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

Memorandum by Associated British Ports (P 19)




    —  The ports industry is an important focus for all maritime industry.

    —  ABP ports' traffic approaches one quarter of the UK trade by weight.

    —  Fierce competition, both nationally and internationally, provide an effective spur to efficient use of resources and competitive tariff setting.

    —  Company Law provides an effective oversight of corporate governance in the public interest.

    —  Ports co-operate in many areas including the Marine Safety Code, Port Safety Organisation, British Marine Industry training and (with other authorities) in developing the statutory schemes of management required for most port areas.


    —  Co-operation through established safety organisations, rather than a prescriptive approach by Government.

    —  Threat to a proven and flexible system of tariffs and corporate accountability by excessive intervention and regulation of access to port services (eg by additional EC Directives) where there is little or no evidence of benefit.

    —  Complexity of environmental designation in the coastal zone.

    —  The consents process in the coastal zone urgently needs reform and should be referred to the Better Regulation Unit.

    —  The requirements of the proposed EC Port Services Directive may act against the interests of best practice safety management by port authorities and also deter investment.

    —  Undermining of the Government's sustainable development policy will occur if environmental regulation is given absolute and unqualified primacy.


    —  Welcome commitment to regulatory simplification, although this is unlikely to succeed unless it is given a multi-departmental dimension, eg by the Better Regulation Unit.

    —  The Paper shows the need for stronger attempts to stem the flow of often conflicting regulation from Europe, or to engender consistency of application with other member states.

    —  Concern that certain measures proposed may be over prescriptive and fail to recognise operational needs of international shipping, especially in the fields of safety, access to port services and transparency.

    —  Welcome commitment to support deep-sea container terminal expansion to meet UK needs, and linkage with success of HMG's Integrated Transport Strategy.

    —  Disappointment at the sweeping criticism of the ports industry on Health & Safety. As shown in section 4 below, ABP has a good and improving safety record.


    —  A clear commitment to the policy of sustainable development set in a context of considered and balanced judgement of human need and environmental goals.


  Ports are the focus of activity in the coastal zone. While important in themselves, they support a large community of users. A government report in 1996[17] showed that the total turnover of marine related industry was £51.2 billion, and the contribution to GDP was £27.8 billion, representing a significant level of UK employment.

  Every statutory harbour, including the ABP harbours, supports the wealth generation of its local community.

  The efficiency of UK ports is of vital importance to our island economy to ensure our importers and exporters remain competitive. UK ports compete with their European counterparts and have maintained a competitive service to port customers, primarily from their own resources, whereas many of the continental ports are in receipt of direct or covert subsidy for operations and capital development.


  Associated British Ports Holdings PLC is the UK's largest ports group, owning and operating 23 ports around the country. In the financial year to 31 December 1999, turnover reached £351 million on underlying assets of approximately £1 billion. Underlying profits before tax and exceptional items amounted to £113 million. Group employs around 3,000 staff. In addition to the major contribution to maritime industry as a whole, ABP's ports handle almost a quarter of the country's seaborne trade by weight and three million passengers per year and are, therefore, of crucial importance to the UK's economy. ABP has statutory responsibility for the maintenance of navigational aids, dredging of channels and the provision of pilotage services at some of the UK's largest estuaries. In addition, ABP plays a leading role in the improvement of safety and the development of best environmental practices throughout the UK ports industry.

  Commenting upon ABP's investment policy, which had resulted in expenditure of £575 million over the previous 10 years, the Group Chief Executive in the most recent annual report said:

    "Historically, the Group has undertaken heavy investment in major infrastructure projects which, by their very nature, do not make quick returns. The ports, however, are now in excellent shape and there will, therefore, be less non-revenue earning capital expenditure in the future. Any expenditure going forward will be very closely monitored and only necessary works will be carried out."

    "We are now in a position to focus on commercially attractive projects, which will generate significant returns over a number of years. We do not intend to undertake speculative projects; rather, we will concentrate on customer-demand projects, which are linked to long-term agreements bringing guaranteed revenue flows and good returns. The bulk of our future investment will be at our major ports."

  The following gives greater detail of the roles played by ABP in three of the UK's major estuaries.


  ABP's Port of Southampton is one of the UK's best-known and busiest ports. With a unique double tide and south-coast location only 28 miles from international shipping lanes, it is one of the few UK ports geographically suited to handling the nation's increasing volumes of deep-sea trade. Southampton handles around 35 million tonnes of cargo a year and over 55,000 commercial vessels, including many of the largest vessels in service. Annually, the Port handles goods including a million TEU (twenty foot equivalent units) of containers; 20 per cent of UK vehicle trade (over half a million cars); 20 per cent of the UK's fresh produce imports; over 20 million tonnes of petroleum; and a million tonnes of dry bulks, making it a vital link in global, national and local distribution chains. Southampton is also the UK's premier cruise port, visited by over 300,000 passengers annually. Last year saw growth across all of the main cargo sectors at the port, boosted by increased productivity.

  Southampton is an important engine for economic growth on a local, regional and national level. Its contribution includes:

    —  over 11,000 people directly employed in port-related businesses;

    —  a conservative estimate that port activities contribute over £1.3 billion to the regional economy every year, with tens of thousands of further jobs indirectly reliant on the port's success;

    —  handling about 6 per cent of the UK's trade (by volume), including about half of the nation's trade with the Far and Middle East.

  With excellent road and rail links that can bypass the pressurised London network, Southampton is one of the UK's leading integrated transport hubs. The port generates over 5,000 freight trains a year, saving around 200,000 loaded HGV road journeys. This makes Southampton one of the UK's leading port users of rail freight and builds on the port's traditional strengths as an interchange for seaborne and rail-hauled goods. Southampton has also developed a number of coastal shipping initiatives and is in a strong position to encourage further coastal shipping activity.

  Over the years Southampton has undertaken a series of major expansions with capital expenditure in the past four years of more than £80 million. A proposal to extend operational activities onto Dibden Bay—port-owned reclaimed land opposite the busy dock area—was submitted by ABP to the DETR in October 2000.


  The Humber is the UK's busiest trading estuary. In 2000, over 75 million tonnes were handled representing more than 13 per cent of the country's seaborne trade. Of this, the four ABP port operations of Hull, Goole, Grimsby and Immingham handled 63 million tonnes. These ports are vital to the major manufacturing companies in the immediate area and to the Yorkshire and Humberside Region. Yorkshire Forward, the Regional Development Agency, cites these ports as among the main drivers of the region's economy.

  In terms of basic UK industries, ABP ports on the Humber:

    —  provide raw materials to the major steel plant at Scunthorpe;

    —  host two major local oil refineries representing 20 per cent of UK capacity;

    —  provide essential infrastructure to the greatest concentration of food production in the UK; and

    —  are home to several major chemical industries.

  The Humber is ideally placed facing Europe, the strongest growing market. In supporting the local community, the Humber ports:

    —  serve the industrial hinterland, linked by the motorway network;

    —  provide substantial input to railfreight. Immingham alone generates 19 per cent of freight tonnes carried by EWS annually;

    —  feed large quantities of products distributed by coastal shipping, including five million tonnes of petroleum products which are distributed by coastwise shipping thereby avoiding inland distribution problems;

    —  support the largest inland waterway freight system in the UK via river and canal traffic.

  Trade of manufactured goods with Europe has strongly developed in the many roll-on/roll-off ferry and feeder container services. Almost 15 million tonnes were handled by this means last year. In addition one million passengers used the ferry services connecting North Europe. Continued development of this traffic from the UK heartlands has relieved stress on the highly loaded North/South rail links and the major motorways, with considerable savings in CO2 generation, congestion and air pollution that would otherwise have occurred in the south and east of England. It is the tri-modal capability of the Humber ports (road, rail and sea) that is making a major contribution to the integrated transport policy of the Government.

  To deal with the growth in traffic by some 38 per cent over the last 10 years, capital expenditure in these ports has been £255 million. In the same period, growth in the UK's seaborne trade has been less than 18 per cent indicating the growing importance of ABP's Humber Ports.


  The South Wales Region of ABP consists of five ports; from Newport in the east, through Cardiff, Barry and Port Talbot to Swansea in the west. The hinterland served by these ports is home to 70 per cent of the population of Wales and in addition to this vital regional role they also provide strategic links with Ireland via Swansea, and fast, convenient access to the Midlands and beyond. Current throughput of some 20 million tonnes per annum mainly supports the South Wales industrial economy. All the ports have excellent connections with the motorway system and are rail connected. All types of cargo are handled; liquid and dry bulks, unit loads, both lift-on/lift-off and roll-on/roll-off, steel, chemicals, forest products, general cargo, chilled and fresh produce and passengers. Port Talbot is capable of handling vessels up to 180,000 tonnes deadweight fully laden, one of only three similar facilities in the UK able to do so, and provides the point of entry for much of the raw materials for the region's steel mills.

  Traditionally, the ABP ports have depended on the heavy industries of coal, steel and chemicals. As traditional industries have declined, with current speculation regarding the future of some of the Corus plants being rife, ABP cannot be complacent. ABP's policy is to reduce its dependence on the remaining traditional heavy industries and to widen and diversify its customer base. At the same time it still needs to secure and support the natural cargo flows of the region. An opportunity also exists to strengthen the connection with Ireland, extending the current summer season service to an all-year sea freight link.

  New capital investment is planned, totalling £15 million over the next year alone, to support:

    —  customer-driven distribution facilities;

    —  ABP's new logistics division;

    —  the expansion of the successful cold store business;

    —  new port traffic being developed at Barry for the chemical industry and flour milling trade; and

    —  new energy schemes with port facilities being dedicated to feeding coal to new power station sites at Newport and possible new facilities linked to Port Talbot. Gas fired and wind energy sites are also under consideration at several port sites.


  Associated British Ports puts safety of its employees, its customers and all the members of the public using its facilities or travelling around its port estates as a very high priority.

  This commitment to safety and safe working practices is reflected in the following processes operating throughout the Company:

    (a)  an active Health and Safety Policy, a Safety Training Policy and a "control of contractors procedure" are in place and have the backing and commitment of the ABP Board;

    (b)  the ABP Board has health and safety on its agenda every month when it receives a report and a review of safety performance and issues arising;

    (c)  the HSE have audited various ABP ports in the past year and Safety Management was adjudged to be generally of a high standard.

  The considerable effort exerted by the Company has reduced the incidence rate as follows:

    —  a 73 per cent reduction in the incidence rate for reportable injuries has been achieved since January 1995;

    —  the number of lost working days has been reduced by 87 per cent over the same period.

  ABP's incidence rate for reportable injuries is significantly better than the industry average:

    ABP—13.1 per thousand employees;

    Total UK port industry—28.0 per thousand employees.

    (Source HSE).

The Way Forward for Safety

  ABP fully supports the work of the Ports Safety Organisation and believes that the major ports trade association, the United Kingdom Major Ports Group, will itself play a more significant role in spreading good practice across its membership and leading the development of contractor codes of practice.

  ABP fully supports the need to ensure that labour contractors are not permitted to supply contract labour unless they can demonstrate that they have been properly trained to work in a safe manner and that they understand the absolute need to comply with laid down safe working practices. We are, however, less certain about the prescriptive nature of proposals outlined in paragraphs 4.1.25 and 4.1.26 of the Government's Modern Ports paper and would prefer that greater thought is given to the most effective way of tightening up appropriate safety standards. We believe that the greatest problems may exist in small operations, particularly where only occasional dockwork is carried out. We note that this issue, for which exemption from ILO Convention 152 is permitted, is not referred to and we do not believe that automatic ratification of ILO Convention 152 which was drawn up in 1979 is necessarily appropriate for today's modern port transport industry.

  We also believe that considerable problems lie ahead in relation to the proposed EC Directive on Port Services which we understand makes it mandatory for port authorities to allow self handling by Shipowners, without contracting with third parties to provide skilled labour.

  ABP will play its full part in ensuring that the industry, its employees and all those who work in or traverse its estates have the fullest protection against health and safety risks.


(a)  Legislative Framework applying to ABP

  The legislative framework which governs the activities of ABP in relation to the operation of its seaports is embraced by the 1964 Harbours Act and the 1981 Transport Act (which established ABP Holdings PLC) and the 1992 Transport and Works Act which deals with Harbour Revision and Harbour Empowerment orders. ABP was the first significant port grouping to be privately controlled and is by far the largest port grouping listed on the London Stock Exchange, although other publicly listed companies now have significant port businesses, eg Forth Ports PLC, Mersey Docks and Harbour Company and Clydeport PLC.

(b)  Competitive Environment

  The 1964 Harbours Act was enacted at a time when the UK seaports industry was largely in public ownership (if Trust Ports are regarded as State assets). Treasury controls were exercised on port investment and the National Ports Council applied public sector controls to new infrastructure investment until it was scrapped in 1980. The comprehensive controls which have been established for nearly 40 years have provided a secure regulatory environment. The modern ports industry has little need for new regulatory intervention because it exists in a highly competitive commercial environment. ABP's ports compete vigorously with other ports near each hinterland. Customer choice is extensive and facilities to handle most types of cargo exist in relatively close proximity to one another. The map in annexe 3 of the DETR document Modern Ports shows the extent to which competing facilities exist.

(c)  Tariff Setting

  Section 31 of the Harbours Act 1964 has been used very rarely to appeal against charges. Every statutory port is required to publish tariffs for use of the port and its facilities but most regular port customers negotiate competitive rates based on continuity of service. Combined charges embracing harbour dues and stevedoring charges have been permitted for some 20 years, being specifically authorised in section 18(1) of the 1981 Transport Act, and major customers much prefer the simplicity and certainty of such negotiated tariffs.

(d)  Regulation

  We are concerned by the underlying assumptions and conclusions reached by Government in "Chapter 3 Modern Management and Regulation" of the policy paper Modern Ports. There is no evidence that the industry or the major commercial ports are exploiting their statutory powers and rights to levy charges on ships using their facilities. In particular, no evidence has so far been presented to suggest that the Government needs to intervene in what is one of the most successful sectors of the transport industry, a success based on private enterprise funding new transport infrastructure.

  Internationally, UK ports are no longer regarded as strike ridden and under invested and the great strength of the UK's major ports lies in the way in which they have rationalised and recovered the economies of scale in the past 10 years. It must be understood that the vast majority of major port infrastructure investment in the UK is entirely privately financed, unlike many state aid supported port authorities in mainland Europe. We believe that it would be a retrograde step to seek to impose new accounting rules and standards for the major private port groupings, and in particular to introduce separate accounts for the statutory duties and functions of major ports. The result may be to force a re-appraisal of the costs (and revenues) incurred in providing various public services. It is difficult to see what public interest will be secured by such a bureaucratic process and there is a danger that charges for non-economic services could rise.

  So, in summary on fiscal matters and port accounts, we recommend that the Government drop its proposals for separate and individual port accounting. It is understood that the EC intends to extend such separation of accounts to individual port services in a forthcoming directive, to which we would also be opposed.


  ABP takes its environmental responsibilities seriously and now participates in the Business in the Environment Index (BiE) each year. The underlying data supporting the BiE response is available on the ABP website at

  ABP has responded to a number of international and UK Government initiatives with respect to environmental protection and, as far as possible, progressed their implementation. In most cases this has involved adjustment of existing arrangements to bring them into line with statutory requirements. Examples of the areas covered include:

    —  Port Waste Management Plans—adjustment required to meet additional EU requirements;

    —  Oil Pollution Response Plans (OPRC)—revision of existing plans completed. Marine Safety Code being implemented;

    —  Habitats Regulations Scheme of Management—ABP is involved in 10 European Marine Sites and is taking a leading role in developing the requirements of their Schemes of Management.

  In seeking to respond to the needs of the nation's trade, ABP has found the growing weight of European environmental legislation is becoming a burden of such complexity that it is now representing a major obstacle to job creation and the achievement of modal shift to relieve pressure on the road network (and more latterly the rail system too).

  These often overlapping, and occasionally conflicting, regulations include:

    —  the Environmental Impact Assessment Directive (including two sets of regulations, one for land side, and other for harbour developments);

    —  the Birds Directive, notifying Special Protection Areas;

    —  the Habitats Directive, designating Special Areas of Conservation (together the areas affected by the Habitats and Birds Directives cover 75 per cent of all UK estuaries, including all major port estuaries);

    —  the Water Framework Directive;

    —  the proposed Directive on environmental liability;

    —  the existing and proposed Directives on public access to environmental information;

    —  the Directive on the provision of port waste reception facilities.

  In the UK, these designations and regulations directly affect the working port areas and the navigational channels required for a safe approach. ABP is unaware of any European port in any other Member State in which working areas of the port, or the approach channels to the port, have been designated. The way in which the European Marine Site legislation has been applied in the UK means that it constitutes a virtual veto by ecological interests in relation to sustainable development policy as a whole.

  These European Directives represent only a small element of the total regulatory burden on coastal zone managers, including port and harbour authorities.

  In addition, the relationship of these Directives and the associated regulations to UK legislation, especially that arising from devolution and the creation of new regional bodies in England, requires considerable development before the new relationships can be properly understood. Recent work by the DETR Review of Marine Nature Conservation has revealed considerable confusion and misunderstanding regarding jurisdiction in the coastal zone. ABP has made a considerable input to these debates, and regrets that regional planning guidance is often failing to take account of new statutory structures, especially the schemes of management required by the Habitats Regulations. If bodies such as ports are required to accept new statutory duties, then they should not be ignored.

  The pattern is further confused by the many plans and management schemes, many of them voluntary, that have been developed in the coastal zone, all seeking the attention of planners and consenting bodies. In a recent report[18] for DETR, no less than 44 different types of coastal zone designation were identified. Simplification of these structures, and proper establishment of their status, is becoming urgent.


  Maritime transport offers many new opportunities to support the Government aims of integrated transport and sustainable development, for example:

    —  by using short sea and feeder vessels from hub ports to regenerated local small coastal ports to reduce stress on inland transport;

    —  increased use of large roll-on/roll-off ferries at major regional ports to cope with growth in EU trade, while avoiding environmentally harmful road traffic increases;

    —  development of the deep-sea container capability in advance of projected demand, including the development of further feeder services from UK hub ports to destinations on the continental mainland from Gibraltar to the Baltic, an opportunity that arises because of the competitive performance of UK ports, even against subsidised competitors.

  UK Government has a well-established policy of sustainable development, which is succinctly set out as requiring a balance between:

    —  social progress which recognises the needs of everyone;

    —  effective protection of the environment;

    —  prudent use of natural resources; and

    —  maintenance of high and stable levels of economic growth and employment.

  Sustainable development in the coastal zone is rendered an ineffective policy unless reasonable development is permitted, subject to it being tested against the public interest. ABP is concerned that all its environmental mitigation measures, worked out in consultation with such bodies as English Nature and RSPB, will be dismissed with the consequence that no development will be supported by such agencies and bodies in the final analysis. We believe the Government must reach a better understanding of the prioritisation of their sustainable development policy and require English Nature in particular to work within these policy guidelines.

  Modal shift to maritime transport offers a path to alleviating congestion, and reducing CO2 generation and other pollution from road traffic which cannot be met fully by shift to rail. Deep-sea traffic needs to be accommodated in the UK if it is to maintain its place as an international trader. The extent of designation in the coastal zone is such that it is virtually impossible for development to take place which is not in or near a sensitive area.

  Contact with regulators and NGOs confirms that the consents process in the coastal zone is not working. Too many different departments are involved, all with narrow remits that do not permit an overall sustainable view to be taken. The effect of these multiple regimes has been to cause cost and delay to job creating developments in the national interest. In the case of some small projects, the costs of obtaining the licence can exceed the cost of executing the works. While this may be tolerable for a major port, it is difficult for a smaller operator, such as a marina, to cope with both the complexity and the cost.

  ABP notes and welcomes the commitment in the Modern Ports Paper by DETR to simplifying the regulatory regime. As a first step, the FEPA and coast protection regimes are being directed in a co-operative manner by MAFF and DETR Ports Division. Other ideas for managing the complexity, including some proposed by ABP, are also being explored. However, an initiative by one department is unlikely to succeed unless it receives firm and effective support from Government as a whole.

  The consents problem is so serious that it would be a serious candidate for consideration by the Better Regulation Unit, with the goal of securing sustainable development in the public interest.


  The main points of this submission are summarised in section 1 above.

  ABP strongly believes that, as a privatised company, we have: modernised our ports without the need for substantial input from the public purse; spearheaded efficiencies in all areas of port operation, coupled with a considerably improved safety record; been proactive in responding to customers' needs; and responded in a highly commercial manner to the fiercely competitive ports environment. All these successes have been achieved within the Government's existing regulatory framework, for ports in particular and business governance in general.

19 January 2001

17   An analysis of marine related activities in the UK economy and supporting science and technology David Pugh and Leonard Skinner: IACMST December 1996. Back

18   Identification of Marine Environmental High Risk Areas in the UK: Safetec, 1999 for DETR. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 26 July 2001