Freight

The Cabinet Secretary for Transport has announced that procurement is progressing for two new freight flex vessels to serve the Aberdeen to Kirkwall/Lerwick route. A ‘freight flex’ option will bring improved freight capacity, higher operating speed and the flexibility to provide space for up to 200 passengers to travel at peak times.

Work with hauliers and businesses to plan commercial traffic volumes

Around 300 respondents answered Question 13, although a number to simply note that they did not know how the NIFS contract operator could improve how it works with hauliers and businesses to more effectively plan commercial traffic volumes.

Overall, the most frequently made comment was that the focus should be on keeping freight off passenger vessels and sailings. This was a particular concern for Shetland residents. Reflecting issues raised at the next question (in relation to managing or reducing demand on routes which experience high freight volumes), respondents pointed to the need for extra freight services or larger vessels.

A number of organisational respondents provided more detailed comments on this issue, including noting the importance of freight services to the local economy and to certain key industries in particular. For example, there was reference to the growing scale of freight and personnel requirements for renewable energy developments and the importance of seafood exports to the economy. It was also noted that freight services carry vital supplies, such as food and fuel, to the islands.

A ‘Local authority or transport partnership’ respondent suggested that the NIFS4 contract should secure freight’s place at the heart of lifeline services. They referred to protecting the collaborative approach already established, ensuring transparent allocation, and planning proactively for future capacity through freight flex vessels and supporting infrastructure.

Respondents also commented on current arrangements, both in terms of the day-to-day management of capacity and joint working and consultation arrangements.

Event Feedback

Feedback provided by attendees at the Stromness community event included:

“Difficulties for managing large volumes of freight - particularly for Shetland which impacts on Orkney service.”

Feedback from the Lerwick included:

“Freight takes priority over passengers.”

“Hire extra freight boats during summer.”

Management of current capacity

There were mixed reports regarding how well current capacity is managed, with a ‘Freight company or representative body’ respondent noting that experience varies depending on a number of factors, including what freight commodity is being moved (dangerous goods or not), how often the individual business uses the service, and how long the vehicle and driver will need to remain on the island destination.

There was also reference to hauliers in Orkney having previously raised concerns that the freight from Orkney bound for Aberdeen is prioritised below freight from Shetland. The ‘Local authority or transport partnership’ respondent highlighting this issue went on to comment that previous contracts have allocated a freight allowance for Shetland but that, with no similar arrangement for Orkney, live fish from Orkney can be removed from the reservation list in favour of live fish from Shetland for example. They also reported that hauliers have experienced problems with receiving empty trailers back from Aberdeen due to capacity issues on board the vessels.

In terms of how current capacity should be managed going forward, suggestions included:

• having a member of staff dedicated specifically to dealing with freight issues, which could help address any disparity in service and support greater collaboration.
• providing clear and timely channels for hauliers to raise issues and receive responses.
• improving coordination with hauliers through forecasting tools and reservation data sharing.
• developing a freight prioritisation framework during capacity-constrained periods.
• deploying larger vessels where demand justifies it.
• making more efficient or dynamic use of deck space on board to maximise available capacity.
• making certain that sector empty trailers and tankers are returned to base expeditiously to ensure seamless flow of traffic.

In terms of the NIFS4 contract, there was reference to:

• retaining the freight link between Shetland/Orkney/Shetland.
• the freight from both Orkney and Shetland being treated in the same manner and any allocation in the Contract being the same for both islands.
• the current contract requirement to retain 18 spaces for time-sensitive traffic (seafood south from the northern isles) continuing to feature.

Joint working and consultation

Other comments focused on how the NIFS4 operator can work with hauliers and business in relation to overall planning of commercial traffic volumes.

A ‘Freight operator or their representative bodies’ respondent was amongst those commenting that the current operator does a very good job in relation to working with hauliers and businesses to plan commercial traffic volumes. Another commented that, while there is always scope for improvement, there are existing mechanisms through which trade bodies, hauliers, the ferry operator and Transport Scotland can discuss important issues. They went on to note the importance of this constructive dialogue continuing under NIFS4.

In terms of specific areas of joint working where there could be potential for improvement (whether through NIFS4 or otherwise), there was reference to:

• a closer working relationship between the operator and ports helping to optimise scheduling and berth management.
• encouraging the sharing of information on current and future industry activity and anticipated freight volumes over the short, medium and long terms.

There was also a call for the perspectives of industry or individual exporters to be central to Transport Scotland’s considerations in designing the next contract, with specific suggestions including that Transport Scotland should establish a formal mechanism for coordination with the Net-Zero Directorates, enabling comprehensive policy planning that incorporates the needs of projects, such as onshore and offshore wind farms.

Managing demand on routes with high freight volumes

Around 360 respondents answered Question 14, albeit that the issues raised tended to echo those from the previous question. The more frequently made comments included that extra freight services should be provided, especially during peak periods or that larger vessels are required.

Reflecting this focus, a ‘Freight company or representative body’ respondent questioned the reference to reducing demand. They went on to note that the transport of freight is a lifeline service and that the focus needs to be on meeting that demand, recognising that future demands will likely increase. They made specific reference to Shetland entering a new era of industrial development. A ‘Public body’ respondent commented that, although many of the major development projects in the Northern Isles will utilise charter vessels due to their scale, the accumulative impact of the additional freight requirements is nevertheless expected to place further demand on freight capacity.

Current arrangements

A number of organisational respondents made specific suggestions relating to managing freight volumes in the shorter term (essentially prior to the deployment of new vessels – discussed further below). These included considering whether additional services need to be added to the schedule and specifically:

• contracting additional freight tonnage for the Aberdeen-Lerwick route.
• introducing an ‘out of hours’ service on the Stromness route.

Other suggestions included:

• using data analysis and forecasting techniques to predict peak demand periods and adjust ferry schedules accordingly.
• considering off-peak freight pricing incentives to spread demand.
• exploring cooperative logistics models to consolidate loads across smaller hauliers.

As at the previous question, there were calls for collaboration, including working with the logistics sector, freight companies, industry associations, and other stakeholders to develop and implement strategies for managing demand on ferry routes.

Longer term and Freight Flex

There was strong support for the introduction of additional freight and passenger capacity when the two Freight Flex vessels come into service in 2029. Associated comments included that their introduction represents a significant opportunity to build on the strong joint-working foundation and that current operator has with freight users, with other points including that the dual capability they offer will or should:

• provide seasonal flexibility by increasing capacity to meet demand, whether it be from freight, resident travel or from visitors/ tourists, during peak points.
• strengthen resilience during refits and disruption.

However, it was seen as vital that the “flex” is managed transparently and fairly, so that freight and passenger needs are given equal weight and businesses and industries have confidence that their needs will remain central in how the new vessels are deployed.

Finally, a ‘Public body’ respondent noted their understanding that no analysis has been carried out to determine that the new freight flex vessels are compatible with the infrastructure at Hatston. They suggested that it is important that this is carried out in simulation, consistent with the testing at Aberdeen Harbour.

Event Feedback

Feedback provided by attendees at the Lerwick community event included:

“Hopefully this new freight ship due in 2029 will help with current bottlenecks at certain times of year.”

“The flexibility promised with the proposed freight vessels might not be as flexible as the public envisages - we were told at a previous exhibition that more crew are required if 12+ passengers are carried - at what point will this be activated.”

Other recommendations for improving freight services

Around 170 respondents answered Question 15, with the most frequently made points again that extra freight services should be provided, especially during peak periods or that larger vessels are required.

Additional issues raised, primarily by one of the small number of organisational respondents answering this question, are set out in turn below.

Impact of constrained infrastructure

It was reported that the current transport infrastructure of the Northern Isles is already under strain, with an ‘Other business or representative body’ respondent for the renewable energy industry commenting that their members are reporting:

• activity being forced to bypass ports like Lerwick and sail to mainland UK or European ports instead; they noted that this redirection is not only inefficient but also limits opportunities for the local supply chain.
• passenger constraints, with many regularly experiencing difficulties when booking travel for essential workers; they went on to note that shortfall leads to significant project delays, increased costs and presents a barrier to those seeking employment opportunities in the Northern Isles.

This respondent was one of those calling for additional capacity to meet demand and noting that key industries, such as renewable energy, cannot wait until the expected new cargo vessels are brought into service.

Similarly, a ‘Local authority or transport partnership’ respondent highlighted a number of large-scale projects being taken forward on Orkney, such as the SSEN power station, proposed Scapa Deep Water Quay, pier infrastructure upgrades and wind turbine projects. They also noted that it is key that the ferry operator can adapt by providing additional frequency across the networks, including so as not to constrain tourism and choice for the community.

There was also a concern that building new vessels to fit a particular port is a flawed policy and there was a call to investigate requirements for likely infrastructure needs, together with the relevant port authorities and others, to ensure the service supports the isles as it should.

Freight charging processes

Around 130 respondents answered Question 16. The most frequent comment was that freight charges should be lower, with a number of ‘Individual’ respondents commenting on the impact of freight charges on the cost of goods and services on which they rely.

A small number of organisational respondents noted that freight charging on NIFS services is a matter of real importance to the industries and economy of the islands, and there were calls for the Scottish Government to complete the review of freight fares. It was reported that industry has lived with the threat of reviewing freight fares for several years and that this causes anxiety for isles’ businesses, a loss of confidence for the future and a curtailment of investment. If the intention is to review fares, it was suggested that industry involvement will be critical and that the focus should be on:

• providing businesses with the clarity which is required to operate with confidence, profitability and efficiency.
• ensuring there is transparency, fairness and flexibility.
• the wider operating environment for islands businesses over the past few years, which has seen them endure increased costs amid inflationary pressures.

The ‘Public body’ respondent making this last point commented that transport is a critical economic enabler and this is especially true of the NIFS services. They cautioned against any measures that would increase the cost of doing business on the islands.

The cost of working and doing business across Orkney and Shetland was a particular concern for a ‘Farming or land management organisation’ respondent speaking for crofters and farmers. They reported that their members find current freight costs to be excessive and unsustainable, placing considerable financial strain on their businesses. They went on to note that the ferries are a lifeline service for farmers and crofters in Orkney and Shetland, enabling them to supply high-quality produce to the UK food industry but that, unfortunately, this comes at a significant cost. They called on Transport Scotland to reconsider the current concession and pricing structure to ensure that island crofters and farmers are treated on par with their mainland counterparts by lightening the financial strain set by freight costs.