New tracks ahead: Rail recovery through innovation

The COVID pandemic had a well-publicised and catastrophic impact on passenger numbers in 2020. Passenger volumes fell to less than a quarter of their norm, though freight volumes only declined by ten per cent and recovered more quickly. Post-COVID, long-distance train services have fared best and are now busier per train (on fewer trains) than pre-COVID, whilst regional and commuter peak services have had a weaker return, with fewer services and fewer passengers per service. Outside of peak time commuting there has been a smaller upside from passengers, both business and leisure, moving into off-peak travel, particularly between major cities.

As the industry now looks to the future there needs to be careful consideration of the purpose of the railway and how we can stimulate the sector to secure its full economic and environmental value. In particular it needs to work out a response to a situation where the domination of peak hour travel every weekday never entirely returns.

Incentivisation and a diverse user base

There are some lessons to be drawn from other countries. Even prior to the pandemic, many European railways offered a more balanced approach for both locals and tourists. The GB and German rail network have a similar blend of regional or city-centric commuter routes that are quieter over the weekends and a significant business travel market of 35-40 per cent of total journeys.

France, Spain and Italy all have strong high-speed networks, with a greater emphasis on long-distance routes, that mean they have a greater share of leisure travel, with only 25-30 per cent of usage for business purposes.

European railways have also generally recovered well from the COVID passenger decline. In some cases, this has reflected help from governments and train operators to reinstate services and to roll out initiatives to reboot demand. State-backed travel passes in Germany and Switzerland incentivised travel and boosted passenger numbers on both weekdays and weekends, whilst the Spanish government’s subsidised fares in an effort to encourage travel.

In other countries, the existing blend of services was already broader and so they were better placed to deal with changes in travel patterns.

These initiatives were highly effective where well-integrated travel either nationally or in urban areas were already the norm for most people. In these locations, hybrid working was quicker to decline. In contrast in the UK, fare increases amidst cost-of-living challenges, together with industrial disputes undoubtedly contributed to a more pronounced shift to hybrid working.

However, the GB rail sector is responding. The return to government operation of some train franchises that started during COVID will now happen everywhere, under the Great British Railways reform process. In doing so, the operator becomes much more involved in the strategic shaping of ‘service’. A sector once dominated by investment choices based on infrastructure will quickly shift to looking for outcomes through the train service lens. This has to be good for the customer – although the economics of available funding cannot guarantee that service change will be equivalent to all, rather it will become increasingly driven by market demand, with service levels presumably finessed to follow.

Could freight innovation be a pathway to change

As well as exploring options for passenger traffic, the industry should look for opportunities for freight traffic to fill the timetable and revenue gap.

There is evidence of potential demand from a range of sectors. One large supermarket has used specialised hub-logistics by train for nearly two decades. Multi-million pound contracts to move goods directly from southern Europe in one seamless trip are also emerging as a preference for some post-Brexit border refrigerated goods movements.

Other opportunities are opening up with the development of fast-freight which is light enough to have a stable place in a train timetable and can increasingly use regular stations as drop-off points.

This is already creating new business. Following a first trial on a shorter route, a household name in to-the-door deliveries has expanded its rail solutions. Its products will be loaded onto train carriages to run on the West Coast Main Line, using stations close to local delivery and fulfilment centres as well as its more traditional port to hub access model. Where these options are combined with city-centre deliveries on electric cargo-bikes or similar, emissions and van journeys are reduced and total journey times shortened.

The choice at this cross-roads is not easy; and certainly not without cost. As train paths need a starting point and destination, some services will always run emptier than others where peak hours skew demand. Yet, there is clearly capacity, either because of weaker passenger utilisation of timetabled services, or because of reduced services. A change to the timetable by day of the week or a backfilling of passenger for light, fast freight solutions may offer innovative options to fill that spare capacity, but not without cost.

If service frequency changes in passenger services, redundancy of fleet, management of fleet or staff movements and rosters has a cost. Whilst in the fast freight side, the economic case to invest in fleet transformation, (likely higher) access charges and different staffing models need a longevity of the cost-benefit-risk analysis against relatively low margins to make them worthwhile and profitable.

These developments could provide a stop gap until digitalisation of the network releases more capacity. They could also serve as a way of bringing in private capital investment drive decarbonisation through integrated transport into city centres. The challenge will be that the result will be less availability and consistency of train services for commuters, marking a permanent move away from traditional rail provision.

What is clear is that the railway cannot be allowed to decline through a lack of revenue from weekday passenger services. The sector will have to respond to the new world and radical solutions will be needed to open train paths that release both value and funds into the rail system as a whole.

This article was originally published in Rail Professional.