Memorandum by Hutchison Westports Ltd
THE GOVERNMENT'S WHITE PAPER ON TRANSPORT
A New Deal for Transport; Better for Everyone
Hutchison Westports welcomes the opportunity
to contribute to the Committee's inquiry. The company provides
vital transport infrastructure and services, and welcomes the
overdue development of a co-ordinated approach to an integrated
transport strategy reflecting the many issues faced by the freight
industry and infrastructure providers in a consistent and comprehensive
Hutchison Westports is a member of the Hutchison
Port Holdings Group (HPH), the World's largest independent port
operator. HBH is a subsidiary company of Hutchison Whampoa Ltd
and operates three ports in the United Kingdomthe Port
of Felixstowe, Harwich International Port and Thamesport.
The Port of Felixstowe is the largest
container port in the United Kingdom and the fourth largest in
Europe. It handles nearly 40 per cent of the country's total container
throughput, and is also the country's second largest port for
roll-on/roll-off ferries. In 1997, the Port of Felixstowe handled
2.2 million twenty foot equivalent units (TEU's), and the Port's
throughput has doubled in the last 10 years.
It is a major multi-modal operation, involving;
Movement of containers between ships
for transfer traffic not entering the UKaround one third
of the containers handled are in this category.
Transfer between ship and rail20
per cent of imported traffic continues to inland destinations
Transfer between ship and lorry with
access via the A14 to the motorway network.
Rail capacity at the port is being expanded
to meet increasing demand and the requirements of an integrated
transport policy with the help of a £1.8 million freight
facilities grant towards the £5.6 million cost of the scheme.
Together with the enhanced infrastructure capacity on the line
to Ipswich described below, this will increase the rail capacity
of the port by 50 per cent allowing up to 300,000 containers a
year to be handled by rail.
The port is at the eastern end of the A14, a
good quality trunk road linking with the M1/M6, and via the A12,
with the M25.
Harwich International Port is a multi-purpose
port, handling passenger and freight ferry services, containers,
general and project cargo, grain and dry bulk traffic, trade cars
and hydrocarbons. It has ample room for expansion.
An electrified main line rail link means that
direct rail connections to and from London can be provided by
Anglia Railways. Anglia also provides a through service from Harwich
to Cambridge for onward connections to the West Midlands. Rail
capacity is adequate for current levels of demand, but immediate
road access is limited to the single carriageway A120 road. Coach
services operate to and from the port via the A12 and A14.
Thamesport is the UK's newest and fastest
growing UK container port, and traffic has doubled over the last
five years. It was acquired by Hutchison Westports in 1998 and
is being expanded to handle 600,000 TEUs p.a. It is located near
the mouth of the Thames Estuary on Isle of Grain in Kent. The
port is rail connected but has only a single carriageway road
link to the M2. Rail capacity is adequate for current demand,
but not for significant growth, while London remains a barrier
to rail movements north, with no freight rail link crossing the
Thames east of the West London Line's Chelsea river bridge.
One of the main themes of the White Paper from
the port perspective is making best use of existing infrastructure,
and in particular, section 3.211 proposes "investment in
measures to deal with increased demand whilst avoiding the physical
expansion of port land." Anticipating the White Paper, the
Port of Felixstowe had taken steps to make more productive use
of its port area, without expanding into the surrounding countryside.
The Productivity Plus Programme (3P) is a five year programme
(initiated in August, 1997) involving investment of £100
million in new equipment and systems, and in better working practices,
designed to increase the capacity of the existing port area by
20 per cent, representing an increased throughput of 500,000 TEUs.
Even before the 3P initiative, Felixstowe was
making more productive use of its port area than its mainland
European competitors, as shown in the table below.
|Port throughput related to area
|TEUs per hectare||16,194
Nevertheless, there is a limit to what can be achieved by
such initiatives, and further expansion will be required if UK
trade continues to grow. Under these circumstances, it is clearly
preferable for capacity to be increased by redevelopment of brownfield
sites rather than building on greenfield sites, and at Thamesport
this is being undertaken by making use of the site of a former
The Government's policy is "based on a broader long-term
vision of the importance of British shipping to the nation."
The same vision should be extended to British ports, but this
is not specifically reflected in the White Paper.
The European Commission Green Paper on Ports and Maritime
Transport is intended to pave the way for free competition and
the elimination of state aids, but the policy has not yet been
adopted, and in the interim, ports in mainland Europe benefit
from state aids which distort competition. There are six issues
which threaten the competitiveness of UK ports with the risk of
adverse impact on the environment. These are:
Light dues, which are levied within the EU only
by the UK, Ireland and Greece.
The cost of dredging which is met by the Port
Operator in the UK, but frequently by general or local taxation
elsewhere in Europe.
Other marine charges, including the levy proposed
in the White Paper to pay for additional cover by emergency towing
Further charges under consideration by DETR to
recover the costs of services provided by DETR, the Maritime and
Coast Guard Agency and the Marine Accident Investigation Board.
(The latter is referred to in paragraph 3.253).
Charges proposed by the Port of London Authority
covering navigational aids on vessels using the Thames estuary
Rail infrastructure costs which are subsidised
throughout Europe, except in the UK, where Railktrack raises commercial
charges. In Holland, no track charges are currently raised.
Around half the marine charges involved for a large deep
sea ship calling at Felixstowe are accounted for by light dues,
and on average, involve a cost of £10 to £15 per container,
or an amount equivalent to 20 per cent of the £65 average
handling cost per container. This approach is unsustainable as
the ships concerned use satellite navigation systems and make
minimal use of lights and buoys.
Strategic deep sea ports in the UK face stiff competition
from mainland European portsin particular Rotterdam, Antwerp
and Hamburg. Competition here is skewed, with no common competitive
basis between the charges levied on ports. Inevitably, this distorts
decision making by freight forwarders who will choose the lowest
available rate even where this involves an extended journey or
additional transhipment. Not only is this bad in terms of Britain's
trading position, but it is bad in environmental terms, consuming
additional scarce resources for an equivalent output. If the conditions
of competition were harmonised throughout the European Union,
shippers would be able to make rational choices about which port
to use which would also usually be the most efficient decision
in environmental terms.
For the future, a change in approach is essential. Shipping
lines and the vessels they use are becoming larger, and the number
of calling points that a ship makes in a round trip is reducing.
The UK is competing with the rest of Europe for a diminishing
number of port calls and a failure to address the issues outline
above will reduce the competitiveness of UK ports. This will result
in more transhipment for freight to and from the UK, with a serious
effect on "just in time" deliveries and on the environmental
costs of extended transits.
The EC Green Paper proposes to improve infrastructure by
integrating ports into the multi-modal Trans-European Networks
and this proposal is generally endorsed. However, there is no
reason why integration should be limited to TEN's, and the aim
should be to secure a seamless onward transit by conventional
rail and road links (and by waterway where appropriate) as well.
In particular, this should not be allowed to delay or defer decision
making on consents for port developments which are already too
lengthy and fail to meet the needs of customers for faster progress
in introducing new investment.
The White Paper's aim to "encourage the provision of
multi-modal access to markets" is similarly endorsed. For
the best use to be made of the opportunities of an integrated
approach, transport infrastructure serving the port has to be
adequate to allow sensible choices to be made. In the case of
Felixstowe and Thamesport, the company would like its customers
to be able to make greater use of rail for the transfer of containers
to and from inland destinations, but the ability to expand significantly
depends on further investment by Railtrack. Particular constraints
Single line sections between Ipswich (Westerfield)
and Felixstowe, and between Hoo Junction (near Gravesend) and
The route from Ipswich via Peterborough to the
West Coast Main Line which is neither electrified nor cleared
for larger (9'6") containers;
Congestion on route sections identified in Railtrack's
Network Management Statement, particularly on routes via London.
The potential restriction of scope for expansion
of rail freight traffic on the West Coast Main Line with the implementation
of the passenger upgrade proposals.
Whilst an investment of £8 million is taking place on
the Felixstowe branch to provide more capacity on the single line,
this will only cater for short term growth, not any significant
additional transfer from road to rail. The rail link to the UK's
largest container port will remain single track and non-electrified.
These issues are not capable of resolution by Railtrack or
by the train operators in isolation. An integrated solution is
required involving not only these parties, but also Government
and this can only be delivered by a Strategic Rail Authority,
with the necessary authority and finance. This is listed as a
role for the SRA in section 3.210, and should be a priority for
the new organisation, given the long lead time for planning and
implementation of railway works.
At the same time, it is important to recognise the dominant
position that the road network will continue to play for many
years to come. Road improvements to provide dual carriageway access
to Harwich and Thamesport will be needed, and it will be important
to ensure that adequate funds are allocated for effective maintenance
of the motorway and trunk road network, even if its expansion
is likely to be limited.
1. The integrated approach adopted in the White Paper is
welcomed, but to be effective, must involve integration at European
level to ensure a consistent approach between member states and
a logical basis for decision making by shippers, without the distortion
associated with hidden or overt state subsidies.
2. Hutchison Westports has shown the way in making the most
effective use of space in the port area and is well ahead of European
competitors. Where expansion is needed, the company is demonstrating
what can be done in developing brownfield sites, rather than focusing
on new construction on greenfield sites.
3. Investment in accessibility, particularly in increasing
capacity of the rail access is essential for the new policy to
be effective, and should be an early priority for the Strategic