Memorandum by P&O (P 29)
MODERN PORTSA UK POLICY
P&O has a major interest in Government policy
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;
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 PortsA
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
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