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EuroParl Transport Committee votes on CEF budget
A Windfall for European Ports?

The European Parliament’s Transport Committee (TRAN) has voted in favour of the draft opinion findings presented by EU Rapporteur and Romanian People’s Party MEP, Marian-Jean Marinescu. TRAN Committee MEPs support of the report’s findings expresses a new era of wider pan-EU support for the Connecting Europe Facility funding instrument. The new TRAN opinion now requires that the cross-border CEF funding for transport infrastructure policy to be upscaled and re-funded to help in the continued diversification of transport infrastructure investment funding for the period after 2020 – in a post-Brexit European Union.

The TRAN committee opinion also articulated a strengthening of purpose for the maritime sector as a whole:

“Underlines the importance of secured funding to achieve an integrated maritime policy, as a flagship initiative for cross-sectoral and trans-national governance, as well as for optimising multimodal connections and shifting to digital transport services and sustainable transport modes, including inland waterways.”

This focus on maritime trans-national governance is a crucial aspect of the post-2020 European Parliament Transport Committee strategy. The Connecting Europe Facility is a purposeful response to the funding requirements of the development towards a multimodal European maritime network. This interconnects with the Ports Regulation framework developed in early 2016. The interconnection of ports is a pivotal part of the TRAN MEPs vision for post-2020 maritime Europe. Funding this vision is the purpose behind this TRAN committee report adoption stage.

The digital transport strategy is also a crucial dynamic within this changing European experience. The smarter, smaller and greener port concept is a well-defined narrative in the changing practices of port operations. However, this changing experience is an incredibly costly affair. The financial constraints on operators, therefore, require state subsidies in the shape of grants to help in relation to the short-term pressures faced whilst operators can, in the longer term, develop green strategies that can result in cost saving outcomes.

The European Sea Ports Organisation welcomes the new investment in a “stronger CEF budget”. However, the adoption of the Marinescu report highlights the EU’s priorities and conditions for ports in relation to the social and economic value of their operations as pan-European network. The EPSO’s Secretary General, Isabelle Ryckbost, stated:

“The Connecting Europe Facility is not just a transport budget, it comes with a very concrete investment plan and very clear priorities. Progress has been made with its implementation, but a lot remains to be done. There is a continuous need to invest in better, smarter and greener transport infrastructure. It is good to see that the European Parliament is supporting this message.”

However, EPSO argues that the EuroParl’s awareness of the value ports bring to the EU is clear in relation to the policy focus of the TRAN adoption of the Marinescu report. Furthermore, the increase of the CEF funding vehicle will also help European ports by helping to frame the Trans-European Network funding in relation to the adequate local demands of port operators and the micro environments they inhabit. This intersects with Ryckbock’s demand for grant funding support:

“Ports can play a role in achieving those. But a lot of port investments aiming at better, smarter and greener transport come with a high economic and societal return but have no short-term financial return.”

Ports de France believe the new funding could help create a new era of port refurbishment and renewal. However, the Hamburg Port Authority sounded a note of caution when it stated that the new option required further reading and clarification – support was welcome, but the detail of the increased funding and the parameters therein are crucial factors. The Port of Rotterdam Authority acknowledged that the TRAN adoption of the Marinescu opinion was a positive step for the European Union in its on-going pan-European multi-transport expansion.

The British context alas is rather opaque. The Brexit conundrum means UK port operators are alas uncertain of what EU financial assistance they are entitled to during either the ‘cliff edge’ or ‘transitionary’ periods. The uncertainty over Brexit casts a cloud of uncertainty over the whole affair from a British ports perspective. However, the adoption of an increased funding strategy for CEF and the re-stating of the importance of ports within the EU infrastructure pan-European transport network is a crucial statement of intent for the European Union during this period of Brexit transitionary uncertainty.

The positive strategic direction of the European Union’s pan-EU transport policy and its focus therein on maritime and port diversification requires a strong funding framework. The hope of European Parliament lawmakers is that the new funding principles of the CEF will help bring European ports into the twenty-first century by allowing port operators access to grants that, in the short term, can help invest in the wholesale redevelopment of the entire pan-European port experience by adopting new greener technologies and utilising new avenues of port operation to help create a more streamlined Europe-wide port experience.


The UK’s Private Port Conundrum
Is European Port Regulation fair towards British ports?

The “long-reaching arm” of Brussels has long affected the operating and governance procedures of the United Kingdom’s vast array of port networks. Britain’s membership with the EU has resulted in a plethora of diverse regulative and directive-led legislative action that has required stringent compliance. Yet, British ports do not receive the same level of public support as their European counterparts. This disequilibrium between the predominantly private actors in the UK against a European backdrop of state-sponsored port cohorts creates a fundamentally unequal arrangement. However, the growth in port freight tonnage means the UK could lose out in such a febrile state-dominated sector in a post-Brexit environment?

UK Background

UK Ports operate in an environment whereby market forces impact on operations. As the British Ports Association argue, “Ports in the UK fall into one of three ownership categories; private, municipal, trust. All three models are open to market forces, and

are run independently as stand-alone, self-financing enterprises, free from systematic Government support or subsidy.”This has resulted in 70% of the sector being in private commercial hands – excluding Trust-owned ports that run independently of government, have no share holders and pay no dividends which account for 25% of UK ports, including the Port of London Authority.

The policy environment is similarly based on an ‘independent-minded’ approach to port support. The National Policy Statement for Ports, published in 2012, set out a Government-supported framework for more sustainable port development based on evidence-informed long—term growth needs. Financial assistance is generally geared towards staff training, security, safety and economic recovery – a prime example is the Smaller Ports Fund, a £ 2million fund for small and micro ports to access resources to help re-build in the aftermath of natural disasters. Private, free-market commercialisation dominates the British port experience.

EU Background

The EU has only just started to explore the dynamics of unfair state funding within the European port experience. The changes to the General Block Exemption Regulation (the rules on state aid) have started to evaluate new rules, that intersect with the new European Port Services Regulation frameworks, that argues for exemptions on threshold and maximum investment levels with a focus on private/non-profit funding with state actors acting as funding ‘stop gap’ support mechanisms – instead of central funding partners.

The reason for this change is that state-controlled port ownership is a larger phenomenon in the European context. According to the CPS, the expansion of Felixstowe and Southampton created new capacity with zero public sector funding. However, expansion of Rotterdam, Hamburg, Antwerp, Bremerhaven and Le Havre had larger public-sector cash injections than private funding alternatives.

The Port of Bremen (Brevenhaven) is a sound example. It is a private status company in public control. It is owned by the Free Hanseatic City of Bremen. The port is the second largest in Germany and creation of a publicly-owned harbour and port vehicle was in response to the millennial collapse of the shipbuilding industry in Bremen. The local authority undertook a series of privately-owned acquisitions with ownership in public sector hands, which helped to stabilise the port without infringing state aid exemption rules. The local Bremen, Federal and National German governments have invested billions of Euros through this private organisation.

The Future Impact of EU Regulation – The Brexit Spectre

The EU, in its long-standing goal of creating a truly interconnected Trans-European Transport Network (TENT) wants to change the modal interconnected nature of the current transport infrastructure of the European Union. New funding mechanisms, more stringent state aid rules along with more defined sustainability targets have the intention of creating a truly unique, level and green transport infrastructure network across the EU. However, the devil is in the detail. The growing pace of port-related policy research in Brussels showcases the importance of the sector. However, the stark difference between the UK experience and the European Union experience is crucial in understanding the unfairness of future policy actions on the sector.

Brexit could create a changing atmosphere in relation to the UK port experience. However, we have yet to flesh out the details of a post-Brexit UK port experience. In reality, “Brexit means Brexit” only in the context of political discourse. In a real-world port governance setting, “Brexit means absolutely nothing”. This ‘unknown’ is a valid problematic issue facing port leaders. The PSP will become law by March 24, 2019. The UK is set to leave the EU on March 29, 2019. It will have to become UK law before the UK exits the European Union.

The talk of transitionary membership will further cement the realities of the Port Services Regulation. Whilst UK Port thought-leaders, like Richard Ballantyne, CEO of British Ports Association, argues that the new rules are “unnecessary and unwelcome.” The lobbying to end the PSR will face stiff structural problems during any transitionary membership period. This could result in the PSR becoming UK law at the cost of medium-term transitionary membership.


SMALL UK SHORTSEA SHIPPING PORTS COULD EXPERIENCE
A “GOLDEN DEACDE” OF GROWTH

The Port of Barrow, owned by AB Ports, has funded a report, conducted by Edge Economics, that has found the future prosperity of the port could see a further £30 million invested into the wider economy due to increased shortsea port operations growth. According to AB Ports:

“future growth prospects could see the Port of Barrow’s annual contribution to the UK economy grow by £30 million in the next decade, taking its contribution to £137 million, with job growth of 40 per cent, equivalent to 1,700 roles. Today, the Port of Barrow contributes £107 million to the UK economy including £89 million to Barrow. The study also found that economic activity in the port supports 1,200 jobs across the UK, including 800 in the town of Barrow.”

Shortsea Ports – Why they are necessary and how Barrow sets an example?

The importance of shortsea shipping ports on the UK economy is critical. The Port of Barrow’s focus, as outlined by the ABP Strategic Port Masterplan, can be seen as a nimbler, more fluid, operation.

The management team at AB Ports understand the disruptive period ahead facing the UK Port sector by creating avenues for improved shortsea container shipping experiences at the Port of Barrow. ABP’s Short Sea Ports Director, Andrew Hartson similarly noted this opportunity for growth when he stated:

“For 150 years the Port of Barrow has served local industry and manufacturing, facilitating maritime trade and hosting world-class shipbuilding. The findings of this new independent study have revealed the true extent of the port’s contribution to the local and national economy, and opportunities for growth in the years ahead. We hope that thanks to its unique position at the heart of the UK Energy Coast and increased economic activity serving the energy industry in the Irish Sea, the Port of Barrow will see its role increase in the decade ahead.”

At the report’s launch event, Local MP, John Woodcock, stated:

“The Port of Barrow has always been integral to the history of the town and I am delighted that we could host this reception in the House of Commons alongside the events we had in Cumbria earlier in the year. It was a pleasure to welcome so many of the people making a huge contribution to the town and share ideas on how we can work together to build on the wonderful shared history we have. With the investment set to flow into the shipyard in the years ahead we can look forward to a very bright future for the whole town and the port is critical to that success."

Shortsea Shipping has declined over the past decade. However, investment by AB Ports, Maersk and other key players have resulted in avenues of growth. The ECSA has found that for every €1 million spent by the EU short sea shipping industry another €1.6 million is created throughout the wider economy. ESCA is clear, “Short sea shipping is an important source of revenue for Europe.”

What can UK other UK ports learn from the Barrow experience?

The 2010 Barrow Port Area Action Planhighlighted the changing nature and aspect of the Port of Barrow as a functional port. The decline of shipbuilding and historical shipping trades have been replaced by a more professionalised shipping industry. In response to this changing port experience, the port operators (AB Ports) with the local authority and other key stakeholders undertook a Master Plan consultation and explored the demands (including present and future) on the port and the operations-based demands such future pressures will place on the governance of the port.

Integration is a key part of the Barrow model. This surrounds the concept of Waterfront planning – the idea of fusing living, recreation, retail, entertainment and port operations in a single space. By making the port district a de facto public district (excluding the port operations areas but regenerating empty and disused spaces for the benefit of local people. This regeneration scheme was kickstarted in 2006 courtesy of a £60m Regional Development Agency grant and additional £100m private sector investment (with a large part paid for by AB Ports).

The Waterfront in Barrow-in-Furness is one of the UK’s costliest regeneration projects with a budget of upwards of £200 million with a completion date of early 2020. The growth of offshore energy services, the expansion of the BAE Systems port and the continued investment of AB Ports has created a plethora of different positive outcomes for the Port and the Barrow community-at-large. In addition to all this, the port will also cater for an increase in cruise ships whilst the marina will be increased to help grow capacity. This diversification is a central tenet of the wider Port of Barrow local enterprise collaboration experience.

The Port of Barrow is a successful role model for smaller shortsea ports in the UK who cannot compete with the super tonnage of the Port of London/Felixstowe but can create alternative pathways to success based on sound local planning, a stronger awareness of the shipping sector and how their regional USP intersects with their overall ‘offer’ and finally how port operators, local authorities and communities can come together and successfully develop port towns as both functional and sustainable.


Are UK Ports facing a Skills Shortage?

In 2009, a little known Parliamentary report was published – entitled “Future of the UK Maritime Industry”. Hidden deep within the report was a stark warning that a skills shortage loomed over the UK maritime sector as a whole – including the UK port network. However, the UK has a long history as a maritime nation of being a premier maritime training nation. The centrality of training, and therein education, is paramount in understanding how UK ports can build success in the future. There is an even more acute problem within the port environment. The ‘gradual’ managed decline of port conurbations has allowed the ebbing of talent. Furthermore, those ‘left behind’ have been failed in relation to upskilling. The disruptive technological changes heralded by the “Fourth Industrial Revolution” and the automated ports of the future create further problematic issues. Therefore, what is the problem and how can UK ports turn it around?

Understanding the Skills Shortage

The decline of STEM (Science, Technology, Engineering and Mathematics) as both a post-16 and graduate destination is a massive problem for UK education policymakers.

The failure to generate STEM-based talent has a knock-on effect for the UK port sector. In 2009, the UK was 28th in the world in Maths (with 85% of students giving up maths post-16). The same mid-level world standing can be seen in Engineering, Science and Technology. This creates the skills shortage. Furthermore, the multi-generational workplace (with Baby Boomers, Gen Xers, Millennials and Gen Yers) skills shortages creating further parameters for future shortage pressures. The structural properties for future skills shortages are being created and maintained right now!

The globalised nature of the world economy, along with a talent shortage means port recruitment strategies are becoming more multi-generational, more trans-national and more flexible. The increase in specialist niche port services recruitment agencies is a sign that HR processes are being outsourced within the port environment in order to better attract talent from outside their natural recruitment environs. Many recruiters have a national footprint allowing regional ports to source talent in their own micro environment based on the relocation of staff. This has also seen an increase in port operations spending on agency support and consultancies.

How Port Operators are countering this shortage?

It isn’t just the lack of STEM talent or the challenging and disruptive experience facing ports but a problem of perception that is also holding back possible talent. Peel Ports, one the UK’s largest port operators, undertook focus groups with school age children in 2015. What they discovered was shocking:

“People generally thought ports were part of a dying industry. They had a very old-world view compared to what it is actually like.”

Peel Ports HR management realised that a wholesale process was required to help change young adults’ mind-sets in relation to a career in port services. This is being accomplished in two different spheres of influence. First, by promoting Peel Ports and highlighting the brand identity and ethos therein to perspective talent. Second, by working closely with careers support and young people to help highlight what a career in the UK ports industry means and the rewards therein.

Overcoming the Skills Shortage through Glocal Acts

“Think Global, Act Locally” – Peel Ports

The power of overcoming the on-going and future skills shortages in about understanding the global dynamics of port operations, governance and market demand whilst leveraging this with the local actions of your operations, staffing and sales representatives. Collaboration is a central tenet of this successful framework for overcoming the skills shortage experience. However, traditional inefficiencies in recruitment aligned with traditional problems facing port operations using the Peel approach can help create a value-driven recruitment process that focuses on the local port activity in line with the global experience.

Outsourcing has become a new norm within the port services environment. Technology, the cloud and automation has helped to create an alternative experience. However, researchers argue that more technology will require greater support mechanisms. This means that automation will require support systems in place manned by human talent. This creates a talent resources issue – especially if regional ports invest heavily into automation without access to the right support personnel within their teams. The smart port and the smart ship will create new roles for the future. However, the port industry has historically been a late adopter – this will be a major factor in relation to the legacy skill shortage crises along with future technological skill shortage experiences.

Understanding Skill Shortages – Why UK Ports can succeed?

Port operators can overcome skill shortages by understanding the issues facing their organisation, their industry and the wider economy. By understanding the decline of STEM and the issue of perception in port services as a post-16 destination, port operations can create successful partnerships with local schools and careers advice providers to help promote and advocate careers in UK ports sector. However, brand identity, technological capacity and solid port operations are required to help nurture young talent and to bring talent from further afield. By understanding these experiences, by developing framework pathways to help overcome skill shortages, port operators can herald a new era of recruitment success.


Are UK Ports facing an Asbestos time bomb?

According to the Institute & Faculty of Actuaries, UK ports and dockyards were major ‘hot-spots’ for asbestos – with extreme examples cited in Barrow-in-Furness, Portsmouth and Tyneside. Billions have been spent to help remove asbestos from UK ports, but on-shore facilities are counter-exposed by the ever-present off-shore vessels coming into port and into contact with port employees. This article will explore the legacy issues facing UK ports and why action is required sooner, rather than later.

The Asbestos Problem

As ports diversify, from dismantling, fuelling to repair, the threat of asbestos become more real. The on-land regulation is incredibly strong. The regulation journey began in 1969 and continued to be strengthened until 2012 – with small fixes since the introduction of the Control of Asbestos Regulations. This new regulation came after the EU found Britain’s regulatory approach to the implementation of the EU Directive

on Exposure to Asbestos (2009/148/EC) a little weak. The new ethos of the regulation was to implement a purposeful “duty to manage” priority.

However, the ship-based regulations are based on global regulatory compliance rules. The global maritime standard is set by the Convention for the Safety of Life at Sea (SOLAS) which states that if asbestos is found on a ship after 2012 then the vessel flag registry, along with the classification society, issues a non-extendable three-year certificate which gives the ship owner three years to action the asbestos. However, any vessel built before 2002 has to have a hazardous material register and a plan to cover the repair work (without a hard deadline). This is a failed system. Yet, such vessels are free to steam in and out of UK ports.

The Challenge – What can UK Ports do?

The Maritime Journal highlighted the ridiculousness of the current system. In an article entitled, “Asbestos time bomb ticking for marine industry”, the problem was laid bare – with 30,000 EU-registered vessels with IHM (Inventory of Hazardous Materials) processes in place. However, the problematic nature of understanding the material structure of vessels means around 80% of ships could have a form of asbestos within its substructure. The usage of Chinese or Korean shipbuilders also inflates the issue – in China, Asbestos is legal. The problem here is that Chinese manufacturers may create ‘asbestos-free’ production lines but cross contamination creates further principled problems.

The biggest issue is this: “Panama, Liberia and UK among other major flag states still accept a classification society’s inspection for an annual operating certificate even though the ‘asbestos free notation’ is based only on a shipyard declaration that the vessel is ‘asbestos free’.” There is a trusted solution to this conundrum. It requires the use of an accredited support solution to help understand the asbestos issue in detail.

ISO17020 – The Asbestos Regulation Benchmark

The International Organization of Standarization is a global benchmark organisation. The ISO17020 (2012) is a conformity assessment that requires various organisations to adopt specialist performing inspections and the adherence of impartiality and consistency within the activity of inspection processes. Using a specialist asbestos surveyor who is ISO17020 accredited can help you understand the structural problem faced by your organisation and personnel.

What is required is for a wholesale change. The International Maritime Organisation, the UN maritime body, must update SOLAS for the twenty-first century. It has to create a process that is manageable and purposeful. It needs to understand that different seafarers and port staff interact with vessels and as such a structural IHM inspection and reporting system must be created to help the industry overcome this problem.

The structural changes at an IMO-level will only help so far. What is required is for flag states to become more aware of Asbestos and seafaring personnel safety. The bigger flag states have yet to fully change – this will be about protecting numbers in case rival nations fail to change. Yet, at the more progressive end of the flag states, some countries are changing. The licensing, planning and removal processes are more defined, and safety is paramount.

What does the future hold?

Asbestos poisoning causes mesothelioma – the rate of historic sufferers is rising. Surveys have found that former military naval personnel are falling ill. The historical implications are stark. Therefore, with historic evidence to validate the stupidity of utilising asbestos in port environments, it is crucial that international bodies, national governments, major port operators and HSE practitioners understand the importance of good asbestos management principles. Using ISO standards can create sectoral trust, understanding flag-related national issues could help protect port staff from infected by bad flag state rules within the port environment. There are structural operational changes that can help protect employees. However, trans-national agreement is required to help create a maritime industry free from asbestos. In the meantime, following industry standard reporting processes can help maintain awareness and help promote good collaboration between asbestos surveyors, the industry and on-site employees access to dangerous materials.


UK Port security – The impact of cyber security

In 2011, the European Network and Information Security Agency (ENISA) analysed the overall preparedness of the entire maritime sector in relation to theoretical cybersecurity attack. Their findings were somewhat shocking – the practical awareness of cybersecurity countermeasures were either low or non-existent within port environments. Since 2011, there have been attacks on Rotterdam, Port of London Authority and San Diego highlight the damage done – with further attacks on large organisations like Maersk and APMT. The damage can be massive. Yet, if the case study evidence is there for all to see, why is preparedness so low to non-existent across the port sector?

The Belgian port of Antwerp – a major European super-hub – was hit by one the largest cyber attacks in modern history in 2017. The port transformed from a digitised example of technological success to a manual operation that resulted in weeks of delays. The size of Antwerp could hinder the wider problem. Hackers attack any organisation – they don’t just go after the big boys. The City of London Police, the

UK’s IT crime police force, believe there is a large-scale under-reporting of cyber attack crimes in the UK. McAffee believe cyber crime costs the global economy $445billion a year.

Port Security: Current Standards

Information systems are integral to the functional operation of a port ecosystem. The diverse aspects managed by information systems is legion – from cargo handling, storage, gate monitoring, exchange of shipping data, agents’ freight and haulage information. The cyber security domain encapsulates this entire landscape.

Understanding how IT systems interact with port operations, in essence, highlights the structural vulnerabilities of the port operations. By understanding the structural inadequacies of their operations, port leaders can better strategize against cyber attack.

A recent example, in Antwerp, saw a gang ship drugs in legitimate cargo containers. They used hackers to access the container storage details at the port. They were able to liberate their ill-gotten gains before the port authorities knew what had happened. This was both a physical and cyber security breach. Furthermore, this invasive double-attack is an extreme example of future possible security attacks.

Port Security: Cyber Defences

As more port systems become automated. The vulnerabilities of cyber attack will only increase. However, cyber defence principles already exist. If deployed and managed in a coherent way, they can help create a strong foundation of cyber security within UK port environments. The UK Government has announced new guidance protecting the UK port industry from possible cyber-attack. A sector that literally carries 95% of the nation’s total trade should take security seriously. The new guidance highlights a new working relationship between Department of Transport (and therein MI5/GCHQ) cyber security assistance and information exchange between port operators and the security agencies. The new support can help by providing vulnerabilities support, analysis support and incident investigation support.

The new “Ship Security Cyber Security Code of Practice” helps with off-shore support. However, on-shore port operators need to be aware of the code of practice. Legacy code of conducts – that incorporate ISPS codes, EC regulations, SPFSR, UKSSI and PSR are predominantly based on pre-2005 threat assessment principles. The latest cyber attacks are not covered by these regulations. Therefore, new approach is crucial in helping to define a structural and process-informed approach to countering cyber security within the shipping industry.

What Port Operators need to do

Port operators have a statutory duty to create a port security plan. The Port Security Regulations (2009) section 15 clearly states that a port operator “must develop, maintain and update the port security plan for each port for it has been designated.” This regulatory framework can help create plans based on procedures, measures and action to be taken in the result of a security-related issue.

Furthermore, the IET Code of Practice can help by providing port operators with a structural process-informed pathway towards cyber security compliance. The cyber security standards can help port operators by providing the right systematic experience to help inform on-site security personnel to understand the complexities of cyber security and the limitless implications of technological rollout!

Finally, Port management need to understand how disruptive future technological change will be on their overall operations and how creating the right cyber security framework could mean the difference between successful automation and information system success and laborious post-attack manual system. Developing framework plans and adhering to international standardised codes of practice can help port security officers manage the effective overall security of the operation. By improving the digital security of port infrastructure, port operators can help keep trade flowing and counter negative cyber attacks by promoting sensible technological polices, frameworks and processes – that cover deployment, management, reporting and audits. By understanding this process, port leaders can create port environments that are safe and accessible to all. Good practice can mean the difference between cyber success and cyber failure.


Understanding Governance Frameworks:
Who should monitor the capacity and service quality of the sector?

The United Kingdom has a predominantly privately-owned model within the expansive port sector. Understanding transparency and accountability within the governance frameworks of UK ports is a crucial question – and one the maritime sector has failed to fully grasp.

Governance is a multimodal private free-market environment is about balancing competing demands. The UK port model is based on the premise that management execute directives in such a way that focuses on long-term growth whilst managing positive relations with shareholders and stakeholders alike.

The UK port model is a success. Yet, at the very hard of this success is an accountability question. How can good governance overcome this conundrum? This article will outline port governance, highlight the regulatory dynamics and the current thinking in relation to future developments whilst articulating a nuanced analysis of the private-public relationship that is currently framing the governance experience in the UK.

Understanding Governance

Port governance is an incredibly diverse concept. The fundamentals of port governance surround the management differentials that intersect within the business environment – which include balancing the competing pressures of organisational stakeholder awareness; which include shareholders, management, clients, suppliers, customers, financiers, government, NGO and the wider community. However, a more fundamental conceptualisation of governance surrounds the role of the private vs. public sectors – from port authorities, tool ports, landlord ports to private ports as frameworks for structural governance. In this article, we will be exploring the dynamics of organisational governance.

As the UK has a predominantly private-operated model – with around 65% in private company hands (with a further 25% in non-profit trust control). The governance principles are similar to that of average corporate governance models. The fundamental principle of governance is to steer a company towards sustainable long-term growth. A more technical definition of governance is as follows:

“Corporate governance is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. Corporate governance is therefore about what the board of a company does and how it sets the values of the company, and it is to be distinguished from the day to day operational management of the company by full-time executives.”

Codes of conduct and Governance codes do exist. Yet, the port experience includes a diverse array of issues, that from a regulatory perspective, require further analysis.

Regulations & Developments

The European Union PORTOPIA project was launched in 2013. The goal of the project is to develop a framework for structuring performance data, and therein quality, by defining key tools, facilitating data approaches and outlining peer-reviewed analysis systems. Core project deliverables include market trends, structure indicators along with aggregate/disaggregate comparability calculations. Furthermore, the project seeks to understand environmental and safety indicators whilst understanding the socio-economic indicators. However, the central deliverable surrounds the governance indicators – which explore the institutional, functional and financial aspects of the European seaport experience. Other investigative analyses of governance surround academic investigations and government-led analysis. This article will explore governance in the context of port operations, regulation and the developments therein before investigating the private-public relationship and the role of transparency, accountability and governance in developing governance frameworks for UK port services.

This is a specific EU response to the Trans-European Network and the role of port authority governance in relation to the multi-disciplinary experience that includes the financial objectivity and shareholder demands whilst understanding stakeholder relations and the issues therein. PORTOPIA has created governance frameworks that are especially relevant to the European seaport experience. One central development has been the deployment of master plans in relation to long-term objective-based growth:

“Port authorities are in most cases responsible for port development. Producing a port masterplan is nowadays common practice. 64% of port authorities surveyed have produced a masterplan, of which 78% date from 2010 or were produced after that.”

The conceptualisation of public development proposals and financial affairs documents creates a transparency framework that imbues accountability into the governance experience of the port service in question. However, how can such organisations balance the demands of private-public collaborations?

Transparency, Accountability and Governance in a Private-Public Relationship

The UK’s private port ownership model creates a problematic local community stakeholder transparency issue. A private company is by default loyal to the company’s shareholders first and foremost. This makes communitarian stakeholder engagement problematic. However, as a PORTOPIA fact-finding report discovered, “port authorities work towards increased transparency”. They found that 93% of port operators published annual accounts. Whilst 99% have their accounts audited by external auditors – whilst 86% use analytical accounting tools. However, on port dues, the increased transparency has increased dues awareness across the European Union – with 95% publishing information on the level of dues, 86% publishing information on the structure of port dues distribution whilst 74% provide information on the infrastructure provided in return for the dues paid. This level of economic and social accountability is central to the wider social transparency of European ports – these figures are not dissimilar to the UK experience. Therefore, by looking at the British experience, the unique private-public relationship between private operators and public awareness, we find that transparency and accountability are built-in to the wider port services governance model in the UK.


Frictionless Trade: The Brexit Uncertainty over RORO cargo operations

The European Union’s Single Market allows for frictionless tariff-free trade to occur between member states. This allows cargo interchange between seaports to simply roll-on and roll off (RORO). This is the very ideal of frictionless free trade and is a uniquely European construct. Some detailedbackground: The European Union accounted for 44% of all exported UK goods. The number of imports from the European Union accounted for 53%. The total value of UK exports to the EU is valued at £223.3 billion whilst the total value of imports from the EU were both £257.1 billion. We therefore import more tonnage whilst we export more in value.

Understanding Brexit – A Ro-ro perspective

The Brexit negotiations are mired in a range of political problems – yet the single greatest issue facing UK sea ports surrounds the frictionless dynamics of roll-on and roll-off traffic. Undertaking full customs checks at Dover would result in weeks, literally weeks, of tailbacks. Furthermore, any border chaos would result in additional

costs – being estimated at nearly a billion pounds sterling. Roll-on, roll-off, therefore, has a major part to play in the determining factors that surround Britain’s exit from the European Union.

Earlier this month (15/11/2017), Ro-ro port operators met with UK government officials to discuss the Brexit freight challenge. According to Lloyds Loading List:

“Unlike the majority of other UK port operations where new requirements would not have the same impacts, the ro-ro sector, which includes ports like Dover, Holyhead and Portsmouth, outlined their concerns regarding new border processes,” the BPA noted. “The ro-ro sector is significant in that it is estimated to facilitate around 40% of the UK’s international trade and a sizeable proportion of the UK’s EU trade.”

Protecting Ro-ro during Brexit

The British Ports Authority argue that:

“The outcome of the negotiations are of course vital to a wide range of industries, and the roll-on roll-off ferry port sector will be right at the forefront of whatever Brexit deal is agreed. This part of the ports industry facilitates thousands of lorry journeys travelling between the UK and the EU each day.We were (yesterday) able to highlight what the possible implications of leaving the customs union and the single market will be for the ports and operators in this part of the logistics sector. We welcomed the Minister’s attention on this area and we have been able to highlight the concerns of this particularly significant part of the ports sector.”

The centrality of frictionless trade in deploying ro-ro shipping is crucial. Brexit poses a fundamental disequilibrium in relation to this freight shipping experience. The trade associations agree, that the focus should be on the technical apparatus that leads to a streamlined process that creates the closest conditions to frictionless trade. However, countering disruption is the central narrative according to trade industry insiders. The role ro-ro plays in growing the economy is a valid and true reality – the end of frictionless trade will create a new experience in ro-ro service operations – and we are yet unsure of what this new experience will entail.

What does the future hold?

Ireland is a curious issue. Nearly 60% of the Republic’s exports are cargoes through the United Kingdom. The value chains created throughout the UK and Ireland are interconnected and the harm done to post-Brexit Britain will also impact on Ireland. However, could Ireland help force the customs union and single market membership? The Good Friday Agreement, the end of violence in Northern Ireland between republicans and unionists, demands that the border remains as fluid as possible. Can Irish stubbornness at the European Council in December (2018) – under a now politically safe Taoiseach Leo Varadkar – cause problems for Britain’s negotiations? Could an Irish ‘bad deal’ force London into re-thinking the process? The uncertainty around Brexit will continue. However, any reality in the thinking that Irish ‘vetoes’ will end the ‘will of the people’ from leaving the European Union is fanciful. The Ro-ro uncertainty will continue until 2018 – when the first glimpse of the post-Brexit relationship will be fleshed together.

Ro-ro operators are in a state of uncertainty because there is no political framework for Brexit. The ‘off-the-shelf’ alternative models – like Norway, Switzerland or Canada – are problematic (predominantly because the 6th largest economy perhaps demands a more personalised relationship?). The hard Brexit realities are daunting for port services strategists having to consider full border checks on nearly 100% of inward and outward traffic. The easiest option is to remain in our current form. However, the political will for such retrenchment would be difficult – with both the Conservatives and Labour agreeing that Brexit means Brexit in relation to leaving the EU, the Customs Union and the Single Market. The uncertainty will hamper Ro-ro strategic planning in the UK and could lead to a downward spike in traffic which will further impact the UK economy.


Peel Ports set to “transform the economics of onshore decommissioning”

The decommissioning of both the UK Continental Shelf (UKCS) and Norwegian Continental Shelf (NCS) oil and gas exploration in the North Sea is set to span several decades. However, this period of decommissioning has caused concern among a range of diverse stakeholders. The sheer scale of Oil and Gas decommissioning is literally mind boggling. The process will cross borders with North Sea decommissioning creating a boom in both Norway and the UK – with the former spending £1 billion in 2016 whilst the latter spent £1.1 billion on decommissioning. The value to onshore ports offering bespoke decommissioning services is therefore unmistakable. Yet, what is the prospect of success? What about environmental, local or other stakeholder opposition curtailing onshore decommissioning services. The single biggest issue with this proposition is saving money for the taxpayer – the UK government will be paying for the decommissioning costs. Value for money is what onshore decommissioning must prove.

Thetechnical term is “onshore-only disposition of retired offshore oil and gas platforms.” The World Bank has articulated the diverse opposition to onshore decommissioning by outlining the importance of stakeholder engagement as a central tenet of decommissioning marketing processes. Furthermore, Oil and Gas UK argue that onshore disposition is about managing waste expectancy issues and navigating waste management pitfalls. The sectoral approach to on-shore disposal follow these four pathways:

  • Removal at the onshore site followed by landfill waste relocation
  • Removal at the onshore site followed by compositing within legal compositing site
  • Removal at the onshore site followed by land spreading processing
  • Removal at the onshore site followed by allowing marine growth to dry before sending the steel to recycling processing centres.
These processes are cumbersome and incredibly low-tech, but the legislative control of marine life makes decommissioning processes even more technical and burdensome in this experience.

What is Peel Ports proposing?

Peel Ports announced a new project – entitled “Designed for Decom.” The purpose of this activity was to understand the challenging facing the sector and how opportunities could be nurtured from the current decommissioning landscape by developing pathways that create economic incentives for onshore decommissioning. The new process poses a range of concerns – from the industry itself to government/third sector cohorts. The costs and funding parameters are also problematic. There are a range of problems facing onshore decommissioning ventures and Peel Ports wanted to understand the technical nature of the problem and could the economies of onshore decommissioning help create a profitable alternative route to onshore success.

This 12-month ‘listening’ project was about understanding the sector and how Peel Ports could create an alternative pathway for decommissioning onshore success. Peel Ports discovered:

“One thing that is abundantly clear is that new solutions are required. [Peel Ports] explores what is required in onshore decommissioning to create and implement a realistic means of securing significant cost reduction and related benefits in safety, the environment and UK plc’s export capabilities.”

The project evaluated oil and gas production, project management, asset management, demolition, heavy lifting processes steel production, recycling, waste management, government policy shifts, trade unions and economic changes. The findings illustrate a core demand for creative thinking when developing frameworks that suitably create the right environment for a sustainable, profitable and achievable onshore decommissioning experience.

What issues face UKCS Decommissioning onshore?

According to Peel Ports, the taxpayer will receive a “bill of around £24bn for the task of winding up oil and gas fields in the North Sea, the decom sector is facing tough questions about cost effectiveness of existing solutions.” This is the structural problem. Oil and Gas UK want decommissioning costs to be reduced by 38% and as such to make this achievable – new decommissioning processes must be evaluated. The Scottish context does help to make the process more beneficial – the proximity to land, the accessibility of deep water ports along with the established supply chain. However, the drawbacks surround the disposal and onshore recycling. The demand for waste management professionals, the economics of storage along with the value of the metal being lost in countering these negatives.

How can UK Ports positively utilise onshore decommissioning?

Peel Ports argues that:

“The UK has the opportunity to drive down the cost of decommissioning. In a way that also benefits workforce safety, the environment and the UK’s export capabilities. The three key onshore dependencies required to deliver this are dry-docking, onsite economies and efficiencies of scale and the use of space to maximise yield from waste materials – However, to succeed they must be geographically developed in public-private partnerships that utilise strategic centres of excellence.”

The massive scale of decommissioning ahead and the continued push by HM Government to save money requires a creative alternative to the current status quo. Peel Ports provide an alternative take to the onshore decommissioning process. Whether they can execute and deploy such decommissioning services requires diverse partnerships from Government, local authorities, NGOs and other key stakeholders to help nurture success.


Bold & Ambitious Goals required to reduce maritime pollution, says IMO Secretary-General

The global maritime sector is facing unparalleled pressure from a range of key actors – from climate change, technological disruption, and the creation of a sustainable business models are just some of the major issues facing the International Maritime Organisation. On the 27th of November 2017, the Secretary-General of the IMO, Mr Kitack Lim, “has urged Member States to seize the opportunity to set bold and ambitious goals, when they adopt an initial strategy for reducing greenhouse gas emissions from international shipping in 2018. The maritime sector is a massive pollutant – deeds not words will help win the day. However, commonality and support assistance between developed and developing nations could be the way forward?

The Greenhouse Gas Conundrum

Secretary-General Lim’s bold intention is to provide a substantive IMO benchmark for the reduction of greenhouse gas within the maritime sphere of influence. The sector is under attack from the green lobby after last year’s failure to agree on a greenhouse gas emission targets:

“JytteGuteland, a Socialist MEP, said the agreement was not enough: “The shipping sector must play its role in Europe’s transition to a low-carbon society. Time is of the essence, and in the absence of IMO action, the EU must include ships’ emissions in its 2030 climate target. By setting up a climate fund for shipping, Europe can help industry cut carbon in a cost-effective way.”

International negotiations on climate change – like the Paris Climate Change Agreement or the Kyoto Accord – have usually excluded air and sea industries from international benchmark targets. The rationale is that the distribution of benchmark criteria would be difficult – how would a UK registered ship, being deployed solely in the Americas transferring goods on behalf of a Chinese agent actually be charged? Who would take the carbon footprint cost? The registered flag state, the country of use, the agent?

The Secretary-General’s demands for “bold and ambitious goals” is therefore a demand for global accord for climate change action. However, what does Secretary-General Lin intend to do?

IMO’s Climate Plans vs the rest of the Agenda

The IMO understands that digital disruption will be a massive ‘game changer’ for the entire sector. Furthermore, the Secretary-General noted:

“Digital disruption will arrive in the shipping world very soon; and, when it does, IMO must be ready,” Mr. Lim said. “For me, this means the regulatory framework for shipping must be based firmly around goals and functions rather than prescriptive solutions. This is the only way to ensure that measures adopted by IMO are not rendered obsolete by the time-lag between adoption and entry-into-force. I know we have already made good steps in that direction, but we must go further and faster in the coming years.”

On sustainable development, Mr Lim argued that the IMO’s work to support the 2030 Agenda for Sustainable Development and the associated Sustainable Development Goals was also stressed. “Because most of the elements of the 2030 Agenda will only be realized with a sustainable transport sector supporting world trade and facilitating the global economy, aspects of IMO’s work can be linked to almost all of the individual SDGs.”

The IMO have their work cut out for them!

These policy endeavours will be problematic, but the assembly’s work on developing a working framework for greenhouse emissions will be the single most disruptive debate experienced by the IMO since the SOLAS debates of the 1970s. The importance of the symbolism aside, the IMO must make a brave, fortuitous and incisive statement on the importance of reducing climate damaging action by agreeing to a workable benchmark for the reduction of greenhouse gases in the maritime sector.

The maritime industry is a polluter – a major polluter. This is a statement of fact. The amount of pollution generated by the world’s shipping network makes up a large part of the global greenhouse experience. What is required is a bold and strategic approach that can help turn the debate and help win over hearts and minds. By allowing shipping firms, port operators, agents and the wider sector to understand the business value of doing business in a decarbonised way, minds can be changed and from this the seeds of sustainable ecological change can sweep through the sector.

Secretary-General Lim does highlight a way this could be achieved. In the context on global growth and sustainability, Mr Lim talks about “the spirit of a ‘voyage together’ where no one is left behind.” This is a crucial spirit and one the Assembly should embrace when thinking about the massive changes required by the maritime sector in pursuing a low carbon goal. We should look at how developed economies can help developing economies – how large nations can pool resources to help small and micro nations. Global co-operation across the maritime industry can help create the right ethos for change.


Portsmouth International Port

Portsmouth International Port is Britain’sbest connected Port. Situated on the South Coast, ships benefit from easy access to the English Channel. Passengers also get an easy ride – the Port is built right next to the UK motorway network with fast, direct road and rail links to and from London, the South East of England and beyond.

The thriving ferry, shipping and cruise business makes Portsmouth International Port the UK’s premier port for the western channel. It is home to one of the nation’s newest passenger terminals. This, and other investment in new facilities, highlights a forward thinking attitude that keeps the Port flexible and competitive in an ever-changing market place.

Portsmouth International Port first opened as a ferry port in 1976.Over the last 40 years it has become the second busiest cross channel ferry port in the UK, handling more than 2 million ferry passengers and 130,000 freight units each year.

The Port offers seamless transfers for car and foot passengers, with no airline style queues, or baggage limits and excess charges. Passengers can choose from more routes than any other UK ferry port. A modern fleet of ferries provides travel in comfort and style to France, Spain and the Channel Islands.

Two ferry companies, Brittany Ferries and Condor Ferries, operate regular passenger and freight services from Portsmouth International Port to a variety of European destination. These include Le Havre, Caen, Cherbourg, St Malo, Bilbao, Santander, St Helier and St Peter Port. 80% of all supplies from the UK to the Channel Islands come via Portsmouth International Port.

For the last fifteen years the Port has developed a growing cruise business, handling all types of holiday vessels and some of the most prestigious small to medium sized cruise ships in the world. Portsmouth International Port offers cruise operators unrivalled flexibility, with each ship and passenger benefiting from a personal touch. The cruise team prides itself on delivering a bespoke, high quality service.

Passengers arriving at Portsmouth International Port cruise past the iconic Emirates Spinnaker Tower and the Royal Navy’s 21st century warships. They also get a great view of HMS Warrior and AdmiralLord Nelson’s flagship HMS Victory in the Historic Dockyard. Inside this world-class attraction people can visit Henry VIII’s Tudor warship Mary Rose, one of many museums that make the city such a special place to spend time.In addition to a rich heritage on the doorstep of Portsmouth International Port there is also premium brand shopping and quality food to be enjoyed at Gunwharf Quays.

From Spring 2018, cruise passengers arriving at the Port will sail straight to the heart of the Great Waterfront City, thanks to a unique free service for port of call cruise visitors.Saving precious visitor time, guests can step from their cruise ship onto a boat that sails direct to the Gunwharf Quays retail, dining and entertainment district.

The bespoke boat ride will give a real taste of Portsmouth, delivering the sights and sounds of the historic maritime city,whilst sailing through the Royal Navy Dockyard and past famous historic ships to base of the Emirates Spinnaker Tower. The Port is looking forward to the 2018 season, working with cruise companies such as Saga, CMV, Noble Caledonian and Viking Cruises.

Portsmouth International Port is also home to a state of the art shipping cargofacility. MMD Ltd has seen considerable investment in recent years and currently handles 804,295 tonnes of quality fruit a year. 70% of all bananas consumed in the UK now arrive via Portsmouth along with all of the UK’s deliveries of Moroccan citrus fruit.

However, MMD Ltd doesn’t just handle soft fruits and vegetables. The team often loads a variety of goods onto recently unloaded ‘banana boats’ heading back to the Caribbean. Many communities there rely on supplies that come from Portsmouth, with food, furniture and building supplies regularly seen in the cargo. Recentlythe team at MMD has been tasked with handling the export of millions of pounds worth of supercars, new general manager Steve Williams is looking forward to expanding the business into new sectors.

Portsmouth International Port has a permanent fleet of tug boats, with the arrival of the UK's largest independent towage company. SMS Towage is expanding its operations, brining two vessels to the Port as part of a new 24/7 service. This means commercial ships sailing into Portsmouth International Port can rely on tug boats with a 40 tonne bollard pull within an hour's notice.

A dedicated ship repair facility has also recently opened at Portsmouth International Port. Flathouse Quay has become a new location for Burgess Marine, Britain’s largest independent ship repairer and marine engineering services provider. ‎The company willutilise space at the dock when cargo ships are not using Flathouse Quay to unload fresh produce. ‎It enables Burgess Marine to offer their services to a wider range of larger vessels, including those with deeper draughts.

Helping to make best use of resources is a newly installed £2.1million heavy lift mobile harbor crane.The 40 metre high Terex crane can lift weights up to 125 tonnes, which is perfect for fully laden shipping containers. In recent years many customers importing fresh produce to Portsmouth International Port from all over the world have moved from lighter pallets to heavier containers.

These latest developments show how Portsmouth International Port has become one of the most dynamic maritime centresin the UK, reacting to new trends, and building new business, whilst maintaining a position at the forefront of the ferry and shipping industries.

Contacts:

Mike Sellers - Port Director: mike.sellers@portsmouth-port.co.uk
Rupert Taylor - Harbour Master: rupert.taylor@portsmouth-port.co.uk
Kalvin Baugh – Ferry Port Manager: kalvin.baugh@portsmouth-port.co.uk
Steve Williams – General Manager MMD: steve.williams@mmdss.com