Select Committee on Transport, Local Government and the Regions Minutes of Evidence


Examination of Witnesses (Questions 260 - 279)

WEDNESDAY 3 JULY 2002

MR BO LERENIUS, CAPTAIN JAMES CHESTNUTT AND CAPTAIN PAUL HAMES

  260. What do you say then?
  (Captain Chestnutt) It is outside my level of competence to tell you precisely what that figure is, but what I can tell you is—

  261. Oh, being outside one's level of competence never stops any of our witnesses, Captain Chestnutt.
  (Captain Chestnutt) Quite. We would dispute some of the standards that are being set.

  262. Some of the standards? You mean you would expect it to be done more cheaply by not complying with existing standards?
  (Captain Chestnutt) We think there are different ways of achieving what we require. At its simplest there are gauges to be met and they have the numbers W10,11 and 12 or whatever, but in order to get them in 96 boxes out of Southampton we believe there is a set of targets that must be met which are cheaper, which can be met well inside the figures that we believe the funding mechanism supports.

  263. So give us the figure, approximately.
  (Captain Chestnutt) I cannot. I will forward to you, to be fair.

Miss McIntosh

  264. I presume that you represent the Major Ports Group.
  (Captain Chestnutt) We are a member of the Major Ports Group.
  (Mr Lerenius) We represent one company, Associated British Ports, but we are a member of the UK Major Ports Group, yes.

  Miss McIntosh: In your submission you say that it is important that protected designations and environmental concerns may influence decisions on ports' ability to meet demand. It is in the memorandum, page 5 at paragraph 4.3. You are saying that the way that protected designations influence decisions on ports' ability to meet demand should be applied consistently both across Europe and throughout the UK. You go on to say that there is compelling evidence that this is not at present the case. You may not be able to share it with us today but I for one would find it helpful if we could have a paper.

  Chairman: Have a go at sharing it with us today. Give Captain Chestnutt the quote again.

  Miss McIntosh: It is page 5, 4.3 of the Associated British Ports' memorandum prepared for you by Adams Henry.

  Chairman: It is the two middle paragraphs.

Miss McIntosh

  265. You say that there is compelling evidence that there is not a persistent application in protected designations that are both within the UK and within Europe. I just wondered if you had examples that you could give the Committee today.
  (Captain Chestnutt) This is evidence on the way in which SPAs, SACs are mitigated for?

Chairman

  266. We are not using too many initials in this Committee, Captain.
  (Captain Chestnutt) This is a reference to the way in which mitigation is provided for European designations and we believe there is compelling evidence and I can present some to you subsequently as to where we think the differences lie.

Miss McIntosh

  267. Thank you. Do you think the demand for your ports services currently exceeds supply, that basically more people are asking for port services than you can supply?
  (Mr Lerenius) Are you talking in general terms or in containers or what?

  268. Which sectors and which ports are under the greatest pressure to increase capacity?
  (Mr Lerenius) To begin with, the way a port operates, when you build something you build to demand, basically. At least, that is the way we work it, so there have to be customers that have the demand. Obviously you build for demand somewhat in the future because when you agree on something and then build it that takes a year or a year and a half, depending on what you build. That depends on what trade you look at and what port you look at. If you look at containers, coming back to, say, Southampton again, yes, with the present growth rate in just a few years we will run out of capacity.

  269. Would you say there are too many small ports in the United Kingdom at the moment?
  (Mr Lerenius) No, I do not think so. We own and run 21 ports and some of them are very big and some of them are very small but I think, at least looking at our ports, they are all needed.

  270. So you seen no argument for concentration?
  (Mr Lerenius) At least not in our own structure.

Chairman

  271. Other people's structure you do not mind if they do?
  (Mr Lerenius) I cannot really comment in detail on that but I do not think it is a big issue.

Miss McIntosh

  272. The extra capacity that perhaps needs to be found, will that be found at ports which already handle a great deal of traffic or will other ports expand their operations into the areas where there is demand?
  (Mr Lerenius) Basically, if you look at our structure and how we look at it strategically, we would try to expand our existing ports.

  273. Post-September 11 and the additional security arrangements, are you able to put a figure on what those costs were?
  (Mr Lerenius) No, I cannot give you that. It has cost us some money but again, we have to cope with it. We get directives from government on what level of security to be on and we just have to cope with that. It is nothing major.

Mrs Ellman

  274. You say that the proposed directive on ports will be very detrimental to ports in this country compared with mainland Europe. What are the differences in the situation between here and mainland Europe, which of course is different?
  (Mr Lerenius) Overall our view is that directives are not welcome and not needed if you put it in general terms. In the UK ports business the structure here is extremely different from what you see on the European continent. We are privately run, rather efficient companies where there is already big competition between ports and in many instances competition between service operators in the ports. With that structure we could say that we have almost sorted out the issue that the directives deal with. I think the directives are more aimed at, as we heard the previous witnesses say, some of the continental ports where they are usually owned by the city and the respective cities or towns and usually you would find more or less a monopoly on the services in the port, and I suppose that is what the directive is trying to sort out.

  275. If the directive is implemented what effect will it have on British ports?
  (Mr Lerenius) We have seen a number of drafts on these directives. The existing draft, which is the one that was decided to go ahead with under the Spanish Presidency in the EU a week or 10 days ago, we have not seen. What we know is that the Department for Transport here in the UK have been instrumental in improving it from how it looked just going back one or two drafts, but there are still things on durability, on contracts, which could limit the customers' or operators' interest in investing in our ports.

Chairman

  276. In what sense? That they would not sign contracts for long enough to cover investment?
  (Mr Lerenius) If an operator invests, say, in a major facility in a port; say, we build the infrastructure and part of it but he invests some of his own money to operate it, it depends what sort of contract it is, but according to the directive it could only have a duration for a certain time and that could make a customer give up his investment because it has to go out for tender and he will be slightly less interested in investing for the future than is the case today. Again, I would say that the Department for Transport have been very helpful. That duration period has increased and we still hope we can increase it further. On the pilotage issue we are not really certain how that will be handled because we have not seen the latest draft. On safety and fragmentation we are slightly worried, but we have not seen the latest draft. You can say that whatever it is we are going to have to cope with it.

  277. How damaging do you think it will be according to the drafts that you have seen?
  (Mr Lerenius) I do not think we can put a figure on it. I think these are the major problems we see with it. Again, the way we are going to have to handle this is to try in a proactive way to cope with it. It is now going to the European Parliament and we hope we can make further improvements by lobbying and continuing to work on improvements.

Chairman

  278. But the history of directives in these circumstances is not that the European Parliament improves the directive. The history of these types of arguments is that there are certain rather vested interested in pushing for particular bits that concern them but that there is no material change.
  (Mr Lerenius) I think the European Parliament has actually, during the process up till now, been a bit helpful and they have tried to make changes which we thought were very good. Some of them were accepted.

  279. They did not succeed?
  (Mr Lerenius) On some of them they did, but on some I think the Commission just said, "Forget it", and went ahead. Parliament will now of course have it for a new reading and hopefully we will work on that.


 
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