WHILE selling the intermodal business to French container shipping line CMA CGM, Brookfield Infrastructure Partners and Singaporean wealth fund GIC have retained ownership of Freightliner’s bulk freight operations in Britain, now renamed as Heavy Haul Rail (HHR) and headed by CEO, Dave Penney. Surveying the recent performance of the business, he notes that “2025 was difficult from a bulk perspective,” particularly in construction traffic where moving aggregates, cement and other building materials accounts for over half of the 20 major contracts held by HHR.
According to the latest freight statistics published by the Office of Road and Rail (ORR), in the third quarter of 2025-26 construction traffic across all rail freight operators in Britain was at its lowest level for this quarter since 2022, the total of 1.15 billion net tonne-km down 13% on the year before and representing the largest single decline of any commodity group. ORR points to subdued demand from urban high-rise construction, with projects taking longer to obtain planning approval. There was also a pause in traffic to HS2 construction sites as the government worked to “reset” the project to build the high-speed line from London to Birmingham, with both having a direct impact on HHR.
“Although it was a tough year in terms of overall volume, by winning new contracts we’ve managed to stabilise the business,” Penney says. “We are on track for earning about £150m this year and we are still committed to growing the business by 20% over the next three years.”
HHR’s share of the construction market was boosted by winning a five-year contract to haul aggregates for Breedon from quarries at Dowlow in the Peak District and Shap in Cumbria to its terminals at Ashbury in Greater Manchester and Walsall in the West Midlands, as well as to additional third-party sites across Britain.
“Although it was a tough year in terms of overall volume, by winning new contracts we’ve managed to stabilise the business.”
Dave Penney, CEO at Heavy Haul Rail
The first train ran on June 28 2025. Traction is drawn from HHR’s fleet of 19 class 70 diesel locomotives, “which have the ability to normally handle three to four wagons more than a class 66 on our heaviest traffic,” as Penney explains. “Effectively, the environmental impact per tonne is less,” he says, with one train being the equivalent of 140 lorries.
Investment by the freight operator has included a new maintenance and fuelling facility at Dowlow, while aggregates are carried in 76 type MWA-C box wagons built by British wagon manufacturer WH Davis. The wagons feature a new lighter and stronger body design to maximise payload, while bogies, braking equipment and other components were recovered from redundant type HHA coal hoppers. The last wagon was delivered to HHR in February, with the project financed on a sale and leaseback basis by rolling stock leasing company Porterbrook.
New markets
Looking ahead, Penney sees the construction market rebalancing as major projects move closer to starting work, such as the new nuclear power station at Sizewell in eastern England, the Lower Thames Crossing between Essex and Kent, wind farms in Scotland and new reservoirs across Britain. “We’re now starting to see some of the bigger government infrastructure investment schemes starting to mature,” Penney says. “We’ll always engage with the market and find ways in which rail can be part of the project.” The resumption of work on the HS2 tunnels to London Euston is also a bonus, with HHR restarting movements of concrete tunnel lining segments from Hartlepool in northeast England to the capital. “Within about a year that will be complete and we’ll move on,” Penney says.
As well as strengthening HHR’s position in the construction market, “the other thing that we’ve got to do is diversify what we carry,” Penney says. Building on its experience of moving domestic waste from the Manchester area for Suez, HHR is now starting to step into moving waste for use as fuel in combined heat and power (CHP) plants. In addition, replacing the fossil fuels used in CHP plants offers the potential for delivering hydrogen by rail. What Network Rail describes as Britain’s first shipment of this commodity by rail took place on December 3 2025, when Freightliner, before it was spun off as a separate company, moved hydrogen in containers from Doncaster to High Marnham under existing regulations for carrying hazardous goods on the national network. “That proved it could be done,” Penney says.
“There’s big industrial change as well, particularly in steel,” Penney notes, with blast furnaces being shut down and the domestic steel industry moving to electric arc furnaces that will require large amounts of scrap steel. “We’re in conversations with the industry about how you can move scrap steel in, and what is the right mix of scrap steel that they will need to charge the furnace, and what the product outcome is from that as well,” he says.
Fleet prospects
Securing a major contract in a new market would require investment in new locomotives and wagons, as well as recruiting new staff, although Penney says he is confident in his current level of resources. HHR has 220 drivers and a fleet of 95 diesel locomotives, mainly the class 66 which since entering service in 1998 has become the workhorse of the British rail freight sector. Almost of all of HHR’s class 66s are approaching the halfway point in their working lives, Penney notes, but replacement seems some way off due to the high cost of new locomotives.
“The freight market is a tough environment with low margins,” Penney says. “If you’ve got a locomotive that’s essentially going to cost you three or four times more per km than a class 66 does, then you’ve got to start looking at extending the life of the class 66.
“Over the last three to five years, there have been quite a number of different schemes, led by either an OEM or a rolling stock leasing company,” Penney says. “We’ve participated in those because we do all of our maintenance in-house, all the way up to engine replacement, and we’ve got quite a lot of technical expertise on the class 66.” While repowering with new engines could be one option, “it’s always just going to boil down to the operating cost going forward. We’d have to balance out the big capex hit at the start as well, and try and find a way for that not to affect the economics of the business.”
“We think ORR has been beneficial in its allocation of access rights and we would support it continuing.”
Dave Penney
Meanwhile, in examining ways to reduce emissions from the class 66 fleet, HHR has focused on reducing the time locomotive engines are kept running when the train is stationary in order to provide power for maintaining air pressure in the braking system. Rather than leave the main engine idling, a smaller auxiliary engine could be used for this purpose. HVO has been tested, but its higher price makes it uncompetitive compared with standard diesel. Hydrogen is hindered by locomotive fuel storage capacity limitations, and the high costs of production, transport and storage. “We haven’t yet got to the culmination point where it makes it easy for rail in Britain to switch to hydrogen,” Penney says.
While HHR’s current access rights are protected under a five-year extension to its track access agreement with Network Rail that was signed last year, the company has been lobbying with the rail freight sector for ORR to retain its role in capacity allocation as the legislation to create the new Great British Railways (GBR), reuniting infrastructure management with renationalised passenger operations, makes its way through Parliament. “We think ORR has been beneficial in its allocation of access rights and we would support it continuing,” Penney says. “But it’s clearly a decision for government on how much they want ORR to be part of that process.” Lobbying has also focused on future track access charges for freight, and if the Network Rail discount will continue.
While welcoming the government’s target to grow rail freight by 75% by 2050, Penney is clear that this will be challenging. “It’s tough,” he says. “Rail freight has to be uber-competitive against road, always finding new ways to meet customer demand in a more cost-effective way. But the fact that you’ve got overt government support for rail freight is a good place to be.”
That support should also translate into measures to help improve the competitive position of rail freight, Penney says. “Road fuel duty has been frozen for 14 years, track access charges in the meantime have increased by 35%, so it’s about having things like the track access charge discount and grants to support modal shift to offset some of that challenge, to level the playing field.”
