There are now approximately 6000 new rail vehicles that have been ordered, are under construction or being introduced into service in the UK. It’s an almost unprecedented number, that will see many older trains being sent for scrap, and will allow more services to be run.
What’s more remarkable is that, until December 2011, there had been almost a 2 year period with no new train orders – almost as long as the 1000-day hiatus caused by rail privatisation in the 1990s. So what’s changed?
Roger Ford has a more detailed analysis of the situation in his Informed Sources column in this month’s Modern Railways magazine. I’m using some of his facts and figures here, but his column is, as always, essential reading for those who want to know what’s going on in the rail industry.1. New rail franchises have a higher focus on quality
In years gone by, rail franchises were generally awarded to whichever bidder could run its trains with the lowest subsidy, or could return the most amount of money to the government. This came to an end after aborted franchise competition for the West Coast Main Line, which was initially awarded to FirstGroup (instead of the current Virgin Trains and Stagecoach joint venture).
Now, bidders are also assessed on the quality of service that they plan to offer passengers. Replacing older trains with shiny new ones is a good way of gaining points for quality, and all of the recent franchise awards have been to companies that have promised brand new trains.
With the recent awards of the Greater Anglia and South Western franchises, the successful bidders plan to even replace relatively new trains. South Western Railway have ordered a fleet of Aventra trains from Bombardier that will replace a fleet of Siemens Desiro City trains that have only just been built, and are still being introduced.
2. There’s more competition in the train building market
A few years ago, there were only three major manufacturers building trains in Great Britain (I’m excluding Northern Ireland as its rail system operates under a different structure). These were:
- Bombardier, a Canadian firm who builds trains in Derby, at facilities once owned by British Rail.
- Siemens, a German firm who builds trains in Germany and Austria
- Alstom, a French firm who used to build trains in Birmingham but now builds vehicles across Europe
Alstom isn’t currently building any trains for the GB market but may do in future. It has recently opened a major new facility in Widnes, primarily for work on the existing Virgin Pendolino trains but which could be used to build new trains.
Bombardier is currently building new trains for Crossrail, London Overground, Great Western Railway, South Western Railway and Greater Anglia. Siemens has orders for Thameslink, Great Northern and South Western Railway under construction.
Newer entries to the market are:
- Hitachi, a Japanese firm which built the Javelin High Speed trains for Southeastern. It has since built an assembly plant in Newton Aycliffe in County Durham, which receives empty body shells from Japan and fits out the doors, windows, bogies, engines, couplers and the interiors. It also took over AnsaldoBreda in Italy, and so it has a factory there as well. Hitachi is building new trains for Great Western Railway, Virgin Trains East Coast, ScotRail, First Hull Trains and Transpennine Express.
- CAF, a Spanish firm that previously built trains for Heathrow Express and Northern Rail, in a joint venture with Siemens in the late 1990s/early 2000s. Since then, it has focused more on light rail, building trams for Edinburgh and the Midland Metro. It also built 43 trains for Northern Ireland, in two batches. CAF is building new trains for the Caledonian Sleeper, Northern Rail and Transpennine Express; these are being built in Spain, but CAF plans to open a factory in Wales soon.
- Stadler, a Swiss firm that is very new to the UK market. It recently took over Vossloh, which built the Class 68 and 88 locomotives for freight operator Direct Rail Services; some of the 68s are sub-leased to Chiltern Railways, ScotRail and (soon) Transpennine Express for passenger services. It has also built the new tram-trains for Sheffield Supertram. Stadler is building new trains for Greater Anglia and Merseyrail.
So, there are now (essentially) 6 companies all bidding for work to build new trains.
3. There’s more competition in the train leasing market
Most train companies don’t actually own the trains that they operate. Typical rail franchises last less than 10 years, whereas a train could be in service for three or four times as long. So the majority of trains are owned by ROSCOs – rolling stock leasing companies.
At privatisation in the 1990s, British Rail’s existing fleet was split between three companies: Angel Trains, Eversholt and Porterbrook. These three companies still own most of the rolling stock in Britain, but new entrants to the market have increased competition. These include Beacon Rail, Rock Rail, Macquerie, QW and others.
4. Interest rates are at an all-time low
The Bank of England base rate is the lowest its ever been, at 0.25%. I’m sure it’ll go up soon, but the cost of credit is negligible compared to even just a couple of years ago. To take a non-rail example, we recently remortgaged our house, and got a five year fixed deal at a lower interest rate that the two year fixed deal that we picked up in 2015.
Therefore, borrowing the money to fund the cost of new trains is less costly than it has been for many years.
5. Train prices are at their lowest in around 25 years
Points 2, 3 and 4 combine to create a situation where new trains are at their cheapest rates for around 25 years. Roger Ford uses the example of the Class 323 electrical multiple units, which were ordered for commuter services in Manchester and Birmingham just before privatisation in the early 1990s. These cost around £1.2 million per carriage at today’s inflation-adjusted prices.
As recently as three years ago, the price per carriage was more like £1.4 million, for the Class 707 Siemens Desiro City units destined for South West Trains. But, now, we’re back into the £1.2 million per carriage. A saving of £200,000 per carriage may not sound like a lot, but some of these orders have been for several hundred trains. South Western Railway ordered 750 new carriages from Bombardier, and will probably pay £150 million less than they would have done for a similar order in 2014. This may explain why those Class 707 units will go back to the leasing company in less than three years’ time. By the time they’ve been delivered, cheaper alternatives have become available.
6. Newer trains require less maintenance
Modern Railways holds the ‘Golden Spanner’ awards every year, which highlight the train fleets with the highest reliability. Although there are inevitable teething problems with new trains, once they’re settled in, they’re typically much more reliable than ex-British Rail units. The much-despised Pacer trains can typically do 6000 miles between technical incidents, whereas some newer trains can reach 100,000 miles before requiring attention.
If fewer trains need to be taken out of service due for maintenance, then you can run more services, or have a smaller fleet. And, your maintenance costs go down. So it may be cheaper long-term to buy new trains (especially now that they’re so cheap to buy) than to keep older trains going.
7. Homogeneous fleets improve availability
When Greater Anglia started its current franchise in October last year, it had 8 different classes of train (plus some trains hired in from Direct Rail Services). These are a mixture of old and new diesel and electric trains, from a variety of manufacturers. With a couple of its diesel trains out of service for a long time due to accidents, it had to hire in the aforementioned trains.
Greater Anglia is planning to completely replace all of its trains with just 3 classes of trains from two manufacturers (Bombardier and Stadler). This will massively reduce complexity with the franchise, and should improve availability. Hiring in trains from other companies is usually expensive, and generally a last resort.
South Western Railway seems to be doing the same; its 750 new Aventra trains from Bombardier will replace four existing classes of trains, including two ex-British Rail fleets and smaller fleets built by Alstom and Siemens.
8. All trains must be accessible by January 1st 2020
All trains built since 1999 have needed to be fully accessible to people with disabilities. They need to have wide, automatic doors, both audible and visual announcements, at least one wheelchair-accessible toilet (if toilets are provided), and a wheelchair space with call-for-help buttons.
But there are still lots of older trains running that don’t meet these requirements. Whilst some are being upgraded – Northern Rail is working on some of its Sprinter trains, for example – in some cases, it’s just not economically viable. The oldest of the Pacer trains, the Class 142s, will all be taken out of service before this date. I expect the rest of the Pacers will go too, despite the existence of an ‘e-Pacer’ which was modified to meet these requirements.
I’m sure there are plenty of trains where, a few years ago, it would have been cheaper to modify them for compliance. But, with new trains being so cheap, the old trains will probably be scrapped rather than modified.
And there may be more to come
The London Midland franchise was recently awarded to a joint venture led by Abellio, who have also promised new trains. The next franchise award announcement is for the Southeastern franchise, and I expect this will include new trains as well, to replace the Networker units dating from the early 1990s. Whilst these trains have probably got at least 10-15 years of life left in them, I wouldn’t be surprised if they’re replaced sooner.
After that? Who knows. At some point, interest rates will rise, and the leasing companies will be stuck with hundreds of off-lease trains that are basically worthless. I expect that the cost of new trains will go back up before long, making this a curious bubble. But for now, we, the travelling public, can look forward to lots of shiny new trains over the next few years.