The Ports Industry in England and Wales (HC 1700-I) Transport Committee 1 Nov 2006

Q19 Mr. David Clelland: Just to follow up on Mr Graveson's comments, is the answer to the problem then improving the road and rail infrastructure to feed the South East ports, or spreading the work around the other ports in the UK? Will the market itself do the latter, or even the former, for that matter?

Mr Graveson: In the short term, improving the infrastructure in the South East would relieve the situation, but that is no long-term solution whatsoever for the nation and for its continued economic viability, because eventually the costs in the South East will increase considerably as a result of density of industry. Therefore, to spread it around this United Kingdom, from the point of view of port infrastructure, would be infinitely desirable, not only for long-term economic well-being but also for considerable environmental benefits.

Q20 Mr. David Clelland: Will it be spread around just by leaving it to the market, as has been suggested, or will it need some sort of government intervention?

Mr Graveson: I would suggest consequently that you would have market failure, ultimately. You may well achieve profitability, and indeed short-term competitive advantage, over a very short period, of maybe five, ten, 15 years, but the long-term sustainability of this country, globally, I believe would suffer, ultimately.

Mr Garner: We support the market-led forces for the build-up and arrangements of the ports. Certainly, we work in a number of ports around England and Wales and we find that we need to service the traffic of the routes on which our customers wish to send their goods; that ranges from short-sea, two-hour crossings to overnight crossings. Certainly we have seen the growth of terminals on the Humber and in other locations as well, other than the South East, but the forecasts in the MDS study showed that the demand, certainly for the future, was very much in the South East, as well as some other areas, although the South East was the greatest increase.

Q21 Chairman: What would be your answer to the point being made by Mr Graveson that it cannot be left to the market because the degree of congestion would make it difficult?

Mr Garner: We have seen ports and shipping companies providing additional capacity to service the market on some traditional routes but to open some new routes as well.

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Q26 Mr. David Clelland: If we just allowed the market to have its head, would it not be the case that all of those shipping lines were using the South East ports because they happened to be closer, therefore with lower fuel costs to get back and forwards from the South East coast to the northern coasts, but if that meant the South East coast became so congested that turnaround times became longer, delays became longer, would it not be more efficient to use other ports around the country, even for the shipping lines themselves?

Mr Garner: Certainly we operate on a number of routes: short-sea, Dover to Calais, and also the North Sea, from Rotterdam into Teesport and the Humber. We bring containers from Rotterdam, on our ro-ro ships, into the North East, so we do serve the northern ports for ro-ro shipping.

Q27 Chairman: Mr Garner, I am sorry to stop you there but actually that is getting away from the question you were asked. Mr Clelland said, if they are being dumped in South East ports and they become congested so that you have to go to European ports on the Continent and tranship, which must add a cost, would it not be more logical to use northern ports?

Mr Garner: I think that refers perhaps to the larger container ships, which is not the sort of trade that we are in; we are in the ro-ro ferry-back market.

Q28 Chairman: You may not have these ships specifically, but I am asking you as somebody who knows about shipping. Mr Friis, you are nodding?

Mr Friis: Certainly, to come back to Mr Clelland's question, yes, if turnaround times in the South East of England were to be unacceptably long, eventually you would move the theoretical line for how far north you would go.

Q29 Mr. David Clelland: Would it not be more efficient to plan for that eventuality, rather than wait for it?

Mr Friis: The question is at what point in time do you start to plan? I think it is important to recognise the significant cost there is in moving a container to the north of England via sea; it is considerably more cost-effective to move it via rail, which is our preferred mode of transport.

Q30 Mr. David Clelland: Yes, but you have got to get it ashore first before you move it by rail?

Mr Friis: Indeed, and I think that touches upon another point, which is that we believe there is a need for greater joined-up thinking between port policy and infrastructure developments.

Chairman: We are not getting off onto that yet.

Q31 Mr. David Clelland: It ties up with that, because what you are saying is let market forces operate and then let Government put in the infrastructure to move the goods. Surely Government should have some say; if you are expecting them to put in new rail lines, or a new motorway, in the South East, there is a massive cost to Government in that? That is what you are saying: "Let us have market forces, but you provide the infrastructure to get the goods to market;" is that correct?

Mr Friis: What I am saying is that is the model which has been used on the Continent, in Europe, and if some of those ports are able to provide services in direct competition with British ports they operate under those market conditions which you describe. I think it is important to consider that fact, because if we continue with a gap it might even increase the gap in the costs with which those ports are faced. We believe that, eventually, the UK will lose out to the ports on the Continent. In many cases, if you are delivering a container to Teesport, or Grangemouth, to take an example, it is equally as cost-effective to do that via Rotterdam as it is via Felixstowe.

Q32 Chairman: Including transhipment?

Mr Friis: Including the transhipment, yes.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee. Neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.