BR 'to lose 25 per cent of its freight business'

BRITISH RAIL will lose a quarter of its freight business in the two years between 1992 and 1994 because of the recession and the Government's onerous profit targets, the Commons transport committee was told yesterday.

Leslie Smith, managing director of Trainload Freight, which carries bulk products like building materials and coal, told the select committee which is preparing a report on rail privatisation that the railway carried 121 million tons of bulk freight last year. He said this would fall to 109 million tons this year and 90 million next year.

He accepted that some losses were being caused by the policy of imposing sharp increases, often of 100 per cent, on some customers in order to deter them from continuing with unprofitable contracts: 'My concern is to run the business profitably so that it can pay for itself.'

He claimed only 2.5 million tons a year - equivalent to 100,000 extra lorry journeys - were lost because of this policy.

He accepted that at some point if there were too many losses from the network 'it will be unsustainable', implying the business would have to close down.

Trainload Freight made a profit of pounds 67.5m last year and expects to make pounds 50m this year. However, Mr Smith said it would not meet the government's objective of earning an 8 per cent return on its investment by 1994-95 because of the losses of freight carried.

Ian Brown, the managing director of BR's other freight business, Railfreight Distribution, which handles all other products, said that its business would fall from 7.7 million tons last year to 6.6 million tons this year, a drop of 13 per cent.

Losses would be reduced from pounds 120m to pounds 90m.