Freight Strategy

2.1 The National Context

2.1.1    Background to Freight Activity in the UK

Government statistics indicate that the UK freight and logistics industry accounts for some 6% of Gross Domestic Product (GDP) and employs about 1.75 million people. However, it may be considered that the freight sector has even greater significance as international trade in goods accounts for a further 30% of GDP. All this freight passes through UK ports, airports, or the Channel Tunnel.

In 2004, the UK ports and Channel Tunnel handled over 588 million tonnes of freight. 95% of Britain’s international trade passes through ports and the UK port industry handles more freight than the ports of any other country in the European Union.

In understanding the freight industry, it is helpful to outline some definitions and measurements which describe freight activity:

Freight Transport is the carriage of goods between an origin and destination.

Logistics is the broader concept of freight activity involving the total supply chain for individual organisations or products. It involves the production process including purchase, manufacturing, storage and interchange distribution, as well as the actual transport of goods.

Domestic Freight is defined as where the original and final destination is within the UK.

International Freight is where the origin or destination of goods is outside the UK.

Freight Tonnes Lifted is the traditional measure of freight transport activity. Tonnes moved can also be measured in tonne kilometres (tkm). This is the weight of freight lifted multiplied by the distance carried and provides an easier comparison between market shares across different modes of transport and is more effective in identifying modal activity and impact.

Bulk Freight is the term used for large volumes of the same or similar cargos between specialised terminals and usually employing specialised equipment. Examples are large flows of raw materials for industrial production such as oil, coal for power generation and aggregate material. It might also apply to significant flows of finished products such as cars. Non-bulk freight is where goods are carried in smaller units generally single lorry units or containers. These are typically higher value commodities such as finished products or retail goods.

2.1.2    Total Freight Activity

Total freight tonnes lifted within the UK in 2004 divided into the various transport modes is summarised in Table 2.1.  This information is from Department for Transport statistics.

2.1.3    Road and Rail UK Freight

Britain is generally regarded as having a highly efficient freight transport sector. This is dominated, in terms of volumes carried, employment and value by a highly competitive road haulage industry. Road freight is price sensitive and responsive to customer needs, and structured around operations by industries and retailers. Haulage specialists offer total logistics packages and warehousing for customers, with smaller, often single owner drivers, filling gaps in the freight transport market. Road haulage operates in an open free access market competing on price and quality. It is also open to competition from within the European Union, with growing volumes of international road freight carried and operated by vehicles based outside the UK. These vehicles may also compete for domestic freight and UK export traffic.

Since the 1950's through to the mid 1990's, the market share of rail freight movements compared to road had been in severe decline. However, since the mid 1990's, there has been a change within the UK rail freight business as a result of the privatisation and liberalisation of rail freight operations on the British railways network. The introduction of private ownership and the opening of access to other operators has allowed competition within the freight rail business to develop and improve the attractiveness of the rail freight product to the freight user. The rail freight industry has developed responsiveness and flexibility to meet more customers’ needs whilst having the capacity to invest in new equipment and innovation for the market.

The size of the UK land freight market (rail and HGV) grew by 8 per cent over the ten years to 2004 to nearly 2,000 million tonnes lifted. Overall, rail has a 5 per cent share of this freight market in terms of freight tonnes lifted and this total volume has remained relatively constant over this time. However, when measured in terms of tonne kilometres (weight of freight multiplied by the distance carried), compared to road, the rail share increases to 12 per cent, an increase of 2 per cent in the last ten years. This indicates the trend for increased distances for rail freight movements and a decline in the distance of road hauls. Within these totals for freight movement, there are considerable variations reflecting changes in the freight market for different commodities.  Traditional strengths for rail haulage are bulk raw materials for industrial production and locally produced coal from coal mines to power stations. Small volumes of finished goods in wagon or lorry load sized consignments are only economic by rail in a few circumstances.

In the ten years since privatisation, rail freight volumes have started to grow, with an increase of 60% in rail freight traffic.  In addition to privatisation and liberalisation issues mentioned earlier, a number of other factors have helped to change fortunes for the rail freight business. These have included:

• Increased flows of inter-modal traffic from UK ports suited to rail movement
• Imported coal moving longer distances to power stations
• Increased costs of road haulage
• Greater costs and delays resulting from traffic congestion
• Central and local government and planning process support for sustainable transport
• A growing and buoyant UK economy.

On the other hand, other elements have worked against the competitive position of rail freight within the UK, namely:

• The decline of the UK coal industry
• Reductions in capacity and demand of UK heavy industry for bulk raw materials
• Limitations on rail capacity over some core UK freight routes
• Loading gauge constraints on the rail network
• Cheaper and more competitive road haulage resulting from the enlargement of the EU.

The movement of coal by rail has continued to grow, but reflecting the transport of imported coal for power generation. Construction material by rail has also increased although there has been a reduction in the movement of some material such as petroleum products. However, a key commodity is the transport of containers or intermodal traffic, principally import movements from the ports but also internal domestic flows. Over the next eight or nine years maritime container traffic, domestic intermodal and channel tunnel flows conveyed by rail are forecast to increase (over 2004/5 totals) at least by 82%, 177% and 200% respectively (source: Network Rail Freight Route Utilisation Strategy – Draft for Consultation 2006). 

2.1.4   Waterborne transport within the UK.

Efficient shipping forms a vital part of the UK economy and an important element of freight movement.  95% of Britain’s external trade (by weight) and 7% of domestic freight moves by water. This represents 25% in terms of tonne kilometres. The shipping industry currently employs some 200,000 people and adds £6.2 billion to the UK economy (Sea and Water 2005).  

Coastal shipping is significant for the distribution of bulk freight especially between major estuaries and for traffic to Northern Ireland. It is important for the distribution of petroleum products between refineries and port based regional storage facilities, the movement of aggregates and also coastal distribution of deep sea containers from major container ports to other parts of Britain.

2.1.5    Air Freight

Air freight within the UK is very small, amounting to 2.4 million tonnes, as calculated by the CAA. This represents around only 0.1% of the total freight tonnes lifted.  The market has grown by an average of 10% per annum. Principal growth has been in the European sector, which makes up two thirds of the market. Key markets are postal and higher value parcels and sundry traffic. Recent data on air freight is difficult to gather, so Tables 2.3 and 2.4 give the figures for 1998.

2.1.6   National Policy Context

'The Future of Transport' White Paper

In ‘The Future of Transport’ White Paper, the Government outlines its key aims for the freight industry.  These are:

“to facilitate the continuing development of a competitive and efficient freight sector, while reducing the impact that moving freight has on congestion and the environment.”

The White Paper outlined four key elements within the strategy for freight which it aims to concentrate on.  The three key elements most relevant for Cornwall are outlined below:

• Access to infrastructure –  A group of key rail routes, including Cornwall, will be identified which freight will utilise; whilst paying for more assured rights of access.
• Enforcement –  Introduce a graduated fixed-penalty scheme for road traffic infringements, and a deposit scheme to ensure offending overseas hauliers do not escape penalties as often.
• Look to disseminate best practice commercially.

In addition to this document, there are a number of national policy documents which have a bearing on Freight:

Sustainable Distribution: a strategy (March 1999)

This document fulfils the Government's commitment in the White Paper "A New Deal for Transport" to set out a comprehensive, integrated strategy for the sustainable distribution of goods and services in the UK.  This paper encompasses supply chain management or "logistics" as well as all modes of transport. The aim of a sustainable distribution strategy is to ensure that the future development of the distribution industry does not compromise the future needs of our society, economy and environment.

The Government's objectives are to:

• improve the efficiency of distribution;
• minimise congestion;
• make better use of transport infrastructure;
• minimise pollution and reduce greenhouse gas emissions;
• manage development pressures on the landscape - both natural and man-made;
• reduce noise and disturbance from freight movements; and
• reduce the number of accidents, injuries and cases of ill-health associated with freight movement.

The UK Ports Review

With respect to seaborne freight traffic, the existing policies strongly support the maintenance and protection of existing ports.  We currently await the outcome of the UK Ports Review, which is currently being progressed by the Government.

The Aviation White Paper 2003

This document provides a national context in which to influence the development of Airports, with increasing emphasis on the role that  regional airports can play in meeting the national demand for Air Travel. However, as highlighted earlier, air freight is an extremely small element of the overall market.

• Back to Top

• Previous
• Next