BACKGROUND ON GB RAILFREIGHT

  GB Railfreight was established in 1999 to operate rail freight services in Britain. It is the first new rail freight company since privatisation of British Rail. The company commenced services in April 2000.

  Currently, GB Railfreight:

—  hauls track renewal materials and supports track maintenance work for Network Rail, mostly in eastern England;

—  hauls intermodal containers for Medite Shipping between Felixstowe Port, the West Midlands and Northeast;

—  hauls Gypsum between ports, power stations and gypsum board factories for British Gypsum; and

—  provides a range of services to other customers under short-term contracts, including provision of drivers and locomotives.

  To deliver these services we have:

—  17 new class 66 locomotives, leased from HSBC Rail; and

—  recruited and trained almost 100 staff, including 64 Train Managers (Drivers) and Assistant Train Managers who drive the trains and perform a wide range of other duties under flexible work terms.

  Our objective is to provide excellent customer service. All staff work as an integrated team, without sharp demarcations between management and production workers.

  GB Railways is a wholly-owned subsidiary of GB Railways Group Plc, which has recently been acquired by FirstGroup Plc.

  GB Railfreight currently has about 2% of the UK rail freight market, and is seeking to continue expanding. We are currently in discussions with a range of potential customers.

RESPONSE TO COMMITTEE QUESTIONS

  "Is the Regulator right, or is rail an outmoded form of transport?"

—  The Regulator is right—rail remains very competitive for certain types of transport, in particular high volume movements.

  Is the present network the right one; if not, how should it be changed?

—  Given the high cost of constructing new railways, we think that major change in the network is unlikely. We think some new routes may be built, but major line closures are unlikely.

  What sort of traffic is the network best used for?

—  There is great variety in the nature of the network and demand on particular corridors. Major inter-city routes such as the West Coast and East Coast Main Lines are dominated by high speed and high volume passenger services, although there is also some capacity for freight. Other routes, for example Ipswich-Peterborough, carry very little passenger traffic and can carry more freight.

  How does our network compare with other railways, and what lessons can we learn from other countries?

—  Britain has a well developed rail network that is the envy of many other countries. Coverage of the network is generally very good. Potential for rail freight services are constrained on some routes by the availability of train paths, and also historic under-investment in depots, signalling, passing loops, etc.

—  Many lessons can be learned from other countries, however the UK situation is in many ways unique with a network of intensive passenger services between several centres, through congested conurbations.

  We look forward to answering any other questions you may have at the hearing.

Michael Schabas

October 2003