With UK ports contributing billions of pounds to the UK economy, Brexit could offer Europe’s second-biggest ports industry a golden opportunity
As an island nation, the UK depends on its ports and harbours to facilitate the country’s diverse export industry and support the handling of critical imports, necessary for the UK to prosper. At a time when the UK is going through unprecedented political change due to its impending departure from the Europe Union, the UK’s shipside cargo handling facilities are also being recognised as key tools in safeguarding the country’s long-term economic prosperity. In a speech delivered in January at Teesport – one of western Europe’s ten largest ports – in the north of England, Brexit Secretary of State David Davis said that the UK’s EU-exit would create “new opportunities” for ports.
It should come as no surprise that the UK government is viewing ports with a Brexit eye: given the crucial role those ports play in the country’s trade they have become an important part of exit discussions.
95% of the UK’s international trade, comprising both imports and exports, passes through UK ports
Contribution to the UK
Maritime UK member, the British Ports Association (BPA) calculates that 95% of the UK’s international trade, comprising both imports and exports, passes through UK ports. The sector is the Europe’s second-largest, providing £19 billion to UK GDP and supporting 344,300 employees. That same industry contributes £7.6 billion to the annual UK GVA and pays £1.5 billion in taxes each year. The job-creation value of UK ports is also high with around 101,000 people employed directly by the UK ports industry. Labour productivity is 46% higher than the country’s national average. In addition to this, many docks are centres for local economic activity.
The UK has around 120 commercial ports in a variety of different forms. They include major, all-purpose facilities like those of London and Liverpool, ferry ports like Dover, specialised container ports like Felixstowe and ports for specialised bulk traffic. Most of the UK’s freight traffic is concentrated among a comparatively-small proportion of these commercial ports, with the UK’s top 20 accounting for 88% of that total.
In addition to the 120 cargo handling ports, there are more than 400 non-cargo handling ports and harbours nationwide, which often serve as the focal points for smaller communities. These smaller ports offer pivotal facilities for fishing and the marine leisure sector and serve as important gateways to remoter parts of the UK. Moreover, UK ports are increasingly diversifying into logistics and other value-added services.
Opportunities and challenges
The current political climate offers both opportunities and challenges for UK ports. Tim Morris, chief executive of Maritime UK member the United Kingdom Major Ports Group (UKMPG), the trade association representing most of the UK’s bigger commercial harbours, says that, although there is a risk of growing protectionism from Brexit, increases in global trade levels present opportunities for major ports.
“In the UK, Brexit has brought trade up the political agenda, which can only be a good thing for both ports and the whole maritime sector, as well as UK plc,” he explains. “Brexit of course brings challenges, but these are concentrated in particular areas, and it’s important that the UK also grasps the opportunities of setting fit-for-purpose regulation.”
Mr Morris cites as examples of these regulatory opportunities the repealing of the EU’s Port Services Regulation and making effective use of more liberty to create enhanced coastal enterprise zones or free ports. Free ports are ports which, though inside a country’s geographical boundary, are viewed as outside the country for Customs purposes and remove Customs duties.
“In policy terms, there are a number of key regulatory developments in the transport infrastructure area that must be grasped, as well as in the UK Government’s Department for Transport’s Port Connectivity Study itself, to increase the value to UK plc of its major ports,” he adds.
“UK major ports will also continue to positively engage with environmental issues such as air quality to work towards robust but proportionate and well-evidenced rules.”
Richard Ballantyne, chief executive and director of the BPA, says that the challenges and opportunities that the sector faces currently include: Cross border Customs and port health checks post-Brexit; increasing planning restrictions and conditions on development and activities; ensuring public investment in port road and rail connectivity schemes; and the performance of the economy, which impacts trade and port activity.
“The BPA has recently written to the UK Chancellor keen to discuss the development of a new vision of port development and enterprise zones, and possibly also consideration of the suitability of free ports,” he says.
Maritime UK has worked with both bodies to develop policy positions on issues like port connectivity – “which have clear benefits for both ports and the wider maritime community”, Mr Morris says. There has also been a joint focus on engagement with the ports sector to include a ports sector-perspective in Maritime UK’s bid for a maritime sector deal as part of the UK’s government’s new industrial strategy. “We feel the sector has a better chance of success of inclusion collectively than individually – as just ports alone,” the Mr Ballantyne says.
Another example of extended UKMPG/BPA and Maritime UK collaboration is representation of ports on Maritime UK trade missions – “and vice versa, with UKMPG acting as an ambassador for the wider maritime sector”, Mr Morris says.
Looking ahead, it’s important to bring the largely unheralded success story of UK ports to a wider audience: “UKMPG members alone invest around £550 million a year to enable key UK supply chains,” Mr Morris points out.
There’s also a drive to promote the case for increased road and rail infrastructure investment to better connect UK ports. “This will keep the sector competitive, reducing costs for the freight and logistics industry,” Mr Ballantyne says. The Association has already called for a new UK freight strategy and will press the Government this year to examine the options.
Further, training will continue to be a focus area in 2018, with the BPA continuing its roll-out of governance and duty holder training on issues such as safety and strategy for all types of ports as well as supporting internal industry benchmarking initiatives and developing a network for port security professionals.
In summary, Mr Ballantyne sees 2018 as a “critical” year for UK ports as “by the end of the year we should know what Brexit will look like”.
With the UK’s departure date from the EU set for March 29, 2019, focus will increasingly fall on the country’s ports as facilitators of UK trade – something that will be vital to the UK maintaining a healthy and robust economy after Brexit. With UK maritime facilities already accounting for such a high proportion of the nation’s commerce, ports are being singled out as areas that will be offered “opportunities” by the UK’s vote to leave, with the potential for significant infrastructure investment. Given how vital the country’s docks and harbours are for UK prosperity, there is little doubt that they will be increasingly seen as lynchpins to a smooth national transition out of the EU – which could see significant benefits unlocked for the country’s ports sector as a whole.
Models of ownership
The UK has three main models of port ownership. The first is the private ownership model, where the UK government has no ownership interest and all investment in these facilities is privately-funded on a commercial basis. This model encompasses ports owned by international groups as well as ports owned by private companies.
The second model in the UK is the trust port model. These ports are independent bodies that other companies or shareholders cannot own, and they serve as strategically and financially-independent statutory corporations. Trust ports are accountable to their users and stakeholders, and although they tend to be smaller, some major ports, including the Port of London, Belfast Harbour and the Port of Dover, are trust ports.
Finally, there are local authority-owned ports, which also run on a commercial and competitive basis. Examples of these types of ports are Portsmouth International Port and the oil terminals in Orkney and Shetland.
Reference: Maritime UK Annual Review 2018