The company behind an app that aims to move freight traffic off the roads and on to the rail network has secured a £150,000 loan from NPIF – Mercia Debt Finance, which is managed by Mercia and part of the Northern Powerhouse Investment Fund.
RailX is encouraging businesses to take a more sustainable approach to their logistics needs by making use of spare capacity on the rail network. Its app RailX – described as a ‘Trainline for rail freight’ – makes it easy to book rail and associated services including ‘first and final mile’ road deliveries.
RailX is currently focused on serving Yorkshire businesses and the freight forwarders who serve them and offers a full ‘port to door’ service. The funding will enable it to continue to grow and expand its reach to target firms outside of Yorkshire, further develop its app and cope with the growing demand for its services.
RailX was developed after Steve Freeman, the former Managing Director of Doncaster’s rail terminal iPort Rail, and Rail Consultant Paul Bathgate recognised that commercial train services typically run at least 25% below capacity. They joined forces with digital expert Tom Ciullo and finance director Ian Waring to launch the app in November last year. The company currently employs two staff and expects to create six new roles in the year ahead.
Paul Bathgate said: “Around 90 per cent of UK freight is moved by road, which means that on any given day there are the equivalent of 20 empty trains running on the rail network. Part of the problem is that it is often difficult for smaller companies, or those unable to contract large volumes, to access and book space on trains. Our easy-to-use app takes the pain out of buying rail freight.
“Per container, rail uses on average 76 per cent less carbon than road haulage. As it requires only one driver for up to 40 containers, it is far less labour intensive and can be cheaper and more reliable. By optimising the existing rail capacity, we can start to bring down costs, increase demand and encourage the modal shift to more sustainable transport solutions.”
Andy Tyas of Mercia Debt added: “Rail freight offers the potential to save over 30,000 tonnes of carbon a year, and to reduce the amount of heavy goods traffic on the road. RailX could play a key role in the transition to more sustainable transport. The team chose to pioneer their service in Yorkshire, building on their existing relationships in the region, and also the fact that an estimated 42% of rail freight moves through or stops in the county. With demand growing steadily, this funding will enable the company to begin its expansion across the Yorkshire region and the wider UK.”
Keira Shepperson, Investment Director at the British Business Bank, said: “We’re proud to support innovative businesses like RailX as it embarks on its growth journey. The Fund has been a catalyst for RailX’s business operations, and it is now prepared to expand its market reach beyond Yorkshire. This investment not only drives innovation in the business but creates valuable employment opportunities, underscoring our commitment to fostering economic prosperity in Yorkshire and beyond.”
Andy McKenna, Access to Finance Advisor for the Sheffield City Region Growth Hub, provided fundraising advice to the company.
The current NPIF investment phase has now completed with the British Business Bank launching the Northern Powerhouse Investment Fund II in March 2024.
The Northern Powerhouse Investment Fund project is supported financially by the European Union using funding from the European Regional Development Fund (ERDF) as part of the European Structural and Investment Funds Growth Programme 2014-2020 and the European Investment Bank.