The question of rail’s role in freight fits neatly alongside issues of increasing consumer logistics, decreasing passenger numbers post-COVID, and the pressing need to reach net zero by 2050.
Consumer demand for fast-delivered goods has never been higher thanks to a next-day-delivery culture which, already well in the ascendency in the last decade, has exploded since the pandemic.
At the same time (and perhaps paradoxically) there has also been an explosion in consumer consciousness about the climate crisis. Over half of consumers are willing to receive their parcel a few days later to reduce its environmental impact[1], and a similar number want the delivery of their domestic or cross-border parcel to be carbon neutral. Moreover 20% of online shoppers are willing to pay more for the cost of reducing their latest delivery’s carbon footprint, event amidst a severe cost-of-living crisis.
Eco-friendly modes like e-cargo bikes have become a familiar sight on the streets of UK towns and cities but prior to these visible signs of green last mile journeys comes the sticky and difficult to decarbonise issue of road freight. Road freight contributes to 10%[2] of the UK’s CO2 emissions and with populations and purchases only set to grow how can we bring down the pollution from our nation’s addiction to online shopping?
Despite a challenging contemporary landscape, rail could hold the answer but to achieve this cross-sector collaboration, innovative thinking and daring solutions will be needed.
The courier, express and parcel (CEP) sector in the UK is very mature. Over the years, strong competition has driven high consumer service expectations and low costs have facilitated heavy investment in customer focused and flexible operating processes and infrastructure.
The CEP market has grown at a compound annual growth rate (CAGR) of over 10% since 2014, doubling in the number of deliveries made between 2014 and 2021. The highest year-on-year growth was between 2019 and 2020, when the market grew by over 35% due to the impacts of COVID-19.
Steer forecasts the CEP market to continue growing at a CAGR of over 7% up to 2030. Without intervention, this additional volume is set to be distributed via the strategic road network (excluding Royal Mail which already uses rail within its linehaul network).
The road haulage industry faces its own challenges including increased operating costs and a shortage of HGV drivers. These pressing issues are compounded by the long-term difficulties of electrifying long-haul trunk vehicles. Zero emission equivalents (be they electric or hydrogen-powered) to internal combustion engine road freight do not match up in terms of performance or cost. The industry will likewise face difficulties linked to charging infrastructure and a ban on new diesel freight vehicles to be incrementally introduced from 2030 – 2040.
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[1]
[2] Department for Transport statistics, Table ENV0202, Carbon dioxide emissions by transport mode, 1990-2020. Energy and environment: data tables (ENV) - GOV.UK (www.gov.uk)
For these reasons as well as the aforementioned issues of the climate crisis, consumer preferences, post-COVID logistics and passenger changes, now is the time to look seriously at a cross-industry strategy to focus on increasing modal shift to rail freight as an urgent priority.
Figure 1: Historical and forecast future growth in the number of parcels per annum delivered in the UK (2014-2030)[3]
To achieve this logistics and supply chain companies must be open to collaborating with their competitors and with the tech sector . These collaborations could produce new models to incentivize the rail freight sector to develop novel, innovative solutions to new, fast moving consumer goods markets, which focus on increasing the average speed of rail freight, reducing cost, and enabling future users of rail freight to achieve ESG goals, reduce their supply chain emissions and achieve sustainability.
One example of an innovative collaboration model would be to convert station space for parcel traffic accompanied by a well-designed rapid loading solution for use off-peak. Aggregating demand across multiple logistics companies, to reduce the commercial barriers and risk from procuring rail solutions, could unlock new traffic to rail from SMEs which would otherwise find it difficult to procure rail freight as a single entity.
There are new, sustainable rail freight business models emerging on the continent which offer faster loading/unloading than traditional intermodal products, offering faster average speeds, which in turn enables time critical markets to access rail freight. However, despite their promise the speed at which this is happening is not keeping up with the increasing demand or urgency to meet net zero targets.
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The rail industry is complex. The logistics industry is complex. The tech industry is complex. The three traditionally operate in silos, and all speak very different languages. Currently, it is extremely difficult for a new to rail customer to understand how to procure rail freight solutions, let alone understand whether it is right for them. It is also difficult for innovators to have the full picture. The provision of open data is emerging, but if the industry could become more accessible and collaborated with the distribution and manufacturing industries more closely, the rate of change could really accelerate.
We’ve seen how simpler concepts such as private hire apps and ride sharing have taken the country by storm. The concept is simple, it’s accessible and technology solutions have therefore evolved. We need to focus on making the rail industry more accessible to help drive forward this innovation. Encouraging sharing of data could help others to develop solutions.
We have a real opportunity for change, but we’ll need to work together to make the industry more accessible so that not only more freight can use it now, but that planning, policy and funding decisions are made that future proof and enhance its use rather than hinder.
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