Port charges making decarbonisation ‘uneconomical’, says rail freight boss
The boss of one of the UK’s biggest rail freight operators has bemoaned high loading charges levied by ports as “uneconomic” for the sector, amid rising tension between the groups over the last year.
Speaking to City PM John Smith, chief executive of GB Railfreight, said sky-high fees were “making it uneconomic to go on rail” at a time when the freight industry is looking to decarbonise away from fossil fuel guzzling lorries.
Container ports charge fees to move deep sea market goods from ship to train, but rail freight groups face far higher costs, as high as £50 per delivery, than their HGV counterparts,
HGVs, which provide the bulk of UK deliveries to supermarkets, retailers and manufacturers, are charged less as the vehicle can be parked near-adjacent to the unloading area.
Smith told City PM that three major ports, Felixstowe, London Gateway and Southampton, hold a monopoly on the deep sea container market, making it difficult for operators to challenge the level of charge.
The rail chief noted there had been “heated debate” with ports over whether they are “encouraging decarbonisation of the supply chain or not”.
Disputes have spiked “very much” over the last year, he added, amid inflation, rising energy costs and a worsening macroeconomic backdrop.
“So we’re saying to the ports, Well, come on, you need to consider this relationship. If you truly want to grow volume on rail… get lorries off the local roads or A14 or whatever it might be, then you need to consider your role in it.
“We’re on tight margins right from the start, but we can’t go to Great Yarmouth and pick a box up, the ships don’t go there. We go to Felixstowe, London Gateway or Southampton.”
GB Railfreight transport a range of goods, including commodities, construction materials, biomass for electricity generation and aluminium.
“We counter the economics by the fact that we can take 40 to 50 boxes per train, and we have one driver. So there’s some things in our favour,” Smith explained.
“But it’s not easy when you’ve got what are effectively geographic monopolies that deal with the deep sea container, which is Felixstowe, the London Gateway in the Southamptons, which are the main ports.”
Felixstowe, which currently has the highest distribution of goods via train in the UK, transports around a third on the tracks.
But Southampton has seen a decline to almost 20 per cent from 35 per cent, according to industry figures, despite the port introducing rebates on some charges, which Smith admitted had given rail freight some more “skin in the game”.
Mark Simmonds, director of policy and external affairs at the British Ports Association, said: “UK ports are highly competitive and, like most other sectors, have been experiencing spiralling energy and wage costs in recent years.
“Container ports have in the last few years expanded rail capacity as well as invested hundreds of millions of pounds in wider infrastructure upgrades such as new quays and deeper channels. Several ports offer discounts to traders to move freight by rail to reduce environmental impact.”
DP World, which operate Southampton and London Gateway, declined to comment. Felixstowe’s operator Hutchison did not respond to a City PM request for comment.