Select Committee on Transport Written Evidence

Memorandum by the North Europe Container Hub Project (POR 22)


  Port development is understood to be both a devolved and reserved matter, between Edinburgh and Westminster. Stated Government Policy is to help ports help themselves, avoid burdens, welcome practical contribution, encourage water-borne transport and port co-operation to clear the roads, whilst making the best use of existing natural and man-made capacity in preference to new infrastructure.

  Britain and Europe's increasing need for efficient, economical, eco-friendly intercontinental containerisation can be met through a single UK "hub and spoke" site in Scapa Flow, Orkney. This is made possible by £700 million of international capital being available for the project, a major inward investment for the UK. It will provide the power house of the UK Water-borne Intermodal Transport Revolution, radiating short-sea fast-feeder services throughout Britain, Europe and the Baltic as far as St Petersburg; put Britain back at the centre of the maritime map; assure the future of Britain's present shallower ports; complement rail services; by-pass bottlenecks at the Channel Tunnel and make an ideal base for international disaster relief. Scapa Flow is Europe's best natural harbour. Already accommodating the largest ships with ease, Scapa Flow is Britain's insurance for the 21m draught Mallaccamax future.

  Scapa Flow makes the best use of geography, natural resources and the debris of two World Wars. Ideal as the now-required North American post-September 11 secure international container gateway or safe portal, Scapa's strategic position will accelerate the expansion of Russian, Baltic, Central and Eastern European Trade. This will fill the empty containers which threaten the viability of marine transportation, whilst bringing prosperity to and consolidating democracy in Russia.

  The economies of "OJIT, only just on time" intercontinental marketing continue to drive the expansion of containerisation. Major shipping lines are building networks and alliances. Their success depends on swift, sure and economical container services. Containers are transported about the world by the most efficient mode of transport available, be that ship, rail, road or air, switching transport modes "intermodally" by "Intermodal Transport" as necessary. Container ships are an essential part of the intermodal system. Cut-throat competition enhances their contribution. That competition requires ever larger, more economical ships being used at maximum efficiency.

  Following commercial aviation practice, "megaship" mainline services, running between "Hubs" and supported by "Spoke" feeder shipping, are being developed everywhere in the World, except in NW Europe where most profit is to be made. Shippers demand reliability, security which includes specialised services, economy, speed and convenience. The MSOs, MegaShip Operators who serve them, survive on tight margins. They cannot and will not be tied to a particular port (as Southampton, Felixstowe and Rotterdam know to their cost). MSOs will go where the port service is cheapest, quickest, with reliability and security for the greatest load at maximal convenience. FSOs, Feeder Ship Operators require the same, with schedules to keep from the Loire to the Urals. Both are delay and fault intolerant. Both depend on ports which support the most efficient ships. These ports will dominate the transhipment trade generated by the economy of larger vessels. If the UK fails to meet this inter-continental container transhipment challenge or is prevented from so doing, shipping lines will divert primary services to overseas ports. This will undermine the Government's Integrated Transport Policy, increase the cost of UK trade and reduce UK competitiveness.

  Set like Byzantium of old, where the trade routes from Europe, Asia and America meet, Scapa is not subject to the "Global Competition" and "Divided Europe" forecast models. Strategic situation and the need to fill both containers and ships means that global competitiveness depends on Scapa.

  Rather than divided, Europe north of the Loire-Alps-Carpathian-Urals Line is united by need for the deep water transhipment Scapa can provide. Optimal intermodal transport favours Scapa. Potential blockade of the Bosphorus and Danube would further enhance the importance of Scapa not only to the UK but the wider European Economy. Russia's ability to enjoy and enhance the World Economy depends on it. For international and disaster relief, immediate access to the megaship system makes Scapa the ideal base.

  The decisive trade shift from east-bound, trans-Pacific to west-bound traffic from the expanding South East Asian economies, will meld Baltic and North West European trade with that between Asia and the American East Coast. For maximum loads, mainline megaships will either call or tranship somewhere in North West Europe.

  An intelligent, enthusiastic work-force empowered by a state of the art, but reliable hub is required to exploit this window of opportunity. Orkney provides both site and skill. International recognition of the potential of the situation has provided the finance. All the essential requirements of the project are now in place. Except the political will to turn opportunity into reality.

  The danger of the situation is that this opportunity is not lost on the rest of Europe. Though less ideal, other sites exist. If Scapa is not pursued with vigour, the available finance and trade will go elsewhere. Leaving the UK the poorer, crippled as a backwater of and obstruction to rather than the centre of Europe and the World's Maritime Trade.

  Easy, interdependent collaboration between Orkney, the Hub and its workforce, captains, crews, ship operators, shippers, Local, National and Harbour Authorities is the key to the success of all the parties involved. FSOs have to keep to tight schedules. MSOs need to keep their ships earning at sea. Container dwell times have to be minimal. Flexibility maximised. Every minute of the year put to best purpose in this key component of the global system. Innovative design, enhancing the ability of the workforce with improved technology; an optimised workplace exploiting Orkney's strategic position; the environmentally friendly situation; the 25 year, proven track record of safe supertanker operations in Scapa Flow; the immediate availability of the necessary international finance; all together make this possible. There is no need for subsidy, but political enthusiasm and support is now mandatory.


  Britain's survival depends on international trade. Trade is containerizing. Success depends on swift, sure and economical container services. Containers transported to/from the world by the most efficient mode of transport available, be that ship, rail, road or air. This involves switching containers between transport modes—intermodally by "Intermodal Transport".

  Container ships are an essential part of that system. Cut-throat competition enhances their contribution, efficiency and economy. Success is based on ever larger, more economical ships being used at maximum efficiency. As in the aviation industry, megaships running between "Hubs" supported by "Spoke" feeder services are being developed everywhere in the World, except in NW Europe. In Britain road congestion requires the urgent development of alternative rail, water- and sea-borne transport systems.


  Our purpose is the construction and operation of a hub facility in Scapa Flow, Orkney, for fast, efficient container transhipment between mainline Megaships, and fast feeder ships serving North and North-West Europe, the Baltic, Central and Eastern Europe, Scandinavia and Russia West of the Urals. This will return the UK to the centre of the maritime stage, provide a 21 m facility for the coming Mallaccamax generation of container ships and secure the future of Britains's shallower ports. Scapa will pump new life into the UK's off-road transport system, re-vitalising coastal feeder and water-borne transport services. Scapa will promote and facilitate the growth of "intermodal" transport links, switching containers quickly and efficiently between transport modes (barge, ship, rail, road and aircraft) as demand and economy dictate. The volume of "Mainline" international transhipment traffic passing through Scapa, will provide the necessary added stimulus for the intermodal transport revolution throughout the rest of Britain.


  Megaship "Hub and Spokes" are the foundation on which the development of the Global Economy depends. They are as important to the Third World as to the First and vital for Britain. Scapa Flow has the seven requirements for such a facility: deep water, strategic location, space, environmental compatibility, practicality, local support and a profitable, Europe-wise hinterland. Within the UK, export trade is being driven back on to the roads by the blockade of the Channel Rail Tunnel. Resurrection and development of UK coastwise maritime links will allow resumption of the Government's Road Relief programme, backing railways with speedy efficient container ports, services and waterways. Meanwhile, international disaster and relief programmes are looking for a base on the global megaship system. Orkney is ideal.


  Inspired by Dr Alfred Baird, Napier University, Edinburgh in 1998 Messrs Scapa Terminals, Stromness, Orkney proposed the present project in Scapa Flow, Orkney. They have been followed and parallelled by an Orkney Isles Council (OIC), Highlands & Islands Enterprise (HIE) and Halifax (Nova Scotia) Port Authority partnership. Rather than simply the North West European end of a North Atlantic link with Halifax, this Group's intention is to make Scapa the "three in one" North West, Central and North European (west of the Urals) component of the world wide megaship "hub and spoke" system. The proposed international strategic base for disaster management and relief in Orkney would then have immediate access to the worldwide megaship network.


  Scapa Flow is Europe's best natural harbour and the "head" of Britain's transport "spine". It is "on a Great Circle to everywhere". Scapa is the "cork" to the Baltic "bottle". The key to and focus of the Baltic's global surface trade. Russia must and will play a progressively greater part in the World Economy. The traditional western outlet for European Russia is St Petersburtg. It already has a container terminal for intermodal interchange to Russian Railways. Scapa is optimal for the Russian-North American Trade. It will also provide convenient translation from Broad to Standard Gauge Rail services to the UK and to Western Europe through the Channel Tunnel. Russian proposals are for a "Girdle around the Earth" service running from St Petersburg to Scapa, thence to Singapore, Hong Kong and Nacholdkha/Vladivostock. P&O and others have been to Russia and told the Russians how to do things. Russians prefer to do things best their own way. P&O discounted St Petersburg and proposed a Moscow container hub, railroading containers west to transfer to standard gauge at Brest-Litovsk for transhipment through Hamburg. Russian business is aware of the opportunities Scapa will provide for them as well as for the UK. The economy "spin-off" for Scotland and the UK in general and the Highlands and Caithness in particular will be considerable.


  A J Baird's work [], based on world wide interhub operations, indicates energy and operational savings on present practice which include:

    —  Mileage reduction: 114 per cent

    —  Fuel cost reduction: 84.5 per cent

    —  Capital cost reduction on next generation megaships: 5.52 per cent

    —  Total system operating cost reduction: 149 per cent


  That a North West European Container Hub will be built is undoubted. The question is where? For Scapa the question is when? Scapa's strategic position and geography are idea. But there is a relatively short window of commercial opportunity to establish the Scapa Hub before myriad expensive, second-rate facilities are built on the North East Atlantic seaboard.

  The Channel and Continental ports are shallow. Continuous, expensive dredging will not provide the 21m draught required for future "mainline" "Mallaccamax" generation container carriers. These ports are "hostages to fortune". They will require expensive re-duplication to keep them in business in the early years of this century. Rather than competition, Scapa transhipment is these ports' salvation.

  The nearest 20m berth is Sines, Portugal, which the Port of Singapore Authority aim to have operational in 2002. Between Mainliner and feeder ships, the Clyde adds a day's steaming. Sullom Voe (adjacent to the Oil Terminal) and Swarbacks Minn, both in Shetland, have deep water, and the former has adjacent low land. Neither have an anchorage. Both are dependent on weather slots for entry and immediate berthing/sailing.

  On the Norwegian Shore, there are sites at and between Bergen, Stavanger/Sandness and as far east as Kristiansund, which have access to the Stavanger railway. The submerged-tube rail-link across the Sound (linking Scandinavia with the European railway system) is their equivalent of the Channel Tunnel. Its problems are only too well known. As Mrs Dunwoody has indicated, if the UK's European trade is not to be strangled by such snags, sea transport has to be optimized and maximized. This in its turn will exploit the current expansion of France's waterways.

  MSOs, MegaShip Operators survive on tight profit margins. They cannot and will not be tied to a particular port (as Southampton, Felixstowe and Rotterdam know to their cost). MSOs will go where the port service is cheapest, quickest, with security for the greatest load at maximal convenience. FSOs, Feeder Ship Operators, with schedules to keep, require the same. Both MSOs and FSOs are delay and fault intolerant. Even without ship development and the depth of water requirement to match the rest of the World, Scapa is competitive in the present market place as a pure transhipment hub, with fast low cost feeder services to the UK, the Continent and the Baltic.


  Bubble technology has put Russian 240 knot torpedoes into service (vide Kursk). It can be applied to surface ships as well as deep-diving concrete submarines. Major drag remains at the waterline. Larger wetted areas and smaller waterlines mean larger, faster, more economical vessels, but of increased draught. For them and Mallaccamax (21m draught, limited by the Mallacca Straights) vessels, depth of water is critical. Present-build, orthodox and "Jumbo" class—15 m draught ships will require ever more expensive dredging in the Thames, Solent and Continental port approaches. The Sound (the entrance to the Baltic) is closed to them. Present builds and orders are for wider, 15 m vessels, to increase both capacity and stability after 50 degree roll incidents with load-shedding in the Pacific. Scapa's commercial success does not depend on the depth of water it provides. That is Scapa's and the UK's guarantee for the future. Nevertheless, present developments will increase Scapa's advantages and further disadvantage the competition. Scapa does not diminish the importance or threaten the viability of other UK and European ports. Rather it guarantees their future. Whatever direction the future takes, with Scapa operational, North and North West European Industry and Transportation will be competitive in World Market.


  There are five potential sites in Scapa Flow where the Megaship/SuperContainer Hub could be built. The Golta Peninsula on Flotta is the OIC, Orkney Islands' Council's preferred site. Messrs Talisman, who run the adjacent Oil Terminal and own the Golta, are favourably disposed to the Hub Project. Though local oil production may decline, Rockall, Faeroe, North Norwegian, Barent's and White Sea developments will maintain Talisman's local interest for at least a further 25 years. The objective is a mutually beneficial development for all the parties involved: the Flotta and Orkney communities, wildlife, OIC, Talisman, the Hub, together with Scotland and the UK.

  Safety is an issue with major oil landing, loading and trans-shipment side by side with containers. Talisman have a 25 years' track record, handling ships of up to 300,000 tons dw. In practice the two activities are complementary rather than incompatible. Environmentally, of all the competing Atlantic Rim sites, Scapa poses the least environmental challenge. Scapa has an established, environmentally-friendly tradition. Long established, major Oil Trans-shipment and Oilfield Support have been practised in parallel with Orkney's unrivalled natural environment. High winds in winter mean that the aerodynamic challenge in Orkney is similar to that for hubs in the Hurricane, Cyclone and Typhoon zones.

  Ultimately, Hub success depends on workforce enthusiasm and ability, 24 hours per day, 366 days per year. In recognition of this, novel approaches have been adopted to provide an optimum workplace.


  Much interest has been expressed in operating the Hub. Local business is actively involved. They are keen to pursue their initiative and contribute local knowledge, shipping experience and management expertise. The Orkney Isles' Council, the Highland and Islands Enterprise and the Port of Halifax, Nova Scotia have actively promoted the project. Our group has assembled a "hard heading" Management Team backed by a consortium, as proved necessary for the Shetland oil terminal and port development at Sullom Voe in the 1970s.


  Full financial backing is available. This is inward investment for the UK. The investors' concerns are for predators and procrastination. The present economic down-turn will assist Scapa allowing the project to catch up with and overtake its continental rivals. The UK Government's handling of RailTrack alarmed international investors. Elsewhere in the world, Government and authority enthusiasm for and loyalty to internationally financed projects is expressed in a financial manner often by a certificate of deposit, which could be provided by the OIC. Alternative options have been arranged for presentation to the OIC. Subsidy is not sought for Scapa. Despite Dutch Government support for Rotterdam (supposedly illegal under EEC Rules), subsidy would involve wrangling and delay with the European Commission. Some part of such major projects are expected to start commercial operations within a year, from start of construction. This could be achieved on Flotta by starting with the OIC.'s "minimal" proposal as a £200 million Stage One adjacent to Talisman. Stages Two and Three would then be rolled-out eastwards along the Golta Peninsula.


  Talisman and/or the OIC own the Flotta site. The OIC is staging an open competition to undertake the project on behalf of the Partners, the OIC, HIE and Port of Halifax. This group's proposal is the only "complete package" which has financial support. Several organizational models have been discussed with the OIC, including a Consortium of all the interested parties. Environmental and engineering assessment, planning, design, construction, engineering and port operation can be undertaken by consortium or by standard commercial arrangement. The choice of hub operator will be agreed with the OIC, the Port Authority.


  There is local political support, which is recognized to be the first requirement for such developments. Despite briefings by Scapa Terminals, the OIC and the HIE, UK and Scots Governments do not appear to be aware of the significance and opportunities of the project. Mrs Dunwoody's Westminster Parliamentary Select Committee has stressed the need to develop water-borne intermodal and maritime links within the UK and Europe. Scapa with its fast feeder ships is the missing link in the Dunwoody Plan. The Highlands and Islands will be major beneficiaries. For Orkney it is an essential component of the Isles' future economic viability. Scapa will also demonstrate Westminster and Edinburgh government commitment to the future prosperity of Europe. The European Commission is aware of the project and feels that the project stands on its own merit. There is all party UK support in the European Parliament.


  The immediate requirement is formal commercial assessment. The OIC has set aside £300,000 to further promote the project. They are considering commissioning that Commercial Assessment as the necessary next step towards assuring Orkney's future economy. A standard certificate of deposit, with this Group doing the rest, was suggested to the OIC on 8 Feb 2002. Once formal commercial assessment is completed this group can immediately commence environmental and engineering assessments for Planning Application and Inquiry, if the latter is required.


  Since 11 September 2001, container security has been a major concern of all States. The US requires safe portals and secure gateways. International confidence, hazard control and surveillance demand it. Scapa is ideal for this role.


  The bottom line is that a 24 hour, 366 day a year trans-shipment hub in Orkney can beat the competition and provide the UK and Norther Europe with the economic commercial link necessary to compete effectively in the world's markets as well as securing the long term future of Britain's other ports. To succeed, the Hub's first requirement is political support. Commercial success depends on a dedicated workforce providing a "round the clock" operation. Orkney provides both site and skills. That keen and skilled workforce must be empowered with appropriate reliable and efficient tools for the job. Improvement in hub design married to proven technology and favourable working conditions will provide MSOs and FSOs with the speed of turn round, loads, economy, security and convenience they need to keep ships earning at sea, rather than losing money in port. Shippers will get the reliability, economy, security, speed of delivery and convenience that are essential to their success. For European and North American Authorities, that efficiency and economy will be matched by the opportunity to achieve the secure gateways they are now required to provide. The UK will get economic spin-off, cheaper transport and a major stimulus to the development of sea and water-borne alternatives to the UK road network. It will ensure that UK trade is not, cannot be crippled by Channel Tunnel, focal or monopoly obstruction.

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