Select Committee on Environment, Transport and Regional Affairs Appendices to the Minutes of Evidence


Memorandum by the Chartered Institute of Transport in the UK (CIT) (FUS 28)

THE FUTURE OF THE SHIPPING INDUSTRY

  Deep-sea shipping today is in every sense a global industry and needs to be treated as such. UK coastal and European shipping has a particular part to play in promoting environmental objectives. A UK-owned fleet can assist British trade performance.

  Issues that require attention are:

    —  Raising the profile of shipping with planning authorities.

    —  Equalising all Governmentally-regulated port charges on a European basis.

    —  Assistance to seafarer training, for national and international reasons.

    —  Focusing on the flag in matters of regulation and state aid.

  1. The interest of the Chartered Institute of Transport (CIT) is in the efficiency of shipping operations to, from and within the UK and the effectiveness with which the needs of industry and the public are met, regardless of the nationality of ownership of the companies supplying the services. Nevertheless, the extent and the strength of British ship ownership may have an indirect bearing on the standard of service provision overall. We therefore welcome this opportunity to comment on certain issues identified in the Sub-committee's terms of reference.

SHIPPING'S CONTRIBUTION TO WHITE PAPER OBJECTIVES

  2. As the White Paper acknowledges, the scope for transfer to water of goods at present transported by land is modest. However, the balance of advantage is slowly shifting towards shipping as congestion on the country's trunk roads increases. Coastal container services which would have been regarded as clearly uneconomical ten years ago are now operated successfully between south-east England on the one hand and the north-east and Scotland on the other. The eventual introduction of charges for road use, while easing congestion, might well encourage more shipping companies to develop new coastal services. Where the movement of bulk cargoes are concerned, the availability of small ports and riverside wharves close to the origin and destination of the consignments is of importance. There are many redundant wharves that can safely be converted to residential or other uses where alternative facilities exist close by, but in some locations the loss of berthing facilities may mean that a particular cargo flow will be permanently lost to the sea.

  3. While for the most part the process of shifting domestic traffic to water can be left to market forces, the Government can assist by:

    (i)  legislating, as promised, to make coastal shipping eligible for Railways Act Section 8 grants;

    (ii)  issuing planning guidance to local authorities to encourage creation of new facilities for coastal shipping and to preserve existing terminals from conversion to other purposes, unless obviously redundant;

    (iii)  giving prominence to the role of shipping and ports generally in preparing guidance to regional and local transport planning bodies.

  4. For any given volume of traffic, waterborne transport involves less generation of carbon dioxide than any other mode and can therefore make a valuable contribution to the Kyoto target. Shipping should be given at least the same assistance in securing traffic as rail. In any case, if the Government's plans for railfreight are carried through successfully, the capacity of the system—already near its limits at certain points—will come under considerable strain. In particular, the Government should be alert to the danger that routes to and through the Channel tunnel will become overloaded and should consider how to encourage more traffic to access Continental destinations from North Sea ports.

  5. The White Paper emphasises the need to make freight transport more efficient. It will be in the interests of our traders and manufacturers, as well as the ports industry, if attention is paid to fostering direct liner services from the UK to deep-sea destinations, rather than having to depend on feeder services from nearby European ports. The pattern of liner services is influenced by the cost of using any particular port, and while UK ports have increased their competitiveness since the reform of the dock labour system, the punitive level of light dues for very large container vessels in particular (compared with the generally free navigation services on the continent) remains a significant disincentive to the use of UK ports.

  6. The light dues system is an example of the distortions to competition that can arise through uneven application around Europe of policies on payment for the use of infrastructure. Similar considerations apply to charges for the provision of regulatory services. It is essential that any new scheme to recover the costs of government services in this area should be applied on a cross-EU basis.

  7. The foregoing remarks apply to ships of any nationality, since by tradition (and in accordance with EU and OECD obligations) no restrictions are placed on access to our ports by ships trading internationally that conform with safety requirements; and since as a matter of national policy our coastal trades are also open to all comers. As indicated above, the Institute recognises that there are certain benefits for shippers and for the transport system as a whole if a significant proportion of services are operated by ships owned and operated from this country. Firstly, a shipowner based here is likely to know the market and his customers better than his foreign counterparts. Secondly, he can be expected to give a degree of priority to maintaining his home-based services when markets generally become difficult. Finally, he is almost certainly going to be a major user of other maritime services in the UK, such as ship repair, insurance and legal services, any of which can make for a smoother relationship with the customer as well as contributing to the economy.

UK SHIP REGISTRATION

  8. We endorse the Government's wish to encourage more shipowners to register their vessels in the UK, but we would like to see explicit justification for the policy. A substantial UK register will obviously help maintain British influence in international maritime affairs and play its part in strengthening the system of regulation by flag state. At present, the port state control mechanism is being asked to bear more weight than is desirable; it is an inherently inefficient method of maintaining standards, in that it relies on what an inspector can discover during what may be a brief port call.

  9. The European Union has recognised this objective through the establishment of a state aids regime which allows governments to create incentives for owners to make greater use of national registers, rather than using tax havens where safety regulation is weaker , or in some cases non-existent. The CIT hold no brief for subsidisation of the industry and we do not believe that practice in other EU countries is necessarily a guide for the UK since there are major differences in tax and social security regimes and in the manning rules for merchant ships. However, where the Government sees fit to give assistance to the industry, we think it should be firmly tied to ships registered under the British flag.

  10. Provided the Government retains sufficient influence over standards enforced by British off-shore registries, these should not be treated differently from the mainland register, though we would point out a disadvantage of Isle of Man registration, that because of that territory's position in respect to the European Union, vessels registered there have no access to the coastal trades of many EU member countries.

MANNING

  11. The worldwide shortage of well-trained seafarers is now well documented. It is in the interests of any country such as the UK, which depends heavily on shipping for the movement of its trade, to play a part in increasing manpower supply. We have some reservations about the numbers that have been quoted as the minimum necessary not only for the maintenance of the UK fleet at its present size but also for the continued supply of experienced personnel for the related maritime industries. The large number of former seafarers presently found in on-shore jobs in the maritime sector can be ascribed in part to the large numbers who of necessity came ashore when the UK fleet shrank from the artificially high level to which it had grown in the 1970s. For some at least of these jobs it should be possible to provide appropriate training without a requirement for an extended period of service at sea.

  12. That said, the present annual intake of cadets of between three and four hundred probably needs to be increased to around six hundred to allow for some growth in the UK-manned fleet and the maintenance, in the interests of the economy as a whole, of a nucleus of sea-trained personnel for certain key posts in related industries and professions, notably the ports industry, navigation services and the various maritime regulatory bodies. The Government should take responsibility for devising incentives for shipping and ship management companies to achieve this level of recruitment. It will not be easy since the sea has lost a lot of its former appeal to young people for a variety of reasons. A combination of carrot and stick will be needed. The "SMART" scheme of assistance for training should be expanded, either to cover a higher percentage of training costs or to embrace forms of training, especially for senior officers, which go beyond the minimum necessary to obtain internationally-recognised certificates. At the same time, consideration should be given to requiring owners to provide a minimum number of training berths on any ship where advantage is taken of tax concessions (personal or corporate) specific to shipping.

AN INTERNATIONALLY COMPETITIVE INDUSTRY

  13. In most sectors of the shipping industry there are British companies that are able to hold their own with the best of the competition. Many, though not all, have only been able to maintain their position by joining overseas companies in using open registers. In arguing for measures to reverse this tendency the CIT would not wish to be associated with any return to the more restrictive provisions on the nationality of crews which used to apply in this country and which remain a feature of the regulatory regimes in many competitor countries. Not only would new nationality restrictions raise costs, but they would be an unrealistic move in the light of the shortage of recruits to the industry in the UK and elsewhere in Europe. The Commission has published a proposal for a directive requiring the employment of seafarers from third countries on passenger and ferry services to be on the same terms and conditions as EU citizens. While recognising that there are drawbacks to the use of non-Europeans on these services, particularly where communication with passengers is concerned, we think that the problem should be tackled through qualitative control of safety procedures rather than employment legislation.

  14. Competitiveness in liner shipping, cruise and ferry services and in specialist fields such as offshore supply and gas and chemical carriage, has a good deal to do with quality of operation and service to the customer. There are limits to the potential for Government to influence companies in this. Some of the UK industry's competitors appear to have an extra edge in their access to domestically-built ships at possibly keener prices. Given the present size of the British shipbuilding industry there is not much scope for helping to match this advantage. We would therefore urge realism in assessing the future prospects for an industry wholly owned in the UK. in any event, shipping, like so many industries, is undergoing concentration as global competition intensifies, and the big players in future may be those companies who have joined forces with partners in other countries, thereby creating bi-national or multinational entities. While this process should give added security to the British element, it may further reduce the scope for any one Government to intervene in support.

  15. In short, the Sub-committees's recommendations should reflect concerns about global training needs and the flag state control problem. But it will find that there is more scope for influencing the fortunes of the British shipping industry if it concentrates primarily on the contribution it can make to the movement of goods around the British Isles and neighbouring countries and to the competitiveness of UK ports. In the process, UK environmental and economic objectives will be sustained.

December 1998


 
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