Official Report 268KB pdf
Agenda item 1 is our inquiry into ferry services in Scotland. I welcome to the meeting Graham Bell, who is a press and policy officer for the Scottish Chambers of Commerce. We hoped that someone from the Confederation of British Industry Scotland would also join us, but unfortunately no one from that organisation can be here. Do members agree that we should invite CBI Scotland to provide written evidence so that we can consider its views?
As members will be aware, this is the third of seven evidence sessions in the committee's inquiry into ferry services in Scotland. After we have heard from the Scottish Chambers of Commerce, we will hear from the National Farmers Union Scotland and Seafood Scotland. We will then hear from the Road Haulage Association and the Freight Transport Association.
Good afternoon and thank you for inviting me to the meeting.
A host of other issues will come up, but I begin our questioning by asking you about the existing routes. Do those routes meet the needs of Scottish business? If not, what changes would you like to be made?
We do not get the message that there is a shortage of ferry routes between the islands, but the people in Campbeltown would be keen to have a ferry between there and Northern Ireland. As I am sure the committee is aware, various attempts to set up such a route have been made, but it has been difficult to make it work economically because of Campbeltown's isolation and its particular challenges. It would be lovely to find a way to make that work, especially given Ireland's booming economy. Circumstances may have changed since the most recent attempt.
You do not see the focus as being on routes within Scotland—you are talking about services from Scotland to other countries.
Yes, and it might be from Rosyth to Shetland and onwards. For example, a ferry service does the circuit around Bergen, Iceland and so on, and it is much more expensive to travel from Aberdeen to Shetland than it is to travel from Shetland to Iceland.
Forgive me, convener, obviously we are looking at ferries, but Mr Bell mentioned increased freight. Mr Bell—do you accept that the work that has been done in Grangemouth on new facilities and so on has seen a fair increase in the amount of freight coming into and going out of Grangemouth? Is that a positive thing?
It is positive, and I suggest that we continue to enhance that role. The key issue is our ability to exchange freight between rail heads and ships, and so on. At the end of the day, freight will ultimately get to wherever it is going by road, but the more we can put on the water in between, the better things will be.
On infrastructure development, do the current ferry fleet and the associated ports infrastructure provide the necessary facilities, capacity and reliability for efficient conduct of business? If not, what changes would you like to be made?
Economics is a difficult driver, especially for the Caledonian MacBrayne routes, where we often see ships on which catering leaves something to be desired, for example. It does not matter for a short route, but if you are going from Ullapool to Stornoway, it must be quite depressing to be faced with the poor choice that is on offer. Making ferries more attractive to people could be considered.
Do the current ferry timetables allow for efficient carriage of goods, and for travel by staff to and from the Scottish islands and peninsulas? If not, what changes should be made?
That is a key question. Islanders have a strong feeling that the ferry services are driven by the needs of mainlanders rather than by the needs of islanders. If the first boat in the morning is from Oban to Tobermory, that is not helpful to someone from Mull who is trying to do business on the mainland, helpful as it is to the person from Oban who is trying to do business on Mull.
So there should be less focus on the mainland, and there should be more and smaller vessels.
Yes. The services should also be more frequent.
Do you recognise the picture that CalMac painted of the problems in trying to acquire new ships? As you know, CalMac is commissioning a new boat via Poland. It told us that it takes at least three years from commissioning to receiving a new boat, not least because there is a world shortage of engine manufacturing for new ships. It is also difficult to lease boats because of issues of compatibility with piers.
That is a good point. A professor at the University of Dundee wrote an interesting study of the history of shipbuilding in Scotland, which was published recently. One of the points that he made, which I have heard reinforced when speaking to ship brokers in London, is that demand for new vessels exceeds supply worldwide, which is a problem. As I said, I do not think that things are easy, given the huge economic challenges that exist, such as determining which routes are profitable. I have proposals that will probably make routes less profitable, but supporting the islands is crucial.
How responsive are the major ferry service providers—CalMac and NorthLink Ferries—to the needs of business? How could communication between ferry operators and business be improved?
I encourage the committee to consider a more flexible approach. Vans under 5m travel at car price and vans over 5m have to pay goods vehicle rates, which is expensive. Increasingly, motor vehicle companies are making vans that are 5.1m long, which takes them just out of the car category. The fact that such vans have to pay goods vehicle rates makes transit of goods much more expensive. It would not be difficult to introduce a bit of flexibility to extend the range to count vans of 5.1m as small vehicles and charge them at the lower rate.
The other part of my question was about communication between ferry operators and business. What you have said about Mull and issues of capacity suggests that there is a lack of communication. Have you any suggestions about how to facilitate communication that would make the services better for the people who use them?
I had not considered that point, but it is worth taking into account. Scottish Chambers of Commerce would be happy to facilitate such dialogue in the future. You can have too much information, but you cannot have too much communication.
Is there no dialogue at the moment?
There is some dialogue, but there can always be more.
I note your interest in serving the islands. Do you agree that if we had shorter links, rather than longer ferry services, that would make commerce easier? For example, there could be a short route from Jura to the mainland or a route between Lochboisdale, Barra and Mallaig?
That is interesting. Shorter routes benefit commerce. In some of the southern islands, there are an awful lot of stops on some of the routes, which can make the passage lengthy. If it were possible to shorten the journey times, that would be beneficial, especially given that a lot of fresh produce is being shipped, so delays should be avoided.
Would you expect the ferry companies to talk to business about that and their needs?
That would be a good thing.
Do you think that the current Clyde, Hebrides and northern isles ferry service contracts allow the operators sufficient flexibility to meet the changing needs of their customers, and particularly the needs of businesses?
I would not confess to being an expert on the matter. When I look at what services are available, I think that we could do better. The Scottish islands are a phenomenally expensive part of the world to travel to. Obviously, there are difficulties with weather, distance and so on, which are not of the ferry companies' making, but if we can fly to New York or Los Angeles cheaper than we can fly to some of the islands, we need to look hard at what we are doing, particularly from the islanders' point of view.
In gathering your evidence, have you had any feedback about whether the contracts that are in place at the moment are stifling innovation and change? Do people feel that there has been a difference since the current contracts were put in place?
I do not hear many people talking about them favourably. There is a difficulty with all such things. Generally, a business support organisation such as ours will always argue in favour of full and fair competition. However, we must ask what "full and fair" means. In the case of CalMac, to cherry pick the profitable parts, rather than buy the whole bag, would not be full and fair, to my mind. It is like allowing TNT to take post where it wants to take it, rather than requiring it to take it to every part of the country at a single price, like the Post Office has to. That sort of approach means competition that is not full, free and fair. If we are to review the situation and ascertain how things can be done better, we must compare like with like. I do not see a queue of people going down the street trying to acquire the ferry routes to which I am referring.
Does your organisation have a view on the Government's road equivalent tariff pilot?
Yes. It is very welcome, but with one drawback: it disfavours the islands that do not receive it. We suggest that mechanisms could be used to prevent that disfavour, such as discounts for islanders during the two years for which the project is going to run. Unlike islands such as Colonsay, Islay, Mull and Arran, which do not get the benefit of RET, the islands that have been chosen for the pilot could become favoured in the tourism market. It begs the question whether there should be further tourism support to ensure that islands such as those that I have mentioned do not lose out.
Is it likely that capacity will be an even greater problem once RET is introduced?
I hope that any increase in traffic will result in increased investment in vessels. However, it would be an optimistic person—not me—who would bet on that happening, although that is the direction in which I would like to see us go. Clearly, the Government has a key role in determining and supporting such developments.
I made the point that capacity cannot be increased magically. Three main options are available: a new vessel can be purchased, which takes at least three years; frequency of services can be increased, but that is not always possible because of issues such as the working time directive; and finally, competition can be introduced on a route by bringing in other companies. What is your view on that option?
It would be helpful if other companies were willing to enter into competition, which works well on the Dunoon route. One reason why Western Ferries does well there is that it has a down-to-the-bone service—there is no catering, for example. The company has cut back its costs to ensure that the service runs okay. However, that is a busy route that will always be at the more desirable end of the market. If competition is introduced, it must not simply take the more profitable routes away from existing operators, leaving them worse off than they are now. I understand that that creates difficulties under European law.
We could have a separate debate on issues of European law, especially in relation to the Gourock to Dunoon service, but that is for another day.
No. The main concerns were expressed by islanders who will not get RET, who fear that they will be outcompeted by neighbouring islands that will get it.
My question relates to the other end of the spectrum of competition. The committee has heard calls for all ferry services to be provided by one operator. Would you support such a move?
That is broadly what I have been saying. If there is to be a mixture of operators, they must all be subject to the same terms and conditions of competition. If other operators come in, they must take the rough with the smooth; they should not get to pick the cream of the routes. Under those conditions, competition would be okay, but I do not see operators queuing up to provide it. Generally, competition is thought to improve things: time and again it has been proved that it makes people get their act together to keep their market share. However, it comes with a price. It is unlikely that ferry services in Scotland will ever be a major profit centre, so they cannot be opened up to competition as an entirely commercial proposition. However, if operators are asking to compete, they should be heard and the option should be considered.
What else may have discouraged private sector operators from becoming involved in ferry services in Scotland?
At the end of the day, willingness to invest capital in any project is dependent on whether there will be a return on that investment. We have seen instances of wealthy Scottish businesspeople investing in projects for philanthropic reasons—that is a growing trend in recent times—but there is no rush to deliver a service to the equivalent of half the population of the Borders, spread between Jura and North Unst. That is not a large commercial market, and the costs and risks are high. Greater competition and interest will be encouraged only if we grow the economies of the islands, which will make services more attractive. Extension of our services to Iceland, Scandinavia and the Baltic represents a bigger growth opportunity than interisland services.
Should we encourage private sector operators to get involved in providing ferry services? If so, what would encourage them?
We certainly should encourage them. However, as I have said, the problem is how to make an opportunity attractive to commercial interests if there is no profit in it, which moves us into consideration of subsidy. If subsidy is sufficient to make an opportunity profitable, a greater number of commercial companies will be interested.
You rightly point out that many ferry services between the islands are heavily subsidised. You represent an organisation with members all over Scotland, and not only in the areas that are dependent on ferry services; my final question is therefore difficult, and I am sorry to put you on the spot. Investment in transport in Scotland is necessary, but Government resources are finite, so where on the scale of priorities would you put ferry services? Would you rather the money was spent elsewhere?
I do not think that we have the choice of spending money elsewhere, but we do have a choice about the level at which the spending is set. The landscape for Scottish chambers of commerce is very uneven. Being a member of District of Wigtown Chamber of Commerce is very different from being a member of Edinburgh Chamber of Commerce. The big metropolitan centres are passionate about the metropolitan region strategy, and they think that growing core centres of excellence and growing profit and employment will create wealth that will then be passed out to the periphery.
I hope that you will not take this the wrong way, but that was the longest way of saying "I don't know" that I have heard. You should be a politician.
I do not have a mandate from 8,500 businesses on the matter, so I am expressing a personal view. In my view, a single operator is the better option at present. If we could find ways to encourage commercial competition, that would be welcome, but the whole CalMac process that we have recently been through showed that not a lot of people were up for it. Maybe that was just because of the conditions of the bid. Maybe people would bid differently if the circumstances were different. We should certainly leave the door open to competition, but we must find a way to make it work, and I do not see that at the moment.
Are you saying that competition is desirable but that you find it improbable?
Exactly.
Casting your mind back slightly, should the private sector be encouraged to run ferry services? There has been no mention of NorthLink or of Orkney Ferries. A successful, privately owned ferry service is about to launch a catamaran because of the expected profits and potential. That is a private, unsubsidised service. We have talked about the need for ferry contracts to be more flexible. Should NorthLink have considered taking a different route from the one it takes to Orkney at the moment, thereby perhaps gaining some of the benefits that Mr Banks sees for his service between Gills Bay and St Margaret's Hope?
I am not aware of the catamaran project. That is good news. Will it run from Aberdeen to Orkney?
No, from the north of Caithness along the shortest possible route.
That is a very short route, along which there is considerable tourist traffic, so it is a hotspot in terms of generating traffic and being profitable. John O'Groats is, after all, named after the ferryman who, for a groat, made the service work in times gone by. I would be delighted to hear of someone making it work with a modern craft and a frequent service.
I thank Mr Bell for joining us and answering our questions. I suspend the meeting briefly to allow the changeover of witnesses.
Meeting suspended.
On resuming—
I welcome to the meeting Stewart Wood and Lisa Webb from the National Farmers Union Scotland and Libby Woodhatch from Seafood Scotland. Before we move to questions, would you like to introduce yourselves and say a few words?
As you said, I represent Seafood Scotland, which is a trade association for the seafood sector working with fishermen and processors throughout Scotland on quality improvement, supply chain issues and promotion and marketing. We literally work from boat to plate.
I am vice-president of the National Farmers Union Scotland. As someone who lives and farms in the Orkneys, I have quite a grasp of issues related to shipping services to the islands. I would prefer to make my points in response to members' questions, so all I will say for the moment is that strong and reliable ferry services are important to the agriculture industry on all the islands.
As NFUS's regional manager for Argyll and the islands, I have more experience in dealing with CalMac ferry services.
Do the current routes meet your members' needs? If not, what changes should be made?
When we asked that question of seafood processing companies and fishermen in the Shetland Islands, the Orkney Islands and the Western Isles, they all gave different answers. However, in summary, our findings tend to echo Stewart Wood's comments: those on Orkney had the fewest issues with transport. Indeed, their only real concern is something that could be said about all the products that we deal with. When your job is to catch something from the sea, you cannot say, "I will ship two tonnes of this or that every Monday"; it all depends on the weather and whether you actually find the fish or shellfish. I should point out that the catch in the Western Isles is predominantly shellfish. Much of the catch in Orkney is also shellfish, but there is more of a mix there and in Shetland.
I pose the same question to the NFUS. Other members will ask questions about RET, so I ask you to respond on routes and timetables.
Three different operators come into three different jetties or terminals in Orkney, so the service is very good from that point of view. The ferry routes are all well supported and well organised and there is a good structure to most of them.
An issue on the west coast is the north Lismore vehicle ferry. Further, there is potential demand for routes between Mull, Coll and Tiree. It was suggested to us that there could be a ferry from Bute to Dunoon and the Kyle peninsula.
There has always been a lot of dependence on the Aberdeen to Orkney and Aberdeen to Shetland ferry services that NorthLink provides. We have heard that there is also private investment in the journey across the Pentland Firth. Is there a change in market demand for ferry services to Shetland and Orkney? In future, is it likely that there will be a gradual shift away from the Aberdeen ferries to the shorter ferry routes that join up to the road network in Caithness?
That was one of the advantages of the Invergordon route. Once you got past Inverness, the quality of the A9 started to deteriorate quite quickly. However, there was good linkage up to Invergordon. One disadvantage of the Pentland Firth routes for the heavy wagons that go up there is the price of fuel, which is a deterrent. The strength of the Pentland Firth routes is in tourism.
I will concentrate on Lisa Webb's remarks. I asked the previous witness about the land bridge option of having shorter routes. I am surprised that you were thinking about a Bute to Dunoon route. A ferry goes from Rhubodach to Colintraive, after which people can travel by road. When we consider services between Islay, Jura and the mainland, between Bute and the mainland and perhaps another service, should we try to stick to shorter routes?
That was just a suggestion from one of our members. Obviously, the Rhubodach ferry is available to people.
Some witnesses have touched on concerns about capacity if RET is successful. Are you concerned that the carrying capacity of ferry routes now constrains the development of agriculture or seafood businesses?
The main concern is that, because the industry cannot always predict its volumes, vehicles might have to wait for or be bumped from a ferry at busy times of year. That concern tends to be seasonal at the moment, but if RET is implemented the capacity might not exist to meet demand.
If we set aside RET, is any route routinely subject to such constraints at the moment?
I do not know the details. We received a general answer from our members in the Western Isles.
We have reports that Islay, Tiree and Mull are all short of capacity and that the Lismore ferry is short of capacity in the autumn, when livestock and other agricultural vehicles have difficulty in finding space.
This will be the first year in a long time that Orkney and Shetland have had no livestock freighter for the back end of the year. For six or eight weeks, a freighter used to service Orkney and Shetland, and probably took about 1,000 head of cattle and 5,000 or 10,000 sheep through Shetland each week on three round-trip sailings.
Are any of you suggesting priority bookings to protect slots on ferries for the seafood and farming industries?
Orkney and Shetland are competing for the same deck space, especially at the back end of the year. Shetland mostly transports fish and Orkney transports cattle and sheep, although Shetland also transports sheep. As I said, at the back end of the year we will have no livestock freighter, so that will test whether the capacity exists. The new crates are a fantastic step forward from what we have had in Orkney. I was the chairman of the NFUS in Orkney and Shetland when the tendering process occurred and I had a lot of input into the crates. If the new system works, it will be a big step forward. However, the best and cheapest way of shipping cattle is to use a livestock freighter and to put as many head of cattle as possible on the deck. The previous ship, though, had reached the end of its life and we had to move on. If the new system works, it will not be far off from what the industry wanted.
Do freight handling facilities at any ferry ports need to be improved? If so, where?
There is potential for improvement in ports that do not have lairage facilities. A farmer could get to such a port with their livestock but find that the boat could not sail, which would mean that the animals would have to stay on the boat or the farmer would have to take them back home, and transport legislation would then impinge on that.
The big advantage that we have in Shetland is the use of crates. When livestock is in crates on the ferry it is standstill time, which means that, after it reaches Aberdeen, there is still eight hours of movement time for going up and down Scotland.
Lisa Webb referred to a problem about travel hours. Where exactly does that have an effect? Clearly, it will not affect every port, but it will be useful to know whether it affects a particular port.
The problem arises when animals—perhaps a bull—are travelling by lorry from, say, the central belt to Islay but cannot get on the boat. No lairage facilities are available at Kennacraig so, if the animals were still on the lorry, it would be unable to travel back to the central belt because doing that would contravene the transport regulations. The same problem can occur when trying to transport animals to Tiree and other outlying areas.
It is helpful for us to know that because we must be specific when commenting on facilities.
Before asking my question, I am interested in what Lisa Webb said about animals being left on board lorries. What are the animal welfare implications of that and is any legislation involved?
The Welfare of Animals (Transport) Order 1997 would impinge in that situation.
Is that a frequent problem?
It happens only at certain times of the year. We cannot predict the weather, so if it is a wild day, the ship's master might not be prepared to sail.
Is there a role for the private sector in providing freight ferry services? If so, how could private sector involvement be encouraged?
The private sector is already involved in freight in Orkney—Mr Banks's services can carry freight.
Would private sector involvement enhance capacity? You spoke about capacity. There is a lack of freight capacity at some stages.
I would say that it would.
Some of the processors to whom we spoke picked up on the fact that there is competition in Orkney. Their view was that, because private companies are in competition, they are more flexible, for example when people are rushing and have a lot of fish or shellfish to process. They felt that if a company is subsidised, that will be it—the ship will be off. There was envy of the position in Orkney because elsewhere there is no competition, so the service does not accommodate the customer.
Could you outline any specific problems with access to ferry services that the people and organisations that you represent face, for example in transporting livestock or getting goods to market on time? Lisa Webb highlighted some issues, but what other problems have people faced in using the ferry services?
On the northern isles routes?
Yes.
As I said before, we have a new livestock freight system. Such a system has been used before in the quiet months, and it has not been a problem, but difficulties arise when the pressure really comes on. I doubt whether enough crates are being built. People could do with a few more. I think that 35 crates will go out on one vessel. Therefore, 35 crates must be emptied, washed and put back on it. That is done in the space of around four or five hours, which is almost impossible. I would like 15 crates in Aberdeen washed and ready to put on the vessel. Only the first crates off would then have to be washed and put back on the ferry; it would then be away. Small things like that, which would involve a wee bit more investment, are important. Quite a large investment has been made, but another 15 crates, which could make the service work, would cost little.
So increased capacity is required to enhance the service.
Yes. Deck space is the big thing with such crates. The number of crates is limited on a sailing—there can be 500 head of cattle and that is it.
How can communication between ferry operators and major users of ferries such as your members be improved?
We have had good communications with Caledonian MacBrayne recently. Our members have twice-yearly meetings with it, which it organises, and things work quite well. It is always willing to speak to us. It is good in that respect.
You said that there used to be a service that ran between Mull, Coll and Tiree.
No. I did not say that there used to be such a service. That is one of the ideas that—
But there was such a service.
Right. Okay.
However, the ferry company did not consult people. It simply made a change when it changed its timetables. Would you say that that is the kind of thing that—
I was talking about Caledonian MacBrayne being pretty good with things to do with day-to-day farming issues. However, I have received quite a lot of complaints from people on Mull that it does not consult local communities.
When I spoke to companies on Shetland, they seemed quite happy. They have meetings that involve NorthLink, Tavish Scott and people in the industry, and they thought that they had opportunities to discuss issues and consider potential solutions. They have picked up on some issues, but they thought that they had a good process for addressing issues.
The issue was raised a couple of years ago of the difficulty of getting NorthLink to provide space and proper storage for fish being transferred from Shetland to Orkney because of an excess of fish in Shetland or a lack of fish in Orkney. We talked about that earlier. Have your members raised that issue? If so, how has the ferry operator responded?
The matter was not raised by anybody. In fact, when we canvassed companies' views, I was surprised by how positive a lot of their opinions were. It is appreciated that one of the biggest problems is that they cannot say that they are going to send 10 sheep to wherever because they do not know whether they are going to have 10 sheep. The situation varies. The companies are happy at the moment, but if something happens next week—if some of their lorries get bumped—I am sure that they will be on the phone to us about it.
Stewart Wood, you think that you have solved your problems with communication.
That is because we have had good communication. NFU Scotland has done a huge amount of work on both islands, especially at the last ferry tender. We had a lot of input into that. It was not only NorthLink—two other companies were involved in the process. They were quite naive about shipping livestock, so we spent a lot of time going through the process with them. The local members of Parliament have taken an interest in it as well, and a working group has been set up that involves people from both islands. We have a pretty strong relationship with both companies.
The system is for people rather than sheep.
Yes. It is for humans. That is an issue that has raised its head, and I guess that there will be a bit of consultation on it.
That is, indeed, a matter to discuss with others, but people are not yet being farmed.
I am not experienced in all the intricacies of it, but CalMac likes to say that they do not. Whenever we ask whether the ferry companies can provide an extra service somewhere, they tell us that that is not in the contract.
Thank you. That is helpful.
As I said, at the start of the tender process we sat down with the three or four ferry companies and stressed the need for appropriate timetables, especially when livestock is involved. It is essential that slaughterhouses get livestock in the first half of the week—they do not want them on Thursday or Friday because, if a sailing is missed, the cattle are stranded and have to be left over the weekend. NorthLink and the other companies took such issues on board at the time.
There is, nevertheless, an element of inflexibility built into where the routes are.
Yes, I guess so. However, NorthLink is going to provide a Sunday night sailing for livestock to get more cattle and sheep to the slaughterhouses in the first half of the week. We have asked for flexibility and NorthLink is doing that for us.
The biggest issue regarding flexibility concerns the links between the islands—particularly the Western Isles—for goods that are being transported to the mainland. The timetables do not seem to have any coherence. The issue was raised by the Western Isles Fishermen's Association. The person who runs the association sits on the board of Highlands and Islands Enterprise and wears about 10 other hats as well, so I assume that HIE has had a conversation about that with the ferry companies. However, it has not had much sway in getting services more co-ordinated. If we could tell the ferry operators how much shellfish we would need to transport every day, the argument might have more clout. However, as we cannot guarantee what loads we will be putting on their services, the argument is not always a good one in their eyes.
We are going to Lerwick soon, and we can ask people there about services between the outer isles and Lerwick.
What are your organisations' views on the road equivalent tariff pilot scheme? Libby Woodhatch has covered some of the points, but I would welcome any additional points that you want to make.
Orkney and Shetland have missed out on the scheme—that is the first point. All the islands, western and northern, that have subsidised routes should have the same chance to find out whether RET would work. In the Western Isles, where the scheme is being tried on some routes but not on others, that will be a huge disadvantage to the people who are not getting the scheme. It is one thing to have RET, but if farmers lose their concessions along with it, it might cost them more in the end. If so, the scheme would be of no benefit to the farmer—he would be better off with the concessions to get his hay and straw out to the Western Isles.
Is there a strong feeling among NFU Scotland members in Orkney and Shetland about the fact that the islands will not be covered by the road equivalent tariff scheme?
Yes. We should at least have had the chance to find out whether the scheme could work in the islands. We are not even going to get the chance to run the scheme. It would have been an advantage to get that chance.
I reiterate that the Shetland seafood companies said no to RET, because they felt that it would be more expensive. The companies in the Western Isles welcome the pilot, although they have concerns about the increase in traffic. They want the capacity of the ferries to be increased if traffic increases. They would also like the scheme to apply to interisland routes and not only on selected routes.
My understanding is that when the RET pilot comes to an end in 2011—which is significant for us, because there might be an election about then—there will be a review of all the routes. The pilot is in the Western Isles, but my reading is that the routes that are covered will be compared and contrasted with those that are not before a decision is made on roll-out. What are your feelings about that? Do you see any prospects for Orkney and Shetland at the end of the pilot?
Do you mean wanting it or having it?
I mean having it, after the three-year pilot. RET has not been ruled out for Orkney and Shetland.
No, it has not. In the end, we want to send away our produce and take in our inputs as cheaply as possible and with the best service possible. We have tried to weigh up whether RET can provide that and whether we would be better off, but until we know in black and white and see where it is coming from, we cannot make a decision.
I have a quick supplementary question. We have not yet had the minister in to respond to points that have been raised, but it is a reasonable guess that, when we put some of those points on RET to him, the response will be that it is the right decision to have a pilot on selected routes, rather than apply a system universally before it has been tested. Given the caveats about the longer term, do the witnesses agree with the decision to run a pilot for a certain length of time, or would they have preferred a different approach?
If that is what is being done, it is probably the right option. I do not know what the cost implications of running RET are, but I guess that the scheme could be applied on a third of the services to give an idea of how it would work for the rest of the services. However, the Western Isles and the northern isles are totally different operations. If RET works in the Western Isles, I am not so sure that we can figure out whether it will be the right thing for the northern isles. There has to be a trial in the northern isles. Even Orkney and Shetland are totally different. When we were working out our needs and livestock requirements for the shipping tender, we found that the needs in Orkney and Shetland are totally different. It was not easy to pull them together and come to a compromise on issues such as crates, fishing and shellfish. It is difficult to look to the future and work out whether RET will be good for the islands.
It is always wise to pilot a scheme just in case it does not work, because we do not want it not to work everywhere. However, Stewart Wood is right that the issue is difficult. Each island is different and the northern isles are different from the Western Isles, so it may be difficult to do a direct comparison. I do not know how we can get round that without having a limited pilot in each place. It is difficult to give a straight answer.
I have an observation on Stewart Wood's comments, rather than a question. The witnesses might want to get their hands on the helpful question-and-answer brochure that CalMac produced that breaks down the calculation on RET—it is the 60p per mile rate, multiplied by the number of miles, plus a fixed sum for different categories, such as private individuals or commercial vehicles. The sums can be done easily. The witnesses will know what the mileages are, so they can work out whether RET would result in larger or smaller fares. From the sums, it seems that RET will not work in Shetland, because it would be more expensive than the current fares.
That brings us to the end of our questioning. I thank all three witnesses for giving up their time to answer our questions.
Meeting suspended.
On resuming—
We move on to our third panel on the ferries inquiry. I welcome to the committee David Eaglesham from the Road Haulage Association and Gavin Scott from the Freight Transport Association. Will you briefly introduce yourselves and your organisations?
I am the policy adviser with the Road Haulage Association, which has 1,000 members in Scotland, a number of whom either operate from Scottish islands or haul goods to the islands from the mainland. Inevitably, opinion on ferry services among the relevant members is somewhat mixed, in that some think that the existing services are, by and large, satisfactory, whereas others have a number of complaints.
I am sure that questions will cover most of the issues. If any issues have not been covered, you can raise them at the end of the evidence session.
As usual, David Eaglesham has stolen my thunder.
We will certainly take that suggestion seriously.
Thanks.
Do the routes that are operating at present meet the industry's needs? If not, what revisions would you suggest?
The general view among our members is that the ferry routes largely meet current needs. However, some routes could be developed, such as links between Arran and Argyll via an enhanced Lochranza route. Thinking beyond internal ferry services, Scotland would benefit from developments in North Sea ferry routes—Graham Bell from the Scottish Chambers of Commerce mentioned that—with triangulation between Scotland, the continent and England, say at Felixstowe. In that regard, we noticed the recent announcement about a proposed weekly service between Rosyth and Kristiansand in Norway.
Generally speaking, the services probably satisfy the demand. In the past, there has been a lack of lateral thinking about what other services might be put on. For example, we service Lochboisdale from Oban because David MacBrayne's steamers always went from Oban—that seems to be the top and bottom of it. There could be a bit more lateral thinking about the ports from which islands are serviced, particularly if we are to introduce RET.
Can you give any examples of capacity constraints for freight transport on the ferry network? What needs to be done to remove those constraints?
There is a continuing problem with Arran—the Ardrossan to Brodick route. I am not sure whether that is compounded by the fact that Arran is often shut for business because of the unsuitability of the ferry port at Ardrossan, but there are always capacity constraints on that route. It would probably be quite expensive to protect Ardrossan harbour and make it safer so that it was not closed for business as often. I return to my point about the need for lateral thinking. Should we consider servicing Arran from Troon rather than sticking with Ardrossan, which we have always stuck with just because it has always been there?
On the point about Ardrossan, I will not be too nautically technical, but funds are available under the Government's harbour capital grant scheme to help develop harbours. I am not sure about Ardrossan, but funds have been available for such developments, which could have an impact on sailings.
We will be moving on to timetables in a few minutes.
I have a question on the issue of capacity. As you have probably picked up from the questions that we put to previous witnesses, it is very hard to turn capacity on and off with regard to providing new vessels. CalMac took around three years to access their Polish vessel. ShipBiz International, which is a Swedish consultancy, provided a report for CalMac that suggests that we consider the second-hand market, which, unlike the second-hand car market, is actually quite good. For example, Croatia acquired two very reliable vessels from the Philippines at a knock-down price. There is still a market about, but one has to be aware of when the market is weak and when it is a good time to buy. Croatia did that successfully. What is your view on increasing capacity by that route?
There has always been an argument in relation to CalMac about the suitability of vessels. I am not qualified to judge this, but the arguments go back and forth and round in circles about whether catamarans would be suitable.
Having a uniform policy of bow and stern loading and unloading is certainly very important—we know about the problems with linkspans, for example, on the Gourock to Dunoon route. That uniform policy has been recommended in relation to new ships.
As I recall, the trend in the market seems to be towards larger vessels, so perhaps there is a growing market of second-hand smaller vessels that might be useful on the west coast. I also heard the Confederation of British Industry's evidence on using smaller ships. My members would not necessarily be wholly in agreement, because there is a particular issue relating to frequency and timetabling on the Coll to Tiree route, and smaller ships pose problems for HGVs. Although I can see that there might be uses for smaller ships going to certain islands, they would pose problems for hauliers who have only certain types of lorries.
For the record, your reference to the CBI's evidence should have been to the evidence of the Scottish Chambers of Commerce.
Would capacity be improved if the most reliable vessels—such as the MV Hebrides, which sails between Skye, Harris and North Uist—were used for more services instead of sitting tied up for so long?
That seems logical, but I do not have a particular view on that.
Do the ferry operators strike the right balance in allocating capacity between freight and passengers? Please justify your views on the issue.
That issue has done the rounds for years and years. Caledonian MacBrayne had a problem some years ago when hauliers block-booked space on the Western Isles ferries in the expectation of taking fish-farm produce to the mainland. In some instances, bad weather would prevent the fish from being harvested, so two or three—possibly even four—vehicles might be cancelled at literally a moment's notice. Locals were okay with that because they knew damn fine that, if they were told that their car was third on the waiting list, they would get on. However, there was a fair chance that tourists who were told that they would be third on the waiting list would not bother travelling because they would not expect to get on the ferry. I think that the issue was sorted out by an agreement that any operator who gave insufficient notice would be fined by not being given their money back or not being given credit. I understand that things are now working relatively well. CalMac tells us that it always does its best to satisfy the freight demand. To an extent, it really must satisfy the freight demand, because if it satisfies only the tourist demand, the tourists ain't going to have a bed and breakfast when they reach the islands.
I agree with Gavin Scott. However, our members are concerned that the introduction of RET will generate increased travel by private users that may impose capacity problems that will affect hauliers. There is a particular issue with winter sailing timetables, but I assume that we will come on to that.
We will indeed. What, if any, timetable changes need to be made to key ferry services to reduce both freight journey times and transport costs to and from Scotland's islands?
The problem for the ferry company is that it needs to balance demand against service. I suppose that the ferry company would tell us that it would be nice to service a small island five times a day, but that would mean that three out of the five trips would not carry any freight. However, vehicles would then be able to travel to the island and return immediately after doing their delivery or pick-up. At the moment, once a vehicle has delivered its hay—let us use hay as an example for argument's sake, as it is a fairly common thing—it may need to wait until late afternoon for the return ferry if there are only two ferries a day. That means that the vehicle and its driver are tied up for a complete day. Somebody has to pay for that. The haulier cannot bear the cost. The person who bears the cost of having a vehicle and a driver tied up for four, five or six hours has to be the customer who is buying the hay. That obviously makes the price of the commodity much higher than it would be on the mainland.
I agree with Gavin Scott that it is a question of economics. A finite amount of business is available. I have heard quite a lot of comments from our members about the services being affected by winter timetabling, particularly between Arran and Ardrossan, where the two-ferry summer service provides flexibility and is a welcome boost to the island's economy.
Do you think that there is a need for major improvements to the freight facilities at any of Scotland's ports? If so, what key improvements would you like to see?
Over the years, CalMac has gone across completely to roll on, roll off. A good number of years ago, CalMac carried loose freight or provided trailers and boxes so that people could drop off loose freight to be taken on the ferry. That meant that there was no need to tie up a vehicle by taking it on the ferry. I understand that CalMac withdrew that service for reasons of efficiency. A number of my members who send small parcels or post office type consignments tell me that even though all they are sending to the island is a mailbag, they have to put it in a vehicle and use the RORO system to get it to the pier at the other end. The vehicle has to be driven on to the ferry and the driver has to sit there. The vehicle goes off at the other side, the mailbag gets dropped off and the driver has to sit and wait until the next ferry comes. There is a degree of frustration for people who do such deliveries. I understand CalMac's argument: it wants to have a service that does not involve it in lugging bits and pieces back and forth, putting them on little trailers and hauling them on to the ferry, given all the security aspects. People might ask, "What happened to my box? I saw it going on to the ferry, but it wasn't there at the other end." There is pressure on that side and I doubt whether we will achieve much in that regard. However, there is also some pressure from people who do not want to take a lorry or a van on board because all they want is a box taken across. If they ask CalMac whether it would do that for them, the answer is no.
I do not have much to add to that. However, I feel that a lot could be done through Government investment in harbours, which could improve the facilities provided. Sufficient funds are available to the Scottish Government through the freight facilities grant scheme to provide extra facilities at ports, which is what was done at Rosyth. Speaking of Rosyth, hauliers who use that port believe that the handling arrangements that are made by Forth Ports could be improved in a number of ways.
Could you expand on the improvements that should be made at Rosyth?
They mainly concern handling arrangements. Hauliers have had difficulties co-ordinating things with Forth Ports. It is also the case that, until recently, a lot of hauliers would not use Grangemouth because they felt that the handling arrangements there were inefficient. That might have changed, but remarks have been made to me about the arrangements at Rosyth.
You have both mentioned drivers having to sit around waiting for a ferry to come back. Do you have any comments on the rest facilities and so on that are available at ports?
Drivers seem to be quite happy to look after themselves. Certainly, I have had no feedback from any of my members in that regard—no one has said, "The drivers' facilities are bloody awful." Drivers are very flexible people. Once a driver is in his cab, he is probably very happy, because he has his book and his kettle and what have you.
I have heard many remarks about the poor dining facilities and the poor quality of what is on offer on the longer sailings in the Western Isles, especially in comparison with services that go to the continent—that corroborates what another witness said earlier.
Mr Eaglesham, you said earlier that CalMac had a kind of take-it-or-leave-it attitude. That suggests that communication between your organisation and CalMac is not that great, or at least that CalMac does not listen when you try to communicate with it. What is the communication like between you and CalMac and other operators?
The Road Haulage Association—like the Freight Transport Association, no doubt—is a broad church, so communication takes place largely between the individual members and the ferry operator. As you will have picked up, there appears to be no great problem with NorthLink, but there are considerable problems with CalMac because of the fact that it does not listen and has a take-it-or-leave-it attitude.
Are there designated meetings at certain times of the year so that strategic discussions can be entered into?
I am not aware of any.
Before the tendering process, what were called shipping services advisory committees had regular meetings with CalMac. There was one committee for each of three areas: Clyde, Western Isles south and Western Isles north. The committees usually consisted of councillors from the local authorities concerned and representatives of the NFUS, the Scottish Crofters Union, the FTA and the Road Haulage Association. Much of the discussion in those committees revolved around timetabling: people wanted earlier ferries, longer ferries, later ferries and so on. Following the tender, those details were set in stone—for example, the facility to extend the shoulder period or the summer period has been lost.
What are the barriers to such meetings taking place? Do the problems arise in regional transport partnerships or in CalMac and other ferry operators?
The level 1 meetings may have happened. It was not intended that I should be involved in those committees—we were asked to nominate members from each of the regions to serve on them. I have received no feedback from members indicating that they have been to such meetings, but that may be the nature of the beast. Level 1 meetings may be happening, and the fact that nothing has been referred to the next level may indicate that everything is working well. However, I have a funny feeling that such meetings have not taken place. I have no evidence one way or the other on the issue.
Mr Scott, you anticipated my question to a degree when you spoke about timetables being set in stone. Do you think that the current Clyde, Hebrides and northern isles ferry service contracts allow CalMac and NorthLink sufficient flexibility to meet the needs of hauliers?
I understand that the contracts are relatively tight and that there is little flexibility to allow changes in timetabling and so on. I want to move the discussion away from goods vehicle operators—the fact that hauliers or others may want the timetable to be changed is not the issue. We are doing our best to integrate transport, but if First ScotRail decides to change its timetable—which it does, occasionally—we get the stupid situation of the ferry arriving in Oban just as the train is leaving, or the train getting into Oban just as the ferry goes out of the bay. That happens and has always happened, for all sorts of funny reasons.
So your concern is about operational flexibility in a given situation.
Yes.
CalMac seems to have more flexibility to increase costs than NorthLink Ferries does under its contract. With NorthLink services, the hauliers know what is coming—whereas with Calmac, each year there are annual cost rises of between 3 and 4 per cent. The committee has already discussed the punitive cost of putting HGVs on to boats. For example, the 20-minute sail to Gigha costs £250 for an HGV. The cost of sailing to Islay is similarly high. The view is that CalMac services are particularly expensive. It is recognised that only limited changes could be made because of the level of demand, but the costs are pretty high.
The problem is that each of the companies has a service level agreement to satisfy. If the conditions of the agreement are broken, a company will have to go in front of the beak to explain why. ScotRail will say that if it gets a service to hang on, it will have to answer for the train being late. There seems to be a great deal of rigidity in the various systems. Just a wee bit of come and go would help. I understand that that used to happen, but that is no longer the case in the modern age, when people are under much more pressure.
I refer members to my entry in the register of members' interests, which states that I am a member of the Scottish Crofting Foundation.
It is partly a question of communication. We should give people the information that the service is likely not to run and should suggest an alternative.
Giving hauliers sufficient notice of such situations is paramount. I have been making the point that CalMac has to be more flexible. That would be welcome.
Is the kind of situation that we are discussing a prime example of when CalMac should be more flexible?
It is one example.
What involvement did your organisations have in the development of the road equivalent tariff pilot scheme? What are your views on the scheme and how it should develop?
I had very little involvement in the current scheme, although I have had discussions on the road equivalent tariff over many years. If the clerk would like a copy, I produced a paper in—would you believe—1984. It was for the Chartered Institute of Transport. The Scottish Parliament information centre probably has a copy, but I have another one here.
In answer to Mr Gordon's question, I would simply add that the RHA's involvement in the most recent exercise has been limited.
Does the private sector have a role in providing freight ferry services?
Yes, absolutely. We have heard about examples up in the north. It is a question of economics and of how much business is available. If it is soundly based, there should be a case for a successful service. Earlier attempts at freighter services between the northern isles and the north of Caithness have foundered; on the other hand, some services have been successful.
There is the historical example of the service that was put on between Ullapool and Stornoway by a private operator and, by goodness, didn't that moderate the fares for goods vehicle operators on the CalMac services? The other operator—albeit not just for that reason—went out of business. However, that modified the costs for operators in that area.
You will be aware that Highlands and Islands Enterprise is carrying out a study into freight transport as we speak. It is considering how it might be done more efficiently. One issue that has always interested me is the fact that, although rail passengers aspire quite legitimately to faster services, we do not tend to talk about the speed of ferries much. It has hardly changed in a decade, although technology has improved dramatically. Fast ferries can now do 25 knots and above in areas that are suitable for that—for example, the Clyde. What are your views on access to faster ferries and reducing journey times? For your members, time is money. If they are spending longer on a boat, it costs them money and makes their businesses less competitive.
I am all for faster ferries, but I know from previous and current experience of horrendous fuel price increases that some services might not be economically viable. The Rosyth-Zeebrugge ferry service is bedevilled by fuel costs: Superfast Ferries have had to throttle back to keep within reasonable costs. In general terms, however, I am very much in favour of faster ferries. Witness my earlier comments about the Coll to Tiree sailing, whereby the haulier is able to undertake extra journeys when he gets on to the mainland at the end of the sailing.
Before David Eaglesham said it, I was thinking of the Superfast example. The ferry has slowed down simply to save fuel, because of massive fuel price increases. An extra 1 knot requires an awful lot more than an extra 1 per cent of fuel. The faster a vessel goes, the more fuel it uses up. CalMac has recently changed its fuel. It has gone from gas oil to black oil to cut down its fuel costs. You might say that that is not very green, but it is still well within the limits that are set out.
I have not been in the transport business as long as Mr Scott, but I have been in it for 15 years. When you go round Scotland with its massive coastline, you see a vast expanse of sea with very few boats on it. Many people have tried over the years to get more boats onto the sea, but the problem is the economics of providing such services. One hopes that, from a technical point of view, vessels will eventually be able to travel faster at a cheaper cost. Many attempts have been made to create motorways on the sea, but not many have come to fruition. We await technical advances.
Notwithstanding your comments about the cost of fuel, which is a real worry, if you could increase the speed of vessels and the frequency of sailings, you would increase your capacity. As I said, it is sad that speed has not changed in a generation, while technology has.
Neither has the shape of the ferries changed.
Thank you. We have come to the end of members' questions. Would you like to make any final comments or address any issues that have not been touched on?
I mentioned the problems of integrating rail and ferry services at Ardrossan.
As a supplementary to what David Eaglesham said, if we are looking at the A75, the narrative in the national planning framework talks about the wonderful advance that we will make by completing the Cumberland gap—the 6 miles of non-motorway between the M6 and the M74—and what an advantage that will be for operators shifting stuff out of Ireland. There is another 100 miles with a 40mph speed limit for goods vehicles between there and Stranraer, so you wonder whether those 6 miles will make much difference.
I thank both witnesses in the panel for their evidence and time.
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