Wednesday, November 5, 2014

Key UK Rail Freight Sites Taken Over

Private Cargo Outfits Pass Control of Infrastructure to Network Rail
Shipping News Feature

UK – Last week, Network Rail completed the acquisition of the lease on more than 100 of Britain’s key rail freight sites from three of the country’s biggest cargo operators. With Network Rail predicting that the industry will more than double over the next 30 years, this self-financing transaction of 105 leasehold sites from DB Schenker, Freightliner and GB Railfreight represents the first substantial change in the strategic management and development of Britain's rail freight estate in the two decades since privatisation.

The acquisition of the 105 sites, of which 87 were from DB Schenker, 15 from Freightliner and three from GB Railfreight, could lead to better use of the network, providing improved access to a wider variety of freight operators and adding capacity at critical points on the East Coast and West Coast main lines. The transaction is reported to be self-funding based on current rent rolls, projected rental growth and operational benefits.

Network Rail has of course just had it massive multi billion pound debt taken on by the British government, a move which met with very mixed emotions at the time, with support from such as the Rail Freight Group (RFG) and strident criticism from rail unions which demanded full renationalisation.

According to Network Rail, by consolidating ownership and management of such a large part of Britain's rail freight infrastructure, it would potentially allow for better long-term strategic management and development, making more sites available to more operators, increasing competition and driving growth in a sector which directly contributes almost £900 million to the UK’s economy each year and supports an economic output of £6 billion. Paul McMahon, Network Rail Freight Director, said:

“This represents one of the biggest changes to the rail freight sector in this country in decades and is a bold strategic move by the industry. It will help drive continued rail freight growth, give customers greater transparency and equality in property arrangements, allow Network Rail to make more efficient use of the network and release capital for freight operating companies to invest in their operations.

“Consolidating the ownership and management of our key freight sites puts us in the best possible position to promote a more efficient and effective use of the rail network by freight traffic in coming years. It will also enable redundant land to be redeveloped and provide a valuable additional source of revenue for Network Rail as it delivers a bigger, better value railway for Britain.”

While the majority of the acquired sites are in regular freight or other rail use, a small proportion are not and the siding infrastructure within such sites, to the extent that it still exists, is either inoperable or disused and not currently supporting or capable of supporting rail traffic. Network Rail has already said that it will not be maintaining or operating at sites where the siding infrastructure has been identified as inoperable or disused, with the hope that any subsequent development for productive use would be instigated either by new rail freight users taking tenure of a site or other new railway operational investment schemes.