House of Commons - Transport

Select Committee on Transport Ninth Report

5 Capacity

76. The United Kingdom handles more goods through its ports than any European competitor. An analysis of the throughput of European ports 2001 (Figures 4 and 5) show the UK at over 566 million tonnes is 33 per cent ahead of the Netherlands, its nearest competitor. The United Kingdom has a still stronger position in regard to container traffic; its ports move twice the number of containers than ports in Spain or the Netherlands.Figure 4: Total Throughput of European Ports 2001 ('000s of tonnes)

Data Source: European Sea Ports Organisation

Figure 5:: Total Throughput of Containers in European Ports 2001 ('000s of tonnes)

Data Source: European Sea Ports Organisation

77. Throughput is only one indicator of port performance. It does not necessarily reflect efficiency. But UK ports are also among the most efficient in Europe. Table 2 illustrates measures of utilisation of facilities at the major container ports of Northern Europe. It is clear that, in terms of volume handled per metre of quay and per hectare of container storage that the UK ports of Felixtowe, Thamesport and Southampton compare favourably with their Continental European competitors.
Table 2: Ports: Comparative Terminal Productivity

Port Quay length (m) Terminal area (Ha) 1999 throughput TEU per m of quay TEU per Ha

Felixtowe 2523 137 2696659 1069 19684

Rotterdam 6800 362 6343020 933 17522

Thamesport 650 27 492112 757 18059

Bremerhaven 3000 167 2180995 727 13060

Southampton 1357 62 921242 679 14859

Hamburg 5700 265 3738307 656 14107

Antwerp 7918 366 3614246 456 9875

Zeebrugge 2350 146 850164 362 5823

Le Havre 5241 190 1378379 263 7255

Source: Institute of Shipping Logistics. Bremen/Port Development International

78. Despite this positive performance, the ports industry accepts that there is scope for UK terminal productivity to increase. By 2015 the capacity per quay metre is expected to reach 1400 TEU per annum - an increase of approximately 1 per cent per annum.[60]

79. However, there is no simple relationship between efficiency and capacity. High utilisation can lead to a reduction in operational efficiency, increased congestion and reduced service levels on both shipside and landside. As ABP and the Port of Southampton pointed out, "increasing the throughput of a berth by quickly transferring cargo to a separate area for subsequent sorting" may maximise the port owner's use of their assets, but will have "inevitable adverse implications for land use needs" further down the logistics chain.[61]

^80.Associated British Ports told us "New capacity will be needed if the UK is to retain its position in the world shipping markets, extract the maximum value from international trade and maintain low prices for end consumers."[62]

81. Modern Ports: A UK Policy recognises that the pressure for expansion at UK ports is greatest at those handling containers and ro-ro traffic.[63] The number of ultra large container ships in service is growing rapidly. We were told that an increased berthing requirement is essential to retain direct calls to the UK by these vessels. As ship sizes substantially increase, the availability of slots becomes more limited. Suitable berths are essential if the United Kingdom is to retain direct shipping services, rather than being served by transshipment from Continental ports.

Future capacity

82. There are currently three major container port developments at various stages in the planning process. These are at London Gateway (Shell Haven) in the Thames Estuary (3.5m TEU), Harwich Bathside (1.7m TEU), and Dibden Bay near Southampton (2.4m TEU). In addition, a new berth is planned for Tilbury in Essex (0.3m TEU) and two further berths at Felixstowe in Suffolk (0.5 TEU). The developments at Dibden Bay and Shell Haven have been the subject of public inquiries. Bathside is expected to go to public inquiry. The Minister of Shipping expected to have reports from two of these inquiries by the end of 2003 and told us decisions would be taken "after weighing up all the relevant factors in the balance."[64]However, the Inspector's report on London Gateway is not now expected until next February.

83. Various independent studies into the demand for and supply of container terminal capacity in the UK have been commissioned by the proposers of new developments to establish the 'need' for their developments during the planning process. These studies are summarised in Table 3.
Table 3 : Independent Studies

Development Proposer Study Consultant Date

Dibden Bay (Southampton) Associated British Ports MDS Transmodal September 2001

Trinity Extension (Felixtowe) Hutchison Ports UK Ocean Shipping May 2002

London Gateway
(Shellhaven)
P&O Ports Drewry Shipping February 2003

84. The consultants considered the following common factors in formulating their conclusions:

Total tonnage of trade goods moving via UK ports and its growth (container and non container)
The correlation between changes in GDP and changes in the growth of overall trade via UK ports
The container volume of cargo transhipped at UK ports to UK and non UK ports
Specific container volume growth in exports, imports, and transhipment via UK ports
Productivity at UK facilities by berth, utilisation, capacity utilisation and throughput
Trends in vessel size
Terminal capacity utilisation

85. Each study has forecast demand and supply as summarised in the following tables:

Table 4: Demand

Consultant Historical growth rate by volume of containers Forecast growth

MDS Transmodal 4.5% p.a. (short sea and deep sea combined)
6.9% p.a. (deep sea)
Period: 1988-1999
5.2% p.a. (deep sea)
Period: 1999-2015

Ocean Shipping 3.7% p.a. (Intra European)
8.6% p.a. (deep sea)
Period: 1990-2001
4.97% p.a. (base case)
4.00% p.a. (low case)
Period: to 2010

Drewry Shipping 8% p.a. (deep sea)
Period: 1990-2001
3.9% to 4.4% p.a. (base case)

Table 5: Supply

Consultant Forecast Factor considered in establishing findings

MDS Transmodal
(Based on 90% berth utilisation)
2002: shipping lines lose ability to switch ports to maintain competitive environment
Trinity extension will provide capacity to 2004
Further capacity required for 2005
If 'major' increments in capacity are not delivered than a shortfall in 2006 will increase to a major shortfall (1968 quay metres) by 2012
Shortfall 6896 quay metres by 2030 even if Dibden, Shellhaven and Bathside Bay are fully developed
Port productivity to increase at 1.5% p.a. through to 2011
Shellhaven not fully developed before 2011
Bathside Bay not completed before 2011
Landguard redevelopment potential not included
Incremental increases at Thamesport, Felixtowe (Trinity extension 2004), and Tilbury (extension 2002) achieved

Ocean Shipping Urgent medium term requirement if trade is not to be constrained
High utilisation of capacity from 2003-2006 such that shipside and landside congestion will incur severe difficulties on the UK economy
Easing of utilisation post 2006 only if major developments come on stream subject to timing
Port productivity to increase at major ports through to 2010 though not contributing significant capacity
Trinity extension completed 2004
Bathside Bay to undergo public inquiry delaying development
Dibden Bay phase 1 earliest 2006
Thamesport increases not before 2008
Shellhaven phase 1 earliest 2007

Drewry Shipping Capacity shortfall will occur within the next 'few' years
Significant capacity is required to be in place by 2008
Port productivity increases at major ports though not contributing significant capacity
Tilbury extension 2002
Trinity extension 2004
Timing of major 'new' developments at Dibden, Shellhaven, Landguard, Bathside is subject to considerable uncertainty and even with approval will only be developed in response to market demand

Data Source: compiled from various sources by Maersk Sealand

86. We note that the predictions of forecast growth in demand are consistent and all the studies conclude that significant capacity increases are needed. The consultants agree that carriers have already lost the ability to switch ports in the UK, necessary to maintain a competitive environment. Capacity constraints in the short term may lead to rising handling charges. There will also be extremely high utilisation of existing capacity until new developments come on stream. Given the progress of the planning processes, this is unlikely until 2006 at the earliest.

87. The shipping lines are becoming increasingly concerned about the delays in the provision of deep-sea container capacity in the UK. Maersk Sealand told us:

The Government position

88. The Government recognises the growth in container trade and the need for container ports to meet the future demand of the global shipping alliances, "If they were to lose this business it would have correspondingly substantial adverse consequences. This consideration is of national interest."[66]

89. The Government does not identify the ports where expansion should be authorised, but accepts that:

90. The Royal Society for the Protection of Birds (RSPB) told us that

"forecasts of both demand for and likely supply of port facilities are possible and should be carried out by Government to inform a strategic planning framework for the ports industry.

91. The importance of assessing the potential need for port development is recognised by Modern Ports: A UK Policy. [69] However the Government does not make or endorse forecasts of port traffic as it does for roads and airports[70], even though Modern Ports: A UK Policy acknowledges that there is a prospective shortfall in freight ferry and container port capacity[71] and that increased capacity will be necessary in some ports to meet future demand[72] and notes that "It is important to have a clear overall picture of trends affecting the ports industry, and especially of the potential need for new port development."[73]

92. In essence, although the Government appears to accept that capacity planning and forecasting is essential to any integrated transport strategy, it is not prepared to be proactive in this area. Instead, the Government expresses faith in the 'market mechanism' to ensure that demand and supply are equated. It stresses the difficulty of forecasting demand and supply for ports 'because it is very much a market'. The Government expects the proposers of new facilities to assess whether existing facilities and increased efficiency could cater for expected demand. "They will also have to demonstrate that the new capacity will produce significant additional benefits."[74] It is not clear on what basis the Government will be able to decide whether the commercial studies of the need for new facilities are accurate and unbiased.

93. The Government's position may be tenable because there are significant proposals for new capacity already in the system. David Jamieson MP, the Minister for Shipping told us that "had these proposals not come forward, then we would have had to have a different view."[75] Even so, the lack of a strategic view of what is needed must surely hinder proper consideration of the planning proposals currently under review.[76] New port facilities may have significant environmental impacts, and facilities to handle freight will not only affect existing land based transport infrastructure, but are likely to require extra land based links.[77]

94. The RSPB argues that because the port industry creates such pressures on the environment and the wider transport network, capacity planning is essential despite the inherent uncertainties. "It cannot be any more difficult than modelling aviation trends. Such modelling would allow an assessment of strategic options and the consequences for environmental, social and economic interests. The consultation on aviation provides a basic model that can be followed."[78]The Ten Year Plan Progress Report makes it clear that airport and port facilities are being considered in the same way:

95. On 20 July 2001 the then Secretary of State said

96. It is necessary to know how much additional capacity is needed together with the environmental costs of development in order to make effective economic decisions about meeting future demand. The Government must undertake such forecasts to ensure adequate port planning at a national level.

Landside Links

97. Decisions about the expansion of particular port facilities need to be taken together with decisions about the land based infrastructure which serves them.[81] Reliance on intermodal links to the port hinterlands has become even greater with the advent of containerisation. Since few ports have the specialist equipment and accommodation for the larger vessels, consignments now have to travel further to and from the port. Modern Ports: A UK Policy makes clear that

98. The 10 Year Plan Progress Report stresses that whilst investment in ports is a matter for the private sector, the Government is committed to providing the necessary access on the landside. As Modern Ports: A UK Policy noted: "Integrated transport policy recognises that Government cannot treat any element of the transport network in isolation."[83]

99. The operation of a port is dependent on intermodal links, which must form part of any United Kingdom ports policy. Whilst the Government is keen to allow market forces to determine port investment and operation, landside links cannot be funded on a commercial basis. The Government must therefore be directly involved in planning, funding and development of road and rail infrastructure to UK ports and set a timescale for such development.

Rail Links

100. Maritime traffic is well suited to rail transport, both for bulk commodities and containers. Ports already provide about half of the total rail freight traffic and have potential for additional volumes.[84] In 1999 Railtrack commissioned its own market analysis on the prospects for rail growth. The study forecast that rail's share of Britain's freight market could grow from 7 per cent to 21 per cent by 2010-2011. This forecast was dependent on the strength of the economy, freight transport policies, and continued efficiency and service improvements from the rail industry.[85]

101. We were told that the benefits of rail freight are considerable in terms of reduced congestion and pollution. "Since 1997 rail freight has kept 600m cargo tonnes off the roads, cut 31.5 million lorry journeys and saved £800m in congestion costs, plus £1.2 billion of environmental cost in pollution, noise and accidents."[86]We are currently examining rail freight as part of our inquiry into the Future of the Railways.

102. Although the number of ports into which rail freight runs on a regular basis is relatively limited, the potential is great. Many ports are physically connected to rail[87] and there could be scope for increased rail traffic to and from these UK ports.

103. The Government's 10 Year Plan set out a strategy for a large increase in the use of railways for both passenger and freight traffic in order to reduce current and projected levels of road congestion:

104. The SRA told our predecessor that securing a greater proportion of port traffic was a key part of their efforts to achieve the 80 per cent growth target laid down by the 10 Year Plan.[89] They stated: "We shall be addressing, in particular, the issues of gauge and capacity on key routes in order to enable operators to run bigger, faster, heavier and longer trains on a high quality, 24 hours per day, seven days per week network."[90] Their memorandum set out an impressive number of infrastructure improvements already planned, or under active consideration.

105. Despite such commitment by the Government and SRA, the ambition of the plans presented two years ago have not been fulfilled. Rail freight has always had a lower priority than passenger rail and this is reflected in the funding figures for 2003-2004. Rail freight revenue support and facilities grants commitments were allocated some £40 million out of a £3.8 billion total rail spend. This potential investment has further fallen victim to the overspend in other areas, not least the West Coast Main Line upgrade. Consequently the Freight Facilities grant has been suspended and, while existing commitments will be honoured, no new projects will be considered in the current year because of budgetary pressures.

106. This lack of investment and commitment has led to deterioration in industry confidence. Maersk Sealand, one of the largest merchant marine carriers, state that the level of investment in rail freight will have serious implication for them in terms of re routing.

"we are increasingly concerned that, in addition to uncertainty about where new port capacity will be built, there is now delay and uncertainty regarding road and rail infrastructure improvements to the principal UK deep-sea container ports.

107. Without rail infrastructure and gauge enhancements to ensure direct call by the international shipping lines, ports cannot function effectively. Physical rail links to many UK ports exist but are underutilised. The Government should produce a programme and timetable for expanding their use as part of an integrated transport policy. The failure of the Government to deliver on its promises for better port access is threatening the competitiveness of UK ports. The strategy for rail freight is currently low priority in terms of funding, falling victim to overspending in other areas. The Government should therefore ring-fence funding for rail freight within the overall rail budget.

Specific Infrastructure Requirements

108. The rail network capacity problem is exacerbated by the switch by many of the shipping lines to 9' 6'' high containers, which cannot be transported on the majority of rail routes. The physical dimensions of a railway vehicle and its load are determined by a number of height and width profiles known as loading gauges. The gauges available on the different rail routes depend on lineside and overline structures. The smaller loading gauges (W6) are capable of operating on virtually any route on the UK network. The larger gauges however have greater headroom to enable them to carry taller containers. Currently the maximum size of containers that can be carried by rail on standard height wagons is 9'1" on W9 routes. These containers can be conveyed by rail without gauge enhancement using purpose built 'well' wagons (wheels at end of wagon with a lowered deck area). However, such trains carry 30 per cent less than standard wagons, and this imposes extra costs on customers. In recent years, containers have got bigger: 'high cube' 9'6" boxes now account for approximately 20 per cent of the market, and is expected to reach 40 per cent by 2010, as the older containers are replaced. Such containers require a higher W10 or W12 loading gauge, and have major infrastructure implications.

109. The SRA has to date only committed to upgrading the access to Felixstowe, and has recently indicated that it cannot guarantee to provide gauge enhancements and capacity to serve the proposed new developments at Dibden Bay or Shell Haven. Promoters of the projects have been approached for contributions but the costs of such investment are well beyond their reach and could not be funded on a commercial basis.[92]

110. Mr Graham Smith, Planning Director of English, Welsh and Scottish Railway, told our predecessors:

His view was echoed by the Freight Transport Association.[94] At the time, the SRA conceded "we would expect to pay the lion's share of the costs on the main routes" for access to ports,[95] but it was clear that private contribution to rail links was a matter of negotiation.[96]

111. In contrast, investment in rail infrastructure is proceeding at a faster rate in Continental Europe. Ports such as Rotterdam and Antwerp have their rail facilities provided, maintained and operated by the national rail companies. Further, the provision of rail facilities at ports is funded entirely at national government level. This must increase such ports' competitiveness with the UK.[97]

112. The Government's view is that it is premature to start improving railway lines before the Department for Transport has approved the projects. Even if Dibden Bay were to obtain approval now, the Department for Transport claim that there is no immediate necessity for improvement of the gauge since the port will not be fully operational for some considerable time.[98] The Government should appreciate that rail enhancements take time to programme and deliver. As soon as any planning consent for a major port development has been given, steps should be taken to ensure that the infrastructure it requires will be in place as soon as it is needed. Where physical rail links exist, the Government should examine the potential for developing and increasing their use as part of an integrated transport policy.

113. Clearly intermodal links are vital in maintaining the competitiveness of UK ports and contributing to the UK economy. Government strategy and policy should strongly reflect the importance of investment in this area. "Integrated transport policy recognises that Government cannot treat any element of the transport network in isolation."[99] The failure of the SRA to deliver its promises for better port access is threatening the competitiveness of UK ports. It is imperative that rail infrastructure and gauge enhancements are made in order to ensure direct call by the international shipping lines.

60 POR 13D Back

61 POR 19, see also POR 23 Back

62 POR 13D Back

63 See also Q 429, 3July 2002 Back

64 Q 476, 18 June 2003 Back

65 POR 05A Back

66 Modern Ports: A UK Policy, para 2.1.4. Back

67 Modern Ports: A UK Policy, para 2.4.9. Back

68 HC(2000-01)244i-iv, p. 106 Back

69 Modern Ports: A UK Policy, para 2.4.10. Back

70 Ibid, para 2.4.16. Back

71 Ibid, para 2.4.6. Back