6 days ago
Eco rail firm on brink of collapse over rising electricity prices
An 'environmentally sustainable' freight train company is on the brink of collapse because of high electricity prices.
Varamis Rail, which promotes itself as helping to 'decarbonise' high-speed rail parcel deliveries using electric trains, has ceased all operations until mid-September.
One of its directors said the firm had been forced to stop paying staff, placing them on unpaid furlough instead, because it was struggling to break even.
Terry Livingstone, the company's director, said: 'As a startup, we're competing with road transport where all the costs and [profit] margins have been taken out already, so there's very, very thin margins, and that's what was difficult to compete with.'
Rumours of collapse have dogged Varamis in recent days, although Mr Livingstone and Phil Read, the company's chief executive, refuted claims that the business had collapsed into administration.
The Office of Rail and Road said it had no record of a rumoured prohibition notice against Varamis. Such notices are issued against companies that break stringent rail safety rules.
News of Varamis's difficulties comes after Royal Mail abandoned its centuries-old mail trains last year, saying its electric rail fleet had become too expensive to operate.
Increasing overheads
Between the financial year 2020-21 and the present day, Network Rail almost doubled how much it charges freight train companies for using its 25,000-volt overhead electric cables.
Over the same period, the price of diesel – as used by road hauliers – increased by about 5 per cent according to RAC figures.
Varamis was promoting itself last year as bringing back the traditional night mail train, a staple of British cultural history. Locomotives hauling travelling post offices – mail sorting offices that ran on rails – would thunder around the country overnight, bringing letters and parcels to all corners of the nation.
The business hoped to recapture this spirit by using converted former passenger trains to carry parcels around the British rail network. Its rolling stock, consisting of Class 321 electric trains with the seats stripped out, were mainly used by passenger operator Greater Anglia before being acquired by Varamis.
Mr Livingstone said the electric freight train company hopes the increase in parcels needing to be moved around in the months leading up to Christmas will bring it some respite.
'We have been unable to get the volume [of parcels needed] to get to a break-even position, so we had to go out and get some financing, which we've managed to secure,' the director said.
'We are holding back from running a service until we can get sufficient volume to really be able to run at least a break-even service,' he added.
'Our hope is that it will be by mid-September… I think we should be good. If we have to wait longer, we'll wait longer.'
Freight firms fading
Varamis is not the only freight train company affected by rising rail electricity prices. DB Cargo UK retired its fleet of Class 90 electric locomotives in favour of diesel-engined alternatives last year.
Industrial electricity costs in Britain have skyrocketed after successive Governments pledged to meet a target of the entire country's net carbon dioxide emissions being zero by the year 2050.
Attempts to meet this self-imposed target have included swingeing taxes on North Sea oil and gas production which have prompted companies there to start closing down their operations.
All coal-fired power stations in Britain have shut down over the last few years, while this week energy secretary Ed Miliband's officials offered 'eye-watering' wholesale electricity prices to wind farm developers who have been holding out for ever greater sums of money.
