Further breakdown of transport flow information for the Northern Maritime Corridor final

R20030114.doc 12 December 2005

Transnational Report

A Practical Business Case and Market Survey for Samskip to

develop a new Schedule incorporating ports in Scotland

Report No. 2-11

February 2004

Type of Report: Transnational

Main Title: A Practical Business Case and Market Survey for Samskip to develop a new Schedule incorporating ports in ScotlandSub-title: Main responsible institution/company: Nautilus Consultants ltd

Cooperating institution/company:

Main responsible person: Crick Carleton

Contact persons in NMC: Roar Lervik

Summary: The study investigates the feasibility of an Aberdeenshire-Continent container service. The study found that the local market in Aberdeenshire was fairly substantial but there were some suggestions that it might not be big enough to support a direct service. Indexing terms: Maritime Transport, Short Sea Shipping Report No.: 2-11 Date of first issue: February 2004 Revision No.: Date last revision: Work carried out by: Peter Baker

Work verified by:

Logo of main institution/company:

1) Background International Shipping Company, Samskip, has announced plans for the launch of a new scheduled LoLo Liner route between Iceland and Continental Europe, commencing in January 2004. The new route, which comes in response to an increased demand for capacity, will be served by a 364 teu capacity vessel re-named the Skaftafell, chartered by the company. Initially the additional vessel could provide a call in Scotland (mainland and/or Northern Isles) every other week on the southbound leg of an itinerary that will also include Iceland, the Faeroe Islands, Immingham (England) and Rotterdam. The schedule incorporates the Faeroe Islands for the first time and two new ports in Iceland (see map below). Samskip now operates 14 vessels on scheduled routes throughout Iceland, Scandinavia, the Baltic and Continental Europe, along with several other vessel types for reefer and project cargoes. The Samskip operation also provides full worldwide forwarding services through its hub in Rotterdam and also direct services to the USA and Canada via Iceland. The aim of this study is to provide market analysis and build a credible business case for the inclusion of a Scottish port (mainland and/or Northern Isles) in the schedule and assist the development of new port calls in the Faeroe Islands and Iceland. Work has included face to face interviews with ports and transport operators, together with companies involved in the key seafood, paper and oil and gas sectors in the North

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East of Scotland. The concluding sections to this report include detailed reports on the subjects discussed and information obtained from these meetings.

2) Executive summary and recommendations The general outcome of the study, based on feedback from exporters and importers, is that the North East of Scotland already generates an appreciable amount of containerised freight. This freight is currently transported by road and rail between the North East and either Grangemouth or Greenock for short sea and deep sea feeder services or direct to deep sea hub ports such as Felixstowe and Southampton in the south of England. Furthermore there is freight currently being shipped by conventional, break bulk, mode that could be containerised and a whole swathe of groupage business that is transported by road to southern consolidation depots. Provided an efficient haulage system can be harnessed to provide cost effective collection and delivery in the area a direct feeder service calling into either Aberdeen or Peterhead, or both, should offer a lower cost option compared to current systems. Lessons can be learned from other services that have been set up and subsequently withdrawn, and the service will need the support of the ports and stevedoring companies to deliver efficient service and competitive quay to quay rates. The main obstacles to success are: a. The divided market characterised by seafood in Peterhead and Fraserburgh and

paper and the oil and gas sector in and around Aberdeen b. An intended fortnightly service that will not meet effectively with the first available

deep sea service vessels in Rotterdam that tend to operate on weekly cycles c. Strong competition from feeder services in Grangemouth and Greenock some of

which are operated by deep sea lines (i.e. Maersk and OOCL) Past experience and the prevailing market structure would suggest that Samskip will need to make a commitment to a ‘long haul’ to develop relationships and trust with the key ‘players’ in the seafood, paper and oil and gas sectors (i.e. across all sectors). Pure seafreight business can picked up from deep sea lines, freight forwarders and exporters controlling the ‘merchant’ haul, while for selected business where there are no conflicts of interest Samskip may be able to offer competitive ‘door-to-door’ packages through its own forwarding network.

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While it is always difficult to obtain any true commitment until a service is in place it is recommended that Samskip should make initial approaches to the following key ‘players’: – Pelagic fish processors (5 in Peterhead and 2 in Fraserburgh) – ARR Craib/Enterprise Freight - paper sector – Freight Management International (Searoute) – oil and gas sector In conjunction with these meetings Samskip should meet the port authorities and potential stevedoring service providers in Aberdeen and Peterhead to agree upon a cost and charging structure and to obtain satisfaction that suitable service levels can be delivered. Initial recommendations for Samskip arising from this study are as follows: o Costs and services at both Peterhead and Aberdeen should be explored and

discussion held with the key contacts identified above o Initially Samskip should focus on its strengths in the seafood sector leading to a

draft agreement of intent with ASCo in Peterhead and a start-up of operations in October 2004, after agreed infrastructure development

o Planning of port operations and customer/cargo handling, including vessel trials, should commence with companies involved in pelagic and white fish processing

o Public sector support and grant options should be investigated at regional and Scottish Office levels to support possible equipment purchases, infrastructure development and initial service support

o The full threat from feeder services and deep sea line interests in Grangemouth and Aberdeen should be investigated to understand whether negotiations with existing carriers is possible or whether Samskip’s approach needs to be on a door to door basis direct with the shippers

o Approaches need to be made to the paper manufacturers and their carriers and the key forwarders in the oil and gas sector to attract business and resolve haulage issues associated with a Peterhead port call (Peterhead southbound and Aberdeen northbound on alternate weeks may be the best solution)

o Consider longer term targets such containerisation for frozen pelagic fish destined to the Russian and Baltic States markets, out of gauge and heavy lift business in the oil and gas sector and European services for the paper industry

The SWOT analysis in Section 9 highlights many of the key considerations involved in this service development proposal. 3) Feeder service history in North East Scotland In recent times Aberdeen has handled two services that have offered Continental connections for container traffic. Nor-Cargo (Sea-Cargo) provided a weekly general purpose return service to Amsterdam and Concorde Container Line offered connections to Rotterdam and Antwerp. However both of these direct services have been withdrawn. Sea-Cargo now operates just one sailing per week on its core route to the West Coast of Norway and Concorde Container Line concentrates its UK call at Grangemouth to serve its most significant client, BP Chemicals. Sea-Cargo continues to market a service connection to the Continent but it is a seven day transit, including transhipment in Stavanger onto the company’s Continental services from Norway. Evidently neither service could operate profitably otherwise they would still be in operation. A mixture a lack of cargo and high fixed costs contributed to the

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withdrawal of the services, but the background to their demise should provide a valuable insight for any new service wishing to avoid the same ‘mistakes’. For Nor-Cargo the service was in general attractive to the oil and gas sector because it linked with a similarly active area in the Netherlands. However, apart from project cargoes generated by Grampian International Freight the Amsterdam/Aberdeen import leg proved very weak. The Friday/Saturday sailing to Amsterdam was otherwise quite popular but key factors in the withdrawal of the service included: • Service based on finding utilisation for a vessel that had ‘slack’ in its schedule

when operating on a single round trip between Aberdeen and Norway • The Amsterdam ‘loop’ represented deviation dedicated solely to traffic between

Aberdeen and Amsterdam • Connections between Amsterdam and the deep sea hubs in Rotterdam and

Antwerp, although based efficiently on barge mode, were costly additions to the overall freight cost

• Sea-Cargo management devised a more profitable use of vessel capacity across its whole route network that did not include the Aberdeen/Amsterdam service

Concorde Container Line was originally set up by companies in Aberdeen (Searoute) to serve the requirements of the Aberdeen market. However priorities changed when the service was acquired by the Mersey Docks and Harbour Company plc. Chief among the reasons put forward for the total withdrawal of the service are given below: The service, especially latterly, was not marketed to the full potential client base

in North East Scotland Business relied upon just two key clients and if they didn’t have enough cargo the

vessel didn’t call in Aberdeen to collect The service lost custom as its schedule lost its pattern and became less regular Calls in Aberdeen meant a round trip deviation north of Grangemouth that had to

attract enough cargo to at least cover extra vessel operating costs and port costs Most crucially Aberdeen’s No. 20 crane (costing £690 for 6 hour hire) broke down

and could not be economically repaired. The only alternative was to hire in mobile cranes that could not operate as quickly and cost £1,800

Neither of the two services appeared to attract much business from the seafood sector, although some OOCL reefer business was mentioned. 4) Competing services and transport modes There has been a revival in the number of container shipping operators serving Scotland in recent years. After a period of decline both Grangemouth and Greenock have increased their portfolio of customers, added to the frequency of sailings and expanded the range of ports served. These ports already have significant infrastructure (gantry cranes), land (open and covered storage) and equipment (straddle carriers) in place to handle container services and Grangemouth is in the middle of a £5 million investment programme to double container handling capacity from 100,000 to 200,000 containers per annum. The range of services now operating from Grangemouth and Greenock are summarised below: Table 4.1 – Grangemouth container services

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Service Frequency Ports served Feederlink 6 per week Rotterdam, South Shields,

Immingham, Felixstowe Concorde Container Line 3 per week Antwerp and Rotterdam Seawheel 2 per week Rotterdam, Blyth CMA/CGM 1 per week Immingham, Teesport, Rotterdam,

Zeebrugge OOCL/SBX 1 per week Hamburg, Rotterdam, St. Petersburg Table 4.2 – Greenock container services Service Frequency Ports served Clydeport Shipping 3 per week Liverpool, Belfast, Southampton Maersk Sealand* 1 per week Le Havre Seawheel 1 per week Bristol, Dublin, Bilbao MacAndrews 1 per week Liverpool, Bilbao MacAndrews 1 per week Leixoes, Lisbon, Liverpool, Dublin, Le

Havre * Information from CMA/CGM the owners of the MacAndrews service suggest that Maersk Sealand will close down its feeder service operation between Greenock and Le Havre in March The range and frequency of services pitched against a direct call into the North East of Scotland has become quite extensive. However, for shippers in the North East the issue still remains cost, and the cost of transporting empty containers north to load and return back to the Central Belt can amount to as much as the cost of shipping the container from Grangemouth to Rotterdam. The greatest competition comes from feeder services from these two ports that are operated by deep sea lines that already exert some control over container traffic in and out of the North East of Scotland. Maersk Sealand, CMA/CGM and OOCL all have some involvement in the North East of Scotland and their planning will be based on ‘feeding’ their own feeder services rather than supporting a direct call from a third party operator in either Peterhead or Aberdeen. Furthermore these same deep sea lines and others may have volume based agreements with Feederlink, Concorde Container Line and Clydeport Shipping that will draw freight to the two Central Belt ports. Road connections to Grangemouth are relatively good and congestion free, but access to and from Greenock requires a sometimes congested transit through Glasgow on the M8. Train services, to and from Aberdeen - Guild Street, have been reinforced by EWS since the withdrawal of the Concorde service but there are still gauge restrictions on the line between Aberdeen and the Central Belt that prevent carriage of high cube containers. These services have been supported by two of the key players in the Aberdeen freight market (ARR Craib and Searoute) and there are gauge enhancement initiatives being considered. 5) Market overview

o Seafood Peterhead, Fraserburgh and Aberdeen receive roughly half of all the fish landed in Scottish ports. Scottish Ferries figures for 2001 showed that for these three ports demersal (white fish) landings amounted to 63 thousand tonnes, pelagic 67 thousand tonnes and shellfish 9 thousand tonnes. Peterhead is the leading port

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amongst the three (55% of joint tonnage), followed by Fraserburgh (29%) and Aberdeen (16%). While the white fish sector has been experiencing problems in Scotland the pelagic and shellfish sectors have grown in recent years with the majority of the pelagic growth focussed on Peterhead. However, Shetland (Lerwick) landings still exceed Peterhead’s. There is scope for further expansion if price and service continue to improve because the Peterhead fleet still lands more than 50% of its catch in Norway, with very little reciprocal activity from Norwegian trawlers. It is this sector which offers most scope for a container feeder service because a significant proportion of processed (headed, gutted and frozen) mackerel is exported by container mode to markets in China, Japan, the Far East, the USA, South Africa and increasingly to Black Sea countries. Aside from the UK, German and Dutch markets the other major export destination is to the Baltic States and Russia, although transport practice in this sector is in bulk reefer vessels to cold stores in Klaipeda, St. Petersburg and Kaliningrad. The main processing companies in Peterhead and Fraserburgh are listed below. Following discussions with all of the main processors in Peterhead and another in Fraserburgh it has emerged that the processors, in general, control the export freight and sell on C&F terms, contracting business to the deep sea lines on a spot basis and transporting containers to Grangemouth, or a main line port in the south of England. o Fresh Catch o Alexander Buchan o Lunar o Caley Fisheries o Croan Seafoods o Scofish o Scottish Fishermans Harvest o Shetland Catch Shetland Catch, based in Lerwick, transports its deep sea export business in bulk reefer vessels to cold store operators in the Netherlands from where it is subsequently containerised and loaded to deep sea vessels on the Continent. There is still some of this practice among Peterhead processors but feedback would suggest that the majority of deep sea traffic is containerised ‘at source’ in Peterhead and Fraserburgh. A rough estimate based on information provided by the five processors in Peterhead and Scofish in Fraserburgh indicates that on average during the mackerel season (October to March) there are over 30 containers loaded out every week. Although there have been efforts by deep sea feeder operators (Maersk, North Sea Containerline) to serve the Shetland market (Shetland Catch) direct there have not been similar attempts in North East Scotland. The Concorde Container Line service did not appear to address this market although OOCL were known to be supporters with frozen fish cargoes. Deep sea export activity falls to negligible levels during the Summer because Scottish herring has lost its market in deep sea destinations to locally caught

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species. However, a significant expansion to local cold storage capacity in recent years should enable the processors to have product available to sell out of the normal season. Cold storage capacity among the five processors in Peterhead now amounts to over 30,000 tonnes. There is also a processing and value added industry in the North East of Scotland based on white fish landings and imports. A direct feeder service into the area could assist in routing supplies of frozen raw material more efficiently. Samskip could also provide the direct supply line for fresh and frozen raw material from Iceland and the Faeroes. Another sector of the processing industry is represented by International Fish Canners in Fraserburgh. This company, a subsidiary of Scofish, processes and cans pelagic fish and salmon for the major brands names such as John West and also for the major multiple supermarkets. A significant amount of production is sold to European customers with some deep sea export to North America and the Far East. Interestingly the company imports its can from Danish supplier Scanem, based in Skive. o Paper There are three major paper manufacturing companies based in and around Aberdeen; Arjo Wiggins, BPB Paperboard and International Paper. Arjo also has a plant in Fort William. There is a concentration of paper manufacturing companies in Fife, 70 miles to the south of Aberdeen, but deep sea exports from these plants are much more likely to ship from Grangemouth and more southerly UK ports. Each of the three Aberdeen based manufacturers produce for UK, European and world-wide markets and freight forwarder ARR Craib is involved with all three for UK and increasingly European distribution. BPB Paperboard recycles waste paper, mostly sourced in the UK, and produces low value plasterboard liner and packaging grade materials in relatively high volumes (in excess of 200,000 tonnes). BPB, through ARR Craib and Searoute services has tended to be a supporter of Aberdeen shipping services, such as Nor-Cargo and Concorde Container Line, for both European and deep sea business. Arjo Wiggins produces ‘fine’ papers at its Stoneywood plant and exports over 50% of its 80,000 tonnes production. The company is owned by a French parent company and decision making is controlled centrally. The deep sea business, controlled by DFDS (Purfleet) is currently out for tender and ARR Craib’s international forwarding operation, Enterprise Freight, is bidding for the business. Raw material imports of pulp are generally shipped in bulk into Aberdeen, Montrose and Dundee. Arjo also has a plant in Fort William where high volume, low value carbon paper is produced. The extent of export activity from the plant and the stimulus that a direct feeder service form Peterhead or Aberdeen might provide are as yet not defined. International Paper in Inverurie is aligned to supplying the UK market while partner mills on the Continent produce for the European market. Most of the

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export business (2,000 tonnes per annum) is moved in trailers but there could be an opportunity for a door to door option in containers. In combined terms, according to the most recent information from the paper companies, this sector in Aberdeen generates in excess of 30 container loads per week for deep sea export with key markets in China, South Africa and the USA. o Oil and Offshore The supply chain processes supporting the oil and gas exploration industries in the North East of Scotland involves a range of different ‘players’ with very little co-operation between the oil majors (BP, Shell, Mobil, Team Marine, Talisman) at the top of the pyramid. The oil companies initiate the movement of freight, whether it is project cargo, hired equipment or simply the movement of provisions and supplies to the rigs. Service and support companies such as ASCo, Seaforth and SBS handle the logistics of receiving, storing and ultimately supplying equipment to offshore installations, while a whole range of engineering and service companies, manufacture and supply the equipment. It is these companies, based in the local area or located around the world that contract with freight forwarders to handle the actual movement of equipment to and from the North East of Scotland. Aberdeen forwarders control export freight in this sector and the freight forwarding community will nominate and work with deep sea shipping lines for containerised traffic. Control of the immediate movement to and from Aberdeen to port of loading will depend on the terms of the arrangement. Deep sea lines will either deliver or collect the container, perhaps also arranging the delivery or collection of the empty container, based on ‘grid haul’ terms, or the freight forwarder will have negotiated and arranged its own ‘merchant’ haul. Any prospective feeder service will need to negotiate with either the local forwarders or the deep sea lines that control the traffic. The deep sea lines need to be contacted for import ‘routed’ freight. The key freight forwarders controlling and overseeing the export business in the oil and gas sector in North East Scotland are: o Grampian International Freight o Eagle Global Logistics (EGL) o R A Executive Freight o Pentagon Freight o Keuhne and Nagel o Petrasco (Full contact details provided) Searoute, part of the Freight Management Group has a big influence over the import business in this sector, also providing deconsolidation and distribution services. Feedback from Searoute management and discussions with a selection of the freight forwarding community indicates that there is a substantial volume of full load container business generated by the oil and gas sector in the North East of Scotland. Although volumes can fluctuate dramatically from week to week information would suggest that volumes are in the region of 20 in and 20 out per

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week, spread across a range of shipping lines (Hapag Lloyd, APL, NYK, MSC and Safmarine mentioned specifically). In the oil and gas sector there is also a large amount of groupage freight, break bulk and project type cargo. Groupage cargo is transported south to feed into national networks or English based NVOCCs. Some of the break bulk cargo could be shipped on specialist ‘flat-rack’ equipment in container vessels but the hub for this type of traffic is Antwerp. Indeed some traffic arriving into Antwerp in containers is ‘unstuffed’ and loaded to break bulk services, such as Euroline/Rulewave to get it direct into Aberdeen. Transit time and service are important in this sector although price is still a key determinant. Meeting the schedules of the deep sea lines, that generally work to a weekly timetable is important, as is the line and line agent’s ability to deal with sometimes complex paperwork. Aberdeen would be the preferred port of call for import and export business in this sector because the industry and its support infrastructure surround the city on all sides. Haulage to Peterhead would add another £25 to £30 to the cost of a consignment and perhaps present difficulties to the haulier in finding return loads. There was some evidence to suggest the freight companies in this sector are still using Nor-Cargo (Sea-Cargo) to tranship freight to Amsterdam via the weekly Norway service to Stavanger. o Other sectors In addition to the three dominant sectors described above there are other sectors that have been identified and in some cases partially researched as part of this study. In all cases further work and direct negotiation with Samskip is required to assess the potential business and the possibilities for development. The key sectors in question are agriculture, food, personal effects and general NVOCC. In the agriculture sector the trade in seed potatoes and the potential for exporting processed chicken portions have both been signalled during meetings and discussions. There is a strong trade in seed potatoes, during the period October to January, from producers in Scotland to growers particularly in the Canary Islands and North West Africa. Ian Shewan at Nor-Cargo was involved in the trade and Chris Anderson at Fresh Catch also had some knowledge of the business, however the key traders need to be identified and contacted. Drawbacks may be the availability of direct Iberian services from Greenock and the apparent need to move the product as soon as it is out of the ground. Chris Anderson’s awareness of the tastes and demands of the consumer in the Baltic States and Russia made him aware that the main competitor for his mackerel and herring was chicken. He believes that as the market in Eastern Europe is expanding there is going to be an increasing demand for chicken based products and perhaps an opportunity for major regional based, national producer, Grampian Chickens (part of the Grampian Country Food Group). In the food sector there are a number of traditional manufacturers in the North East of Scotland with international market penetration. The most significant of these manufacturers are Baxter’s (tinned soups) and Walkers Shortbread.

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Another opportunity, highlighted in reports produced by Nautilus Consultants, lies in feeding ‘raw material’ to the white fish processors based in Aberdeen, Peterhead and Fraserburgh. These processors already import white fish species in frozen ‘blocks’ from a range of world-wide sources. The Samskip service could provide a cost effective source of frozen product from Iceland and the Faeroes, while also feeding in a regular supply of reefer containers for re-loading. Discussions with specialist forwarder Crown Worldwide, involved in the international transport of ‘household effects’, and its group buying trade organisation ‘Movers and Traders Club’ identified 100 export container loads a year from the region with Crown alone. The Movers and Traders Club administrator was particularly interested in potential savings, mentioning a cost of £700 just to get a container from Aberdeen to Southampton. Key among the organisations carriers are P&O Nedlloyd, Maersk and OOCL. One other opportunity identified and worthy of deeper exploration is the potential for a ‘neutral’ company, such as Samskip or perhaps Caledonian Logistics, to provide NVOCC services for general groupage freight using a local consolidation hub and a local short sea feeder service.

6) Current costs The FOB costs being quoted to shippers in Aberdeen and Peterhead to move containers to Grangemouth (£220 to £250) and Felixstowe and Southampton (£600 to £750) clearly demonstrate the disadvantage faced by companies in the North East of Scotland. Such high rates in part reflect the line’s attempts to recover some profit on one leg of a journey that is otherwise not profitable. It also reflects the absorbed cost of getting empty containers re-positioned to the area because of the general lack of freight coming into Scotland in containers. The contradiction for the freight community in the North East of Scotland is that haulage operators have to offer very low rates to capture any of this business from the deep sea lines. This set of circumstances and the absence of a direct container feeder service explain why ARR Craib and Searoute have both made a concerted effort to work with train operator EWS to handle a regular train service from Guild Street terminal in Aberdeen to Coatbridge, Mossend and Grangemouth. It would seem that even though there is still a road collection and delivery in the Aberdeen area the company’s are still having some success. In general terms there is a tendency for companies in North East Scotland, wherever possible, to make their own collection and delivery arrangements to get containers to and from the ports to connect with feeder or main line services. An indication of the feeder cost from Aberdeen to Rotterdam, via Grangemouth, is in the order of £470 (Road £220 + Feeder £250). This is similar to the freight rate charged by Nor-Cargo on its Aberdeen/Amsterdam service. Competition for a direct feeder service in Aberdeen is therefore most likely to be with Grangemouth services, although transfer costs to deep sea terminals in Rotterdam will reduce the differential when compared with delivery direct to main line vessels in Felixstowe or Southampton. Samskip’s position and ability to compete on price will depend on negotiations with the ports and terminal operators in Peterhead and Aberdeen, although the service has the advantage of working with minimal route deviation. There may also be a

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competitive edge provided if empty containers can be shipped from Rotterdam or Immingham on the Samskip service. According to Eddie Anderson the Managing Director at ARR Craib any feeder operator would need to offer a rate in the region of £440 for a movement from the North East of Scotland to Rotterdam quay to be competitive. 7) Port options There are two port authorities in Peterhead, although procedures are in place to combine them into one, and one authority in Aberdeen. Details of contacts and berth information are listed at the end of this section. None of the authorities themselves provide stevedoring services. The port authorities are essential for putting together an acceptable ‘package’ for a prospective shipping service and for initiating action to expand and create the necessary infrastructure. Any prospective service will need to consult with the port authorities about ship and goods dues, appropriate quays, open storage areas and particularly the provision of a sufficient supply of electrical connection points for reefer containers. Aberdeen and its port operators have the advantage of having experience in the handling a container feeder services, although the crane used for the purpose is now permanently out of action. It also has suitable quays with sufficient depth of water but a limited amount of open storage space for container storage and handling. As with Peterhead there is a shortage of electrical connection points required to maintain loaded reefer containers at suitably low temperatures, while they are stored after loading awaiting the arrival of the vessel. Container handling in Peterhead is undertaken on a day to day basis by ASCo on its two supply bases, although it is limited to the specialised handling of 10 foot and 20 foot containers on and off of supply vessels operating in the offshore sector. While Aberdeen has a heavy forklift truck permanently at the disposal of Nor-Cargo for container handling operations Peterhead is currently without. Peterhead would require to ‘gear up’ to handle a container service but ASCo is experienced in adapting operations and hiring in the most suitable equipment to match particular needs. Both ports would rely on hired in cranes to handle ship to shore operations were it not for the fact that Samskip’s vessels are ‘geared’ with their own container cranes. Stevedores at both ports would probably also need to invest in ‘yard’ trailers (mafis) to move containers around the port to open storage areas and in the case of Peterhead to transport containers to and from the local fish processors. Peterhead would be the port of choice for handling seafood exports and imports with ASCo’s supply base facilities also attracting oil and gas sector traffic. Aberdeen is closer to the concentration of paper manufacturers and the cluster of oil majors and their suppliers and forwarders. The stevedores providing cargo handling services in the two ports are listed below, with full contact details in Section 11 of this report: Aberdeen • Nor-Cargo (the only company owning and operating a container ‘top lift’ • Streamline (North East Stevedores)

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• Aberdeen Cargo Handling (specialising in break-bulk and offshore work but currently laying-off labour)

• SBS (provide labour for the Northlink service but otherwise 99% involved in offshore activity)

Peterhead • ASCo • George Stephen Stevedores Limited • Willie Whyte Stevedores Contact details and berth information: Peterhead Bay Authority Bath House Bath Street Peterhead Aberdeenshire AB42 1DX Telephone: 01779 474020 Fax: 01779 475712 Web: www.peterhead-bay.co.uk Chief Executive: John Wallace (johnewallace@Peterhead-Bay.co.uk) Commercial Manager: Stephen Paterson (Stephen.paterson@Peterhead.Bay.co.uk) South Base Quay (ASCo) Berth numbers 4-8, total quay length 470m, quay width 22m Quay height, above MHWS: 2.4m Minimum depth of water: 6.8m Open storage: 4.5 ha Mobile cranes: 36 to 500 tonnes capacity, plus forklifts and transportation fleet South Breakwater (Peterhead Bay Authority) Berth numbers 9-12, total quay length 390m, quay width 17m Quay height, above MHWS: 3.4m Minimum depth of water: up to 7.8m Princess Royal Jetty (ASCo) Berth numbers 2-3, total quay length 170m, quay width 23m Quay height, above MHWS: 2.4m Minimum depth of water: up to 7.0m Princess Royal Jetty (Peterhead Bay Authority) Berth numbers 1, total quay length 90m, quay width 23m Quay height, above MHWS: 2.4m Minimum depth of water: up to 6.0m North Breakwater (Peterhead Bay Authority) Berth numbers 13-15, total quay length 240m, quay width 17m Quay height, above MHWS: 3.4m Minimum depth of water: Up to 14.0m North Base Jetty(ASCo)

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Berth numbers 17-18, total quay length 122m, quay width 15m Quay height, above MHWS: 4.4m Minimum depth of water: 7.0m Notes: ASCo is the largest cargo handling company in Peterhead, specialising in the ‘offshore’ sector but actively trying to diversify into other sectors. The company also has a large transport fleet including articulated units, flatbeds and road tankers. It now has bases in both Peterhead and Aberdeen and would be the best company to talk to in Peterhead in terms of a short lead time to start of operations. There are no fixed container cranes in Peterhead but a plentiful supply of high capacity mobile equipment. Peterhead Harbours Harbour Office West Pier Peterhead Aberdeenshire AB42 1DW Telephone: 01779 483600 Fax: 01779 475715 Chief Executive: John Paterson Harbour Master: Captain C. T. Hemingway (capt.hemingway@peterhead-harbours.co.uk) Albert Quay Albert Quay South: 250m of quay with depth ranging from 8.0m to 9.5m at Chart Datum Albert Quay East: 90m of quay with depth ranging from 6.2m to 8.0m at Chart Datum Merchant Quay Quay length 200m with a minimum depth of 6.2m and 120m at 8.0m depth Notes: Two major strategic studies directing the future of the Port of Peterhead are currently nearing completion. Deloitte and Touche is carrying out a due diligence exercise prior to the possible merging of the two port authorities. At the same time the Halcrow Group is due to present a final report into further development options in Peterhead Bay. This latter report has been sponsored by a range of private and public sector organisations, including the two port authorities, ASCo and Aberdeenshire Council. Publication has been delayed by a decision to incorporate a further project proposal for a RoRo development immediately to the west of the new Merchant Quay. The development would require land reclamation and provide berths with a minimum depth of 8.5 metres. If approved the ‘RoRo’ development (that could easily be engineered with LoLo capability) would still be subject to parliamentary processes that would mean a minimum of 2 years to completion. Albert Quay and Merchant Quay could accommodate a LoLo service but it wouldn’t be possible at present to offer dedicated use. Aberdeen Harbour Harbour Office 16 Regent Street

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Aberdeen AB11 5SS Telephone: 01224 597000 Fax: 01224 571507 Web: www.aberdeen-harbour.co.uk General Manager: Barclay Braithwaite (b-braithwaite@aberdeen-harbour.co.uk) Harbour Master: Captain Colin Parker (c-parker@aberdeen-harbour.co.uk) Atlantic Wharf 137m quay with 9.9m depth of water at MLWS Pacific Wharf 205m quay with 9.9m depth of water at MLWS Waterloo Quay West 172m quay with 9.9m depth of water at MLWS Regent Quay East 255m quay with 9.9m depth of water at MLWS Telford Dock 520m quay with 9.6m depth of water at MLWS Diesel electric 30-tonne Demag-Gottwald mobile crane Matthews Quay 236m quay with 9.6m depth of water at MLWS Over 7,000 sq. metres of cargo handling area Notes: Cranes up to 1,000 tonne capacity are readily available from local crane hire companies. Otherwise there is no container crane capacity permanently in place in the Port of Aberdeen. The port already has 6 or 7 “live” electrical connection points and Nor-Cargo controls a further twp points. Theee is also wiring in place to install 12 more plug sets at a location on the central roadway west of the Nor-Cargo shed. 8) Re-positioning of container equipment Positioning containers in Scotland is a problem common to all deep sea operators. The Scottish market, unlike England, has an imbalance biased towards export cargo. With the bulk of container traffic destined for delivery in England, where there is an import imbalance operators have had to develop ingenious methods for getting the right equipment into Scotland for loading. The situation is made even worse because the domestic trade imbalance, biased towards movements into Scotland, has forced up road haulage costs. The Scottish situation is difficult in general but it is accentuated for Aberdeen and the North East of Scotland because it is a further 120 miles north of the Central Belt. Furthermore, the deep sea lines that have import business are not generally the same as those with export business offering re-load opportunities. A situation possibly accentuated by the general variation between export and import markets for North East Scotland’s shippers and consignees.

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The rail system offers some solution and northbound services driven by Safeway and Asda do offer some capacity. However, with road haulage costs increasing and the driver shortage situation worsening there may be other, more economic, maritime based solutions. There are some specific traffic flows in and out of North East Scotland where containerisation is deferred until the freight has been transported by an alternative mode to a port where there is a ready supply of empty equipment, such as:

i. Keuhne & Nagel transport full loads in trailers to company depots in Felixstowe and Southampton where the freight is then transferred into a container

ii. Deep sea container freight, such as pipes and steel from Japan for the oil industry, arriving in Antwerp is ‘un-stuffed’ and loaded as break bulk to the Euroline/Rulewave service

iii. Frozen pelagic fish is shipped in bulk on pallets in reefer vessels to cold store operators in the Netherlands where it is subsequently containerised and shipped to deep sea destinations

Some re-positioning options open to Samskip in the context of the proposed direct call into North East Scotland are detailed below:

o Use Samskip’s northbound services to deliver empty reefer and dry cargo containers picked up from Immingham and Rotterdam

o Utilise the Euroline/Rulewave and Nor-Cargo (Sea-Cargo) services to repatriate empty containers from the Continent and Immingham to Aberdeen

o Investigate train options from Immingham to transport empty reefer and dry containers to Scotland for loading out on the Samskip direct call

o Work with deep sea lines to carry inbound cargo direct into the North East of Scotland

9) SWOT Analysis The key strengths and weaknesses of the service proposition and market under consideration are summarised in the following ‘SWOT’ analysis. Opportunities and threats are dealt with and should form an integral part of the process leading to a decision from Samskip. Strengths Weaknesses • Improving export business in the

frozen pelagic sector estimated to amount to 20 containers per week to China, Japan and Far East alone

• Deep water berths available in Peterhead and Aberdeen

• Experience and business base can be developed from previous services operated by Concorde and Nor-Cargo

• Key supporters: Nor-Cargo, Searoute and ARR Craib

• Samskip vessels have on-board cranes for container handling

• Market demand for 1st available deep sea vessel – service normally running to weekly schedules. Confusion caused by a fortnightly service because customers lose track of which week the vessel will call rather than knowing that it will be every week

• General lack of suitable container cranes and yard handling equipment

• A single fortnightly service is not enough to support high investment in container handling equipment

• Limited number of electrical

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• Pelagic fish, paper and seed potatoes offer high volume exports

• Should be a lower cost option • Samskip’s integrated European and

Baltic services and connections with deep sea shipping lines in Rotterdam

• Containers can be loaded with 26 tonnes to ship out of Aberdeen or Peterhead direct but can only load to 21 tonnes if taken by road to Grangemouth (not a problem on rail or if transhipped via Rotterdam)

• Container operations involve less handling and damage of product during shipment

• Bulk reefer services are low cost but also low service

• Increasing amount of local cold storage capacity available and availability of general covered storage

• Local fish processors in Peterhead could provide the traction and trailers for ‘shunting’ containers around the port

• Samskip is an experienced operator in the seafood sector for both fresh and frozen product with established international supply chains and transhipment processes

connections in Aberdeen and Peterhead

• Perception of slow handling and poor labour productivity in Peterhead

• Declining manufacturing sector in area

• Inability to guarantee berths and uncertain availability in the Harbour area

• Perceived lack of sufficient local groupage business to build up single destination full loads

• Split market – Fish in Peterhead and paper and oil in Aberdeen

• Seasonality of the pelagic fish trade • Local forwarders deal with deep sea

lines mostly handing over control of freight at their depot

• ‘Spoilt’ forwarding community whose main focus for customer is on speed of transit and meeting delivery deadlines rather than cost and modal selection

• Fortnightly and not a weekly service – missing the weekly deep sea links and not satisfying customer demands

• Dry container traffic inbound and reefer traffic outbound. Reefers have to cleaned and ready for use

• Pelagic processors need to sell during the season, as close to catching as possible, for cashflow reasons

• Oil sector business tends to be project based, out of gauge, heavy lift type freight (could be an opportunity, but sector also demands high service levels)

• Quality of pelagic fish has to be above a certain standard to be acceptable in the Japanese and Far Eastern markets (Japanese buyers are based in Peterhead)

Opportunities Threats • Potential to use other shipping

services into Aberdeen to re-position empty line containers (Rulewave and Sea-Cargo). Re-position Samskip and deep sea containers by rail from Immingham

• Samskip call in Peterhead on southbound leg and Aberdeen on northbound to match cargo flows and

• Improving rail service connections from Aberdeen to Grangemouth and English ports and inertia in market to support rail

• Ability to take maximum payloads in containers on rail services

• Critical mass and frequency of service from Grangemouth

• Port closures when bad weather

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enable re-positioning of empty containers

• Samskip can offer a full door to door package for deep sea destinations

• Use ARR Craib toplift/reachstacker, currently employed on Guild Street terminal

• Capitalise on ASCO’s spare capacity in Peterhead

• Rail from Aberdeen still stifled by gauge restrictions for freight i.e. can’t take paper loaded into high cube containers

• Possible support from harbour authorities

• Export groupage business could be developed by a single ‘neutral’ NVOCC in North East Scotland

• Development of efficient Aberdeen/ Peterhead road haulage operations

• Development of cold storage in Peterhead is helping to expand processing volumes, reduce handling damage, provide an alternative to using costly Rotterdam storage and adding to year round export potential in containers rather than in bulk

• White fish processing could be stimulated by imported raw material from Iceland and the Faroes

• Bulk shipping requires large consignments (frozen fish) and the average size of vessels is increasing, making smaller bulk consignments more expensive to ship

• Fortnightly service might suit the fishing sector, unless a call is missed for any reason

• A regular scheduled container service could stimulate pelagic trade over the full year cycle

• Samskip can market export services to the USA via Iceland for whisky and salmon sectors

• Direct service can satisfy the oil and offshore sector for out of gauge and heavy lift loads transhipped in Rotterdam from the USA – system with ‘flat racks’ would avoid road journeys from Grangemouth and Rosyth (Refer to Grampian International Freight). Also serves general break bulk market

• Need to approach the deep sea lines

causes heavy swell and disruption to cargo handling operations

• Sea-Cargo weekly feeder service from Aberdeen via Stavanger, albeit nearly 7 day transit (departs Saturday, arrives Friday)

• East European trailer operators offering very low, all road, rates for Scottish export cargo back to the Continent

• Also Dutch reefer trailer operators (importing cut flowers etc) offering low rates to take product back to Netherlands for containerisation

• Ability of fish processors to handle and load containers at their premises

• Perceived conflicts between Samskip’s Icelandic customers and Peterhead customers involved in the fish business

• Failure of Concorde Container Line and Nor-Cargo Continental services

• Samskip’s relatively large vessels may attract punitive port costs

• There is a “prohibitive” cost attached to getting empty container equipment to the North East of Scotland for loading and a shortage of inbound freight to provide a balance

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for US import routed cargo • Port development plans catering for

improved RoRo and LoLo facilities are being proposed in Peterhead

• Use of ‘cheap’ supply boat capacity for moving containers between Lerwick and Peterhead for pelagic exports from Shetland Catch, or direct call?

• Possible NMC support for elements of Samskip’s initial marketing campaign?

• Samkip’s integrated European services could be used for paper (BPB) and other exports

• Deep sea import transhipment traffic can be picked up in Antwerp

• Attract more direct landings of pelagic fish from Scottish fleet vessels to North East Scotland ports

• Import and export traffic between Scotland and North America could be shipped cost effectively via Iceland

10) Contact reports – January 2004 Several of the meetings and telephone conversations detailed below are follow-ups to meetings held during the second half of 2003. The notes below should therefore be read in conjunction with earlier contact notes. a. Streamline Shipping – Phil Bremner (PB) and Alex Roberts (AR) Streamline’s ability to handle a container service in either Aberdeen or Peterhead and international freight generated by the company out of Aberdeen, East Kilbride and Inverness offices were discussed. Streamline first handled the Concorde Container Line service when it started operations in Aberdeen, although handling operations were subsequently contracted to Nor-Cargo (containers) and Aberdeen Cargo Handling (offshore). Its ability to handle a container service was limited by port congestion and restricted landing space. If such a service began calling in Aberdeen outside crane hire would be required if the vessel is not self-discharging and quay options would be restricted to Pacific and Atlantic. Otherwise Streamline would be able to acquire handling capacity. According to PB, Streamline could handle the vessel in Peterhead, although its own experience was of slow service. Handling could take place on the north side of the Bay, with Streamline working with a Peterhead company that has land in and around the port area. PB’s opinion of Concorde was that it wasn’t a ‘sellable’ service due to the “erratic” pattern of the schedule.

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Streamline’s forwarding operations do control international and deep sea freight movements. One particular flow of 40’ containers to China was mentioned, although volume flow is varied, subject to customer demands. (No clues were provided as to the commodity involved but care needs to be taken to avoid double counting). Streamline works with one particular deep sea line for the Chinese traffic and has to react to the demands of the customer to meet delivery windows. It is therefore often a case of arranging to meet the first available vessel departing either UK or Continental ports destined for the Far East. Haulage costs were discussed and specified as: • Aberdeen-Peterhead £120 one way • Aberdeen-Grangemouth £200 one way Streamline operates its own container, trailer and traction fleet b. SeaRoute – Rod Palmer (RP) Searoute (Alan Porter and partner) was behind the original Concorde Container Line service when the UK focus was on the company’s own Aberdeen cargo. The service used to handle 20/30 northbound containers per week, mostly oil industry equipment from the US, with the southbound business supported mostly by BPB Paperboard using K Line. At the time Searoute hired a toplift for 6 months to handle the Concorde business the cost of which was underwritten by the Harbour Board. However when the port’s No.20 crane broke down the operation was made more expensive by the need to hire in a mobile crane. With the demise of the Concorde service in Aberdeen and Nor-Cargo’s decision to drop its Amsterdam service from Aberdeen, Searoute has begun to concentrate on using rail services. Searoute has now moved its depot into the Guild Street rail terminal and closed its container storage depot on the port. The company has recently recruited an ex EWS manager to develop the business, although the line from Aberdeen still suffers from gauge restrictions (can’t take high cube containers). Searoute has customers for LCL and FCL export and import but no under cover facility for discharging and loading containers. Hapag Lloyd sends in LCL containers that Searoute deconsolidate and distribute and K Line, for whom Searoute act as agent’s, is one of the carriers employed by BPB Paperboard for its export business. Searoute tries to re-load Hapag Lloyd containers with groupage but generally the containers have to be sent south to Coatbridge and Grangemouth to build up a full load. The company and operation has generally been a focus for holding empty containers, either for release for export loading or ultimately for transporting back to Coatbridge. RP’s view of Peterhead was: • Not a good option for import oil business – Dyce traffic still has to pass through

Aberdeen congestion points to get to Peterhead – Oil companies around Aberdeen used to collecting from central Aberdeen consolidation depots

• Albert Quay in Peterhead would be feasible but container handling and loading direct to transport would be a problem at times of heavy swell

c. Euroline – Mike Packer (MP) Euroline does control some deep sea container business from/to the area (steel and pipes from Japan in containers transhipped in Antwerp and Rotterdam to move in

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bulk on Rulewave, thus avoiding problem of re-positioning the empty container out of Scotland). The Concorde service was not used because it was ‘too costly’, Euroline preferring to order up empty containers by road from Coatbridge to load and send back for onward transport to Southampton by rail to meet main line vessel. Euroline are/were pleased with the timings and costs via this route and the relationship with the deep sea line. MP’s view on Concorde was that it only called when BPB business was available, which for other shippers with concerns for cost and transit time was not acceptable. However MP did admit that deep sea business from Aberdeen still suffered from high grid haul costs (although becoming more competitive) and general FOB cost barriers. He also advised that any feeder service calling in Aberdeen would need the support of the deep sea lines but expressed concern over the decline in manufacturing in the area. MP didn’t know whether Aberdeen port has reefer points but believed a feeder vessel could be easily handled on the Atlantic Quay. However Samskip’s proposed Friday/Saturday call could conflict with both the Nor-Cargo and Streamline services, with competition for the use of available handling plant. Euroline’s experience in Peterhead was not good. The port had only two independent stevedores (Whyte’s Cargo Handlers & Stephen’s – Andrew Smith & Schultze), neither of whom own any handling equipment or have any experience with containerised shipping. In fact both are primarily local farmers. Other issues raised by MP included: • No guarantee of a berth in Peterhead • Trailers would need to be trucked away from the quays to off-dock locations for

storage • Customs inspection? • Limited quayside storage and security • Poor labour situation at ASCO • Lack of suitable available handling equipment According to MP the haulage cost for a load between Aberdeen and Peterhead is £70 (Euroline use ARR Craib haulage with flatbed trailers). Maybe Euroline/Rulewave could be used for re-positioning empty line containers to Aberdeen from Rotterdam and Antwerp? Why not keep pipe and steel from Japan in containers and ship to Aberdeen on Samskip service. They can then be used to re-load with paper etc. d. Grampian International Freight – Andy Smith (AS) Grampian International Freight (GIF) used to be big supporters of Nor-Cargo’s weekly service between Aberdeen and Amsterdam with unaccompanied trailer loads (mainly groupage) and heavy lift imports from the USA. Nor-Cargo’s alternative offering via Stavanger is not meeting the company’s requirements. GIF has a depot just 16 kilometres from Amsterdam. GIF has many clients in the oil related sector. According to AS most of the business is not suitable for containers and Aberdeen based shippers and receivers are geared up for handling flatbed trailers and not containers. The business is built around project cargo with very little general freight. According to AS a fortnightly service wouldn’t be able to compete with current services to/from Aberdeen for the European Continent, unless it is low revenue freight that can be containerised. He emphasised the range and frequency of

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services on offer from Grangemouth and the oil sector’s demands for high service levels. In addition the full load European market expects delivery within 4 days. For US imports routings are governed by the US (Houston) based suppliers and the deep sea lines they employ. GIF also handle oil sector exports to Nigeria that are containerised in Aberdeen and also containerised paper exports to Eastern Europe. For a container feeder service AS advised that although rates must be competitive, price was not the only issue. A fixed, regular and reliable service would be important for the Aberdeen market, criteria that Concorde did not meet. e. Peterhead Harbour Authority – John Paterson (JP) Key questions for the discussion with the Peterhead Harbour Authority concerning the handling of a regular container service were; berth availability, quay space, back-up land options and availability of suitable handling plant and equipment. JP mentioned Halcrow’s report, ‘Peterhead Port’s New Quay Feasibility Study’ and provided plans but it was stressed that this enquiry was live and imminent. One short term measure proposed was provision of a temporary road connecting the harbour and the Fresh Catch factory. JP suggested that either Albert Quay (limited quay space and subject to proposed extension plans) or Merchants Quay (used for pumping pelagic into Fresh Catch plant / long enough?) would be suitable for a 100m long vessel but could not confirm dedicated use, even for a fortnightly service. He did not think the North Breakwater was suitable. However he did believe that the Harbour would always be able to offer a berth option as and when required. Issues concerning heavy swell in the harbour should be discussed in more detail with the Harbour Master. JP advised that the Harbour Authority was taking over areas of Keith Inch and the North Base currently leased to ASCO that could be used for container operations, however he warned that the fish processors might have difficulties handling containers at their premises. It was also mentioned that sufficient power supply was available to the harbour for electrical connections but no specific infrastructure was in place. The port has two independent stevedoring companies offering services to shipping lines. Both owners have farming backgrounds and have developed as a result of handling agricultural produce through the port. George Stephen Stevedores Limited is owned by George Stephen (also owner of Andrew, Smith and Schultze, Ships Agent), while the other company is Willie Whyte Stevedores. The Authority does not own handling equipment and it was unclear which party would take that risk and therefore which companies might benefit from grant assistance, if it were available. Peterhead Harbour is a member of the British Ports Association and they would use this channel to obtain advice on grants. JP is providing figures for the volume of fish landed in the port (by type), along with details of frozen processed fish shipped out of the port in reefer vessels. In this way we should be able to identify the net amount of processed fish leaving the area by road in trailers and containers, destined for UK, European and Worldwide markets. f. Caley Fisheries – Ian Lake (IL)

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IL estimated that Caley Fisheries exported 30 to 40 containers from Peterhead in 2003. Some of this product was first transported by road trailer to Rotterdam, taking advantage of cheap ‘back-haul’ rates, where it was then containerised. However the main routing was via Grangemouth to Rotterdam and on to Korea, China and Romania. IL advised that containers loaded for road transport could only take a payload up to 24 tonnes whereas a full payload going direct to ship could be up to 28 tonnes. Therefore containers taken to Grangemouth cannot take the full potential payload. The pelagic season in Peterhead had been depressed before Christmas because all of the fish were ‘feeding’ across the ‘Line’ in the Norwegian sector. However volume had picked up considerably in 2004. In addition to low pre-Christmas volumes the quality was poor and therefore most export was going to Russia. IL was not happy with the service levels provided by some of the reefer operators. Silver Seas was singled out as providing poor vessels with poor crews g. Scofish – Allan McRobb (AMcR) Scofish is based in Fraserburgh and also operates some storage in Peterhead. The company is part of a group that also includes International Fish Canners and Nor-Sea Foods. Scofish is involved in pelagic fishing, processing and sales, while Nor-Sea Foods is involved in smoking and curing of fish. Fishing vessels contracted to Scofish land in Fraserburgh and pump the catch direct into the Scofish plant. Busy periods for the Scofish plant are July to August, October to December and January to March. The company uses a shipping agent in Hull to get the best deal and has recently changed from shipping out of Southampton to using feeders out of Grangemouth. Export orders are despatched in large consignments, either in containers or in bulk. The company had just loaded 11 containers with frozen mackerel in Fraserburgh to go to the Far East via road to Grangemouth and recently sent out a further 24 container loads. Scofish also utilise cold storage in the Netherlands and recently shipped 1,500 tonne of herring on a pallet carrier where it was stored and subsequently containerised for shipment to the Far East. AMcR is very interested in developing into the Russian market and recently shipped 480 tonne of frozen mackerel on pallets to St. Petersburg. However AMcR advised that bulk shipping is OK when the volume is available and in demand but impractical when meeting smaller orders and when there is less volume in the market generally. (The minimum bulk consignment is now about 350t). AMCR expressed a preference for Peterhead over Aberdeen (in terms of container service) and over Fraserburgh (because of larger bulk vessels can be handled). However he expressed a concern over a fortnightly frequency because he needs to react to his customer’s demands and the customer dictates when it wants to receive product. h. Lunar Fishing Co – Sinclair Banks (SB)

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SB confirmed that there was no regular liner operation for bulk reefer services, or general co-loading arrangements between the processors. Vessels call on average every two weeks on an ‘as and when required’ basis. He described the peaks and troughs in supply and demand and a market that doesn’t necessarily allow planning to suit a regular container service, although admitting that a regular container service would satisfy elements of demand, particularly the Far East market where some flexibility exists. Lunar has its own 6,000 tonne capacity cold store for own and third party product but they don’t load out many containers. Containers could be loaded only if retained on a trailer and SB advised that a local operator would have to handle the logistics of container movements around the port (Lunar has 5 ‘shunters’ and trailers that could do the job). SB estimated that Lunar ships 50 container loads of mackerel a year to Japan, where high quality standards have to be met, but very little herring (In fact very little herring is containerised). Lunar’s main market is China. Although SB had no complaints about services through Grangemouth he felt that if a direct service proved cost effective it would be ‘interesting’ and could stimulate trade. (Freight rates for China in the region of $150 per tonne. Reefer rates to St. Petersburg @ $75 per tonne) SB would require rate indications from Samskip, ex cold store loaded to container, for the following destinations: o Tokyo o Qingdao o Dalian o Yantai SB preferred Peterhead port compared to Aberdeen for fish exports, although road transport to Aberdeen was not a problem and if the overall price was equitable there would not be an issue. i. Alexander Buchan – Alec Buchan (AB) Alexander Buchan process and export mackerel and herring to European, Far East and Middle Eastern markets as well as to Black Sea areas such as Romania (Bourgas), Moldova and Bulgaria. According to AB most markets are served by bulk shipments from Peterhead with the exceptions being the Far Eastern and near European markets, served respectively by container and trailer modes. Containers for the Far East are loaded either in Peterhead or in Rotterdam after being shipped from Peterhead in bulk. To obtain maximum payload some containers are ‘topped-up’ in Grangemouth with product transported down by road following the container. The Russian and Black Sea markets are both fed by bulk reefer services to Klaipeda and St. Petersburg. According to AB there is a regular reefer service that offers space for all the processors and overall capacity for 1,500 tonnes every week. The Peterhead processors appear to be satisfied with the service that feeds into cold stores and onward into rail wagons from Klaipeda and St Petersburg. Transport to the Black Sea region via the Baltic is apparently cheaper and leads to less damage. AB considers a fortnightly service as adequate, providing the shipping cost is less than current alternatives and reliability is maintained. ‘Frequency’ is not necessarily an issue, local cold storage capacity is increasing (Alexander Buchan has 7,000 tonne storage capacity available) and containers could be used for additional

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temporary storage. Processors, according to AB, have access to container loading bays and would be able to maximise the payload with a direct shipping service. He believes that the Albert Quay and Merchants Quay would not be suitable but there would be no problem on the North Breakwater. Fish is already generally sold on a C&F basis with local companies controlling the freight costs. AB estimated that a total of 40 to 45 containers, from all the local processors, left Peterhead by road every week loaded with frozen pelagic fish, although this may be an over-estimate. j. Peterhead Bay Authority – John Wallace (JW) & Stephen Paterson (SP) During this follow-up meeting specific business development options were discussed. SP suggested that a Samskip service featuring a southbound call in Peterhead, followed by a northbound call in Aberdeen could best satisfy the local market’s demands. For the Peterhead pelagic business Samskip should either contact the producers direct to offer a door to door package or contact the deep sea lines already carrying the business to offer Samskip’s feeder option. JW suggested that the North Breakwater would be an appropriate berth and generators could be hired in on a short term basis to power plug in points for containers. He also identified the availability of covered storage capacity on the ‘North Base’ area, perhaps for paper. JW asked whether the feeder service would call in Lerwick, principally to load frozen fish from Shetland Catch. It was also suggested that ASCO could be involved in a ‘feeder’ service, utilising spare supply vessel capacity to transport containers between Peterhead and Lerwick. (Shetland Catch now has cold storage capacity for 20,000 tonnes). Another subject discussed was the demand for raw material from local white fish processing companies such as MacRaes. Was demand being met by local landings or is extra raw material required from Iceland and the Faroes? (Need to discuss with Crick Carleton, Ann Bell and White Fish Association) k. ASCo Peterhead – Steve McDonald (SMcD) and Fraser Stewart (FS) SMcD (steve.mcdonald@ascoplc.com) manages the ASCo bases in Peterhead and Aberdeen. ASCo also operates supply bases in Great Yarmouth and Stavanger but Peterhead is the only company owned site. ASCo’s operation in Peterhead is split between the South Base (minimum depth of water 6.0 to 6.5 metres) and the North Base (taking vessels up to 14 metre draft). The company could handle a container service at either base and if waves are breaking over the North Breakwater wave wall (<10 days per year) other quays could be used. It would assist them if vessel details could be supplied. ASCo use a range of cranes for vessel and terminal handling (no heavy forklifts) and average 30 lifts per hour when handling 10’ and 20’ containers from supply boats on the South Base. According to SMcD there is no problem with the 42-strong labour force and the company is open to negotiating a flexible package to suit the customer’s specific requirements. Detailed handling arrangements, such as loading direct to/from trailers, depends on the ship and container specifications, particularly the specification of the cranes and

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spreader attachments on the ship. Ground conditions are very stable and can take heavy loads, forklift trucks can easily be hired in and the South Base already has provision for 12 external power points. In addition to cargo handling ASCo can provide others services, such as: o Customs Clearance – through ASCo Agencies o Freight business – through ASCo Freight Management (AFM), Richard Singer

and Ed Arnett o Road haulage – local collection and delivery services o Consolidation and distribution Also discussed was the possibility of setting up a container feeder service between Peterhead and Lerwick, utilising spare supply boat capacity, take move reefer containers for Shetland Catch cargo. Further discussion is required with ASCo Marine and SBS in Lerwick to explore this opportunity. l. Fresh Catch – Chris Anderson (CA) Fresh Catch is the largest processor of pelagic fish in the area, receiving fish from trawlers in Peterhead via a direct pipeline into its nearby 48,500 square metre plant. The company has recently expanded its own on site cold storage capacity from 6,000 tonnes to 18,000 tonnes and operates a large processing plant close to the harbour. Fresh Catch sells frozen mackerel to the Far East and into Eastern and Central Europe and Russia. The Far East market is served with container services (less now being containerised and transhipped in Rotterdam where damage problems arising) while Russia and Eastern Europe is served by bulk reefer services into Klaipeda, Kaliningrad and St. Petersburg. The Baltic is served throughout the year with sales based on price, service and volume. Most sale terms are C&F. CA does not think a container service would compete on cost with reefer services that cost in the region of $60 to $70 per tonne ‘free alongside quay’ (Previously quoted $105 per tonne to St. Petersburg). Carriers such as Green Reefers and Silver Seas are chartered on a spot basis. In addition the buyers in this market tend to be big ones that buy in large volumes, then selling on to smaller traders. However one downside to this mode is the cost of demurrage associated with slow loading operations due to poor labour and badly configured holds (Normal loading time is 60t per hour) Most herring is sold into the European market and transported in Fresh Catch’s own trailers. CA estimated that Fresh Catch shipped an average of 10-12 containers per week to the Far East during a season that lasts between October and June (peaking November to March), although volumes caught can fluctuate dramatically during the season depending on catches. CA felt that a fortnightly service could be a problem because a missed sailing because of bad weather turns it into a monthly service. Fresh Catch currently use Hanjin, Maersk and OOCL for containers out of Peterhead and COSCO in Rotterdam for fish transhipped in Rotterdam destined for China. Duncan Adams and a couple of other Grangemouth hauliers are controlled and paid direct by CA working on a round trip basis, often involving container cleaning prior to delivery in Peterhead. Fresh Catch ship out to a range of ports in the Far East, namely: o Pusan (Korea) – Forecast for February to May 2004: 180-190 containers

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o Qingdao (China) – Forecast for February to May 2004: 225 containers (all China) o Dalian (China) o Tokyo (Japan) – Forecast for February to May 2004: 80-90 containers o Yantai (China) o Manila (Philippines) o Kaohsiung (Taiwan) o Bangkok (Thailand) o Songkhla (Thailand) o Hong Kong (China) o Singapore o Djakarta (Indonesia) o Penang (Malaysia) o Johore Bahru (Malaysia) Fresh Catch also ship 65-70 containers a year to Norway. CA would require rates and a service specification for all the above routes for 40’ reefer containers. Fresh Catch have already had discussions with Samskip representatives in Rotterdam and offered to supply electrical points and skeletal trailers but Samskip had not responded. Berthing on the North Breakwater was discussed but CA and Samskip would need to be confident that bad weather disruption would be minimal and CA would want to know what ‘back-up’ contingencies Samskip could provide to ensure containers meet the scheduled mother vessel. The situation, as described by CA, for provision of electrical connections for reefer containers was as follows: Fresh Catch has 5 points on its own site Further plug in points could be set up on the factory site (CA has just invested

£0.5m in upgrading the electricity supply to the factory) Temporary generators as a ‘stop-gap’ are costly and unreliable (£700 per day for

a large generator, plus fuel costs) The harbour might struggle for power on the ASCO North Base and Keith Inch

areas, but a new transformer due to be installed in May will solve that problem Reefer containers require 32 amp / 440 volt power supply, i.e. 1,500 to 1,600

amps for 40 containers Points need to be near the quay (stack 3 high?)

Fresh Catch has increased production in the last 12 months and has increased sales to existing markets. In 2005 CA also intends to develop ‘added value’ activities in Peterhead (such re-processing operations, such as filleting, are currently carried out in China), with an overall increase in output of 6,000 tonnes anticipated. ‘Added value’ operations will require bringing in foreign labour. m. Enterprise Freight – John Dickie (JD) and John Morrison (JM) Enterprise is now part of the ARR Craib organisation with offices at Craib’s new Cumbernauld depot. JD and JM have worked mostly in the Central Belt and Fife areas for many years and built good working relationships with manufacturers (Tullis Russell, Forbo Nairn etc.) and deep sea lines. Enterprise is currently preparing a bid for Arjo Wiggins deep sea business, estimated to amount to 906 teu out of the Stoneywood Mill per annum. ARR Craib (Enterprise) already controls the BPB Paperboard business out of Aberdeen. The BPB business controlled by Criab’s is currently shipped from Grangemouth. Empties are obtained from a common user stock in Grangemouth and transported up

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to Aberdeen either by Craib’s own haulage or under the control of the deep sea line. Once loaded the containers are transported back to Grangemouth by EWS train services from the Guild Street terminal in Aberdeen. JD confirmed that the rail services and general re-positioning costs are competitive for eastbound freight movements and the train service worked on a 2 day round trip transit time. Craib’s also use deep sea containers for northbound domestic loads to get the equipment re-positioned into Scotland. BPB’s South African business is sold on an ex-works basis and therefore Craib’s has no control over the choice of shipping line and routing. This traffic is handled by P&O and loaded out of the UK from Tilbury. JD believes that a fortnightly service could be of use for the BPB business and other Enterprise traffic. He also suggested that Samskip’s integrated European services could be of use for BPB’s European business providing the receivers (Stuttgart was mentioned) can handle containers. Key carriers and destinations for BPB business are: • COSCO – China (Shanghai) • CMA CGM • K-Line – Thailand (Laem Chabang) • P&O – South Africa The Arjo Wiggins business that is out for tender is currently controlled by DFDS (Purfleet office). In relation to this business JD would be interested in receiving rate indications from Samskip for the following destinations, ex Aberdeen: New York and Chicago – 100 x 20’ containers Qingdao (China) – 150 x 40’ containers Hong Kong – 40’ containers Fuzhou (China) – 40’ containers

n. SeaRoute International – Alan Porter (AP) AP was behind the original foundation of the Concorde Container Line service, primarily to serve Searoute’s Aberdeen based deep sea business (Nor-Cargo provided stevedoring services for containers and Searoute for break bulk). There was also a strong association with K Line (red boxes) from the outset. However BP is now such a large customer that Grangemouth is the Scottish focus for the service. AP considers a fortnightly offering from Samskip would not be able to compete for transhipment traffic, on service terms, with the regular services using Grangemouth. As the ships employed had to get larger to satisfy the BP business and costs in Aberdeen increased as a result AP proposed to bring the three main parties together to reinstate a direct Aberdeen call and a service connecting with Rotterdam and Antwerp. The three potential partners were: Nor-Cargo – export break bulk Searoute – export and import containers and break bulk Concorde (John Hie) – Third party deep sea containers (OOCL, P&O, Lykes,

Medite etc.) However Nor-Cargo failed to support Concorde when it needed it and concentrated on its own Amsterdam service. Since then the Amsterdam service has been withdrawn and Nor-Cargo has renewed interest in a partnership but Searoute has already begun a process of developing the use of the UK rail system, albeit mostly from Mossend southwards.

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In AP’s view Aberdeen needs to be the base port for the service and there needs to be capacity to handle break bulk (on flat racks?) Searoute represent K Line in Scotland and handle fish and potatoes in reefer containers. Concorde had problems in Aberdeen with the provision of electrical connection points. Most Searoute business in Scotland is ‘merchant’ controlled, i.e. Searoute has its own contracts with rail, road haulage and feeder companies. Therefore Samskip would negotiate direct with Searoute on feeder costs. AP believes there will be business for a fortnightly service from Aberdeen, but only when transit time is not an issue. Samskip must demonstrate that it has good transhipment connections. Felixstowe is generally regarded as the best port for US exports while Rotterdam and Antwerp lead on Far East connections. Searoute’s potential business is summarised as follows: o Import – 15 to 25 Searoute controlled containers per week mostly via Antwerp

carrying oil related business and personal effects from the US. Plus 3 to 4 containers from others (Hapag Lloyd is prominent, for whom Searoute provide de-consolidation and delivery services)

o Export – Mostly BPB Paperboard/Craib business with K Line, ranging from 5 to 50 containers per week

o Export – Potential to ship 20 containers per week to Northern Germany but business does not originate from North East Scotland and rate and service would need to be keen to match the existing service

AP would require quay to quay rate indications and service details (schedule and transhipment services) for 40’ and 20’ dry containers shipped between Aberdeen and Rotterdam and Antwerp. He is also interested in the possibilities for importing out of gauge and heavy lift business on flat racks direct into Aberdeen because of the problems encountered in road transport between Grangemouth and Aberdeen o. Freight Co – Bill Lints (BL) Freight Co works with the companies that supply and service the oil and gas ‘majors’ in Aberdeen. FCL business is generally ‘sporadic’ and would currently be shipped via Grangemouth (feeder) or Coatbridge (rail to southern ports). BL could not put an estimate to the total volume of freight associated with the sector but confirmed that there are large period fluctuations. Import business is mainly ‘routed’ by suppliers agents and shipping lines from Japan and the US, while Africa and the Middle East are strong export markets. Freight forwarders in Aberdeen generally use major NVOCC companies (many based in Manchester) for LCL exports. The system appears to work efficiently with daily collection services linking Aberdeen with companies such as Cardinal Freight, Tuscor Lloyds, Allseas Cargo and Aerial Maritime. These Manchester based NVOCCs sub-contract the haulage to Scottish companies such as Caledonian Logistics to maintain efficiencies. BL identified Searoute as the only local NVOCC but suggested that the only way for a company to capture the critical mass of cargo required from the local market for a full NVOCC operation was to be totally ‘neutral’ (Maybe Samskip could provide that ‘neutral’ service – only if they stay out of the door to door market and work with the forwarders in this sector)

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BL thought a fortnightly service would not meet market requirements where transit time is important. It would need to be weekly in order to catch the deep sea lines that also generally operate on weekly schedules. He felt that a mid-week call would be most suitable, allowing time for freight to meet deep sea lines that generally call into Rotterdam and Antwerp on a Friday, Saturday or Sunday. BL suggested that Samskip should advertise a weekly service and arrange transport via Grangemouth on the weeks when the vessel doesn’t call. BL recommended contact with Panalpina as generators of regular freight and advised that DHL would most likely use its own internal networks to move freight to ports within the UK. He also advised that airfreight operators such as Servisair would be unlikely to use the service for its ‘flights’ that are transported by road down to London. p. ARR Craib – Eddie Anderson £440 Aberdeen/Rotterdam – door to quay q. Petrasco/Denholm – Jim Cunningham (JC) Petrasco business is mainly airfreight. JC has no view on the volume of road freight transported in and out of Aberdeen, but has some contact with the trade and transport of seed potatoes. r. Morrison (Leith) – Alf Forrest (AF) Morrison is a pure freight forwarding company dealing mostly in deep sea exports to the US, Far East and Australasia, but with only limited business in North East Scotland. Virtually all transport and shipping arrangements, including collection and choice of feeders, are left to the deep sea line to organise. Maybe there is an opportunity to sell US export and import services via a Samskip call in Aberdeen/Peterhead and transhipment over Iceland. s. John S Braid – John Ashton (JA) Most of the company’s dry container business is carried by Maersk and Evergreen and it is the line that decides upon the routing and feeder service options. If Samskip can reduce the deep sea line’s feeder costs they are likely to work with them, although Samskip may wish to offer the full door to door package direct with the shipper/consignee using a different deep sea line. Only a small element of Braid’s business comes from or goes to the North East of Scotland. Braid’s is the Scottish agent for Hanjin, Geest and HUAL (clarify with GWR). Braid’s ISO tank and Flexitank business is handled by Joe Gillick (JG) and Gary Russell in Glasgow. The company has very little business from the North East of Scotland, other than collection of whisky and delivery into the Central Belt for bottling. Overall Braid’s move 130 to 150 ISO tanks per month. JG did advise that there was a benefit in using UK ports for deep sea export and import because of the difficulties that can be encountered when a Continental port is the first European port of loading/discharge. When that is the case and containers have to be transported from one terminal to another it causes complications with T1 documents. If bulk product is coming out of North East Scotland for export Braid’s could consider ‘flexitanks’ on an Aberdeen/Peterhead feeder. Maybe there is an opportunity to ship

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empty containers into Aberdeen or Peterhead for loading in the North East? Braid’s could also be interested in US export connections. t. Croan Seafoods – Martin Croan (MC) Croan Seafoods has offices and processing plants in Peterhead and Edinburgh (0131 657 9888). They sell mackerel to three main markets; UK (50%), Russia (25% - depending on exchange rate) and deep sea (25%). Annual production, concentrated in the period October to April, is in the region of 7,000 tonnes. Russian exports are shipped in bulk on reefer vessels from Peterhead, usually through ports in the Baltic States, sold on both FOB and CIF terms. Bulgaria is an emerging market with product transported by road in containers (previously in bulk). For deep sea destinations Croan’s use mainly Maersk (Glasgow office) and OOCL with containers trucked to either Grangemouth to load to feeder services or to southern England to connect with ‘mother’ vessels. Approximately 100 container loads go to South East Asia, China and Japan during the mackerel season. Croan’s used to sell “roll” herring to Japan but competition first from North American suppliers and latterly from stocks caught in the Sea of Oktootsk have “blown European herring supply out of the water”. Michael Croan (and Linda) handles the logistics of transporting fish to customers around the world, but according to Martin initial interest in the Samskip service would be for Far East destinations only. Deep Sea business is normally conducted on a CIF basis and any direct shipping link in the chain would have to be cost effective and provide goods connections to the deep sea lines on the Continent (Rotterdam). Although MC did concede that the urgency attached to different orders is variable. He also suggested that a cost effective service could also improve competitiveness and open up new markets. (Help herring sales outside of UK and Germany) Croan’s would be interested in quotations for door to door packages and believe that Peterhead Port would be the best option. Further discussion revolved around the availability and use of cold storage. MC identified Daalimpex and Klosterebere in the Netherlands as providers of competitively priced intermediate storage services. However Croan’s is also a partner with Denholms in the Peterhead cold store service company, Pelagic Freezing. Current storage capacity at Pelagic Freezing is 5,000 tonnes, equivalent to 10 days of solid landings. MC advised that they would need more capacity to be able to sell through the year and take advantage of not being a ‘forced’ seller. Current practice is biased towards medium term storage at the customer’s end of the supply chain. MC believed there had been a change in the market towards smaller more frequent orders during the season. Currently capacity restrictions require Croan’s to clear out as much of the mackerel as they can at the end of the season to accommodate herring. u. Caley Fisheries Sales Agent – Mark Pratt (MP) MP’s company, based in Brighton, handles the sales and transport process for Caley Fisheries and other similar organisations in the fish processing sector. According to MP the company deals with 5 export containers per week from Caley Fisheries during the mackerel season (October to March). He also advised that if a more cost effective transport solution was available for the north east of Scotland, other than ‘costly’ inland road haulage, new markets could be opened up for herring exports. His

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company alone could contract to sell 40 to 50 container loads during the season (July to August) if it could compete on price. MP uses the shipping line that offers the best door to door rate for any given shipment and therefore suggested that Samskip would need to contact all of the shipping lines to make them aware of the new routing possibility. v. Shetland Catch – John Angus (JA) Shetland Catch processes up to 800 tonnes of mackerel per day during the season, operating on a continuous 24 hour, 7 day week cycle. Cold Storage capacity on site in Lerwick was doubled to 12,000 tonnes (15 days production) in 2001. According to JA choice of shipping options comes down to cost. The company has used Maersk and North Sea Containerline feeder services in the past but has difficulty loading containers on its own premises. An area close to the local Co-op store was surfaced and set aside for this operation in conjunction with the Port Authority, even allowing for the provision of power connections for reefer containers. Shetland Catch use Shearers Shipping for stevedore labour in Lerwick and hire equipment from SBS Logistics. Currently reefer services such as Green Reefers or Silver Seas are chartered to load frozen product on the quay adjacent to the Shetland Catch plant to ship either direct to customers in the Baltic and on the Continent or to intermediate cold store operators in the Netherlands. Loading of 2,000 tonnes from the company’s own pier generally takes 24 hours. Shetland Catch has negotiated a price for storage and handling with Daalimpex in Velsen and Harlingen in the Netherlands that includes four weeks storage. From these high capacity stores product is subsequently loaded into containers and transported by road or barge to Rotterdam for loading to deep sea vessels destined for the Far East and African markets. JA would need door-to-door rates from Samskip for Far Eastern destinations to consider the benefit, but the whole operation would first need to be assessed. He advised that Shetland Catch wouldn’t be able to load containers fast enough to keep up with total production but container mode could be suitable for some customers that require smaller volumes more frequently (i.e. not enough storage capacity at destination). w. International Paper – Gary Oliver (GO) Latest feedback from GO indicates that there is very little Continental or deep sea export traffic being produced at the Inverurie plant. If there are any shipments GO arranges transport direct with the appropriate carrier and already supports the Superfast service (through ARR Craib) from Rosyth whenever possible for European traffic. The Inverurie operation is part of the company’s pan-European structure geared up to supplying the UK market. Export volume currently amounts to around 2,000 tonnes per annum, mostly transported by trailer with ARR Craib. x. Nor-Cargo – Ian Shewan (IS) Nor-Cargo in Aberdeen represents the weekly Sea-Cargo service to Norway providing stevedoring, ship’s agency, transport, storage and line agency services. It is not a general forwarder with general forwarders tending to be Nor-Cargo’s customers on the Norwegian service. Nor-Cargo also uses the Fjord Line service

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from Newcastle to complement its own connection from Aberdeen to the Norwegian west coast. It would only support a new direct service to the Continent if appointed as the agent because it already offers a Continental connection via transhipment in Stavanger on its own services. Nor-Cargo used to operate its own weekly service between Aberdeen and Amsterdam but according to IS the inbound leg was weak, carrying only oil related business. The stevedoring division operates a large forklift truck in Aberdeen and was involved in handling the Concorde Container Line service. According to IS the port’s No.20 crane was perfect for the job but when it broke down the high cost of crane hire and slower handling rates meant Aberdeen could not compete with Grangemouth. When Concorde did call in Aberdeen IS estimated that it averaged 20 containers in and 20 out per week based around the paper and oil industries, but the overall picture was very “up and down”. He assessed that Peterhead Harbour and Bay authorities failed to make lasting commitments and Aberdeen was the best option, not least because Bills of lading generally denote Aberdeen as the port of discharge for imports. IS advised that haulage rates from Scotland to southern UK ports are currently very low to encourage eastbound freight, redress the trade imbalance and re-position containers for more profitable westbound business. Concorde used to pick up empty containers in Grangemouth to bring up to Aberdeen to load. Nor-Cargo would naturally favour an Aberdeen port of call, especially if the planned vessel has its own lifting gear. IS estimated that it would cost £20 to £30 more per load to take containers from the Aberdeen area to Peterhead compared to Aberdeen port. Currently Craib’s run an efficient haulage service to and from the port because it can generally pick up an inbound load from the port when it delivers an export load. IS used to handle 300 40’ containers during the season (October to February) loaded with seed potatoes destined from North East Scotland to the Canary Islands and North Africa. He would expect to be able to get this business on a new direct service to the Continent, although he had reservations about a fortnightly service being suitable. Sea-Cargo is in the process of introducing new and larger ships to its fleet and senior executives have been promoting its services to the local oil and gas industry as an efficient means of serving and connecting the offshore industries concentrated in Scotland, Norway and the Netherlands. A new direct connection between Aberdeen and Rotterdam could also play a part in this development. y. Panalpina – Gary Archer (GA) Panalpina in Aberdeen is heavily involved with the oil and gas sector and according to GA a direct container service connection to the Continent would be of interest. However existing business is generally break bulk (out of gauge) with only a limited amount of container activity. Furthermore break bulk transhipment activity is increasingly concentrating on Antwerp. Forwarders in Aberdeen utilise the Euroline/Rulewave general cargo service that links Aberdeen and Antwerp, but there could be options using ‘flat-racks’ for loading equipment to container vessels.

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z. Crown Worldwide – Wendy (Wx) Crown Worldwide, based in Montrose, is involved in the transport of personal effects on a world-wide basis. The company has offices throughout the UK and overseas with all inbound container loads directed through the company’s depot in London where customs clearance is dealt with prior to inland distribution by road and rail. The Montrose office deals with approximately 100 containers a year, mostly exports. Wx would be interested in a direct service to the Continent from Aberdeen and already use Nor-Cargo for all shipments to Norway. However, Crown Worldwide, along with other companies in the same sector work with and affiliate to the Movers and Traders Club. This trade organisation provides group buying power with deep sea lines (P&O Nedlloyd, Maersk and OOCL). aa. Movers and Traders Club – Moore Shanks (MS) Through the Movers and Traders Club companies such as Crown Worldwide have agreements in place with the deep sea lines. According to MS the Club nationally administers 15,000 teu international movements every year. MS perceives a direct service from Aberdeen as an opportunity to take vehicles off the UK roads and save money. He quoted a cost of £700 to get a container from Aberdeen to Southampton. However he advised that the decision would rest with the lines that control the collection and delivery and have an interest in the feeder services that call into Grangemouth. Samskip would either need to contact the appropriate lines direct, offering a saving on the overall feeder movement to and from the North East of Scotland. bb. Eagle Global Logistics (EGL) – Chris Milne (CM) EGL are one of the top 3 forwarders involved in the oil and gas sector in Aberdeen. According to CM a big reason for its prominence is a contract with ABB Vetco Gray. CM has to work with EGL’s preferred carriers, now including Hapag Lloyd, APL, NYK, MSC and Safmarine (presumably to specific routings and terms). EGL (Aberdeen) handle approximately 30 export containers per month to worldwide destinations and according to CM utilise Nor-Cargo for connections to Antwerp (via Stavanger?). However CM also indicated that volumes can be very unpredictable. EGL’s control over the ‘merchant’ haul depends on the contract of carriage and whether it is designated ex-Aberdeen, Grangemouth or Rotterdam. CM confirmed that a lot of conventional and break bulk cargo for the oil and gas sector tranships through Antwerp but the minimum load for a bulk charter is over 500 tonnes. If the “price is right” and transit time and frequency meet the schedules of the ‘mother’ vessels weekly cycles CM believes EGL would be interested. EGL’s groupage business is channelled through the company’s hub in Thurrock from where the company consolidates over 100 container loads per month. Imports are usually landed in either Felixstowe or Southampton and then ‘routed’ up to Aberdeen. cc. Keuhne & Nagel – Brian Milton (BM)

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K&N use southern UK ports for deep sea business but tend to transport cargo from Scotland by trailer and then stuff into containers at depots in Felixstowe and Southampton, simply because of the cost associated with getting an empty container to Aberdeen is prohibitive. dd. DHL Danzas – Maureen Weir (MW) The Aberdeen office handles mostly airfreight. Any LCL cargo that is picked up is fed into the company’s own consolidation network, i.e. it is moved south from Aberdeen. ee. Aberdeen Harbour Board – Colin Parker (CP) CP advised that Concorde Container Line used to handle 40 to 50 containers per week (loaded and empty) on its deep sea feeder service. K-Line/Searoute used to be key customers for the line, carrying paper out and oil related business from Houston in. CP felt that the Aberdeen paper business could work with a fortnightly service. CP named the leading oil majors based in Aberdeen as; BP, Shell, Team Marine and Talisman. He also advised that the container operation at the Guild Street rail terminal was suffering because the container lift being used by ARR Craib was causing ground subsidence in the yard. ff. ASCo Freight Management (AFM) – Ed Arnett (EA) AFM, according to Ed Arnett is not typical of the general freight forwarding community in Aberdeen. Its business is based around UK distribution services with very little business on an Aberdeen/Rotterdam routing. Any export business that the company does control originates from other areas of the UK. gg. Hapag Lloyd – Sue Duggan (SD) SD was very anti-Aberdeen saying she had ‘given up on the port’, claiming that high handling costs (‘crazy charges’), inflexibility and poor equipment control reporting processes had alienated Hapag Lloyd during the course of using Concorde Container Line’s feeder service into the port. Hapag Lloyd control high volumes of equipment movements for the oil industry in and out of Aberdeen. (There is a relationship with Searoute). The equipment is generally shipped on specialised line’s equipment such as ‘flat-racks’, but Hapag did not like the arrangements for shipping in and out of the port of Aberdeen. There is/was no return cargo for Hapag so the flat-racks are returned empty to the Continent. They are now using feeder services into Grangemouth (from Rotterdam and Antwerp?) and transporting the freight on flat-racks, by road and rail to and from Aberdeen. There would appear to be a developing relationship between Hapag Lloyd and EWS (Scottish Manager, David Murray). Hapag co-operate quite closely with NYK but no detailed information was available on consortium arrangements. The company is in a process of review and seems to be very introspective. It will take a strong argument to change her perceptions of the Port of Aberdeen (maybe Peterhead is the answer?) According to Alan Porter at Searoute in Aberdeen, Searoute Cumbernauld is the main customer for Hapag on this traffic. Equipment is shipped from the US on Hapag’s Genesis service. He says Hapag found Concorde a poor and unreliable service and Aberdeen Harbour Board far from supportive. The mobile harbour crane, No 40, purchased to replace the heavy lift No 20 crane does not have the capacity to lift containers from/to the ‘offside’ of a small feeder vessel and the port would not

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assist in the acquisition and use of a suitable container handling machine (Nor-Cargo did). Freight is either handled on and off the flat-racks in Aberdeen by Searoute or by the receiver, depending on the nominated consignee. Hapag’s empty flat-racks have collapsible ends and can be stacked in 4’s for return shipment. A container ship with on-board cranes should have the capacity to lift this cargo (up to 35 tonnes). hh. Maersk Sealand – John Hawthorne (JH) JH expressed an interest in the prospects of a new service but possibly only because it might pose a threat to Maersk’s own container service from Greenock and its interests in the Feederlink service from Grangemouth. ii. Mediterranean Shipping Company (MSC)/Medite General discussion revealed the specific nature of Scottish trade (2 sub-sectors: Central Belt and North East) and the problems faced by all of the deep sea shipping lines in serving the market. In summary it is a process of repositioning empty containers into Scotland for loading out that have arrived at an English port with freight consigned to English receivers. For example empties are moved from Felixstowe to Grangemouth (by feeder and rail) and from Liverpool (by rail) Having positioned containers in the Central Belt of Scotland, where the critical mass of export cargo is generated, it is a further road haul to get the containers to North East Scotland. Hauliers from the Central Belt will then naturally return to the Central Belt with the loaded container and so add to the critical mass of freight using feeder services from Grangemouth and Greenock. Without the availability of a direct feeder service transport routines have developed that concentrate on delivering loaded containers back to the Central Belt. Different deep sea lines will have different customer profiles (generally mismatched), but the ideal scenario is loaded deep sea containers into North East Scotland being reloaded out again, enabling use of shipping services in both directions. In the specific case of MSC it has very little business in the north of Scotland. All lines are paying a high cost to reposition empty containers into Scotland, while England has a high concentration of empty containers lying idle in storage yards. MSC perceive that major changes in the process are required. Samskip will have to work hard on persuading deep sea line management based in the south east of England to work with a feeder service into the north east of Scotland. Samskip’s use of Immingham could present an opportunity to collect empty line containers from what it becoming an increasingly popular feeder port in its own right. Equally the Immingham call, following a call in the north east of Scotland will delay the vessel’s arrival in Rotterdam and possibly mean that deep sea connections to ‘mother’ vessels for some markets are missed (Grangemouth has the advantage of a range of departures and Continental destinations).

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11) Contact list Paper BPB Paperboard (ARR Craib) – Eion Henderson, Aberdeen (01224 661000) Arjo Wiggins – Alec Lornie, Aberdeen (01224 802200) International Paper – Gary Oliver, Inverurie (01467 627000) Seafood Fresh Catch – Chris Anderson, Peterhead (01779 474860) Alexander Buchan – Alec Buchan, Peterhead (01779 477380) Lunar – Sinclair Banks/Ross Gordon/Alec Buchan, Peterhead (01779 477898) Caley Fisheries – James Brown (01779 479772), Ian Lake (07980 680092), Len Myers, Frankie Kidd (Home - 01779 479121) Mark Pratt – Selling agent for Caley Fisheries based in Brighton (01444 881091) Croan Seafoods – Michael or Martin Croan, Peterhead/Edinburgh (01779 471621/0131 657 9888) Scofish Ltd (Thistle) – Allan McRobb/Michael Clark, Fraserburgh/Aberdeen (01346 586407/01224 222089) Scottish Fishermans Harvest – Nicolay Koudreiko, Fraserburgh (01346 519254) Shetland Catch – John Angus (07801 976315) International Fish Canners – Jill Campbell, Fraserburgh (01346 513191) Norsea Fish – Maurice Taylor/Ian McFadden, Aberdeen (01224 703222) MacDuff Shellfish – Paul Beaton (01771 624000) Deveron Shellfish – Steven Inglis, MacDuff Bellamy’s Shrimp MacRae Foods (secondary processors into UK market) – Adrian Robertson, Fraserburgh (01346 513741) Youngs Bluecrest - Fraserburgh Cooper and Thompson – Aberdeen (white fish) John H Milne - Peterhead Thistle Seafoods – (white fish) Noble Brothers – Andrew Noble Whitelink – Ronald Noble, Fraserburgh Pelagic Freezing Scotland (jointly owned by Croan Seafoods and Denholms) – David Fasken (01779 481481) Oil and offshore Petrasco – Jim Cunningham, Aberdeen (01224 337733) Grampian International Freight – Andy Smith, Aberdeen (01224 661000) Eagle Global Logistics (EGL) – Sandra Wilson, Dyce (01224 770548) SBS Logistics – Mike Porter, Altens Industrial Estate (01224 241446) Panalpina – Gary Archer (01224 773755 x 221) UTi Logistics – Neil Howarth, Dyce (01224 725225) R A Executive Freight – Richard Allan/John Campling, Kirkhill Industrial Estate (01224 770600) Pentagon Freight – David Hodges/Dave Wilson/Gordon Shand (01224 405600) Keuhne and Nagel – Brian Milton/Gary Gordon, Aberdeen (01224 725288) Freight Co International – Bill Lints, Dyce (01224 771881) DHL Danzas – Maureen Weir, Dyce (01224 214161) SBS Logistics – Mike Porter, Aberdeen (01224 784529)

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ASCo Freight Management – Richard Singer/Ed Arnett (01224 729955) Blue Water International – Neil Youngson, Dyve (01224 771191) Other exporters/importers Nexfor – Ian Murray, Cowie (01786 819250) Baxters Deans Shortbread Walkers Shortbread Grampian Chickens (Massive year round potential in the Russian market for chicken portions Chicken is Fresh Catch’s biggest competitor in the Russian market) Potatoes (seed potatoes) – “Tati Bill” Power Jacks – Fraserburgh Gray and Adams – Peter Gray, Fraserburgh (manufacture fridge trailers, importing parts and exporting finished product) Johnsons of Elgin Freight Forwarders Nor-Cargo – Ian Shewan, Aberdeen (01224 596481) Streamline – Phil Bremner and Alex Roberts, Aberdeen (01224 211506) John S Braid – John Ashton, Glasgow Morrison (Leith) – Alf Forrest Knight Watson – Gary Louden, Grangemouth Searoute International – Alan Porter/Jim Cochran, Cumbernauld (01236 861230), Rod Palmer, Aberdeen (01224 581777) Denholms – John Watt, Grangemouth (01324 482201) Euroline – Mike Packer, Aberdeen (01224 595999) ARR Craib – Eddie Anderson, Aberdeen DFDS – Peter Reid/Ray Jones, Uddingston (01698 811522) Frigecosse/Tradimar – Andrew Kirk/Allan Smillie, Bellshill/Aberdeen (01698 845225/ 01224 584400) Blue Water International – Neil Youngson, Dyce (01224 771191) T.Ward – Souter, Grangemouth (www.tward.co.uk) Enterprise Freight (Int’l Forwarder for Craib) – John Dickie, Cumbernauld (01236 794570) Ports and port operators Aberdeen Harbour Board – Barclay Braithwaite/Captain Colin Parker, Aberdeen (01224 597000) Peterhead Bay Authority – John Wallace/Stephen Paterson, Peterhead (01779 474020) Peterhead Harbour Authority – John Paterson, Peterhead (01779 483600) ASCo – Heather Sharkey, Aberdeen (01224 564738), Steve McDonald, Peterhead (01779 873178/873000, 07803 498955) Stevedores Nor-Cargo Streamline Aberdeen Cargo Handling SBS ASCo George Stephen Stevedores Limited Willie Whyte Stevedores Road Haulage ASCO

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ARR Craib Ashley Transport (Seaforth) JBT

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12) Appendix

Company Export/Import Markets Indicative deep sea volume (containers) Freight Forwarder/ Further comments

Per week Overall estimate Deep Sea Line

Arjo Wiggins Export (Paper) China, USA, Hong Kong 16 940 teu tender indication (including 400 x 40') - 100 x 20' containers to New York and Chicago, 150 x 40' containers to Qingdao

DFDS (Purfleet) Business currently handled by DFDS but is out to tender. Developing business to China (Shanghai) - 2 containers per day. Get more information on Arjo business from John Dickie. Twice as much volume is exported to France (Lyon) and western Europe

BPB Paperboard Export (Paper) South Africa, China and Europe

16 Volume in 2004 dropping from 1,100 to 800 containers

K Line, CMA CGM, COSCO and P&O

Could also be potential to containerise European traffic and use the service providing the receiver can handle containers

International Paper Export (Paper) European Approximately 2,000 tonnes for export annually currently shipped in trailers

ARR Craib International Paper once had 20 trailer loads per week out of Aberdeen in the Nor-Cargo service to Amsterdam. Business was lost to an IP plant in Poland

Fresh Catch Export

(Pelagic) China, Japan and Far East

12 Mackerel shipments between November and May (360)

Hanjin, Maersk, OOCL and COSCO

Use reefer vessels for bulk shipments to Klaipeda, Kaliningrad and St. Petersburg. Being quoted $48 per tonne from Rotterdam to Far East

Alexander Buchan Export (Pelagic)

Far East (China and Japan)

10 Shipper advises approximately 300 containers shipped during the mackerel season

Middle East, Black Sea, Russia and Baltic served by reefer vessels. Netherlands and Germany in trailers

Lunar Fishing Co Export (Pelagic)

Japan and China 2 50 containers a year to Japan Russia and Egypt served by bulk reefer vessels

Caley Fisheries Export (Pelagic)

China, Korea and Romania

2 30/40 in 2003 Direct call would enable full payload in containers

Croan Seafoods Export (Pelagic)

South East Asia, China, Japan and Bulgaria

3 Approximately 1,750 tonnes for deep sea markets

Maersk and OOCL Annual production of 7,000 tonnes of mackerel. 50% for UK market, 25% for Russia and 25% for deep sea

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Company Export/Import Markets Indicative deep sea volume (containers) Freight Forwarder/ Further comments Per week Overall estimate Deep Sea Line Scofish Export

(Pelagic) Far East 4 Very approximately 100

containers. Plus bulk shipments to Rotterdam for storage, containerisation and transhipment to Far East

Agent in Hull. Uses OOCL, Hanjin, Zim (for Israel) and MSC

Interested in developing into the Russian market

Scottish Fisherman's Harvest

Export (Pelagic)

Shetland Catch Export (Pelagic)

Japan, Far East, Africa 19 Total mackerel production is in the region of 50,000 tonnes. Ship in bulk direct to Baltic or for deep sea via cold stores in Netherlands

Processing up to 800t per day during the peak mackerel season October to March. Have used Maersk and North Sea Containerline feeders in the past

International Fish Canners Export Europe, USA, Canada and Far East

Involved in pre-cooking and canning of pelagic fish. Raw material supplied by parent company Scofish. UK is main market. Cans are sourced in UK and imported from Denmark

Norsea Fish MacDuff Shellfish ASCo Freight Management Mostly UK distribution from aberdeen with

any export traffic originating fron other parts of the UK. Not a typical Aberdeen based general forwarder

Danzas Mostly airfreight DFDS Eagle Global Logistics Export World-wide 7 Provided with an estimate of 30

containers per month EGL 'preferred' carriers - Hapag Lloyd, APL, NYK, MSC, Safmarine

Imports generally routed into Felixstowe and Southampton. Groupage is directed through EGL consolidation depot in Thurrock

Executive Freight Freight Co Import &

Export US and Japan for imports, Africa and middle East for exports

FCL business only sporadic NVOCC Most cargo is grouage exports shipped via Manchester based NVOCC. Also handle routed import consignments.

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Company Export/Import Markets Indicative deep sea volume (containers) Freight Forwarder/ Further comments

Per week Overall estimate Deep Sea Line

Grampian International Freight

Export & Import

European exports and US imports. Also containerised exports to Nigeria

Oil sector exports to Nigeria and paper exports to Eastern Europe. Unspecified volumes

Imports governed by US companies (Houston) and the deep sea lines that they use

Deep sea imports from the USA for the oil and offshore sector, mostly out of gauge and heavy lift items. Mostly unaccompanied trailers otherwise

Keuhne & Nagel Export Transport freight south and load to containers in southern ports, due to prohibitive cost of re-positioning empty containers

Panalpina Export & Import

Some container business and could consider 'flat-rack' options out of Antwerp

Business as with most forwarders in this sector is break bulk and out of gauge. Will be customers of Euroline

Pentagon Freight Petrasco Involved mostly with airfreight but has

contacts with the seed potato shippers

SBS Logistics Export & Import

World-wide Full load and groupage business World-wide movement of equipment (mostly rental equipment) for the oil industry

Blue Water Shipping Uti Export &

Import Searoute for groupage

exports Also handles import routed cargo and had experience with Concorde Line albeit once removed via Searoute

Enterprise Freight (ARR Craib)

Euroline Export (& Import?)

Japan Agent for Rulewave - General cargo liner service. Use(d) Southampton by road Aberdeen / Coatbridge and rail Coatbridge / Southampton. Steel from Japan transhipped in Antwerp? Scottish agent for NYK and Mitsui OSK

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Company Export/Import Markets Indicative deep sea volume (containers) Freight Forwarder/ Further comments

Per week Overall estimate Deep Sea Line

John S Braid Hanjin, Geest, HUAL Involved in whisky business. Opportunity to bring empty ISO tanks and dry containers into Aberdeen or peterhead for loading in the North East

Nor-Cargo Export Canary Islands and Morocco

Nor-Cargo could control movement of 300 40' containers of seed potatoes destined for Canary Islands but needs to move as soon as it is out of the ground. Fortnightly service not good enough

Nor-Cargo is general agent and ships agent for Sea-Cargo service, not a general forwarder and doesn't control traffic directly - other than potatoes

Searoute Export & Import

Imports from USA 20 import

K Line, Hapag Lloyd Agent for K Line and provide de-consolidation services for Hapag Lloyd imports. Aberdeen's only deep sea NVOCC operator

Streamline Shipping Export China Unspecified, but variable volume of 40' containers

Movers & Traders Club Export &

Import World-wide 2 per week from Crown Worldwide P&O Nedlloyd, OOCL,

Maersk Movers & Traders Club represents UK forwarders involved in the international movement of personal effects

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