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

Memorandum by P&O (P 29)



  P&O has a major interest in Government policy on ports:

    P&O Ferries is the largest operator of ferries and associated port terminals in the UK;

    P&O Nedlloyd is the single largest shipping line carrier of containerised trade to and from the UK;

    P&O Trans European's logistic operations are reliant upon the efficiency of UK ports and transport networks; and

    P&O Ports is a leading investor in, and operator of, container terminals both internationally and in the UK.

  We welcome the publication of Modern Ports—A UK Policy and the initiatives it establishes. We appreciate the invitation to provide the Transport Sub-Committee with our views. In so doing we have concentrated on those aspects where we have concerns or believe there is scope for enhancement.


  Ports are today a fundamental part of the global economy. They are increasingly reliant upon efficient transport systems and supply chains between the geographic locations of supply and demand.

  Efficient ports are fundamental to tourism through enhancing the attraction of ports for cruise ship operations and through supporting passenger and vehicle movements.

  Consumer prices are influenced by the competitiveness of ports due to their efficiency and cost of delivering a product to the end consumer.

  The attractiveness of the UK for manufacturing investment and the future competitiveness of industry is significantly dependent on the capacity, efficiency and cost of ports as part of the total land transport system. To the extent that UK ports do not have the capacity, are not efficient or are comparatively costly, manufacturing and distribution will favour other countries.

  The importance of ports to the success of UK industry, to the economy generally and to the end consumer are all strong reasons for the Government creating and maintaining a clear policy framework within which UK ports may be developed and operated efficiently and cost competitively.


  The UK policy of leaving the development and operation of ports to the private sector has proven successful in the context of port capacity not lagging demand and the efficiency of ports increasing. P&O is firmly of the view that the prime responsibility should remain with the private sector. For its part, however, the Government needs to monitor the situation carefully and to be prepared, on a case by case basis, to take a proactive role with respect to those issues that inevitably fall to government, particularly in respect of planning and the provision of infrastructure.

  Private sector investors will tend to see port operations and developments as independent schemes whereas in practice they should form an integrated part of the total transport network. This applies particularly to the EU Trans-European Network Scheme (TENS). This is understood to be based on the identification and creation of integrated transport systems, which implies that ports in the UK will to an extent be planned in this context. TENS, however, are international in nature whilst the private sector developers of ports have at most a regional input.

  Transport of freight needs to be increasingly inter-modal so that the utilisation of sea and rail increases and the demand for increased road capacity, and the associated investment, is minimised. The Government has a crucial role to play, particularly through the planning process and funding of new infrastructure, in determining the balance.

  The future cost of developing port capacity may be uneconomic for the private sector due to the escalation of development costs or due to international competition from publicly funded ports. If this were to occur then a shortfall of capacity may result.


  P&O favours the total private funding of port developments. It is important, however, that this should not place the UK economy and industry at a competitive disadvantage. Internationally, it is common for basic port infrastructure such as breakwaters, channels and wharves to be publicly funded with the private sector funding superstructure and equipment. This applies particularly on the Continent with which the UK competes for manufacturing and distribution business. This needs to be monitored carefully to ensure that UK port operators and, ultimately, UK companies are not disadvantaged.

  The cost of port development will increase in future due to the need to develop less favourable sites, as the best locations have already been developed, and the size of ships to be serviced is ever increasing. The increased capital cost of port infrastructure arising from breakwaters, reclamation or dredging could result in economics that are unattractive to the private sector without increased port charges. This also needs to be monitored.


  Modern Ports recognises the challenges of developing ports, including that ports are inevitably developed in environmentally sensitive areas due to their conflict with leisure activities, residential options and their location in coastal or river environs. The New Approach To Appraisal (NATA) sets out the latest approval criteria. However the approval of port schemes remains a major factor in the context of both time and expense. NATA, although an improvement, still appears far too bureaucratic and time-consuming.

  P&O's consideration of the redevelopment of Shell Haven on the Thames as a major ferry and container port has identified 32 mandatory consultees (including separate departments of the same body) and 35 advisory bodies and organisations. Our assessment of the approval process is that it will take three years for final approval to be granted or rejected with associated expenditure of several million pounds.

  The current approach to approval is on a local, specific project basis without Government ranking or selection of preferred schemes. That is to say, provided a port development complies with all regulatory, including environmental, issues then it may be expected to be approved. However Modern Ports (Weighing the Options 2.4.14.) requires the promoter of a development to demonstrate comparisons to all available options. It is impractical for the promoter of one port to collate all of the information required to rank all other schemes.

  P&O submits that there is potential for the approval process of ports to become yet more efficient and that under the current UK port ownership structure it is the responsibility of Government to consider the comparative merits of individual projects.


  The UK regulation of ports has been successful in attracting private investment, increasing their efficiency and promoting safe and environmentally friendly practices. Recently, there have been reports of a proposed Ports Directive to be issued by the European Commission. P&O has a number of concerns about the apparent direction of the Commission's thinking eg the intention not to include issues related to port financing. If the Directive were to be implemented along the lines of the informal drafts currently in circulation then it would seriously jeopardise the framework established in the UK.


  Modern Ports is a welcome statement of ports policy which recognises the importance of ports to the UK.

  The current industry structure of total private sector responsibility has proven successful to date. However, the future cost of new developments, international competition from publicly funded ports and the increasing stringency of planning and environmental constraints may alter this. The Government should monitor these developments carefully.

  Government could increase the potential for the on-going private funding of port developments by further enhancing the efficiency of the approval process.

  The planning of ports needs to be undertaken in the national context of rail, road and shipping developments as well as the EU TENS policies.

  P&O agrees that undue interference in the ports market by government, whether it be national or EC, is undesirable. The proposed EU Ports Directive threatens to add complex and inappropriate levels of bureaucracy to the administration of ports businesses which, contrary to the intentions of the Green Paper on Seaports and Maritime Infrastructure, may threaten the efficacy and competitiveness of UK ports. It is vital that the national policy of the UK is not considered in isolation from the effects of the proposed Directive.

Peninsular & Oriental Steam Navigation Company

January 2001

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