Research and Analysis of Options for Ferry Freight Fares
8 Conclusions
8.1 Conclusions
8.1.1 This research study has provided a comprehensive analysis of the current approach to ferry freight fare setting in Scotland, both for standard commercial vehicles and for all other classes of freight.
8.1.2 It is clear from the research that the current freight charging regimes, both on Transport Scotland funded services and local authority services, are based largely on historical precedent which has been evolved over time to reflect a series of policy decisions. Whilst there are broad similarities within and between networks, there are also a wide range of inconsistencies in the means by which freight is charged and the surcharges, discounts and policy measures applied to each network.
8.1.3 The issue of inconsistency between islands and networks was recognised in the Transport Scotland's Ferries Plan 2013-2022. The Ferries Plan committed to the review and development of an overarching policy for freight fares which will:
- deliver a new fare structure that is simple, transparent and does not advantage one part of the network over any other part; and
- balance the wellbeing of communities against the public sector cost.
8.1.4 This research was focussed specifically on the Transport Scotland tendered ferry networks. It developed and consulted on a range of network wide fares systems which could be considered for implementation going forward. There was a general consensus amongst stakeholders that:
- the lane metre or lane metre equivalent should be used as the basis of the charge for all freight carried; and
- fares should bear at least some relationship to distance, with a view that the £/mile fare should decline with distance travelled.
8.1.5 This above also ties in with the assessment criteria in that it would offer consistency, transparency etc.
8.1.6 The research has analysed potential fares options and has consulted on them. Therefore, three options will be taken forward for further consideration and these are options 3, 5 and 7.
8.1.7 The following table summarises the key issues for each of the three options based on the quantification analysis exercise and shows the routes that would be more adversely affected by each of these options.
| Option | Pros | Cons | Routes with most Adverse Impact |
|---|---|---|---|
| Option 3: Fixed Charge (assumed at £50) plus rate per lane metre per mile based on distance threshold |
1) Limits the impact of fares changes on long routes. 2) Includes a fixed cost element aimed at cost recovery. 3) Maintains link between cost and distance |
1) Long routes suffer disproportionately large increases under the example formula. 2) Particularly large increases for the Northern Isles |
1) Lerwick - Aberdeen 2) Kirkwall - Aberdeen |
| Option 5: Constant rate per lane metre per mile within distance band |
1) Relatively small fare changes vis a vis the current situation. 2) Maintains a link between cost and distance and minimises the overall change in fares |
1) Defining distance bands would be challenging and could disadvantage one community over another 2) Lacks a fixed cost element aimed at cost recovery. |
1) Oban - Castlebay / Lochboisdale 2) Uig - Tarbert / Lochmaddy |
| Option 7: Flat Fare per lane metre within distance band |
1) Relatively small fare changes vis a vis the current situation. 2) Maintains a link between cost and distance and minimises the overall change in fares. |
1) Defining distance bands would be challenging and could disadvantage one community over another 2) Lacks a fixed cost element aimed at cost recovery. |
1) Lerwick - Kirkwall 2) Kirkwall - Aberdeen |
8.1.8 The research also considered a range of issues pertaining to surcharges, discounts and wider policy questions. It found that there was no appetite amongst stakeholders for any major changes to the current surcharging regimes; commercial fuel surcharges; or increased fares to reflect network improvements.
8.1.9 The debate around issues such as drop trailer handling charges, the definition of a CV, fuel related surcharges and discounts was more nuanced and there was an acknowledgement amongst stakeholders that further research is required on how each of these areas links impacts on individual islands, economic sectors and businesses.