Memorandum submitted by Sea and Water
1.1 Sea and Water welcomes the Environmental
Audit Committee's inquiry into the steps taken by Government to
encourage reductions in carbon emissions from transport. We are
pleased to be able to set out the contribution which water freight
can make to achieving that goal.
1.2 Sea and Water is the national bodysponsored
by the UK water-freight industry, the Department for Transport
and the Scottish Executivecharged with promoting transport
of freight by short sea shipping and inland waterways.
1.3 Our membership is drawn from all parts
of the UK water freight industry including ports, navigation authorities,
carriers and related services. Sea and Water was created to pursue
current Government policy and aspirations.
1.4 Water freight makes a major contribution
to the economy. More than 95% of freight by volume and around
75% by value is moved into and out of Great Britain by water.
Within the UK, 24% of freight (measured in tonne kilometres) is
moved by water. The industry employs more than 200,000 people,
and contributes at least £6.2 billion to the UK economy.
1.5 Compared to alternative transport modes,
especially road transport, moving freight by water is environmentally
sustainable. Emissions generated by water transport are considerably
smaller than by road, and by switching to water lorries are taken
off the congested road network.
1.6 Yet the water freight sector faces considerable
challenges, and is not able to deliver to its full potential.
It therefore needs support from Governmentboth in terms
of resources, but at least as importantly, in policy terms. The
freight industry in turn will respond, as it has in the past,
by investing in wharves and craft to deliver coastal and inland
1.7 In short, with that support water freight
can make a vital contribution to a more effective transport system,
reducing road congestion and promoting a cleaner environment.
2. HELPING THE
2.1 In its report into Transport and the
Environment, published in 1994, the Royal Commission on Environmental
Pollution highlighted the environmental advantages of water freight
transport. It called for action "to increase the proportion
of tonne-kilometres carried by water from 25% in 1993 to 30% by
2000, and at least maintain that share thereafter".
2.2 The 1998 White Paper, A New Deal for
Transport, also recognised the "useful contribution"
that water freight could make to a sustainable transport system.
That position was supported in the subsequent "daughter"
document, Waterways for Tomorrow, which was centred on the contribution
waterways could make to sustainable development.
2.3 In short, it is widely acknowledged
that moving freight by short sea, coastal and inland shipping
delivers a number of environmental benefits compared to other
transport modes. Principally this is because moving freight by
water uses significantly less fossil fuel than other modes.
2.4 As a result moving freight by water
reduces the amount of carbon put into the atmosphere by up to
80%. It reduces the volume of nitrogen oxides put into the atmosphere
by about 35%. This is vitally important when carbon emissions
from transport are growing, with road transport accounting for
22% of all of the UK's emissions. Almost 40% of CO2
emitted by road transport comes from lorries and buses.
2.5 Water transport is more sustainable
in other ways. The water "network" uses considerably
fewer finite resources such as aggregate. A kilometre of motorway
consumes more than 100,000 tonnes of aggregate, and UK roads as
a whole account for 90 million tonnes of aggregates each year.
By contrast coastal waters and rivers are naturally-occurring,
and what maintenance is required can be delivered sustainably.
2.6 If freight is switched to water the
need for long distance movement of freight by road is reduced,
thereby reducing the demand to widen existing motorways or build
new trunk roads. Enhancing water-based transport facilities instead
of road infrastructure has the great advantage of being specific
to freight and will not be taken up by unregulated growth of passenger
3.1 Over recent months the Government has
made plain that it wishes its policies towards and expenditure
on freight grants to be well-targeted and to deliver long-term
results. As a result it has decided to amalgamate grants for rail
and water freight into a single potwhich will be of a smaller
size than the previous, separate, funds.
3.2 Sea and Water believes that grants are
necessary in the short-term to support the water (and rail) freight
sectors. However, the objective for the medium- to long-term is
to ensure a level playing field for all transport modes, meaning
that in the long-term grants are no longer required.
3.3 Our contention is that all freight users
should be required by HM Treasury and DfT to meet the full social
and environmental costs they impose. This would recognise that
road haulage tends to have a greater negative impact than water
(and rail) freight, as it adds to road congestion, causes more
environmental damage, uses more finite energy resources and is
often the cause of increased noise levels and more accidents.
3.4 We believe that all users of road transport
should contribute through road pricing an amount, based on the
DfT's own Sensitive Lorry Mile measure, to compensate for non-user
costs and other damage their activities create ("externalities").
The following table is reproduced from recent DfT guidance on
freight grants, and illustrates net external costs of road, rail
and water-freight after tax paid (values of Sensitive Lorry Miles).
||Pence per lorry mile
|Unquantified road costs||8.0
Source: DfT 2005
3.5 The table shows that, on average by comparison with
rail or water and after allowing for taxation already paid, an
HGV fails to cover its full costs to the community by a weighted
average of 51.1 pence per mile. More accurately reflecting these
true costs will allocate resources on the basis of the full costs
of delivery, encouraging more freight to transfer to water, resulting
in a more efficient transport system and a cleaner environment.
3.6 If road haulage was required through road pricing
to pay its full costs, there would be a substantial modal shift
to both rail and water. There would then be no case for expecting
the costs of assisting the rail or water modes to be paid by the
taxpayer as the alternative rail and water services would be self-funding.
3.8 Sea and Water calls on the Government adequately
to fund water-freight in the interim period before road user charging
is introduced to redress the market failure that current fiscal
practice has imposed upon non road modes. It would also allow
the water mode to expand its level of service so that it will
actually be able to deliver alternative freight strategies by
the time road pricing is introduced. This will render road pricing
effective in encouraging change and remove some of the inevitable
objections to its introductionbecause alternative methods
will already be in place and delivering services.
3.9 Current grant levels are often inadequate to induce
the market to capitalize on opportunities, particularly insofar
as inland waterways are concerned. There is market failure because
without the consequent waterway track revenue, infrastructure
has not been adequately maintained, developed or upgraded to allow
carriers to deliver the competitive services which would otherwise
be the case.
3.10 Sea and Water calls on DfT to overhaul the freight
grants scheme to reflect current commercial practices and to level
the playing field between all transport modes. The freight grants
scheme needs to be adequately funded so that water freight may
compete effectively with road haulage.
3.11 Once road pricing is introduced and road hauliers
are paying their true costs, Government funding for water freight
would naturally cease.
3.12 Inland water transport is regarded as a risky investment
by financial institutions due to the high level of initial costs
associated with purchasing vessels. Operating margins are tight
and sufficient surplus to invest in new vessels is not being generated.
An already ageing fleet is getting older and will soon become
unserviceable if no financial mechanism is available to allow
3.13 Financial institutions are generally risk averse
for long term projects and the internal models used by banks to
assess risk do not fit easily with the typical capital structure
of an inland shipping operator. Therefore, there is little or
no private finance available for small vessels.
3.14 Sea and Water calls on the Government to further
address the problem of market failure described above, by taking
some of the credit risk associated with commercial borrowing by
4. CREATING A
4.1 UK ports deliver their services to the national economy
without cost to the public purse. The absence of a UK planning
policy framework that recognises the overriding national importance
of ports makes it difficult for ports to demonstrate the need
for any port development.
4.2 In addition, the process for obtaining Harbour Revision
Orders and other approvals is too slow, too uncertain, overly
complicated and costly. As a result, port development is delayed
and frustratedand the UK remains at a disadvantage to European
4.3 We welcome the review of ports policy being undertaken
by the Department for Transport. It is crucially important that
the current difficulties with the planning system are urgently
resolved. It is self evident that if inland waterways and coastal
shipping are to expand their roles, ports must expand to become
distribution hubs and will therefore require the physical developable
space to fulfil that role. This approach is entirely consistent
with established planning policy.
4.4 Ports offer ideal locations for distribution activities
as they are often rail and waterway connected and well located
to serve regional markets. Regional policy guidance implies that
the demand for rail/water connected sites will be very extensive
as one million m2 of large distribution sheds (requiring around
250 hectares per annum) are built each year in the UK.
4.5 Ports must be allowed to physically expand if the
policy objective to locate such buildings at rail and water linked
sites is to be addressed. Water connected sites will promote coastal
shipping because the cost of a road leg to reach quayside buildings
is eliminated. Port locations can constitute the most competitive
locations for industrial development.
4.6 Sea and Water calls upon ODPM, DfT, and Regional
Assemblies to ensure that planning policy allows for the expansion
of ports in the UK.
4.7 Port authorities themselves do not generate freight
but they are a vital component of the UK logistics chain and their
contribution in transferring traffic to other modes and countries
is significant. Increasingly, Government is imposing a condition
on new planning applications requiring ports to fund enhanced
road and rail connections. In making it more expensive to develop
a distribution role in rail connected ports, this condition will
reduce cargo moved by rail or water.
4.8 Sea and Water call upon the Government to cease the
requirement for port authorities to fund national infrastructure
4.9 Increasingly, water-side facilities are being developed
for housing and leisure amenities. In addition, poor planning
is allowing housing and other sensitive developments to be located
close to existing freight wharves and this incompatibility often
results in freight operations being curtailed or restricted. Without
adequate water-side freight handling facilities the movement of
freight by water will cease.
4.10 Sea and Water calls upon the ODPM to require Regional
Planning Authorities to identify and safeguard potential deep
water berths and riparian freight handling facilities.
4.11 To allow for the potential of efficient inter-modal
supply chains, ODPM should identify and safeguard sites where
road, rail and water naturally come together.
4.12 Government should also be encouraged to take a holistic
and "joined-up" approach to future activities where
the use of water transport could have a positive effect. An example
is waste management where there is great potential to move large
quantities of waste and recyclates in a sustainable, environmentally
friendly and cost effective way.
4.13 Sea and Water calls on the ODPM and DfT to protect
potential multimodal interchange sites.
4.14 An under-funded and limited waterway network restricts
the movement of freight by water and provides further opportunities
for freight to move by road.
4.15 Sea and Water calls on DEFRA and DfT to properly
fund a strategic waterway network for the movement of freight
so that water transport can deliver its full social and environmental
benefits to UK plc.