Examination of Witnesses (Questions 100
WEDNESDAY 14 FEBRUARY 2001
100. Will the existing ports which handle containers
and the other demands for services be able to handle the increase
or will it spread out to some other ports which are not providing
that kind of service at the present time?
(Mr Gray) I believe that at the existing major container
ports in the UK, which are Southampton, Tilbury, Felixstowe and
Thamesport, to name but four, there is sufficient opportunity
to be able to handle the future demand going forward for the next
ten to 15 years at least. As the previous witnesses indicated,
there are already four schemes which have either been tabled or
are about to be tabled which will be able to take care of this
growth in the future.
101. What about passenger services? Is there
any surplus capacity?
(Mr Sloggett) My answer on the issue of the ferry
ports answers that as well.
102. It is a bit unfair because I know it is
not your side of the country, but Irish Ferries are going ahead
at a good old rate and expanding their traffic. Would you feel
able to make any comment about some of the Welsh ports and the
possibility of the ferry traffic there? That is rather vital to
the areas concerned.
(Mr Sloggett) I cannot really speak as an expert on
the Irish Sea trade but all of us who have had problems as a result
of the loss of duty free over the last couple of yearsand
Dover's traffic has fallen
103. Do you have figures which show that up?
(Mr Sloggett) Certainly. Dover's passengers have fallen
from about 20.5 million to about 17 million as between 1998 and
2000. The Channel Tunnel has had similar problems. On the Irish
Sea there are problems of concentration of traffic and that is
an issue everywhere. Nothing succeeds like success in a sense
and it is very difficult to spread what growth there is over all
the ports which would like to participate in it.
104. Is there evidence to say that the abolition
of duty free has caused the passenger numbers to reduce?
(Mr Sloggett) It is very clear, certainly on the short
sea routes to the continent, that the ferry operators relied very
heavily on the profits they made from duty free. Duty free might
have been duty free but it certainly was not profit
free. When duty free went ferry fares rose very substantially.
It is not the fact that people are staying away because they cannot
buy duty free any more; in fact they can buy duty paid goods at
the same prices that duty free was priced before. It is simply
that to do so now, they have to pay very much higher fares to
cross the Channel.
105. Can you give us any indication as to the
percentage increase in the fares over this period of the last
(Mr Sloggett) I would have to have notice of that
106. Can you let us have a note to that effect?
(Mr Sloggett) Surely.
(Mr Whitehead) The duty free issue also affects the
Irish routes as well and their profitability. They have to adapt
to these changes.
107. Is it then that the Irish have had more
help with their infrastructure because of the European institutions?
(Mr Whitehead) In the Republic, because of a cohesion
fund. Yes, they do get assistance and that is an issue for us.
108. Has that made a lot of difference?
(Mr Whitehead) It is difficult to estimate it so far
but potentially we have heard of plans for major developments
in Ireland which may possibly mean then that the GB is bypassed
and that would affect ferry volumes quite significantly. That
would be an example of cohesion fund really changing traffic patterns
109. Is there any indication as to what can
be put in place to increase the ferry traffic? Are any plans available?
Are any initiatives being brought forward?
(Mr Sloggett) I would not want you to be under the
impression that ferry traffic is not growing. It has been signalled
as one of the two areas of growth in the port sector. Certainly
across the short sea ferry routes we are forecasting that perhaps
after we have got over the duty free problem our traffic might
double within the next ten years or so. It is not that the traffic
needs stimulating; there is plenty of traffic there both passenger
and freight. At the moment the market is adjusting not only to
the introduction of the Channel Tunnel but also this issue of
duty free, which is really if anything as severe as the Channel
110. What is the difference in the growth say
between your trade and the container trade? If you do not have
the figures, do you have an approximate percentage?
(Mr Sloggett) They are broadly the same. We are looking
at our freight to grow at six or seven per cent a year. The container
people would say that theirs will grow perhaps slightly less fast,
but of the same order, five or six per cent.
111. When you say that the passenger ferries
are growing at a slightly slower rate, you are talking about purely
the passenger traffic.
(Mr Sloggett) I am talking about the overall ferry
traffic. Ferries depend very much on the mix of cargo, being able
to carry passengers during the day and during the summer, with
freight filling the space during the night and in the winter.
We view the ferry market as indivisible as between passengers
112. Are any new ferries being introduced into
(Mr Sloggett) Ferries are being constructed for the
North Sea routes out of the Humber and Sea France is planning
to introduce one ferry at Dover this year. We hope for new building
decisions from the major operators like P&O before long, but
they have a merger investigation from the EU to go through before
they will come to any decision.
113. What criteria do you use to invite ports
to become members of the UK Major Ports Group?
(Mr Dempster) We do not have any criteria for membership.
114. How do you define a major port then?
(Mr Dempster) Our members are largely the larger ports
in the country and for the most part they also represent the privately
owned ports. The distinction is not absolute. The British Ports
Association in the main represent the trust ports sector and on
the whole the smaller ports. We do collaborate quite closely.
Our position is not always identical, the differences, if there
are differences, are more likely to be of emphasis than of major
115. You do not have an obvious definition of
what is a large port. You just know one when you see one, like
(Mr Dempster) We know who our members are and we do
not poach from anyone else.
116. That is always helpful. I think the Labour
Party would envy you that. In what way do you think the attitude
of the United Kingdom Government towards the ports industry differs
from those of other governments in continental Europe?
(Mr Whitehead) There is a fundamental difference of
funding of port activity. In the UK we have commercially and operationally
independent ports, which is a long established system. There is
no doubt that on the continent ports are regarded as part of public
transport infrastructure and as a result they are funded out of
public finances. Therein lie many of our problems of distortion
to competition and really a difference in philosophy of approach
as to what ports should be required to do as well.
117. May I declare my interest in Eurotunnel
and also that I was the Member of the European Parliament for
Harwich for ten years? May I put on the record that when you talk
about routes which were lost because of the loss of duty free,
I think I am correct in understanding that Harwich lost one of
the routes to Sweden with either DFDS or Stena because of the
loss of duty free and that that vessel now calls via Norway from
Newcastle purely to be able to pick up duty free; Norway not being
a member of the European Union means you can purchase your duty
free there. Just to place that on the record, is that correct?
(Mr Gray) Yes, that is my understanding.
118. Following on from Mr Whitehead's last answer
to the Chairman, do you think that this philosophical and fiscal
practical difference between the ownership of ports has led to
a different policy approach in the way we run our ports in this
country and the way we do not give state aids and also the way
the continental reports receive probably a higher rate of state
aid including help from the local councils?
(Mr Whitehead) Yes, you have expressed it very well.
There are big divisions and we tend to get very taken up with
the financing aspects. Clearly that is a major issue. It does
tend to give a signal to the European Commission in terms of legislation
that if ports are part of local government, part of the municipality,
then they have a greater range of duties and they can take part
in perhaps more bureaucratic procedures than we would want to
have them perform in the UK. The distortion is on various levels
and seeps through in these different ways.
119. How confident are you on the two mechanisms?
One you have mentioned is the European Directive on Ports and
the other is that I understand the Commissioner has actually changed
the definition of ports through the Trans-European Network. That
has implications at two levels: one is the definition of a port
and how Harwich could possibly get money for the last eight miles
of road to access Harwich, but also definitions generally as to
whether it will qualify as the Trans-European Network.
(Mr Whitehead) In terms of TENs funding, this is extremely
modest for ports. My understanding is that there is an unwritten
agreement that funding under TENs would be for feasibility studies
only and not for actual port projects and that is a situation
we are happy with. TENs in itself is not a major player in all