Food and drink supply chain and transport industry: evidence report

5. Appraisal Findings, Recommendations and Next Steps

The need for this study was identified following events in 2015 impacting on Scotland's overseas trade. The aim was to provide various options for how to strengthen the resilience of Scotland's transport infrastructure to facilitate more overseas exports leaving from Scottish hubs, by use of existing transportation hubs or development of new hubs.

The data gathering stage identified the varying needs across Scotland's export markets: the time critical nature of Scotland's seafood with one major destination is very different to the long shelf life and wide-ranging destinations of Scotland's whisky market. The options generated and appraised take cognisance of this variance and the appropriateness of the measure to each industry has been identified.

The output of this study is a range of options with recommendations to investigate the following eight options further. Appendix A lists all options that were considered.

1: Adjusting supplier/buyer expectations

As identified previously, the time constraints associated with some of Scotland's food and drink exports, primarily the seafood industry, limit the viability of alternative transport options. Seafood orders are taken until 16:00 and the client expects the product to be in Boulogne-sur-Mer by 08:00 the following morning giving a short window for transport (Day 1 for Day 2 delivery)^[64]. Previous studies have considered the current routes to market and concluded that there are limited transport options to satisfy the time constraints determined by the market. This was reinforced through our discussions with industry representatives and hauliers. The transport system currently works well for the industry and in times of short term disruption adjustments can be made to limit the impact, for example, delayed harvesting. To build in resilience to the system a review of the buyer/supply expectations and market destinations could be considered.

The review may cover a number of changes which would reduce the time pressures on travel and could include:

• Day 1 for Day 3 delivery;
• Earlier deadlines for orders;
• Technological advancements such as electronic auctions;
• Earlier opening times at Scottish markets to allow more time for onward travel.

This is a measure which could be implemented in the short term with the onus on processors to negotiate with buyers to agree a mutually agreeable way forward to ensure reliable delivery. The demerits associated with this option are potentially lower market prices negotiated with buyers and higher travel costs if two driver shifts are required. However, this could be outweighed by more flexible packing and travel time and the possibility of products being consolidated to reduce costs.

Scottish Government role: Support the seafood industry in initiating discussions with major buyers.

2: Explore new markets and customers for seafood in addition to Boulogne-sur-Mer

Boulogne-sur-Mer is Europe's seafood sector's primary fish market and distribution hub. Even if the product is not sold at the market it is often routed through there given the warehousing and processing sites in the surrounding area. It is estimated that 80% of Scottish seafood exports to Europe are through Boulogne-sur-Mer.

Increasing the routes to different markets would improve the resilience of the export market. Seafood Scotland has recently commissioned a study into potential new markets for exports of seafood which will include investigating the impact of Boulogne-sur-Mer. This study may inform the development of this option. Completion is expected in early summer 2019.

Scottish Government role: Review the outcomes of study and work with suppliers to understand whether there are alternative markets available.

3: Incentives to increase HGV driver numbers in the UK

The UK is facing a driver shortage. 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. Some of the issues and options discussed in this report will result in a greater need for drivers and increasing HGV drivers will be key to building resilience into the export market.

Incentives to increase HGV drivers could include better driver facilities, raising awareness of the logistics sector and increased support for apprenticeships or up-front costs for training.

Scottish Government role: Work with the UK Government to support campaigns raising awareness of the logistics sector, investigate financial support for training up-front costs and review HGV facilities.

4: Increased storage capacity at Scottish airports

Airport storage in Scotland is still in the development stage. Edinburgh Airport will shortly be undertaking a review of the aviation export market which will consider the facilities required. Glasgow Airport has an 80-cubic metre chiller which is currently used for storing seafood prior to export in bellyholds. Prestwick Airport does not currently have any permanent chilled storage facilities but has previously hired refrigerated containers (from lorry operators) which can be configured at short notice in hangars to provide significant capability.

This is a short-term solution with the opportunity to provide immediate capacity at ports and airports with refrigerated containers. The investment in storage capacity, especially at airports, needs to be considered alongside an export aviation strategy to drive demand for the facilities through increased flights and destinations.

Consideration also needs to be given to the competing market demands of the current main players in the export industry. For example, shellfish is very price sensitive and in response to a growing market from Glasgow Airport there have been reports of Heathrow dropping prices to compete with regional airports. The role of freight forwarders is also key and they should be involved in discussions as their current logistic centres and relationships will impact on the mode and route chosen. Investment in airport storage may also give an unfair competitive advantage to one location.

Scottish Government role: Provide input to Edinburgh Airport's freight strategy and support other airports to review their approach to freight where desired. Consider developing a business case for investing in airport storage in addition to Option 7.

5: Scottish Exports Working Group

The food and drink export market has a number of inter-dependencies. These can include, but are not limited to, producers, processors, markets, freight forwarders, hauliers and customers. To make improvements to the way food and drink is exported requires good communication between the various parties. Many of the organisations we spoke with represent many aspects of their industries (e.g. Quality Meat Scotland and Seafood Scotland) and have good relationships with the Scottish Government and relevant logistic companies but this option proposes formalising those relationships. A Working Group with representatives from industry, hauliers, freight forwarders and Scottish Government would provide the platform to discuss issues and propose initiatives. In times of emergencies the group could respond quickly and provide details of the challenges faced and potential solutions.

Sub-groups for individual trade, e.g. seafood and whisky, would be beneficial with an over-arching group to recognise inter-dependencies and cost savings between industries.

Working Groups would also provide a good opportunity to develop Government supported pilot schemes to investigate and test new markets and routes to market.

Scottish Government role: A commitment from Scottish Government to develop and administer a Working Group with industry representatives.

6: New technology for transporting products.

The shelf life of some Scottish products, for example seafood, has a considerable impact on the routes to market available. Delays to delivery often reduce the quality and therefore the sale price for the product. Technological improvements to the storage of products being transported may allow for a longer shelf life and open up new transport routes. There have been a number of recent studies and pilots into ensuring the freshness of the product including the monitoring of seafood in transit to ensure freshness. The scheme was recently piloted in Norway and Iceland^[65]. New developments also include new ways of transporting live seafood in containers with the environment monitored and optimised^[66].

Scottish Government role: Financial support for pilot projects for new technology.

7: Increased chartered flights or scheduled flights with bellyhold capacity for freight.

Most food exports using air currently travel as bellyhold produce on long haul aircraft from Heathrow and to a lesser extent UK regional airports. The alternative of a dedicated charter aircraft may possibly be made to be viable but a range of issues would need to be understood:

• The portfolio of produce that could be combined on such a flight and the logistics of both gathering and holding the produce in a timely manner for loading.
• Consistency and seasonality would have to be considered as would the potential for symmetrical backloads.
• The demand and distribution at the destination end of the route would also need to be understood as a large consignment might temporally flood a market and hence reduce the price it could command.
• Potential carriers and optimal Scottish departure airport would have to be considered.

Scottish Government role: Work with suppliers to develop the business case for increased chartered flights or scheduled flights with bellyhold capacity for freight.

8: Enhanced Scotland – Europe rail freight capacity

Rail freight infrastructure is currently available, providing capacity for freight movements to major ports in Scotland, England and onwards to Europe through the Channel Tunnel. This option proposes a number of rail freight improvements including the consideration of a direct connection through the Channel Tunnel from Scotland and increased rail use for internal movements to the main English ports.

Investigation of the operational feasibility and business case of any rail freight improvement would be required but potential benefits include the reduced reliance on HGV drivers and reduced CO₂ emissions associated with rail freight compared to HGV journeys.

Scottish Government role: Financial support for pilot projects testing new rail freight connections.