Streamline, the company which is challenging the award of the North Boats contract, has raised fears over the future of its container shipping service between Shetland, Orkney and the mainland.
The company, which 10 days ago served a writ against Scottish ministers at the Court of Session, said it believed the government would “very shortly move to have the suspension of the signing of the proposed new contract lifted by the courts”.
Streamline managing director Gareth Crichton said he would find such a move “difficult to accept” given the “array of unanswered questions” surrounding the award of the £243 million, six-year deal.
In its most recent statement on the matter, the Scottish government said it would “robustly defend the action against us” and hoped to be in a position to award the contract to Serco “in the very near future”.
The contract is due to be handed over from current operator NorthLink to Serco on 6th July. While the government hopes for a “speedy conclusion” to the court action, transport minister Keith Brown has confirmed that, as a contingency, he has asked NorthLink to make plans to continue operating the service beyond early July.
The fishing and agriculture industries have sought re-assurance regarding what the Serco deal will mean for the future of freight services to and from the Northern Isles.
Mr Brown insisted Serco was “especially conscious of the importance of getting time sensitive freight, such as fresh fish, to market on time”. He said the government was “fully satisfied” with Serco’s plans in that department, but again neglected to say whether the existing two-vessel freight service will be maintained.
Contradicting Mr Brown’s assertion that the tendering exercise had been “open and transparent”, Mr Crichton claimed the specification for the ferry service had “not been at all clear”.
He said his company had been advised by government officials to “consider that support for the container service may come to an end” when the existing contract expires in 2014.
Mr Crichton said Streamline currently gets £500,000 a year towards securing capacity for 400 or so shipping containers a week to Orkney and Shetland. He contended that civil servants had sent out mixed messages, initially suggesting the subsidy would be removed entirely in two years’ time.
“We therefore went into this tender with that in mind and brought forward a solution which could integrate the two services, giving the capacity and, importantly, the frequency of scheduling that we believe is required to meet current and anticipated future demand,” he said.
“While there were indications that this type of solution might be well received, it quickly became clear that the specification for the freight service was something of a moving target.”
Streamline’s bid, he continued, demonstrated that shipping by “LoLo” (lift on, lift off) is more economical and leaves a lower carbon footprint than the equivalent RoRo service, burning much lower fuel per tonne of cargo.
Combining that with a nightly RoRo freight for “time sensitive” trailer traffic, such as seafood produce, would give “the best of both worlds”, Mr Crichton said.
“Some way through the tender process the message came over that [the] Scottish government may opt to continue the LoLo subsidy after all. Among other issues, we feel that others perhaps set more store by that information than did Streamline.
“Certainly, from the information fed back to us on the preferred bid there does not appear to be sufficient capacity nor the frequency of sailing to meet the current daily requirements for RoRo shipping, let alone provide capacity to accommodate the 140,000 tonnes of cargo shipped north by Shetland Line each year. So the assumption has to be that they do not envisage carrying LoLo in any volume.”
Mr Crichton said that during a meeting last week the government had reasserted that there was “definitely no intention of continuing to subsidise container services beyond 2014”.
He added: “With a lack of nightly RoRo capacity apparently on offer under the proposed contract with Serco, this begs the question as to just how the sea freight market is envisaged in the future.”