ACCESS TO PORT SERVICES BRIEFING PAPER
1. Hutchison Ports (UK) Limited ("HPUK")
is a member of Hutchison Port Holdings Group ("HPH").
HPH is a subsidiary company of Hutchison Whampoa Limited based
in Hong Kong. The HPUK group is the largest employer in the UK
port industry and owns three ports in the United Kingdomthe
Port of Felixstowe, Harwich International Port and Thamesport.
HPUK is a member of the United Kingdom Major Ports Group (UKMPG),
and through UKMPG, the European Sea Ports Organisation (ESPO)
and the Federation of European Private Port Operators (FEPORT).
2. The proposed European Directive on Access
to Port Services was published on 14 February 2001.
3. The salient points of the Directive can
be summarised as follows:
(i) It covers the provision of pilotage,
towage, mooring and cargo handling services.
(ii) Providers of services should have access
to the market.
(iii) The highest number of service providers
possible be allowed in each port, for cargo handling this should
be at least two for each category of cargo.
(iv) The number of providers can only be
limited due to lack of space or, in the case of mooring/pilotage/towage,
for reasons of maritime traffic-related safety.
(v) Port users must be able to "self-handle".
(vi) Any service provider must have the right
to employ personnel of his own choice.
(vii) Where the managing body of the port
also wishes to be a service provider, a third party must be appointed
to grant the authorisations.
(viii) Authorisations will be limited in
(ix) Transitional measures will apply to
4. The Commission issued its Green Paper
on Sea Ports and Maritime Infrastructure on 10 December 1997.
The European Parliament delivered a Resolution on the Commission's
Green Paper on 13 January 1999.
The Parliament made it clear that it did not see the need for
a legislative framework to ensure market access for port services.
5. HPUK fully supports fair and open competition
but believes that the proposed Directive particularly as it relates
to cargo handling, is ill conceived. The extension of the Directive
to include cargo handling (it was originally intended to include
only the technical-nautical services of pilotage, towage and mooring)
was made after only a very perfunctory consultation and without,
it would appear, a clear appreciation of either the industry or
6. The European port industry is diverse
and this diversity is recognised by the Commission as a strength.
The UK is unusual within the EU in that virtually all major ports
are in private hands. It also has many more ports than in the
majority of member states. The application of the Directive in
a blanket way to all ports is contrary to the principle of equality
and would indirectly discriminate against UK ports.
7. The Directive fails the proportionality
test. The cost to shipping lines of handling a container in a
UK port is circa $100 (£68). This compares with an average
of approximately $134 (£91) in North Europe, $200 (£135)
on the East Coast of North America, $260 (£176) on the West
Coast of North American, and $360 (£243) in Japan.
Cargo handling charges in Europe are not consistent with a market
to which access is denied. To the extent that there is any concern
regarding competition within the industry then the European Treaty
already contains provisions designed to deal with anti-competitive
practices or abuse of dominant position.
8. There may be problems with port efficiency
and access in certain member states but there has been only one
such complaint in the UK, which on investigation proved to be
unfounded. No case has been made for a Europe-wide Directive.
The subsidiarity principle should apply.
9. Notwithstanding the fact, acknowledged
by the European Parliament, that there is no need for a Directive,
there are many shortcomings with it as drafted. This Paper does
not provide a full critique but major problems include:
(i) The rationale for the Directive, and
the implicit assumption that each port constitutes a distinct
market, does not reflect the structure and competitive nature
of the port industry, particularly in the UK, which is characterised
by a large number of ports and the competition between ports rather
than within ports.
(ii) The market for most cargo handling services
(eg deep sea containers) usually covers a number of ports although
for certain categories of cargo (eg dry bulk) in ports covering
a very large area the market may be only part of the port.
(iii) It takes no account of the extended
hinterlands of many ports. The definition of "port system"
assumes each port serves only a single city or conurbation.
(iv) Owners of, and investors in, private
ports have a reasonable and legitimate expectation as to the lasting
nature of their property rights and the possibility of continuing
to derive economic benefits from the exercise of those rights.
(v) The transitional arrangements will deny
rights to operators of legitimately acquired terminals/ports.
Operations acquired in accordance with accepted practices at the
time should be exempt.
(vi) The European Commission states that
it does not wish to harmonise port structures but the Directive
imposes the "landlord" model on all substantial ports.
(vii) Relatively small ports handling a number
of cargo categories would be obliged to appoint multiple cargo
handling service providers.
10. If the Directive eventually becomes
law in a format similar to the published proposal, there will
be a number of very serious consequences to no obvious benefit:
(i) It will encourage greater use of poorly
trained or casual staff and a consequential reduction in safety
(ii) UK port operators have made huge investment
in the facilities at their ports: if they were to be deprived
of the use of these facilities they would look to the Government/Commission
for substantial compensation.
(iii) The Proposal will jeopardise investment
in much needed new facilities in the UK. Restrictions on concession
length and size could make future investment unattractive.
(iv) The requirement for "the highest
number of service providers possible" removes the benefits
of economies of scale and will result in less efficient operations
with higher operating costs and port prices thus discouraging
short sea shipping.
(v) Contrary to UK Government policy the
loss of economies of scale will also result in less efficient
use being made of existing infrastructure with consequential negative
environmental implications through the need to expand existing
facilities to compensate.
(vi) It will impose an unnecessary and onerous
regulatory burden upon an efficient and otherwise liberalised
11. A number of meetings have been held
with politicians and officials in the UK and with the European
Commission at which the concerns of the UK industry have been
raised. These include the following:
21 March 2001John Prescott, Deputy Prime
Minister (joint meeting with T&GWU)
8 January 2001DETR Ports Division (UKMPG)
17 October 2001Loyola de Palacio/Wolfgang
Elsner DG TREN (UKMPG)
2 October 2000John Prescott, Deputy Prime
Minister (briefed in Harwich by HPUK on the occasion of the Stena
Britannica naming ceremony)
15 September 2000Wolfgang Elsner DG TREN
1 August 2000Keith Hill MP, Minister,
In addition ESPO and FEPORT have both been in
regular contact, and held meetings, with the European Commission.
12. The Directive seeks to increase choice
and efficiency in European ports. In reality it will have the
opposite effect by discouraging investment in new facilities and
removing vital economies of scale from existing port operators.
10 COM 97/678. Back
OJ C 104 14/04/1999. Back
Commission press release IP/01/203 14 February 2001. Back
Source: Federation of European Private Port Operators (Feport)/Ocean
Shipping Consultants. Back