The answer's in the box
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IMPRESSIVE — a word not to be taken lightly when it's applied to the Freightliner network. Today it comprises 25 terminals throughout the UK plus service to 11 port terminals and four privately owned terminals. There is a fleet of 7,000 containers, 575 tractive units and 1,600 trailers and 200 trains run each day, together with 2000, rail wagons. The company employs a staff of 2,340.
In addition to services in Great Britain, Freightliner serves Ireland and Europe and has connections at all UK ports providing deep-sea container shipping services. The annual revenue in 1979 was £60.3m, which produced a trading profit of £1 .8m. The share capital of Freightliner is £9m.
According to Cyril Bleasdale, Freightliner's managing director, the railways in general and Freightliner in particular have a marvellous opportunity to tackle a range of technical and marketing challenges in the context of a rapidly changing framework.
"The Government is clearly taking steps to check energy consumption, and environmental issues are becoming more important. Although the lorry may get quieter and cause less pollution, it will still remain out of scale with the environment particularly in a small densely populated island such as this."
Freightliner has three problem areas to consider in this context: (a) The need to reinvest in resources and equipment to be used in the future.
(b) How the system reorganisation can be improved in the interests of greater profitability and better service.
(c) The need to convince railways that the future of general goods freight lies in the box rather than the wagon.
Freightliner's current reinvestment problem is caused by the fact that having grown rapidly over the past ten years. there is now an investment bulge to be accommodated during the next few years. They will have to spend between £5m and E.6m a year on replacing containers and either renewing or refurbishing cranes.
Cyril Bleasdale is quick to point out that Freightliner's fu ture now lies entirely with the railway systems, and believes that since the transfer back to British Rail, the company is benefiting. 'Freightliner is now back at the heart of British Rail's own challenge.'" Marketing the Freightliner service in the UK is not that easy because it has to compete with the British Rail's Speedlink network as well, But Cyril Bleasdale has always felt that there is a place for areas of overlap and that to succeed Freightliner must take business from lorries and promote the container "'which can do everything a rail wagon can do and more .
Freightliner's home trade will still remain competitive, thinks Mr Bleasdale, particularly because the return to British Rail has enabled more flexible attitudes towards integrating Freightliner with Speedlink in the trade name for British Rail's 120km /h wagon load service.
There will obviously be set backs in these unpredictable economic times. Despite the steel strike, Freightliner managed to make a trading profit in the second and third four-weekly periods of 1980, but this followed a loss in the first period.
The steel strike cost the company £200,000 in potential profit for the second period alone, but Cyril Bleasdale warned that "trading profits are now being achieved at a price because we are maintaining our reputation as a profitable com pany by cutting back on expenditure:"
Although financial targets are being maintained, the number-of containers being carried is down. Some of them were taken out of service as a result of the steel strike, and the effects of the worldwide recession also explained this trend.
Interestingly, a lot of these containers then went by road because the customer found a haulier who could do the job cheaper — probably by reducing his rates to get the work — a dangerous ploy unless very carefully monitored.
Current Freightliner charges are likely to be ten per cent above market rates on a 200mile haul, and immediate reductions in operating costs are needed to maintain the profit record. Last year's record £2m profit was all ploughed back into the Freightliner business with no cut being taken out for the Government or British Rail.
But Europe offers enormous opportunities to benefit from the growth in British trade with the EEC and to join with Freigh liner's European partners i combating the road trailer.
As to Freightliner's futun Cyril Bleasdale is adamant that does not lie in a confrontatic with road and ro ro, but more evolving a robust and broad based strategy.
-In some cases we shou even co-operate with operato of ro-ro ferries by spreading ol port coverage, while at same time seeking to underp and expand these areas of ol European business, such as tf UK/Italy market, where rail e
iys unique advantages.
Freightliner considers it can nly move towards automation i the context of thinking 'rough the ways in which its minals function.
One important step in this rection is the commissioning f the Container Operations 'ocessing System, Freighter's own real-time computer 'stem to which customers will ,entually have direct access. According to Cyril Bleasdale t is already beyond the scope the human mind to select the tst path for a container rough a terminal, deciding nether it should be left on a )iler or placed on the ground in operational storage, or 3ded onto a rail wagon.
The overall objective is not 3t to reduce manpower, but to e cranes more productively — containers per hour rather 3 n the 15 at present — and 3ke lifts in a more logical ler.
Freightliner is also examining iys in which double-handling n be reduced. One idea is to park trailers in parallel groups under the back cantilevers of' terminal cranes. Cyril Bleasdale believes that COPS will enable the container fleet to be reduced by ten per cent for the same throughput within one year.
On the subject of progress, Cyril Bleasdale said that in 1978, 79 per cent of capacity on available Fleetliner trains was used, compared with 69 per cent five years earlier, Computers have also made it possible for Freightliner to refine its management system, which has been designed to give terminal managers their own profit centre and enabling their accounts to be credited with a share of the prof its of traffic which either starts or finishes at their terminal.
With cheaper and simple handling systems being developed, Cyril Bleasdale is looking for ward to the opening up of more terminals in rural areas. In his view such terminals will provide the means of reducing road movements within towns.
As maximum road weights are raised, it will be necessary to have a higher-capacity 60ft wagon with the ability to carry 75 tons in three heavily loaded 20ft.•containers. Also desirable will be a low-cost two-axle 40ft. wagon capable of carrying two relatively light 20ft containers of a fully loaded 40ft container.
The trend of rail haul will be towards bigger block trains with the recognition that Freightliner's ability to exceed the level, of growth in the economy in general depends on its success in selling its services to smaller' and more fragmented markets.
Since Dr Beeching swung his axe, the Freightliner concept cannot be applied to many smaller towns, and Cyril Bleasdale is adamant that unless some way can be found of alleviating the crippling financial burden of lorries travelling long distances to pick up packages in remote areas, the only relatively long hauls will still be around in five years' time.
When comparing containers with piggy-back or trailer or flat car (TOFC), Cyril Bleasdale believes that containers have more to offer, "'they offer a lower tare, weight, they provide the natural link with maritime freight and 'they are cheaper.'' For comparison purposes Freightliner quotes that in spite of the greater capital cost of a Freightliner wagon against a similar general purpose rail wagon., the Freightliner unit offers a capital cost of £510 per payload ton against £750 for the conventional wagon.
Cyril Bleasdale sees a real challenge in sea traffic. The Irish scene in particular has meant that the company has had to switch its areas of activity. Industrial depression in Ulster and the republican South's booming trade with EEC have all had an effect, and to make matters worse competition became stronger when P&O launched a rival service in 1975. Freightliners withdrew one of two ships used to serve Ireland in 1976, but restored the service again in October 1978.
"Our marketing goal is to continue the growth of our business with the Republic and Ulster and to persuade deep-sea shipping lines to serve Ireland through English ports via the Freightliner network rather than using a feeder ship.
One of Freightliner's biggest success stories is that of deepsea traffic. Evidently over 67 per cent of the boxes moved from Southampton are from Freightliner's service.
In Europe, Freightliner is only too aware that the container has been outgunned by ro-ro, which is not surprising considering the shortness of the Channel crossing and the nearness of the main UK markets of the South coast to the Channel ports.
Poor productivity and difficult industrial relations at container ports may have been a contributory factor, but the crucial factor is ihe slowness of European railways in developing a marketable and comprehensive container train network.
But this is changing because of the increasing costs of road transport and growing restrictions ranging from bans on weekend working to drivers' hours limitations with the EEC. Outside the Community, one important European transit country — Austria — has a transit tax on lorries.
Europe accounts for some 35 per cent of Freightliner's maritime traffic involving some 130,000 container movements a year but they have been losing a market share.
The pattern of its business in Europe has been erratic. Italy, for example, accounts for 45 per cent of its Continental business, a fact which is explained by the length of the route and the geographical and regulatory difficulties faced by their road competitors, and compounded by the reluctance of the Italian and French authorities to step up the number of road permits for British lorries.
Cyril Bleasdale has hinted at a new marketing strategy for Freightliner's maritime traffic in an attempt at increasing its share of this market.
Details of this are being finalised and should be presented when the first six months' trading results are announced.