ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 
Freight customer event Welcome 
21 November 2018 
 

# Setting The Context Orr Freight Customer Event

Maggie Simpson Director General - RFG 
21 November 2018 

## Growth - The Long View Renewing The Environmental Case



- 
Working to update environmental measurements and comparisons. 


- 
Research to inform future traction options including 
potential to replace / 
supplement diesel. 


- 
Continued pressure for longer trains, moving more with each locomotive. 

 
- 
Consideration of options to improve air quality emissions in terminals. 
 
 
Investment needs for next control period 

## Positioning For Successful Brexit

# Rail Review Raises Questions For Freight.

## Summary

- Strong prospects for rail freight growth 
 
- Rail freight sector is working to reconfirm its environmental position for the 

 


future. 
- Brexit remains a risk, but work is developing on key areas including Channel 
  


Tunnel. 
- Potential structural reform needs careful thought to be a positive for freight 
sector. 

## Thank You

 
CP6 freight access charge decisions 
 
 
Freight customer event 21 November 2018 
 
 
Pedro Abrantes 

## Headlines Charging Framework:

- Stability 
- Simplification 

## Quantum:

- 2019 - 2021: Variable costs going up by CPI inflation 
 
- 2021 - 2028: Variable costs going up by CPI + ~3.2% p.a. 
 
- Infra costs going up by CPI for ESI coal, iron ore and spent nuclear fuel 


- Biomass to pay Infra Cost Charge from 2021 

## Variable Charges - Headlines

 
- Legal framework: 
- Infra costs directly incurred must be recovered from operators 
 
- Changes can be capped and phased-in over a finite period of time 


- Capacity charge and coal spillage charge will be scrapped = saving 
- But: 
- CP5 capping catching-up with us - NR variables costs have continued to increase 
 
- Without capping/phasing-in, total variable charges would have gone 
up by 26% + inflation over CP6 


- Capping/phasing-in mean that: 
- 2019-2021: variable charges will increase with CPI inflation 
 
- Overall CP6 increase = CPI inflation + 10% 
- Change from RPI to CPI further expected to save 5% by end of 


CP6. 

## Variable Usage Charge Capping/Phasing-In Detail

Illustrative transition profile for capped freight operators 

- Decision took account of 
ORR's statutory duties, in 
particular: 
 
 
- Better use of the network 
- Supporting rail sector 
growth and stability 
 
- Impact on funding 


- Total variable charges will increase by CPI inflation between 
March 2019 and March 2021 


- Then transitioning to uncapped levels via a steady straight-line 


'glide path' to end of CP7 (March 2024) ~ CPI + 3.2% p.a. 


- The increase in total variable charges over CP6 will be CPI+10% 

## Infrastructure Cost Charges (1)



- Freight-only line (FOL) and freight specific charge (FSC) being replaced with overall 
infrastructure cost charge (ICC) 


- ESI coal, iron ore and spent nuclear fuel will continue to be charged ICCs - Charges will increase with CPI inflation 
- Freight services carrying biomass for the electricity supply industry (ESI biomass) 
deemed to be able to bear a mark-up charge in CP6 
 
- This will be introduced in April 2021 and increase gradually to the end of CP6 
 
- Our decision took into account the fact that there could be some reduction in biomass traffic as a 
 
 
result of this charge. 

## Infrastructure Cost Charges (2)



Similar to the way ICCs were introduced for ESI coal, iron ore and spent nuclear fuel in CP5, the charge will be phased in for biomass services over CP6. 

| 2017-18 prices    |   2019-20  |   2020-21  |   2021-22  |   2022-23  |
|-------------------|------------|------------|------------|------------|
| ESI coal          |            |            |            |            |
| 1.6               |        1.6 |        1.6 |        1.6 |        1.6 |
| Iron ore          |            |            |            |            |
| 1.6               |        1.6 |        1.6 |        1.6 |        1.6 |
| Spent nuclear     |            |            |            |            |
| fuel              |            |            |            |            |
| 34.2              |       34.2 |       34.2 |       34.2 |       34.2 |
| ESI biomass       |            |            |            |            |
| 0.0               |        0   |        0.3 |        0.9 |        1.4 |



Note: charge in £ per thousand gross tonne mile (kgtm). Biomass takes into account phase-in profile. 

 

ORR Freight Customer Event Network Rail update 
 
 
Paul McMahon Managing Director, Freight & National Passenger Operators 
21st November 2018 
 

## Safety Moment Freight & National Passenger Operators

- Established as "ninth operational route" or "virtual 
route" 
- Formation of FNPO, built on National Freight team, 
established following McNulty 
- Strongly supported by customers and stakeholders 
 
 
with high levels of FNPO people engagement 
- Do not physically operate infrastructure but are 
 
accountable for outputs 
 
- Principal point of contact with customers who 
operate over multiple routes 
- Work closely with rail freight end users, who 
 
 
include ports, aggregates companies, third party logistics providers 
 

## Our National Customers And Our Priorities Our Purpose

Deliver growth and provide excellent service for our customers and stakeholders, through improving safety and performance, and enhancing capacity and capability, at an efficient cost 

## Fnpo Priorities

Deliver safe, 
 
 
Customer reliable and focused and efficient 
 
collaborative performance Identify and provide 
 
network capacity 
 
and capability Develop the 


FNPO team, in line 
 
with wider 
 
transformation Business 
 
development to 
 
 
generate growth 
 

## Fnpo Route Scorecard At Period 8

|                                                                   | Safety - (PRP 20%)           | PRP Weighting   |
|-------------------------------------------------------------------|------------------------------|-----------------|
| Actual                                                            | Target                       | Actual          |
| Target                                                            | FYF                          |                 |
| Worse than                                                        |                              |                 |
| Safety                                                            |                              |                 |
| Safety                                                            |                              |                 |
| Work related absence                                              | 5.0%                         | 0               |
| 1                                                                 |                              |                 |
| 0                                                                 | G                            | 13              |
| Safety                                                            |                              |                 |
| Derailments                                                       | 4.0%                         | 0               |
| 1                                                                 |                              |                 |
| 8                                                                 | R                            | 6               |
| Safety                                                            |                              |                 |
| SPADs                                                             | 4.0%                         | 4               |
| 3                                                                 |                              |                 |
| 33                                                                | R                            | 24              |
| Safety                                                            |                              |                 |
| Close Calls Raised                                                | 2.0%                         | 19              |
| 13                                                                |                              |                 |
| 162                                                               | G                            | 111             |
| Safety                                                            |                              |                 |
| Close calls closed within 90 days                                 | 2.0%                         | 100%            |
| 90%                                                               |                              |                 |
| 100%                                                              | G                            | 90%             |
| Safety                                                            |                              |                 |
| Operator lost time incidents on NR infrastructure                 | 3.0%                         | 0               |
| 1                                                                 |                              |                 |
| 2                                                                 | G                            | 7               |
| Train Performance Measures - (PRP 20%)                            | PRP Weighting                |                 |
| Actual                                                            | Target                       | Actual          |
| Target                                                            | FYF                          |                 |
| Worse than                                                        |                              |                 |
| Train Performance Measures                                        |                              |                 |
| Train Performance Measures                                        |                              |                 |
| Freight Delivery Metric (FDM-R)                                   | 6.0%                         | 94.0%           |
| 92.8%                                                             |                              |                 |
| 93.1%                                                             | R                            | 93.7%           |
| Train Performance Measures                                        |                              |                 |
| Right time Departures - Freight                                   | 3.0%                         | 76.9%           |
| 79.0%                                                             |                              |                 |
| 78.4%                                                             | R                            | 79.7%           |
| Train Performance Measures                                        |                              |                 |
| FOC on TOC (DM/100 train km)                                      | 2.0%                         | 1.72            |
| 1.37                                                              |                              |                 |
| 1.39                                                              | R                            | 1.23            |
| Train Performance Measures                                        | Delay per Incident - Freight | 0.0%            |
| 30.0                                                              |                              |                 |
| 27.5                                                              | G                            | 26.6            |
| Train Performance Measures                                        |                              |                 |
| Cross Country - PPM                                               | 3.0%                         | 82.5%           |
| 87.1%                                                             |                              |                 |
| 83.5%                                                             | R                            | 87.9%           |
| Train Performance Measures                                        |                              |                 |
| Cross Country - CaSL                                              | 3.0%                         | 5.7%            |
| 4.7%                                                              |                              |                 |
| 6.6%                                                              | R                            | 5.1%            |
| Train Performance Measures                                        |                              |                 |
| Cross Country - Time to 3 minutes                                 | 0.0%                         | 63.6%           |
| 64.9%                                                             |                              |                 |
| 67.2%                                                             | R                            | 72.7%           |
| Train Performance Measures                                        |                              |                 |
| Cross Country - Cancellations                                     | 0.0%                         | 2.49%           |
| 2.86%                                                             |                              |                 |
| 3.27%                                                             | R                            | 3.13%           |
| Train Performance Measures                                        |                              |                 |
| Caledonian Sleeper-Right Time                                     | 3.0%                         | 77%             |
| 70%                                                               |                              |                 |
| 76%                                                               | R                            | 77%             |
| Train Performance Measures                                        |                              |                 |
| Charter Trains - performance measure                              | 0.0%                         | 89%             |
| 91%                                                               |                              |                 |
| 90%                                                               | R                            | 91%             |
| Investment & Asset Management - (PRP 10%)                         | PRP Weighting                |                 |
| Actual                                                            | Target                       | Actual          |
| Target                                                            | FYF                          |                 |
| Worse than                                                        |                              |                 |
| Investment & Asset Management                                     |                              |                 |
| Investment & Asset Management                                     |                              |                 |
| CP5 SFN schemes - current year GRIP 6 completion vs baseline      | 10.0%                        | 90%             |
| 90%                                                               |                              |                 |
| 90%                                                               | G                            | 90%             |
| Customer - (PRP 30%)                                              | PRP Weighting                |                 |
| Actual                                                            | Target                       | Actual          |
| Target                                                            | FYF                          |                 |
| Worse than                                                        |                              |                 |
| Customer                                                          |                              |                 |
| Customer                                                          |                              |                 |
| Net tonne miles moved - Freight (Great Britain) - (billions)      | 4.0%                         | 1.0             |
| 0.9                                                               |                              |                 |
| 7.1                                                               | G                            | 6.5             |
| Customer                                                          |                              |                 |
| Freight service plan reviews - delivery against agreed milestones | 3.0%                         | 100%            |
| 90%                                                               |                              |                 |
| 94%                                                               | G                            | 90%             |
| Customer                                                          |                              |                 |
| Strategic capacity - Freight                                      | 3.0%                         | 21%             |
| 10%                                                               |                              |                 |
| 21%                                                               | G                            | 10%             |
| Customer                                                          |                              |                 |
| Cross Country - Average minutes lateness                          | 4.0%                         | 6.05            |
| 5.29                                                              |                              |                 |
| 6.14                                                              | R                            | 4.96            |
| Customer                                                          |                              |                 |
| Cross Country - Access planning agreed milestones met             | 4.0%                         | 81%             |
| 80%                                                               |                              |                 |
| 78%                                                               | R                            | 80%             |
| Customer                                                          |                              |                 |
| Caledonian Sleeper - Roll up of customr scorecard                 | 3.0%                         | 60%             |
| 50%                                                               |                              |                 |
| 56%                                                               | G                            | 50%             |
| Customer                                                          |                              |                 |
| Charter planning compliance                                       | 3.0%                         | 50%             |
| 50%                                                               |                              |                 |
| 56%                                                               | G                            | 50%             |
| Customer                                                          |                              |                 |
| Freight End Use (FEU) satisfaction                                | 6.0%                         | 61%             |
| 73%                                                               |                              |                 |
| 61%                                                               | R                            | 73%             |
| Financial Performance - (PRP 15%)                                 | PRP Weighting                |                 |
| Actual                                                            | Target                       | Actual          |
| Target                                                            | FYF                          |                 |
| Worse than                                                        |                              |                 |
| Financial Performance                                             |                              |                 |
| Financial Performance                                             |                              |                 |
| Financial Performance Measure (FPM)                               | 15.0%                        | -6%             |
| 0%                                                                |                              |                 |
| -1%                                                               | R                            | 0%              |
| People - (PRP 05%)                                                | PRP Weighting                |                 |
| Actual                                                            | Target                       | Actual          |
| Target                                                            | FYF                          |                 |
| Worse than                                                        |                              |                 |
| People                                                            |                              |                 |
| People                                                            |                              |                 |
| Your Voice Action Plans - delivery against agreed milestones      | 5.0%                         | 100%            |
| 80%                                                               |                              |                 |
| 100%                                                              | G                            | 80%             |
| 100%                                                              | 60%                          | 47.56%          |
Weighted 
Target
Target
Better than 
Target
Achievement
Weighted 
Target
Target
Better than 
Target
Achievement
Achievement
FYF
FYF
Weighted 
Target
Target
Better than 
Target
Achievement
Achievement
FYF
FYF
Weighted 
Target
Target
Better than 
Target
Achievement
Achievement
FYF
FYF
Weighted 
Target
Target
Better than 
Target
Achievement
Achievement
FYF
FYF
Weighted 
Target
Target
Better than 
Target
Achievement
Achievement

## Freight Traffic Trends

ends ic tr
aff tr ght
rei
f

## Capacity & Capability - Total Sfn Contributions £419.7M

 
Scheme 
SFN funding 
(£m) 
Ipswich Chord 
50.5 
Mar-14 
Increased capacity, faster journey times 
Ipswich Yard 
32.7 
Dec-14 
Increased capacity, longer trains, better operations 
North Lincolnshire resignalling and re-control 
4 
Jan-16 
Improved operations 
Southampton - WCML diversionary gauge 
29.2 
Jul-16 
Clearance for diversionary capability 


Southampton Freight Train Lengthening 
90.5 
Mar-19 
775m capability 
Banbury area remodelling / Oxford corridor 
20.2 
Mar-19 
Line speed improvement, reduced headways 


Northern Ports Freight Capacity 
8 
Mar-19 
Improved capacity to Port of Liverpool 
Great Western Main Line gauge clearance 
15.2 
Mar-19 
 
 
Thames Haven Level Crossing improvements 
0.5 
Mar-19 


Peak Forest Freight Train lengthening 
48.9 
Mar-19 
Longer, heavier trains, upto 3000t 

 
Gauge clearance schemes connecting W Midlands / S East with N East / Scotland 
67.3 
Mar-19 


Ripple Lane Nodal Yard (GRIP 3) 
0.3 
Jul-19 
Enables European traffic to access terminals in Barking/Dagenham area 
Felixstowe Branch Line Capacity 
52.4 
Aug-19 
Upto 47tpd each way 
 
 
Complete 
(freight part) Output 


Clearance for 9'6" high maritime containers on 
standard deck wagons between London and Bristol/Cardiff 
Clearance for 9'6 high maritime containers and 
domestic/European swapbodies on standard deck wagons 
 

## Freight End User Survey (July 2018)

| Question    | Score (out of 5)                                                   |
|-------------|--------------------------------------------------------------------|
| 1 -         |                                                                    |
|             |                                                                    |
|             |                                                                    |
| overall?    |                                                                    |
| 3.47        |                                                                    |
| 2 -         |                                                                    |
|             |                                                                    |
|             |                                                                    |
|             | Rail Freight?                                                      |
| 3.13        |                                                                    |
| 3 -         |                                                                    |
|             |                                                                    |
|             |                                                                    |
|             | first in its dealings with your company?                           |
| 3.93        |                                                                    |
| 4 -         |                                                                    |
|             |                                                                    |
|             |                                                                    |
|             | infrastructure reliability and performance?                        |
| 3.13        |                                                                    |
| 5 -         |                                                                    |
|             |                                                                    |
|             |                                                                    |
|             |                                                                    |
|             |                                                                    |
| 6 -         |                                                                    |
|             |                                                                    |
|             |                                                                    |
|             | Network Rail is helping to deliver your wider business objectives? |
| 3.47        |                                                                    |
|             | Overall score 61% against a target of 73%                          |

## Proposed Freight End User Scorecard

TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
TB
C 
TBC 
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TBC 
lntermodal 
Target 
TBC 
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TBC 
TBC 
TBC 
TBC 
A
ctual 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Construction 
Target 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
A
ctual 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Target 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Metals 
Actual 
TBC 
TBC 
TBC 
TBC 
TB
C 
TBC 
Target 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Energy 
Actual 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Target 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Automotive 
Actual 
TBC 
TBC 
TBC 
TBC 
TB
C 
TBC 
Target 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Royal Mail 
A
ctual 
TBC 
TBC 
TB
C 
TBC 
TBC 
TBC 
Other 
Target 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 
Actual 
TBC 
TBC 
TBC 
TBC 
TBC 
TBC 

## Cp6 Orr Fnpo Determination - Key Points For Freight

FNPO Route 
- Noted that FNPO route is different 
- Role is to provide "advocacy" for customers across all NR 
Stakeholder engagement and satisfaction 
- Continue customer/FEU satisfaction surveys - Set up Supervisory Board 


CP6 Scorecards 
- Content with Route scorecard targets - FDM 94.0%; FDM on Route scorecards 
- All 'TBC' to be agreed by March 19 
- Supportive of customer scorecards - FEU scorecard to be developed 
 
Access charges 
- Freight access charge increases - capped and phased 
Safety 
- Allocated £22m to address and mitigate safety risk 
Scotland 
- Specific measures for growth, gauge and journey time 


Capacity & capability 
- Maintain published and operational capability - 15.6% growth in freight moved assumed 
Financials 
- £28m for Opex 

## Cp6 Traffic Forecast Cp6 Candidate Enhancement Schemes

| Key Freight                                |               |             |
|--------------------------------------------|---------------|-------------|
| Corridor                                   |               |             |
| CP6 Candidate Freight Schemes              |               |             |
| Estimated cost                             |               |             |
| range                                      |               |             |
| -                                          |               |             |
|                                            |               |             |
| Doubling of Haugley Jn                     | £10m -        |             |
|                                            |               |             |
| £15m                                       |               |             |
| -                                          |               |             |
|                                            |               |             |
| Signalling Headways Bury                   | £50m -        |             |
|                                            |               |             |
| £70m                                       |               |             |
|                                            |               |             |
| Felixstowe to West                         |               |             |
| -                                          |               |             |
|                                            |               |             |
| Ely area (level crossings / bridge speeds) | £100m -       |             |
|                                            |               |             |
| £250m                                      |               |             |
|                                            |               |             |
|                                            |               |             |
|                                            |               |             |
|                                            |               |             |
|                                            |               |             |
| Midlands & the                             |               |             |
| -                                          |               |             |
|                                            |               |             |
| Ely to Soham doubling                      | £120m -       |             |
|                                            |               |             |
| £150m                                      |               |             |
|                                            |               |             |
|                                            |               | £50m - £60m |
| North                                      |               |             |
| -                                          |               |             |
|                                            |               |             |
| Peterborough - Syston signalling/level     |               |             |
| crossings                                  |               |             |
| -                                          |               |             |
|                                            |               |             |
| Syston -                                   |               |             |
|                                            |               |             |
| Sheet Stores gauge (W10/W12)               | £5m - £10m    |             |
| -                                          |               |             |
|                                            |               |             |
| Further refine layout at Ipswich Yard      | £1m - £5m     |             |
| -                                          |               |             |
|                                            |               |             |
| Kenilworth doubling                        | £100m - £170m |             |
|                                            |               |             |
|                                            |               |             |
| Southampton to                             |               |             |
| West Midlands &                            |               |             |
| WCML                                       |               |             |
| Channel Tunnel                             |               |             |
| classic route                              |               |             |
| -                                          |               |             |
|                                            |               |             |
| Gauge enhancement (up to W12)              | £50m - £80m   |             |
|                                            |               |             |
|                                            |               |             |
|                                            |               |             |
| -                                          |               |             |
| -                                          |               |             |
|                                            |               |             |
| Ripple Lane Nodal Yard                     |               |             |
| -                                          |               |             |
|                                            |               |             |
| Thameside Level Crossings (capacity)       |               |             |
|                                            |               |             |
| £40m                                       |               |             |
| Cross London, and                          |               |             |
| Essex Thameside                            |               |             |
| -                                          |               |             |
|                                            |               |             |
| Trans Pennine gauge enhancement (up to     |               |             |
| W12)                                       |               |             |
| -                                          |               |             |
|                                            |               |             |
| New loop between Up Decoy and South        |               |             |
| Northern Ports &                           |               |             |
| Trans Pennine                              |               |             |
| Yorkshire Joint Line                       |               |             |
| -                                          |               |             |
|                                            |               |             |
| Trans Pennine freight capacity             |               | tbc         |
|                                            |               |             |
| Total                                      |               |             |
| c.£0.6bn - £1bn                            |               |             |

## The Future... Rail Freight Strategy Office Of Rail And Road - Freight Customers


## The Case For Government Support For The Rail Freight Industry Is Articulated In Its Rail Freight Strategy



- Government's Rail Freight Strategy was published 
in September 2016 
 
 
- Government policy: support modal shift and rail 


freight growth to mitigate the negative external impacts of road haulage. 
 
 
- Support for rail freight based on productivity gains, 


reduced road congestion and environmental benefits. 


- 
Sets out vision for how rail freight can continue to grow, collaborate, and innovate to help relieve pressure on the road network. 


- 
Identifies intermodal, construction and automotive 
sectors as key growth areas 


The strategy identifies four priority areas where action by Government & industry could help rail freight achieve its potential 

## Innovation And Skills

 
 

BEIS' Clean Growth Strategy to look at freight 
into cities with zero emission last mile delivery 



Innovate UK funded Accelerating Rail Innovation project into short freight 'track 
train' 

## Track Access Charging


 
 
SofS issued guidance to ORR to consider affordability of charges, recognising benefits of rail freight 

 
ORR's Final Determination issued cap and phasing-in of VUC for rail freight 
 

## Network Capacity

 
- 
HLOS & SOFA include funding for strategic freight network 
 
- 
NR's 'FNPO' established 
- 
Investment in digital ETCS freight cab fitment 
 
- 
Freight in franchising workstream 

RDG 
 published 'Rail 
 Freight: Working for 
Britain' 
 in summer 2018 

DfT Rail 
 Freight video 
 
We meet regularly with our stakeholders to identify the strategic challenges facing the rail freight industry 
 
DfT is working on many live issues to support rail freight - many require collaboration with industry and across government 

## New Approach To Enhancements

# Rail Network Enhancements Pipeline

James Conway Programme Director, London and South East 

## Rail Enhancements Lessons From Control Period 5

Moving Britain Ahead November 18 
November 18 

## Rail Network Enhancements Pipeline

- 
Only commit to the next stage of the pipeline 
 
- 
Each decision taken will be informed by a business case 
 
- 
Entry into the pipeline does not guarantee it will be delivered 
 
 
More information at: 
https://www.gov.uk/government/publications/rail-network-enhancements-pipeline 

## Engaging With The Pipeline Delivering Enhancements In Cp6

 
Dave Whyte Planning & Investment Manager, West Midlands, Chiltern and Freight 

## Enhancements Delivered Or In Delivery Through The Sfn Fund In Cp5

- Felixstowe Branch Capacity Enhancement 
- Southampton Freight Train Lengthening 
 
 
- Buxton Peak Forest 
 
- Ripple Lane Nodal Yard 
 
 
- Gauge Clearance (Humber / Yorkshire to Midlands; ECML North) 
 
 
- Enhanced capacity / gauge to ports (Liverpool / Thameshaven / 
 
 
Immingham) 
 
- Business case development for potential CP6 enhancements 
 

## Approach For Cp6

November 18 


ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 
Freight customer event ORR regulation 
 
21 November 2018 
 
 
Gordon Herbert, Patrick Talbot, Lisa Thurston, Jeremy Bohl. 



ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 

## Orr Economic And Safety Regulation Orr Overview

- Our railway health, safety, economic and road functions overall are driven by 
UK and EU legislation and on the basis that we are also accountable to laws passed by the Scottish government. 


- As a regulator we are accountable to Parliaments and the public to: 
- Protect the people who work on, use, or interact with the railway. This is both to ensure 


continuous improvement in health and safety and, on the economic side, to temper the 
monopoly power of Network Rail. 
 
- Ensure fair access to a rail network and other infrastructure which are becoming 


increasingly congested. 
- Ensure Highways England carries out its investment programme on England's strategic 


road network effectively. It is our job to report on Highways England's progress in 
delivering this investment, on budget and to time. 
 
- Protect the interests of future users by working with the industry and with funders as they 


develop the network of tomorrow. 


Freight customers 
- Freight customers are those with a direct interest in rail freight, including purchasers of 
services and their representative bodies, but not the operators of the trains. 


- ORR wants to better understand the interests of rail freight customers, balancing them 
with the interests of other users and with funders of the rail network. 
 

## - Webpage, Feedback And Ideas

- 
http://orr.gov.uk/about-orr/who-we-work-with/industry-organisations/freight-customers. 
 

## - Freight Customer Panel

 
 
- "help to ensure that our policies and regulatory decisions take into account the 
 
commercial environment that freight customers work within". 


- ORR's panel is made up of freight customers who represent a wide area of expertise 
and interest from across the rail freight community. 

## - Specific Initiatives

- Freight customer track access contracts. 


ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 

## Access Gordon Herbert Track Access Manager (Freight) Access And Licensing Team, Orr Gordon.Herbert@Orr.Gsi.Gov.Uk Track.Access@Orr.Gsi.Gov.Uk

Access: framework 
- Railways Act, Access and Management Regulations 
- Track access 
- NR contracts 
- New/other IMs 
- Facility access 
- Contracts 
- Appeals 
 
- Connection contracts - ORR guidance and advice - Open, transparent, efficient and competitive market. 
Access: current issues 
- Service facility transparency 
- AMRs and Implementing Regulation on Service Facilities 
 
 
- NR network statement and other IMs - NR templates 
- "The Common Template" is available on RailNetEurope's website. 
- networkstatement@networkrail.co.uk 


- Model clauses FACs - New networks/other than NR - Changing markets and access rights 
- Access rights framework, model clauses 
- Enhancements, Capacity, Investment 


ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 

ORR's approach 
to competition 
policy in the rail 
freight industry
Jeremy Bohl 

 

Lisa Thurston 

 

November 2018 

 

## Agenda

 
- ORR's competition role - Competition CA98 investigation: Intermodal (deep 
sea container) case 


- Access issue: Scope for potential application of 
the A&M Regs 
- What you can do 

 

ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 

## Orr'S Competition Role Orr'S Competition Role

We use competition policy 
(and where necessary our 
 
powers) to optimise 
 
competitiveness and create conditions for innovation, efficiency and growth 

## Competition Powers Competition Act 1998 (Ca98)



- 
Chapter 1/ Article 101 TFEU - **agreements** between undertakings (business) or decisions of associations of 
undertakings (e.g. trade associations), and concerted practices which have, as their object or effect, the 


prevention, restriction or distortion of competition within the United Kingdom (or any part of it) and which may 


affect trade in the United Kingdom 


- 
Chapter 2/ Article 102 TFEU - conduct by one or more undertakings amounting to the abuse of a dominant 
position in a market which may affect trade within the United Kingdom. This is known as the Chapter II 

 
 
 
Prohibition 

## Railways (Access, Management And Licensing Of Railway Undertakings) Regulations 2016 (A&M Regs)



- 
Regulation 34 provides ORR with the power to issue directions to correct discrimination against applicants 
for access to the rail network, market distortion; or undesirable developments in relation to the competitive 


situation in the rail services markets 


ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 

Competition CA98 
investigation: 
Intermodal (deep sea 
container) case 

## Overview

  
- CA98 opened in August 2014 


- Suspected **abuse of a dominant position** in the provision of deep sea container 
rail transport services between ports and key inland destinations in Great Britain. 
 
 
- ORR accepted commitments in December 2015. These will remain in force until 
31 March 2019 

## Orr'S Competition Concerns Commitments - Some Examples

- Outright end to practice 
- Not enter any contracts which require customers to 


purchase exclusively from a single FOC 


- Outright end to practice 
- Not enter into any contracts which place any 
restrictions or conditions on re-sale. 
 
- Outright end to practice. 
- Remove all retroactive rebates in place with 
| customers on the routes specified in the commitments.    |     |     |     |
|----------------------------------------------------------|-----|-----|-----|
| Minimum volume                                           |     |     |     |
| -                                                        |     |     |     |
|                                                          |     |     |     |
| Mitigation                                               |     |     |     |
| -                                                        |     |     |     |
|                                                          |     |     |     |
| Provide customers with rights to reduce their minimum    |     |     |     |
| commitments                                              |     |     |     |
| volume commitments after a set period                    |     |     |     |
| Duration                                                 |     |     |     |
| -                                                        |     |     |     |
|                                                          |     |     |     |
| Outright end to practice                                 |     |     |     |
| -                                                        |     |     |     |
|                                                          |     |     |     |
| Remove evergreen clauses. Not enter any contracts        |     |     |     |
| with a duration of more than 5 years.                    |     |     |     |

## Impact - Preliminary Data Suggests A Positive Impact On Competition:

- Ability for customers to choose shorter more flexible contacts 
 
 
- As contacts are open to competition on an annual basis, customers have more ability to 
 
 
choose the FOC with the most competitive offering 
- Indications of more rivalry between FOCs 

## - However, There Are Still Issues With Gaining Access To The Network



ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 
Access issue: 
Potential application of the A&M Regs 

## Complaint Regarding Access To Rail Facilities

 
 
- Key concern was the potential that the operator of the facility was 
preventing a customer of a freight operator from operating at the facility and expanding its business 


- ORR considered all options including issuing a direction under the 
A&M regs 
 
 
- ORR's policy objective was to ensure fair competition and market 
conditions for growth 
 
 
- Ultimately resolved issue without the use of regulatory or competition 
powers 

## What You Can Do

 
- If you experience an issue which could be anti-competitive contact us: 
http://orr.gov.uk/rail/promoting-competition/how-to-report-a-breach-of­
competition-law 

 
- Examples of anti-competitive conduct: 
- 
Issues with getting access to rail facilities 
 
 
- 
Price fixing between freight operators 
 
- 
Markets being split by geography or customer by freight operators (customer 


sharing) 
- 
Exclusivity requirements by freight operators 


ORR protects the interests of rail and road users, improving the safety, value and performance of railways and roads today and in the future 
 

## Safety Matters

 
Patrick Talbot 

## Health And Safety Regulation - Safety Regulator For Britain'S Railways

- Responsible for all railways (mainline, metros, heritage, trams) 


- Certification body (safety certificate/authorisation) 
 
- Enforcing authority for health and safety legislation 
- Prosecuting authority 
What about off- network sites? 
- Enforcing Authority is most likely either ORR or HSE 
- Health and Safety (Enforcing Authority for 
 Railways and 
 Other Guided 
Transport Systems) 
 Regulations 2006 
 (as amended) (EARR) 
- Clarification in the MoUs between ORR, HSE and ONR - Enforcing Authority may vary depending on the 
 
 nature of the activity carried 
out on 
 site 
- Usually exempt 
 from the requirements of ROG 
 
S 

## Freight Safety Issues

- Unauthorised access - Freight derailment 
- Interconnected factors (infrastructure condition, vehicle maintenance and 
 
 
loading) lead to derailment 


- Industry Cross Industry Group (XIFDWG) 
 
- Collaborative approach to solving a system problem 
 
 
- Representatives from Network Rail, FOCs, Customers, Wagon owners, 
consultants 

## Off- Network Infrastructure

- Two questions… 
 
- How can railway safety performance be improved and maintained? - How can guidance, best practice and learning from incidents be 
shared? 
- Questions/ queries/ more information: 


- Patrick Talbot, HM Principal Inspector of Railways 
- patrick.talbot@orr.gov.uk