Memorandum by the Transport and General
Workers' Union (P 38)
This paper is the response to the inquiry into
UK ports by the Environment, Transport and Regional Affairs Committee.
The Transport and General Workers' Union (T&G) represents
9,786 people employed in the Ports and waterways of England and
Wales. We are the largest trade union in this sector, and our
association with this sector goes back to our foundation in 1922.
The T&G overall welcomes the publication
of Modern Ports: A UK Policy but our response will raise issues
of concern relating to issues to be examined by the Environment,
Transport and Regional Affairs Committee.
The ports along with airports are essential
transport hubs, and are also important centres for local and regional
growth. There are 259 ports in England and Wales and they range
in size from the Port of London, which extends 95 miles from Teddington
to the North Sea, to little quays, piers and other facilities.
The top 10 UK ports handle 67 per cent of cargo handled. Of which
the English and Welsh ports handled 41 per cent of the UK total.
According to Keith Stuartthe then Chairman
BTDBthere was no real competition in the industry, partly
because of this pattern of ownership. He argued that because 90
per cent of the UK ports were publicly owned what competition
could there be? He also said that the ports were a service industry
and could not in the main create trade, they were almost dependent
on producer and manufacturing industries to supply the cargoes
for which the ports are competing. The consumers on the other
hand were very large companies and could play one port authority
off against another.
However he also pointed out that in many of
the other container areas, for example the Trans-Atlantic trades
and even the Far-East trades, container operators had switched
from port to port with lightning rapidity. It was quite false
to suggest, therefore, that competition was not a major force
in these new containerised systems, just as it always has been
in the conventional trades.
Consumer Power in the Port Industry
Consumer or buyer power is likely to be high:
When there is a concentration of
buyers, particularly if the volume purchases is high.
When there are alternative sources
of supply, perhaps because the product required is undifferentiated
between suppliers, and this would be case for the port industry.
However, this was, and still is not the case in the port industry,
there was excess capacity, but the structure of the industry both
in number and location of the ports, was virtually the same ie
If the component or material cost
is a high percentage of their total cost, buyers will be likely
to "shop around" to get the best price and therefore
"squeeze" the suppliers.
The port industry was also affected by the dramatic
redevelopment of the transport infrastructure in the UK. The change
in the infrastructure increased the competitive pressure on the
ports, as the customer could pick and choose which port to use
for virtually any inland destination or origin of cargo.
It has argued that such competition between
ports had been evident for many years and intensified further
after the introduction of roll-on roll-off ferries and containerships
revolutionised the industry. The fixed asset base of the industrywhich
involved high sunk costsmeant that ports must operate where
they are and with the basic infrastructure which was handed down
by their founders and predecessors. Also the shippers were unwilling
to sign long-term agreements with a particular port: a port therefore
could invest heavily in new facilities to attract a customer,
only to have the customer switch to a rival port after a year
or two, leaving the facilities redundant.
As we stated earlier competition between ports
is nothing new, competition has characterised the industry for
some time and will doubtless continue to do so irrespective of
the pattern of ownership.
Thus both port and ship operators' interests
require traffic to be concentrated at bigger and fewer ports than
they were once. However, the degree of spatial competition between
ports is a function of geographical separation of ports, the configuration
of the inland transport system and the nature of the trade. Its
long coastline endows the UK with a large number of seaports and
they are well connected with their hinterland by a well-developed
inland transport system. Thus the possibility of a local monopoly
power being enjoyed by UK ports is probably limited. We exclude
the small fishery harbours from these comments.
In "economic" terms the industry overall
is probably inefficient due to the over-capacity in the industry,
and it might mean that there should be some form of decommissioning
of capacity in the industry. Resources should be concentrated
in the larger ports, especially in regard to freight cargo, whether
inter-modal transport is by road or rail.
What is more important now is that modern ships
are large in size and expensive in terms of opportunity costs
of waiting time at ports. These bigger and more sophisticated
vessels make ever-more exacting demands on port services. This
includes the people employed in the ports, many of them are now
expected to work irregular shift patterns, which meet the needs
of these ships. It may also be true to say that a port works efficiently
if it can service a steady flow of large vessels and that way,
the workforce and handling equipment is fully used. However this
can result in workforce working long, and unsociable hours, which
are family unfriendly. In line with other industries we believe
that more attention should be paid to making the working patterns
in the ports more family friendly.
The UK's new port's policy must also ensure
that employment standards in UK ports are improved. This is essential
if the UK ports industry is to meet the challenges of the future,
both in terms of increasing the proportion of freight carried
by water and to meet the needs of its customers in other industries
who require high levels of quality and reliability from port services.
However, at present employment in cargo handling
is characterised by high levels of casualisation, poor levels
of training and poor health and safety standards. Current employment
and training policies cannot deliver the highly skilled and productive
workforce that is required by the industry. The T&G believes
that this can be addressed in the UK's new ports policy through
greater regulation of the industry, setting clear national standards
on conditions of employment and health and safety issues. To achieve
this we need better information and the areas that need to be
addressed are discussed below.
According to Focus on Ports 2000: p68 "It
is not possible to establish precise statistics for the number
of dock accidents. Formal information on dock accidents was available
from the Port Safety Organisation.
SIC 92Rate per 100,000 60-641,577 6322012,089
However, Focus on Ports 2000 gives information
on the injury rates for SIC63221 per 100,000 employees. The rate
for SIC 632201 is 51 per cent higher than for the transport sector
as a whole.
We agree with 2.3.10 that it is important to
have a clear overall picture of the trends affecting the port
industry, and especially of the potential need for new port development.
However, we are concerned about the lack of statistical information
available for the port industry. This is not a new phenomenon
in the industry, but it is difficult to see how proper economic
planning can be undertaken without reliable statistics. This can
be seen in Focus on Ports November 2000: 68. The latest comprehensive
figures on employment at ports come from the British Ports Federation's
Manpower Census carried out in 1992. Some information is available
from the Labour Force Survey (LFS) which suggests that there were,
at most, ten thousand stevedores and dockers employed in the UK
during the period 1993 to 1999. Due to the small sample size in
the LFS means that these are not reliable estimates.
For an industry as important as the ports industry
it is imperative that the statistical information is improved
and we would welcome the opportunity of being consulted about
what information is needed.
We do not agree with the European Commissions
proposals to open up port service operations to competition. These
proposals will have serious implications for the future of the
UK ports because of the fundamental differences between our ports
and those of mainland Europe.
We believe that competition already exists between
the ports, the introduction of competitive tendering for cargo
handling services and towage and pilotage would not increase efficiency,
but would result in increased transaction costs which would make
the industry less efficient. Also we believe that there would
be reductions in employment which would result in a further reduction
in safety standards in the industry.
We do agree that there should be open and accountably
managed safety standards and related matters, and the principal
of transparency in port financing and charging is agreed with.
As stated earlier we believe that the ports
are important drives for economic growth but this cannot be at
the expense of the environment. We agree that any developments
should be compatible with sustainable port development.
Roads to and from gateway ports will be important
transport spokes, and are likely to generate considerable extra
traffic. The T&G supported the introduction 44 tonne lorries
to reduce the number of journeys on the road. But this was only
with support for cleaner engines to counteract in increased environmental
impact of these new lorries. We would not want to see local communities
damaged by increased traffic volumes.
We believe that the policy failures of the last
decade must be clearly acknowledged by the government. The previous
administration claimed that deregulation of the industry, through
the abolition of the National Dock Labour Scheme (NDLS), would
result in a more competitive industry, the creation of new jobs,
new investment and lower prices for port users. However, to date
these benefits have failed to materialise.
It has been the experience of the T&G, backed
up by numerous studies
that, in fact, deregulation in the ports industry has had negative
effect on the competitiveness and efficiency of the UK ports industry.
It has also had a negative effect on the quantity and quality
of jobs in the industry.
Some salient facts that we believe should be
highlighted in the new port policy document in relation to the
legacy of the previous administration include the following:
The cost to the taxpayer of abolition
of the NDLS far exceeded the estimates of the previous administration.
The Department of Transport originally estimated that between
1,500 to 2,000 jobs would be made redundant at a cost of around
£25 million. In fact redundancy costs were more than five
times the original estimate. By July 1992 (when the Dock Labour
Compensation Scheme expired) over 7,200 ex-registered dockers,
almost 80 percent of the former total, had been made redundant.
Despite repeated reassurances that
there would be no return to casual labour on the docks, the general
pattern following abolition of the NDLS was for ex-registered
dockers to be made redundant only for many of them to be subsequently
re-hired on a temporary or causal basis. In other cases, ex-registered
dockers were replaced by other, unskilled and untrained workers,
again employed on a casual basis.
The T&G estimates that 85 per cent of ports
in the UK now use casual labour to some degree. This has serious
implications for health and safety as well as for the efficiency
of the industry and its ability to respond to future developments
for example in new technologysee earlier comments.
Privatisation of the ports, another legacy of
the previous administration has not lived up to expectations either.
Privatisation was supposed to give the industry greater flexibility
for investment and borrowing, new working practices, a more commercial
approach to the business and greater competition between ports.
However, comparisons between the now privately
owned ports and those remaining in the public sector
have found that the performance of the privatised ports has not
been better than that in the publicly owned ports. There is also
evidence that privatisation has actually restricted competition
between ports, with public monopolies being replaced by private
Privatisation has also undermined efficiency
through the poor co-ordination of investment, for example encouraging
over investment in facilities and exacerbating a long standing
problem in the UK of excess capacity in the industry. Thus privatisation
has worked against the current Governments stated objectives,
particularly in terms of "making best use of existing port
infrastructure, in preference to expansion wherever practicable".
Key facts that the T&G would like to see
highlighted in relation to ports privatisation included the following:
There is no evidence that privately
owned ports have a superior investment record to publicly owned
ports. Of the investment that does take place in privately owned
ports, much simply duplicates facilities available at other ports,
thereby adding to destructive competition within the industry.
Privately owned ports have failed
to deliver significantly higher levels of traffic growth compared
to publicly owned ports.
The majority of the world's most
successful ports operate on the basis of public sector ownership
Ports we believe are a classic "public
good" and the ethos, which drives them, have to put shareholder
value second to the wider public interest.
The T&G overall welcome the publication
of Modern Ports: A UK Policy. We believe that a successful port
industry is essential if UK plc is to succeed. However this success
will not materialise without the introduction of modern employment
standards and better statistical reporting.
The industry will require better quantity and
quality regulation taking into account sustainable port development.
34 For example see Turnbull P and Waas V (1995) "The
Great Dock and Dole Swindle: Accounting for the costs and benefits
of port transport deregulation and the Dock Labour Compensation
Scheme" Public Administration Vol 73 No 4 pp 513-34. Back
Saundry R and Turnbull P (1997) "Private profit, public
loss: The financial and economic performance of UK ports"
Maritime Policy & Management, Vol 24, No. 4, pp 1-16. Back