Examination of Witnesses (Questions 66-79)
MR TERENCE MORDAUNT, MR JOHN DEMPSTER, MR DAVID WHITEHEAD AND MR NIGEL PRYKE
WEDNESDAY 24 APRIL 2002
66. Good afternoon, gentlemen, thank you for joining us. Would you be kind enough to identify yourselves for the record?
(Mr Whitehead) I am David Whitehead. I am the Director of the British Ports Association.
(Mr Pryke) Nigel Pryke. Chairman of the British Ports Association and Deputy Chairman of Port Skills and Safety.
(Mr Mordaunt) Terence Mordaunt, Chairman of the Bristol Port Company. I am standing in for Chris Gray, who is abroad today.
(Mr Dempster) John Dempster, Executive Director of the United Kingdom Major Ports Group.
67. Does anyone wish to make an opening statement?
(Mr Pryke) Yes, if I may. We welcome the opportunity to talk to you this afternoon. Both of our organisations have put in submissions and our major concerns currently are the Port Services Directive, the application of the Habitats Directive, state aids, light dues and various planning issues.
68. You have given us quite a long shopping list there. Let us start with one bit. Let us start with the Directive on access to port services. What concerns you mainly about the Directive?
(Mr Pryke) May I say one small thing and hand over to Mr Mordaunt who is our expert on this? May I come back to one thing Mr Elsner said? He said that the British Chamber of Shipping and various other organisations were in favour of the Directive. May I say that they have told us that they are in favour but they are in favour of it because they see a problem on the continent of Europe. They are not in favour of it because they see it as a problem in the UK.
(Mr Mordaunt) The UK ports industry has been through a revolution in the last ten years and we have generally gone from being some of the worst in Europe with some of the highest prices to now some of the best in Europe with, I am glad to say, probably the lowest prices in the civilised world, certainly in container handling. After this massive period of change the Directive is very unwelcome because it creates uncertainty. Mr Elsner has correctly pointed out that it may be that no-one comes along and says they want to do this, they want to do that, but as long as it is possible that you may have to hand over a bit of your operation in any period ahead, inevitably there will be a reluctance to invest in the way we have in the past. It creates a whole new commercial climate. Uncertainty is always very unwelcome to business. Secondly, the Directive is extremely disproportionate to the UK; extremely disproportionate. I should like to pick up again on one thing Mr Elsner said about Felixstowe. He indicated that no-one could get in there and handle containers and that may be right, but that port has been on the market twice in the last ten years, it has been available for any shipping company to buy. This is far freer access than exists anywhere else in Europe.
69. Ah, but we are not interested in finance.
(Mr Mordaunt) I believe the Directive as drafted may improve efficiency in some very large ports, but I am certain that in medium and small ports it will make them less efficient and more bureaucratic and that has to be unwelcome. I have touched on this before: I am convinced that it will reduce investment and I also believe that we shall go back to something which was very unpopular with the shipping community in the past and I am glad to say that the shipping community are beginning to wake up. If ports cannot see a certainty ahead for a long period, they are very likely to turn to the shipping companies and say "If you want us to put in this facility, then you must guarantee it". That will be satisfactory for the very big, powerful shipping companies. The smaller shipping companies are starting to get very worried about this because they see the general user facilities disappearing because it will only be the big companies which can afford to guarantee a way into a future. I believe the shipping community is very much beginning to see the dangers in this, as indeed the airlines have in the Baggage Handling Directive which has some similarities.
70. What role can ports play in meeting the challenge to United Kingdom industry of increasingly difficult export markets?
(Mr Mordaunt) The first thing we have to do is be aware of costs. There is no doubt that any port cost is a tax on trade. We have been fairly successful in getting port costs down. I said in my opening statement that certainly fragmenting smaller ports or having the possibility of smaller ports being fragmented will put costs up, not down.
71. What about self-handling? Will that help?
(Mr Mordaunt) There is undoubtedly need for more container capacity in the UK and there is undoubtedly need for more container capacity in the South East. There are other solutions. We have generally capacity on the West Coast of the UK, because Europe has tended to create a lot of East Coast trade. One possibility would be a trans-shipment port somewhere like Falmouth to feed up the West Coast. It does not mean we will not need more capacity in the South East: it would mean we need less capacity with a massive advantage that then we would not have all this trade going from the South East to the West of the country.
72. If ports did allow operators into the ports self-handling their materials, would that help efficiency? Would it help the drive for exports?
(Mr Mordaunt) I can only really talk for myself here, we do let people. If someone comes along to us and says they would like to do their own thing, we sit down with them and if it makes sense for them to do their own thing, and often in the sort of port which is also manufacturing, where they have people on site, it does make sense and if they do that we are quite happy to let them. What we are much more concerned about is having a chunk of our existing business taken away or going to someone else who may not handle it in the same way and that cargo could be lost by someone else not handling it as well.
73. Is that the usual practice throughout the ports?
(Mr Pryke) Felixstowe is within the conservancy that I operate and if you ask that question about the port of Felixstowe, for another operator to come in clearly they would either have to lease the equipment from the port or buy their own equipment. If they had their own staff, there would not be the same synergies that there are now between the different areas of the port, in fact I cannot see that it could possibly be as efficient because that operator would only want to operate his own ships and not everybody else's. The current situation is that all the berths are common user, any shipping company can use any of the berths. If you bear in mind that some of the berths are deeper than others and that the biggest problem in the UK at the moment is a lack of the deepest berths, at the moment all the shipping companies want these big ships and there is only a certain number of berths they can use. They have to rotate through the same two or three.
74. What you are saying is that self-handling is a non-starter then.
(Mr Whitehead) The scope for self-handling is very limited. There is a lot of self-handling in the ro-ro trade. It is extremely difficult to introduce more self-handling for containers for example. Under the terms of the Directive self-handling also applies to pilotage for example and the ability to grant pilotage exemption certificates. That is an extremely important principle for us.
75. I thought pilots were in and then out and maybe in again.
(Mr Whitehead) We have a system of exemption of certificates whereby the master of a ship can choose not to take on a pilot. All we are saying is that is an extremely important ability to have. Going back to cargo-handling, the opportunities to advance that are extremely restricted.
76. Are ports in the UK harmed by state aids, because state aid is given to European ports outside the UK through government support for infrastructure and in other ways? Is that a real problem?
(Mr Dempster) There is no doubt that, in the overworked expression, the level playing field is not level. You had some exchanges with Mr Elsner in this connection. There is no doubt that in many continental European countries the provision of port infrastructure is treated like roads as a public facility and therefore it is financed one way or another from public funds. That is a situation we have to live with. However, there is also a good deal of suspicion that public funds leak into illegitimate operations in the form of state aid and I have to say that we are very disappointed that the Commission did not see a need to address this issue of state aids when they were very concerned about the issue of access to port services. A lot of pressure has been put that they should at least produce some guidelines which would clarify what is and what is not a state aid in the port sector. There is a lot of uncertainty around what is and what is not and there is also a lot of uncertainty as to where the money actually goes. That was one of our major criticisms of the package which they produced.
77. Where have you made representations on this? You mentioned the Commission. Have you made them there and have you made any representations to the Government?
(Mr Dempster) Certainly we have had many exchanges with our friends in the Department of Transport, Local Government and the Regions and they share our concern. Certainly we feel the package was unbalanced because it did not address what we would regard as an equally important topic. We have also made similar representations with the European Sea Ports Organisation of which both our bodies are members.
(Mr Whitehead) We have a problem for both organisations. We have made clear complaints about potentially distorting state aid, for example to some Dutch ports, and never received any reply from the Commission in spite of reminders.
78. Had you understood that there was this differentiation between the two Directives? It is quite obvious that Mr Elsner does not regard this as part of his work at all.
(Mr Whitehead) I cannot speak for him. I am sure he does regard it as part of his work but the Access to Port Services Directive is a very distinct piece of legislation if it gets through. All I would say is that if it does get through it should be part of a complete package of other work.
79. No, I am asking whether you realised that the other Directive, which according to Mr Elsner is the one which refers to transparency, was not only already in existence but presumably would allow you to make formal complaints of a kind that you say you received no answer to.
(Mr Whitehead) We have made formal complaints and there is a Transparency Directive. It may be that one of the spin-offs from the Port Services Directive is a tightening up on transparency and more information coming through.