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


Memorandum by the Transport and General Workers' Union (P 38)

INTRODUCTION

  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.

CONTRIBUTION TO THE UNITED KINGDOM ECONOMY

  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.

COMPETITION IN THE INDUSTRY

Pre-Privatisation

  According to Keith Stuart—the then Chairman BTDB—there 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 highly fragmented.

    —  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 industry—which involved high sunk costs—meant 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.

POST-PRIVATISATION POSITION

  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.

WORKING PRACTICES

  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.

HEALTH AND SAFETY STATISTICS

  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 92—Rate per 100,000 60-64—1,577 632201—2,089

  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.

STATISTICAL INFORMATION

  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.

THE EUROPEAN CONTEXT

  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.

REGIONAL PLANNING AND GROWTH

  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.

MODERN MANAGEMENT AND REGULATION

  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[34] 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 technology—see earlier comments.

PRIVATISATION

  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[35] 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 monopolies.

  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 and regulation.

  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.

CONCLUSION

  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

35   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


 
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