Why Is Railfreight So Expensive?

[Moonshot]

You'd kiss good bye to significant portions of the network!

You dont actually know that.........

The true price of what the passenger will pay is masked by regulated fares.

 

[The Planner]

Out of interest I travelled the London Overground route last week from Clapham to Stratford and the TFL timetable was pretty much clockface, so although the line is congested I'm still waiting to hear of actual examples of actual applications for paths made by TFL or other TOCs to NR that have been turned down due to freight train occupation. I am sure one or two exist but absolutely miniscule in the context of around 24,000 trains run per day.

Which would require one of the several planners that plan that route being on the forum and being able to remember when and what was rejected. Considering there are 250+ planners working on various aspects of planning be it LTP, STP, RSB, engineering haulage, test trains and the like for the country you might strike gold and get an example but I wouldnt bet on it.

 

[HSTEd]

You dont actually know that.........

The true price of what the passenger will pay is masked by regulated fares.

So would the passengers on lines like the Far North line be willing to pay fares treble what they are now?

Or the Durham Coast Line, or the Cumbrian Coast Line?

Vast portions of the network would simply cease to exist, with most of the rest specced down to the minimum required to deliver a service that makes money.
ie. Single track 'main lines' and such things, with most stations eliminated.

 

[Moonshot]

So would the passengers on lines like the Far North line be willing to pay fares treble what they are now?

Or the Durham Coast Line, or the Cumbrian Coast Line?

Vast portions of the network would simply cease to exist, with most of the rest specced down to the minimum required to deliver a service that makes money.
ie. Single track 'main lines' and such things, with most stations eliminated.

Which would then free the taxpayer from carrying the burden of subsidising the railway.

You dont actually know what the rail network would look like if that was the case.....

 

[NSEFAN]

Which would then free the taxpayer from carrying the burden of subsidising the railway.

You dont actually know what the rail network would look like if that was the case.....

Arguably the NHS is a burden too, but we still support it because of the social benefit it provides. Profit isn't always the most important thing in life.

 

[Moonshot]

Arguably the NHS is a burden too, but we still support it because of the social benefit it provides. Profit isn't always the most important thing in life.

Except that the NHS is free at the point of use. I ve no doubt it provides a benefit , and as long as it still recieves the support of the taxpayer , then it will obviously carry on. But the downside of the NHS is that the demands on it are ever increasing, and care has to be rationed. This is not an issue that affects private healthcare, where patients are free to choose and define what they recieve.....

 

[edwin_m]

Which would then free the taxpayer from carrying the burden of subsidising the railway.

You dont actually know what the rail network would look like if that was the case.....

The closest we can get is probably the Serpell report from the 80s, which attempted to identify the "profitable core" of the railway. No doubt Google will find the maps.

It did include some freight routes, but they were colliery to power station of the type that doesn't exist today.

 

[Moonshot]

The closest we can get is probably the Serpell report from the 80s, which attempted to identify the "profitable core" of the railway. No doubt Google will find the maps.

It did include some freight routes, but they were colliery to power station of the type that doesn't exist today.

Which of course was quietly dropped and bears absolutely no relation to the railway of today.

Until we take out the barriers which are imposed on the industry, we will never know whats worthwhile investing in and what isnt.

 

[HSTEd]

Which would then free the taxpayer from carrying the burden of subsidising the railway.

The 'burden' is not a significant fraction of total government spending, even though I would rather it was smaller or we were to get more for it. (Through a return to state ownership)

You dont actually know what the rail network would look like if that was the case.....

I can give you a very good guess.
Despite what the rabid privatisers like to think the fact is that the vast majority of the public transport provision in the United Kingdom would cease to exist without massive state support.

Railfreight would essentially dissapear completely (with very minor exceptions for the few remaining coal flows), along with most of the Midland Main Line and pretty much the entire Northern Rail network with the exception of the WCML.

None if can ever hope to make any money, if fares were increased sufficiently to have an effect it would lose all the custom to the buses which while slower would be significantly cheaper.

There is no magic wand that the market can use to make it amazingly profitable and amazing for users if only we were to let them do it and not constrain them with the 'dead hand' of the state.

 

[Moonshot]

The 'burden' is not a significant fraction of total government spending, even though I would rather it was smaller or we were to get more for it. (Through a return to state ownership)



I can give you a very good guess.
Despite what the rabid privatisers like to think the fact is that the vast majority of the public transport provision in the United Kingdom would cease to exist without massive state support.

Railfreight would essentially dissapear completely (with very minor exceptions for the few remaining coal flows), along with most of the Midland Main Line and pretty much the entire Northern Rail network with the exception of the WCML.

None if can ever hope to make any money, if fares were increased sufficiently to have an effect it would lose all the custom to the buses which while slower would be significantly cheaper.

There is no magic wand that the market can use to make it amazingly profitable and amazing for users if only we were to let them do it and not constrain them with the 'dead hand' of the state.

None of which you actually know......

Fares have been increasing year on year......but so have passenger numbers. This would seem contradictory to accepted economic theory.

 

[NSEFAN]

Fares have been increasing year on year......but so have passenger numbers. This would seem contradictory to accepted economic theory.

The railway only has limited capacity it can offer. Surely this results in a supply and demand situation: more people want to use the trains (for various reasons), so you can charge them more for the convenience.

 

[Moonshot]

The railway only has limited capacity it can offer. Surely this results in a supply and demand situation: more people want to use the trains (for various reasons), so you can charge them more for the convenience.

Your not a million miles away from the answer.....when supply is constrained and demand is increasing , the rational answer is to price choke demand. But the railway industry hasnt done that .....what it has done is to increase supply to match demand with no reference to price. And this is why we have ended up on a situation where costs have risen at the same rate as revenue and still left us with the same percentage of empty seats on a daily basis.

I ll accept the reasoning that a significant portion of demand is compelled, but that doesnt mean to say that pricing differentials should fail to work at the margins of demand at the very least.

 

[HSTEd]

None of which you actually know......

If we restrict things to what we actually 'know' we can't really have a meaningful discussion about anything

Fares have been increasing year on year......but so have passenger numbers. This would seem contradictory to accepted economic theory.

Well prices of other transport modes have also been rising, as has the population of the United Kingdom and thus the population density, all factors that will tend to improve the lot of public transport.

(There are nowhere near as many cheap domestic flights available as there once were for instance).

Remember a fully privatised network would have no use for anything like cross subsidy, so any line that did not independently make a profit would likely face the axe - network effects would likely have no impact in an industry that would be even more balkanised than now as all the companies attempt to divest themselves of lossmaking services that still provide 'feeder traffic' to themselves.

Additionally nonprofitable services on 'profitable' lines would be axed to enable rationalisation and cost saving in infrastructure.

Once the ECML has essentially ceased to exist north of Peterborough (since almost all its destinations will not be able to justify significant services or can be served via other routes) there is little reason to maintain the extensive triple and quadrouple tracking for instance.

 

[deltic]

If you look at http://www.rail-reg.gov.uk/server/show/ConWebDoc.11143 it provides the best indication of the true financial position of each TOC taking into account payments by Govt to Network Rail - East Coast, Thameslink and South West Trains are the only truly profitable TOCs.

If operators could increase revenues by 10% and reduce costs by 10% then C2C, WCML, Great Western and Southern would also be profitable.

Northern covers just a third of its costs through the fare box, Scotrail, Wales and Merseyrail just 40%

 

[Buttsy]

Which would then free the taxpayer from carrying the burden of subsidising the railway.

You dont actually know what the rail network would look like if that was the case.....

In that case, why not also free the taxpayer from the burden of subsiding the road network. While it can be argued that car drivers pay more in tax than goes into the road network for the damage caused, it is also fairly clear that commercial operators pay significantly less proportionately than car drivers for size of vehicle and environmental damage. The answer is therefore remove all tax on fuel and vehicle and charge tolls based on road use. My thinking is that we would soon hear howls of protest as the tolls were excessive as they are set 'at the market rate' by free market operators so that they make a profit and can carry out minimum maintenance...Also the fuel providers realise that they can make bigger profits by not reducing the cost of fuel by the reduction in tax amount. Both factors would drive up the cost of goods overall, particularly so if there were no freight railways left to move goods around because the 'free market' has meant that most lines have ended up being closed as they cannot compete with road hauliers. The free market thinking could mean that we would end up with a monopoly and, as we are told, monopolies are bad.

We should accept that road and rail transport, particularly in freight, are, and need to be subsidised in some way in order to make the goods we buy reasonably priced.

 

[tbtc]

If you look at http://www.rail-reg.gov.uk/server/show/ConWebDoc.11143 it provides the best indication of the true financial position of each TOC taking into account payments by Govt to Network Rail - East Coast, Thameslink and South West Trains are the only truly profitable TOCs.

If operators could increase revenues by 10% and reduce costs by 10% then C2C, WCML, Great Western and Southern would also be profitable.

Northern covers just a third of its costs through the fare box, Scotrail, Wales and Merseyrail just 40%

...something that should be remembered next time we see someone complaining that Northern / ATW don't want to throw money at something - these are very unprofitable lines (in terms of investing extra resources on)

 

[Moonshot]

In that case, why not also free the taxpayer from the burden of subsiding the road network. While it can be argued that car drivers pay more in tax than goes into the road network for the damage caused, it is also fairly clear that commercial operators pay significantly less proportionately than car drivers for size of vehicle and environmental damage. The answer is therefore remove all tax on fuel and vehicle and charge tolls based on road use. My thinking is that we would soon hear howls of protest as the tolls were excessive as they are set 'at the market rate' by free market operators so that they make a profit and can carry out minimum maintenance...Also the fuel providers realise that they can make bigger profits by not reducing the cost of fuel by the reduction in tax amount. Both factors would drive up the cost of goods overall, particularly so if there were no freight railways left to move goods around because the 'free market' has meant that most lines have ended up being closed as they cannot compete with road hauliers. The free market thinking could mean that we would end up with a monopoly and, as we are told, monopolies are bad.

We should accept that road and rail transport, particularly in freight, are, and need to be subsidised in some way in order to make the goods we buy reasonably priced.

I dont see a monopoly in Air Travel since the state subsidised carrier was privatised. I dont see a monopoly in the telecoms industry since BT was privatised, I dont see any monopolies in the gas and electric industries......I even dont see a monopoly in the recently privatised Royal Mail, which has now attracted competition in the form of TNT postal!!

 

[Buttsy]

I dont see a monopoly in Air Travel since the state subsidised carrier was privatised. I dont see a monopoly in the telecoms industry since BT was privatised, I dont see any monopolies in the gas and electric industries......I even dont see a monopoly in the recently privatised Royal Mail, which has now attracted competition in the form of TNT postal!!

I will hold my hands up and say that monopoly was the wrong word, on reflection, cartel would be more appropriate. A group of companies agreeing to keep their prices at a level that they all get a reasonable share of the cake. If you do not believe this actually happens, the customer service industry in Swindon works on that basis to keep salaries artificially lower than the average for such roles within the UK.

The National Grid I believe is effectively a monopoly as you would find it very difficult to get someone else to look after your gas pipes and electricity wires, same applies to the water companies. Therefore, these companies are regulated otherwise they would abuse their market position as their first responsibility is to their shareholders, not their customers.

 

[Moonshot]

I will hold my hands up and say that monopoly was the wrong word, on reflection, cartel would be more appropriate. A group of companies agreeing to keep their prices at a level that they all get a reasonable share of the cake. If you do not believe this actually happens, the customer service industry in Swindon works on that basis to keep salaries artificially lower than the average for such roles within the UK.

The National Grid I believe is effectively a monopoly as you would find it very difficult to get someone else to look after your gas pipes and electricity wires, same applies to the water companies. Therefore, these companies are regulated otherwise they would abuse their market position as their first responsibility is to their shareholders, not their customers.

Of course if someone feels they are paid a salary a lot less than they think they should be getting, isnt it true that you can simply apply for a role thats better paid? Of course employees who work for the state are currently subject to a 3 year pay freeze.......which is what would have happened to rail employees should BR still be around today...

 

[Buttsy]

Of course if someone feels they are paid a salary a lot less than they think they should be getting, isnt it true that you can simply apply for a role thats better paid? Of course employees who work for the state are currently subject to a 3 year pay freeze.......which is what would have happened to rail employees should BR still be around today...

I may have not made myself clear, if all you have done is telephone based customer service roles, all the companies that operate in Swindon offer basically the same salary based on experience, so jobs offered by other firms means that you wouldn't get much more money (£200 pa roughly), hence why most staff have been with the same firm since they started. The only way of breaking out of the cycle is to get a job in a different town, but then you have to factor in transport costs which generally means you end up with the same money.

If the railways and roads were not subsided in some way, do you honestly think that we would have as many of both of them we currently have? Certainly roads and railways in the far north of Scotland or mid Wales would either be closed (railways) or not maintained (roads), leaving most roads not passable at not much more than 5 mph if you valued your suspension. If you have bad minor roads, most people will drive on the better roads and add to the congestion on those roads, adding to the cost of freight transport and so increasing the costs of goods. Perhaps then we would go back to Victorian times whereby you lived near where you worked...It has it plus points.

 

[Moonshot]

I may have not made myself clear, if all you have done is telephone based customer service roles, all the companies that operate in Swindon offer basically the same salary based on experience, so jobs offered by other firms means that you wouldn't get much more money (£200 pa roughly), hence why most staff have been with the same firm since they started. The only way of breaking out of the cycle is to get a job in a different town, but then you have to factor in transport costs which generally means you end up with the same money.

If the railways and roads were not subsided in some way, do you honestly think that we would have as many of both of them we currently have? Certainly roads and railways in the far north of Scotland or mid Wales would either be closed (railways) or not maintained (roads), leaving most roads not passable at not much more than 5 mph if you valued your suspension. If you have bad minor roads, most people will drive on the better roads and add to the congestion on those roads, adding to the cost of freight transport and so increasing the costs of goods. Perhaps then we would go back to Victorian times whereby you lived near where you worked...It has it plus points.

Or maybe re training and arming yourself with different skills with a higher value.....

 

[CalderRail]

We should accept that road and rail transport, particularly in freight, are, and need to be subsidised in some way in order to make the goods we buy reasonably priced.

This is nonsensical. If the subsidies weren't in place, you would pay less tax and have more take home pay, and thus could afford higher prices!
--- old post above --- --- new post below ---

If you look at http://www.rail-reg.gov.uk/server/show/ConWebDoc.11143 it provides the best indication of the true financial position of each TOC taking into account payments by Govt to Network Rail - East Coast, Thameslink and South West Trains are the only truly profitable TOCs.

If operators could increase revenues by 10% and reduce costs by 10% then C2C, WCML, Great Western and Southern would also be profitable.

Northern covers just a third of its costs through the fare box, Scotrail, Wales and Merseyrail just 40%

Do you know if the figures for Northern include WYMetroCard income as part of passenger income or as government or other?

 

[Moonshot]

This is nonsensical. If the subsidies weren't in place, you would pay less tax and have more take home pay, and thus could afford higher prices!
--- old post above --- --- new post below ---


Do you know if the figures for Northern include WYMetroCard income as part of passenger income or as government or other?

A fact which is lost on a lot of posters on here. Having more money in your salary from a reduction in direct tax gives people greater choice. A major step change in my view would see the end of state pensions, these cannot be sustained. To counter this, abolish National Insurance completely, and let people invest the money in schemes of their own choosing.

 

[GB]

If the subsidies were withdrawn today, do people really think the government will lower income tax??

 

[Moonshot]

If the subsidies were withdrawn today, do people really think the government will lower income tax??

If its a manifesto committment then yes......

 

[NSEFAN]

If its a manifesto committment then yes......

My goodness, where is your good British sense of cynicism?

 

[HSTEd]

A fact which is lost on a lot of posters on here. Having more money in your salary from a reduction in direct tax gives people greater choice. A major step change in my view would see the end of state pensions, these cannot be sustained. To counter this, abolish National Insurance completely, and let people invest the money in schemes of their own choosing.

Leaving those too poorly paid to pay significant contributions towards a pension to work themselves into an early grave for fear of starvation should they retire?

National Insurance also raises far more than the state pension costs, so what else do you cut to balance this insane concept?

This is just another case of 'I don't care about you, I'm fine mate'

 

[Buttsy]

A fact which is lost on a lot of posters on here. Having more money in your salary from a reduction in direct tax gives people greater choice. A major step change in my view would see the end of state pensions, these cannot be sustained. To counter this, abolish National Insurance completely, and let people invest the money in schemes of their own choosing.

Based on that thinking, how are those who do not pay direct tax at present given greater choice?

 

[Moonshot]

Leaving those too poorly paid to pay significant contributions towards a pension to work themselves into an early grave for fear of starvation should they retire?

National Insurance also raises far more than the state pension costs, so what else do you cut to balance this insane concept?

This is just another case of 'I don't care about you, I'm fine mate'

Those too poorly paid do have a choice of improving their own standing.....no one is forcing them to stay in low paid jobs.

Of course those who rely on a state pension are going to be working far longer anyway with the retirement age being pushed up. Which is not an issue affectin holders of private pensions who have far greater choice about when they want to retire.