Memorandum by the British Ports Association
OPPORTUNITIES AND DEVELOPMENT PROSPECTS AT
This response is submitted on behalf of The
British Ports Association which represents 59 port authorities
in England and Wales (86 throughout the UK). These include trust,
private and municipal ports. It also takes into account the views
of the United Kingdom Association of Private Terminal Operators
(UKAPTO). A list of BPA members in England and Wales handling
more than one million tonnes and/or more than 200,000 international
passengers annually (criteria for consideration as a Trans European
Network port by the European Commission) is attached.
The BPA works in close co-operation with The
United Kingdom Major Ports Group (UKMPG), the Ports Safety Organisation
(PSO) and British Ports Industry training (BPIT).
1.1 UK ports are essential to the country's
trade which depends on the import and export of raw materials
and finished goods. The total tonnage handled by ports in England
and Wales in 1999 was 414 million tonnes, equivalent to 73 per
cent of all UK port trade. The UK has the largest ports sector
in the EU; throughput in England and Wales alone would place them
at the top of the European league table. Even with the opening
of the Channel Tunnel, 95 per cent of all freight by tonnage enters
or leaves the country by sea.
Ports are also vital communication links and
just over 31 million international passengers passed through English
and Welsh ports in 1999.
Ports support industries critical to the UK
economy such as the offshore energy sector. They are part of vital
logistics networks supporting domestic and international trade.
These can range from links between Ireland and the Continent to,
for example, providing an outlet for the manufacture of cars in
the north east.
1.2 There are approximately 25,000 people
directly employed in the ports industry. Numbers employed declined
after the repeal of the Dock Labour Scheme in 1989 not only because
of the change in labour arrangements but also because the continuing
switch from traditional bulk cargoes to containers and roro traffic
demands less labour and greater mechanisation. Nevertheless, ports
can be major indirect employers where local jobs are dependent
on the existence of a nearby port and the trade it generates.
Summary: The UK economy depends on a successful
and efficient ports industry. Apart from its traditional cargo
and passenger handling roles, ports also play a key role in supporting
other sectors and are significant local employers.
2. WHAT PROBLEMS
This section assesses the main problems and
opportunities facing ports in terms of port management structures,
port markets and the effect of government policies.
2.1 Port types: UK ports operate in either
the trust, private or municipal sectors. Trust and private ports
in particular operate as commercial entities which are independent
of government and unsubsidised; municipal ports operate within
a similar framework although in some cases decisions might be
based on different criteriafor example the need for local
regeneration. A proportion of profits from municipal port operations
might be used for non-port, local purposes. Whereas private ports
will be primarily profit driven, this is not always the case with
trust ports which might, for example, regard traffic maximisation
as their main objective. In spite of these differences in emphasis,
the UK ports sector is characterised by its independence from
government and reliance on port users for its funding; this situation
is almost unique in the world. It has, in many ways, provided
a model for the development of EU ports policy. The BPA supports
the UK approach.
2.2 All port authorities have statutory
powers; a major theme of "Modern Ports" is how accountability
for these powers can be expressed taking into account different
management structures and commercial imperatives. Private ports
will be subject to the same pressures as other private companies
in other sectors, especially in the pressure to expand through
acquisitions and mergers. The trust sector has recently been the
subject of an extensive review by the DETR and the resulting guidelines
have concentrated on board appointments and the responsibilities
of board members; the government continues to make some board
appointments, especially in the larger trusts. Currently, the
trust sector is being consulted on its powers, particularly its
Municipal ports handle the least tonnage of
the three port types. Nevertheless, their ability to compete fairly
with private and trust ports is under question and will soon be
the subject of a new DETR review. A particular problem is financing.
Municipal ports have no borrowing powers except where central
government allows Supplementary Credit Approvals (SCAs). Whilst
a few SCAs have been reintroduced following a period when none
was available, these have only been for "essential safety
and maintenance" and have not fully addressed the problems
of investment in this sector.
Summary: Unduly restrictive or inappropriate
port structures are not a significant problem for the UK, although
reform is needed of some aspects of municipal port management;
trust ports are currently being consulted on their commercial
and other powers and would strongly resist any government interference
in their management beyond the principles set out in recently
published trust port guidance.
2.3 Port markets: Port location is the single
most important factor in determining a port's ability to attract
and retain traffic. Ports are vulnerable to changes in the trades
on which they depend, for example fluctuations in the oil industry,
or to the effects of competition. This is especially marked in
the container and roro trades but can apply to other cargoes such
as paper and steel where shippers have tended to consolidate at
large distribution centres. The ability of ports alone to influence
patterns of trade is practically non-existent. There is a statutory
duty on ports to operate an "open port" policy whereby
legitimate trade cannot be unreasonably refused.
2.4 The port market in England and Wales
has expanded by approximately 2 per cent each year over the past
decade. Within these increases is significant growth in the container
and roro trades amounting to 5 per cent and 4 per cent respectively
in 1999. Overall growth in containers has risen by an average
of 9 per cent each year from 1990 to 1999. If this growth continues,
an additional capacity of almost four million TEUs will be needed
by 2005 in the south east of England where most containers are
handled. Even if annual growth is pegged back to 5 per cent, an
additional 1.8 million TEU capacity would still be needed (source:
Drewry Shipping Consultants). The way in which the industry will
absorb these increases will primarily depend on the success of
current major planning applications. Ports outside the south east
region and ports not currently handling containers to any significant
extent may have a market opportunity if these trends materialise
without a matching increase in capacity.
2.5 Another potential area of market expansion
is for coastal roro traffic. Progress here could depend on the
development of fast roro ships achieving higher average speeds
than freight trains and offering a strong commercial challenge
to road and rail transport. The BPA is currently participating
in a research project with Napier University to examine traffic
flows within the UK and select a number of routes for their susceptibility
to a switch of cargo from land to water transport. Use of fast
ferries has some implications for port design and new investment
would be required in both ships and ports. One potential source
of assistance is a recently agreed extension to the Freight Facilities
2.6 The passenger market will continue to
grow. However, the two main areas of activity, cross Channel services
and links to Ireland, have been subject to different pressures.
The Irish routes, notably from Holyhead, carried 50 per cent more
passengers in 1999 than in 1990 (4.3 million passenger movements).
The cross Channel market is more complex, handling 22 million
passengers in 1999 (3.5 million more than passed through the Channel
Tunnel). It has had to adaptand is still doing soto
the effect of the opening of the tunnel and the loss of duty free
(a factor which also affects routes to the Republic of Ireland).
2.7 The increasing size of ships, the growth
of containerisation, the decline in bulk cargoes and the effects
of fierce competition mean that those ports not on the main routes,
without deep water and without specialised equipment will face
major problems in adapting to these market changes. The success
with which new markets can be found and the ability to diversity
will be major factors in determining the future shape of the industry.
Summary: commercial challenges over the coming
decade include accommodating the expansion of container and roro
traffic, the potential to develop new coastal traffic and the
role of ports previously dependent on traditional bulk cargoes.
2.8 Government Policies: The government
proposes in "Modern Ports" that NATA (a new approach
to appraisal) will be developed so that more detailed guidance
is available to ports when planning applications are submitted.
Ports would be expected to demonstrate that new capacity would
produce "significant additional benefits". A port development
would have to be "demonstrably commercially viable, regardless
of the status of the port". This may shift the emphasis from
what up till now have been almost exclusively environmental impact
considerations to judgements by government on the way in which
a development would contribute to port industry capacity and efficiency
overall. This is a potentially difficult area both for the government
and for the industry. There are the seeds here of unwelcome market
intervention. Our concern is that such intervention may start
to override the needs of the market as perceived by individual
ports which expect to take on the commercial risk.
2.9 Europe has a growing influence. Under
the Transparency Directive, ports with a turnover above
40 million will be required to separate accounts
into port authority and service provider functions; assuming an
Access to Port Services Directive (6.4 below) comes into force
over the next few years, virtually all ports of any commercial
significance will be required to separate their accounts. These
requirements, and especially the need to consult widely and publish
plans across a range of issues, are a major new burden on ports
and can require considerable resources. We will monitor their
2.10 There are other major influences on
the industry. For example, the planning system on a national,
regional and local basis is complex. The setting up of RDAs in
England provides another layer of bureaucracy. We see the RDAs
as taking a role both in the preparation of regional plans and
in providing a business oriented view. Generally, we have problems
with the way in which planning guidance is decided because of
the variations in methods of consultation from region to region
and the lack of targets and objectives which can be monitored
and reviewed. In the south east, for example, we have recently
been asked to take part in the SEAPLAG (South East and Anglian
Ports Local Authority Group) initiative. We are not certain of
its status and how it relates to other regional plans. Similarly,
the planning policy guidance advice issued by government which
recommends, for example, that industrial sites should be located
as near to water as possible has, to our knowledge, never been
monitored on a national basis to see whether it has any effect.
We will be pursuing this point with the government.
2.11 As to other organisations which have
an influence, the Commission for Integrated Transport and the
Shadow Strategic Rail Authority are two important examples. We
have established good links with the CfIT and have regular meetings
with it; some of our original concerns about the lack of a representative
from the maritime sector on the CfIT have been partly addressed.
We welcomed their recommendations on the use of 44 tonne lorries.
Even so, we still believe that the emphasis within the Commission
is too strongly on passenger issues to the neglect of freight.
2.12 Similarly with the shadow Strategic
Rail Authority we have, through a series of meetings, established
good contact but we are very aware that the decisions that SRA
will make when established on 1 February will have an impact on
the viability of ports. At the time of writing we are conducting
a survey of BPA members to establish what rail links they will
need. Already there are indications that considerable investment
is needed if links to ports are to be improved and government
targets of expansion of railfreight are to be met. Following Hatfield
there have been some significant increases in coastal container
business because rail could not cope. Even when the rail system
returns to normal as expected later this year, there are fundamental
problems with the rail network and its ability to cope with increasing
numbers of passengers and freight. We are concerned that in its
10 year transport plan the government has allocated £60 billion
to the rail industry of which only £4 billion is allocated
for rail freight. Although some of the investment aimed at passenger
traffic would benefit freight, we are nevertheless still looking
for much stronger emphasis on providing the service that was promised
immediately post privatisation and doing so in a consistent and
Summary: The influence of government policy
on ports is critical, as are the policies of a range of other
organisations which influence port development and transport links;
we are concerned that some of the proposals in "Modern Ports"
will lead to greater market interference.
The potential for ports to co-operate commercially
is extremely limited. There are a number of reasons for this,
the diverse, commercially independent
nature of the industry with a number of independent owners and
management types; although there has been some consolidation of
the industry there has been significantly less than in other commercial
the existence of a market led port
system based on competition and the existence (up till now) of
sufficient and sometimes excess capacity;
the tendency for ports to exist within
specialised markets created by patterns of trade which are beyond
the port's influence; there is little movement of management personnel
between one port and another;
the limited scope to achieve economies
of scale through co-operation (or sometimes even through mergers
and acquisitions); and
concern about the compatibility of
co-operation with competition law; equally concern about the reaction
of users if users did not receive tangible benefits.
These are all strong factors highly unlikely
to change in the short term. The most compelling factor for changein
the absence of any change in government policieswill be
the pressures exerted by port users. Each port type would have
to assess these pressures in the light of port objectives. We
are not aware of such pressures at present; as a general rule
the shipping industry would prefer to have choice from as wide
a range of ports as possible. Nevertheless, there are a number
of fields such as the environment, training and safety where there
is extensive industry co-operation.
Summary: Although the industry will co-operate
on a range of non-commercial issues, the current structure of
the industry and the markets in which it works allows very limited
scope, if any, for commercial co-operation.
4.1 Safety at Sea: Marine safety has been
the subject of a new Code of Practice. The Code addresses navigational
safety at all levels but with particular emphasis on the role
of port boards and the responsibilities of senior management in
developing a safety based culture. The Code requires the appointment
of a "designated person" who will liaise between a port
board and operational staff so that the approach is fully integrated.
The BPA has worked closely with the DETR in
the Code's preparation and continues to work closely with officials
on the extensive follow up work. This has already resulted in
the publication of competencies for pilots on which training programmes
and recruitment can be based; similar competencies are being drawn
up for harbour masters. Work is underway on rules surrounding
the granting of pilotage exemption certificates and pilot approvals.
One of the "spin offs" of the work could be the potential
to train and recruit pilots and other marine staff from less traditional
sourcesfor example from those without such extensive sea
4.2 In spite of the development of a more
nationally based approach to marine safety, ports regard their
autonomy as Competent Harbour Authorities (CHAs) as an essential
part of the approach. Local port managers are the frontline; good
safety practice for ports is based on an appreciation of local
conditions and the ability to respond to these in a flexible and
practical way. We are concerned, for example, at the government's
proposal to take on wide powers of direction if it considers that
a port is not acting safely in accordance with the Code; we doubt
their ability to make judgements on detailed marine matters of
4.3 Safety on land: Advice and safety training
on port land and especially for cargo handling is dealt with primarily
by the Port Safety Organisation (PSO); the overwhelming majority
of BPA members are also full members of the PSO. Each organisation
regularly informs the other of its activities and the BPA strongly
supports the PSO and its vital role.
Recently the BPA co-operated with the PSO in
drawing up and publicising a safety Code of Practice for non-permanent
employees and will continue to assist in spreading the safety
message wherever its resources can be appropriately used. The
BPA will be taking part in a major conference in March which will
explore ways of both tackling port specific safety issues and
the consequences of the government's "Revitalising Safety"
Summary: The BPA is committed to work with all
parts of the industry and with the government in setting standards
and in meeting the objectives of the government's "Revitalising
Health and Safety" programme.
5. THE ENVIRONMENT
5.1 Ports are subject to increasing various
environmental responsibilities arising from a number of sources.
They have a general responsibility (1992 Transport and Works Act)
to have regard to the environmental consequences of their operations.
They now have new statutory responsibilities concerning waste
management and oil spills; there have recently been changes extending
the scope of the Environmental Impact Assessment Regulations whereby
a greater range of projects will be subject to assessment; there
are new proposals from the European Commission relating to environmental
liability (based on "polluter pays" principles) and
greater access to environmental information based on the Aarhus
5.2 A further complication is the effect
of environmental designations and especially the creation of Special
Areas of Conservation (SACs) and Special Protection Areas (SPAs)
introduced under the 1994 Habitats Regulations. Ports located
within these areas, because of their statutory powers, are of
high importance in delivering the protection required by the Regulations
and in establishing management schemes. The effects of designation
under the Habitats Directive are starting to be fully felt. So
far, the concentration has been on the mechanics of site identification
and the quality of the scientific evidence used. But a feature
of designation has been the lack of information from English Nature
about the reasons for designation and its precise effect on existing
and future operations and development. This jeopardises the ability
of a port to plan for the future with any degree of confidence.
5.3 The cost of assessing the effect of
an operation or a new development on a designated site can represent
a very significant investment and some ports, for example, have
had to employ specialist environmental managers both to deal with
the extra work load and to provide scientifically based arguments
where sites have been, in their opinion, wrongly designated. Equally,
time and resources dedicated to taking part in management steering
groups, environmental assessments and so forth are significant;
they are only likely to increase in the future.
5.4 By way of example, a port recently undertook
a major dredging programme and was required to spend £2 million
on preliminary studies and mitigation; there is an annual rental
of farm land connected with the mitigation package of £100,000;
all these figures are considerably in excess of the original estimates.
Other ports as licensing authorities can receive
applications for large numbers of very small developments such
as jetties which then require detailed environmental assessment.
This detailsometimes involving surveys of bird populationcan
be, in our view, entirely out of proportion to the project. Environmental
assessment should be based on proportionality.
5.5 We believe that the current system of
planning consents is inadequate to deal with the demands and pressures
of these new designations. Current arrangements are deficient
when it comes to dealing with compensation issues, deciding whether
projects are ones of "overriding public interest" and
encouraging speedy and efficient decision making arrangements.
We need simplification of the whole process.
5.6 Dealing with the Habitats Directive
is part of an increasing range of coastal management responsibilities.
The BPA is being consulted by the DETR Wildlife Division on the
creation of a new marine nature designation; there are also proposals
from the European Commission on integrated coastal zone management
which will require a "stock take" of current practices;
ports are also to be involved in biodiversity action plans.
5.7 In response to these pressures and requirements
the BPA has been working closely with Continental ports to establish
common ways of assessing environmental performance and exchanging
environmental information. The BPA was a prime partner in an "Eco-information"
project part funded by the European Commission and which made
its final report in the autumn of 1999. The main products of this
research were an environmental database providing contacts throughout
Europe with information on environmental problems and remedial
techniques and a self diagnosis methodology (SDM) which analyses
a port's environmental activity and performance. SDMs can be completed
annually so that a port can build up a comprehensive picture of
its progress. The BPA has organised seminars providing training
in the use of SDMs and will be a prime partner in a follow-up
project ("Ecoports") which has been submitted for funding
under the European Commission's 5th Action Programme and which
should begin in the early summer of this year. There have been
very positive indications so far from the Commission that the
project will be accepted.
5.8 The BPA strongly supports the recommendations
of the European Sea Ports Organisation (ESPO) which will shortly
be published in an ESPO Environmental Review. These recommend
each port to write an environmental plan and make it public, to
carry out appropriate environmental monitoring (for example of
water and sediment quality) and to select appropriate environmental
indicators and provide data on them. Again, the BPA is planning
to set up seminars in 2001 and beyond assisting ports in fulfilling
Summary: Environmental legislation is having
a major impact on port operations and port development; the cost
of compliance with legislation is growing and represents a significant
new area of funding. The system of planning consents needs urgent
reappraisal. The industry is taking action both within the UK
and with other European ports, to establish a common approach
to the environment and to encourage ports to collect environmental
6.1 Current Issues: There is little regulation
which is directly aimed at ports: this is true both in the UK
and in the EU. The recent two extensive reviews of industry practice
(the Trust Port Review and the review of navigational safety)
have been implemented almost entirely through Codes of Practice.
This is an approach which we generally favour for its flexibility
in covering a very diverse industry more effectively (the Port
Marine Safety Code for example will cover Competent Harbour Authorities
ranging from those with 157 pilots to those with one part time
pilot). Even so, there are some proposals for relatively minor
changes to harbour legislation to implement these reviews and
we are still in consultation with the DETR on their implications.
6.2 An important feature of regulation is
that most is initiated not by the Ports Division of the DETR or
by the DETR itself but by other parts of government which are
remote from port operations. For example, policy on the disposal
of dredged material is the preserve of MAFF who issue disposal
licences. The ability to dredge is essential for the majority
of ports and the cost of licences have risen substantially over
the last five years. Ports have to demonstrate that there is no
alternative to sea disposal and the system of approval for new
disposal sites, particularly in protected areas, involves wide
and lengthy consultation. A further example of regulation affecting
ports from a non port source is the current discussions on the
funding of the Immigration Service. The Immigration and Asylum
Bill allows the government to recoup more costs from the industry
and discussions are continuing between the industry and the Home
Office of what these new costs will cover. This is a critical
issue for passenger ports, not only in terms of their individual
costs, but in terms of competition between themselves and with
the Channel Tunnel. These are brief examples, but underline an
6.3 In our original submission to the DETR
as part of the consultation on "Modern Ports", we pointed
out that there is a need for closer liaison between the industry
and the various sponsoring parts of government about the cumulative
effect of these regulations. The DETR have been sympathetic to
a number of ideas, including setting up a new liaison group with
the industry, to ensure that each side can brief the other on
the effect of new legislation. We will be working on this as part
of our follow up discussions with the DETR following the launch
of "Modern Ports".
Summary: Regulation comes from many sources
within government and will require better co-ordination to assess
its overall impact and opportunities for saving implementation
6.4 New regulation: The most significant
piece of prospective legislation is an "Access to Port Services"
Directive which we expect to be published by the European Commission
in early February. This is a major piece of legislation specifically
directed at the ports sector. The Commission consider that the
market for service providers in the EU (the services are mainly
defined as cargo handling, pilotage, towage and mooring) is insufficiently
liberalised and should be opened through an EU Directive which
lays down basic rules on entry into the market. The Commission
take the view that current arrangements for the granting of concessions
are not sufficiently transparent and that the length of concessions
is a bar to new entrants; the Commission say that the legislation
confirms basic Treaty rights. Although the UK industry supports
greater liberalisation and market forces, the proposals could
have a major restructuring effect on UK ports and especially those
ports where there is full integration between the port authority
and service providers.
6.5 A port authority which wished to provide
services would have to submit a tender alongside other applicants;
a final decision on the successful applicant would be made by
a third party; the details of these arrangements would be left
to member states and have yet to be worked out. Port authorities
not involved in service provision could continue to grant concessions.
The uncertainty already produced by what we know of the proposals
could seriously jeopardise future investment.
This system largely reflects the Continental
port model which generally separates port authorities and private
service providers. The UK industry, which is regarded by users
as successful, efficient and low cost, has developed a different
system. One of the main safeguards within the UK is strong competition
between ports; new entrants into the market are able to buy and
sell ports, something not available on the Continent.
Summary: We are alarmed at the possible effects
of the Access to Port Services Directive and look to the government
to work with the industry in resisting any measures which will
undermine the industry's efficiency and future investment programme.
7. ADEQUACY OF
A UK POLICY"
7.1 The BPA welcomed "Modern Ports"
as a comprehensive and important review of the ports industry.
We welcome the government's strategy in as much as it supports
an independent industry in which ports of various types should
be able to compete fairly; we welcome the statement (paragraph
1.1.8) that "it is not the government's intention to run
the ports industry".
7.2 The paper indicates a considerable future
work programme, including areas which have not previously been
the subject of government/industry co-operation, such as port
performance indicators and environmental regulation of marine
development. We do not know where this work will eventually lead,
but we would certainly resist any move towards using the results
to limit port autonomy and the ability to make independent commercial
decisions. The industry may face "rising expectations"
(paragraph 1.1.4) but expectations across different areas may
require different approaches; many of the policies outlined in
the paper aimed at delivering the main strategy will need constant
updating in the light of fast changing commercial and political
Summary: "Modern Ports" largely confirms
the basics of UK ports policy and the market led approach which
characterises it; many of the proposals require the industry to
provide more information across a range of activities; this information
(which represents a further burden) must be used constructively.
8. OTHER POLICIES
There are three areas which could have received
more attention in "Modern Ports", these are:
8.1 Europe: In the initiatives listed in
Annex 1 of "Modern Ports" there is no mention of any
in connection with European ports legislation and policy. We have
already highlighted our problems with an Access to Port Services
Directive (paragraphs 6.4 and 6.5 above). Continental ports benefit
from subsidy to varying degrees for both operating and infrastructure
costs. We have recently complained formally to the European Commission
about subsidies that have been made available to some Dutch ports.
One of the ports (Den Helder) is in direct competition with a
UK port in servicing the offshore energy sector, we are also using
this complaint to establish the procedures involved in challenging
subsidies in other ports. State aid rules are complex with grey
areas; ports in most Continental countries are regarded as part
of the national infrastructure and, like roads, can legally receive
public funding. The UK should, as part of its long term European
ports policy, press the Commission to introduce "user pays"
principles into all EU ports. Applying these principles to the
payment of Light Dues for navigational aids, which are a burden
on shipping using UK ports but not Continental ports, would be
a major advance in redressing the balance.
8.2 Trade facilitation: There are only passing
references to trade facilitation issues. In paragraph 6.3 we expressed
support for better co-ordination between government departments
in consultation with the industry. However, we believe that not
only should co-ordination of regulation be looked at but also
general issues of trade facilitation and whether, for example,
the Single Market is being fully and effectively implemented.
Trade facilitation's issues tend to be handled by the DTI and
other connected organisations such as SITPRO (Simpler Trade Procedures
Organisation). We would prefer to have a central contact point
on port specific problems.
8.3 Integrated Freight Transport: Ports
depend on the adequacy of their transport links and will lobby
on a local and regional basis. However, we are unconvinced that
traffic flows resulting from ports are fully taken into account
when national planning decisions are taken. This is also the result
of the tendency by government to concentrate on passenger rather
than freight transport. A better defined freight transport policy