Food and drink supply chain and transport industry: evidence report

1. Introduction

The Scottish Government's Scotland's Economic Strategy recognises the Food and Drink industry as one of six key Growth Sectors (alongside Financial and Business Services, Life Sciences, Energy, Tourism and Creative Industries). The significance of the sector to the economy is underlined by recent growth, with annual food and drink export sales accounting for £6bn in 2017, a rise of over £550m compared to 2016 and a more than doubling in food sales (+130%) since 2007.^[8]

Significant opportunities for long-term growth are foreseen. 'Ambition 2030. A growth strategy for farming, fishing, food and drink', published by Scotland Food & Drink Scotland in 2018^[9], sets out plans to double the value of the sector to the Scottish economy by 2030.

The 'How Scotland's Transport Network Supports the Growth Sector' report, published by the Scottish Government in 2016^[10], considered how Scotland's six Growth Sectors collectively use the transport network and reported that, while transport is not the main issue experienced by businesses in Scotland at the moment, a resilient transport network is crucial to promoting growth.

Recent events, such as the Channel Tunnel/Calais route disruptions in 2015, severe winter weather in 2018 and potential disruptions associated with Brexit, highlight the vulnerability of the transportation network for the reliable movement of goods and people. Resilience of the transport network is particularly pertinent when handling time-critical perishable goods which are integral to the Scottish food and drink industry, and to all others for which customers insist on reliable, timely deliveries. Any loss of capacity on the transport network can lead to delays which could have significant consequences to onward trade, with goods either ruined or their market value significantly eroded.

This report presents the outputs of a study investigating existing Scottish food and drink export logistics, and in particular the resilience of those logistics to ensure the reliable, timely delivery of products to markets. Our work has been based on evidence provided by representatives from the key food and drink markets and transport/logistics sectors and also informed by reviews of published information and studies. Seventeen stakeholders have been involved in the study. The evolving and fast-moving political landscape in which this study has been conducted is considered throughout this study and we recognise that views of stakeholders may also evolve as Brexit discussions continue.

It should be noted that many stakeholders engaged during this research are highly concerned about the post-Brexit lack of capacity available for customs checks and food standards checking, and resulting delays to transportation. This report does not focus on these customs and regulatory issues, as separate investigation of them is underway by the Scottish Government, and instead considers in detail only matters directly relating to the transport system.

1.1 Methodology

At the first stage of the study, key stakeholders were identified and a series of face-face meetings were held. Alongside the initial discussions the research team undertook a review of previous studies and data including maritime, aviation and food and drink studies. These initial discussions and our concurrent review of published information were used to help develop structured interviews with a range of transport, food and drink and logistics organisations. The stakeholders contacted as part of this study evolved and was led by information gathered from the initial stakeholders. There were seventeen interviews (some undertaken face-to-face and some by telephone) and a number of follow up discussions to clarify or investigate points further. The purpose of these interviews was to understand the current and anticipated routes of food and drink and explore relevant issues and constraints.

Figure 1. Study methodology

The research team, which included personnel with expert knowledge of the Scottish maritime, aviation and seafood industries collated the outputs of the information gathering stage and undertook a high level option generation. The option generation was informed by outputs from discussions with stakeholders, previous studies and the project team contributing further options for consideration.

The options were considered through a high-level appraisal. The appraisal was largely qualitative in nature and took account of different criteria:

The potential of different options has been considered through a high-level appraisal. This appraisal has been largely qualitative in nature, incorporating quantitative information where feasible and takes account of different criteria:

• Deliverability:
• Deliverability will consider the feasibility, acceptability and timescales of options;
• Investment required/affordability:
• Details of the investment required, where available, including capital and revenue funding, subsidies and any state aid conflicts;
• Inter-dependencies:
• Inter-dependencies will appraise the impact an option would have on existing operations, for example, processing hubs in England;
• Environmental sustainability:
• Environmental sustainability will consider the environmental impact associated with the option;
• Support to other key Growth Sectors:
• Whether the option is considered to provide benefit to Scotland's other Growth Sectors (Financial and Business Services, Life Sciences, Energy, Tourism and Creative Industries)

Recommendations for further investigation were concluded following this appraisal.

1.2 Report structure

The next section of this report summarises the main sectors of Scottish food and drink, their markets and transport routes currently used. The following chapter on the broader transport context explains the impacts transport issues can have on the industry and its potential to grow. A review of the facilities and capacity of Scottish ports and airports in relation to their ability to handle a greater proportion of Scotland's food and drink exports is then presented. The outputs from the initial chapters were then considered as part of the option generation, appraisal and development to provide recommendations to improve resilience in Scotland's food and drink sector.