June 1, 2010 3:00 am
The company that runs the Channel Tunnel will today take a significant step forward in its efforts to boost cross-Channel rail freight with the acquisition of the UK's third-largest operator.
Groupe Eurotunnel will pay about £30m for GB Railfreight, which FirstGroup, the bus and train operator, has owned since 2003, according to people involved in the transaction.
Strategically, Eurotunnel intends to link up GB Railfreight with the French operations of Veolia Cargo, which it bought last year, to encourage cross-Channel freight traffic.
Cross-Channel rail freight - goods carried on longdistance trains, as opposed to Eurotunnel's cross-Channel truck shuttles - has been the most disappointing traffic segment since the tunnel opened in 1994. From a peak of about 3m tonnes annually, traffic has declined, to just 1.18m tonnes last year .
Under Jacques Gounon, executive chairman, Eurotunnel has pursued a strategy of building up its own rail freight arm out of frustration over the poor record of the only other existing service, run jointly by France's SNCF and the UK freight arm of Germany's Deutsche Bahn.
Eurotunnel's Europorte 2 subsidiary already owns 11 Class 92 locomotives, the only kind allowed to haul freight through the tunnel under present rules. Eurotunnel is expected to make use of GB Railfreight's
fleet of 41 locomotives.
FirstGroup bought GB Railfreight in 2003 as part of its takeover of GB Railways, a small, independent train operator. Its decision to retain ownership for so long was a surprise given the passenger focus of all its other operations.
However, the business, founded in 1999, has grown gradually under FirstGroup's ownership and now has an annual turnover of about £60m. Its two biggest competitors - the former EWS, bought by Deutsche Bahn in 2007 , and Freightliner, bought by Bahrain's Arcapita in 2008 , are already owned by nonBritish groups.
GB Railfreight hauls many of the container trains that leave the UK's biggest ports and also has significant heavy-haul operations moving coal and other bulk goods. It currently has no cross-Channel services.
SNCF had been seen as the frontrunner to buy GB Railfreight after FirstGroup started seeking buyers but it appears to have been outbid by Eurotunnel.
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