The Impact Of HS2 On The UK’s Transport Sector – BinaryOptions

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The Impact Of HS2 On The UK’s Transport Sector

Published on February 17, 2020

The background of the HS2 has been long and controversial, with many people threatened with being uprooted from their homes and much debate around the large expense.

However, the struggle has seemingly been won as the UK government announced its plans to approve the HS2 project.

The route, which is set to link London, Birmingham, Manchester and Leeds, aligns with the government’s desires to create more jobs and rebalance the country’s economy.

The project, which is already running behind schedule and over budget, is now due to be completed in full by 2040.

Project Clarity

After much confusion over the status of the project, the recent statement from Prime Minister Boris Johnson giving the project the green light has worked to fix some of the uncertainty that had been hanging over HS2 and its associated engineering companies.

Not only has the government backing for HS2 had a direct impact on several shares in the engineering sector, but it has also provided a further boost for other companies that have been on a rally in recent months.

Where uncertainty had previously been hanging over Balfour Beatty, Costain and Kier, shares have now been boosted.

So, which other companies and shares have been affected by the announcement?

FirstGroup (LSE: FGP) is one of the companies that has been buoyed by the recent news, especially as FirstGroup recently secured the rights to a joint venture on the West Coast Mainline that will include the HS2 line.

FirstGroup’s shares have risen 4% to 130p after a continuous rise over the past year.

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Hargreaves Services (LSE: HSP) has also been positively impacted by the news of HS2’s progress. Hargreaves Services is the preferred supplier for many of the specialised earthworks set to take place between London and Birmingham for the new railway line.

Costain (LSE: COST) has had an order worth £1.1 billion on their books for the new high-speed railway line, along with more works with southern main, going some way to pick up the price of their shares.

Their shares previously dropped on the UK’s December 2020 election day after receiving their second profit warning in six months. Since then, Costain’s shares have rallied by 5%.

Keir (LSE: KIE) has received a boost since the HS2 decision was announced. Keir previously crashed to their lowest level in 20 years during 2020, however, there is £1.5 billion in their order book that has been counting on the approval of the HS2.

Balfour Beatty (LSE: BBY) secured a contract in September for the construction and delivery of the HS2’s Old Oak Common Station worth £1 billion, leading the recent confirmation of the project to be welcome news.

Go-Ahead Group (LSE: GOG) represents a further boost in transport shares beyond railways, growing an added 2% to 2,166p.

This rise has been due to the separate plans to funnel £5 billion into new buses, new bus routes and more frequent bus times.

Over two million passenger journeys are made using Go-Ahead buses each day, and the company is responsible for 11% of national services.

Overall, the news is looking good for the transport sector in the UK. Not only has the HS2 announcement caused a boost in engineering and transport shares, but a recent announcement of £170 million funding to electric buses, increased rural mobility and the trial of new Superbus services has no doubt positively impacted shares for the foreseeable future too.

The Impact Of HS2 On The UK’s Transport Sector – BinaryOptions

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Why is HS2 important to UK freight transport infrastructure?

Posted January 26, 2020 by Tony Groom

As legislation reaches the final hurdles for the new rail line HS2 to be approved we look more closely at the supposed benefits.

The Bill reached the Report stage in the House of Lords on Tuesday, January 24, with a number of concerns being raised about the effect on local roads and communities during its construction, among them the potential for increased road traffic because of the need to transport waste material away from the sites.

This raises the question of what might be the actual benefits for freight transport of the new line.

The economic arguments or the benefits for businesses in the West, and eventually East Midlands in being better connected to the South have been well rehearsed during the interminable consultation process.

Once the legislation is passed there will still be a long way to go, with phase 1 (Birmingham, West Midlands) expected to be completed in around 2026 and phase 2 (extension to Manchester and Leeds) expected to open in 2032-33.

The new high speed line may eventually reduce passenger journey times somewhat and increase the passenger transport capacity. The Department for Transport has argued that once complete there will be almost 15,000 seats an hour on trains between London and the cities of Birmingham, Manchester and Leeds – treble the current capacity.

However, crucially in our view, not much has been said about the importance of additional freight transport on the line. Arguably this is more important to the UK economy especially if we are to increase productivity and output.

Environmental and capacity benefits of UK freight transport

Moving goods and materials by road is less efficient and more costly than by rail.

UK roads are near capacity and choked with HGVs at some times of the day, particularly during peak commuting times. It only takes a couple of accidents or breakdowns for a region’s main road arteries to be brought to a slow crawl or even to a standstill. This adds to the costs for businesses relying on deliveries within specified times, with knock-on effects if it delays orders to their customers.

Shifting container transportation to the rail network would allow far more goods to be efficiently shifted over long distances than can be managed by road, with the added benefits of a cleaner environment by reducing fuel emissions from lorries.

However, there are concerns about whether the plans for the new HS2 rail lines have additional freight capacity built into the equation.

Last November, Chris MacRae, the Freight Transport Association’s Head of Rail Policy, said: “There is no mechanism in place to guarantee additional capacity released by HS2 is available for freight.”

He argued that adding additional passenger services could be counter-productive and squeeze the capacity for freight transport on the lines. The FTA argues that freight will only benefit from rail capacity released by HS2 if the Government ensures it doesn’t have to compete with passenger operators through the existing train path bidding process.

UK Businesses will need every bit of help they can get if they are to compete effectively in a post-Brexit and increasingly protectionist global market and this should include a more efficient, more cost effective and faster freight transport system.

2 Responses to “Why is HS2 important to UK freight transport infrastructure?”

The biggest plus in favour of HS2 is for fast er, ‘greener’ freight transfer from the ‘power hub’ to the south east. The biggest anti is that it is an unaffordable transit for rich folk to commute from a cheap place to live to a place to earn megabucks. Yes… If you don’t understand this then get it now. Freight will win you green votes, saving long haul lorries, shame u didn’t keep the canals open
Slow but green and like a 20 speed zone..low emission,low noise, min power use, socially low impact and high social cohesion.

Just how many containers go (or would go) from say Euston to Birmingham New St or Manchester Piccadilly? How could train loads of containers be managed in a city centre? Would freight trains travel at 125mph or more? How would these and stopping passenger trains be accommodated?
What is the benefit of knocking 20 minutes off a train journey if the ticketing arrangements mean you are charged again at maximum rate if you miss your train? So you would have to aim to get to the station well before the train was due to leave – net result – the journey won’t be any quicker.
What use is HS2 to cities like Nottingham, Derby, Sheffield that will in effect be at the end of branch lines?
Why spend all this money so that 15,000 people can be carried to work from 8am to 9am, especially as most of the jobs now-a-days can be done from home most of the time.
Meetings involving day & overnight trips I used to have to do in the 80’s for HMG can now be done with Skype…….

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