Tunnel of gloom for rail freight: Hopes for carrying goods by train through the Channel tunnel look like being dashed. Christian Wolmar reports

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The Independent Online
THE opening of the Channel tunnel ought to be the most exciting development of the century for the rail freight industry. But it is set to be a damp squib that may plunge Eurotunnel, the operator, into further financial difficulties and push up fares for passengers using the tunnel.

There is now a severe risk that a combination of lack of planning and the uncertainty over British Rail's privatisation will mean there will be only a trickle of rail freight using the tunnel, compared with expectations of 6.5 million tonnes per year by 1995.

While there is little concern about the shuttles for road freight between Folkestone and Calais, which will be provided by Eurotunnel, the future of the freight trains is still uncertain. Eurotunnel has sold 200 train paths a day to the railways in each direction and BR has said that initially it wants to use 27 for freight, rising to a maximum of 35.

Eurotunnel questions this apparently arbitrary limit. 'What if they discover there is enough in the market to run 50 trains rather than 35?' a spokesman asked. 'It seems an arbitrary restriction for an organisation that is supposed to be acting commercially.'

The first problem is over price. Two private-public joint ventures have been set up to take advantage of these train paths: Combined Transport and Anglo-Continental International, both of which are partly owned by BR. BR will sell them whole trains, which will go from nine terminals around the country - London (2), Glasgow, Cleveland, Cardiff, Birmingham, Manchester, Liverpool, and Wakefield - to various points on the Continent, as far afield as Valencia, Rome, Vienna and Hamburg.

The two companies will then have to find customers for the space and will haul freight from customers to one of the nine railheads. With less than a year to go to the opening of the tunnel, the uncertainties over freight mean they have yet to announce publicly the names of any customers that have signed up.

This week the two companies were given BR's suggested price list. It made such depressing reading that there are now real fears that the whole scheme is unworkable. Alastair Dick, a consultant advising Eurotunnel, said the prices on offer from Railfreight Distribution, the heavily loss-making BR subsidiary that will haul the trains, were so high that it would be cheaper for hauliers to take their loads to a railhead in Calais than to use Manchester or Glasgow. Prices would need to be reduced by at least a third to make them competitive with road haulage.

There is, so far, no definitive schedule for the trains, but a preliminary one issued last year suggests that some of the provincial 'freight villages' will have only one train a day - an 11pm from Glasgow to Paris and Brussels, for example, and a 4pm from Cardiff to the same two destinations. Mr Dick argues that this kind of schedule is far too unadventurous: 'If you have only one train per day, it is bound to be expensive because all the costs of the freight village have to be met by that one train.'

Railfreight Distribution has decided that the future lies in intermodal containers, boxes that can be transported by road or rail. Confidence in the use of intermodal transport on rail was severely dented by the collapse of Charterail, which was partly owned by BR. Its containers were designed to be easily loaded on to rail wagons and it developed a successful service, but the company collapsed last month because BR's track charges were too high.

It seems that freight through the tunnel may encounter the same problem. Railfreight Distribution, which lost pounds 119m on a turnover of pounds 175m last year, is under orders not to lose money on its international services, even during the early stages.

Freight hauliers are also worried about the impact of rail privatisation. Next month, the Government is supposed to be issuing its plans for how BR should charge for track use after the sell- off begins. This is scheduled for April 1994 but likely to be at least a year later.

Colin Beaumont, the divisional manager of the British International Freight Association, said: 'Until the basis for charging for the track is known, how can my members begin to make any sensible decisions about investment?'

Mr Beaumont had hoped that by now there would be a clear schedule and tariff to enable his members to begin investing in the equipment needed to use rail. 'I don't see how many people will be in a position to use the tunnel when it opens,' he said. 'The longer this uncertainty goes on, the less likely it is that companies will invest in the railways in the short term.'

Finally, critics argue that BR and the Department of Transport have shot themselves in the foot by failing to ensure that most freight can actually go by rail. Currently, intermodal containers represent about 25-30 per cent of the freight market between Britain and Europe, with the rest going by truck. BR hopes to capture about half the container market but much freight is likely to stay on the roads because of the cheapness of road haulage rates.

The trains will be able to take containers and specialised swap- bodies, as BR has upgraded the freight routes between the tunnel and the nine terminals to be able to take slightly taller loads. It says this is sufficient for 90 per cent of containers, but it will not be big enough to take lorry trailers, the vast bulk of the market.

BR claims it would cost pounds 3bn- pounds 4bn to upgrade the lines to B+ standard, the gauge required for lorry trailers. That figure is disputed by most freight experts, who say the cost is likely to be only a tenth of that.

Alastair Dick said: 'BR is limiting itself to getting a substantial proportion of a small market, instead of going for the whole market.'

More potential may be lost by a similarly unimaginative policy on the Channel tunnel rail link with London. The report by Union Railways, another BR subsidiary, on the route of the link is due to go to the Government before Christmas. One of the Government's requirements was that the link should carry freight, which would mean building it to the B+ gauge. But the route chosen - through east London - cannot, according to many experts, take freight.

These problems mean that Eurotunnel may well receive less freight income than expected.

More worryingly, if little freight is using the BR infrastructure - and a memo leaked to the Independent last month suggests that the Government will allow BR to take freight only if it can make a profit out of it - then more of the costs will fall on passengers and consequently fares will rise, deterring people from travelling through the tunnel and damaging Eurotunnel's prospects of making a profit.

Since Eurotunnel's shareholders are already having to wait until the next century for any dividends, it is a prospect they can probably bear with equanimity, but the waste of the potential of the pounds 9bn tunnel for reducing congestion on the roads is a question with much wider political and economic ramifications.

(Photograph omitted)

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