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Scotland's Rail Freight Strategy – Consultation Response of The Scotland’s Rail Freight Strategy – Consultation response of the Scotch Whisky Association 21st January 2016 Introduction The Scotch Whisky Association1 welcomes this consultation on the development of a refreshed rail freight strategy for Scotland. Scotch Whisky is Scotland’s biggest manufactured export. Each year £4bn of Scotch Whisky is exported to 200 markets around the World. This equates to around 40 bottles every second. In addition to transporting bottles to market, the industry requires large volumes of raw materials, packaging goods, by-products, fuel and other materials to be transported to and from the production facilities in Scotland. Freight transport is therefore crucial to the success of the Scotch Whisky industry. The industry requires transport to meet strict health and safety standards, ensure the product quality is maintained, is secure and compliant with HM Revenue & Customs regulations (Scotch is an excisable product and the movement is tightly controlled), is reliable and is not dependent on long-term government finance. The strategy aims to increase the use of rail freight. However, it is not clear that the modal shift the Strategy seeks to encourage is from road to rail. This should be clarified. Most exports of Scotch Whisky leave Scotland either by rail or by ship. It is not clear how the rail freight strategy fits within a broader freight strategy for Scotland which includes all modes of transport. This is important as all export movements of Scotch Whisky (and presumably many other goods) involve at least one road journey to either the rail terminal or the port. There are obvious benefits of establishing direct ship-to-rail connections at Scotland’s two main container ports (Greenock and Grangemouth). We believe that a broader freight strategy should be developed to address the issues affecting each mode type and how they interact with each other. A good starting point would be the report of the Scottish Parliament’s Infrastructure and Capital Investment Committee’s inquiry into freight transport in Scotland. The use of rail 1. Exports Bottled Scotch Whisky accounts for over 80% of all exports. Most of this is moved in intermodal shipping containers. Generally speaking, rail is well suited for transporting that type of freight. The industry already makes good use of the rail and shipping services from Scotland. For example over 95%2 of exports to the USA 1 The Scotch Whisky Association (SWA) is the trade association representing 95% of the Scotch Whisky industry. SWA members are distillers, blenders, bottlers and those engaged in the wholesale and export trade in Scotch Whisky. 2 Scotch Whisky Industry Environmental Strategy: 2012 distribution data 1 left Scotland on either feeder services from Scottish ports or Anglo-Scottish rail services to connect with deep sea vessels in either England or the near continent. 29%3 of movements to France – Scotch Whisky’s largest export market - used rail to reach the port of departure from the UK. That might increase following the opening of the rail terminal at Teesport. We may also see the increased use of the Channel Tunnel following the introduction of connecting rail freight services from Scotland. Paragraph 52 of the consultation paper suggests that improvements to the Highland Mainline (Perth to Inverness) and the East Coast Mainline to Aberdeen may increase rail’s market share of containerised exports of Highland exports such as Scotch Whisky. However, the vast majority of Scotch is actually exported from the blending and bottling facilities located in the Central belt and not from the distilleries. Improving those lines will therefore not lead to a noticeable increase in exports of Scotch Whisky from, for example, Speyside. 2. Internal movements Containerised shipments of bottled Scotch to the export markets are one type movement. The other, perhaps less well defined, type involves movements of goods to and from the industry’s production facilities (e.g. distilleries, maturation warehousing sites, cooperages, and blending and bottling operations). For example, movements of raw materials and casks to distilleries and warehousing sites, packaging materials to bottling sites, fuel (e.g. oil or biomass) to production sites and movements of spirit within Scotland (e.g. newly distilled spirit from distilleries to maturation sites and mature spirit (Scotch Whisky) to blending and bottling sites). Currently all of these goods are moved by road. The consultation refers to the Lifting the Spirit trial which began in September 2013 to test the feasibility of transporting bulk spirit from distilleries and warehouses in Speyside to the central belt by rail. There was a real willingness by distillers to be involved in the collaborative demonstration project. A number of challenges were revealed during the trial – some of which will require strong collaboration to overcome in the long term for modal shift to take place. To help, the industry has presented its broad requirements to the rail freight industry. The Association’s paper – Road to rail modal shift: Distillers’ requirements – ‘criteria for success - for rail freight – is attached. Consultation questions 1. What are your views on the vision for rail freight in Scotland? We agree with the Strategy’s broad vision although as mentioned earlier, we believe that there should be an over-arching vision or strategy for freight transport which includes all modes and how they interact. 2. What are your views on the market opportunities identified in the document? The industry is working hard to improve access to markets around the world. Exports of Scotch Whisky have increased by almost 30% over the last 10 years. We envisage further growth. There is therefore scope for increased volumes of containers to be 3 Scotch Whisky Industry Environmental Strategy: 2012 distribution data 2 transported by rail, either to the port of departure or more directly through the Channel Tunnel. There is scope for rail to play a part in the ‘internal movements’ for example transporting supplies of glass bottles from glass manufacturers and possibly cereals as well as bulk spirits (which were part of the Lifting the Spirit trial). We are keen to work with the rail industry to investigate opportunities for modal shift in this area. 3. What are the 3 biggest opportunities for growth in the rail freight sector in Scotland? Anglo-Scottish intermodal (containerised) freight perhaps presents the biggest opportunity. For the Scotch Whisky industry, rail may play a bigger role in transporting finished product to market by connecting to ports in England or via the Channel Tunnel. One opportunity for the rail freight industry might be to investigate further the practicality of putting on additional Anglo-Scottish services during the industry’s busiest exporting period (September to December). Innovation might create an opportunity for growth. Low-bed waggons which allow ‘high-cube’ shipping containers to travel on lower gauge lines and possibly ‘rolling roads’ which allow HGVs to be driven onto specialised rail waggons. This might allow cereals in bulk carriers and spirit in road tankers to be transported. 4. What are the 3 biggest challenges to growth in the sector? Investment is possibly the biggest challenge. Some rail operators have identified the need to invest in rail terminals in order to increase efficiency and capacity. Investment is also needed across the network. Routes need to be gauge cleared to allow rail to handle containerised traffic. Although work is progressing on gauge clearing the East Coast Mainline, flooding (and closure) of the West Coast Mainline in December 2015 and January 2016 (possibly throughout February too) in northern England and southern Scotland highlighted the fragility of Scotland’s rail freight connectivity to England. We understand that the success of gauge enhancements on the East Coast Mainline for intermodal rail freight to/from Scotland is dependent upon gauge clearance work that would be achieved by electrifying the Edinburgh South Suburban Line, which is used as a diversion route to avoid Waverley which has restricted train paths and routes for rail freight. In terms of the internal movements, the challenges identified during the Lifting the Spirit trial will need to be addressed if rail is to play a part in the industry’s internal movements. 5. What are your views on the role of the Scottish Government, as outlined in the document? The Scottish Government and Transport Scotland has a role to play in providing funding to enable the industry to invest but also to act as a central body in promoting rail freight and possibly coordinating action. The Strategy identifies a need for the rail freight industry to improve the way it communicates its offering to business and how business can access information about rail freight services. 3 6. What are your views on the steps necessary to create a stable environment for growth? No comment. 7. Should targets be set in the final strategy and if so, what areas should these cover? We are not convinced that setting targets in this area will be necessary. Targets will require accountability and may drive policy decisions with unintended consequences. For example, a policy which seeks to increase rail freight volumes might lead to a reduction in the use of short-sea feeder services from Scottish ports. This may jeopardise the future of some feeder services and ultimately delay investment in Scotland’s container ports. 8. What are your views on the actions identified in the document and who should take the lead role in delivering these? No comment. 9. Any other views? No comment. The Scotch Whisky Association 21st January 2016 4 Road to rail modal shift: Distillers’ requirements – ‘criteria for success’ 1 April 2015 Introduction Scotch Whisky industry investment and subsequent increases in spirit production is driving the need for ever better and flexible modes of transport for all the industry’s input needs, by-products and spirit (bulk and cased goods).
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