Water Freight Opportunities in Scotland reviewed

9/8/11 3:10 PM

Over 50 logistics industry professionals participated in an FTA Freight by Water conference in Glasgow September on Water Freight Opportunities in Scotland. This report summaries the discussions that where held.


Container Services – MSC

MSC presented first on container shipping for Scotland. They set out their current services to the UK, which include weekly feeder services to Greenock and Grangemouth from Antwerp – thus connecting Scotland to global deep-sea trades.

They also provide for the Scottish market rail from Coatbridge to Felixstowe and vice versa to load directly to mainline services from that port, and a Canadian service for Scottish imports and exports via Liverpool, which is rail operated.

MSC sees the core of the Scottish market as:

Exports

  • Major components
  • Beverages
  • Recycled products
  • Specialist traffics i.e. Quaker Oats, potato season, frozen fish

Imports

  • Furniture
  • Consumer goods
  • Empty barrels (whisky)

The main difficulties MSC face in the Scottish market are:

  • Empty equipment supply
  • Fluctuating market demands
  • MSC feeder constraints due to ports/equipment sizes
  • Lack of equipment in the North West Continent
  • Storage space at ports and railheads
  • Commercial feeder space

On the topic of empty equipment MSC utilise various methods of empty equipment repositioning:

  • Own feeder services ex Antwerp in Greenock and Grangemouth
  • Commercial feeders ex Felixstowe and South Shields to Grangemouth
  • Commercial feeders ex Liverpool to Greenock
  • Rail services ex Liverpool (Garston) to Coatbridge
  • Rail services ex Birmingham (Hamshall) to Moss End

In conclusion, MSC said that Scotland must have a short sea feeder service to move containers. “The reliance on exit via English ports has to stop as this is too expensive!” they said. They questioned if there an acceptance by importers and exporters that feeders into Scottish ports is the future? MSC believes Scottish ports should recognise that they will always be feeder ports and not mother ports.

They ended by stating that MSC are committed to supporting the Scottish market through their feeder service.


Utilising Bulk Services – Carr’s Flour Mills

Carr’s Flour Mills then presented on their work with Forth Ports to switch a flow of wheat from road to sea – by reopening the port of Kirkcaldy.

The services moves wheat from the south-east of England to Scotland, removing almost quarter of a million lorry miles from Scotland’s roads alone every year.

Carr’s set out that any shipper looking to move to a water based option should consider the following questions:

  • Are there better options?
  • Are the savings from switching Ports enough to justify the investment?
  • Is the business regular in volume?
  • Is the market going to alter?
  • Are there fringe benefits?
  • Does the Project have a sensible payback?

Freight Facilities Grants were key to getting this project working. Carr’s take on FFG was:

  • Somewhat technical and onerous process, but…
  • Very helpful and willing people in Transport Scotland
  • Give them the facts to help them make the right decision
  • Prove that the Environmental Benefit is real
  • Demonstrate that it is long term

Whilst the FFG has since been cut out of the Scottish budget there will be some scope to replicate its work through other Scottish infrastructure investment funds.

Carr’s faced many difficulties due to the need to re-open a port, which many such schemes would not. Other key issues included hidden costs with ships and commodity price increases.

Despite the level of work that was required to get this project off the ground Carr’s concluded it had been well worth the effort. The main advantages to the new arrangements were the environmental benefit, the consistency of consignments, the protection against haulage cost increases and securing a long term foundation for their operating model.


Ro-ro services and Scotland - DFDS

DFDS set out their view on the market for Scottish ro-ro services, with particular reference to their experience with the Rosyth-Zeebrugge ferry.

They took the meeting through the development of this service and the efforts to make it financially sustainable. This included the recent switch to two pure Ro/Ro vessels in place of service incorporating passengers, the change of service schedule to 4 departures/week in each direction, a change of service speed (29hrs crossing) to save bunker consumption and organisational changes.

Following these changes, the budgeted result for 2011 were still loss making with breakeven expected in 2012. Support for additional frequency only marginally better than with 3 sailings and not enough to justify maintaining the 4th sailing.

Significant increase in bunker prices in 2011 of over 40% resulted in BAF climbing from 3.9% to 18.6% which came on top of a stiff rate increase. This reduced the competitiveness of the route compared to Teesport and the Humber.

2011 volumes now likely to be in line with 2010 volumes as capacity is broadly the same as with the previous ROPAX vessel

In DFDS’s view the lack of direct Scottish imports acts as a brake to developing volumes. A lot of Scottish exports are shipped through English ports in order to match the import collection

Unaccompanied operators need scale to make best use of haulage combinations. This favours concentration around large hubs like the Humber and to a lesser extent, Teesport where there are multiple routes and daily schedules.

The hinterland from Rosyth is relatively limited, making local haulage expensive as there is not enough daily mileage. This means hauliers are working on day rates.

In theory there is enough volume in the Scottish/Near Continent market to support at least 4 sailings per week, but the economics of the route are very difficult, especially in the current environment of high fuel prices.

Come 2015 this will become even more of an issue when the SECA limit is reduced to 0.1% from the current 1.0% pushing fuel costs even higher.

They concluded that in principle there is enough volume to support a direct link between the Continent and Scotland but it is a niche market. The further south in the UK the port of entry is the larger the available market becomes. High operating costs favour scale and economy over frequency and speed The offer is very much geared to the unaccompanied market. Anything above the drivers legal rest period is seen as wasted time and money for a driver accompanied operator, of which there are many in Scotland.


Ports Perspective – Forth Ports

Forth Ports set out their capabilities across Scotland.

They set out their belief that an opportunity is being missed. Sea routes match critical freight corridors, there is almost unlimited capacity, it reduces, reduces road congestion and delivers environmental benefit

They detailed their ro-ro service to Scotland - fast ferries to the Thames for cars, trailers, reefers and chilled goods, and scheduled service to Humber. They noted that 10% of all imports arriving in England are destined for Scotland.

Considering the possibility of further coastal services they feared this could be potentially expensive to set up. The main issues were:

  • Availability of the right vessel
  • Availability of the right speed
  • Availability of the right fuel economy

For liner services they noted that this was already in existence – Agricultural trades, building trades. As further thoughts they commented that

Cost of repositioning is often a barrier

  • Further opportunities may be in steel, bulks, timber
  • Confidence in the service and flexibility would be key

Forth noted the possibility of setting up and east coast UK service that would call Thames-Humber-Forth. They believed there were opportunities:

  • Further North bound cargo
  • Salt
  • Barley
  • Grain
  • South bound cargo – containers / tanks
  • Inland waterways
Neil Berry