Prospects for the privatised rail freight industry looked promising in its early years. The period saw significant investment by the two main players, English Welsh and Scottish Railway (EWS) and Freightliner, while New Labour backed an explicit commitment with extra funding for rail freight grants.
Together, these factors produced a big increase in freight tonne-kilometres.
But, more recently, pressures from inside and outside the rail industry have made progress more difficult. Competition from road haulage has become sharper, with the government abandoning the fuel duty escalator in 2000 and then permitting 44-tonne lorries in 2001. The government also took its time to sort out the asylum seeker problem, which devastated Channel Tunnel rail freight traffic.
The lack of rail-served regional distribution centres (RDCs) around the M25 is a major strategic weakness that must be addressed if the volume of food, drink and consumer goods moved to and from London by rail is to increase. It had been hoped that Argent's London International Freight Exchange (LIFE) would be the first of several such projects, so its rejection following a public inquiry (Planning, 30 August 2002, p6) was a major blow.
The Strategic Rail Authority's (SRA) financial difficulties have led to a temporary curtailment of new rail freight grants and delayed proposed investment in freight routes. The network also faces a crisis over the cost of maintenance and enhancement. At present the industry's trade body, the Rail Freight Group, is locked in battle with the SRA over the perceived impacts of its cost-cutting plans on the freight network.
The Royal Mail's decision to end its contract with EWS and move to a road and air-based strategy was another blow to the government's "sustainable distribution" strategy. The ten-year plan target of an 80 per cent growth in rail freight looks increasingly beyond reach. Rail freight activity declined significantly last year. The SRA assumes 30 per cent growth by 2010 in its recent capacity utilisation policy.
Overall, it could be concluded that the failure to grow rail freight is further evidence of the failure of the botched railway privatisation. But there is some counter-evidence.
The rail freight companies are not franchises and cannot hand the keys back to the SRA. Although EWS is still the biggest player, several other operators have appeared. This is evidence of a maturing industry with the competition that has been so effective in driving down road haulage costs and improving customer service.
From the planning perspective, a number of additional rail freight terminals have been secured or are in the pipeline. These include the extension of the inter-modal facility at Hams Hall in Warwickshire, now managed by Associated British Ports - a positive sign in view of the projected growth in maritime container traffic. Nearby, a rail terminal opened last March at Castle Bromwich for the export of Jaguar and Land Rover vehicles.
In another part of the Midlands logistics "golden triangle", the owners of the Daventry International Rail Freight Terminal (DIRFT) have submitted an outline planning application for a large rail-served extension of 180,741 sq m of "high bay" warehousing. The secretary of state recently decided not to call this in and approval is awaited once details of the parallel legal agreements are resolved.
DIRFT is widely regarded as a model to be replicated elsewhere, with its combination of an open-access inter-modal terminal and rail-served warehousing. As the logistics industry continues to seek economies through bigger sheds grouped in RDCs, the potential demand for the bulk haulage that is so essential for rail is greatly increased.
Maritime container traffic also has great potential for rail, with projected annual growth of four to five per cent. Despite the SRA's generally downbeat view of network enhancements, rail is a key element of all the container port expansion projects currently proposed in southern England, including Dibden Bay, Thames Haven and Felixstowe's Vanguard Quay.
One of the problems for rail freight is the government's approach to handling such major projects. Having set out what it sees as a supportive policy framework, it then lets the market and the planning process sort out which schemes go ahead. This runs the risk that none will win approval, given the general public hostility to major projects, or at least pushes up the costs through delay. The result is great uncertainty for the SRA in prioritising route development, undermining the confidence of rail operators and customers.
The SRA is at least promoting work to allow higher containers on the key route from London to Felixstowe. Work has also commenced to increase train capacity on the Cherwell Valley route between Leamington Spa and Banbury - an important bottleneck on the container route to Southampton - and progress has been made in developing the economic case for gauge enhancement on this route.
Push factors in the road haulage industry are forcing companies to look to rail. There is a broad consensus that congestion will increase, even with road pricing and new roads, so extra time and cost has to be built into delivery schedules. The EU working time directive will further restrict truck drivers' hours and add to the developing driver shortage. So it follows that the opportunities are there if the rail freight industry can respond.
But it is also clear that there will be a continuing need for the planning system to work with the industry and its customers to identify and bring forward accessible locations for terminals, RDCs and other facilities.
The SRA has been working behind the scenes to learn the lessons of the LIFE case and is expected to produce a statement on interchange policy soon.
Regional spatial strategies and regional transport strategies will be significant in drawing the threads of freight distribution policy together, ensuring that a clear set of goals and a modal shift to rail is developed for each region. The SRA is developing its planning capability through its commitment to regional planning assessments. The resources and mechanisms for closer liaison between the industry and regional planners are in place.
The short-term issue is whether or not the government will support rail freight in the 2004 comprehensive spending review. Beyond that, there are bigger questions about the potential of the new Channel Tunnel Rail Link to carry freight around London and the Central Railway proposal for a new strategic freight railway from the north of England to the tunnel.
If the government fails to respond positively, then a part of the privatised railway that is beginning to look like a maturing private sector service provider is going to be strangled in its infancy, with obvious implications for road traffic growth and Labour's pro-business reputation.