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


Memorandum by Hutchison Westports Ltd (IT 52)

THE GOVERNMENT'S WHITE PAPER ON TRANSPORT POLICY

A New Deal for Transport; Better for Everyone

INTRODUCTION

  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 way.

BACKGROUND

  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 Kingdom—the 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 UK—around one third of the containers handled are in this category.

    —  Transfer between ship and rail—20 per cent of imported traffic continues to inland destinations by rail.

    —  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.

PORT DEVELOPMENT

  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

1997FelixstoweRotterdam HamburgAntwerp
(ECT) (HHLA)(Hessenatie)

TEUs per hectare16,194 13,2649,29412,308


  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 oil refinery.

COMPETITION

  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 vessels (4.148).

    —  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 including Thamesport.

    —  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 ports—in 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.

INFRASTRUCTURE AND ACCESSIBILITY

  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 are;

    —  Single line sections between Ipswich (Westerfield) and Felixstowe, and between Hoo Junction (near Gravesend) and Grain (Thamesport);

    —  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.

CONCLUSIONS

  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 Rail Authority.


 
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