Too many in the property industry have yet to appreciate the full impact the Channel Tunnel will have on the distribution industry, warns John MacRae.
Current levels of Channel Tunnel-related development activity typifies the property industry’s relative indifference to this muchvaunted rail link to the continent. Work on eight of the nine designated Railfreight Distribution Eurofreight terminals is either complete or will be by next March; but development of associated freight villages is puffing along more slowly.
British Rail was required as part its agreement with Eurotunnel to establish a network of intermodal Eurofreight terminals known as G9 – Group of Nine – for traffic transferring from road to rail.
A declining market, the recession, negative images of BR’s freight operation and the uncertainty and lack of confidence caused by rail privatisation, have created a climate of caution about the effect of Eurofreight on rail-linked warehouse and distribution space. AMEC’s unhappy pioneering experience at two of the terminals – Mossend and Port Wakefield – has not helped.
The term freight village is used by Railfreight Distribution – the BR Eurofreight subsidiary – to refer to an intermodal terminal with facilities for storage, warehousing, break bulk and associated manufacturing and distribution.
Originally, AMEC wanted to build the terminals at Mossend and Wakefield on the back of large scale B2/B8 developments. But, says John Early, chairman of the firm’s housing and property sector, “our original proposals assumed that people would pay a premium to be located near a rail-freight distribution terminal. However, with recession we haven’t been able to generate the land premium”. AMEC is pursuing a development agreement for commercial space at Mossend. Port Wakefield, he adds, has been “more difficult”.
BR’s critics regale anyone who cares to listen with stories of lost freight trains, the demise of Speedlink in 1991, and place heavy irony on the “We’re getting there” slogan. So, is it any wonder that some in the property world appear not have woken up to the impact on the UK distribution market of a 750m-long freight train leaving Willesden, London, every night for, say Milan, and arriving 21 hours later? Up to 70 trains a day (35 each way) will join the UK with key markets in Europe when the link opens next summer.
In October, Jean le Vot, managing director of Allied Continental Intermodal, told the Freightconnection 93 conference at Trafford Park, Manchester, that, for a newly landed Frenchman, the national sport seemed to be making jokes about BR.
“Having visited dozens of terminals all over Europe, I can tell you that the UK terminals have nothing to envy about their continental counterparts,” he said. He warned UK hauliers to react quickly to the opportunities of road/rail combined transport through the tunnel, otherwise “continental operators will come in and take over”. The firm has a UK office in Reading, which will become a main hub for Eurofreight from the North, Wales and the South West on its way to Tonbridge and the tunnel. Stratford will play a similar role in bypassing London and will eventually be an entry point to the Channel Tunnel rail link. ACI is jointly owned by Intercontainer (the intermodal marketing arm of European railways), BR and SCNF. Its business is to provide intermodal wagons and to act as a shipping agent for forwarders and other third-party contractors.
It already has a fleet of 720 wagons and this will grow to 1,200 by the end of 1994. Each swap-body or container will be monitored throughout its transit by a satellite connected to a computer-based management system.
A second joint venture is Combined Transport, whose shareholding is owned by 28 UK transport firms, the Road Haulage Association, BR and two leading continental combined-transport operators, Kombiverkehr and Novatrans.
At Freightconnection 93 the company unveiled details of intermodal train services from the UK to 15 terminals in Italy, France, Germany, Switzerland, Spain and Austria, with later plans to branch out to Eastern Europe. It hopes to handle 65,000 unit loads pa (swap-bodies and containers) in the first few years, rising to 400,000 pa.
Railfreight Distribution, which will remain in the public sector until Channel Tunnel freight services are up and running, received Government approval to invest more than £450m in new infrastructure, electric locomotives, wagons, terminals and information technology. The tunnel freight marketing strategy intends that railways should act as wholesalers by selling track and traction to joint ventures, such as ACI and CTL, which then aggregate capacity and retail space to sell to the market, for instance, forwarders. Only major users will purchase directly from the railways.
The scale of investment in rail freight certainly indicates confidence that rail can wrest market share from road transport, particularly as Government and EC policies look set to encourage more freight on to the railways.
Rail’s share of the UK freight market is about 7%, having fallen from 50% in 1952. Cross-Channel road transport is projected to increase by 40% between 1984 and 2000, and rail is soon expected to capture 9% of this traffic.
David Baker, of Baker Rose, forecasts that sea routes are likely to dominate the less time-sensitive cargoes, but railports and the tunnel should be able to provide the service at the costs required for just-in-time services, such as perishables, electronics, cars and components. Rail could show 5% to 10% cost savings over road/sea-only shipments for volume and long-haul traffic, he says.
However, Railtrack has not yet announced its charging structure, and many distributors are waiting to see tunnel rail freight in action next year. But Barry Allen, of DTZ Debenham Thorpe, joint agent for Hams Hall, Birmingham, is not alone in saying that major players are now looking carefully at a rail freight option. Some companies are already committed to using rail. Harris Distribution has a rail-connected, purpose-built, 120,000-sq ft humidity controlled centre at Trafford Park Euroterminal. Also at Trafford Park, Davies Turner has commissioned a new northern depot and regional headquarters which will be ready in February.
