 Good morning everyone and welcome to the 8th meeting in 2015 of the infrastructure and capital investment committee. Everyone present has reminded to switch off mobile phones as they do affect the broadcasting system. As meeting papers are provided in digital format, you may see tablets being used during the meeting. No apologies have been received. The first item on the agenda is for the committee to decide whether to take item three consideration of its approach to scrutiny of the harbour Scotland bill in private. Are members agreed? The second item on our agenda today is for the committee to take further evidence on its freight transport in Scotland inquiry. This week, the committee will hear from representatives from retail and shipping sectors. I welcome Paul Barker, country manager, UNIFEDER, Stan Van Est, managing director DFDSC Ways and Justin Kirkhope, national transport support manager at the co-operative group. Good morning gentlemen. The witnesses have not requested to make an opening statement, so we will move straight to questions. Perhaps I could kick off by asking you to provide the committee with an overview of your business and its role in the Scottish freight transport sector. Who would like to begin? The co-operative group operates around 2,800 food stores in the UK, with the fifth-largest food retailer in the UK. We also provide supply chain and distribution services to a further 1,200 co-operative stores, so a total of 4,000 stores. We have a turnover of around £10.5 billion. In terms of Scotland specifically, and just to say as well, we are the fifth-largest food retailer, but unlike the bigger four retailers, we are unique in terms of the fact that we are a co-operative and that we are owned by our members. In terms of Scotland specifically, we operate 400 of our own stores in Scotland and we provide supply chain and logistics distribution facilities for a further 200 co-operative stores, including those for the likes of ScottMid co-operative and also for a number of small community co-operatives. Our reach in Scotland stretches from Shetland, Orkney, across to the Western Isles, down through Caithness. We have quite a large presence in Inverness. We have a large presence in the central belt and stores down into Dumfries and Galloway and East Lothian. In terms of the operation from our new house composite distribution centre, we make around about 5,500 deliveries from that site each week. We have about 350 pieces of transport equipment on the road at any one time. We handle about 1.1 million cases a week out of that site for Scotland alone. We have also got a facility in Inverness that is a cross-stock, which allows us to deliver to stores to the north and to the east of Inverness. We have a slightly smaller presence in Scotland. I represent the SCways. We operate a ferry service between Versailles and Zebrugge. We employ a number of people here in Scotland in Versailles, where we have a ferry operation and an agency that is performed by Danone Ships Agency. We run the service to Zebrugge. This is one of the 26 services that we operate in north-west Europe. The FDS both has a logistics division and a sea-waste division, of which I represent the sea-waste division as such. The FDS logistics has a number of offices in Scotland as well, where we are primarily involved in the salmon trade. We have approximately 40,000 units that we carry on the Versailles Zebrugge service. Westbound trade is primarily trade cars. We have a number of automotive customers. We carry 21,000 containers on an annual basis and approximately 6,000 trailers both in and export. Our customer base is a mix-off industry retail as well. It is the Scottish whisky trade of course as both an export and some of the elements that go into whiskeys as imports. It is a mix-off different cargo types as such. We have a one vessel operation. It is the Finlandia sea-waste, which is a row-row service. It sells three times a week between Versailles and Zebrugge. We in total operate approximately 50 vessels across north-west Europe. We now have a first step into the Mediterranean as well, where we operate a service between Versailles and Tunis. This is for us an important service that we have been operating for a while previously under the Header of Norfolk line. That was acquired by DFDS. We have been operating the service from 2008 onwards. Initially this was a combined passenger and freight service operated by the Scottish Viking. We then moved into a two vessel operation, because of the falling demand. We had to cancel one vessel and we now operate it with one vessel, as I mentioned before, the Finlandia sea-waste. My name is Paul Barker from Unifeda. We are the largest feeder operator in Europe. That may mean nothing to some people what feeder is. The best way to describe it is that the business is in two elements. One is that we are the last marine mile and the first marine mile for probably the top 20 shipping companies in the world bringing in, combining with the motherships to bring in cargo in and out of Scotland. We also operate a short sea division, which is intra-European deliveries. We operate roughly in northern Europe, 47 vessels calling 49 ports in northern Europe from Rotterdam up through into the Baltic on a weekly basis. We operate two services into Grangemouth. One is coming from Hamburg, which connects Scotland to Hamburg, and the second one connects to Rotterdam. The mix of cargoes that we have on there is probably one of the most poignant ones. We bring Russian standard vodka in and we take Scotch whisky out. Whether that is synergy, I am not sure, but that is the kind of business. Again, we are working very much with a lot of the retailers and a lot of the shippers that are importing and exporting to and from Scotland. That is very helpful. Based on the reach of your respective businesses, how would you describe the current infrastructure that exists to support the freight industry in Scotland? What improvements, if any, would you identify? From our perspective, because our focus is primarily marine, we buy in our road services and rail services in Scotland. The benefit of it, but the curse of it, is that it is a relatively small community. There is a set number of carriers and it is not increasing if somewhat it is decreasing. It is quite a closed market. Competition is always interesting, but that is one observation that we find at peak times, when the system is full, it is full. That creates backlogs for us. Do you address that from Lord? I can get on my hobby horse now about general industry things. It is my chance. For my sins, before I came into the marine sector, I was in the road sector and I sat as chairman of the FTA. My biggest criticism of my own industry is that we are not a sexy industry to come into. The average age of a driver is not mid-20s, mid-30s, it is mid-40s, mid-50s. I think that getting more of a cohort of people into the industry would be a good start. That is an observation. In terms of that backlog that you mentioned, did you have anything specific in mind there? No, not really. Once the system is full and we have a vessel coming in with maybe 100 units on, it might take us three or four days to clear it as opposed to a normal two days. The work gets done, it just gets done slower. Obviously, that impact on the classic thing is before delivering it to supermarkets. Everything backlogs a little bit. It is more capacity than any—I do not think that there is a silver bullet out there. Are there any specific measures that you would see as being able to increase capacity or bring about a modal shift that would reduce capacity? I think that my on-going debate with Forthport says, please unload my vessel quicker. Work quicker, work longer. It is like the last few days. The unfortunate thing of our industry is when the wind blows, we do not work. Either the vessel stops or the crane stops. That is all driven by safety. My wish for all the terminals in the UK is to work much quicker, much cheaper, but that is a selfish view. Mr Van Est. To distinguish ourselves a little bit from Unifeeter, our operation is even more characterised by fast turnaround time. We operate the service. In order to enable us to have a three-weekly call in and out of our sight, we only allow ourselves a four-hour turnaround time because of the rest of the time we actually need to spend at sea. We have four hours to turn around the vessel, and it means that you need to discharge 100 units and you need to load approximately 100 units as well. It is a rural operation, so it means that as compared to containers, everything is on either a roll-muffy or it actually has wheels itself, so it can drive off and on. The turnaround time is by default already a bit faster. I can agree with my colleague here that the infrastructure is, let's say, fairly limited in the sense that there is only one provider that can provide services to us in the East Coast of Scotland, and that is Ford Ports. There is one rural birth available that we can use on the entire West Coast of Scotland, and that is owned and operated by Ford Ports. That makes the position, let's say, not necessarily competitive, and it has created service issues with us as a customer to Ford Ports. If there would be any suggestions or changes as regards infrastructure, it would obviously be that there would be investments needed to allow for additional rural births on the East Coast of Scotland, and that will also then be operated by other parties than Ford Ports. I know that Charles Amont has also been here to present his view on this, and it is probably contradictory to what we would believe is necessary to develop the rural industry in Scotland further, but they are, of course, in a certain situation where there is simply no competition for them. We see them not only in price levels, but also in service levels. In terms of road, we welcome recent developments for the M74 extension. We can see the work going on on the M8 from outside our distribution centre at Newhouse in Lanarkshire, which is welcome again. In terms of the focus on the likes of the A83, which provides a vital link to some of our community stores, which are obviously accessed via that road, that's important to us. We welcome the proposal to dual the A9. Again, that will certainly help. Obviously, the speed limit, the trial for the increased speed limit on the A9 is something that we do welcome. Seeing some of the feedback from the Road to Average Association who presented to you last month, we're seeing some benefits in terms of if we can get product up to Cathness half an hour earlier, fresh product. Obviously, the supply chain in Scotland means that Newhouse is quite often at the end of a supply chain that starts in the English Midlands, so fresh product is actually going from Newhouse to Cathness. The faster we can get it on the shelf and get it there so that the customers have that fresh product first thing in the morning, the better it is for us. We do welcome some of those improvements. We'd like to see a review of what is happening south of the border in terms of increased speed limits with LGVs to see whether Scotland could do something similar on that. We appreciate that the cautious approach has been taken on the A9 because, obviously, road safety is absolutely key, but I think there's been some significant improvements there. In terms of rail infrastructure, we are currently bringing product from the English Midlands from Coventry to Mossend and also Grangemouth, slow-moving ambient lines, grocery lines, and we use WH Malcoms to do that. That's been really, really good in terms of reliability, but what we would like to see is, in terms of rail, some provision of a full seven-day service. That's one of the things that's absolutely critical. I don't think it's come up in the previous evidence, there's been a lot of evidence about rail, but one of the key things on UK, not just in Scotland, on UK key freight routes, there's no provision for Saturday night services on key routes. I understand that's mostly to do with engineering, however, if there was a move to make alternative and diversionary routes available on Saturday nights, we could look at moving significantly. We'd have more opportunity to move volume on to rail away from road if we could actually get more of a 24-7 type operation. So we can run six days, that's fine. It's the Saturday evenings and because grocery is an industry where the lead times are very, very important in terms of if we can reduce lead times between the store placing an order or the systems placing an order for stores and them actually being on shelf, then the accuracy of those orders can be improved so that the availability to the end customer is as good as it can be. That's certainly a point that we can put to network rail when we have them before the committee in the near future. Mike, did you have a... Yes, thank you, convener. I was just very interested when fourth ports were in, given evidence to the committee, they suggested to us in the face of a bit of mild criticism that we should speak to their customers who are over the minimum of the services they supply according to them. So I was very interested to hear that that may not be exactly the case and I just wondered if Mr Barker and Mr Van Ness could perhaps be a wee bit more specific in terms of what would improve things. You've mentioned another rural berth, perhaps Mr Barker could be a bit more specific. Fourth ports were at pains to point out to us their investment programme and what they are seeking to achieve, but I'll just wonder if that would really meet your needs. I'll just, with your indulgence, convener, to hear that Mr Kirkhop just touched on something that the Parliament talked about yesterday in the debate about the dairy sector. I would refer you to my colleague Mr Day's speech of yesterday afternoon in which they talked about the dairy sector in Scotland's produce, dairy produce, actually finding great difficulty getting into the supply chain in Scotland. In terms of the relevance to her discussion this morning, you mentioned that most of your fresh produce is coming from far south. I just wonder if you could alleviate that problem by sourcing from within Scotland. I think that it's very important. Sourcing is not my area of expertise. We do source, for example, milk within Scotland. We have Scottish-specific milk, for example, and butter as well, for example. In terms of other fresh lines, I'm not familiar with that. That's not really my area, but what I can do, I can take away with me and we can get something in writing in terms of submission about where fresh product is sourced from for Scotland. In which it shortens the supply chain, the transport route, if you see what I mean, that would seem to make sense in terms of this morning's discussion and perhaps relieve some of the problems that you've touched on, but this is almost in her side to her discussion. I'm keen to hear about the ports and fourth ports in particular. To answer that question, I've seen the session where Mr Hammond was here and I've also seen the questions that you raised there. I had the same feeling when I first visited the port of Versaith as you had when you did your site visit. To be fair, I was also ashamed of the port facilities that are there. If you compare that to any of the terminals that we operate in the rest of Europe, the facilities are extremely poor. There's potholes everywhere, health and safety issues are arising, and it's fair to say that there is a lack of investment in the facilities that they operate themselves. I can't say that about the other facilities that they operate, but for sure, where we are a customer in Versaith, there is a need for additional investments just to service the area, for example. In addition, there's a lack of investment in equipment that is used to operate the ferry service, and there's a lack in talkmasters, there's a lack in reach stackers. They tend to break down quite frequently, leading to delays, and as I explained before, we have a very tight schedule. We have a four-hour turnaround time. We keep statistics on this, and it hardly ever happens that we achieve a four-hour turnaround time. If I compare this to the port of Zebrugge, which is on the other side of the operation, they always manage to operate the vessel within four hours. So this is clear evidence that there is a lack of investment and a lack of operational awareness at four ports. Like I said, for us, there is no alternative. Would there be an alternative? We would easily switch to someone else, and we would do so straight away. You've just made… On which one? The point about the lack of turnaround within the four hour. Yeah, so it's a rural operation, so you need talkmasters to operate the service. I meant Britain. Ah, sorry, yes. Yeah, of course. We keep the statistics on every departure, so we can provide that information. That's great, thank you. Mr Bunker. I think I would agree with Stena, that the level of investment is relative to the appetite of fourth ports to meet the demand, and the competition is non-existent. I think we're in very much the same situation as DfDS. I always paraphrase, we just run a marine bus service. Pretty much like buses, if they're late, everyone gets a bit stressed and it all gets a bit difficult. I think one of the things that we see is the level of investment compared to other terminals is lacking. Whether that's driven by their appetite to invest or whether they're by the the conditions that they've come from. But we can certainly see our market growing in Scotland, but at a point in time, it's weighing the balance of more capacity on our vessels weighed against a longer turnaround time, and we actually can't sacrifice the turnaround time. I agree with Stena, that the level of equipment is somewhat of an older vintage than, dare I say, other terminals that we visit, to be polite. Quick point to Mr Kirkhope. I was very interested in your points about the increase in speed limit to trial on the A9, and you may or may not know why I was very actively involved in leading the campaign from each of each drivers to get that increase. I was pleased that the Scottish Government looked at that. There's a couple of very quick points. You made the point to yourself that this month, England and Wales will increase speed limits to 50 and 60 for single-carriage ways and dual-carriage ways, so we've got this almost ludicrous cross-border war going to be breaking out where vehicles have to change, reduce speeds when they cross the border. First of all, what does your view about increasing, making the speeds consistent with England and Wales? Secondly, do you share the view of the Hologens to you who have told me that it's actually less submitting driving at 50 because you're in a higher gear? Ironically, counterintuitively, increasing speed actually reduces emissions going from 40 to 50, so you both have a good for climate change and good for road safety, but I do frankly see it ludicrous that we have different speed limits from England and Wales. Yes, I mean, I would agree. I mean, we set our vehicles, our LGVs, have a speed limiter set at 52 because we've done trials. We ran at 56, which is obviously the legal permissible maximum. 52 is seen as a sort of sweep spot. You know, once the vehicles get into the highest gear, that's definitely seen as an advantage over 40. I think that the fuel consumption between 40 and 50 is negligible in terms of the change there, so we'd certainly support that. I think, as well, I support what you say about, you know, cross-border having to change speed limits. Drivers having to be aware that when they cross the A1 at Berwick, they have to then reduce speed, so we would definitely support an increase to 50 miles an hour throughout the A-road network. I understand why the A9 was handled in the way that it was because safety was obviously the highest priority, but I think that maybe taking on some of the learnings once we've actually, once the English speed limits got a few months under its belt, perhaps we can get some evidence of whether there's been any increase in accidents or safety issues. Okay, Mr Barker or Mr Van Es? I mean, obviously we're looking at the freight transport industry in Scotland, but we can't look at that in isolation. I was just wondering, given the global, European and global, reach of your businesses, whether you were aware of any trends within the wider industry that are impacting on Scottish freight transport? We're seeing an actual growth in volumes in and out of Scotland. For us, the situation in Scotland is that there is actually more exports than there is imports, so we actually position empty equipment into Scotland to load product out, so we're very active in trying to search out imports into Scotland, and we're seeing a slight increase. I wouldn't say a huge increase, but it's starting to come. I mean, we cover mainly in our northern European network a sweep from Rotterdam around into the Baltics, into St Petersburg and the rest of that area, and we're starting to see a slight increase in imports, which is a good sign. Apart from that, nothing significant from my perspective. No, I think it's fair to say that if you look at the various operators that either have container operations or rural operations like ourselves, we only carry a very small portion of import and export out of Scotland, and unfortunately the majority of the traffic actually goes to sell imports and even down to the channel. If I look at the logistics, which is our sister company, they transport sellmen all the way down south to go to France, so they take this channel tunnel for this. It's actually transport that is going in and out of Scotland, so you could wonder if there should be some more sustainable, let's say, environmentally friendly alternatives other than to drive fish that is sourced in Scotland all the way down to France using the entire road network in the UK. This is a sign of a lot of cargo and goods being available in Scotland, but actually not being moved in the most environmentally friendly way, and this is simply price-related. Excellent. Okay, thank you for that. Alex, you have some questions. My questions are specifically for Mr Kirk-Hope. First of all, can you describe the specific features of the retail distribution network that impact on the use of road freight in Scotland? Okay, in terms of how we use the road network, we're running a lot of traffic between the central belt and in Venice, for example, is a key route for us, but we're using a lot of local roads as well because we've got stores in every postal area virtually within Scotland. The reliability of the trunk road network is very important to us. Obviously, I mentioned the A83 and previous landslides, and we're obviously very pleased to see that there's been some work done on that over the last couple of years in terms of improving resilience and obviously that the old military road has been opened up as an alternative diversionary route, so that's important. Obviously, the last mile into the stores is quite important for us as well in terms of the way local authorities keep up local road networks because that can be us frustrating if we've got problems with local roads and congestion and parking and that sort of thing. We do have some particular challenges in city centres with parked vehicles and access to stores. A lot of our stores are quite historic in terms of being trading for over 100 years, so they've been designed for a horse and cart. For example, in the centre of Glasgow, we would welcome opportunities, for example, to look at more nighttime deliveries, and that was something that was trialled to a small extent, but was quite successful during the Commonwealth Games. We had some good discussions with the local authorities then, and we were able to deliver a handful of stores during the night. Unfortunately, those stores have gone back to daytime delivery, but what we've done in London, for example, we've actually been working again with the local authorities to try and get some of the nighttime deliveries that we instituted for the London Olympics back to nighttime. The advantages there are that if we can deliver quietly so that we're not upsetting neighbours and residents, we can actually take vehicles off the road during peak times, we can reuse our vehicle fleet, which is obviously more efficient. It's effectively a win-win because we're double utilising the resource and we're reducing congestion on the roads when they're the most busy. Just on that point, we visited the Benderstads in Nijmegen, a consolidation centre, and they did a lot of the stuff that you're talking about, but can I ask you, the Glasgow example that you used, the Commonwealth Games example, have you followed that up with them? Has there been any positive noises from Glasgow that they would consider doing the nighttime deliveries that they had very successfully during the Commonwealth Games? It's one of the things that's on our to-do list. I mean, we've had some good discussions in London, and we've been really positive there, so it's about rolling that back out. We've focused on London, but definitely it's something that we should do and will be doing going forward. You mentioned some of the challenges surrounding increasing the use of rail freight between Daventry and Moss End, as well as using the Highland Mainline for delivering freight to Inverness and Beyond. Can you tell us about those challenges and how you might overcome them? I think that it goes back to something that I'd said briefly before, which is around the seven-day railway, some of it's around that. Certainly, in terms of looking at the product that we source from our distribution centre at Coventry, which is our slow-moving ambient lines. As I say, we've had some success in terms of, we've trialled that. We started in 2010 with one container a day, we dipped our toe in the water. That was extremely successful, both from a reliability point of view and we weren't expecting it to be cheaper than road because we used double-deck road trailers, which are significantly efficient. We can get really good fill on those, but it wasn't significantly more expensive, so we decided to expand that following the success of the trial. We now move 25 per cent of that volume from the Midlands to Scotland via rail. Again, the reliability is generally very good, but in terms of the barriers to further expanding that, it goes back to the need to have a consistent service across seven days. We've actually got a very wide dispatch window and the Newhouse of Scotland is actually, in terms of its dispatch window, significantly wider than any other distribution centre in the UK. What I mean by that is that if we're dispatching shops that are being delivered in Glasgow or Cotebridge, for example, we're also dispatching stores that are being delivered to Shetland via ferries, so there's a huge wide dispatch window for a product that is dated on a certain day. Ideally, we would have products arriving in a staggered fashion. If we have a road trailer, we can actually have a road trailer arriving every two hours, so that will suit that outbound dispatch. With rail, generally everything arrives at once. Although currently we're doing the product that we choose to move by rail, we're doing that very successfully. In order to expand rail, what we would need to start doing is moving on to say two different services running at different times of the day, but again, one of those significant barriers is what do we do on a Saturday evening. We can't run trains at the same time. We do run trains on a Sunday late morning early afternoon, but it's a different product. We can't use the same product day in day out. One of the things with grocery distribution is getting some consistency so that the operators can run something that makes sense day in day out. You mentioned in your written evidence that you'd like to reduce your freight traffic on the A77 by the possibility of using rail to get product to Cairnryan for going to Northern Ireland. You mentioned that this would involve reopening other rail lines. Have you done any study into whether it would be viable for that work to be done? We haven't done a study ourselves now. Essentially, it would be up to Parliament and Government to consider the broader possibilities of that and take it forward. Sometimes these things are led by industry and rail operators, but in that instance it would be useful to have some sort of stay from the Scottish Government. In terms of Northern Ireland, it makes sense for us to supply Northern Ireland from Scotland. Some of the ranges are shared, but that's not to say that we haven't looked in the past at the business case for supplying Northern Ireland from Hayesham or Liverpool via our St Helen's distribution centre. We have no plans to do that, but it's one of the things that we look at in terms of what are the economics of supplying Northern Ireland in terms of the range that we supply there. It's an option that could be achieved as part of our broader policy. Those questions are probably mainly directed to Mr Carcope. The committee has had the opportunity to visit some rail heads during the course of its inquiry. Have you felt that the industry has enough terminals to allow full access to rail services? If the other two gentlemen would like to contribute to that, they might have some insights, but perhaps it's Mr Carcope to start off. We face a different challenge to the likes of some of the larger retailers. I know that Tesco run a number of trains up to Inverness, and their facility in Inverness is probably best described as a concrete base with some lifting equipment. What Tesco can do, and they have the luxury because of their store profile, they can take a container, load it onto a train in the central belt, load it onto a flatbed, what we call a skelly trailer, add Inverness using that facility and deliver it direct to store because it's full loads. Most of their stores are what we call dock-level access, which means that there's a purpose-built dock. For ourselves, our store network is predominantly convenience, a lot of older stores, so a lot of the access is at ground level. We tend to use vehicles that are fitted with tail lifts. We've also got access issues, so we're using smaller vehicles to deliver into stores, and where the likes of Tesco—I use Tesco as an example again—can use a 45-foot container and deliver it direct into store. There's much less of our stores that we can deliver on that size of trailer. For us, it's about looking at innovations around how we get product consolidated. We've got what we call a cross-stock centre in Inverness, and that's exactly what that does, but it does it using road double-deckers and we consolidate onto smaller delivery vehicles. It might be something that takes a number of retailers to get together in terms of getting a critical mass of volume, but if we were to move a critical mass of volume to rail, I think that could probably make the economics a little bit better. However, at the moment, the least cost option for us is to move products to Inverness, for example, using double-deck trailers, because we can get that fill and the economics are right. In terms of Mr Barker and Mr Lannis, in terms of the work that you do, is there a kind of blockage because of a lack of real freight terminals? I think there is obviously a need for road and rail and ferry services to be combined at a certain point in time. Unfortunately, at this point in time, we at least don't have the opportunity to combine our ferry services with direct rail connection. This is, from a competitive point of view, obviously not ideal, but also from an environmental point of view, I think there is a need for for rail connection at a ferry terminal. We basically see that in most of the other ports that we operate ourselves. I'm responsible for our terminal in Ghent, for example, in Belgium, where we are now looking at a train service from the southern part of France to connect to the port in Ghent and thereby have a direct connection to the Scandinavian countries. So it's a very strong product that you can sell if you can combine a ferry service with a rail connection, especially if the trade is characterised by a lot of container movements as we see on the side service. If you look at our terminals that we operate within Europe, a lot of them are what I would call truly multi-modal or able to get modal shifts, so you've got the option of a road, a rail and a sea option all contained within one terminal. I think one of the kind of unique situations that we have in the UK, and I say this haven't come to uni feeder from previously working for PD ports, which was a port authority. The model in the UK is the ports are privately owned, so they are beholding to a shareholder as opposed to a statute for the better of the community. Obviously, we still have trust ports in the UK, so they are a little bit more, sort of have more involvement. I think that's one of the, in the UK terminals, port terminals are privately owned, you've got elements of rail that is privately owned and it's how you get to be blunt to private businesses vying for the same end user to actually co-operate a little bit. That's the challenge for all of us, for ourselves as well as yourselves as a Government. Question. There have been a number of road improvements suggested in written submissions to the committee. I wonder if you could just consider what, you know, how road improvements might impact on your businesses and what improvements you would hope to see. From our perspective, I mean, I think that Stine and I go back to the same point that we started with. Our kind of product is a time-driven, we have a moment in time to clear that vessel and reload that vessel, so our interaction with the roadside of either for a delivery or a collection. This week is a classic, we've got obviously holiday this week, so I've got a lot of the distilleries actually trying to get as many boxes to me before the vessel leaves, because if it doesn't leave, it's another week or two or three days. So from our kind of passive view of the road network is that ability to kind of have the major arterial routes in and out of the port and being blunt in and out of the rail terminals as free and as accessible as possible, because we're all driven by, you know, as I say to people, the vessel leaves, and if the containers aren't on or the trailers aren't on, and it's the worst thing in the world to see someone drive onto a terminal just to see the vessel leave, because it's all the action of everyone has failed. Our experience is the same thing as that passing to another street. Back in what Paul said, I mean, in our written submission we'd actually mentioned the A801 between Grangemouth and Bathgate. Now, I think that the basis of our submission was around stores we service in the Falkirk, Grangemouth and Burness area, but also the rail terminal at Grangemouth, where our trains come into on a weekend, but there's a number of the big retailers also moving trains into Grangemouth. I think that A801 completion would be a worthwhile sort of missing link, certainly in the central belt. That's certainly one of them. I mentioned before the A83, I think that it's just about keeping focus on making that resilient as possible. We do understand that Scotland has significant challenges in terms of the geography and the weather, but again it's just about making sure that any road schemes are as weatherproof as possible. It's the resilience that's the key for us. We certainly welcome the A9. We've seen some significant improvements due to the M74 extension, for example, and hopefully the M8 work and the work around the junctions linking the M73 should make things a lot better in terms of those pinch points. My final question is about Rhoda Clyw of Vontaraf. You mentioned that in your submission. Have you had any discussions with the Scottish Government about Rhoda Clyw of Vontaraf for freight? I haven't yet. We put it in our submission and we would welcome further discussions on it. Obviously, it's a step in the right direction, but we see if that could be applied to freight and larger goods vehicles, even on a gradual scale, we see that as an advantage in terms of us being able to more accurately differentiate in terms of prices of ferries between operators and that sort of thing. We would welcome further discussions on that. I'm just finally sorry about your indulgence again, convener. On the Northern Isles routes, I've had discussions with road haulers and so on, who seem to be pretty pleased with the service that Serco are providing there. Would you go along? You mentioned you have a store in Lerwick, I think, in Shetland. We do. We have a store in Lerwick. We use a local haulier, Shetland transport, actually do our distribution to that store, and the reliability has been generally good. Mr Vanes, you talked about the challenges around lack of investment in our port terminals, and Mr Barker, you've talked about the barriers to achieving multimodal operations within a single terminal. How much, in prickly giving your experience operating across a variety of different countries and legal jurisdictions, how much of a barrier to achieving the investment and the multimodal operations that you would like? Do you think that the private ownership of the ports is at the moment? I speak with two heads here, my current one and my previous one. I think that it is markedly different when you see a private port model as opposed to what I would term as a municipal one. I think that there are benefits and curses for both. We deal with some municipal, as I recall, terminals, which are not particularly astoundingly good. I think what we've tried to do with the terminals in the UK, and we obviously call five up and down the east coast, is really to try and push them to invest and to move with us. I don't think that I can honestly say whether, if it was a municipal model, would it be any quicker in investing than a private model? I'm not sure whether something passes through a governmental process quicker than it does through a boardroom process. I think that it comes down whichever model to an appetite to invest, because ultimately there's a return to be made from it. I can only agree with this. I think that we operate a number of terminals ourselves, where either the landlord is the municipality, or it's privately owned, like we have in our Imingham facility, where ABP is the owner of the terminal, or owner of the land. I think that a private party would look at the business case and say, okay, is this something that we are willing to invest in? The business case is always based on assumptions, and I think that you can either make a low-risk investment and say, I need to have a business case and a customer and a plan to operate this, or I'm willing to make an investment for the future and actually see if I can then attract a cargo or customers to it. So I don't know whether there's any difference in a state-owned or municipality-owned terminal or privately owned. What have you seen across the different jurisdictions that you operate? For example, the terminal that we operate in Gothenburg, it was owned by the municipality of Gothenburg, and it contained a terminal that was sold to a private party. The terminal was sold to ourselves, and we then take a different look at investing in that, but again, we take a certain risk in that as well. I think that in the end, as a private company, it depends on the number and the level of risk that you're willing to take. I think that there's a clear advantage of having someone that is operating the terminal to also have a direct link with the customers, or even being the customer themselves, because then, of course, the level of risk that you're willing to take is obviously higher. Is the issue not the lack of competition that you pointed out earlier, the fact that the force ports operate essentially a monopoly on your part of Scotland, part of Scotland that you want to use? Is that not the issue? I think that it is very obvious that the choice is singular. I think that the stance that we would take was that, yes, we would welcome competition, but would the competition be equal to better than or less than what we've currently got? That then comes back to the level of investment or risk that a new player in the market would be willing to take. Certainly, if a new terminal came along and it could give us the throughput that we benchmark against, yes, we would consider it, whether it be private or municipal. We have no view one way or the other, but the competition particularly on the east coast of Scotland is singular. There is no competition. I can't say how good the competition would be, because I'm not sure who it would be and what they would offer. From our perspective, there obviously is a certain level of competition available on the east coast, but it's not in Scotland. We have been evaluating T-Sport as an alternative, and we were very close in moving our business to T-Sport. This would have added 40,000 units on the road that need to go into Scotland. The competition is clearly there, and the alternative is there. We couldn't come to commercial terms, but from a commercial point of view, the terminal at T-Sport is much more beneficial for us than the terminal on the roadside. Is the Scottish Government or should it have a look at the operation that you are talking about to try to encourage improvement? If there is a name to grow the general economy and the commerce of Scotland, I would advocate looking at a range of options. Our customers are very focused on a very singular item. They have a point of origin and a point of destination. From origin to destination, it is driven by two pretty brutal facts—one is cost and one is time. They will make a decision based on the mode of transport that fits either or both of those criteria. To have more options in Scotland, the optimist says that it will increase trade. The pessimist says that it might, but for a growing economy, to give it as many options to trade is obviously positive. To illustrate this with a small example, we have three automotive customers on our ferry service. We have Mercedes, Mazda and Ford. There are obviously more cars that are being sold in Scotland than these three brands. This is an illustration of a lot of the automotive customers choosing for ports that are further down south and actually moving it on the road to Scotland. Any of the cars that you see driving around that are not either of these three would have come to a port further south, such as Teesport, Imingham or anything on the Humber. You see the number of miles that is adds to the road network. Could I keep on the theme of ports and ask some more specific points? You are probably aware that the committee has visited a number of ports during the investigation, such as Aberdeen, Rotterdam and Grangemouth. James Dorn and I visited Rotterdam just last week. As we will know at one time, it was the largest port in the world, and it is now the eighth largest. It is the largest in Europe. Although I have not been pedantic, I would argue that the seven Chinese ports above the league table have different criteria that involve inland port activity, but perhaps that has been a bit too pedantic even for me. Do you believe that there are sufficient ports in Scotland in terms of both number and quality? The other aspect that I was really fascinating about was that Rotterdam basically made the argument to me when we asked some questions about why you are so successful. Basically, the point is that 99 per cent of the reason that you are successful is because of the ideal location in the central Europe that you are at. The other key point is that they believe that infrastructure development is absolutely vital. For example, the development of a specific freight rail that they have developed. One example before I ask you to answer is that they said that boats would steam past Italy to get to Rotterdam to deliver goods by rail from Rotterdam to Italy because it is more efficient to do it that way. It is not just about providing the port with all the infrastructure of what they call the hinterland. Do you agree with the analysis from Rotterdam? I would again put in my old hat on what I used to say to people when I work for a port authority is that the great strength of the port authority but its biggest weakness is it will never move. It is pretty fixed. The corp can see their customer trend move and they can actually rejig their network to move. With the port, it is all about the location. One of the things that I advocated when I worked in the sector was that there is an obligation on the port to work with the region. It is an enabler to commerce. I would always say that more competition is not always better, but it is certainly better when there is a monopoly position. At the moment, it is a one-horse race and that will be constricted by the appetite of the operator to take risk or no risk because the choice is singular. My biggest frustration with Grangemouth as an example is that they have a historic working pattern between a certain time on a Saturday evening and a certain time on a Sunday morning. They do not work. So, they are 24-7, six and three-quarters days. Can you ask a sort of sensitive issue, are they meant to be working? You have this great situation of saying, well, hang on. They say, well, we are 24-7 port, you are not because you have this gap. Why can you not? I think if I use the example of what we do a lot in and out of Rotterdam, their approach is very much that we will provide infrastructure and it will naturally be a magnet for trade. In the UK, the port models, because they are private, are more circumspect in their investment. It is like, prove to me, I am going to get this return before I will do it. I always use the term that the British port sector does not use the Kevin Costner school of build it and they will come. If anyone has seen the film, feel the dreams then. I am taking the words out for a minute. Faths the port, it does not move by definition. What was interesting in Rotterdam is that, as you know, it is owned by the city. They have great independence, but what they have done is developed phenomenally from the infrastructure around about the port. They have developed phenomenally in terms of creating development and the size of the port. The freight rail specific only freight line is a phenomenal example of building infrastructure. I think that what you have got to do with any port, and I will be critical of the UK port sector, is that it is not as developed as creating a port community, which is a combination of municipality, private, freight sector and the manufacturing and service sector. If I look at my time with PD, one of the things that we managed to do, which was reasonably first in the industry, was to get retailers to build a facility on the port, so that the first point of intervention was at the port. Again, being brutally honest, that was done very much on Will, Asda and Tesco pay me enough to build this. Yes, we will do it. If they had said, well, will you build something and we might use it, we would have said no. I think that it is the appetite to invest and the appetite to create a community. What Rotterdam has done is that they have crossed across model types. They are as comfortable with sea, as road, as rail. Unfortunately, we still have a model that has three competing disciplines, and they are always uneasy bedfellows. I think that you are right, if I recall. We took evidence from the ports and it was more than just four or three. We asked about rail and it certainly got the feeling that it said, well, effectively rail is competition rather than part of a wider package. I think that it is perceived as an adversarial relationship as opposed to a co-operative one. I think that Rotterdam is actually an interesting example. I am from the Netherlands myself and I have worked in the port of Rotterdam as well. To the previous discussion that we had on private and public ownership of ports, I think it again is down to a level of risk that you are willing to take. If you take the port of Rotterdam, they have taken a significant or enormous risk actually by developing the second mass factor, which is a huge facility to operate. On the one hand, you could argue that it is maybe not the best risk that they have taken because some of the land is still available for a commercial party to operate. At the same time, of course, they have been able through this investment that they have made to attract a lot of customers to it. I think that it is a combination of the two that you need to have. You need to have a closed partnership with the commercial parties that are then the ones that are operating the services into your port and at the same time a degree of risk that you are willing to take to make such an investment. We have not really got a major view on this. In terms of imports from the Far East, for example, we tend to handle those through our distribution centre in Coventry because we have the facilities to de-stuff containers. That is where you have containers that are filled from floor to ceiling to maximise fill. We very much leave it up to our suppliers in terms of those imports as to which ports they are coming in to, given the volume that we are pulling in, such as non-food versus food, for example. I am conscious of time, convener, just a couple of quick points. Do you believe that there is a case or a demand for a deep water port in Scotland? I think that the difficulty with a deep water port is its ability to attract. Again, I used my previous experience in Teesport. My model, when I worked for PDD, was to look at being a direct call port. What happened, and what we are seeing happen now, particularly in the container sector, is that the vessels are getting ever bigger. You either build something that is oversized for the largest now, or you run the risk of marginalising yourself in a particular sector. From my perspective, and you might say this, what is needed in Scotland is some very strong feeder ports that can pick up from Hamburg and Rotterdam. If there could be a situation that there was an option in Scotland to have good facilities that would feed off Hamburg and Rotterdam and Felixdall, we move a huge amount of cargo from Felixdall into Grangemouth and vice versa. My answer to your question would be deep, but not massively deep. Stick for the feeder. It is a branch line as opposed to a main line if I can mix my metaphors. A good branch line would be better than a main line. For my perspective, I would agree. If you would copy the model of Teesport and you would put it somewhere on the east coast of Scotland, you would come very close to something that is suitable for the Scottish trade. It is a feeder port, it has container operations, it has rural facilities as well, and I think that would be suitable for Scotland as such. Mr Cackle. I do not think that we have a major view in terms of the ports. Obviously, if there is a benefit to the local community and our local customers and members in terms of reduced carbon, reduced travel time from the port to the end destination, that is obviously a positive thing all around. On my final question, how well in new views does EWGFERRY service operate? I did not get it. How well does the resouth ferry service to the mainland of Europe operate? There are different ways of looking at it. From a financial point of view, it is not very well. As you are aware, we have signed a memorandum of understanding with the Scottish Government and with Ford ports, where we looked primarily at the finances of the route. The route is loss making. From a DFTS perspective, if this situation continues, there is no further interest to continue operating this route purely from a financial point of view. We have tried to, in this memorandum of understanding with the Scottish Government and with Ford ports, find a solution for this. There are a number of different scenarios that are on the table at the moment. We are looking at purchasing a new built vessel, which would then be financed by the Scottish Government. This is one of the things that is on the table, and we are very interested and very eager to find a solution for this. If we just look at our own financial perspective, we at this point in time do not see a very long future for the route if it continues like this. We are a commercial company as well, and eventually our shareholders will also start asking questions why we operate a service that is continuously loss making and has been loss making since 2008 when we started operating this route. How can it be improved? Well, there are a couple of things that we agreed in the memorandum of understanding. Since it is a confidential document, I cannot really provide all the details since it is also a public hearing, of course. But there are a number of things that we agreed with Ford ports in terms of infrastructure adjustments, and those would need to take effect. Again, this is similar to the discussion that we had previously. They argued that one of the clauses in the MOU is that the board needs to give an approval for it, so obviously they look at this as a business case and they want a long-term commitment from ourselves and from the Scottish Government that the service will be there, which to a certain extent is understandable. At the same time, of course, this is what we agreed in the MOU and it is not materialised. This would allow enable the current vessel to have double stack containers on the weather deck, and this would basically add additional volume to the route. So that is one thing. The second thing is that we need to look at the more sustainable solution for the service and for the ferry itself. As you know, we are faced with some new software regulations that require us to burn a different type of fuel since the 1st of January this year, and this has added a lot of cost to our service. Our fuel is approximately 40 per cent of our cost base, and the additional cost or the change, the difference in bunker prices has moved the bunker from, let's say, 600 as it was, to 900. So our bunker prices increased with 50 per cent, and this is 40 per cent of our total cost price, and we have not necessarily been able to retrieve this from our customer base. So the finances that I described before are even more difficult at this point in time. So we need to find a solution, and within our fleet, in the rest of our network, we actually have a number of different solutions like a scrubber insulation that washes the sofa out of the emissions, and this could be a potential investment that we are also looking at, and this is one of the scenarios that we are also investigating together with Transport Scotland. Thank you, that is very helpful. Do any other witnesses wish to add any comments? I think I would. I would say that, from my perspective, I believe that the service that we offer needs a counter—there needs to be another offering. I kind of step back and look at it from a Scottish economic point of view of cargo in and cargo out. As I said earlier on, our clients are the same as DFDSs, where they look at an end-to-end solution, and within that they will have a price and a time, and I can only offer one price and one time. So I would rather have a strong competitor who can counterplay what we do so that the flows continue and prosper rather than wither on the vine because there is just one player. If I use the fourth port analogy, I do not think that us being the only player on the east coast in the Grangemouth is a good thing. That might be strange to say, but it is a fact. I can see our customers who actually—we are both customers of each other. We share terminals, we carry their cargo and they carry ours, so there is a need for that synergy. From our perspective, we would like to see a very strong competitor in Scotland, because it is good for all of us. Some of them have already been answered in the last few questions, but Mr Van Es, you talked about the impact of the seeker regulations. Mr Barker, do you have anything to add to the comments that Mr Van Es made? Exactly the same. The vessels that we operate are very similar to the DFDSs. We have seen that it hit us hard. Customers are basically saying, why? We do not want to pay it. We do not recognise it. We do not have to do this. It is a difficult battle. We took the simple view that it was not—it was not by our choice, it was imposed on us—granted for valid reasons. Nevertheless, I go back to my point of time and cost, and this significantly impacts on cost. People are looking at their freight routes and saying, well, hang on, if this is going to go up by X, and I can do it by trailer coming into Felix's door or Imingham and bringing it up by road, and it is cheaper, I will do it. In some ways, it is counterproductive, because it is not a clear tax for everybody. It is seen in isolation as a marine imposed tax. Would you drop an oil price of made up for it anyway? A little bit, but, again, it still has a significant impact on us. How would you see the situation developing over the months and years? At the moment, it is a battle. Try and be a bit happier than that, unless they are back. I know. At the moment, it is a difficult battle, because we are actually going to customers and saying, hey, guys, this is not us. We have nowhere to go with this, and it is a long road. I think one of the things that, in hindsight, I would have liked to have seen, and this is a personal view, not the view of Roonifede, maybe, is that if the sector came in, that there was already a mechanism to a basis of calculus of when it moves, because at the moment, we are getting compared to road, and they say, well, road diesel is cheaper, and they have the plat's average, or whatever. There is not that mechanism that was built in from the beginning. In hindsight, if it had been brought in with some method of measurement, either up or down, it would have been slightly better. Is there any discussion? Do you know what is going on with the European Union about? Not that we are aware of. Basically, it is in now. The genius is out the bottle, and we are having active, vigorous discussions with our customers, shall I say. Thanks very much, Mr Vanes. To answer your last question, I think it is actually that the European Union is not the right place to address this, because it is the IMO that has rectified this, and that means that all the member states of the IMO, the International Maritime Organization, need to rectify this. You will have countries like Mexico, for example, that also need to accept that we wouldn't implement this. The FDS has always taken a stance since 2009, actually, that this is there to come, and we have also at that point in time started making investigations in the scrubber installation, as I explained previously. We did some tests, and they have been very successful. This is one way of, let's say, counteracting some of the additional costs that you would have. It is a significant investment that you need to take. A scrubber installation on board a vessel costs something like between four and seven million euros, and, obviously, this eventually also needs to be paid back by the customer base as well. One way or another, it will add costs to the system. That being said, the sacred regulations are there, of course, for public health, and I think we can all agree that it is very valid that these have been imposed. There are a lot of things you can say about the sacred regulation, but the downside for this, let's say, the Scottish industry is such, is obviously that, with the trade on the continent, we're in a sort of a peripheral situation where, of course, the Scottish route is impacted the most. As I explained previously, the turnaround time is very short. The time at sea is very long, and it means that we basically, most of our time, burn fuel, and thereby we are hit the hardest of any of the short sea routes in Europe. That's unfortunately the consequence of these new regulations. Are there any other regulatory or policy obstacles to the free flow of sea freight into Scotland? My last question is, is there anything that other European countries do to encourage and sustain sea freight, which might be replicable in Scotland? In particular, to encourage freight into Scotland, as opposed to maybe the ports further down south? For me, it's engendring this port community approach, where there's a bit of cohesion, that the port isn't seen as... Again, I go back to my time at PD ports, and I find it quite amusing that I'd talked to local industries in and around the T's, and they'd say to me, are you based in the Kremlin? I used to have... My office was in the port office, which was an old Victorian port building, and it was red, so locally it was known as the Kremlin. That painted the picture to me of the relationship. We were an authority as opposed to a partner, and I think the big thing that we certainly try to do with all our terminals, and even our competitors in terminals, is engender that we have an answer to a certain set of problems, but we don't have them all. You might, so how do we get that to work? I think that's one thing that Derisyn may be a bit lacking in both ports. Okay, thank you, Mr Valleys. I think from an infrastructure point of view, there's obviously the things that we already previously discussed that you could be involved in. Direct funding or subsidising services is very difficult, and that's also what we notice ourselves now in the MOU that we've signed. We have applied for the minimum funding, and that's basically all that we can get. Obviously, there's good reasons for this. We wouldn't want to have unfair competition either, as compared to our counterparts in that operate, for example, on the T-Sport service. I think that if there's anything that the Scottish Government can do, it's on the infrastructure side and facilitate this for a number of, let's say, commercial companies to them operate services in out of Scotland. I explained it before that there is much more cargo flowing than what we jointly carry in and out of Scotland. There clearly is a case for other companies to operate services in and out of Scotland and use a maritime service rather than road, for example. If there's all that extra business that's out there, why is there not more of it coming to the east coast, for example? Unfortunately, it's cost-related. Like my colleague already explained, you have cost and you've got time. Time-wise, we can definitely compete with self-drives using the channel tunnel, but it is cost-related. We don't have to delve into the subject of Eastern European drivers driving all the way up to Scotland, but it is the case. At this point in time, it's very cheap to have a truck driving all the way from France to Scotland instead of using a maritime link anywhere. I think that as well as you've got the situation that there is a finite capacity on a marine solution and you do get into this chicken and egg. You say, well, if you put more capacity on wood, you get more cargo. The answer is, I'm not sure, because it's getting people to make that transition from, look, I need it there in six days. The difference between ours is quite obvious. If we've got something going into northern Germany and it misses the service the next time, it's a week from now. If a ship can hit that service, great. If he can't, he'll actually send it by truck to Immingham and put it on DFTS to go to Cuxhaven, because he gets back into his time frame. I think that's the balance. For me, if there was an option out of Scotland that gave more frequency and certainty, there would be a natural take-up just because it's easier. I don't think anyone thinks it's great fun to say, right, I'm going to load something in Glasgow and, by the way, I'm going to send it to Dover to make its transit into Europe. Nobody sets out with that view, I don't think, but, unfortunately, the fact is that that is their choice, and it's a cost-and-time calculation. Their option to choose other services is limited, equally as it is for us. Okay, all right, thanks for that. Thanks, convener. I could ask Mr Kirkhope. In your written submission, you pointed out that you've been successful in shifting freight from road to rail. You say there was over 10,000 tonnes of freight that have been moved off the road network, and you also flag up that that was partly due to the fact that you were able to access a mode shift or revenue support scheme. Was this an easy process for you to achieve? In respect of that traffic, yes, because that grant was actually administered through WH Malcolm Group. Malcolm Group, on our behalf, claimed back that MSRS, and we get the benefit of the rate. In terms of the direct discussion between ourselves and the Government, there wasn't the need for that, because Malcolm's were able to claim that themselves. You have made approaches to the Scottish Government to access this grant, for other developers, and you haven't been so successful. Could you maybe explain what's going on there? To clarify that point, we said in the written submission that there had been some issues. We were looking at moving some goods on to rail for in-Vaness traffic, so that's goods that are currently using the A9. We approached the Russell Group, who were looking again on our behalf, looking at the possibilities of moving some freight on to rail. Russell's actually made the approach on our behalf to the Scottish Government around MSRS, but also freight facilities grants at the time. I think that they came back to us and gave us the indication that the Scottish Government weren't minded to give further grants on that particular route, central belt to Invaness, so that's where that was to clarify. I know that we put that in our written submission, but it was actually through Russell's that we'd made that application, or the expression of interest. Okay, there was a no in the response that came back for that, but you would recommend the use of this particular scheme as a good one. I think so. Anything that can make rail economical, one thing we look at all the time, yes, we want to do the right thing. We'd like to remove goods and freight on to rail, but not at any expense. Anything that brings a playing field to a little bit more level in terms of road and rail has got to be welcomed, whether that be in terms of facilities. The definition of facilities perhaps is maybe slightly too narrow, because I don't think it allows us to invest in things like containers, specialised containers, or flatbed, skelly trailers, as we would call them. I think that the definition of facilities is maybe a little bit narrower than we would like. So you'd recommend us reviewing that area? I think that would be good. Okay. Sorry. I have a very quick supplementary question. I was a bit surprised to find that there wasn't any successful freight facility grant word since 2011, although there was for work boring grants. I can't understand a view that says that we don't want any more applications to take freight off-road on to rail, because clearly that's a huge problem on the A9. However, there's a huge problem that's identified in your report, which is there are height restrictions on that route. Two thirds of the route is single track. There may be some concerns there, but I still don't understand a view that says that there's a freight facility grant, but we don't want any more for this crucial route, where the A9 is congested with HD fees and requires to get a change round, not least for climate change. I totally agree. I mean, I don't know what the politics were around that, you know, that negative response. Again, as I say, it wasn't an approach that we made directly. I certainly think that there's an opportunity in that sort of Inverness area for not just the sort of concrete pad that maybe the Lexitesco are using, but some sort of facility that can maybe consolidate inbound orders from the highlands and obviously from central belt as well. I think there's opportunities now. We're very interested in consolidation centres, but I'm perhaps like James Durbin to take the glory for that. Thank you as a politician, obviously. I'm always happy to take the glory for anything that I'm not convinced that it was all my doing. But it's just that they just touching on what David said there that we had holliers in front of us who said that there was no issue with applying for the grants at all. That part of the reason that the money wasn't given out was that either people hadn't applied for them or they'd applied for them inappropriately, but they didn't seem to think that there was an issue in getting them. I can only take the feedback that we've had from from Russell's on that particular approach and that's what sort of led to us making that comment. So, you know, just on that one experience, I think, you know, and perhaps that's a lesson all round in terms of having direct contact with Scottish Government ourselves and, you know, a two-way communication in which, you know, I'm certainly welcome. Can I ask the shipping lines? Have you seen any evidence of freight grant schemes helping to shift freight away from road to rail or, indeed, to see freight? And if you have, how might these schemes be further developed? From our perspective, certainly into Scotland, we've not seen any, or we've not had any approaches. If I can give an example of something that we've done in England is we're now working with one of the major retailers who was traditionally bringing deep-sea exports into Felixdor, and their delivery was the north of England, and they were previously moving them from Felixdor by road up into the north-east. We now move them from Felixdor to Teesport by sea, and we're actually actively pushing our customers to consider, can we do the same for Grangemouth? Can we do the same for Eamingham? Now, that's driven really by dogginess on our part rather than any access to grants. So, I must admit, my ignorance to the availability of grants is huge. I know nothing on that front, certainly in Scotland. I know a little bit more about it. Within DFDS, we have successfully applied or received funding from the TNT programme, the European programme. This is in relation and connection with the scrubber installations that we've had on board a number of our vessels. The TNT programme obviously characterises itself by having infrastructural investments that are also required on both ends of the port. Ideally, you need to do this where you, in some sort of a way, also influence yourself in the port operation. So, we've successfully applied for that. We've obviously had the waterborne freight grant for the recite service in 2009, I believe, and we've now received the de minimis funding. In the MOU, we've also identified a marketing match fund that could be applied to the marketing spend that we have on the service. But other than that, I think that the majority of the funds available would come through the European institutions, such as the motorways of the seas in the past, the Marcapola programme, and of course now the TNT programme. This obviously requires that there is a corridor that is being identified and that we can apply our routes or routes going into Scotland within a certain corridor that is being identified by the European institutions. Potentially, do you think that they could affect your business and help trade access to these kinds of schemes? I think that anything that impacts on either of those positively will be taken up in a structured way, I think, positively. I think it's one of the important things that you've seen with the motorways of the seas is that a lot of routes that have been started with the motorways of the seas funding have actually seized operation after the funding run out. From our perspective, a ferry service that you would operate for a longer period than just the motorways of the seas funding. I don't think that it's a very healthy situation, but it's a personal point of view that we should subsidise ferry routes across Europe. Of course, if there's certain infrastructure investments that you need to do and undertake and you can achieve a modal shift, then of course it would be interesting to look at it, but I think in general ferry services need to be able to sustain itself also for the long term and not just for the funding period. It's certainly the model that we use right across Unifee to both in northern Europe and southern Europe. We'll base our decision on the service based on its sustainability as a standalone rather than, hey, we can have a crutch for six months and we'll hope and pray that we can win ourselves off that. But your experience, Mr Kirk, was that you did manage to, via the grant funding, to make a sustainable shift away from the road to rail that, in the longer run, you can do without any subsidy? I think that the subsidy that we received for the product that's coming from the Midlands to Central Belt Scotland helped to make the business case viable. Obviously, we're always looking at ways of improving the cost and efficiency of what we do. We were running on double-deck road trailers, so that bit of grant just made that difference to make the business case worthwhile. As I said, we knew that it wasn't going to be any cheaper to move product via rail. It's definitely the right thing to do from an environmental point of view. However, as a business, we can't afford to invest in unlimited amounts of money in moving to a different mode of transport because, at the end of the day, we need to be a successful business, first and foremost. However, MSRS, a bit that is claimed on our behalf by Malcolm's, has made the difference in terms of making that a viable operation or that it is too costly for us. Does that subsidise the transition, or is that an on-going subsidy? I believe that it's an on-going subsidy that's reflected in the container rate that we pay. I understand that 25 per cent of your freight in terms of the Scottish market is transported by rail from Durft in Daventry to Mossend. What would be the specific measures that you've talked about, the grant schemes that are available? What specific measures would you want the committee to recommend to the Scottish Government that would help to bring about a greater increase in that percentage? First of all, just to clarify, we're moving 25 per cent of what we call slow-moving grocery. We have a national distribution centre at Coventry and that supplies a percentage of our ambient grocery offer. We have local offer, which is some of its regional specific, which has held at our distribution centres locally, so to say, Newhouse. We have the slow-moving lines that are moved up from Coventry. 25 per cent of that slow-moving line is moved. Just to clarify that, it's not all product coming from England that 25 per cent refers to. I think that in terms of improving that or increasing that percentage, I think that one of the points that I've made previously around the seven-day railway, that is critical in terms of being able to make that next step at the current rates, because we do need to be able to move similar stores and similar volumes across a 24-7 period. That's important to us. I think that anything that can bring down the cost in terms of not just using that grant but also the ability to have longer trains, which means that the individual container cost is brought down. I must admit that we work closely with the WH Malcolm group. They have been trialling a longer rail container recently. We were the first food retailer to utilise that longer rail container. I know that they had to overcome a number of hurdles in terms of the Department for Transport in England, which hadn't allowed permission initially for the longer flat trailer that was required. That's now up and running. We've used that on a trial and that was successful. Those innovations are certainly of use and helpful because anything that can bring the unit cost down obviously then makes the case for rail more compelling. Longer trains also require investment in longer sidings and longer passing loops on the key routes east coast and presumably east coast because of the need to divert trains when lines are closed. We've given plenty of things to ask Network Rail when they appear before us. We'll move on. Mary, you've got some questions. Can I ask about efficiency and carbon emissions? The Scottish Government has set quite challenging targets for reducing emissions. Obviously, the freight industry has a significant role to play in that. Can you identify uses of technology, whether it's vehicles, transport information or logistics, that play a part in that and will make freight more sustainable and more emission friendly? From our point of view, we're really keen to that. One of the big things in terms of our ethics and our social goals is to improve carbon and general greenhouse gas emissions. We've made some big... Over the last... We've been measuring our environmental impact since 2006. We've made some significant improvements in, for example, fuel efficiency. Some of that has been around delivering the right stores from the right depots as part of our network review that we've been doing for the last several years. Vehicle technology also helps as well. We've invested in things like aerodynamic kits even for smaller vehicles. We've done trials and we've found that the smaller rigid vehicles are suited to certain types of aerodynamic kits, which have given us a payback on better fuel efficiency, which is good. We're also working on dynamic route scheduling. Previously, we would have had a bus stop-type route schedule for store deliveries. We've now moved that to a daily dynamic routing schedule that is optimised through software so that we can reduce mileage and optimise daily for our vehicle deliveries. I think that one of the things that I should mention... I know that you had Chris McRae from the FTA here, I think, in February. He mentioned the logistics carbon reduction scheme that the FTA runs. We've been members of that since last year. One of the things that we like to do is understand what the best practice in the industry is. We're very much involved in discussions with the LCRS in terms of measures that are being undertaken in the wider industry that we can look at, implying ourselves as well. I very much appreciate the view of the co-operative group on this, because, in the end, they are also the one that is driving reduced emissions to the transport companies, but also the shipping lines. It's high on that agenda as well, and it has been for a number of years already. Obviously, the impact that we have on emissions in Scotland is relatively limited as we spend not that much time in Scottish waters. At the same time, of course, and I mentioned it before already, if there is a real connection connecting our services directly to other real hubs in Scotland, then, of course, I will reduce emissions instead of using roads as the main transport mode. I think that, from our perspective, we've followed similar routes. As Steve mentioned, we've looked at our vessels to look at efficiencies, particularly with SACA, but on the other areas as well. We also spend quite a lot of time looking at our vessels, where we use the term eco-steam. Again, because we have the good old bus route, we can build in enough time so that wherever possible, we can eco-sale. We've also done quite a lot of work with customers. The container market traditionally is very dominated by the deep sea sector, and they basically have two weapons of choice. It's 20ft and 40ft. They haven't even gone metric, so it just shows the kind of—it's a 20ft or it's a 40ft. What we've done quite a lot of is, if we've introduced—not us exclusively, but the industry has introduced 45ft containers—we're working quite closely with carriers to say, well, can you move from particularly on intra-European movements, for example, being some of the drinks industry that we take from Scotland into, say, Russia or the Baltics. We've tried to introduce a 45ft to them, which gets more capacity in. Again, I think that we'd pick up Steve's point that if we could plug into either rail or road, which is more efficient, it would certainly be a first choice for us. We have a lot of the big manufacturers in Europe that indirectly and directly measure our carbon footprint as part of their supply chain. Someone like Mars, for example, wants to know about how we handle their cargo in our small link in the chain, so that they can give an overall carbon footprint from point of origin to point of destination. What are the strategies on the horizon that could be adapted or used by the freight industry to help to reduce emissions? The one in the marine is that people are looking at LNG vessels, but, again, as Steve has well put, it's a big investment. It's an investment for—I always draw the analogy that it's an investment not like buying a car, it's an investment like buying a house. You're in it for a much longer time. We've all got used to that. We've got a car and we can buy it on lease for three years and when it's finished we give it back. You don't do that with a house. An LNG investment in marines side is more akin to a house investment than a car investment to use a kind of analogy. Obviously, people are more aware of, is this route going to be for a much longer period? Are there any strategies or innovations in our neighbours abroad that are used, that we could use here that we're not taking advantage of? I think the only one that I would put is trying to maximise the—or make the best use of the options of modal shift, play the right suit of cards for the right type of movement. I think we could all do a little bit better at that than be—I still think there is a degree of adversity between sectors as opposed to collaboration. How you change that, I'm not quite sure. I've not got the answer for that one. Maybe one of the suggestions and maybe you've actually seen it when you visited the port of Rotterdam during the development and the investments that they've made in the second mass flock today and they've put a target up how the cargo that is arriving at the mass flock needs to be moved to the hinterland. I can't remember the percentage by heart but I think it's something like 35% of the cargo needs to be moved on rail. If there is a wish for the Scottish Government or someone to make a certain infrastructure investment, then my suggestion would also be to put certain targets on there in terms of how the cargo needs to move to the hinterland. Mr Kurt Cobb? I think that support, again, modal shift in terms of the percentage of reduction in emissions is a very small percentage for ourselves and we're always going to have to deliver to the likes of Lochilpedd. We're never going to have a rail option to get there and I think what we've done is worked on looking to maximise vehicle fill, so for example consolidating product within the vehicle, having multi-temperature vehicles now rather than sending separate grocery and fresh vehicles for example. We've been doing a lot of trials at the moment around trying to fit more products in the roll cages that we actually use to deliver to store without damaging products and without creating cages that are too heavy for drivers to actually wheel into stores and store staff to handle. There's quite a tight line in terms of making sure that things are safe but also maximising that vehicle fill so that we're not transporting fresh air for example. Just one other thing in terms of, I think it was a statistic that was mentioned from the Road Origin Association around the amount of empty running that there is certainly on return legs. It's up to 30 per cent, I think, as an industry figure and what we've started to do is actually we're now backhaul waste from our stores, segregated waste, so that we can actually recycle that at our distribution centre and we also do quite a lot of supplier backhauling for suppliers that are actually based out. So for example, Campbelltown cheese, we've backhauled for a number of years, it fills the vehicle on the way back as well as the way up. Can you identify any processes of integration or collaboration, whether it's at consolidation centres, sharing containers between operators and combining flows that would make freight transport more sustainable? How can different sectors within the industry be encouraged to do that more? I think, particularly from our sector as a container operator, it is a challenge, it is finding, again, we would probably be the enabler to a consolidation centre of coming to us and saying, right, we've consolidated this cube of cargo, can you please provide us with a container? It's an area that the container sector, we are primarily a full container movement. If we could plug into that kind of network, it would certainly be of interest to us. How that is driven is a much more difficult question, I think, but we would support it, because it's a sector that I can't even get into at the moment. To me, that's predominantly a road freight weapon of choice rather than anything for us. Is the main difficulty logistically organising it, or is the main difficulty resistance between organisations and companies within the sector? I think it's an understanding of. I use the analogy that if someone is thinking about moving something, whether it's this big or this big, the default is road, because we're all comfortable with it. Our second default has come a long way in that being rail, because for a while everyone had a blind spot to rail. The difficulty for particularly the container sector or the maritime sector is that we're an even further away blind spot, because everyone's idea of a voyage is that you go away for years and it's something that they don't correlate with. One of the things that we're trying to do, particularly as a uni feeder, is to break that down a little bit and get people, as we've proven from Felix Dodd to Teesport, we can move product from Felix Dodd to Teesport in the same time as it can be moved by road, but I'm not restricted. I don't need, for every container, I don't need another truck. I can get much more on one vessel. Education is probably not the right word, but it's an awareness of the options that marine is an option and that rail is an option. That's the challenge, certainly we find, of getting people to think a little bit, because the default is road. Did I see you think outside the box? Yes, exactly. I'll write that one now. I couldn't resist, I'm sorry. I think it's interesting, because on the continental side in Zebrugge where the other side of the road is, we have two of our main customers, ECS or C2C, and to excel that actually have a consolidation centre themselves in the port. They bring a lot of the supermarket products, for example, from all over Europe, or let's say France, Belgium, the Netherlands, consolidated in the port and then have a full box that is moving from Zebrugge into a site. As far as I'm aware, that similar infrastructure is not necessarily in place on the Scottish side, where you consolidate cargo into a certain consolidation point and thereby move full boxes from our site into Zebrugge. So there's an imbalance in the trade that we have, so we carry more empty units from Scotland to Belgium than the other way around, and that's unfortunate. Of course, if there's a consolidation point where these companies can jointly attract volumes to, then I think that would be beneficial. In contradiction, I do the exact opposite. I bring more empties in than I take, full out. I think there's certainly merits in looking at consolidation. I think it's probably about having an honest broker, perhaps, for the big retails, for example, so that, for example, if there was a shared service, whether it be a train or whether it be a facility, if, for example, Mr Tesco's volume increased by 50 per cent, what would the priority be? Whether that would be working with the British Retail Consortium or the Freight Transport Association or having someone like Malcolm's or Russell's who already deal with a number of different retailers, I don't know the solution to be fair, but certainly I think that there is merit in looking at it. We might well be forced to look at consolidation when we start looking at urban deliveries in London, for example. Some significant talk about reduced emissions in central London around diesel particulates and that sort of thing. It might be something that we're forced to look into or encouraged to look into further. I move on now and ask you about Government support, because it's been suggested to us in previous evidence that it's time the Government updated its freight policy. Is that a view that you share? If you do, what would you like to see changed in the policy? Who would like to start? It's a difficult question to answer, since I'm not in detail familiar with the policy itself, but, as I said before, I think that if there is a wish from the Scottish Government, if we just look at the DFS operation to continue this operation that I highlighted before, then it does require that there is a certain interest from the Scottish Government in either way. Like I said before, we don't require subsidies to run the service for a number of years. We want the service to be sustainable for the next 30 years. If we indeed look at purchasing a new vessel, anelangipropad vessel, this is an investment that you do for 30 years. I would urge—and I think that's also what we agreed in the MOU—that the Scottish Government, in its policy, makes a strategic decision to support ferry services in and out of Scotland. It's gaining the collaboration of people. One of the difficulties that we find is that everybody is driven by their own requirement of time and cost. If there was an option to even pull together the interested parties and think outside the box and say, hey, what if we could do that, that would go a long way of dragging people kicking in agreement to actually sit around a table like this and say, right, let's have a discussion about what's the art of the possible. We can influence all of us individually in a very, very small way, but once you start to get people to join up—again, I go back to the discussion that we had in Felix, where we're moving cargo for a retailer—we managed to get the retailer who is the cargo owner, his 3PL who was doing the road transport and ourselves, and we actually got an agreement from all three of us that the way to do it was better, which to me was a great step forward because actually the 3PL was giving away work, but they still gained because we actually in effect worked for them. So it was breaking down those traditional barriers of, well, I'm not going to speak to you because you're actually my competitor or I perceive you as a competitor. I think if there's something that any government or anybody could do is to pull those people together and actually get them to even just agree so that at the end of the thinking, say, you know what, we've actually, we can achieve nothing or we've got five points we can have a look at, then it would—and I think you'd find the industries are all willing. I think it's just that enabler and I think the honest broker is the right thing because if I do it or DFTF do it, we're going to perceive that, well, why is he doing it? Because he'll want to know what I'm—so there's immediately this—whereas if there is an honest broker that says I'm collecting information that says if I put it all together, it makes a different picture that makes more sense. Would you accept that picture? The answer would probably—yeah—I probably would look at it. The next question, Mr Barker, and I'll come to you in a moment, Mr Kirk-Hope. It almost seems as if the time is now right for the Government to introduce a strategy, a freight strategy, to pull all those strands together, to be more focused, to set long-term goals, to get everyone together. Is that a view that you would share? I would. I think it is—the strange thing about the logistics industry is it's huge, but actually a lot of people know a lot of people, so it's very—it's a contradiction in some ways. And I think to get—to have a strategy that people can—terus say—if we could see a strategy from anybody that said, within this period of time, we're going to go from there to there, I actually would use that as a weapon internally to my board to say, I think we should put a bigger vessel on the Grangemouth service because this is a strategy, this is going to happen, and we think we can believe in it. I think it gives—it suddenly puts a stake in the ground, and it would give people a direction. We can all base—mathematics is a wonderful thing that it's absolute, but you can make it say what you want. But if there's something there that you said, right, there's the strategy, and it says it's going to go—the freight tons are going to go from there to there in x years, you could buy into it and use it as a basis for our commercial discussions, because I don't think we can drive those. None of us—well, certainly us to—we're not cargo owners, as I will call it. We're purely a service. We're unfortunately the petrol that nobody wants to buy, but they have to because it makes the thing work. Mr Kurt Cope. I think that I would agree that if that forum had the right stakeholders in it, then I think that that would be really useful in terms of understanding a joined-up approach going forward. Quite often, some of the communities we're serving in Scotland, it isn't about the competition because we're actually quite often the only store either on an island or in a particular town, so it's not always about being afraid of what Tesco is doing or the other retailers. So we'd certainly support any strategy that brings that strategy together in terms of the overall Scottish strategy and framework. I can only agree. I think that if there is an overall strategy where you say that the cargo going in and out of Scotland needs to travel in a certain way, reducing carbon emissions, for example, then I think it will also allow commercial parties to also buy in and present this to their board and say, okay, this is where the Scottish Government wants to be in 10 or 15 or 20 years. This will also enable us to, like I mentioned before, if you make a business case, you put in certain assumptions. If we can derive those assumptions from the strategy that the government is forming, then it will definitely reduce the risk that is associated to a certain business case, so it will only allow private companies to be more interested in being involved in the strategy that the government is going forward. Are you aware of any infrastructure schemes in Europe that highlights the best use of government intervention and funding that could transfer to Scotland? You have the TNT programme that I mentioned before, which is a European-wide programme, and I believe that the call has been oversubscribed with, I don't know, how many billion euros, so it seems that that is a suitable measure, but I think Scotland actually falls within that or could apply within that. Okay, Mr Barker. And other than the TNT one, no. I mean, the more provocative one is obviously I work for a Danish organisation and the Danish government look very favourable on shipping companies in lots of ways, but that's a different kind of, you know, that's a much wider perspective, but I think it's different, you know, different regimes look at how they drive their commerce in different ways, you know. We see, I mean, it's a slightly flawed one at the moment, but obviously the Russian economy was very supportive for a while of the shipping sector, you know, and that's kind of gone a bit awry at the moment due to a certain gentleman's decisions. Yes. Mr Kurt Cobb? No, I mean, I've been asked to contribute to a few EU sort of work streams in terms of, I think, the last one I was talking to were the West Flows project, who were looking at port locations and sustainable logistics. But, you know, and I think that the organisations do feed into those sort of workflows and I know Cestrans are responsible for looking after local transport in Edinburgh and the Netherlands. They were heavily involved in that project as well. Okay, thank you. Thank you, convener. Thank you, many. Is there a take-home message that you would like to leave us with today? Is there anything specific that you would want our committee to ask of the Government? If I can start on that one. I think a number of these things have been discussed already, and for me there's three key takeaways. One is, of course, we discussed a port situation, and I think there needs to be a clear view from the Government on how four ports can operate, let's say, a number of ports on the east coast of Scotland without any firm competition. The other one for us is that there should be a look at multimodal transport and potential infrastructure investments in that. Thirdly, and this will be related to the MOU that we signed with Transport Scotland and with the Scottish Government, eventually we will come to a conclusion with Transport Scotland and then we will come with a joint proposal as regards the future of the service. My request would obviously be that whatever your takeaway from these sessions is, that that will also be evaluated together so that there is a sustainable future for this route as well. Okay, thank you for giving us three and for being so concise. Mr Kirk Hope. I think just one thing to say is that logistics is sort of the one area that's probably least visible to our customers, but it's probably the lifeblood of actually getting the products on to the shelf available for customers. Anything that highlights the importance of that and I think that this committee is actually really good that this committee is actually discussing this whole topic because I think it's vital that it's brought to the front, so that's really welcomed. I think in terms of just making sure that we've got robust connections in terms of looking at those key trunk routes, the A9, the A83, I think in terms of weatherproofing those and making sure that they're fit for purpose going forwards, I think that's one other sort of key message. Just one other thing, I'd like to just open up an invitation to the committee if they would like to come and visit our multi-temperature site out at Newhouse, they'd be more than welcome. Okay, thank you for that invitation. Mr Barker. I think one thing is not to lose sight that Scotland needs options in terms of maritime connections, it would not be in my view a major step forward if DFTS stepped out of the market, it wouldn't help me, I would not gain from it. I think an observation adding to Steen's point about fourth ports, we currently service the ports of Tyne and Tees who are 50 miles apart and they both do reasonably well, so don't be frightened of the future, don't fear competition and I think the point of, I've actually, through maybe afraid strategy, making Scotland an easy and progressive place to deal with. I think that I certainly get my, I had the most questions from my colleagues in the rest of Unifeida when the independence vote was on because all of a sudden everyone kind of understood that Scotland was a separate place and it had a different dynamic. I mean they were even asking me as, you know, my Danish colleagues were saying well when we go to Grangemouth will I need my passport and things like that, so it actually heightened people's view that there is another economy and I think to actually stake a claim to that economy and say this is what we want to do with it, would not be a bad thing. It has a general comment really. Well thank you very much. Are there any final questions from members this morning? In that case can I thank each of our witnesses for having made their experience and expertise available to our committee this morning, we're extremely grateful to you. That now closes our evidence session and we'll now pause to allow the witnesses to leave the room. Thank you.