Freight & Logistics Strategy For The North Of England
Chris Rowland, Managing Director of MDS Transmodal, presented the draft conclusions from the Transport for the North (TfN) Freight & Logistics Strategy at the Freight in the City Conference in Manchester on 3 March 2016. He explained how the draft strategy, which sets out a series of public sector interventions that incentivise investment by the private sector freight and logistics industry, could secure public benefits of about £51bn up to 2043.
The strategy, which was produced in partnership with Mott Macdonald between September 2015 and March 2016, is the first ever pan-regional freight and logistics strategy to be produced in the UK and is designed to consider how the freight and logistics sector can contribute to transformational economic growth in the North of England.
While the freight and logistics industry is owned and operated by the private sector and invests in its own infrastructure and equipment, the industry also has the potential to be a key enabler of transformational growth for the northern economy by securing greater levels of logistics activity. As the industry is highly competitive and sensitive to changes in the policy and regulatory environment, appropriate public sector interventions will lead to a response from the private sector. However, the private sector needs a clear, consistent and harmonised view of the future business environment within which it can make investment decisions.
The North of England has the advantages of a cluster of population centres (creating local demand) and associated logistics activity, along with key strengths in the energy, manufacturing and extractive industries, and major ports on four deep water estuaries. However, the North suffers from a lack of both road and rail network capacity, a fragmented land use planning framework (as in most of the UK) and a relatively peripheral location compared to the logistics ‘golden triangle’ in the Midlands.
The strategy that was developed by MDS Transmodal focuses on rail and waterborne transport to reduce the cost of transporting freight within, to and from the North and, in effect, make a virtue of the North’s relative peripherality by using modes of transport that are cheaper over longer distances. This strategy also has the advantage of providing net environmental benefits because the traffic would otherwise have been transported by road. However the strategy also includes a wide range of highways enhancements, particularly on east-west routes within the North and to improve access to the North’s major ports.
The draft strategy sets out an integrated package of public sector interventions that would ensure that rail network capacity is available ahead of demand on routes to, from and within the North; reduce the fragmentation of the planning system to facilitate the growth of a network of Multimodal Distribution Parks (MDPs) – distribution parks that are served by rail and/or waterborne freight services as well as road; improve connectivity to the North’s ports by, in particular, sea and rail; and target investment in the highways network, including to and from the major ports. This package of interventions would provide more cost-effective access to the North for shippers and receivers, making the region more attractive to manufacturing industry and inward investors.
The consultancy team adopted an analytical and quantitative approach to the development of the strategy, which allowed the benefits of the package of interventions to be calculated using an approach that would be acceptable to HM Treasury and the Department for Transport. MDS Transmodal used its GB Freight Model, which is the freight demand model used by the Department for Transport within its National Transport Model, to determine the likely benefits directly for the freight and logistics industry in terms of lower costs (user benefits) and for society in terms of lower emissions and levels of congestion (non-user benefits) from a Preferred Strategy Scenario compared to a Do Minimum Scenario up to 2043. The user costs amounted to about £16bn up to 2043, while the non-user benefits net of taxation impacts amounted to a further £16bn. Economists at Mott Macdonald examined the impact on employment and GVA of the additional economic activity in the North that would be generated by the strategy, which provided a further £19bn of benefits up to 2043.
The impact of the Preferred Strategy Scenario on highways flows in 2033
The impact of the Preferred Strategy Scenario on rail flows in 2033
The draft strategy shows how appropriate public sector interventions can lead to about £51bn of benefits up to 2043. These benefits can be employed to support the business cases that will be made by Transport for the North and its partners to HM Treasury and the Department for Transport in the next few years. It also demonstrates the scale of the public benefits that can be achieved by the public sector in partnership with industry when a strategy is developed based on a strong evidence-base using a quantitative approach.
The presentation can be downloaded here.