Supply Chain Resilience (S.R.4/2024): Response of the Minister for Sustainable Economic Development.

Findings

Comments

1

The Jersey Competition and Regulatory Authority have undertaken two Market Studies of the freight logistics market and made a number of recommendations that have been accepted by the Minister for Sustainable Economic Development.

This is correct.

2

The Minister for Sustainable Economic Development has produced a Policy Framework for the Ports Sector and updated Sea Transport Policy.

This is correct.

3

Although efforts are made to consult with stakeholders regarding policies relating to the Island's supply chain,

Government maintains open and robust routes of communication with external stakeholders in the supply chain. Engagement is led by Ministers and Officers alike. Government is always happy to hear  from,  and  work  with,  stakeholders  to

Findings

Comments

some key operators feel as though their views are often ignored.

understand  how  their  perspectives  can  be integrated in policies.

4

The Government of Jersey is producing a New Civil Contingencies Law which will reinforce emergency procedures, including those around the supply chain.

This is correct.

5

Inclement weather was identified by many as a key disruptive factor to the Island's supply chain, with there being calls for greater communication and investigation of operational decisions leading to cancellation of services in this regard.

Noted.

6

Potential mechanical failure of ferries and harbour facilities, pose a notable risk to the supply chain's reliability and efficiency.

Elizabeth  Harbour  is  currently  capacity constricted  in  freight  handling  terms.  The Government  is  keen  to  see  freight  handling infrastructure  and  processes  improved.  This  is why it is  important that Ports  of Jersey Ltd's Elizabeth  Harbour  redevelopment  plan  is implemented.

7

Although disruptions due to weather, and to a lesser extent mechanical failure, are accepted to a degree, early and open communication to stakeholders is required.

The  Government  agrees  with  this  view.  The Government  encourages  early  and  open communication  among  supply  chain  bodies  in Jersey.

8

Port infrastructure is identified as a key enabler of the marine supply chain and a planning application for the redevelopment of the Elizabeth Harbour is underway.

The Government supports Ports of Jersey Ltd's plan for the redevelopment of Elizabeth Harbour and is keen to see planning processes completed so that work can begin.

9

"Freight corridors" allowing transport of goods on roads by larger vehicles have been implemented and are being assessed for success levels, however the Government indicates that loads that can be transhipped from larger to smaller vehicles at the dock area may not be granted a permit.

Government  permits  oversized  vehicles  to circulate on Jersey's roads where it's in the public interest  using  the  P30  permitting  system administered  by  DVS.  This  allows  strict conditions  as  to  where  and  when  oversized vehicles  can  circulate.  These  conditions  are continually reassessed as permits are renewed in the light of changing traffic conditions and road usage.

Following  a  successful  three  month  trial  of removed time restrictions for P30 vehicles

Findings

Comments

between  the  Harbour  and  Rue  des  Pres,  the Minister for Infrastructure has decided to lift the restrictions on the route.

10

Warehousing and stockpiling in Jersey is limited, with supplies of most goods, bar fresh foods, ranging from 4 to 8 weeks.

Noted.

11

Increased production of goods in Jersey, particularly in food, may help strengthen the Island's supply chain, however it is acknowledged that production potential within the Island is limited.

The Rural Initiative Scheme seeks to promote this by assigning credits to enhancing the resilience of the food system. It is recognised however that, like most Island jurisdictions, Jersey will always need to import a significant percentage of the food it consumes.

12

The Minister for Sustainable Economic Development, Ports of Jersey, Jersey Competition Regulatory Authority and other stakeholders identify that additional trade with France will benefit the Island's supply chain and consumers.

This is correct. Expanding our use of the Southern supply chain creates additional routes to market for Jersey businesses and allows the  Island  to source a greater variety of more competitively priced goods on a route which is less susceptible to weather related disruption.

13

Air freight provides for additional resilience of time critical goods.

With 95% goods arriving to Jersey by sea, it is likely that air freight does not represent a viable alternative  to  Ro-RO  and  Lo-Lo  harbour operations in the context of overall supply chain resilience.

14

An updated Operating Agreement for passenger and freight ferry services, due to be finalised in March 2025, provides a key opportunity to strengthen the Island's supply chain resilience.

While procurement is ongoing, the Government cannot comment on the future of ferry services beyond  the  end  of  the  current  Operating Agreement.  However,  the  firmest  emphasis  is being placed on freight handling and supply chain resilience in the procurement process.

15

Business failure is a key threat to supply chains and has resulted in market consolidation within Jersey.

Noted.

16

The current ferry Operating Agreement poses a specific barrier to operation of Roll-on Roll-off freight service due to those proposing to use the harbour ramps being required to also provide passenger services. The Recently issued Sea Transport Policy would appear to maintain this position.

The current Operating Agreement puts in place a so-called "high barrier to entry" which allows the issuance  of  additional  ramp  licences  to  other Ropax operators that can provide the same service level as the principal ferry operator. Note, this does not apply to other types of freight vessels such as load on, load off vessels (LoLo) or, more broadly in the ferry services market, passenger- only vessels. LoLo remains an important mode of freight transport for the Island and provides an

Findings

Comments

alternative  form  of  competition  for  freight services.

17

A volume discount-based structure is incorporated within the ferry service's rate card, although this is generally accepted as a standard practice there are calls for the rates to be open published.

The current ferry services procurement process is placing firm emphasis on freight handling and prices. The Government cannot comment on next steps at this stage.

18

No detailed numerical economic analysis of the ability for the Island's economy to support multiple operators within its supply chain has been undertaken.

Through ongoing ferry services procurement, the government has undertaken detailed commercial and technical analysis around the ferry services market in the Channel Islands, and globally, to inform its processes and decision-making. This analysis remains commercially sensitive.

19

The Government supports competition in the freight logistics market, or in the absence of effective competition, regulation of the market.

Agreed. This principle is set out in the Ports Policy Framework.

Recommendations

To

Accept/ Reject

Comments

Target date of action/ completion

1

The Minister for Sustainable Economic Development should, in his Ministerial Response, clarify a timeframe for updating the Policy Framework for the Ports Sector to ensure it remains current.

MS ED

Completed

The Ports Policy Framework (PPF) was published in January 2024 to provide a policy platform for bodies across  Jersey's  ports  sector.  The PPF is an output of the Ports Policy Ministerial  Group;  the  group  will review  the  PPF  periodically  to consider any updates but do so on the  basis  on  need.  It  is  not anticipated that this framework will be updated during the remaining two years of this term of office.

Completed

2

The Minister for Sustainable Economic Development should ensure Government of Jersey consideration of

MS ED

Neither accept  nor reject

The  Minister  is  always  open  to meeting with Chamber committees and  has  previously  met  with  the Chamber  of  Commerce  Logistics and Supply Chain Group. He has a

N/A

Recommendations

To

Accept/ Reject

Comments

Target date of action/ completion

the views of the Chamber of Commerce Logistics and Supply Chain Group, results of the consideration should be clearly communicated with the Panel by 31 December 2024.

standing monthly meeting with the Chief Executive of the Chamber of Commerce.  The  Minister  also engages  regularly  with  the membership of Chamber and other industry  bodies,  particularly  when developing policy.

The content of these discussions are not published to allow for all parties to express their views in confidence.

3

Clauses requiring timely communication of any alteration, or cancellation, of services should be included within any updated ferry Operating Agreement.

MS ED

Neither accept  nor reject

The  Government  cannot comment on  any  eventual  contractualised terms beyond the end of the current Operating Agreement. However, the firmest emphasis is being placed on high  quality  customer  care  and communication as the government moves through procurement.

Q2 2025

4

Analysis of the success of freight corridors on Jersey's roads should be undertaken by the Council of Ministers by 31 December 2024 and should include consideration of the necessity for further implementation of corridors, as well as the potential for wider allowance of permits for freight vehicles.

MI NF

Reject

Individual  applications  for  freight corridors  will  be  continued  to  be considered and appraised on a case- by-case  basis  though  the  P30 Licencing  process.  However, potential  for  wider  allowance  of permits  for  freight  vehicles  is problematic due to the character of Jersey's  constrained  and  historic network.  A  balance  is  required between the  needs  of all users  to prevent  conflict,  damage  to infrastructure  and  increased  road safety  risk  with  a  reduction  in amenity for vulnerable road users, sustainable forms of transport such as walking and cycling.

N/A

5

Noting the limited warehousing and stockpiles on Island, the Council of Ministers should ensure that consideration of replenishment of supplies for essential goods such as foods, medicines and fuels, are included within

Co M

Accept

The new Resilience Law, if adopted, would  place  duties  on  relevant persons / bodies to anticipate and assess  risk,  collaborate  and  share information  with  government, partners  and  emergency  services, develop  and  evidence  business continuity plans and participate in validating the effectiveness of those processes, among others.

Q4 2025

Recommendations

To

Accept/ Reject

Comments

Target date of action/ completion

the New Civil Contingencies Law.

Alongside  these  duties,  the Emergencies Council would require the maintenance of the Community Risk Register which would consider the  risk  of  disruption  to  critical supply  and  therefore  create  the requirement for those duty holders to operate those duties in the context of supply chain risk.

6

The Minister for Sustainable Economic Development should outline in his Ministerial Response how air freight services will be supported to ensure maintenance of provision, and include further consideration of this within any updated Policy Framework for the Ports Sector.

MS ED

Completed

Since 2003, Jersey has adopted the "open skies" principal which creates an  open  market  for  aviation operators to access Jersey. Jersey is served by a number of air freight operators  and  there  will  be  an amount of belly-hold freight carried by  commercial  passenger  carriers. Nevertheless,  the  overwhelmingly largest quantity of freight is carried by sea so it is questionable that air freight  represents  a  viable alternative to ferry services in terms of overall supply chain resilience. I would  be  happy  to  answer  any further  questions  the  Panel  may have in writing.

Completed

7

Whilst mindful of any impact upon passenger services or the attractiveness of operating a ferry service to Jersey, the Minister for Sustainable Economic Development should consider, prior to renewing the current ferry Operating Agreement, allowing the use of Roll- on Roll-off ramps for provision of freight only services.

MS ED

Neither accept  nor reject

The existing ferry operator utilises a freight-only capacity within its fleet.

The  current  ferry  services procurement process is placing firm emphasis  on  freight  handling  and prices.  The  Government  cannot comment on next steps at this stage.

N/A

8

The Minister for Sustainable Economic Development should ensure, whilst renewing

MS ED

Neither accept  nor reject

The  current  ferry  services procurement process is placing firm emphasis  on  freight  handling  and

N/A

Recommendations

To

Accept/ Reject

Comments

Target date of action/ completion

the current ferry Operating Agreement, that the rate card for shipping of freight be clearly and openly communicated with the industry, prospective operators and, if possible, the wider public.

prices.  The  Government  cannot comment on next steps at this stage.

9

To aid in clarity, the Minster for Sustainable Economic Development should, in his Ministerial Response, define the meaning of effective competition and provide an outline of potential methods of regulation of the freight logistics market.

MS ED

Completed

Effective  competition  could  be defined  as  separate  actors  in  the freight logistics industry competing for customers on the basis of cost and  service, granting existing and prospective  customers  choice, and potentially better value-for-money. I would  be  happy  to  answer  any further  questions  the  Panel  may have in writing.

Completed