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PURPOSE of REPORT to Consider the Outcomes of a Study Commissioned Into the Socioeconomic Impact of Capacity Constrained Ferry Services to and from the Outer Hebrides

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PURPOSE of REPORT to Consider the Outcomes of a Study Commissioned Into the Socioeconomic Impact of Capacity Constrained Ferry Services to and from the Outer Hebrides TRANSPORTATION AND INFRASTRUCTURE COMMITTEE 21 FEBRUARY 2018 OUTER HEBRIDES FERRY SERVICES – CAPACITY CONSTRAINTS Joint report by Directors of Technical Services and Development PURPOSE OF REPORT To consider the outcomes of a Study commissioned into the socioeconomic impact of capacity constrained ferry services to and from the Outer Hebrides. COMPETENCE 1.1 There are no legal, financial, equalities or other constraints to the recommendations being implemented. SUMMARY 2.1 The provision of lifeline ferry services to and from the Outer Hebrides is central to the sustainability and well being of island communities. The economic and social potential of the islands can only be fully realised when reliable and sufficient transport links are in place between the islands and the mainland. 2.2 While the Comhairle welcomes the support of the Scottish Government in terms of subsidised ferry services and the sustained availability of Road Equivalent Tariff, there are significant capacity issues during peak periods which are constraining socioeconomic development. These capacity issues have been reported by travellers, the local Tourism sector and hauliers and, while some carrying statistics are available from ferry operator, Caledonian MacBrayne, it has been difficult to prove the actual socioeconomic impact of a constrained ferry service. 2.3 In order to accurately review the current impact of a constrained ferry service and its growing impact going forward, an Economist was commissioned to carry out a study into ferry capacities across the Outer Hebrides. 2.4 The resultant Study indicates that, over the last four years, vehicle carryings have increased by 25% while summer passenger numbers have increased by 21%. The key pinch point is the Ullapool – Stornoway route with the new MV Loch Seaforth already operating at, or near, maximum capacity in July and August with an average capacity of 88% from June to September. The report projects growth in demand of between 3% and 9% per annum going forward and this could double visitor numbers by 2022. This level of growth simply cannot be accommodated by the MV Loch Seaforth but could mean an increase of visitor spend by between £4.6m (at 3% growth rate) and £7.9m (at 9% growth rate), leading to an annual employment impact of between 84 FTE and 144 FTE. RECOMMENDATIONS 3.1 It is recommended that the Comhairle: (a) note the content of the Outer Hebrides Ferry Capacity Study; and (b) agree to engage with the Scottish Government to seek the provision of additional ferry capacity, proportionate to the growing demand evidenced by the Study report. Contact Officer: John Cunningham Strategy Manager 211397 [email protected] Appendix: 1. Outer Hebrides Ferry Capacity Draft Study Report 2. Outer Hebrides Ferry Capacity Study Key Findings Background Papers: None BACKGROUND 4.1 The Comhairle has been aware, for some time, of capacity constraints on lifeline island ferry routes. As far back as April 2014, the Comhairle warned that the new £45m MV Loch Seaforth, introduced to the Ullapool – Stornoway route to alleviate emerging demand constraints, would not provide sufficient additional capacity to meet that growing demand. 4.2 The Comhairle has been concerned, particularly, about the impact that a constrained ferry service is having, and will continue to have, on the socioeconomic development of the islands. Tourism interests have long made the case that visitor spend in the islands is being constrained by an inadequate ferry service while hauliers have pointed out that summer ferries are running at capacity during a time of relatively slow economic activity. 4.3 In an effort to ‘bottom out’ the actual socioeconomic impact of constrained ferry services, using actual carrying statistics supplied by ferry operator Caledonian MacBrayne, the Comhairle commissioned a respected Economist to review the available data and to undertake some trend analysis. The Outer Hebrides Ferry Capacity Study report is now to hand and its findings are the subject of this report. OUTER HEBRIDES FERRY CAPACITY STUDY 5.1 The Study considered carrying statistics over the period October 2012 to September 2017. Figures were analysed for the Outer Hebrides as a whole and the Ullapool – Stornoway route, the key pinch point in the island network. 5.2 Over the study period, total passenger numbers increased by 17.5% from 470,000 to 553,000. Considerable increases were also recorded for cars (up 25.1%), coaches (up 29.5%) and commercial vehicles (up 6.0%). In the summer months only, total passenger carryings increased by 20.8%, cars by 28%, coaches by 26.8% and commercial vehicles by 7.7%. ULLAPOOL TO STORNOWAY PINCH POINT 6.1 The Ullapool – Stornoway route carried 1.2 million passengers between 2012 and 2017 and almost half (48.9%) of all passengers travelling to and from the Outer Hebrides use this route. Over the summer of 2017, 31,000 passengers travelled per month compared to 13,000 per month over the preceding winter. 6.2 Between 2015, when the MV Loch Seaforth was introduced to the Ullapool – Stornoway route, and 2017 carryings increased by 18.9% (passengers), 25.8% (cars), 19.5% (coaches) and 6.9% (commercial vehicles). Maximum capacity for the Loch Seaforth (143 cars) was reached in July and August 2017. 6.3 Assuming the same rate of growth into the future, it is projected that 2,056 cars, nine coaches and 337 commercial vehicles will not be able to travel in July and August 2018 and, by 2019, full capacity will extend to the months of June, July, August and September in 2019. OTHER CONSTRAINED ROUTES 7.1 Transport Scotland’s Vessel Replacement Deployment Plan contains an estimate of unconstrained demand across the CalMac network. Average Weekly Capacity Utilisation (WCU) percentages cover the nine peak weeks in July and August and a WCU above 70% indicates that full sailings are a regular occurrence. The WCU for the Uig – Tarbert – Lochmaddy triangle was 71% in 2015, forecast to rise to 78% in 2018 before a new, higher capacity vessel takes over the route in 2019. IMPACT ON SOCIOECONOMIC GROWTH 8.1 The Study report models future capacity constraints on the basis of three growth scenarios: Low growth (3% increase in demand); Medium growth (6% increase in demand); and, High growth (9% increase in demand). The scenarios suggest that, by 2022 on the Ullapool – Stornoway route, the following percentage utilisation of a second ferry would apply: 29.7% (Low growth); 39.8% (Medium growth); and, 51.1% (High growth). The associated increase in visitor spend with a second ferry available would be: £4.6m from 13,178 additional visitors (Low growth); £6.1m from 17,656 additional visitors (Medium growth); and, £7.9m from 22,670 additional visitors (High growth). The additional FTE’s created by this additional spend, by 2022, will be in the region of 366 (Low growth), 447 (Medium growth) and 534 (High growth). In short, these are the economic impacts of an inadequate ferry service..
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