 We will restart the committee meeting and thank you for the witnesses for being with us. The Parliament experienced a sudden internet outage across the whole Parliament. That is an outrage, but no. We do understand as broadcasts and have worked very hard to resolve this, so we are pleased to welcome you back. I understand that Maggie Simpson has had to leave the meeting at the former or the norufied. I will now move on to Colin Smyth이�az that his questions remain a panel us. Thank you, convener, and welcome back to the panel. Can I follow up on the points that Fiona was making? Obviously, the vast majority of freight is transported by road, and that's likely to continue. If you think about the example, we've just been talking about the transportation of goods from Scotland to Northern Ireland. There's no rail links to Cairnryan ferry port at all, and no rail links from the south to the town of Srinard. The nearest town is only a windy track from Glasgow. We've heard that the idea of a fixed link between Scotland and Northern Ireland is rightly being buried in the, in Boford's Dicton, Irish Sea. In reality, no one ever complains about the ferries to Northern Ireland. The problem is the condition of the roads to get to those ferry ports in the first place, the A75 and A77. My first question is to Richard Ballantyne. How reasonable is it when it comes to transportation of goods from Scotland to Ireland? Is the option of rail freight or do we just need to be realistic and accept that without improvements to the A75 and the A77 at a key Scottish ferry port is going to continue to lose business to Hayesham, to Fleetwood, to Liverpool, to Holyhead when it comes to transporting goods to Ireland? It's an excellent question and very well articulated and described, I would agree. I don't think that although certain freight operators and indeed the ports may have a particular view in that part of Scotland, but I don't see that the rail freight is a particularly viable option there, not least because there is an absence of rail freight operations in Northern Ireland itself, so those goods are traditionally transported on lorries, where you might have slight mode shift is on a driver accompanied versus unaccompanied freight, that's where the trailers are dropped or driven by the same driver etc. So there's some one or two options there, but for the most part you're absolutely right. The A75 and the A77 are two critical routes for Scotland and indeed Northern England and we have a specimen that's a Peter Hendy's review of connectivity around the union, which almost kind of stimulated this debate about having a fixed link. In our evidence to that inquiry we did suggest that even if you had a fixed link you'd still have to invest not huge sums but substantial sums in both those roads with a identified and others of course. Why spend all that money on a fixed link if you've still got the existing internet connections? Thanks very much for that. I think the figure you had in your report was £1 billion in the roads and I will take that any day for improvements in the south west. I want to move on to an issue that is still very relevant obviously to trade between Scotland and Northern Ireland, particularly as the gateway to the Republic of Ireland but it also has implications for trade with the rest of the EU and that's possible customs changes from 1 January 2022 and obviously some of the plans have been postponed until possibly the middle of next year but others will go ahead. Can I ask the panel how significant will the impact be and how ready is Scotland to manage those particular changes and if and particularly if you have any specific comments on the unique challenges that we have regarding trade between Scotland and Northern Ireland and maybe I could put that question first of all to Robert Windsor as I know the association of published material on the issue of the customs changes from January 2022. Right, the customs changes coming in on 1 January are very significant. In effect you are seeing the UK reimposing full customs controls on all goods coming from the European Union into the UK and I'm dealing here with the UK as a whole. I don't want to separate Scotland out from this matter because it is a mainland issue if you like. What you will see is the imposition of the GBMS system for the road freight environment in particular. You will see the need for a full customs declaration. You will see the need for greater compliance with rules of origin because those have been largely overlooked. You will also see the disappearance of the delayed declaration system, which will be replaced with a proper EIDR system. You will see the requirements for SBS goods, which is food stuffs and products of animal origin, for the IPAPS declaration. It is basically a pre-notification of those goods coming into the UK before they are shipped. It is quite a lot of bureaucracy to go through. As I said earlier in my evidence, my view and the association's view is that these are more significant impact on the UK as a whole than what we saw on the first January this year. I have to be honest, the Northern Ireland situation is extremely complex. We have already had problems being caused by basically trade importers. Import agents should not be using what we call chief, which is the customs handing of import and export freight. That is tied to the Northern Ireland protocol. That is for imports to Northern Ireland. It is being replaced with the customs declaration service. The customs declaration service is a much more difficult system. To give you an idea, in a full entry of about 55 data fields, we are moving to 88 on a CDS entry. There is a lot more data required. The specific problem with Scotland Northern Ireland is the increased disruption that is stemming from the imposition of the CDS at the moment. I am afraid that it is a technical subject. I am afraid that I have been doing this for 45 years and even I cannot get my head around it sometimes. It is a very technical and complex issue. As I said earlier, we have got a lot of bits of the jigsaw. We know what GBMS is and there are trader schemes where people can sign up to voluntary use it to see how it works. We have seen it working in transit because it all makes certain functions. Until we see that vast bulk of railroad freight moving between the EU and UK mainland, we are not going to see what it is. What we have to have in size is GBMS is really only for what I would call road freight, whether it is accompanied or unaccompanied. It will predominantly be impacting on the venture on the south coast ports. For freight from Rowe from Scotland to Northern Ireland, yes, they will still have to be. I mean, they are already using things like GBMS and there are now customs decorations going into Northern Ireland. In a way, the impact I venture for you on the first journey is going to be less. That is really interesting. I suppose that the same question to Brian Hepburn at DVDS. Robert has just said that he has been working in this business for 45 years and that he cannot get round some of the challenges. Brian, in your experience, are businesses like yours and others ready for the possible changes that come into play from January? We view the whole thing as an exclamation of dismay. We are getting as ready as we can be. In some ways, no more postponing the declarations will be helpful for some items of general freight. We are hoping that it is not going to lead to bottlenecks at various ports. We have had bottlenecks at ports, just to be the paperwork no matching. Sometimes it is good enough to get it out of the EU but it is not good enough to import it into the UK. What ends up happening is that it ends up lying at the port. That happened to me just this week. It was important to some boats by Holland. We are trying to get as ready as we can, but it is more about getting our customers ready. We need to try to pass the suit and spread the kind of load. We need to do a process of education amongst everybody that will currently work with a lot of them. We are saying that the South Coast ports will affect us in a lot of ways for our exports, because where fish primarily go through those ports in the South England, they do not go through. Obviously, there is no direct link really between Scotland and Europe that has to go through England. That is where we are shipping our fish. That is all the fish. That is everything from all the Scottish sea farms, all my way, all those big salmon producers, all coming out of Larkhall, all getting doing. Either they are going air freight or they are going across the channel. We are needing to be ready to ensure that we do not incur any further delays on that route. We are actively preparing and we are hoping that we are going to be ready, but we are just hoping that it is going to be easy enough. Have you had any issues? Even Northern Ireland is a domestic market, but for obvious reasons there are problems. Have you experienced problems when it comes to simply transport and domestic products from Scotland to Northern Ireland? Definitely. It is nearly worse than important to the continent. It is funny that there are actual barriers that seem to be unevenly applied in reality. For example, important directly into Holland is harder than important into France. Going into Ireland is harder than going into France. It should not be. It should be the same, but there seems to be difficulties. I could get some proper examples and send them across to you all for later on, if you like. You can sort of see, but no, trying to get something into Ireland, Republic or Northern is bad. It has just been grim. That is across that route, so it is not the best, frankly, in reality. Those examples would be really helpful. Can I put that question to Kieran? I appreciate that your research was focused on the impact of Covid. Sorry, Mr Smith. Unfortunately, Professor Fernandez has had to briefly leave the meeting. I hope that he will be able to return. However, I understand that Richard Ballantyne is interested in coming in on this point, so I will introduce and invite Mr Ballantyne to come in. To follow Brian and Robert's suggestions and comments there, it is quite an interesting case. We have had, of course, a lot of the controls enforced at European borders, and Robert is absolutely right about the bureaucratic changes. I will not repeat what he is saying there, but what I will talk about is the physical nature of some of these changes that are being phased in next year. To start with, in quite a basic term, and notwithstanding what Brian said about a lot of the Scottish exports going through English ports, for example, and obviously, in the reverse, a lot of commodities that are consumed in Scotland will have come through in English or a Welsh port, for example, somewhere else in the UK. A lot of the unitised activities in Scotland are focused on containers, and apart from that, as we heard earlier, we do not have any roll-on-roll-off links. The major challenges of facilitating border checks at Scottish ports are not perhaps as dramatic as it may be at some of the row-row ports in England that have been much publicised about holding trucks up for minutes or even hours to unpack and inspect goods. That said, Scottish ports still have to comply with new control regimes. Many of them are building infrastructure or preparing infrastructure to facilitate those checks, and they could be relatively light-touch checks where you have environmental or port health officers inspecting things like timber or other products that are coming in. That is all a cost and an extra activity that we have not had to deal with. That requires resource not only from the port operator but local authorities quite often in terms of environmental officers and, of course, costs on those traders. Making sure that Scottish trades remain viable is essential. Another positive about Scotland is that Scotland is very much an export-led economy, unlike the rest of the UK, where it is heavily import-balanced and so on. Those commodities that we export in Scotland—things such as whisky and fish—I think that Brian mentioned aquaculture and fish has been or possibly still is the number one UK export by value, and a big bulk of that is Scottish fish and seafood products. Those products are the changes because we export much more than we import on those products. We have already had those changes come in this year, and notwithstanding those challenges that Brian articulated, we are not expecting a big dramatic move there. I will concede to Brian's frustrations with getting goods over to Ireland, but there are now, of course, different regimes in place even on the island of Ireland with Northern Ireland, although it is a domestic route. Of course, they are applying de facto customs rules. However, the enforcement of those rules is being done slightly differently to the Republic of Ireland. We have seen the traffic that travels between Great Britain and the island of Ireland move up and hemorrhage towards Northern England and Scottish routes from the West Coast of England and, of course, places like Kenryne, Llockryne, into Belfast and Larn, more so than those services in Wales into the Republic of Ireland, which have really seen a decline in activity. Ironically, we have seen a slight uptick and an increase in activity on the GB Northern Ireland routes, which some of the Scottish ports have done rather well out of. I will now move on to Colin Beattie, to be followed by Alexander Burnett. One thing that I am trying to get my head round here is that we hear a lot about bottlenecks, and I can understand the bottlenecks arising from the Brexit shambles, but other bottlenecks are caused by, I am told, containers being in the wrong place as a result of Covid, of people restocking, perhaps overstocking, because the just-in-time concept is a bit wobbly at the moment, so they are taking extra goods to try and cope with that. How much of those bottlenecks are going to resolve themselves when those containers are in the right place and when people are fully stocked again? There must be a point at which that will ease in certain aspects, perhaps not in others, and I am trying to understand where that easing might come from. Maybe I can ask Richard Ballantyne to come in on that. Yes, it has been a big topic of focus across the freight industry, as you no doubt would have seen over the last 18 months or so, particularly with a few peaks. The issue, as we mentioned earlier, is very much a global challenge, and it is worth going back very briefly for a bit of a history lesson to remind ourselves that, as we rely on a lot of goods being manufactured in Asia, where they are produced in a cheaper, more cost-effective way and shipped round to big hubs like Europe and North America, we did see the Chinese economy lockdown. First, of course, that affected production, affected their exports to Europe. We then were short on various goods coming in because we were not locked down, and there was a bit of a jostle and an increase in demand, and then, of course, the UK government and Scottish government and other parts of the UK closed down our economies into lockdown, which affected the demand for non-essential goods and services. Of course, in that time, the Chinese economy opened up, and you saw a big glut of shipping containers come into the UK, which was not needed, and then you saw runs on storage supply spaces. You saw a shortage of space at ports for getting containers through, and that started the problem. Then we had issues in getting those containers that arrived in, getting them emptied and shipped back to a source, if you like, in Asia, where they would be repacked. This was a particular problem, I'd say, in continental Europe and North America. We were suffering a bit, but not quite as much as the rest of those big markets. Gradually, we continued to unlock ourselves, so to speak, and there was even more demand. We've all seen the demand for consumer products from Amazon home delivery type things, furniture, garden furniture, etc. All those products, those finished products that we wanted to get round from places like Asia. We did see big backlogs and challenges getting a lot of those commodities in, and then they were in storage. It's just been an ongoing challenge, coupled with some operational challenges that one or two of the big container terminals in Europe, including the Port of Felix, have all boiled up to create a perfect storm alongside things like haulier shortages and one or two other pressures to really hit our sector in a tough way. Now the forecasts are that this congestion, these issues could stabilise or dramatically increase that short notice for another year at least. We have seen recently this year the Suez Canal blockage exacerbating the problem. So it is quite a sensitive market that's going to take some time to settle, I would say. Now, equally, just a final point. One, I suppose, kind of positive for Scotland in a way, was that when you get blockages and particular issues at big hub ports in England, like Felix, though, the market always looks for alternative routes, and of course other ports are available, and we saw big lines like MERSC and others re-route into different ports and then feed traffic across to smaller container facilities on the east coast of England and indeed Grangemouth. So there is a resilient freight system here. That means that we can keep the country supplied if not causing a few minor delays. Perhaps I can turn to Ciaran Fernandez. I don't know if you heard my original question. Is he there? Yes, he is. Sorry, my understanding was that he was. He is back. Welcome. I'm sorry, there's a fair amount of the building, so I'll have to hang in here. Did you hear the question that I asked initially? Let me just briefly say, we hear a lot about the bottlenecks that we're facing, and some of these obviously are caused by Brexit, but there's others that we're told are due to Covid, people restocking containers in the wrong place, ships in the wrong place, et cetera, et cetera. Now when you think about it logically, some of these bottlenecks must resolve themselves when people are fully stocked, when the containers are now back into their correct cycle of being exported and so on. What sort of timescale would you say it would take for that to resolve itself and which specific elements of the bottlenecks would you say are going to resolve themselves? I think it's a very good question. First of all, I think it's very important to understand that supply chains are not linear and are not static. They are evolving. In fact, they evolve quite rapidly and in very unusual ways. One of the issues, and you particularly look at this from a bottleneck perspective is a lot of modelling that's done, unfortunately, assume linear or fixed supply chain in a very traditional way. A goes to B, B goes to either C or D, and then you sort of end up modelling it and trying to understand. However, the study which we did, we tried to understand in far detail in what would a supply chain look like and what are the features of a supply chain. One of the first features of a supply chain is that supply chains are the network and they evolve constantly, which makes two things challenging. Firstly, is predict the actors that are involved and secondly what the outcomes of these networks are. One of the outcomes, as you have rightly stated, is the issue about bottlenecks. So what can we do to do this and understand these batteries? First thing I would say is we need to understand how supply chains work, the type of networks they are, and how they connect to one another. Now, the reason I raise this is very specifically because they are different in different regions. They behave differently in different regions. The different connectivity they have to not just regional policies but links to knowledge transfer centres as well as how citizens behave vary. So there are a number of these things that need to be taken into account. However, as you say, for example, the most obvious example of bottleneck that perhaps everybody's heard was this example that you talked about where citizens were going and trying to basically buy and the classic example was a flower, which is one of the other ones of loo rolls. Now, if you actually look at what was happening is, only 4% of the flower that was sold is sold through shops and supermarkets. The rest of it are actually going directly to bakeries, to restaurants, directly from the flower mills and they had no problems. So what was the issue here? The issue in this particular supply chain was that there were intermediary innovation hubs or packaging companies that used to take the flower, they used to put it in different packages, they used to add something to it, they used to mine the setting from it and this is where the bottleneck started. So the bottleneck was not as a result of less produce or there was an issue in the supply chain in terms of delivery. The bottleneck was purely down to how the innovation hubs were unable to cope with that external demand. So to understand a bottleneck type of an issue what I would argue is you need to do the four players of policymaking, knowledge transfer business and society in general. I think there are a number of levers from a policymaking that needs to be brought into play and one of which, without taking too much of the committee's time, almost goes against the sort of reports I have written and that is, I think we have taken and that includes me, a very simplistic view of how supply chains work. So our entire study has been based on a very, very simplistic understanding of supply chains in Scotland and that is to look at the standard industry classification as a proxy to understand what happens. Now this is perhaps the fundamental flaw in any supply chain. Now, you know, we have modelled a number of supply chains and if you start digging into it, the supply chains that we need to understand, we need to understand them from a business model perspective. What is that particular unit adding value to a particular region rather than looking at it and saying it is an SIC code, whatever it is, and therefore we will behave and treat it in a very different way? And I think here the policy was absolutely crucial and I feel there's a bit of work needed in policymaking to recognise the importance of supply chain, secondly the behaviours of supply chain and thirdly how policy at the regional level can pull the appropriate levers for both resident business clusters but also new business clusters to make sure that there is resilience building a supply chain. So I'm slightly giving a long-winded answer to perhaps a question you were looking at saying it will all work out, but in my view the reason it perhaps won't work out is because they are not linear and it's not just items that flow back and forth, it's ideas, it's innovation, it's knowledge, it's information and even if there's a blockage in any of these, now I won't necessarily make companies here but if you think about company where you go online, order something by 12 o'clock and the item is delivered to your house by 4 o'clock on the very same day. Now in that company the reason the item comes from a point to a point is not just because of the physical transportation of it, it's because the knowledge and information that flows into it is as fast as how the delivery takes place. So I think in this conversation generally what has been missed and I don't mean in these particular committees the importance of supply chain and what I am arguing in my work and report is supply chain is the essential archery in an economy and this has to sort of have a place in serious conversation and that includes ongoing debates on how Covid should be managed, the entire advisory group in all devolved nations do not have supply chain experts, they are entirely made up of epidemiologists and biology experts, but I think what is needed is how you also connect supply chain. So I don't know if I'm answered exactly what you're looking for there but what I'm trying to get to is a supply chain is far more complex than a linear end-to-end point where we can optimise particular elements of bottleneck. You can and that's an easier solution but that is not going to solve the problem. Well thank you, you've certainly given me a different perspective to look at. Can I turn to Robert Windsor on the same question? I find it a fascinating sector to work in, probably the most fascinating. I think you've got to go back almost to 2008 to start understanding this, for the very simple reason that financial crash then completely disrupted the market and to be honest it's never quite recovered from then that's my personal view and we've seen a period of market consolidation with shipping lines merging and alliances being formed and this has in fact created and increasingly brittle supply chain. There's a lack of flexibility, capacity is carefully managed but there is a finite capacity in the market and in a way what's happened in the last two years has stretched it. The other problem we have is as the professor was alluding to, we have got multiple parties within the supply chain and all of us have slightly different needs. For instance the shipping lines have gone and built these ultra large container vessels which are up to 24,000 Tu now and that doesn't quite gel with how the port operators function because you've obviously got to develop the port infrastructure. It then creates a huge problem if you like for both freight forwarders, the transport operators even customs, the revenue and customs because you suddenly get this tremendous peak of activity when one of those vessels comes in because instead of three or four seven to eight thousand Tu vessels you now get one and it creates in effect its own bottleneck and we have seen real issues with that sort of problem. When is it going to solve, every industry expert I've read about seems to think it would be between 18 and about 30 months time. Obviously demand will come out of the system slightly the shipping lines are ordering large amounts of new vessels and they should start feeding into the market from about four to four of next year. We will hopefully also see a diminuation of the impact of EU exit because you have to remember forwarders where some of us are looking all the time at Brexit some of us are looking at the maritime situation and some of us are looking both ways and it's very difficult to compromise. Just to give you an idea of the situation on the 17th of October there were over 600 container vessels looking for a birth sorry not container they were all types of vessels looking for their birth. 100 of them were off California about 40 of them were off Europe of which only seven were awaiting off the UK and over 300 were looking at somewhere in Asia so it's going to be predominantly China, Singapore, Hong Kong that is sucking capacity out of the market and it's reckoned possibly 12% of the market is actually just waiting around doing nothing so you can imagine that's the problem. I do think we have a long term strategic problem in the United Kingdom we are increasingly becoming an import destination and increasingly we have less and less exports for shipping lines to load back onto their vessels in effect we're becoming a dead end and so now there's an imbalance instead of being able to reload some of the containers with export freight there's less and less of that going out and that is creating a problem and it's something I know the shipping lines are concerned with. At the moment if you look at the photographs in and around the Felixville area you will see vast amounts of old airfields and that sort of thing full of empty containers waiting for their vessels to go you know to take them away there is no solution it will eventually work itself out but it's going to be a wall. I'm afraid we'll have to make some progress I understand it's been a disjointed morning but if I could ask the final questions and answers to be succinct that would be helpful. Alexander Burnett to be followed by Maggie Chapman. Thank you convener to to hopefully quick questions the first one is an awesome together now the first one to Richard Ballantyne is is really how can free ports improve the resilience of Scotland's supply infrastructure and does he have any views on how many and the location of them was maximum benefit and my second question is to Professor Fernand is a very interesting submission and I concur with everything you said and he talks about how they're evolving and unusual supply chains but without being cheeky he just suggests more research is needed which might sound like answer this is a relatively short this is a short study by the committee to make suggestions and to the Scottish Parliament and to the government I just wonder if Professor Fernand is is able to suggest any actual solutions and specific policies for the immediate benefit of the supply chain thank you so to Richard Ballantyne first well thank you for that question yeah free ports is definitely something the sector is particularly interested in and and the advent of the free ports policy has broadly been welcomed as a as a useful tool and concept it's it's more than the traditional free port which was about easing customs and tariff regimes this is uh this is the the the UK model UK governance model of which we have eight locations uh spans into things like enterprise stimulus planning rules um and employment taxes um as well as those customs functions and easements it's free ports is not a solution directly for a lot of the new bureaucratic controls that Robert very well articulated are coming in as a result of the UK's departure from the single market and the customs union although there will be some assistance provided if needed for certain operations it's more an economic development strategy this free ports proposal and it's it's a way of making a business and regulatory friendly environment to attract inward investors developers manufacturers etc to uh come into the UK and in Scotland and locate the activities close to a port and possibly take advantage of transshipment opportunities but also take advantage of fast track planning rules and other taxation incentives low business rates etc lower national insurance contributions on certain staff and if you package that all up um it does become quite a good and attractive offer i have to say um now in England we've got eight of course so um uh we were um somewhat underwhelmed with the aspiration that um there should only be eight we we didn't see the the need to cap um the number of ports and that has to be said is the same as our position in Scotland the Scottish ports group of which we run which includes includes all the uh main Scottish port operators and many others um has around sort of um 30 or so uh cargo gateways in Scotland some of them quite modest of course but you could probably create a case uh for many of those locations that they should be a free port so um the proposal and suggestion that there may be one or two free ports stemming from the UK government's um uh free ports policy is somewhat underwhelming I would say I think we need to be careful of uh picking winners in a in a sector that has traditionally been market led and um made its own um decisions and based on competition etc we are now seeing government intervention coming in by capping the number so we're pushing for a more inclusive policy and then finally the the Scottish government's equivalent green ports policy some of which will be similar but we are now seeing a bit of divergence and we're not quite sure whether that will go ahead um in parallel in partnership with the UK one or whether there'll be separate mechanisms as being mooted uh recently um those proposals again we want to see consistency and inclusivity aligned there so free ports is an exciting exciting complex uh concept but I'm not sure directly whether it leads supply chain issues uh certainly not immediately anyway thank you very much and professor Fernandez on the uh any short term policy suggestions uh in in whilst we're looking for more research yeah thank you I mean uh you'll be delighted to know I'm not probably asking for more research to be done um however what I think is needed in the short term is I think there's got to be a willingness particularly from policy makers to start looking at this particular idea from a different framework and what I mean by this is uh perhaps more than me you have seen loads of reports from predominantly a very economic perspective so the report would probably give you a cluster of companies say this particular type of sector is being better than the other sector and so on so forth and this is predominantly driven from the all we are looking at standard industry classification now that has a purpose if you want to know how the taxation is working and so on so forth but if we are serious about trying to understand that we want to develop an ecosystem let's say in Scotland which supports a particular type of industry that exists or perhaps wants to attract new types of industry that don't exist but are complementary I think we need to look at the way which is looking at the business models of what can and cannot operate now just to give an example of what I'm trying to say here is if you look at in the SIC world and call companies that are in the business or pharmaceutical order of manufacturers and you would assume that the 2000 odd companies that operate in the UK and some of very well known ones in Scotland that they would all be under one or two standard industry classification code and perhaps somebody would download a lot of data and present to you and say this is policies that could work because of the data now there are if you look at the 2000 odd companies actually something in the order of 25 to 30 SIC code would be needed to capture that dataset now if you then are what how can we look at these sectors and therefore build supply chains to support them both from a policy perspective but also from a business perspective now if you look at the pharma sector or the drug manufacturing sector and ask example in the news all the time which I won't mention but happens to be in Livingston now this is an example of what is called as a business model of commercial strategic alliance and this would mean financial outsourcing things like joint marketing and selling the whole ability of the two partners to produce technology sharing etc etc would be the characteristics of this type of business model which would manifest itself in Livingston as an example however a very close business model to this type of drug manufacturing would be something like personalized stratified medicine or strategic alliance or going on to VC funded companies to in-house researching entrepreneurs spin out primary care pharmaceutical or companies that are in the business of purely buying and selling IT acquisition biosimilar manufacturing these are all manifestations of different business model in the so-called SIC code drug manufacturing I think we need to look at that level of conversation and then ask the question from a policy perspective and business perspective if we want to suppose in-house researching and I just use that as an example as one of the value addition drug manufacturing hubs in Scotland what do we need now we know what we need for example if you want to in-house researching cluster of companies that genuinely is world class the sort of things you need is you need to support those companies on how the IP can be protected you need those companies to have an ability to manufacture outsource the manufacture because they are not a manufacturing companies you need to make that sure you need to make sure that there is a B2B connectivity that links into key factors of royalty and patents you also need many such things now those are where the policy levers come in place and what I'm trying to say here is the policy levers for different type of these business hubs or these business model hubs are different so what is needed what is needed is for policy makers to say listen thanks for the data how else can we look at the same sectors and how can we then come up with intervention and support policies and I would very strongly argue they would look very different to a generic idea of saying we want to have game manufacturing in for example then the region or game development now in game development you have about 22 different business models that exist and I don't need to tell you how successful the entire area of gamification is and and continuing to grow to grow but you can't have one universal policy that supports that so we need to slightly stop looking at SIC code they have a purpose but I think we have been reliant on it for too long and I have been to you as a researcher because it's easy the data is already there all you need to do is download the data put it into a simple business informatic graphs and you can make some general assumption so so my response to you is do we need more research no what we do need is a different we are looking at it I think there are enough models developed that you could use without having to redo the voting all over again okay thank you very much that's all convenient thank you thank you I will now move on to Maggie Chapman that thanks very much and and hello to to the panel thank you for for putting up with some of the glitches we've had this morning I want to explore a little bit about how how ready we are and what we need to do to meet our ambitious net zero targets and and other climate change ambitions that we have and particularly around what is needed to take advantage of some of the innovations and new technologies that we are going to we're going to have to have to adopt in how we changing what we do changing how we how we function both economically and socially we heard a little bit from Maggie earlier regarding some of the infrastructure requirements in rail and also there's been discussion around modal shifts that are possible but can can I ask in terms of infrastructure or other elements of development other elements of investment and change what do we need or what do you need to ensure that we can actually take advantage of the innovations and new technologies that we're going to have to rely on in the future and if I can ask Brian first I'm based up in Shetland and at the moment we're standing at trying to weird about the situation nearly like a kind of generational shift and the kind of fuels that we're doing we're actively engaged up here in trying to work with Hydrogen with the Orion project of Batsillum for the repurposing of that terminal from oil and gas to this you know which can also provide a route to market for hopefully hydrogen is the best bet at the moment you know in some kind of ammonia solution that can help decarbonise shipping we're in the process of a huge construction boom in terms of wind farm that's getting built and doing a lot of experimental work with tidal energy and there's a transmission link being built between Shetland and down the north road to Caithness and Nosshead I believe it is and that's going to allow us to export energy crucially there's talk in the future laying a cable basically out to Norway's as we can then be one kind of big thrombin grid what that'll allow us to do here is we can will be of a glut of hopefully cheap renewable energy that we can do to decarbonise certainly to the local transport inside Shetland you know that we can be electric vehicles and we're making moves we've all of what the moment DFT has just placed in order for 100 Arctic units things the biggest order yet you know that are purely electric and we're looking to get smaller like 18 tonners seven and a half ton there's all these things all the all the smaller things that do the collections and deliveries and everything from your kind of central hubs like a kind of spoken hub model kin so that is what we're looking to do in the immediate future in like 2023 to 2024 or have we supplied you initiatives that a lot of these things aren't just not available yet you know that we can't keep up with the demand a production so when will these things be here it's probably going to be the end of next year by the time we start seeing some of these trucks in operation but also looking to get for example a lot of the stuff as I mentioned earlier is temperature controlled you know so we're temperature controlled reefer trailers we're looking at reefer containers that we can use for multimodal logistics to take advantage of rail freight and also shipping you know can we can we instead of putting these things on trucks and trunking them 700 miles can we ship them the difficulty with that is the infrastructure is not ready yet you know in terms of rail and everything like that like I mentioned earlier for example to get to basically Glasgow down to Tilbury it's going to be a day and a half and it can't be that long it's just just economically won't work so it's not ready yet and also the handling facilities we have reefer trailers you know we don't have lots of skeleton trailers and lots of reefers you know there are more on the continent you can access but still but we are looking to invest in something called sunswap trailers which are where instead of running like diesel to power the reefer container the trailers we're looking to use solar power for that so we're investing in that now too so these means we're looking to try and get that done and spread it around but yeah it's about how we can do this and take advantage of the wider framework that we're living in you know like what we're going to do with this renewable things how we can we support it and what's the barriers to that um yeah no that's that's kind of the environmental thing uh I would let's say as well up in shetland just without monopolising the time much more we are kind of ruled by the ferry that takes up in tune from here is that all the northern aisles are and that's a bit of a kind of bottleneck uh to the supply chains both in ornia and shetland I think thanks very much Brian can I go to Richard next the same question yes thank you uh for that um obviously uh very important topic and actually I'm glad you've raised this because um we do have some uh some asks as you as you would you might not expect essentially I think it's important to factor in that freight is quite a sensitive and long-term industry with you know self-financing as I said earlier and so unlike other forms of transport public passenger transport you know rail etc some some areas uh of aviation uh indeed we don't get that support from um government and we have to do it ourselves and when you get um good aspirations from governments to uh reach net zero by 2045 or even sooner etc the the industry which is built on a sort of long-term commercial structure has to adjust so what I'm talking about here is in my case ports acquire things like cranes and plants and machinery and warehouses and they're typically built with a longer term life than you might expect elsewhere and they have to uh usually bought um on finance and have to be they have to pay back the investment um and so when you have cranes that are traditionally for example powered by diesel um you know phasing and moving those over to electric um uh source it can be quite costly although it is happening I'd say we're doing our best but there may be a case for some public support for transitional support and that is the case particularly for things like shore power and this is the um you're probably familiar with this this is the concept of where a vessel comes into a port and instead of continuing to generate or have its generators on and its engines on uh you may be able to plug it into a local domestic energy source at the port uh and which is electric uh and you wouldn't have all the fumes being pumped out by the ships uh whilst they're in ports sometimes into the urban areas etc um now the challenge of course is not only the cost of that infrastructure which we think there is a case for some kind of public support there um across the board but the the big challenge is actually providing the energy and the electricity now in places like the northern aisles and Ortley's particularly you you have an abundance of renewable energy that's generated but elsewhere we don't have that capacity we don't have that grid capacity so there is quite a lot to be done uh for um the the maritime community and sector before we can reach a lot of these targets and a lot to be done by other players other parties uh which I think is a bit of a challenging thing and it could be quite costly I think we need to kind of understand that and then there was a a bit of a kind of jokey example but one of the Norwegian ports a few years ago was testing its own energy supply shore power supplies plugged a relatively modest sized vessel into um into its electricity supply and it drew all the electricity and there was a power outage in a small town on in western Norway so you know those examples of how much energy we need to produce uh I think is is quite a good one and equally obviously that that electricity will need to be generated in a clean way itself so it's no good you know generating electricity elsewhere and then just um you know moving the issue downstream uh to a port in our case so yes there is a lot going on I mean modal shift is something we talked about earlier and absolutely there's opportunities to get more goods away from roads and indeed off rails even on to um onto coastal ship but it has to be said that that's quite a niche and specialist sector we have modal and revenue support grants from the Scottish Government and the UK Government which can help facilitate this they're not always taken up perhaps we need to look at how those grants regimes are a bit more generous and broader and can have a longer life in maritime because typically those grants can only be allocated to three year basis and just um you know stimulate a new activity unlike rail where they're you know much more uh open-ended but equally we have other commercial operations that are already functioning just fine without any um Government support so we need to preserve that sort of market it's very it's a very sensitive wonderful one but I think there's definitely a case for a sort of freight review looking at how we move towards net zero that thanks very much Richard and if I could ask Robert the same question our members are all waking up to this issue to be honest but we have to remember most of my members are sub 20 employee companies um and there's a variety of factors at play um and I think the first one I'll draw people's attention to is quite simply that there are factors outside the UK which influence what happens um you know shippers determine routing of cargo very often and whether it's on air or or sea or road so that has an influence um most of the bigger members will work on a pan-European basis and they have definitely woken up to this as an issue um but they tend to take their lead from their European headquarters um and you know they've got large departments and actually you know just people like DHL and DSV and Schenker employee you know specialists in this area but that's not available to to the smaller member um the question I keep being asked by smaller members is what are we actually trying to change and there is a feeling that um policy makers haven't made it very clear and certainly there's a view that carbon we're all obsessed with but maybe there's other problems as well um smaller people are looking at this definitely you know the smaller companies but there's a big concern that the technology is just not there um yes bands up to three and a half tons can probably run on battery or or whatever fairly easily not so possible for a four-foot articulated lorry um so the thing is they are starting to look at it um they're beginning to wake up the question but it's a very complex area to be honest um it's actually probably the most complex area I've come across in my my career in making this change um it's got to happen but it's going to be bumpy and messy I fear I mean there's certainly a big problem with infrastructure particularly for charging and we hear that all the time um and historically our sector is a very low profit margin um industry net net profit up two percent maybe three percent for for a lot so there isn't a lot of fat left over to risk money on on either infrastructure or equipment which may be um not what we're going to go and to be honest we keep on hearing changes in what I would grow regard as policy you know firstly we're going to have you know a prohibitional diesel cars and such and such date and then it changes and we've got the same for lorries and if you look at the arguments in the international maritime organization they are extremely complex very contradictory and we just don't know what's happening okay thank you I'll leave it there thank you miss Chapman we are extremely pushed for time I'm going to allow a brief question from Jamie Halcro Johnston and a brief question from Michelle Thompson if the question could be directed to one panelist that would be helpful thank you very much indeed Camila the question is to Brian Hepburn I've visited Shetland transport and I've seen some of the great work that they're doing up there and also um to some extent are aware of some of the issues and you touched Brian on the issues around ferries and of course we've talked about ferries to the continent we've talked about rail infrastructure but even getting to your your depot for some of your producers can require two one or two internal ferries in Shetland you've then obviously got to have reliability for the ferries down to Aberdeen and capacity on that and I know a lot of work's been done by Circa and previously to make sure that working with organisations like yourself just wonder if you could give us maybe expand on I think what you were looking to expand on in terms of some of those issues around the infrastructure within Scotland within the islands and what needs to be done better to improve reliability for ferries and roads and that like thanks very much for the opportunity there Jamie to bring that up we are a fed up here in Shetland and in Orkney we're going to buoyant economies and where archipelago is islands so for example we for salmon we produce a lot of salmon here and ship it out and that gets produced up in the northern as a great employer up there you know and it's good sustainable food and it's got a got a high value well well sought after. One of the problems that we've got is we have to catch an inter-island ferry down to the main island of Shetlands for example and then another obviously the north link circle ferry down which is government operated ultimately down to Aberdeen and where we suffer it's a real bottleneck it's really really constrained you know and certainly during like livestock season these kind of things but a couple of things would improve it one would be fixed links to some of these smaller islands you know like say for example tunnels to the island of Yel and that would start to make it more an attractive place to live you know and stave off the threat of depopulation of these remote islands the second would be bigger or more reliable freight vessels like we're experiencing a construction boom here just now and there's going to be a decommissioning boom it's great to be so busy but it's comes at a kind of cost we can't get the stuff here you know so there's a cost to opportunity as well that's kind of missed I think and this is with offshore developments in wind as well we need to get physically get the equipment here and improve that so you know what we that if we could ask anything you know i'm here to ask anything it would be kind of just to see if we could put additional tunnels in place to address like the current shortfalls and what we could do to hustle up replacement ferry services and and yeah and then we that's really what I was kind of thinking we've we struggle we could be busier you know and it's kind of hindering us I think both in Orkney and in Shetland and that's something we could do something about you know right now you know I think you know in the short term it does on our maybe look to follow that up further with you as well okay thank you Michelle Thompson very briefly we've a very interesting session where we've covered dynamism in supply chains we've explored a lot of near side issues my simple question to Richard Ballantyne and the other contributors may want to follow up is have we covered have we gained a good understanding of the structural issues that and what we need to do to get resilience going forward so you could answer it yes or no if the answer is no please do follow up with some further information because I'm quite aware of time thank you Richard I think yes in very shortly yes I think we have got a good understanding of resilience issues it's just you have to factor in the fact that the freight and shipping and ports markets are independent of government so there is an element of control that policy makers don't have that they might have in certain other sectors so yeah it's it's one we could discuss quite in quite a lot of detail to say but in the interest of time I'll cut that one off okay thank you very much for the response as I said earlier if witnesses have additional evidence they would like to present to us I'd be happy to receive written evidence but I would like to thank all the panelists very much for taking the time this morning and for your patience with our technical issues and thank you for your contribution and your expertise I'll now move on to agenda minor three which is consideration of an SSI the committee is invited to note the public procurement agreement on government procurement thresholds etc amendment scotland regulations 2021 members will note that in its report the delegated powers and law reform committee drew the instrument to the attention of the parliament because two errors were identified the scottish government has acknowledged these errors and has laid an amending instrument at this point we are asked to simply note the instrument we're content well thank you and we'll now move into private session