Safeway is way down the track, but now the other multiples are shifting freight on to the railways. Simon Creasey reports

Safeway might be lagging behind its rivals in some areas but when it comes to its logistics and more specifically its rail freight operation, the multiple has been on the right track for years.

Now, new pressures on road haulage are forcing everyone else to reassess rail. Last month, we reported Tesco was piloting deliveries by rail between its new Daventry non-food RDC and Scotland (The Grocer, October 11, p40) and others are either piloting schemes or discreetly switching elements from road to rail.

So why, after years of eschewing rail, are they changing their minds? And will the Safeway model be the blueprint?

A decade ago, the view was that rail freight did not work. It was expensive and unreliable because of deteriorating infrastructure.

But, over the past few years, the government has started to ramp up its efforts to shift traffic off the roads, increasing fuel taxes and introducing more toll roads.

And a number of other initiatives are set to make road haulage a whole lot more expensive. When the Working Time Directive comes into force in 2005, additional drivers will be required for long-haul deliveries.

On top of this, in 2006 the government is set to introduce ‘road pricing’ on all HGV movement, effectively meaning all lorries will be charged on a mileage basis.

Not that everyone has been caught short. In 1997 Safeway decided to invest in a pilot scheme running non-food goods from the Midlands to Scotland on a dedicated rail service even though, compared to road use, the scheme was at best cost-neutral.

Today, as well as moving goods from the Daventry International Rail Freight Terminal (DIRFT) in the Midlands to its RDC in Bellshill near Glasgow, the chain also moves
food, mineral water, soft drinks, chilled and frozen products and household goods on a daily basis from central Scotland to the Highlands, difficult to reach by road.

Safeway was clever because it asked for, and got more than, £1.5m of Freight Facility Grants from the Scottish Executive and the Strategic Rail Authority.

Now, Asda is doing the same to get its scheme off the ground. The chain is transporting mixed cargoes of ambient goods and clothing six days a week from Daventry to Grangemouth in partnership with WH Malcolms and DRS Rail Services.

The once-a-day service takes a minimum of 13 containers a night with trains arriving within 30 minutes of scheduled arrival time in 90% of cases - “much better than road”, says an Asda spokesman.

Asda is to trial a second train from Grangemouth to Aberdeen to service its four stores there and the train may, in future, service ports such as Felixstowe and Southampton to accommodate the increasing amount of stock shipped in by sea. “It’s hoped eventually the train will enable us to get product from the docks virtually to the shop door,” says the spokesman.

Hot on Asda’s heels is Tesco, piloting two new rail freight delivery programmes - one from the docks to DIRFT and one from DIRFT to Scotland with the aim of moving all goods within Scotland via rail.

A spokeswoman confirms it is working with the Scottish Executive with a view to receiving grant assistance and the strategy should come to the fore next year.

Marks and Spencer is also committed to shifting more goods from road to rail. Corporate social responsibility manager Rowland Hill says it is examining a number of opportunities. It is looking at areas of tertiary trunking between the warehouse and stores with a particular concentration on Scotland.

The only one of the top four without a rail strategy is Sainsbury. But that, too, could be about to change.

The retailer did begin distributing goods by rail in September 1997 and began a regular service moving its own brand Scottish mineral water from East Kilbride to Dagenham in 1998.

But the service no longer runs and although the company has a railhead at its Hams Hall depot, this is rarely used.

Now, however, confirms a spokeswoman for Sainsbury, the company is trialling the use of rail to transport wine shipped in from Europe, from the docks to a bonded warehouse. She says: “We are looking at opportunities in Scotland and reviewing our rail freight strategy there.”

The rail freight pioneer, Safeway gained a Queen’s Award for Excellence in 2001 in recognition of its rail strategy and has even invited rivals to take space on its scheduled service when it was not full to capacity with its own goods.

Despite the bid saga, it insists it is not sitting on its hands.

In fact, says a spokeswoman, it is looking to push out its model in other regions, even beyond the UK. “We are considering further opportunities to deliver by rail in the UK, not least in Scotland and the south west of England. “Transporting wine and produce out of southern Europe and into Kent is also of interest to us.”

The question is, will it be of interest to Morrisons. The northern chain is not thought so far to have developed a rail strategy.

If it does buy Safeway, will it share the same freight expectations?

n Simon Creasey writes for Property Week