It is thought that rail freight volumes will need to treble to keep up with rising consumer demand. With the government’s target of reaching net zero by 2050 also on the horizon, upgrading the nation’s railways could be the key to more sustainable and greener transportation of goods across the UK.
The importance of this has recently been highlighted through several large consultations including the government-led Future of Freight Plan, which sets out a long-term vision for the UK’s freight sector, and the call for evidence from the Great British Railways Transition Team, which closed in September 2022 and seeks input into how rail freight can be grown in order to reduce road congestion.
Increasing the amount of goods transported around the UK by rail freight would impact everything. With strong cross-country connections, rail allows goods to travel up and down the UK at pace, minimising the use of vans and lorries and reducing carbon emissions by 76%. As it currently stands, the UK’s rail freight infrastructure leans in favour of the bigger-box industrial and logistics (I&L) players. However, to truly utilise the reach of the nation’s railways, collaboration will be needed between I&L property companies of all sizes, rail and transport operators as well as local authorities and the government to consider new ways to move goods efficiently.
According to recent research conducted by Savills for Potter Space, the small to mid-box I&L sector equates to 95 percent of all logistics property in England. Research also shows that rail freight only makes up 9 percent of the weight of transporting goods around the country, whereas transportation via road makes up 79 percent. Despite sub-100k sq. ft. units accounting for over half of the floor space in the I&L property sector, tapping into rail freight remains one of the biggest challenges facing property developers and businesses.
Although I&L developers within the sub-100k sq. ft. property sector are choosing to grow in locations that enable their customers to better utilise transport links and networks to carry out their work more sustainably, without the proper infrastructure in place, reaching net zero by 2050 feels like it could be an unlikely reality. With restrictions such as bridge heights that can only be accessed by trains with certain gauge sizes and a lack of space for small to mid-box operators in rail terminals, encouraging businesses to use rail to transport goods can be challenging.
Currently, there is a concentration of big box providers around the largest freight terminals, with funding schemes having been set up to encourage this growth. However, there is also an opportunity to bring other freight terminals forward which may be more suited to the small to mid-box market, driving the industry further towards its net zero targets. To make this a success, a detailed funding strategy will be needed if it is to truly involve small to mid-box providers and overcome predicted challenges.
One such challenge could come from the conflicting desires of local councils and their residents. Where housing estates have been built in close proximity to major freight terminals, residents are often vocal and resistant to these terminals being built or redeveloped, as they can be noisy and disruptive. With one of the primary focuses of local authorities being meeting the needs and wants of their residents, it could be that those I&L sites with potential for rail connections remain undeveloped, presenting a missed opportunity for further strengthening the UK’s supply chain infrastructure.
To overcome challenges there needs to be a coordinated and properly subsidised government approach in place for small to mid-box operators to truly reap the benefits of rail freight transportation. Upgrading and expanding existing terminals should be considered to allow larger freight trains to travel more freely across the country, enabling more businesses to tap into the potential of rail freight. However, whilst there is a willingness within the industry to push for green incentives and for collaboration to lower carbon usage, it may be some years before the rail infrastructure is in place to fully support this goal, unless a concerted effort is made sooner rather than later.
By looking at the opportunities presented to combine rail, road and waterways to transport freight, it is clear that the best way to achieve net zero will be to see each of these elements as part of a whole solution, and to ensure cross-collaboration between all industries. Improved rail infrastructure across the country would make the transportation of goods by train an even more viable option for logistics companies and businesses, whilst reducing the number of vans and lorries on the roads, lowering carbon emissions.
Whilst the Future of Freight Plan and continued commitment to all current infrastructure projects demonstrates the government’s ambition to keep investing in infrastructure as well as their recognition of its importance for economic growth, it is vital that all parties of the I&L industry are heard when making policy. By utilising the flexibility and reach of the small to mid-box sector in collaboration with rail, new economic possibilities can be unlocked in a sustainable way.
