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Should GBR have a freight business? Is the sale of DB Cargo UK an opportunity to acquire one?

Bletchleyite

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Noting the sale of DB Cargo UK being mooted, should GBR also have a freight business as a means of generating additional income?

Would purchasing DB Cargo UK into DfT Operator Ltd be a good plan to acquire one rather than starting one from scratch? Or would expanding Direct Rail Services, already nationalised, be a better plan?
 
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Zomboid

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Nationalizing it is one thing (it's already state owned, isn't it?), but making it part of GBR would be a different matter - the other freight operators would have legitimate concerns about competing with the infrastructure owner.

I think it'll be sold to whoever makes the best bid, and the government would only get involved if that happens to be one of the other freight operators.
 

Dr Hoo

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Noting the sale of DB Cargo UK being mooted, should GBR also have a freight business as a means of generating additional income?
Presumably it would come with additional costs as well.
What sort of annual NET income (profit) could The Treasury and The Taxpayer look forward to?
 

The Planner

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No, you would end up with a nationalised operator competing commercially for freight flows, which GBR doesn't appear to be looking favourably to anyway.
 

Essex Express

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So another option is each GBR area has a small fleet of locos for work in there own region which is not commercial work such as RHTT, weed killer trains and the Test trains and thunderbird. Then leaves Colas, GBRF, Freightliner and heavy haul to run all the commercial work. So the work that DB does at present is transfered to them and the Network rail contacts go back to the GBR areas.
 

172007

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No, we already have a state freight operator (DRS) who bids for commercial contracts so why duplicate.
 

Rail Quest

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Given the government has an objective to increase freight taken by rail by a certain percentage (can't remember what the percentage was pr by what year), perhaps an assessment on how the government expanding nationalised freight operations would influence freight growth is the primary question.

What are the biggest blockers to growing rail freight traffic in the UK currently and can such a move positively impact any of these?
 

cactustwirly

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Noting the sale of DB Cargo UK being mooted, should GBR also have a freight business as a means of generating additional income?

Would purchasing DB Cargo UK into DfT Operator Ltd be a good plan to acquire one rather than starting one from scratch? Or would expanding Direct Rail Services, already nationalised, be a better plan?
Why would a state owned operator be good at bringing in commercial revenue? It will become some political loss making behemoth that will pull everything down with it.

Nationalising DB cargo, would essentially make the existing DB cargo employees jobless via a slow death. State companies are bloated with waste, have no incentive to cut costs and be commercially dynamic, no incentive to grow market share or profits. So in effect they'll be out competed by GBRF, Freightliner, Colas etc who will have lower costs and a better commercial drive to win contracts.

It needs a new buyer with cash to invest and a proper commercial drive to cut the deadwood and reverse the DB stagnation.
 

HSTEd

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My own view on this, probably more extreme than others, that GBR can only achieve the sorts of operational efficiencies we need if it is the only game in town on the vast majority of the UK railway.

I think that Freight business should be inside the GBR structure, and if there is a means to move in that direction, I support it.

I feel that many of the failures of the privatisation era have been caused by "contractual paralysis", where strongly formalised contractual relationships between parties have prevented the railway from rapidly moving with the times or embracing technologies and working practices which could improve the industry's financial, environmental and political position.
We end up in endless arguments over where costs and benefits fall in the industry, so things either move slowly or not at all, even if the industry as a whole would be better off.

EDIT:

However I don't think GBR should have a freight business to "generate more revenue" - because the lesson of the railway of the last 30 years is that freight barely generates revenue.
If you want more revenue you would want more EMUs moving more people on expensive passenger tickets, not moving piles of rocks a worth a few tens of thousand pounds a hundred miles for almost nothing.
 
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Oxfordblues

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One of the great benefits of privatisation for rail-freight was the introduction of real rail-on-rail competition. I remember BR freight sales managers visiting customers and giving them a take-it-or-leave-it offer with the annual increases in rates. With eager road hauliers waiting outside the office many chose to leave it. Now if you get any grief from one FOC you can simply get in touch with another FOC to see if they can do any better. Renationalisation would ruin that.
 

Mag_seven

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GBR have enough on their plate trying to sort out the passenger side of things without getting involved in freight work.
 

Bletchleyite

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One of the great benefits of privatisation for rail-freight was the introduction of real rail-on-rail competition. I remember BR freight sales managers visiting customers and giving them a take-it-or-leave-it offer with the annual increases in rates. With eager road hauliers waiting outside the office many chose to leave it. Now if you get any grief from one FOC you can simply get in touch with another FOC to see if they can do any better. Renationalisation would ruin that.

That would be so if competition were removed, not if GBR had a freight operator per se.
 

HSTEd

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One of the great benefits of privatisation for rail-freight was the introduction of real rail-on-rail competition. I remember BR freight sales managers visiting customers and giving them a take-it-or-leave-it offer with the annual increases in rates. With eager road hauliers waiting outside the office many chose to leave it. Now if you get any grief from one FOC you can simply get in touch with another FOC to see if they can do any better. Renationalisation would ruin that.
Given how heavily subsidised railfreight operations are, is this truly a good thing?

Right now track access charges are set on an "what the market will bear" level, which is very low because of competition from roads and between operators. The more "competitive" the railfreight market becomes, the greater the indirect subsidy is provided by the taxpayer.

In any case, a large part of the railway's freight traffic is aggregates or biomass which are not meaningfully in competition with the road. Noone would move aggregates a hundred miles by road, it would cost many times more than digging it out of the ground closer to the destination. Similarly moving bulk biomass by road any meaningful distance would destroy the economic of Drax etc.
 

Dr Hoo

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I’m surprised that @HSTEd feels that freight has suffered from “contractual paralysis”. The sector has seen both entry and exit from the market, handled huge changes in the coal and other industries, massive changes in intermodal flows, innovation with new locomotives, wagons and operating practices, a lot of private investment both directly and in partnership with ROSCOs and terminal developers, etc..

I am completely unclear what remaining problems ‘nationalisation’ would solve. (Please don’t mention “electric traction” until there is adequate power supply for the 25kV network, including 75% growth, of course.)
 

The Planner

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Given the government has an objective to increase freight taken by rail by a certain percentage (can't remember what the percentage was pr by what year), perhaps an assessment on how the government expanding nationalised freight operations would influence freight growth is the primary question.

What are the biggest blockers to growing rail freight traffic in the UK currently and can such a move positively impact any of these?
Capacity and the fact freight is slow, which goes back to the original issue of capacity.
 

Merle Haggard

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One of the great benefits of privatisation for rail-freight was the introduction of real rail-on-rail competition. I remember BR freight sales managers visiting customers and giving them a take-it-or-leave-it offer with the annual increases in rates. With eager road hauliers waiting outside the office many chose to leave it. Now if you get any grief from one FOC you can simply get in touch with another FOC to see if they can do any better. Renationalisation would ruin that.

I'm not sure that a number of FOCs obtaining traffic by undercutting each other is good for the long term survival of any of them. Very often it seems to be not traffic won from road but won from another FOC operator. Each FOC operator is likely to have similar costs - Network Rail tolls, loco hire costs, staff (mainly ASLEF) staff costs, so the successful one is likely to be the one that accepts the lowest margin. Good for the customer though.
The 'take it or leave it' attitude - BR Railfreight was not allowed to take on unprofitable traffic so when the price offered came down to the level below which Railfreight were not allowed to quote that was it.
Many road competitors did not accurately cost their own business particularly relating to costs arising from unexpected events. But, when they went into liquidation as a result, there was always another one waiting to make the same mistake. Good for the customer, though,
 

HSTEd

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I’m surprised that @HSTEd feels that freight has suffered from “contractual paralysis”. The sector has seen both entry and exit from the market, handled huge changes in the coal and other industries, massive changes in intermodal flows, innovation with new locomotives, wagons and operating practices, a lot of private investment both directly and in partnership with ROSCOs and terminal developers, etc..
Locomotive innovation seems to have consisted of buying several hundred Class 66 in the 1990s and early 2000s and then small handfuls of locomotives, none of which have been particularly successful, since then. That was, ultimately, nearly 25 years ago at this point. Since then much of the locomotive innovation seems to have been playing games of various types to maximise the number of EMD 2-stroke engines available and to subvert emissions regulations.
Of the classes of locomotive introduced for freight use since the Class 66, few seem to have been very succesful at all. Perhaps the most succesful, the Class 68, was of course procured by a state operator with a core business outside "regular" rail freight - DRS.

I am completely unclear what remaining problems ‘nationalisation’ would solve. (Please don’t mention “electric traction” until there is adequate power supply for the 25kV network, including 75% growth, of course.)
I really don't want to derail the thread into a discussion of "How HSTEd would reimagine freight operations", but there are several ways in which a freight operation fully integrated into the passenger one could be a big benefit.
Personally I'm not sure that the 75% growth target is really that relevant, given that (as far as I can tell) it was introduced by the Sunak government in an attempt to sure up it's eco-credentials, I don't think I've seen a proper government whitepaper or report suggesting where this growth will come from since then.

In any case, if we were to replace all the freight locomotives with Class 99-esque electrodiesels we'd likely improve the position of the industry as a whole, even without wholesale improvements to power supplies sufficient to allow for true electric traction. Areas where faster freight trains would release paths would then be easier to target with power supply improvements, and I imagine some areas probably would benefit right off the bath (GWML?).
Given that the Elizabeth line generated £670m in ticket revenue in 2024/25 whilst the entire freight sector only generated ~£1bn, I don't think its silly to suggest that doing almost anything that improves the ability of the Elizabeth line to use the GWML reliefs is likely to improve the industry's finances, even if it notionally increases the cost of operating the Mendips aggregates and other freight services (new locomotives, more rolling stock to run out of peak hours etc).

As another example, it's hard to get good a good estimate due to statistics gaps, but at the established fitting costs of Electronically Controlled Pneumatic (ECP) brakes (a few thousand US dollars per vehicle), it wouldn't take long fo them to see real benefits on a systems basis. For example, the system would provide continuous surveillance of handbrake state, axle bearing temperatures and wheel rotation speed, eliminating incidents like the derailment of an oil train at Llangennech (caused by overheating axles) in 2020 as well as reducing the need for complex and expensive trackside hot axle box detectors. On intensively used routes, that the performance of such freight trains can get much closer to passenger operations is also likely to be a boon.

As it stands freight operators are provided paths with access charges far below what even passenger trains would pay (let alone their true cost!) and given their supply of very cheap railway diesel, are not incentivised to bear the cossts of switching to new locomotives and new braking equipment for which the benefits will accrue to others.

EDIT: Assuming an ECP brake installation included a vibration detector, it could also have limited the damage from that freight train derailment on the Gospel Oak to Barking line (also 2020!) where the train continued for ~2.5 miles after the derailment. They are in the palette of supported features but I do not believe the original FRA specification requires them. Vibration sensors are not expensive!
 
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Dr Hoo

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Thank you to @HSTEd for his manifesto.

So part of the nationalisation 'magic bullet' will be paying for a system-wide conversion to ECP brakes and reaping system benefits soon afterwards. Practically all freight rolling stock is 'privately owned' one way or another but I suppose that Network Rail's engineering wagons would be a good start, if only to 'warm up' the supply chain.
 

Class15

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An example of this is Serbia, where Srbija Kargo is the state freight operator and had a monopoly until the market got deregulated. Its continued presence is no hindrance for the competitiveness of rail freight as they continue to bid against private companies for it.

I think GBR should go for this.
 

cactustwirly

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I'm not sure that a number of FOCs obtaining traffic by undercutting each other is good for the long term survival of any of them. Very often it seems to be not traffic won from road but won from another FOC operator. Each FOC operator is likely to have similar costs - Network Rail tolls, loco hire costs, staff (mainly ASLEF) staff costs, so the successful one is likely to be the one that accepts the lowest margin. Good for the customer though.
The 'take it or leave it' attitude - BR Railfreight was not allowed to take on unprofitable traffic so when the price offered came down to the level below which Railfreight were not allowed to quote that was it.
Many road competitors did not accurately cost their own business particularly relating to costs arising from unexpected events. But, when they went into liquidation as a result, there was always another one waiting to make the same mistake. Good for the customer, though,

You're assuming the cost base is the same.
BR Railfreight had a fleet of old unreliable locks, with expensive maintenance costs.
Foster Yeoman famously went above BRs head to order the more modern and efficient 59s from EMD

Other operators have different fleet profiles, some have brand new types with lower maintenance costs etc. Back office costs will be different between each operator.

There is a reason why DB cargo lost the Somerset Aggregate to Freightliner
 

Helvellyn

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Given the overall subsidy that GBR will still need, and the fact the Secretary of State has stated one of GBR's objectives will be to reduce Net Subsidy, I really can't see DfT or HM Treasury signing off on DFTO getting the funds to either buy DB Cargo or set-up a standalone freight division.

You might get a decision at some point to transfer ownership of DRS to GBR but it's hardly likely to be a priority.
 

Elecman

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Network Rail aquiring all the DB yards and converting them to access to any freight company would be a good start
 

Merle Haggard

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You're assuming the cost base is the same.
BR Railfreight had a fleet of old unreliable locks, with expensive maintenance costs.
Foster Yeoman famously went above BRs head to order the more modern and efficient 59s from EMD

Other operators have different fleet profiles, some have brand new types with lower maintenance costs etc. Back office costs will be different between each operator.

There is a reason why DB cargo lost the Somerset Aggregate to Freightliner

All valid points, Just a few observations.

The Cl 60 was Railfreight specified and I believe not unreliable; that was a condition of the manufacturer being paid and stronger than CL 66s. Only 100 though. The 56 and 58 weren't old either, not sure about reliability. The really old ones were Cl 20 and cl 37 and the former, at least, was very reliable. Old locos have exhausted their capital costs so it's maintenance only.

The benefit of new loco. types having lower maintenance costs may well be balanced by having higher capital cost (implicit in lease charges) to amortise.

Back office costs - how many staff are involved? Not many, I would think. DB cargo's Doncaster office was a perk from the Council to encourage them to move to the town, not sure if it's still open.
 

Farnborough

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So another option is each GBR area has a small fleet of locos for work in there own region which is not commercial work such as RHTT, weed killer trains and the Test trains and thunderbird.
Given that this would mean they're sat around for much of the time, this leads to capital tied up in unproductive assets?

== Doublepost prevention - post automatically merged: ==

GBR have enough on their plate trying to sort out the passenger side of things without getting involved in freight work.
Many would argue that GBR/Railtrack had enough on their plate trying to sort out the rail infrastructure, without getting involved in passenger services...
 

Oxfordblues

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Given how heavily subsidised railfreight operations are, is this truly a good thing?

Right now track access charges are set on an "what the market will bear" level, which is very low because of competition from roads and between operators. The more "competitive" the railfreight market becomes, the greater the indirect subsidy is provided by the taxpayer.
If railfreight operations are "heavily subsidised" then so is road freight: a haulier can take a container all the way from Southampton to Scotland without once encountering a toll-booth.
 

Merle Haggard

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If railfreight operations are "heavily subsidised" then so is road freight: a haulier can take a container all the way from Southampton to Scotland without once encountering a toll-booth.
Indeed, and an operator from another country with a large and full fuel tank on arrival can make journeys in this country without contributing a penny to the costs caused.
 

HSTEd

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If railfreight operations are "heavily subsidised" then so is road freight: a haulier can take a container all the way from Southampton to Scotland without once encountering a toll-booth.
Again, I don't wish to derail the thread, but if you total up the HGV levy, fuel duty and VAT the road haulier has to pay on diesel etc, it comes to a substantial portion of the cost of the entire road system. Last time I came up with it it was about £5bn per year, which is about the cost of operating National Highways (ie. the trunk road system overwhelmingly used by road hauliers) and about half the total.

Freight operators, like all road users, pay for the infrastructure through the levy on road fuel.

Rail operators pay very little tax at all on diesel by comparison (10.18p/L & VAT at 5% vs 52.95p/L & VAT at 20%) and pay very little for access to the railway system.
 
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Magrar

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It's insane to have the tracks and management of the railway, and the steel industry, all in public hands, all ostensibly for national security reasons, but leave one crucial part of it all, transporting steel by rail, in private hands.
 

Bletchleyite

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It's insane to have the tracks and management of the railway, and the steel industry, all in public hands, all ostensibly for national security reasons, but leave one crucial part of it all, transporting steel by rail, in private hands.

Direct Rail Services is nationalised, presumably that could be used for strategic steel transport of that nature e.g. in a hypothetical war with Russia.
 

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