DP World has announced it will directly incentivise clients to transfer their imported products off the road and onto rail.
The ‘Modal Shift Programme’ is designed to increase the attractiveness of intermodal rail for customers through the use of carefully designed financial incentives.
The programme has the potential to prevent an estimated 30,000 metric tonnes of carbon dioxide (CO2) being emitted per year.
This is more than three times the total emissions of DP World’s logistics hub at Southampton, where it will be trialled from September for an initial period of 12 months.
John Trenchard, UK Commercial and Supply Chain Director at DP World, said: “DP World in the UK has been a market leader supporting our supply chain partners with access to a comprehensive network of rail options to connect our logistics hub to inland locations across the UK.”
Trenchard admitted that over the last few years there has been gradual decline in the share of rail.
“Through the Modal Shift Programme we aim to increase the rail share up towards 40 per cent by the end of 2025 – removing an estimated 30,000 tonnes of carbon dioxide from our customers’ onward supply chains,” Trenchard added.
He noted that the programme’s introduction will assist clients in their own decarbonisation journeys and supports the UK Government’s stated objective to accelerate the modal shift from road freight to more ecologically viable options.
The Modal Shift programme will charge a flat £10 ($12.41) fee on all import-laden containers.
Customers whose container is moved to a railhead more than 140 miles from the terminal are reimbursed, and a £70 ($86.90) incentive is paid to those whose container is moved to a railhead within 140 miles of the terminal.
The market economics for using intermodal rail for distances of 140 miles or more from Southampton are seemingly clear.
However, for deliveries within the 140 mile zone the economic difference is less clear, and this incentive aims to increase the likelihood of a modal shift to rail.
DP World operates the UK’s most advanced logistics hubs: two deep water ports at Southampton and London Gateway with access to freight rail terminals, and a rapidly expanding logistics park on the doorstep of the capital.
DP World’s investment in rail at Southampton and London Gateway is said to ease traffic congestion, with 300,000 truck journeys taken off UK roads each year.
Last year, the company launched a new weekly rail freight service connecting the two terminals, which takes up to 120 lorries a week off the roads, cutting carbon emissions by 80 per cent.