What Does HS2 Mean for Road-Based Logistics Operations?March 31st, 2020
HS2 Will Carry 2.5m Lorry Loads Per Year
According to Midlands Connect, additional capacity when HS2 goes live will put 144 extra freight trains on the network every day, transporting cargo equivalent to the loads of 2.5 million lorries on the road.
Now that funding has been agreed and the future of HS2 is assured (at least, assuming agreed government budgets aren’t affected by current national spending on shoring up the economy during the Coronavirus outbreak), transport and logistics operators must consider whether there will be an impact on their business.
Slicing 2.5m loads out of the current market sounds like very bad news for road hauliers. Logistics organisations with business models built on long distance road haulage will need to consider which routes, customers and cargoes are most likely to transfer to rail. But with six or more years to go before the first phase of HS2 is due to launch, there’s plenty of time to plan ahead to make positive strategic changes.
Start Talking to Customers to Understand Their Approach
Forward-looking firms will be talking to their key customers to understand whether HS2 rail freight is an attractive option. Once they’ve assessed the risk to their business, they can consider how to reshape their network. Using modelling tools like Optisite, logistics planners can review the locations of their hubs and fleets and determine where they could be relocated to maximise other market opportunities, if HS2 is a threat.
For logistics and supply chain leaders running in-house transport operations, it’s not too early to begin considering whether using HS2 freight transport could increase efficiency, reduce costs and improve sustainability. Of course, there are no confirmed details of capacity or operators yet. Depending on the geography of your business and the type of goods currently carried by heavy goods vehicles, the train could take some of the strain.
Consider How Your Network Might Proactively Evolve
Commercial and industrial businesses may be looking to relocate or expand hubs and warehouses in the next few years, to take advantage of the new HS2 capacity. Most are likely to need delivery or onward road transport from HS2 freight hubs. This will mean adjusting logistics resources to meet different needs.
Looking at a six-year timescale, vehicle technologies are likely to have moved on. If there are affordable and efficiency electric freight vehicles on the market, they may be a viable option for shorter journeys from rail hub to destination.
Planning tools like Optisite will be helpful to model the fleets that may be needed in this new situation. Logistics divisions may require fewer HGVs and more smaller lorries or vans to make shorter, local journeys in the HS2 catchment. A modelling tool designed for logistics and supply chain can show the impact of different potential scenarios.
Long-term Planning Gives You More Options and Competitive Advantage
With the HS2 launch still a few years away, long-term planning means looking at a broad range of possibilities and understanding the operational and financial impact of each. As more information emerges, scenarios can be updated and refined until the right moment to make an investment or business transformation decision.
There are many complex factors that will affect logistics operators’ responses to HS2. Key insights to feed into planning and analysis include rising road freight costs, public and corporate sustainability concerns and policies, emissions legislation, the availability of new vehicle types and the actual available capacity and prices on HS2 rail freight services.
With so many variables to consider, starting the planning and modelling process early, based on available facts and information, is a sound business move. If you know that you need to relocate a distribution centre early on, you can be first in line for attractive sites and negotiate prices shrewdly before demand accelerates.
If you’d like to find out more about the Optisite supply chain network planning tool and how you could use it to help understand and prepare for the impact of HS2 on your particular organisation, please get in touch with one of our specialists.