NEW FREIGHT FORECASTS FOR NETWORK RAIL

On 2 October Network Rail presented some new rail freight forecasts to an audience of rail freight customers at an Office of Road and Rail event in London. These forecasts presented a total of six scenarios to reflect uncertainty about future growth in the market, in the impact of factors that affect the competitiveness of rail with road and the impact of capacity constraints on the network.

In 2013 MDST produced rail freight demand forecasts to 2023/24 for Network Rail, which were published in its Freight Market Study (FMS). Since then several unforeseen exogenous developments, such as lower fuel prices, have affected the competitive position of rail and MDST was commissioned by Network Rail to re-run the 2023/24 demand forecasts with a 2016/17 base year and with revised assumptions for the following four new 2023/24 scenarios.

Scenario B2 leads to the greatest growth in tonnes (+49% overall), with the highest growth in construction and intermodal sectors. Scenario C2 shows a slight decline (-9%), which is mainly accounted for by the fall in the volumes of coal transported to power stations (ESI or Electricity Supply Industry coal).

Both the FMS and these latest projections are forecasts of demand – i.e. they do not include any capacity constraints. In order to represent capacity constraints due to bottlenecks for the high market growth scenarios - where the available capacity cannot satisfy the market demand – MDST required rail freight capacity through seven known capacity bottlenecks across the network to be limited to 20% above that required for the base year of 2016/17. These capacity constrained scenarios (A3 and B3) are based on the forecast demand in scenarios A2 and B2.

The graph below shows how the new scenarios compare with the forecast produced for the FMS in 2013, along with the historical tonnage of traffic from 2004/05. They also show what the FMS forecasts would have been for 2016/17 if out-turn assumptions for 2016/17 had been input into the FMS models.

ESI coal has historically been a volatile commodity and is no longer forecast to be carried by rail in 2023/24 due to the closure of coal-fired power stations. The graph below shows an equivalent graph to the total rail freight tonnes but without the movements of coal to and from the power stations.  Note that the graph does include biomass, which reflects conversion of power stations from coal to biomass.