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

Memorandum by the British Ports Association (P 16)


  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.


  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 criteria—for 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 commercial flexibility.

  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 Grant (FFG).

  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 adapt—and is still doing so—to 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 effects carefully.

  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 dependable way.

  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, as follows:

    —  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 sectors;

    —  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 change—in the absence of any change in government policies—will 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 sources—for example from those without such extensive sea going experience.

  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 this kind.

  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" strategies.

  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.


  5.1  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 Convention.

  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 detail—sometimes involving surveys of bird population—can 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 these recommendations.

  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 data.


  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 important point.

  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 costs.

  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.


  7.1  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 circumstances.

  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.


  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 is necessary.

January 2001

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