Food and drink supply chain and transport industry: evidence report

3. The broader transport context

This report focusses on the resilience of the Scottish food and drink sector to potential shocks to the transport network's ability to deliver its export products.

But our evidence review and discussions with stakeholders highlight that it is inappropriate to include export transport options entirely in isolation, and that there are a range of broader issues to consider. This section introduces the effects that have been identified.

3.1 The effects of transport delays

Delays to transportation of exported goods will affect different parts of the food and drink export industry in different ways.

Perhaps most obviously, a large proportion of Scotland's food exports are perishable, with those of fresh/live fish and shellfish the most time-sensitive. Fishing/aquaculture producers will typically seek to ensure that their products reach their customers with 60 hours of dispatch.^[44] Each day of delay reduces the freshness of the product and hence its value; a day's delay on delivery of fresh salmon is reported to reduce typical market prices by around 30 pence per kg (approximately 10% reduction).^[45]

Furthermore, the time at which consignments arrive at markets can have a significant bearing on their value. Most wholesale markets rely on deliveries and sales in the early hours of the day. Seafood Scotland estimates that transport delays which mean that a consignment does not arrive at a market until midday would typically reduce values by a half.

But it is not only perishable products which are affected by transport delays. Stakeholders from both food and drink sectors highlight that contracts for the purchase of any product will usually place conditions on its volume, quality and delivery time. This is of particular importance for deliveries to larger customers (such as supermarkets), who seek regular deliveries so that they can retain product on shelves without extensive warehousing requirements.

Scotland Food & Drink have highlighted that if transport delays mean that Scottish products are regularly missing delivery windows at customers' premises, those customers are likely to lose confidence in Scottish produce and may seek alternative supplies from elsewhere.

Seafood Scotland anticipates that in the short-term producers can adjust their salmon, shellfish and white fish harvesting and catching to a degree in response to transport issues or changes in the market conditions. In the longer term, they feel this would disproportionately impact on smaller food producers. Delays to farmed salmon harvesting would also require approval from SEPA due to stocking densities and biohazard issues.

Regular delays will reduce the capacity of the transport industry. As an example, a lorry can typically carry a consignment of Scottish salmon from the DFDS consolidation centre in Larkhall to the main fish market at Boulogne-sur-Mer in one driver shift, so making the return trip in two days. If a delay of just 45 minutes per journey were introduced on each cross-Channel journey^[46], this is no longer possible, meaning that three days (or a second driver) is required to deliver a single consignment; a 50% increase in time, and so a 50% increase in the number of drivers needed to get any given volume of product to that market. An increase in standby vehicles and drivers would be required to complete journeys.

This concern is amplified by the views of the Freight Transport Association. They noted in consultation undertaken as part of this research that if the business case for import / export to the EU becomes unviable for haulage firms, or it is administratively too burdensome, some may well scale back their operations to UK-only. This reduction in haulage supply would likely increase costs of exporting to the EU.

They also note that there is already a fairly severe driver shortage in the UK market. The industry has an ageing workforce and an existing shortage of approximately 45,000 drivers nationwide. Some hauliers are stated to be already turning away work due to a staffing shortage and around 15% of drivers working in the UK are European; there are concerns that some may no longer be able to, or choose to, work in the UK.

3.2. Exports are reliant on imports

The efficient production and export transportation of Scottish food and drink products depends, in some instances significantly, on imports.

In part, this arises from transport system efficiencies. As highlighted by the Freight Transport Association, logistics companies (using all modes) seek to ensure their vehicles are operating loaded, and hence fee-earning, for as much of their mileage as possible. This includes always seeking backloads, whereby a vehicle or container will return loaded from as close as possible to the delivery point to collection point of its primary load. For lorries returning from mainland Europe, or planes/ships returning from more distant destinations, to Scotland, these backloads ensure that the total cost of the round trip is shared between customers.

If no backloads are available, Scottish food and drink exporters would end up being liable for the whole cost of the round trip. Barriers or delays to in-bound movements will therefore tend to increase the transport costs of Scottish exports.

Furthermore, some Scottish food and drink exports are directly reliant on imports. Stakeholders have identified examples of some Scottish shortbread manufacturers making use of Irish butter for some of their produce, and of salmon producers purchasing imported boxes (in which exported produce is carried, and which also provides a backload for hauliers).

Restrictions on the movements of these items, or increased costs, would have a direct impact on Scottish producers' ability to produce (and hence export) their products.

3.3. Other potential causes of delays to shipments

Stakeholders report that direct transport issues are only one of their potential concerns relating to delays to consignments. All of the aquaculture industry stakeholders we spoke to have highlighted the limited capacity of Environmental Health Officers to certify perishable products for export, and the meat industry the limited capacity of vets to check consignments. At present, these Officers have sufficient capacity to certify exports to non-EU countries. If, post-Brexit, there was a similar need to certify exports to EU27 countries, their workload would increase substantially, and to a point where significant delays are anticipated before consignments could be dispatched and there would be increasing documentation-related costs for producers.

Stakeholders also report significant concerns about the capacity for Border Inspection Posts to handle increased volumes of checks.

We understand that the Scottish Government has parallel work underway to investigate options around these issues.