are taken through the Tunnel via the through rail services, details of the levels of tonnage are included in section 4.2 on cross-Channel flows. Containers are shipped to near and short-sea destinations in Continental Europe, however, much of the cargo through the Medway Ports is in deep sea containers and therefore not in direct competition with the Channel Tunnel. In 2002 Ro-Ro accounted for 16% of UK port freight, it’s share of the total growing by 5% in 10 years (from 11% in 1992)8. The principle ports serving the English Channel route for Ro- Ro traffic include: Dover, Port of London, Portsmouth, Ramsgate and the Channel Tunnel.
Table 11: Share of Ro-Ro traffic - Ports Serving the English Channel Routes
% Share 1982 1990 1993 1999 Dover 92.0 72.4 60.5 50.6 London 0.2 13.7 14.3 12.9 Portsmouth 6.5 12.7 13.3 8.9 Ramsgate 1.3 1.2 11.9 1.8 Total 100.0 100.0 100.0 74.2 Channel Tunnel - - - 25.8
Total with Channel Tunnel 100.0 100.0 100.0 100.0
Source: DfT Maritime Statistics
The data in Table 11 (above) show that by 1999 the Channel Tunnel had the second largest share (to Dover) of the Ro-Ro market for crossings on the English Channel. Vehicle numbers through Ramsgate had declined and while numbers for Dover, London and Portsmouth had continued to increase, their percentage shares of this market have declined since 1993. The Tunnel is thought to have had a significant effect not only on freight traffic from Kent Ports but also knock on effects else where in the UK. At some ports this has resulted in rationalisation of operations and services, in others, a termination of ferry services all together (see section 4.3 on services). The percentage share of the market for road goods vehicles (both powered vehicles and unaccompanied trailers) to Continental Europe are shown below. The data up to 1999 are taken from the DfT publication; Focus on Ports.
Table 12: Share of Road Goods Vehicles between UK and Continental Europe by Port Group
% Share
1993 1994 1995 1996 1997 1998 1999
Channel Tunnel - 2 12 15 7 17 19
Dover Strait ferries 47 46 39 37 46 39 40
North Sea ferry routes 41 40 37 36 37 35 34
English Channel ferry routes 12 12 12 12 10 9 7
Total 100 100 100 100 100 100 100
Source: DfT - Focus on Ports, 2000
Over the period there was a 55% increase in the number of vehicles from 2.83 million to 4.38 million vehicles. The data show that the Tunnel gained a significant share of the market for Road Goods Vehicles destined for Europe between 1993 and 1999. This gain was accompanied by a general decline in the shares of the other port routes as well as a drop in the absolute numbers carried through each route.
Closer examination of the data on freight by port group reveals differences in the preferred routes for carrying either accompanied or unaccompanied freight across the Channel. They indicate that the Tunnel plays a stronger role in the market for carrying accompanied freight to Europe, due to its importance on the Dover Strait. The data separate routes originating from the UK in three regions: The Dover Strait (Dover, Folkestone and Ramsgate-including the Channel Tunnel), the North Sea (all ports on the East Coast, north of and including the
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Thames Estuary), the English Channel (all ports on the South Coast west of Folkestone). For powered goods vehicles the prevalence of the Dover Strait routes is noticeable, with a 67% share of the market 1988, growing to 84% by 2003. The respective shares of the English Channel and North Sea routes both declined over the period.
Figure 15: Powered Vehicles Leaving the UK - Percentage Share by UK Port Group (1988 – 2003)
0% 20% 40% 60% 80% 100% 1988 1990 1992 199 4 1996 199 8 2000 2002 % p er Y ear English Channel Dover Strait North Sea
Source: DfT – Maritime Statistics
For unaccompanied trailer freight, however, the North Sea routes carry the largest numbers, with a share of 76% of the unaccompanied freight market in 1988 growing to 94% by 2003. The share held by the Dover strait routes has been declining since its high of 16% in 1996: in 2003 it had just under 3% of the total, less than the 4% of the English Channel routes.
Figure 16: Unaccompanied Trailers - Percentage Share by UK Port Group (1988 – 2003)
0% 20% 40% 60% 80% 100% 1988 1990 1992 1994 1996 1998 2000 2002 % p er Y ear English Channel Dover Strait North Sea
Source: DfT – Maritime Statistics
Defining the market in terms of the countries of destination/origin of freight is not straightforward as freight is often destined for a number of countries and drops off and collects along the way. We have looked at freight travelling to all of mainland Europe as well as to ‘Near Europe’ (defined in this case as France, Belgium& Luxembourg, Denmark & Germany and the Netherlands).
DfT data on the number of Roll on-Roll off vehicles by country of vehicle registration shows that over 1.8 million powered goods vehicles left the UK for mainland Europe by ferry or Channel Tunnel in 2002. This is an increase of 134% from the 1992 level of 769 thousand vehicles leaving the UK Ports. The proportion of these destined for Near Europe rose over
the period to 46% in 2002 (from 37% in 1992). France held the largest share of registered vehicles at 20%, followed by the Netherlands (10%), Germany (8%), Belgium/Luxembourg (7%) and Denmark (1%). Significant numbers of vehicles were registered in Spain and Italy at 6% and 7% shares respectively of outbound vehicles in 2002. The relative shares of the Ro-Ro traffic by Near European country are shown below for 1992 – 2002.
Figure 17: Powered Goods Vehicles leaving UK Ports - Percentage Share of Traffic by Country of Registration (1992 – 2002) 0 5 10 15 20 25 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 % Belgium/Lux Denmark France Germany Netherlands
Source: DfT – Transport Statistics
These figures exclude numbers for unaccompanied trailers which grew overall by just 15% over the 10 years from 629 thousand (1992) to 726 thousand (2002). These represented 29% of the total Ro-Ro market outbound from the UK in 2002.
Data on Bilateral traffic between the UK and EU countries (excluding ‘cross trade’) for 2002 show the total tonnage transported between each EU country and the UK (by vehicles registered in the UK and each corresponding European country). For bilateral traffic between the UK and the EU (excluding Ireland) in 2002 there were nearly 29 millions tonnes in total. Almost 18 million of these were loaded in the UK and just over 11 million unloaded in the UK. The Near EU countries accounted for over 75% of bilateral traffic tonnes in 2002, France alone accounted for over a third, Germany 15%, Belgium and Luxembourg 13%, Netherlands 12% and Denmark 1%.
Figure 18: Powered Goods Vehicles to Mainland Europe by Country of Disembarkation (1988 – 2003)
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 1988 1990 1992 1994 1996 1998 2000 2002 P o w er ed G oods V ehicles ( 000' s) Other*
Denmark & Germany Netherlands Belgium France
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Data on the country of disembarkation of powered goods vehicles shows that France is the major disembarkation destination country for accompanied freight travelling to Europe from the UK, and its share of this market has been growing rapidly. Numbers disembarking in Germany or Denmark were low, averaging just over 2 thousand a year over the period. An average of approximately 4 thousand powered goods vehicles disembarked in ‘other’ EU countries over the period (Finland, Norway, Poland, Spain, and Sweden). These data are summarised above in Figure 18.
For unaccompanied trailers the data present a different picture. France is no longer the main point of disembarkation and in fact both its total level and share of all unaccompanied freight has fallen over the period (from 17% in 1988 to 7% in 2003). The Netherlands and Belgium have instead seen their share of unaccompanied freight grow throughout the period, with shares of 44% and 34% respectively in 2003. The number of unaccompanied freight disembarking in Germany or Denmark was above that of France by 2003 (8%: 58 thousand trailers). This is shown in Figure 19 below.
Figure 19: Unaccompanied Trailers to Mainland Europe by Country of Disembarkation (1988 - 2003)
0 100 200 300 400 500 600 700 800 900 1988 199 0 1992 199 4 1996 199 8 2000 2002 U n acco mp an ie d T rai le rs ( 000' s) Other*
Denmark & Germany Netherlands Belgium France
Source: DfT – Transport Statistics *other refers to Finland, Norway, Poland, Spain and Sweden
The data used show that the market for freight destined for France is large and has grown rapidly over the period examined – particularly for accompanied freight vehicles. This may have been a result of the time savings offered by the Tunnel for transporting freight across the Channel as well as increased efficiency and the ferry services and price cuts due to competition and rationalisation within the industry. However, France as a destination seems to have become less favoured for unaccompanied freight over the period. This could be due to a lack of appropriate facilities at the Ports and Tunnel serving France as a point of disembarkation relative to those at other East Coast ports serving other countries (Belgium and the Netherlands).
4.131 Rail Freight
The Tunnel provides the opportunity for rail freight to be transported between the UK and Europe. While currently there is no direct competition for the Tunnel for cross-Channel rail freight it could be said that there is inter-modal competition in the carrying of freight by road with road. The Channel Tunnel was expected to boost through rail-freight between the UK and the Continent but has failed to do so. The size of the domestic markets have at least some relevance for the possible future development/expansion of the cross-Channel rail- freight market.
Though rail was once the major mode for the transport of goods with 42% of the total tonnes moved in the UK in 1952, it was fast overtaken by road and subsequently its share has steadily decreased since 1953. DfT data show that by 1996 rail’s share of the UK market had fallen to just 6%, followed by some recovery resulting in rail’s share rising to 8% by 2001. The Figures show an increase in the average length of haul for rail freight since the early 1990’s (to just over 200km by 2001), thought to be partly due to the length of distance coal
has to be moved as more is imported. Bulk goods dominate the movement of goods by rail, followed by ‘domestic inter-modal’ commodities: comprising of containers moved by road or rail including some that have arrived by sea. Rail is the predominant mode for the movement of coal and coke in the UK, accounting for 70% in 2001. It accounts for just 2% of petroleum and 7% of ‘other commodities’.
However, international comparisons conducted by the Department for Transport between the UK and other European countries reveal that rail freight plays a slightly larger role in the EU more generally (though road freight continues to dominate). This is thought to partially reflect the longer journeys possible in mainland Europe which are more suited to rail. Rail freight in the EU accounted for approximately 14% in 2001.
4.14 Low-Cost Airlines
Discussion of recent developments in the cross-Channel travel market would be incomplete without reference to the advent of the low-cost airlines. Indeed this has often been advanced as an important factor in the shortfalls from expected traffic volumes and revenues in both tunnel and ferry operations, and certainly it was a development that was not anticipated in the initial planning and forecasting for the Channel Tunnel. At that stage the main competition from airlines was seen in terms of premium business class operations between London, Paris and Brussels. Eurostar's fares were initially pitched very much at this market. It is however rather too simple just to blame the failure to achieve forecast traffic on the advent of low-cost airlines. Although the low-cost airlines have had a major impact, much of this has been in terms of growing markets and developing new markets and is not just a simple diversion of traffic on key routes.
The main characteristics of low-cost airlines are that:
• They offer cheap “no frills” services, booked in advance via the internet or phone rather than via a travel agent with no refunds and no (or extremely limited) scope for changing flights. Nevertheless they have made significant impacts on some business markets
• They operate mainly from cheaper regional airports or secondary airports in metropolitan regions rather than from the main hubs; often they have received significant subsidies from these airport authorities as inducements and to keep landing charges low – in some cases these have been ruled improper by the European Commission
• They have sought to develop new markets in both the city break market (e.g. increasing services to destinations in Central and Eastern Europe) and in the second home markets (e.g. the many services to small airports in SW France) • They have a clear marketing policy towards groups who would not otherwise fly The impacts of the low-cost airlines have been as follows:
• Firstly, they triggered a wholesale restructuring of the conventional airlines at the same time as they have suffered from a reduction in flying due to security problems, particularly on their more lucrative long-haul routes. This has brought down the level of air fares significantly and increased the flexibility of ticketing for much travel in Europe. For example airlines like British Airways no longer require minimum stays to access cheaper fares and they have adopted low-cost airline practices in ticket sales to enable customers to see a range of alternative prices. This has posed a competitive challenge to both Euro Tunnel and Eurostar to adopt more flexible fares and conditions in order to defend their market share. • Secondly, it has led to direct services between secondary airports in metropolitan
regions, thus reducing pressure on the main hubs and enabling them to continue to develop services which may otherwise have been squeezed out. For example in September 2003 there were 30 daily flights from London Heathrow to Paris Charles de Gaulle provided by the three main airlines (and their partners) BA, Air France and BMI. In addition there were flights from Gatwick, Stansted, Luton and
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London City and to other Paris region airports by these airlines and by low-cost airlines. Travellers are therefore offered flights from/to airports that may be much closer to their trip origin/destination than are major airports or the Eurostar terminals.
• Thirdly, it has been argued to us that the advent of low fare regimes has lowered general consumer expectations of what is a fair fare, which militates against the premium fare regimes adopted by Eurostar.
• Fourthly it has led to an overall growth in air travel at a time when it would otherwise have been squeezed, mainly to new destinations. Inasmuch as these new destinations are not located in the near Continent they do not compete directly but they may have detracted from the Tunnel's markets by offering a different bundle of destination-and-mode.
• Finally it can be noted that the idea often quoted before the Channel Tunnel opened that the airlines would use the presence of the Tunnel and Eurostar as a way of freeing up slots for long-haul traffic seems not to have occurred. Each operator needs to provide the same level of service as Eurostar which offers some 15 weekday daily services to Paris, on a roughly hourly basis, so they have responded by reducing aircraft size rather than reducing frequency.
There is little doubt that the advent of the low-cost airlines and the consequential effects on the travel market has made it more difficult for Eurotunnel, Eurostar and the ferry operators to identify appropriate marketing strategies for the cross-Channel markets. It is not clear however, that those effects have been decisive in terms of market share and financial outcomes.
4.2 Flows
Here we examine the levels of cross-Channel movements since the opening of the Tunnel, given the market for cross-Channel passenger and freight. It might be expected that the operation of the Channel Tunnel would result in:
• A decrease in passenger/car/coach numbers crossing the channel by ferry • A steady increase of people travelling by both the Shuttle and Eurostar. • A decrease in the amount of freight being carried by ferry across the channel • An over-all expansion of the market & higher cross-Channel traffic flows • A reduction in, and elimination of some ferry routes
4.21 Cross-Channel Passengers
The data for 1985 to 1995 show that passenger numbers travelling by ferry increased steadily (with an anomaly in 1988). There were rapid increases in the periods both before and after the opening of the tunnel, but the number of passengers crossing the Channel has declined since 1999. This is evident for both passenger numbers and cars. Figure 20 shows the number of cross-Channel passengers from 1995 to 2002 through the ports and Channel Tunnel (Shuttles and Eurostar), using data provided by Kent County Council. It shows that while numbers travelling via the Channel Tunnel (by both Eurostar and Shuttles) increased quite steadily up to 1998, Port numbers after a peak in 1997 of almost 24 million passengers, decreased by 14% in 1998 and since then, numbers have continued to decline up to 2001. In 2001 to 2002 there was a 3% increase in passenger numbers crossing the channel through the ports. Shuttle passenger numbers grew by over 160% from 1995 to 1998 when they began to decline between 1999 and 2002. Eurostar passenger numbers grew most strongly and only began to decline in 2001 and 2002. However since September 2003 and the opening of the CTRL there has been a steady increase in Eurostar passenger numbers. The reasons for the decline in recent years are generally thought to relate to the abolition of duty free shopping, an increase in cross-Channel fares on all modes (partly to compensate for loss of turnover in duty free shopping), and competition from the low-cost airlines.
In addition it should be noted that in 1996 there was a fire in the tunnel. As a result the shuttle was out of service for 6 months from December 1996 – May 1997, and Eurostar for 6
weeks. This would have resulted in a transfer of cross-Channel traffic from the Channel Tunnel to the Ports.
Figure 20: Cross-Channel Passenger Numbers (1995 – 2002)
0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 1995 1996 1997 1998 1999 2000 2001 2002 Passenger s Ports Shuttles Eurostar Totals
Sources: KCC Tables from- Dover Harbour Board, Eurotunnel, Cruise and Ferry Info, Hoverspeed, Port of Ramsgate, 1997 figure for ports estimated, due to anomaly in the data.
Passenger vehicle numbers for the period exhibit a similar pattern. The shuttle experienced a rapid increase in the number of cars crossing the Channel each year up to 1998 (a total increase of 166% from 1995) when numbers began to decline. The number of cars travelling through the ports by car ferry declined throughout the period 1995 to 2002 (the anomaly in 1997 was due to the fire in the tunnel).
Figure 21: Cross-Channel Car Numbers (1995 – 2002)
0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 1995 1996 1997 1998 1999 2000 2001 2002 Car s Ports Shuttles Totals
Sources: KCC Tables from- Port pf Dover, Eurotunnel, Cruise and Ferry Info, Hoverspeed, Port of Ramsgate, 1997 figure for ports estimated due to an anomaly in the data
Earlier data for both cars and coaches shows a similar pattern to that of passenger numbers; a steady increase from 1985 to 1995. Coach numbers for both modes continued to increase up to 1998 but then declined through to 2001. On the Shuttle, coach numbers grew by over 309 % from 1995 to 1998 and from then on declined each year. For coaches travelling via the ports the data show a decline for most years from 1995 to 2001