Memorandum by the Chamber of Shipping
"OPPORTUNITIES & DEVELOPMENT PROSPECTS
AT MAJOR PORTS"
The Chamber of Shipping represents the British
shipping industry, comprising owner, operators and managers of
ships. Almost all its members are users of the major British ports,
and each of the latter will number Chamber members amongst its
The Chamber has a close and cooperative relationship
with the UK ports industry, and particularly with its two representative
bodies, the UK Major Ports Group and the British Ports Association
(whose membership also encompasses some of the larger ports).
Generally speaking, we do not differentiate in our thinking about
ports policy matters between "major" and other ports.
The views in this Memorandum are, except where stated otherwise,
applicable to all commercial ports in the UK.
THE UK ECONOMY
It is self-evident that, as an island and a
major trading nation, Britain's ports have always made a major
contribution to the national economy. Despite the growth of airfreight
and the opening of the Channel Tunnel, about 95 per cent of our
foreign trade is carried by sea. Furthermore, despite the enormous
improvements in land transport infrastructure, as much as 24 per
cent of domestic freight moves by sea.
Over the last decade or two in particular there
has been an enormous investment in new port facilities and equipment,
not only by port operators themselves but also by shipping operators
and other service providers. This capital investment in terminals,
dredging, container and other cargo-handling equipment, rail connections
etchas been stimulated by two underlying structural changes
in the ports industry. The modernisation of the labour supply
arrangements in the late 1980s, through the removal of outdated
employment structures and restrictive working practices, led to
rapid improvements in both stevedoring costs and throughput, particularly
in the major ports, all of which (with the exception of Felixstowe)
were previously covered by the National Dock Labour Scheme.
This deregulatory reform gave greater impetus
to the second important changethe injection of large amounts
of private investment capital into the industry. This arose not
only from the privatisation of port operators (whether truly in
the public sector or local trusts) but also from a more general
improvement in the quality of management and the wider application
of mainstream business skills.
The result of these changes have been to put
UK ports generally amongst the most competitive, efficient and
flexible, certainly in Western Europe. On the whole, those costs
that can be controlled by port operators compare favourably with
their nearby competitors in the EU, though there is undoubtedly
room for further improvement in efficiency in some areas, particularly
container handling. There is healthy competition between UK ports
for most traffic (excepting that for direct port-side industrial
terminals such as oil refineries or steelworks, or where ship
operators themselves have made considerable investments, as is
the case with some ferry operations). This level of competition
has been to the benefit of British trade and the shipping companies
engaged in it.
No doubt the ports industry in their Memoranda
will have considered in some detail the problems and opportunities
that they face. Our underlying concern is that the improvements
over the recent past in relative efficiency and competitiveness
of British ports must not be compromised by over-regulation. There
have been no serious signs of any such initiatives from the British
Government but there is a distinct threat of damaging results
from a package of proposals from the European Commission due to
emerge over the next few weeks. In addition to proposals on port
service, considered below, the Commission is expected to take
steps to make the flow of public funds into Continental ports
more transparent as well as proposing that such funding in the
ports sector should continue to be approached under the normal
EU State Aids rules, rather than through any special new regime.
That approach is welcome.
EU Proposals on Port Services
There is undoubtedly a need in many parts of
the EU for a package of reforms along the lines of those seen
in the UK over the last 15 years. However, the Commission's approach
is expected to be based firmly on its home ground of opening markets
and removing restrictions on competition (particularly for "commercial
port services" such as stevedoring, towage, mooring and pilotage)
as well as State Aids Policy. The Commission considers, maybe
rightly, that deregulation of the labour market, the infusion
of private capital and the modernisation of management are all
matters for national governments. It is regrettable therefore
that many governments have shown a lack of political will to tackle
these failings within their own ports sectors.
The Commission is likely to propose a Directive
that will require commercial port services to be open to competition,
either by multiple service providers or by competitive tendering
for exclusive or limited contracts or licences. It may require
that in the larger ports, for stevedoring and cargo handling in
particular, there are at least two competing service providers
and that, if one is the port operator itself, it is clearly separated
from its parent. This approach is copied directly from the existing
EU Directive concerning ground-handling services at major airports.
In the UK, where is extensive inter-port competition,
ports have developed differing "product strategies",
generally responsive to the target customers' needs. Some major
ports, notably Felixstowe and Bristol, have decided to offer an
"integrated service" with a range of port commercial
services, including cargo handling, as a single package. This
can have benefits, actual or potential, of bringing business and
labour efficiencies and quality standards, to the benefit of customers,
for example by encouraging multi-skilling and the deployment of
integrated labour resources to cargo-handling, maintenance or
other port functions as required. The ports concerned argue that
since they are entirely privately-owned ports, receiving no public
funding whatsoever, and are in competition one with another, their
freedom to offer their service in this way should not be compromised.
The Chamber has considerable sympathy with this
view and would not welcome any moves which would roll back any
of the benefits accruing from the hard-won reforms of the UK ports
industry. However, it must be noted that this is held against
a underlying belief in not only the need for inter-port competition
but also open access to the port services market, whether by independent
service providers or by ship operators themselves. Unfortunately
this is needed in some other EU member states and it is likely
therefore that shipowners will favour the introduction of some
EU instrument in this regard. The principles adopted in this regard
by the European Community Shipowners' Associations are annexed.
The overall approach of the British regulatory
system, which provides a statutory "light touch" protection
for port users in most of the key areas in which port authorities
might be able to abuse their statutory powers (for example in
the setting of conservancy or pilotage charges, or in matters
requiring Harbour Revision Orders), is supported by the shipping
industry. Nevertheless there does appear to be some need to ensure
that major shipping operators in particular are not shut out from
providing port services, particularly for their own shipping services,
without good justification.
It is likely that an EU Directive will eventually
be adopted as a result of the forthcoming debate and it is our
firm objective to ensure that it provides sufficient flexibility
to ensure that shipping industry's interests in preserving the
benefits already enjoyed under the present structure and practice
in British ports are secured, even though additional safeguards
against abuse of dominant position may be developed on a national
Environmental and Safety Legislation
The Chamber, along with responsible shipowners
world-wide, strongly supports effective measures to protect the
natural and human environment and the health and safety of all
those ashore or on board vessels. This, perforce, means the imposition
of restrictions on the activities of both shipowners and ports.
We strongly advocate the establishment of rules and standards
on a regional or global basis, as appropriate, and that they should
be applied with equal vigour by all authorities. Nevertheless,
it is important that, in devising regulatory controls, due importance
is given to the wider economic interests of the country and its
individual businesses, and the application of environmental tests
in particular should be transparent.
We understand that the ports industry is particularly
concerned about the application of the EU Habitats Directive,
where the designation of new Special Areas of Conservation and
Sites of Special Scientific Interest (alongside other protected
areas), seems to be proceeding without clarity over the scientific
reasons for selection. If this process is to lead to excessive
constraints on the ability of ports to develop new or improved
facilities for their shipowner customers, that would be a retrograde
Modern Ports: A UK Policy"
The Government's recent Paper "Modern Ports:
A UK Policy" is a useful progress report on the development
of ports policy under the present Government. There is very little
in it that is newbut many of the elements discussed are
already taking their own course. The Chamber is actively engaged
in all those aspects of review and change, which directly affect
their own operations of the costs.
In particular we welcome the developments on
safety in ports: the Review of Pilotage and the introduction of
the Port Marine Safety Code. The Code, with its roots in formal
risk assessment and in consultation with all interested parties,
particularly shipowners users, should provide a much more consistent
and solid basis for port authorities to carry out their responsibilities
for safe navigation in their harbours. There is ongoing work still
on the implementation of the Code, both at national level and
in each port, to which the Chamber is fully committed.
The Government's Paper touches also on a range
of policy developments which we welcomebetter Planning
Advice to ensure that waterside sites are not unnecessarily lost
to waterborne transport, the extension of the Freight Facilities
Grant Scheme to seaborne freight movements, for example.
However, little policy groundwork has been laid
in relation to the proposals expected to emerge from the European
Commission, discussed above. To that extent, further work will
be necessary in the UK to policy in the ports field to protect
the British national interest.
Other Policies to Benefit Major Ports
We would identify one matter in particular,
touched on briefly in "Modern Ports: a UK Policy", where
government policy disadvantages trade to UK ports in particularthe
continuing imposition of Light Dues. However long-standing the
present system of funding the provision by the General Lighthouse
Authorities of lights and other aids to navigation from a tax
levied almost entirely only on commercial shipping using UK ports,
the effect is to place a burden on British Trade which is not
borne by that moving through the ports of our near-European competitors.
Around £70mn is levied on shipping per annum, with a large
proportion of that being borne by a few operators, principally
those operating larger ships.
Governments of all hues have argued that Light
Dues are a "charge" and are consistent with a User Pays
approach to the provision of services. This is a false analysis.
Firstly a very high proportion of the "users" of the
GLAs' aids to navigation pay nothing, either because they do not
call at UK/Irish ports at all or because Governments have conspicuously
declined to bring them into payment (most particularly leisure
users and smaller fishing vessels, who probably place most reliance
on traditional and expensive lighthouses), indeed a modest contribution
from the Ministry of Defence has inexplicably just been ended.
There is in any case a continuing subsidy, at unjustifiable levels,
of the provision of aids to navigation in the Republic of Ireland
from light dues collected in UK ports, though the DETR have taken
steps to secure an improved agreement.
Secondly, the size of the charge and its frequency
make no reference to the extent, if any, of use of the system
provided, but are based entirely on the net tonnage of the ship
and its trading pattern. Such an arbitrary system is bound to
favour one ship compared to another, and it is not therefore surprising
that shipping interests are not able to reach a common view of
a different division of the burden.
The Government's stated commitment to the continuation
of the Light Dues system, should be changed. It should be accepted,
as in all the UK's nearby EU competitors, sundry in the public
interest and under international treaty, should be funded from
central government funds. Failing this, at the very least, serious
attempts should be made to collect a reasonable proportion of
the total from all classes of user, particularly leisure craft.
19 January 2001