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Tunnel
vision
GB Railfreight has had a busy couple of years. Its sale
to Eurotunnel has seen it begin services to Spain for
Tesco, while its domestic services have continued to
grow, as Katie Silvester discovers
When the Channel
Tunnel opened,
its owners,
Eurotunnel,
expected it to
be popular with
rail freight operators – primarily BR at the
time – giving them the opportunity to run
trains seamlessly between the UK and the
Continent for the first time. But take-up has
been low. High access charges for using the
tunnel, coupled with the problems typically
faced accessing infrastructure in France via
the notoriously bureaucratic SNCF, have
put most freight operators off. DB Schenker,
formerly EWS, has always run some services
through the tunnel, but other UK freight
carriers have avoided it.
When Freightliner wanted to expand
internationally, it began operations in
Poland and Australia, rather than send trains
through the Channel Tunnel. GB Railfreight
was also wary of the Tunnel. MD John Smith
told Rail Professional in 2007: ‘I’d rather steer
clear of the Channel Tunnel. There’s too
much risk involved.’
Now all that is set to change. GBRf,
formerly part of FirstGroup, was sold to
Eurotunnel 18 months ago. Its new owners
bought the company expressly to improve
the tunnel’s credibility for rail freight,
FirstGroup having sold GBRf off to settle
some debts as it was a non-core business for
the passenger train and bus operator.
John Smith has remained as managing
director of GBRf, but now also has
responsibility for the management of
Europorte Channel, Eurotunnel’s freight
subsidiary.
‘Life’s changed fairly dramatically,
because we are strategically important to
Eurotunnel, which wasn’t the case at First.
We sit within the Europorte subsidiary, to
keep operations separate from infrastructure,
which is the concession of running through
the Channel Tunnel. The portfolio of
operations within Europorte includes other
terminal operations in France – Europorte
France, which is a rail freight operation, and
Europorte Channel, which is what I’m now
responsible for in addition to GB Railfreight.’
This sounds a bit complicated. In
essence, GBRf continues to operate as an
independent freight operator as it always
did, but it also offers services to other rail
operators wanting to use the tunnel.
Smith explains: ‘At a very practical level,
Europorte Channel has a licence to operate
trains in the UK, so, depending on where
the destination is, particularly for Daventry,
the Europorte Channel driver climbs on
the train and Europorte Channel charges
the customer for haulage from Coquelles to
Daventry. We don’t stop in Dollands Moor
anymore, we bypass that. With some of the
business we are developing, we’re going to
new locations.’
GBRf has begun its own services through
the tunnel. One carries refrigerated goods
for Tesco from Spain through to Barking,
on behalf of Stobart. It’s a time-sensitive
service that needs to arrive within an hour of
its booked time, but customers are prepared
to pay for this level of reliability. Another
regular run carries white goods from
Daventry to Italy.
‘There’s talk of how much the cost of
transiting the tunnel is, but all I can say is
that we’re managing to make money, satisfy
customer needs and price it at a level that
allows incremental growth,’ says Smith.
The company is looking at other
potential services from the Continent.
‘We’ve looked at France, at the consolidation
of logistics centres in France; we’ve looked
at Spain, though you’ve got a gauge change;
we’ve looked at the France, Germany, Spain,
Italy-type corridor through the tunnel.’
Like other freight operators, GBRf
has struggled in the recession, but it hasn’t
seen the losses that its larger competitors
Freightliner and DB Schenker have. Its profit
was £3m on a turnover of £57m in 2010,
the most recent year-end figures publicly
available. And the company’s performance
impressed the Rail Business Awards judges
sufficiently for GBRf to win the VTG Rail
Freight Excellence of the Year prize in the
2010 awards.
‘Since then, growth has picked up,’ Smith
says. ‘To a certain extent, that’s because
we’ve been procuring our own assets – now
we don’t have to lease anymore, we’ve been
buying Class 66s. Our growth has continued
for 2011; that will show in our turnover and
profits increasing quite dramatically.’
Smith, 50, started out as an engineer on
the railways, having begun his professional
life as a toolmaker. He joined British
Rail 35 years ago and ended up running
Page 28 march 2012