News / Industry ‘shock’ at NorthLink freight fares rise
INDUSTRY bodies and transport companies have expressed their disappointment after Serco NorthLink announced a 2.9 per cent rise in freight charges for commercial traffic travelling to and from the Northern Isles.
Chief executive of Seafood Shetland Ruth Henderson said the organisation is “angry and dismayed” that the rise comes at a time when passenger fares are set to reduce.
Murray Prentice, managing director of Northwards Limited and Hamish Balfour, managing director of DFDS Shetland, said it puts its customers at a “greater disadvantage when it comes to remaining competitive in the marketplace”.
The near three per cent increase will be imposed by Transport Scotland, which runs the North Isles service for the Scottish Government, from 1 January.
A Transport Scotland spokesman said in a statement that the fares are being increased in line with inflation after being frozen for two years.
Henderson, however, said Seafood Shetland had believed freight fares were going to be frozen again next year.
But interested parties were told last week in a letter from operator Serco NorthLink that prices would be rising.
“This comes ahead of concluding several transport studies, including a comprehensive review of ferry freight fares, which has been underway since 2016, the delayed issue of the Scottish Government’s Scottish Transport Analysis Guide (STAG), which will inform the future of the Northern Isles’ ferry contract, and the ferry services procurement policy review,” Henderson said.
“The seafood sector and transport operators in Shetland have been seeking clarity on Transport Scotland’s intentions in this regard, particularly since the announcement of a passenger fare reduction in August.”
Henderson warned that “all options” would now need to be considered due to the impact it could have on Shetland’s largest export industry.
“Any increase in freight charges has a significant bearing on the sector and has much wider implications for the islands’ and, indeed, Scotland’s economy,” she said.
“The importance and dominance of the sector’s freight to the external ferry system is well known, currently running at around 60 per cent of all Shetland imports and exports.
“However, this latest announcement serves to emphasise the fragility of the sector, given that the the first step to accessing global customers and competing in the fresh fish markets is Shetland’s lifeline ferry service.
“Securing timely, daily, reliable and cost-effective transport is crucial to the success of the Shetland seafood industry. It is vital that we can guarantee that produce landed and cultivated in the isles reaches its destination, if Shetland is to continue to punch above its weight in terms of its contribution to the Shetland and wider Scottish economy.
“This rate rise also appears to be at odds with the Scottish Government’s own vision to double the size of the food and drink industry by 2030, through its Ambitions 2030 strategy.”
Prentice and Balfour, meanwhile, said that extra income gained from shipping company Streamline’s recent decision to use NorthLink’s services instead of chartering its own boat should be factored into Transport Scotland’s plans.
“We had expected a reduction in rates, which would largely be passed on to customers, encouraging growth in the island economies,” they said.
“We believe that the costs of leasing/owning the vessels should now be reducing, given their age, and that should be reflected in the charges.
“There has also been a recent increase in freight volume, due to the Streamline container ship operations ceasing, resulting in additional revenue, which should also be considered.
“We will be seeking further detail regarding the strategy employed in this movement in charges and, importantly, if this is the start of a trend.”
Shetland MSP Tavish Scott echoed the industry’s criticism, saying that “supplies of every kind and materials will allow now be more expensive”.
“It is difficult to imagine a less joined up transport policy,” he said.
“Passengers and freight use the same boats. Cutting fares for passengers and cars while increasing fares for freight is the government giving with one hand and taking with the other. Islanders and our local economy will be no better off.”
Scott added: “It is beyond belief that ministers have sat on their own freight fares review and done nothing. I will be directly questioning the government next week when parliament returns. This is just not acceptable.”
A Transport Scotland spokesman said passenger and freight fares will also increase by 2.9 per cent on the Clyde & Hebrides and Gourock-Dunoon routes.
“Passenger and car fares on the Northern Isles network will be frozen ahead of the introduction of Road Equivalent Tariff (RET) fares in the first half of 2018. RET fares do not apply to freight, but we are currently conducting a comprehensive review on freight fares,” he said.
“The reduction in fares for the Northern Isles will be of great benefit to the Northern Isles, for both Islanders and those looking to visit.
“Following two years of price freezes, ferry fares will increase by 2.9 per cent in 2018 to reflect the increase in CPI. This applies to freight and non-freight fares on the Clyde & Hebrides and Gourock-Dunoon contracts, as well as freight fares on the Northern Isles network.
“The only exceptions are passenger and car fares on the Northern Isles network, which will be frozen ahead of the introduction of RET. Fare levels are routinely uprated by CPI [consumer price inflation] annually, in line with the arrangements set out within the public service contracts.
“The Scottish Government strives to offer the best value for money for ferry users in order to support our island economies, but this increase is necessary after two consecutive years of fare freezes to ensure we continue to deliver these vital services for the communities that depend on them.”
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