme in England in January Whilst the scheme has closed to new applicants, DfT continues to monitor the performance of past schemes, with a view to ensuring the benefits as anticipated at the time of applying are delivered. For the current status of the scheme in Scotland and Wales, it is advisable to contact the relevant devolved administration. Although the FFG scheme has closed, the DfT continues to support modal shift through its two operating grant schemes. These are designed to facilitate the purchase of environmental and wider social benefits that result from using rail or water transport instead of road. These schemes are: Mode Shift Revenue Support (MSRS) scheme: assists companies with the operating costs associated with running rail or inland waterway freight transport instead of road (where rail is more expensive than road); and Waterborne Freight Grant scheme (WFG): assists companies with the operating costs, for up to three years, associated with running coastal or short sea shipping freight services, where water transportation is more expensive than road. In England DfT has secured a budget for these operational grants of 20m for , 19m for , with a further indicative 19m for both and Applications for the DfT s freight grant schemes are prioritised in a bid round process. Further details on bid rounds and how to apply, plus details of those bids that have previously been successful please see DfT s rail or water freight grant webpages Case Study 35: Lafarge Aggregates Lafarge Aggregates Ltd is one of the UK s largest producers of construction materials, meeting around 10% of the UK s demand for aggregates. Employing over 2,000 people at 200 sites across the UK, the company produces around 20 million tonnes of aggregate per year. The company takes its environmental responsibility very seriously and continuously works to improve its environmental performance in areas such as: Quarry restoration Recycling energy efficiency Alternative transport solutions Each year the company transports around 200,000 Tonnes of processed sand and gravel by barge over 130 km from the Newark area via the Rivers Trent, Ouse and the Aire & Calder Navigation to Leeds. The company accounts for approximately 20% of the total aggregate tonnage carried on inland waterways in England. Lafarge began shipping aggregates to Whitwood Wharf, West Yorkshire, in 2004 after receiving a 2.3 million Freight Facilities Grant. This was used for the redevelopment of the Wharf and the construction of loading facilities at Besthorpe. Delivering the material produced from two of its quarries by barge instead of road, Lafarge is able to remove around 25,000 lorry movements each year from the local road network, which, in addition to reducing traffic congestion, helps to reduce their transport s environmental impact. 44

45 It is possible to receive a grant so long as there is sufficient environmental benefit to justify them and the DfT website contains full details of each scheme. In addition, potential applicants can use an online calculator that works out the value of the environmental benefits that can be gained by transferring a particular freight flow from road to rail. For the most up-to-date information on grants please visit the DfT website at the following addresses: Rail Freight Grants: Water Freight Grants: grants/ For advice on the availability of freight grants in Scotland, Wales and Northern Ireland, please see the following websites. or or How Are Grant Applications Judged? The Environmental Benefit Calculator can currently be found at transportdirect.info/web2/journeyplanning/ FindEBCInput.aspx?&repeatingloop=Y and can help you to calculate the value of an individual journey, which will greatly aid your grant applications. Which Grant Applications Will be Successful? Bids for grants will be ranked by value for money and environmental benefits. The higher the benefits / cost ratio (BCR) the more likely the scheme will be allocated funding. The following advice is suggested when applying: Approach the DfT early on in the process to determine eligibility Ensure all information supplied is current and up to date Ensure there are no existing services providing similar modal shift facilities i.e. you are not going to take loads that are already being moved by water or rail Allow time for the DfT to assess grant applications, in certain cases this could take up to six months Ensure that your research is correct and realistic Environmental Benefits Monetary values are used as a means of quantifying the benefit of shifting freight from road to rail or water. These values are used in the calculations of all three grants and they are designed to reflect the environmental benefits to be gained. Benefit Calculator An Environmental benefit calculator provides a quick assessment of the environmental benefits to be made when a freight operator proposes to switch to a different mode and remove lorries from the road. 45

46 Where Grant Applications Fail Grant applications fail when the feasibility study has not been sufficiently robust. Common areas of failure are: Planning and other consents not in place Unrealistic assumptions about volume and growth Insufficient detail on aspects such as project management, procurement, cost control and timescales Road alternative not fully evaluated (e.g. capital cost of road option omitted) The plant and equipment proposed were not suitably geared to the traffic in question (FFG only) In the case of WFG and MSRS if the volume of traffic in your application is not achieved the DfT may reduce the amount of grant you receive Details of how to conduct a bid can be found on the DfT website. It is good practice to allow a third party to review your submission which will provide a common-sense check and highlight unclear areas and obvious omissions. Where a bid is not made in-house (i.e. through a consultant) it is critical to maintain good communication with, and if necessary provide staff resource for, the consultant to help develop the best bid possible. E. Business Case A Business Case is where your aspirations meet practicality and profitability. It can be used in the first instance as an aid to researching the proposed modal shift, weighing up options, detailing costs and service levels, etc, but it will go on to become a key document for successfully obtaining grant funding. costs and benefits but also the expected volume of freight, the routes that it will take and the commodity that will be moved, will help the DfT and its independent consultants to process your application. There is no need to hold back what you might consider commercially sensitive information as all applications are treated in the strictest confidence. When constructing your Business Case you should aim to produce a document that is: Consistent - Internal company documents will be set to specific guidelines and criteria but when these documents are included as part of a grant application then their format must conform to the grant application guidelines Business Oriented - Often, concerns the DfT might have relate to marketing and finance, so the Business Case cannot afford to have a solely technical bias Understandable - The contents of the Business Case must be clear and concise and written in such a way as to aid understanding. Always get a third party to read your submission with fresh eyes before you submit it Measurable - All key aspects and tasks involved should be quantifiable so future progress in the new operation can be tracked and measured. This will enable the Government to track the success of its investment Accountable - Accountability for the delivery of benefits and the management of costs should be clearly set out as they will be checked and audited at a later date by DfT s consultants In theory your application form will probably set out all the information that is required by the DfT (and the DfT will contact you with any reservations it might have about your application). The production of a clear, concise stand-alone document setting out not only the 46

47 F. Review As the Business Case is formulated it will soon become apparent that there are cost-benefit trade-offs to be had in terms of the equipment, volume and load. The principles of efficient supply chains are as applicable in the rail and water freight industries as they are in road haulage. Every empty space on a vessel or train decreases your profitability just as a failure to react to changing customer requirements may lead to termination of your contract. It is important therefore, to ensure a comprehensive review system is in place and relevant KPIs are established so that they will help you to understand how you are performing if the proposed service starts to operate. Comments This guide has been written as an introductory guide to rail freight, short-sea shipping and inland waterways. It has tried to provide some discussion on some of the main factors that need investigation when considering using any of these modes of transport. It has used illustrations from many companies that are using rail or water freight as part of the supply chain. However there is no substitute to researching how these modes could positively impact on your business. Appendix 2 features a list of a number of organisations that can provide you with much more information on how to progress. G. Operate If your grant is approved, the final stage of the process is to start putting your plans into operation. As with all supply chain initiatives improvements in the level of service come as a result of good communication between customer and service provider. Each has to understand the other, from the provision of appropriate wagons / vessels to the importance of presenting a loaded train / vessel to the rail and water network in time to meet a booked slot or sailing. In order to do this efficiently a freight operator operating in a multi-modal environment requires specific rail or water knowledge to handle operational problems. However, you cannot rely on one person alone and must ensure that knowledge is shared so that potential problems can be overcome on any mode by all members of the management team. This requirement for multi-modal familiarisation is best addressed by building it into the recruitment and training process. 47

48 Appendix 1 Glossary of Terms Break Bulk - Taking a large consignment and splitting it into smaller amounts for onward delivery. Containers - There are 4 different lengths of container in the general market place, 20ft, 30ft, 40ft and 45ft long. The height of the boxes varies from 8 feet 6 inches (2.6m) to 9 feet 6 inches (3m). 9 6 boxes are sometimes described as high cube, as they have greater volumetric carrying capacity. These are becoming more common. Container width is fairly standard at about 8 feet 4 inches (2.5m). with some at 2.55m Container Stuffing - The loading of containers often by hand or by specialised fork-lifts. The use of dunnage (packing material designed to minimise movement in transit) is of great importance. Feeder Services - Deep sea ships that move intercontinental containers are expensive to operate and tend to only serve a small number of very large ports in Europe. A proportion of the containers are transhipped at these large hub ports and placed on smaller vessels for onward movement to smaller regional ports. These regional feeder services feed the hinterland with goods and also feed the deep sea ships with return loads. FOC - Freight Operating Company in the rail sector that provides traction, wagons and much more to potential customers. Groupage - Combining orders from several different sources or customers into efficient and cost effective loads for onward movement. Hub Port - These are typically larger ports where a shipping line might locate several of its services to different geographical areas. The hub tends to be the centre of a hub and spoke delivery network. Inter-modal - An adjective describing the ability to transfer goods from one mode to another without having to handle all the goods individually. LASH (Lighter Aboard SHip) Barge - A type of barge that can be carried within a mother ship for cross ocean journeys and then be propelled by a tug up a river or waterway. Loading Gauge (gauge sizes) - The UK rail network was not built to a uniform size. Although the width of the track is the same, the levels of clearance under bridges, station canopies, in tunnels and next to station platforms are not. The smallest gauge is described as W6 and in general the higher the number, the bigger the gauge. The gauge becomes an issue when needing to move high cube boxes as in general at least W9 is required unless special rail wagons are used. Multi-modal - More than one mode of transport being used for a given journey. Short Sea Shipping - Shipping that moves a relatively short distance, for example, between mainland Europe and the UK. This is generally a door-to-door movement as compared to feeders which are generally port-to-port. Short Sea shipping includes both Roll-on-Roll-off (Ro-Ro) trailers and Lift-on-Lift-off (Lo-Lo) containers. Swap Bodies - These typically are trailers that can be lifted off a road-going vehicle and transported by rail or water. They are often but not exclusively curtain-sided and secured in place through the use of twist-locks. Tonnes Lifted - This figure reports the number of tonnes physically moved and therefore is an indicator of business activity. This enables a year on year analysis of the volume of goods being moved by the different modes of transport. Tonnes per Kilometre - This figure is the product of the tonnage multiplied by the distance it moves. This shows changes in the geographical pattern of trade; the physical volume of trade may stay the same but the goods may move over greater distances. TEU - A Twenty-foot Equivalent Unit (TEU) is the standard measurement in the container industry.1 TEU = 1 twenty-foot container and a forty foot container = 2 TEU. Ship capacity and train length capacity are described with the number of TEUs they carry. 48

49 TOC - Train Operating Company, this tends to be used for passenger train companies. 3PL - Third Party Logistics companies organise the transport and logistics operations of a client and usually provide the transport themselves. 4PL - Fourth Party Logistics companies organise transport and logistics operations but do not usually own any assets. They also tend to organise the complete supply chain. 49

50 Appendix 2 Relevant Contacts Department for Transport Modal Grants Team Zone 2/16 Great Minster House 76 Marsham Street London SW1P 4DR Tel: Web: Freight Transport Association Hermes House St John s Road Tunbridge Wells Kent TN4 9UZ Tel: Web: Christopher Snelling Head of Rail Freight and Global Supply Chain Policy Tel: csnelling@fta.co.uk Rail Freight Group 7 Bury Place London WC1A 2LA Tel: Web: Freight by Water Freight Transport Association Hermes House St Johns Road Tunbridge Wells TN4 9UZ Tel: Web: British Waterways 64 Clarendon Road Watford WD17 1DA Tel: Web: Freight on Rail The Impact Centre Hoxton Street London. N1 6NG Tel: Web: Commercial Best Operators Association P.O. Box London SE16 4WX Web: Association of Inland Navigation Authorities Fearns Wharf Neptune Street Leeds. LS9 8PB Web: Office of Rail Regulation One Kemble Street London WC2B 4AN Tel: Web: Network Rail 40 Melton Street London NW1 2EE Tel:

51 Freight Operating Companies Running Freight Trains at the Time of Writing (Spring 2011) Colas Rail Ltd Fairbairn close, Off Beaumont Road, Purely, Surrey CR2 2EJ Tel: / Fax: Web: Mr David Attoe, New Business Manager - Freight dave.attoe@colasrail.co.uk Direct Rail Services Ltd Kingmoor Depot, Etterby Road, Carlisle, Cumbria, CA3 9NZ Tel: Fax: Web: DB Schenker (UK) Lakeside Business Park, Carolina Way, Doncaster, South Yorkshire DN4 5PN Tel: info@dbschenker.co.uk Web: Freightliner Group Ltd 3rd Floor, The Podium, 1 Eversholt Street, London, NW1 2FL Tel: pressoffice@freightliner.co.uk Web: Ms Lindsay Durham, Head of Rail Strategy durhaml@freightliner.co.uk GB Railfreight Artillery Lane, London, E1 7HA Tel: Fax: gbrfinfo@firstgroup.com Web: John Smith, Managing Director gbrfinfo@gbrailfreight.com 51

52 Logistics Companies Running Freight Trains In Conjunction With Freight Train Operating Companies at Time of Writing (Spring 2011) Malcolm Group Burnbrae Drive, Linwood Industrial Estate, Paisley RenfrDB Schenkerhire, PA3 3BU Tel: Fax: Web: Mr Alan Thornton Mr John Holwell, Rail Development Manager Potter Group Ltd Green Lane, Melmerby, Ripon, North Yorkshire, HG4 5HP Tel: Fax: / Mr Derrick Potter, Chairman John G Russell Ltd Deanside Road, Hillington, Glasgow, G52 4XB Tel: Fax: sales@johngrussell.co.uk Website: Mr Paul Hines, Manager Transport Mr Graham Russell, Transport Director Eddie Stobart Ltd Brunthill Road, Kingstown Industrial Estate, Carlisle, Cumbria, CA3 0EH Tel: Fax: enquires@eddiestobart.co.uk Mr Richard Butcher, Commercial Director butcher@eddiestobart.co.uk 52

53 Appendix 3 Map of Port Locations and Main Inland Waterways 53

54 Port Locations and Main Inland Waterways Port ID 1. Aberdeen 2. Aidrishaig 3. Ayr 4. Barrow 5. Berwick upon Tweed 6. Bideford 7. Blyth 8. Boston 9. Bridgford 10. Brightlingsea 11. Bristol (Avonmouth and Portbury) 12. Brodick 13. Bromborough 14. Buckie 15. Burghead 16. Burton Upon Stather 17. Caernarfon 18. Cairnryan 19. Cardiff 20. Charlestown 21. Cowes 22. Dover 23. Dundee 24. Falmouth 25. Felixborough 26. Felixstowe 27. Fishguard 28. Fleetwood 29. Folkestone 30. Fowey 31. Fraserburgh 32. Garston 33. Girvan 34. Glasgow 35. Glensanda 36. Goole 37. Grangemouth 38. Great Yarmouth 39. Grimsby 40. Harwich 41. Hayle 42. Heysham 43. Holyhead 44. Hull 45. Immingham 46. Invergordon 47. Inverness 48. Ipswich 49. Killingholme 50. Kings Lynn 51. Kinlochbervie 52. Kirkwall 53. Kyle of Lochalsh 54. Leith 55. Littlehampton 56. Liverpool 57. Llanddulas 58. Lochmaddy 59. London 60. Lowestoft 61. Lymington 62. MacDuff 63. Mallaig 64. Manchester Ship Canal 65. Medway 66. Methil 67. Milford Haven 68. Mistley 69. Montrose 70. Moston 71. Neath 72. Newhaven 73. Newport 74. Oban 75. Padstow 76. Par 77. Penzance 78. Perth 79. Peterhead 80. Plymouth 81. Poole 82. Port Ellen 83. Port Penrhyn 84. Portland 85. Portsmouth 86. Ramsgate 87. Rosyth 88. Rye 89. Scrabster 90. Seaham 91. Sharpness 92. Shoreham 93. Silloth 94. Southampton 95. Stornoway 96. Stranraer 97. Sunderland 98. Sutton Bridge 99. Swansea 100. Tees 101. Teignmouth 102. Troon 103. Truro 104. Tyne 105. Ullapool 106. Weymouth 107. Whitby 108. Whitstable 109. Wick 110. Workington 111. Londonderry 112. Larne 113. Belfast 114. Dun Laoghaire 115. Dublin 116. Waterford 117. Rosslare 118. Cork 54

55 Appendix 4 Rail Freight Network Including Terminals (W8 Gauge and above) This network allows 9 6 container traffic although some routes may require low platform wagons (see operator). Please check with Network Rail for latest guage details 55

56 Appendix 5 National Rail Infrastructure This shows the National Rail Network which is gauge W6 and above. All conventional wagons can be used on this network and an 8 6 container can be transported on low platform wagons on certain routes (see operator). 56