Memorandum by Associated British Ports
SUBMISSION TO TRANSPORT SUB-COMMITTEE OF
THE UK PORTS
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
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
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
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
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.
2. ABP IN THE
UK PORTS CONTEXT
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
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
3. THE ABP GROUP
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
"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
Southampton is an important engine for economic
growth on a local, regional and national level. Its contribution
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
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 Bayport-owned reclaimed
land opposite the busy dock areawas 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
In terms of basic UK industries, ABP ports on
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
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
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
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
4. HEALTH AND
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
This commitment to safety and safe working practices
is reflected in the following processes operating throughout the
(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:
ABP13.1 per thousand employees;
Total UK port industry28.0 per thousand
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
(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
(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.
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 www.abports.co.uk/environment.
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 Plansadjustment
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
ManagementABP 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,
the Environmental Impact Assessment
Directive (including two sets of regulations, one for land side,
and other for harbour developments);
the Birds Directive, notifying Special
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
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
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;
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
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
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
Identification of Marine Environmental High Risk Areas in
the UK: Safetec, 1999 for DETR. Back