TheChek News Flow

UK transport secretary says full electrification of railways ‘not affordable right now’

Heidi Alexander says focus will be on other projects such as HS2

Ministers are not planning to electrify any more of the UK’s railway lines in order to focus investment on other projects such as HS2, the transport secretary said.

Heidi Alexander said any further electrification of lines is “not affordable right now”, despite industry anger over decisions that have led to key routes being left with stretches that require diesel trains.

“We are only supporting projects that are fully costed and affordable,” she told the Rail Industry Association summit in London. She said approved projects included electrifying the Midland main line up to Wigston Junction, which is just south of Leicester, and enhancing the overhead lines south of Bedford.

“We are keeping further electrification of the line under review, which I believe is the responsible thing to do,” she added, doubling down on a decision first announced in July.

Alexander said the move has “allowed us to make commitments elsewhere”, including the record £3.2bn settlement with Transport for London, and allocating £20bn of contracts on the HS2 line.

But the industry has been frustrated that electrification projects have left several major lines with gaps. The decision to stop upgrades at Wigston has left Nottingham, Derby and Sheffield without a fully electrified line to London — requiring the use of diesel trains or hybrid models that use diesel and electric power, instead of new, fully electric trains.

One industry executive said the transport secretary’s comments on Wednesday showed she recognised the industry frustration over the issue, but that Alexander made clear no further investment was coming for badly needed electrification projects.

Later on Wednesday, Alexander will introduce the Railways bill in parliament, which will form Great British Railways, the body that will run the newly nationalised rail service.

The move reunites train operators with the management of the rail and signalling infrastructure for the first time since the industry was privatised in the 1990s.

The bill will not, however, set out how the network will be managed, or detail its cost savings.

Alexander told the FT that these details would come later after consultation with the industry.

“A lot of the work will be done as we do the design work for GBR, so that information isn’t contained in the bill,” she said.

In her speech, Alexander criticised the fragmented nature of the privatised sector, which she said was a “Kafkaesque nightmare of different contractual relationship and red tape”.

“We will never improve while the industry is fractured into 17 different industry bodies, each with their own teams, none working together, and each ready to blame each other when things go wrong,” she added.

GBR would be “one whole system, it will have an unashamedly long-term focus, and a mandate to drive up revenues and grow the railways”, Alexander told the conference.

However, Conservative shadow transport secretary Richard Holden told the event he was concerned the bill would not include any passenger growth targets.

“We believe [GBR] should be for passengers, and taxpayers and operators, not the government’s union paymasters,” he added.

German authorities say suspects used stolen card details to buy 19mn subscriptions on fake websites

Eighteen people have been arrested in Germany and several other countries in connection with an alleged international online fraud and money laundering network that caused losses amounting to hundreds of millions of euros.

Prosecutors allege that between 2016 and 2021 the suspects used credit card details from about 4.3mn victims in 193 countries to purchase more than 19mn subscriptions via “professionally operated fake websites”, according to a joint statement from the Koblenz public prosecutor’s office, German financial regulator BaFin and the federal criminal police (BKA) on Wednesday.

BKA vice-president Martina Link described the arrests — part of one of Europe’s largest investigations into online fraud in recent years, dubbed “Chargeback” — as “a significant blow to the global financial fraud scene”.

The suspects were detained after 29 arrest warrants were issued, and more than 60 buildings searched in Germany and abroad, with assets worth €35mn seized in Germany and Luxembourg.

Investigators are pursuing 44 suspects of various nationalities, including American and Canadian, in a case that began in 2020. Among them are six former employees of payment companies.

Prosecutors said the stolen credit card data was obtained in part through phishing attacks and data leaks. Intermediaries allegedly acted in between the fake companies operating the websites and the payment service providers.

Officials suspected the group “compromised four major German payment service providers” to process the fraudulent transactions, in one case using software to disguise the flows of money.

In other cases, prosecutors said the group collaborated with former senior managers at payment companies, who allegedly enabled the providers to generate substantial revenue from so-called chargeback fees.

The cost of unauthorised credit card charges is estimated at more than €300mn. At least €150mn in proceeds were allegedly laundered through bank accounts and about 500 shell companies, mostly in the UK and Cyprus.

The roughly 2,000 fake websites mimicked streaming, dating and pornography services, typically charging about €50 a month and concealing payments under “incomprehensible” descriptors such as helpyourselfbill.com or righttobill.com. Germany’s Financial Intelligence Unit uncovered the network after identifying recurring patterns in suspicious transaction reports.

BaFin’s Birgit Rodolphe said the fraudulent activity was fully halted in 2021 and the suspects no longer worked in financial services.

The authorities declined to confirm the names of suspects and affected companies. Der Spiegel reported that the affected payment providers included Unzer, Nexi Germany (formerly Concardis), Payone and Wirecard, which collapsed in 2020.

Unzer, which is part-owned by Goldman Sachs, said police had visited, but not searched, its Heidelberg office.

The investigation concerned “former employees of Unzer”, with whom the company had “ended all relations in 2021”, a spokesperson said. At that time, Unzer was owned by American buyout group KKR. There were no investigations into current staff, Unzer added.

Unzer had been subject to special audits by BaFin in 2021, which led to a fine for deficiencies in its anti-money laundering and organisational controls. The regulator also imposed a temporary ban on new customers and appointed a special representative to oversee remediation between 2022 and 2024.

Nexi said it would not comment on an ongoing investigation, adding: “Nexi Germany has not been involved in such business since 2021, as we proactively ended all related partnerships. Nexi Germany always co-operates transparently with the authorities.”

Payone, owned by France’s Worldline, said it had “no knowledge of investigations” against the company or its employees.

Prosecutors said the final number of victims and total losses could rise. The probe has taken years, they added, because investigators had to contact hundreds of credit card holders in several countries and issue more than 90 international requests for legal assistance.

Clive Selley also warns that tax rises in the Budget will undermine investment in internet coverage

BT’s Openreach has threatened to scrap the final leg of its goal to make full fibre available to 30mn homes by 2030, escalating a dispute with the communications regulator over price curbs on the UK’s biggest broadband provider.

Openreach, the broadband infrastructure company owned by the former telecommunications monopoly, is on track to increase its coverage from 20mn to 25mn homes by 2026, and is then due to grow that to 30mn.

But Clive Selley, the company’s chief executive, said the business case for covering the additional 5mn homes would be undermined by Ofcom’s draft proposal for the next five-year regulatory period, which would retain restrictions such as price controls to limit Openreach’s dominance.

“I’m going to hold fire getting approvals for that final 5mn tranche [of homes] until I see what comes out of the TAR,” Selley told the Financial Times, referring to Ofcom’s Telecoms Access Review — a five year regulatory check-up of the market. 

Openreach also hosts customers of other providers such as Sky, TalkTalk and BT’s brand, EE. The company previously said it would struggle to meet its 2030 target if Ofcom maintained measures such as caps on the price it can charge broadband companies to use its network.

“If I can’t see where the regulation is going to land then I can’t articulate the business case [internally] and therefore that business case goes on hold until we see the final wording,” Selley said, indicating a hardening of Openreach’s stance.

“These are worrying times for the UK because, as the only credible builder for the last tranche of homes . . . it’s incumbent on us to keep the programme going,” Selley said. 

The warning, which could risk leaving millions of households without access to full-fibre broadband, comes as Ofcom reviews how to regulate the UK broadband market, with the results expected in the spring of next year. 

The previous review in 2021, which curbed Openreach in an effort to stimulate competition, led to a wave of new entrants known as alternative network providers, or “altnets”, spending billions of pounds rolling out their own networks. 

The scale of the altnets’ rollout — which has seen more than 16mn homes now covered by providers other than Openreach or Virgin Media O2 — previously led Openreach to demand that restrictions be lifted in parts of the country with two or more networks.

But competitors including Virgin Media O2 and CityFibre have argued that Openreach retained significant market power and that restrictions should stay in place.

Ofcom said its “pro-competition, pro-investment regulation” had led to the UK becoming one of the fastest builders of full-fibre broadband in Europe and that it was “consulting extensively on proposals to maintain that momentum”.

BT chief Allison Kirkby warned in September that UK telecoms operators pay 10 times the amount of “government inflicted costs” — such as business rates and energy levies — than peers in comparable European countries.

Selley warned that further tax rises in this month’s Budget would hamper “our ability to invest in critical national infrastructure and a full fibre future for the UK becomes undermined”. He added that 20 per cent of homes in the country were still without full coverage, which was “huge”.

“They [Ofcom and the government] have to create the conditions or maintain the conditions for continued investment,” he said. “I worry that the new regulation in draft form does not do that”.

Brussels launches €345bn high-speed rail plan to compete with planes

Brussels has set out a €345bn plan to cut train times between EU cities by as much as eight hours in a bid to make the bloc’s railways competitive with planes over the next 10 years.

“If we present to the people . . . a way to go somewhere fast and safely, rest assured that citizens will definitely choose the train over any other means of transport,” EU transport commissioner Apostolos Tzitzikostas said on Wednesday.

The plan’s aim is to have major EU cities connected by a high-speed rail network with trains travelling at least at 200km/h by 2040.

Despite setting a target in 2020 to double high speed rail traffic by 2030 compared to 2015 levels, the European Commission said that progress had lagged. In 2023, high-speed rail traffic had only increased 17 per cent compared to 2015, with the majority of high-speed lines running through the EU’s biggest member states.

“Central and eastern Europe remain poorly connected. With persisting fragmentation and barriers, a truly connected European high-speed rail network is therefore still far from completion,” the commission said.

Rail groups have also hampered Brussels’ efforts to try to allow passengers to buy tickets across different services from one operator.

In response, the commission said that it would propose a law in 2026 that would force operators to share data, making it easier for passengers to buy one ticket for a journey across the bloc using multiple different trains.

CER, the rail industry body, welcomed the plan, saying it could “revolutionise the way travel distances are perceived in Europe”.

To achieve the goal for high-speed rail, the commission estimated the required investment at €345bn. It said this would come from “more strategic” use of EU funds, national financing including money from the bloc’s emissions trading system, and “credible action to attract sufficient financial investment from the private sector”.

Brussels has proposed that funding for European transport infrastructure should be doubled in the bloc’s next seven-year budget, which starts in 2028. That would bring the amount dedicated to cross-border travel to €51.5bn if it is signed off by EU member states and the European parliament.

A high-speed network reaching speeds of 250km/h or more would require investment of €546bn, the commission said.

China’s high-speed network is designed to reach speeds that are more than 100km/h faster.

EU executive vice-president for cohesion Raffaele Fitto said that the rail industry was a strategic sector for the EU in which it still had global leadership.

“Global competitors are improving fast and we cannot afford to lose another strategic industry to Asia,” he said.

However, Jon Worth, an independent European rail analyst, said that the commission’s plan “doesn’t justify the name”.

“It’s more like a wish list,” he said. “It sets aspirations for 2035 and 2040, far enough in the future to mean no one can demand anything concrete now. It talks of financing infrastructure, but doesn’t explain how that will work. It mentions more rolling stock, but lacks detail about how to get it.

“The whole thing reads like a comfort blanket for the railway industry,” he added.

The company will open two new distribution centers and expand a third as demand surges for GLP-1s and other refrigerated medications

Cencora will invest $1 billion over five years to expand its U.S. supply chain, including new distribution centers.

Half of new medicines from 2023-2027 are expected to need cold storage, up from 37% in 2013-2017, increasing logistics complexity.

Cencora’s revenue grew almost 9% to $80.7 billion for the quarter ended June 30, partly due to GLP-1 and specialty medication sales.

Pharmaceutical distributor Cencora will invest $1 billion in its U.S. supply chain as demand soars for cancer therapies, weight-loss drugs such as Ozempic and other medications that need special handling and refrigeration.

The Conshohocken, Pa.-based company plans over the next five years to open two new distribution centers and expand an existing warehouse that handles specialty drugs.

The investment is meant in part to help the company respond to a surge in the number of medications that require more complicated logistics handling than traditional pills, cough syrups and topical ointments.

“We’re starting to see, and continue to see, more cold-chain products come to market,” said Heather Zenk, the company’s president of U.S. supply chain. “We need to expand cold-chain capabilities.”

Half of new medicines hitting the global market from 2023 to 2027 are expected to require cold storage, up from 37% of products launched between 2013 and 2017, according to healthcare research firm IQVIA.

Cencora—known as AmerisourceBergen before rebranding in 2023—is one of the largest companies in the U.S. that handle pharmaceutical distribution between drug manufacturers and healthcare providers such as pharmacies, doctors and hospital systems.

Cencora and its rivals such as Cardinal Health and McKesson have seen revenue climb over the past several years amid skyrocketing demand for the class of diabetes and weight-loss medications known as GLP-1s. Beyond the weight-loss drugs, many popular medications such as AbbVie’s arthritis therapy Humira, Regeneron Pharmaceuticals’s eye treatment Eylea and Merck’s cancer drug Keytruda are injections or intravenous infusions that have to be stored at specific temperatures.

Cencora’s revenue grew to $80.7 billion for the quarter ended June 30, up about 9% from a year earlier, which the company attributed in part to increased sales of GLP-1s and other specialty medications. The company is scheduled to report earnings Wednesday morning.

Cold-storage requirements make transporting and storing items more expensive and difficult for logistics providers. “If you don’t manage it appropriately, you can lose product,” said Maria Nieradka, an analyst with research firm Gartner. “These logistics providers are really upping their game and building the capability so that they have it available to pharmaceutical clients.”

Cencora today operates one so-called national distribution center in Lockbourne, Ohio, near Columbus. Drug manufacturers ship truckloads of their products to that warehouse, where shipments are broken down into smaller quantities and sent to other facilities throughout the U.S. that handle final-mile delivery.

The company plans to open a second national distribution center about 120 miles southwest in Harrison, Ohio, by spring 2027. That 530,000-square-foot warehouse will increase Cencora’s storage capacity and make its supply chain more resilient by providing a nearby backup in case of disruptions to the power grid.

“If I wanted to move the same manufacturer between the two, it’s only two hours apart,” Zenk said. “It’s far enough, but close enough.”

The building will use more automation such as robotic arms to break down and build pallets and autonomous picking machines that bring items directly to human workers for sorting.

Cencora also plans to close a wholesale distribution center in Corona, Calif., outside Los Angeles, and replace it with a new building in nearby Fontana that is twice as large, adding to its network of more than 30 distribution facilities across the U.S.

The company plans to build an addition to its specialty distribution center in Dothan, Ala., that is one of its three facilities across the U.S. handling specialty medicines. The expansion will dramatically increase the building’s refrigerated storage and frozen capacity.